Accounting & Finance

Business Owner's Guide to Profit Planning

Owner's Guide to Profit Planning

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How Michigan's new regulatory philosophy affects your small business. Today at 10 a.m. on the Business Next audio seminar

Michael Rogers talks with Steven Hilfinger, director of the Michigan Department of Licensing and Regulatory Affairs and Chief Regulatory Officer. Listen today at 10 a.m., 3 p.m. and 8 p.m. on the Michigan Business Network. Listen to archived programs anytime at your convenience on your PC or mobile device by going to the Business Next show page

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Small business tax and financial advice! Today at 10 a.m. on Business Next

Longtime small business advocate and retired CPA Paul Hense talks about the positive impact of business tax reform and how to get nuggets of useful information out of your year-end financials. Listen Friday at 10 a.m., 3 p.m. and 8 p.m. on the Michigan Business Network. Listen to archived programs anytime at your convenience on your PC or mobile device by going to the Business Next show page. 

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Ancient philosophers had surprisingly helpful advice for modern small business owners

(By Paul Hense, CPA, past chairman of SBAM. From SBAM’s member-only Focus on Small Business magazine.)

We often believe the problems we have as a small business owner are unique. The reality is that people have struggled with the same problems for centuries. Marcus Aurelius (121 to 180 AD) was a Roman Emperor and author of “Meditations,” a book he wrote during a military campaign in Gaul. He was the elderly Roman Emperor in the movie “Gladiator.” Epictetus (50 to 130 AD) was a Greek slave owned by a Roman master. Jiddu Krishnamurti ( 1895 to 1986) was a Hindu and Buddhist philosopher from India. He was the author of many books including my favorite, “The Awakening of Intelligence.”

These men from distant times in distant places wrote about the most fundamental of human problems. They pursued fulfillment through the search for reality.

Of the thousands of philosophers who have written books, I have chosen these three because these are the three that have made the greatest impression on me. Here are a few of their quotes that push me to see the connection between philosophical wisdom and every day business.

From Jiddu Krishnamurti, “If we can really understand the problem, the answer will come of it, because the solution is not separate from the problem.” One of the worst things a business owner can do is to misunderstand the problem sometimes correct a problem that doesn’t exist while leaving the true problem unaddressed.

From Jiddu Krishnamurti, “What is needed rather than a running away or controlling or suppressing or any other resistances is understanding fear: that means one should learn about it, come directly into contact with it. We are to learn about fear, not how to escape it.” During these economically unstable times, fear often causes business owners to make bad decisions. It would be almost inhuman to expect someone to face financial difficulty calmly and coolly. Knowing that you’re afraid and that your fear is affecting your decision making gives you an opportunity to alleviate that fear by understanding.

From Marcus Aurelius, “Began to begin is half the work, but half still remained; again begin this and I will have finished.” I don’t know about the rest of you, but once I start something I find it difficult to stop. If I never start a project, that pretty much guarantees that it will never be finished. Starting the project is 50% of the problem. Once you have started a project you have been avoiding you most likely will finish it.

From Marcus Aurelius, “Look back over the past with its changing empires that rose and fell you can see the future too. “ That’s what financial statements are for. Your financial statement tells you your history. Looking at years of the company’s financial statements tells you their history. If you want to avoid failure, look at General Motors, Enron and other failed ventures. If you are seeking success, look at the financial statements and histories of companies like Microsoft. Textbooks teach you histories of countries. Financial statements are the histories of failed and successful companies.

From Marcus Aurelius, “The art of living is more like wrestling than dancing.” Much is made of the glamour of being a business owner. What is often not recognized is that a successful company is the result of simply hard work. Dancing is elegant. Success in wrestling is often simply a function of which contestant is the most determined. It’s not pretty. Operating businesses is much the same.

From Epictetus, “Men are disturbed not by the things which happen, but by their opinions about things that happen.” One business owner faces a crisis and turns it into an opportunity. Another business owner faces crisis and collapses. It’s all in how you view it.

Epictetus, “If a man has

IRS clarifies W-2 reporting of group health plan coverage costs to employees

Under the Patient Protection and Affordable Care Act passed in 2010, many employers will soon be required to report to employees the cost of their group health plan coverage. As the deadline gets closer, many employers are having trouble figuring out how they are supposed to calculate the reportable cost.

The IRS has recently provided some guidance, but first, here is some background information.

As part of the sweeping healthcare law, reporting of the aggregate cost of employer-sponsored healthcare benefits is to be made on annual Form W-2s. It was originally supposed to start with the 2011 calendar year but reporting for last year was made optional after the IRS provided relief (IRS Notice 2010).

The IRS recently issued guidance (IRS Notice 2012-9) to help employers with the mandatory reporting that is scheduled to begin with 2012 W-2 forms. Employers are generally required to give 2012 W-2 forms to employees by January 31, 2013, and then file them with the Social Security Administration.

Important: The reporting requirement is informational only. It does not affect whether coverage is excludable from gross income under the tax code and does not affect the amount includable in income or the amount reported in any other box on Form W-2. It also does not cause otherwise excludable employer-provided healthcare coverage to become taxable.  

"The purpose of the reporting is to provide useful and comparable consumer information to employees" on the cost of their coverage, according to the IRS. 
Fortunately, there is relief from the reporting requirements for some employers. Here are some highlights of the latest IRS guidance:

If an employer issues W-2 forms for less than 250 employees in the preceding year, it is exempt from the W-2 reporting requirement.

Tribally chartered corporations, which are wholly owned by federally recognized Indian tribal governments, are also exempt.

The aggregate reportable cost generally includes the portion of the cost paid by the employer and the portion of the cost paid by the employee, regardless of whether the employee paid for it through pre-tax or after-tax contributions.

Employers who are subject to the reporting requirements include federal, state and local government entities, churches and other religious organizations, as well as employers that are not subject to the COBRA continuation coverage requirements under the tax code, to the extent such employers provide applicable employer-sponsored coverage under a group health plan.

The aggregate reportable cost will be reported on Form W-2 in box 12, using code DD.

What are the requirements if a staff member terminates employment during the year? An employer may "apply any reasonable method of reporting the cost of coverage provided under a group health plan" for the employee, provided that the method is used consistently for all employees receiving coverage under that plan who leave their jobs during the plan year and continue or otherwise receive coverage after the termination of employment. However, an employer is not required to report any amount in box 12 using Code DD for a departing employee who has requested to receive a Form W-2 before the end of the calendar year.

An employer also does not have  to issue a W-2 reporting the healthcare cost to retirees, who are not otherwise required to receive a W-2.

An employer is not required to include the cost of coverage under a dental or vision plan if it satisfies the requirements for being excepted benefits under the Health Insurance Portability and Accountability Act (HIPAA). (Generally, to be excepted benefits for this purpose, the dental or vision benefits must either:

1. Be offered under a separate policy, certificate, or contract of insurance (that is, not offered under the same policy, certificate, or contract of insu

Steven Strauss: Federal Grant Funding

Question: I was wondering if there really is federal grant money available for my small business, and if so, where do I find it? It would be great if there was.

Answer: Let me ask you: In your experience, is there really such a thing as a free lunch? Right.

But actually, it is a qualified “right.”

If you think there is free government grant funds to start your business, you would be wrong. But that said, in special circumstances, there is grant money available. Typically, that money is awarded by a federal agency to a business that is doing something that furthers that agency’s public policy objective.
Example: In 2007 a company called TruTouch Technologies received grant money to assist in the development of its invention, a device that detects blood-alcohol levels by shining infrared light on the skin. The uninvasive test takes 60 seconds to get results as opposed to 20 minutes for a Breathalyzer.

The funding came from an IRS program that offered grants to businesses that demonstrated the potential to develop “new therapies to treat chronic conditions or unmet medical needs, reducing long‐term health care costs in the United States.” That was the public policy purpose. Said Dr. Trent Ridder, CTO of TruTouch, the grant “recognizes our commitment to reducing the devastating medical costs caused by alcohol related accidents and injuries.”

The company got almost a quarter million dollars in Round 1, and another $438,000 in Round 2; the second grant coming from the United States Army Medical Research and Materiel Command (USAMRMC).

The point of this story is two-fold:
1.    It shows that yes, there are some of those magic government grants out there that we all hear about. But hopefully, the story also illustrates that
2.    Such grants are very specific and often very technical in nature.

The fact is, while there is indeed some limited grant money available to business, it is not for individuals, not for startups, and also is very difficult to get. As the website says, “We have all seen them; late night infomercials, websites, and reference guides, advertising ‘millions in free money.’ Don’t believe the hype! Although there are many grants on, few of them are available to individuals and none of them are available for personal financial assistance.”

That said, if in fact you do think you might qualify for some of this R&D research grant money, then the place to go is the U.S. government’s Small Business Innovation Research (SBIR) program and its Small Business Technology Transfer (SBBR) programs. SBIR/STTR does in fact offer grants to companies that are involved in high-tech R&D. When looking for a federal grant, this is your best bet. For more information, go to

Beyond SBIR/STTR, there are some other, less technical grants available through other federal agencies. You can find them at
•    The online Catalogue of Federal Domestic Assistance, and

Additionally, you might consider conducting an online search for the terms “business grants” and the name of the federal agency that may need your goods or services.

All of that said, it is probably better to think of these sorts of opportunities as federal contracts as opposed to free grants. If you do that, then the answer is that yes, there is federal grant money available.

Today’s Tip: The prototypical small business will probably have a better chance of finding grant money on the state level. But even so, the same caveats apply: Grants are not given to individuals, or to new entrepreneurs to start new businesses. But money is available to entrepreneurs who can help their state promote economic activity or otherwise foster a valued social cause