Most Silkin Management Group clients have some sort of retirement plan, whether it is a 401k; IRA, profit sharing, defined benefits, ESOPs, etc. There are a variety of options available depending upon how one’s business is structured and how many employees one has.

I don’t know about you, but when I look at my quarterly statement it is next to impossible to determine what fees are being charged to the account and how that is affecting my profits and/or losses. I’ve heard this from other Silkin Management Group clients as well.

I turns out that we are not alone. Retirement plan providers have for years and years had extremely poor fee disclosures leading many to believe that their plan was free. This led to a recent Labor Department regulation that will require plan providers to give participants a clear and easy-to-understand disclosure about the fees being charged.

This is something any business owner should be aware of whether you are a Silkin Management Group client or not. It is important because some of your participants could have a rude awakening when they get an easy to understand disclosure statement and discover the amount of fees that their plan is charging.

The first disclosures are due May 31. 2012. Any fees and expenses should be clearly stated showing the percentage of fee charged and the actual cost per $1000 in the account.

Once participants get over any shock at unknown fees, they should also be interested in encouraging their business to shop for the most competitive plans available. This, in turn, could produce lower fees throughout the industry as the competition increases for better pricing.

This blog is presented for Silkin Management Group clients and any business owner who has a retirement plan for their employees as we want them to be aware of: a) possible upsets with employees when they find out the fees being charged to their account and b) potential increased competition by plan providers resulting in the possible availability of lower prices for your plan. If you are a business owner with a retirement plan for your employees, be ready to take action come May 31st.

DAVE MCKEVITT
Silkin Management Group Consultant

You can find out more about how Silkin Management Group can help your business by visiting our website at www.silkinmanagementgroup.com.

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In yesterday’s Silkin Management Group blog we presented an example of a successful yearly game one of our clients used that ended up sending their entire office to Hawaii for a week. Was it worth it? Yes! It increased their income by about $200,000 that year. You can link to that article at this Silkin Management Group blog site: http://bit.ly/AzGa8L

Today we’ll offer up another example yearly game that can be gone over at a first of the year staff meeting. It is for a veterinary office, but can easily be adapted to any health care office.

If you would like more information about the various management tools used at Silkin Management Group that can expand your practice, contact us at 800-695-0257 or you can go to our website: www.silkinmanagementgroup.com

JONO LOBUE
Silkin Management Group Consultant

EXAMPLE AGENDA FOR FIRST OF THE YEAR STAFF MEETING
SETTING UP PRODUCTION GAMES
FOR A VET OFFICE

I. Employee of the quarter:

The following criteria will determine the employee of the quarter.
a. Employees will vote on their choice—winner receives 5 points
2nd place receives 3 points
3rd place receives 1 point
b. You will receive 2 points for each referral you have come in during
that quarter.
c. You will receive 1 point for each puppy or kitten program you sell during that quarter.
d. You will receive 3 points for any solution to a problem you come up with or 2 points for any suggestion you make and we decide to use.
e. You will receive 5 points for meeting your target stat each month. (If you exceed your target by 50 points or more, you will receive an extra 5 points.)
f. For each time you are late, 3 points will be deducted and for each day you miss that was not a scheduled vacation day (scheduled at least 2 weeks in advance), 3 points will be deducted.

The employee of the quarter will receive $250.00 cash and a plaque with their name on it to hang in their reception area for the next quarter.

II. Staff Referrals:

a. Each quarter a prize will be given to the employee with the most referrals for that quarter and a year end prize will be given to the staff member with the most referrals at the end of the year. The prizes are as follows:

Each Quarter Winner: dinner for two at the restaurant of your choice ($100.00 value), plus $100 cash.
Winner for the entire year: $500.00 cash

III. Bonus/Goal:

If the office increases production and collections by 20% for the entire year, all staff who have been here all year will receive a $200 bonus. Any staff who have been here less than one year will get a bonus pro-rated to their time here.

Any staff member who also meets their yearly production quota will also receive an additional $250 bonus if the office’s 20% increase goal is made and a $100 bonus if the goal is not made.

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Two days ago, on this Silkin Management Group blog site we began a discussion of when and when not to acquire debt and the use of a balance sheet when applying for a loan. Our philosophy is that one should attempt to pay off debts as fast as possible and only go into debt for something that will increase income and productivity and/or increase in value. Examples would be educational expenses that make one more able to manage and deliver services, new equipment that will increase productivity and keep one competitive, buying a house that will increase in value over the long term and provide tax savings yearly, etc. Examples of things not to go in debt over would be vacations, “toys” like a boat, jet ski, etc.

Once you have decided to get a loan, you will more than likely be required to submit a balance sheet as part of the application documents. We discussed what a balance sheet is in the previous article on this Silkin Management Group blog site. It is simply a snapshot at any point in time of a business’ worth by comparing assets to liabilities. Today we will get into more details on what assets consist of for the purposes of a balance sheet. This information was compiled from an article published in Fox Business New which can be found at http://smallbusiness.foxbusiness.com/legal

.Here are some categories of assets:

• Current assets: these are assets that can easily be liquidated in a year or less. Cash, stocks, accounts receivables, etc.

• Prepaid expenses: These usually are expenses incurred for the long term but paid for early. For example, let’s say you have a 2 year contract for maintenance of your equipment that you pay $5000 for. You will expense this monthly at $208.33 per month (1/24th of the $5000). Tax laws generally require you to expense it this way and it results in a less distorted balance sheet.

• Fixed assets: these are things that have more than a one year life span, such as business vehicles, equipment, office furniture, leasehold improvements, etc.

• Goodwill: You man not count the value of your business’ goodwill as an asset unless you paid for it when purchasing the business. Although goodwill is often the major asset of a practice, it is only allowed on a balance sheet if it is something you actually paid for.

In our next Silkin Management Group blog we will complete the outline of what is involved in a balance sheet by going over liabilities and other relevant information.

Gary Crawshaw
Silkin Management Group Consultant

Find out more about Silkin Management Group by visiting our website at www.silkinmanagementgroup.com or give us a call at 800-695-0257.

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At Silkin Management Group we preach getting out of debt and have many financial tools to help our clients accomplish this. At the same time, having a fixed idea of never wanting to incur a new debt is not always wise. The philosophy at Silkin Management Group is that one should only incur new debt for things that are likely to increase in value and/or make you more productive. Therefore incurring a debt to get educated so you can become a professional is wise. Incurring a debt to go on a vacation is foolish.

Since all Silkin Management Group clients are professionals, they sometimes have to look at borrowing for equipment as a means to increase their productivity and remain competitive. Although we encourage our clients to pay cash for equipment as much as possible, it is sometimes the case that saving up for a needed but expensive piece of equipment takes too long and borrowing is the right business decision.

The process of getting an equipment loan or lease can be somewhat cumbersome and involve putting together a variety of financial reports. One of the items that the lender will often ask for as part of the application process is a recent balance sheet. When that happens our clients often ask us what a balance sheet is. In this article and following Silkin Management Group blogs we will, as simply as possible, outline the basics of a balance sheet.

A balance sheet simply shows your business’s worth or value. It is done by showing the assets and liabilities of the business at any point in time, normally quarterly. The difference between the assets and liabilities shows the worth of the business.

Most accounting software programs, like Quicken or QuickBooks will show a chart of accounts and thereby classify the various accounts you have into different types of income and expenses. A profit and loss statement (P & L) is easily put together from totaling the income versus expenses. As part of the application process a P & L is often asked for as well. But a balance sheet is a little more involved.

Again, a balance sheet elucidates your assets and liabilities and thereby calculates the value of the business. In our next article we’ll go over what exactly are assets and liabilities so that Silkin Management Group clients and anyone reading our articles have a better understanding of these terms. This will make it easier for anyone to put together a balance sheet.

Jack Hennessy
Silkin Management Group Consultant

Find out more about Silkin Management Group by visiting our website at www.silkinmanagementgroup.com or give us a call at 800-695-0257.

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Over the last several weeks we’ve written a series of articles on our different Silkin Management Group blog sites covering some key tax related points that all small business owners, whether Silkin Management Group clients or not, should be aware of this year.

Previous articles have covered the following points: a) increased tax audits and b) some potential tax consequences of the federal health care legislation that will be ruled on by the Supreme Court this year, c) extensions of some favorable tax rules, d) federal, state and local governments on the look-out for new sources of revenue, e) the potential effects of the Presidential race and election, f) potential increases in unemployment taxes, g) possible changes in estate taxes, and h) the impact of lower interest rates on dealing with the IRS.

Today we’ll present the final two points in this series:

• Online filing of returns: If you use an accountant or other professional to prepare your tax return, and they file more than ten 1040/41 forms, they are required as of this year to e-file all returns. Given that most Silkin Management Group clients use professional tax preparation services, it is quite likely that their returns will be done by e-filing. This speeds up the process and, if you are due a refund, you should get it faster.

• The ever increasing complexity of the tax system: The U.S. has a highly complex tax system and it is getting worse. In fact in the last two years alone the U.S. system dropped 23 places out of 183 countries in terms of complexity – meaning it became more and more complex over the last two years. Many other governments are attempting to simplify their tax systems and several candidates running for office, including the Presidency, have proposed different simpler systems. But, as of this date, we are continuing to get more and more complex and it seems that the upcoming elections aren’t helping the matter. The idea of eliminating income tax and replacing it by a national sales tax has made interesting progress over the last few years and, some think, would greatly boost our economy. More on this in future Silkin Management Group blogs.

Dave McKevitt
Silkin Management Group Consultant

For more information about Silkin Management Group visit our website at www.silkinmanagementgroup.com or call us at 800-695-0257.

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In earlier Silkin Management Group blogs, which you can find on this site, we’ve discussed what a balance sheet is and its use when applying for a loan. As part of this we’ve also discussed Silkin Management Group’s philosophy on incurring debt.

Today we’ll complete our discussion of balance sheets so that Silkin Management Group clients are more educated on what a balance sheet is and why lending institutions want them as part of most loan application processing.

Once you have decided to get a loan, you will more than likely be required to submit a balance sheet as part of the application documents. A balance sheet is simply a snapshot at any point in time of a business’ worth by comparing assets to liabilities. Today we will get into more details on what liabilities consist of for the purposes of a balance sheet. (Please refer to the earlier articles concerning classification of assets.) This information, as well as what we’ll go over today, was compiled from an article published in Fox Business News which can be found at http://smallbusiness.foxbusiness.com/legal

Liabilities: Liabilities are things you owe, obligations you have to meet whether short term or long term. Liabilities would include payroll taxes owed, quarterly income taxes owed, accounts payable including credit cards, deposits from patients/clients for work to be done, etc.

The bank is going to look at your equity – i.e. the difference between your assets and liabilities to get a snap shot picture of your net worth. This can vary depending on the type of business structure you have. Most Silkin Management Group clients are sole proprietorships or partnerships. In such a case owner contributions and withdrawals can have a significant effect on the net worth at the start of each year which thereby affects the balance sheet.

The article noted above gives a simple formula: Beginning net worth + contributions – withdrawals +/- profit or loss = net worth. This net worth would then be carried forward to the next year’s balance sheet.

For example, let’s take someone starting up a practice. They put $50,000 of their own money into the practice and take out $45,000 in withdrawals. And, after a year’s worth of activity, the practice itself posted a profit of $10,000. The net worth would be:

50,000 – 45,000 + 10,000 = $15,000 net worth useable for the balance sheet.

There is much more detail involved in determining balance sheet assets, liabilities and net worth. The above mentioned article can provide a more detailed overview. Silkin Management Group consultants always advise their clients to use a good accountant when an important balance sheet and/or profit and loss statement is needed for a lending institution.

Dave McKevitt
Silkin Management Group Consultant

Find out more about Silkin Management Group by visiting our website at www.silkinmanagementgroup.com or give us a call at 800-695-0257.

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I just read an article from Bloomberg Business Week that outlined a proposal from President Obama to help small businesses. Some of these ideas I thought were actually good and possibly helpful to Silkin Management Group clients and readers of our various Silkin Management Group blog sites.

In many past Silkin Management Group articles we’ve written about some of the less than exciting and unrealistic proposals from the Administration that did little to help small businesses over the last 3 years. As an example, one past item included a small incentive to hire more employees, without thinking that a business had to have enough income and customers to warrant hiring an employee whether they got small incentives or not. Ideas like this are, of course, typical in Washington where 90% of our legislators have never run a business in their life.

The new proposals, though, could be helpful. Here are the highlights:

• Making permanent a zero capital gains tax rate on small business investments.

• A tax credit of 10% for hiring and/or increasing wages. Tax credits are good incentives as it directly reduces the amount of taxes one pays.

• An increase from $5000 to $10,000 in deductions for a start up business.

• An extension of the 100% first year depreciation on qualified business equipment bought in 2012. This is something we discussed in a recent Silkin Management Group article which you can link to here: http://bit.ly/yD03Zl

The President is trying to encourage the opening of new businesses and the expansion of existing businesses with these incentives. It looks like this could be a bi-partisan piece of legislation that might not create the normal nuclear fall-out between the Democrats and Republicans that we’ve seen over the past few years.

My only question is, “why now – why not 3 years ago?” Do you think it could possibly have anything to do with this being an election year? No way!

Gary Crawshaw
Silkin Management Group Consultant

For more information about Silkin Management Group, check out our website at www.silkinmanagementgroup.com

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This is a continuation of a multi-part series presented on our various Silkin Management Group blog sites covering some key tax issues that Silkin Management Group clients and blog readers should be aware of for this new year.

Previous articles have covered the following points: a) increased tax audits and b) some potential tax consequences of the federal health care legislation that will be ruled on by the Supreme Court this year, c) extensions of some favorable tax rules, d) federal, state and local governments on the look-out for new sources of revenue and e) the Presidential race and election. Yesterday’s article can be accessed at this Silkin Management Group blog site: http://bit.ly/xOWgXK.

Here are two more issues to consider:

• Unemployment taxes: Many states borrowed from the federal government to help pay for unemployment benefits during the economic downturn as they didn’t have enough money to pay for the extended benefits. 20 states have not repaid their loans. Employers in those states will be paying higher FUTA (federal unemployment) taxes due to this. The states involved are: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and Wisconsin. Be on the look-out for higher unemployment taxes if you are a business owner in one of these states,

• Estate taxes: Through the remainder of this year the Bush-era rules regarding estate taxes remain in effect. One of the important items from these rules is a $5,000,000 exemption. Once the rules expire the exemption reduces to the pre-Bush figure of $1,000,000. This could have a major effect on business owners, especially small business owners whose businesses could easily be valued at more than the exempt amount, thus making it very difficult to pass on their business to their heirs without onerous taxes being assessed. Keep an eye on whether the $5,000,000 exemption is extended or allowed to expire. With the recent State of the Union Address by the President, it seems unlikely that the Democrats would be willing to extend this rule.

Keep an eye out on our Silkin Management Group blog sites for additional tax issues to be aware of this year.

Jono LoBue
Silkin Management Group Consultant

If you’d like to know more about Silkin Management Group visit our website at www.silkinmanagementgroup.com.

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Today we’ll present the 3rd part of a series of articles on Silkin Management Group blog sites concerning tax issues we all should be aware of in 2012.

The points we’ve covered in our two previous articles were a) increased tax audits and b) some potential tax consequences of the federal health care legislation that will be ruled on by the Supreme Court this year, c) extensions of some favorable tax rules and d) federal, state and local governments on the look-out for new sources of revenue. You can access yesterday’s article at this Silkin Management Group blog site here: http://bit.ly/yD03Zl

Today we’ll simply point out that tax issues are going to be key points of contention in the upcoming Presidential race. Anyone who watched last night’s State of the Union Address by President Obama should now be very aware that tax issues will be a key political punching bag over the next 8 months leading up to the election. The Democrats, through the President, have laid out their position.

On the Republican side we find the following:

Romney: He has voiced support for the tax cuts from the Bush Administration as well as wanting to eliminate the double taxation of the estate tax and reducing the overall tax rate by 5%.

Gingrich: He is against higher taxes and has proposed an optional 15% tax rate which would be up to the tax payer whether to choose or not. He has also stated opposition to capital gains tax and wants lower rates for businesses.

Additionally the “Super Committee” failed to come up with a plan to control the federal deficit last November, setting the stage for further battles over taxation at the federal level.

The rest of this week on our Silkin Management Group blog sites we will continue to add to this list of 2012 tax related issues that all business owners should be aware of.

Jack Hennessy
Silkin Management Group Consultant

For more information about Silkin Management Group, give us a call at 800-695-0257 or visit our website at www.silkinmanagementgroup.com.

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Silkin Management Group clients, all small business owners and primarily health care professionals, are certainly interested in anything having to do with taxes. Nobody likes to pay more taxes than they have to, and many of us also feel that excessive taxes adversely affects the economy and penalizes small businesses. Therefore knowing upcoming tax trends is important and relevant to Silkin Management Group clients and anyone reading our various Silkin Management Group blogs.

Today we’ll start a several part series covering upcoming tax issues and trends that we all should be aware of for this new year.

• An increase in tax audits: The last thing anyone of us wants to get is that dreaded notice in the mail that our tax returns are being audited by the IRS. Given that the IRS system often finds one guilty until you prove yourself innocent, a tax audit can often put fear in one’s heart. A recent survey of corporate executives by KPMG showed a 61 percent increase in federal tax disputes and a 37% increase in state tax disputes. As we have written about in earlier Silkin Management Group blogs, a big issue with the IRS is whether or not businesses are properly determining whether or not someone is an independent contractor. This is often a key point of any audit as it affects whether the business is paying proper payroll taxes. There are very specific rules that qualify whether someone is or is not an independent contractor, and both the IRS and many states are cracking down on what they see as abuses in this area. Make sure you know the federal and state rules and regulations regarding this if you pay anyone as an independent contractor.

• How will the health care legislation affect taxes?: As we’ve written about in numerous Silkin Management Group blogs, the health care legislation, also called “Obama-Care”, is being fought tooth and nail in the courts. The key points of the legislation are now before the Supreme Court with initial oral arguments happening in March of 2012. Depending upon the ruling of the Supreme Court, many small businesses could be forced to carry health insurance for their employees and, as part of that, some businesses could be eligible for a tax credit for helping to pay for their employee’s coverage. The high court is expected to rule on the legislation in June of this year.

We will add to this list of potential 2012 tax issues in future Silkin Management Group blogs.

Dave McKevitt
Silkin Management Group Consultant

Find out more about Silkin Management Group by visiting our website at www.silkinmanagementgroup.com

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