Certified Public Accountants CPAs – Santa Ana, Orange County California & Business Advisors

ELLS Ladies Wearing Red

In honor of National Wear Red Day, the ladies of ELLS CPAs sported red!

The Anaheim Enterprize Zone is Here!

Carol Painter

The waiting is over!  Anaheim received its Enterprise Zone final designation, with effective start date of February 1, 2012!  Yes, enterprise zones are still around in California.  What you heard on the news was the elimination of economic development agencies.  Enterprise zones have NOT been eliminated!  Orange County has two enterprise zones – Anaheim and Santa Ana. 

 If you think your business is located in an enterprise zone, give us a call at 714.569.1000,  to learn about all of the tax incentives that may be available to you.

By Carol Painter

Start 2012 Off by Reducing Your California Tax Liability With Enterprise Zone Credits

Edward Lieber, CPA

If you own a business in certain areas of Santa Ana or Anaheim, California, you should be taking advantage of the California State Enterprise Zone (EZ) Credits. These credits can reduce or eliminate your state income tax liability. ELLS CPAs has seen manufacturing businesses owners save over $1 million in state income taxes over the years by using these credits. EZ Credits work best if the business is a sole proprietor or in a pass thru entity like an S Corporation, Partnership or LLC.

Two credits are available under the EZ program; hiring credits and sales tax credits. The hiring credit, can earn you an excess of $37,000 per eligible employee spread over a 5 year period, this can add up to substantial  savings. In order to claim the credit, you must apply for and receive a voucher from the local EZ Agency. Hiring a professional to assist you in the vouchering process is your best bet to insure you maximize your benefits under this program.

The second credit is the sales tax credit. This credit is the “no brainer”. If you are located in the zone and purchase qualifying equipment on which you pay California sales or use tax, you can reduce the depreciable basis on the equipment and claim the state credit, it is that easy! Examples of qualifying equipment include machinery and parts used in the manufacturing process and certain office equipment including computers, telephones, fax machines and copy machines.

Make your business more profitable by using valuable Enterprise Zone credits today! Call ELLS CPAs for more information about Enterprise Zone Credits and other tax saving strategies at 714.569.1000.

By Edward Lieber, CPA

The Low Down on Hot Tax Topics

New Developments

The new hot button for the IRS is shareholder loans in S-Corps because there is usually a lack of documentation or interest being paid on these loans. It can be tough because if it is reclassified by the IRS as a shareholder distributions or salary it can dramatically increase the shareholder’s income tax.

 Success based fees Safe Harbor Deduction Election

• Normally under the Regulations, you can’t deduct fees and costs that facilitate a business acquisition or reorganization or fees contingent upon the successful closing of the transaction.
• Rev. Proc. 2011-29 provides a safe harbor election for allocating success-based fees paid in business acquisitions or reorganizations. 
• Under the new safe-harbor election, 70% of the fees are deductible and 30% are capitalized.

Foreign Bank anf Financial Accounts (FBARs) 

• A taxpayer must file Form TDF 90-22.1 if: 
  • The person has a financial interest or signature authority over an account in a foreign country AND
  • Aggregate Value of all foreign financial accounts exceeds $10,000 at any one time during the calendar year
  • Must be received by June 30^th. Not mailed.

By Suzanne Lieber

Attention Orange County Manufacturers!

Doriz N. Zhu, CPA

The federal bonus depreciation expires on January 1, 2012. Make your equipment purchases by the end of this year to be able to receive your bonus. I found this great article with more information, here.

By Doris Zhu, CPA

New ERISA Disclosure Requirements

Maria Arriola, CPA

The Department of Labor (DOL) has recently released new FINAL rules regarding the ERISA 408(b)(2). These disclosure rules become effective April 1, 2012.

Service and fee disclosure regulations – ERISA Section 408(b)(2) applies to retirement plan service providers effective April 1, 2012.

New 408(b)(2) Service Provider Disclosures:

• A description of the services provided
• Whether services provided are in fiduciary capacity
• Description and amount ($ value or formula) of all direct and indirect compensation received from plan
• Description of compensation among related parties
• Description of termination fees
• Transaction fees, operating expenses and other fees of designated investment alternatives
• Any changes must be disclosed within 60 days

For more information about your pension plan disclosure requirements call ELLS CPAs at 714.569.1000.

By Maria Arriola, CPA

Posted 12/9/11

Are You Planning to Setup a Branch or Related Company Outside of the US? What Should You Know?

Sherry Radmore, CPA, MST

Many businesses are now considering operations in a foreign country.   There are many issues that should be discussed and processes to be initiated before the decision to move offshore is made.  Here  are three of the more basic things to think about:

1. Intangible property transfers: Intangibles include customer lists, use of patents   and processes, etc.  If these types of property are transferred to a foreign subsidiary, the foreign sub is expected to pay the US parent company for  these items at their fair market value.  The US company will have to report this as taxable income which may be an unwelcome surprise at tax time. 

 2. Compliance issues: Each country has separate filing requirements over and above what you file with the IRS, your state and possibly city or county governments.  Tax treaties may help but there are many countries that the US doesn’t have a treaty with and in most cases a treaty will lower but not totally eliminate tax in the other country.

3. Transfer pricing: If the US company plans to sell or buy from the foreign subsidiary transfer pricing policies must be created and followed.  Typically this starts with a transfer pricing study that documents the accuracy of arm’s length pricing from one entity to the other.    The initial study should be reviewed yearly to insure that economic changes are recognized and prices are updated as needed.

 An ELLS advisor can be instrumental in working with you and your company to avoid the problems associated with going offshore.

 Posted 12/6/11

By Sherry Radmore, CPA

Doc, Implement Your EMR STAT!

A well defined electronic medical record system (EMR) should include a patients’ complete medical record, medication lists, health problems and clinical notes from previous visits. The doctors can also send drug prescriptions, lab tests and radiology test electronically via this system.

Is it mandatory? And when?

The federal government has set a deadline that by the year 2014 all doctors and hospitals have to convert to EMR.

Is there a penalty for not implementing EMR?

As a health care provider if you use Certified Electronic Medical Software, you can qualify for a $44,000 Medicare Incentive; physicians will be compensated with an amount that will equal an additional 75% of the charges that are allowed for professional services rendered by physicians, these incentives are for 5 years beginning in 2011 and ending 2016.

The table below is indicates the benefits of a meaningful implementation of an EMR and the penalties that will be levied for non-compliance of the EMR by the year 2014.

ELLS CPAs help to facilitate the integration of your EMR. We work closely with health care information technology specialists, banker that can finance your purchase and we can help you to with a depreciation strategy for the equipment that you purchase. Call ELLS today at 714.569.1000

By Suresh Narayanamoorthy, CPA

Posted 11/11/11

Medical Office Embezzlement – Are you at risk?

Yana Weaver, CPA

Do you know how much your patients really pay you for procedures? Are you getting all the money that they bring to your practice?

You would be surprised to know that according to the survey released by the Medical Group Management Association last year, nearly 83% of 688 practice managers were at some point affiliated with medical offices where employee theft occurred. Even though only 18% of such incidents involved the theft of $100,000 or more, usually taken in dribs and drabs by the most trusted employees, these high-dollar thefts accounted to 93% of the total losses. For more information about the survey click here.

Dentists, plastic surgeons, concierge physicians and other medical providers who customary accept cash from clients (vs. billing the insurance) are particularly vulnerable to employee embezzlement.

Most people who commit embezzlement do so because they need money – this much is obvious.  It is also obvious that they spend whatever they embezzle.  There is very little you can do after the fact to recover your losses. 

I just spent 3 days as a juror on a trial that involved embezzlement in the medical office.  A typical case of theft by a trusted employee who has been around years and whom the doctor treated as “family”.  The jury did find the defendant guilty, but it’s highly unlikely that the victim will ever recover financial loss.

If your medical practice involves procedures that are not covered by the insurance you are at risk of employee embezzlement.  Don’t take it lightly. Call ELLS CPAs & Business Advisors at 714.569.1000, we can help you establish good financial controls so that malfeasance will be deterred and come to light sooner rather than later if it does occur.

By Yana Weaver, CPA

Enterprise Zone News

Carol Painter

Great Enterprise Zone news – especially for Anaheim Enterprise Zone!  The Department of Housing and Community Development (HCD) has finally been given the go ahead from the Governor’s office to complete pending zone applications.  This means Anaheim will receive its final Enterprise Zone designation as soon as all required paperwork is processed. 

Call Carol Painter, ELLS CPA’s EZ Specialist, for more information about claiming your Enterprise Zone tax credits at 714.569.1000.