Archive for May, 2015

Hackers Target IRS – 100,000 Taxpayer Accounts Breached

Wednesday, May 27th, 2015
Hackers Target IRS – 100,000 Taxpayer Accounts Breached - Rea & Associates - Ohio CPA Firm

Reports state that cyber-criminals were able to gain access to taxpayer accounts by obtaining specific, personal information, which allowed them to navigate the Get Transcript authentication process. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Just when you thought it was safe to let your guard down, cyber-criminals have blindsided us again. This time they’ve used the Internal Revenue Service’s “Get Transcript” application to gain access to approximately 100,000 taxpayer accounts.

Read: Could A Cyber-Attack Cripple Your Business In 2015?

The IRS released a statement Tuesday stating the government agency is “working aggressively to protect affected taxpayers and strengthen [their] protocols even further going forward,” after learning that hackers used “non-IRS sources” to access data, including Social Security information, dates of birth and street addresses associated with the accounts of nearly 100,000 taxpayers. The IRS said the security breach occurred when criminals gained access to its online Get Transcript application, which has since been shut down pending a full investigation by the Treasury Inspector General for Tax Administration.

According to the IRS, “the online application will remain disabled until the IRS makes modifications and further strengthens security for it.”

The data breach was limited to the Get Transcript application, said an IRS representative. The main IRS computer system that manages tax filing submissions was not affected and remains secure.

Reports state that the criminals were able to gain access to the accounts by obtaining information specific to the certain taxpayers, which allowed them to navigate the Get Transcript authentication process, which includes asking the user to answer several personal questions to confirm their identity. The IRS said, since February, there have been about 200,000 attempts to access taxpayer’s Get Transcript accounts from “questionable email domains – of which, about 100,000 were successful.

Expect to receive a letter in the mail if your account was one of the 200,000 accounts targeted. And if your account was one of those that were compromised, your letter will provide additional information, including specific instructions to access free credit monitoring services that will be provided by the IRS to ensure your data is not being used in other financially damaging ways. According to the IRS, the letters started going out this week.

Concerned about identity theft as a result of this breach? Click here to learn what to do if your identity is stolen or if your personal information is compromised.

If you are a business owner, do you have protocols in place to protect your business from a cybercriminal?Email Rea & Associates to learn how you can protect your business from a cyberattack. You can also get some useful tips and information in the related articles below.

By Lesley Mast, CPA (Wooster office)

 

Related Articles 

How Much Is Your Data Worth To Criminals?
When Scammers Demand That You Pay Up, IRS Says You Should Hang Up
8 Tips For Crafting A Strong Password
How Do You Protect Yourself From Identity Theft?

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School’s Out For Summer, But Tax Credits Are Still In

Tuesday, May 26th, 2015

Summer is an exciting time for families. It’s a time to get outside and have fun hanging out by the pool or to catch fireflies in a jar at the end of a long day. For many parents though, the summer holiday is overshadowed by the need to find affordable childcare during your work hours. The good news is that your opportunity to claim the Child and Dependent Care Tax Credit doesn’t end at the last day of school. In fact, you may be able to claim a variety of summertime childcare expenses when tax season rolls around again. Check out the list below to familiarize yourself with this credit.

Read: Can My Summer Day Care Expenses Earn A Tax Credit?

8 Tips To Help You Claim The Child Care Tax Credit

  1. Child care must have been provided so that you (and your spouse if filing jointly) can work or actively look for work. Your spouse must also meet this obligation during any month in which the child was a full-time student or was physically and/or mentally incapable of self-care.
  2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There’s an exception to this rule for a spouse who is a full-time student or who is physically and/or mentally incapable of self-care.
  3. Care must have been provided for dependent(s) younger than 13 years old. Your spouse or another dependent qualifies if they lived with you for more than have the year and are physically and/or mentally incapable of self-care.
  4. Qualifying child care expenses include those that are used to secure enrollment at a daycare facility outside the home or at a day camp. Expenses for overnight camps or summer school tutoring do not qualify. NOTE: If you pay someone to come to your home to care for your child or children, you may be a household employer. For more information, see IRS Household Employer’s Tax Guide.
  5. If your employer provides dependent care benefits, special rules apply. See Form 2441, Child and Dependent Care Expenses.
  6. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person and can be up to 35 percent of your expenses, depending on your income.
  7. You can claim up to $3,000 of your total unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying persons.
  8. Keep your receipts and records to use when you file your 2015 tax return next year.  Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

Email Rea & Associates to learn more about the Child and Dependent Care Tax Credit or other tax incentives you may qualify for.

By Denell Skelton, CPA (Coshocton office)

 

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The Do’s And Don’ts Of Summertime Tax Prep
From Toddler To Teen And Beyond: Tax Breaks For Families
Three College Savings Account Tips You Can’t Afford To Ignore

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Don’t Shy Away From Business Debt

Friday, May 22nd, 2015
Leverage Your Debt - Leverage Your Cash Flow - Ohio CPA Firm

Traditionally, companies with strong, positive cash flows are those with proper pricing models in place, a healthy labor force, controlled spending and active collections. When it’s time to grow, they are ready to make a move.

You know the satisfaction you feel when all of your debts have been settled and any extra cash flowing into your bank account is purely disposable income. Neither do I. But, contrary to popular belief, if you are a business owner, carrying a little extra debt could be a good thing – and here’s why …

Read: How Can My Statement of Cash Flows Transform My Business?

One of the most important jobs a business owner has is to prepare, monitor and analyze their company’s cash flow. As the single most important tool you have in your business’s arsenal, your company’s cash flow (business income minus its cash payments) provides you with an accurate way to measure its overall financial wellness.

Do You Know What You Need To Grow?

One of the most powerful ways to measure how well your company is doing is to monitor its projected/forecasted cash flow while analyzing the business’s past financial information.

  • Your company’s projected/forecasted cash flow should provide you an educated prediction of your future cash income and expenses. You can use this information to develop the initiatives needed to ensure the long-term growth and sustainability of your business.
  • When you monitor your company’s past cash flow you will tap into the data needed to zero in on the business’s strengths and weaknesses – effectively shining a light on processes, products, services and strategies that are hindering your company’s growth. Then you can act quickly to build upon the objectives that work and eliminate those that hinder ongoing success.

Traditionally, companies with strong, positive cash flows are those with proper pricing models in place, a healthy labor force, controlled spending and active collections. (Notice that I didn’t say that these companies were debt free!)

Leverage Cash Flow, Leverage Your Debt

The word “debt” has a bad reputation. Yes, for many reasons living your life and managing your business “debt free” can be a great thing. But, especially in business, working exclusively for the purpose of eliminating all debt can actually hinder you from experiencing healthy, sustainable growth. For example, in the quest to settle your company’s debts, you may be left with an anemic savings account and little-to-no cash to jump on opportunities that arise and could potentially propel your company to new heights. As a savvy business owner, you should always anticipate changes that could positively and negatively impact your business. The key is to leverage your company’s cash flow. Here are two ways you can get started.

  1. Take advantage of financing opportunities with favorable interest rates.  

Oftentimes, especially if you have taken the time to develop a strong relationship with a local financial institution, you can secure financing at a very low interest rate. This will allow you to take the cash that was not used to finance your project and reinvest it in the market, which can provide you with a better return. For example, in the current market, if you are able to finance new equipment for your company with an interest rate of 4 percent, you are free to invest your own cash in the market, which could yield a return rate greater than the interest charges you owe to the bank per your financing agreement.

  1. Utilize a line of credit

One of the best ways to invest in your business is to make sure you have the cash on hand that will allow you to take advantage of unforeseen opportunities. It’s hard to predict when a strategic partnership or change in the marketplace can open up a door that had previously remained shut. But when it does, an open line of credit makes seizing the opportunity possible while ensuring that your business’s current operations remain unaffected.

If you practice strategic control over your business, make sure you are giving your cash flow the same attention. To properly leverage your company’s debt you must constantly monitor your cash flow to ensure that these strategies make sense for you. Email Rea & Associates to learn more about leveraging your cash flow and whether it is the best move for your company.

By Dustin Raber, CPA (Millersburg office)

 

Related Articles:

Cash Flow Is King: Where Do You Need To Focus?

Should You Maximize Cash Flow Or Minimize Income Taxes?

How Do You Increase Cash Flow?

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Study: Nonprofit Organizations Lack Governance Structure, Processes

Tuesday, May 19th, 2015
Directors of Nonprofit Organizations Lack Governance Structure - Rea & Associates - Ohio CPA Firm

Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying.

If you had to guess, how strong do you think your nonprofit organization’s policies are? If you’re unsure or have that gut feeling they’re not strong, you’re certainly not alone. After surveying more than 900 directors of nonprofit organizations, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, reported some concerning findings in their 2015 Survey on Board of Directors of Nonprofit Organizations.

You may know that it’s important to have good governance when it comes to ensuring the stability and strength of your organization. Without having the right procedures in place to help govern the board of directors and the institution as a whole, the entire organization risks collapse.

While securing sources of revenue and recruiting new members are critical elements of every nonprofit, the real backbone of your organization is your board’s governance. Without the proper structure in place to help shape and reinforce your vision, mission and objectives, your board will not have the tools needed to lead – making your funding and membership objectives less effective.

According to Stanford Graduate School’s survey:

“Over two thirds (69 percent) of nonprofit directors say their organization has faced one or more serious governance-related problems in the past 10 years. Forty percent say they have been unable to meet fundraising targets. Twenty-nine percent have experienced serious financial difficulty. A quarter (23 percent) have asked their executive director to leave or had to respond to unexpected resignation [and] sixteen percent say they have had extreme difficulty attracting qualified new board members.”

Furthermore, the study found that:

  • Too many directors lack a deep understanding of the organization
  • Most lack formal governance structure and processes
  • Many directors are not engaged, do not understand their obligations

While the shortcomings underscored by this report highlight a widespread problem throughout the nonprofit industry, the solution may be as simple as writing (or reevaluating) and implementing a variety of key policies. Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying. Policies can, and should, be in place to help manage the organization’s advisory council, board member orientation, ethics, confidentiality, donor relations, performance, and sponsorship activity – among many others.

Not sure what policies you should have in place? Take a look at this comprehensive Not-for-Profit Policy Checklist. Here are also a few examples of sample policies to give you greater insight into what you should be striving to accomplish.

By Mark Van Benschoten, CPA (Dublin office)

 

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Investing In Your Business’s Immortality

Monday, May 11th, 2015
Business Teamwork - Rea & Associates - Ohio CPA Firm

Ensuring that you have the right team in place – from the ground floor to upper management – is a solid, common sense strategy for business owners who are looking to add short-term and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Go ahead. Take pride in all that you’ve accomplished. Relive the moment you decided to go into business and reflect on your trials and triumphs. And as you reminisce, identify everyone who helped you achieve your vision – because chances are you didn’t get where you are by yourself.

Make no mistake. In business, the strength of your team directly impacts your company’s success and overall val­ue. Therefore, it’s never been more im­portant to ensure that your exit from the company doesn’t lead to a “going out of business” sale.

Read: This Is An Intervention – Step Away From Your Business

Your Company’s Longevity

As a business owner, it’s your responsibility to continually evaluate your busi­ness. Part of the evaluation process is ensuring that the right people are in the right place to help guide and grow your company – even when you’re not around.

Whether they move on or retire, eventually every person on your leadership team will leave, including you. You must decide what kind of impact this will have on your company when it happens.

One of the best strategies you can em­brace is to become obsolete. That’s not to say that your work is not important, it just means that your team, your business, does not depend on you for its survival.

Every time you recruit an employee, you have an opportunity to reinforce your company’s mission. Do your due diligence to make sure the people you hire are on board with the company’s vision. They will continue to set the tone after you leave, which is why the qualities you consider when hiring a candidate should go beyond their education and experi­ence. Anyone you hire must have the passion to succeed, the capacity to learn and a personality that helps them easily overcome complicated situations. From entry-level to leadership positions, your ability to maintain a strong team ensures the longevity of your business.

Is Your Team Valuable?

Ensuring that you have the right team in place – from the ground floor to up­per management – is a solid, common sense strategy for business owners who are looking to add short- and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Email Rea & Associates to learn more.

By Don McIntosh, CPA, CGFM, CFE (New Philadelphia office) and Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

 

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Retirement Plan Design: One Size Does Not Fit All

Monday, May 11th, 2015
Planning Ahead for Retirement Makes All The Difference - Rea & Associates - Ohio CPA Firm

When it comes to your retirement plan, planning ahead can mean the difference between sipping tropical drinks on a beach to taking on a part-time job at 75 to make ends meet. Is your retirement plan advisor working in your best interest?

Do your employees dream of spending their golden years on a sun-drenched beach, sipping tropical drinks from a coconut shell? Or do you think they’re looking forward to taking on a part-time job at age 70 to pay medical bills and their mortgage? Like you, they’re probably expecting an R&R-fueled retirement – but they need your help getting there.

Read Retirement Roulette

An employer-sponsored retirement plan is a great tool for business owners. Not only do retirement plans provide businesses with leverage when it comes to attracting and retaining a skilled workforce, employers that make contributions to their employee’s accounts are entitled to tax incentives – which gives you more control over your company’s cash flow.

From Business Strategy To Retirement Planning

Whether your company presently offers a retirement plan or is planning to beef up its benefits package, work with a retirement plan advisor who can review your options and identify the plan that best addresses your company’s unique challenges. You’ll need to:

  1. Identify The Primary Purpose Of Your Retirement Plan
    Will your retirement plan be used as a recruitment tool or as a tax shelter? While all plans accomplish a little of both, make sure your plan design meets your needs. For example, when a closely held business offers a retirement plan, its primary goal is to provide maximum retirement benefits and income tax deferral to the owners, while minimizing the cost of benefits to the employees. Incorporating a retirement plan into your existing benefit package is also an opportunity to diversify your assets away from the reach of creditors – making you less dependent on the value of your company to provide an income stream in retirement.
  2. Get To Know Your Team
    Does your company hire younger workers? Do you have an established workforce that will retire from your company? Do you have high turnover? What does your projected workforce growth look like? Your plan design should consider your demographic information – and promote the short- and long-term financial wellness of your employees and your business.
  3. Put Your Own Retirement Goals In Perspective
    Your employees aren’t the only ones looking at your employer-sponsored retirement plan as a dependable source of retirement income. You and other key employees will likely use the plan as well. That’s why, during the design phase, your advisor will take a look at the current and projected profitability of your company alongside the ratio of key employees and the company’s other employees.

When all is said and done, your plan design could be the thing that stands between your employees and a comfortable retirement – or it could be what lets them reap the benefits of all their years of hard work.

This is a great time of year to explore your options. Email Rea & Associates to learn more.

By Paul McEwan, CPA, MT, AIFA (New Philadelphia office)

 

Related Articles: 

Retirement Is Knocking … Are You Ready To Answer The Door?

What Are Ways You Can Ensure You’re Ready For Retirement? 

Will You Be Ready For Retirement? 

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Charter Schools Can Thrive In An Era Of Reform?

Friday, May 8th, 2015

It’s hard to avoid the topic of charter school reform these days. From news reports to proposed policy changes, everybody seems to have an opinion when it comes to the proper way to manage these public educational institutions. While it’s still too early to rewrite policy, it doesn’t hurt to monitor the ever-changing pulse of the legislature, especially when it has the potential to drastically impact the way our state’s charter schools are managed.

As students continue to flock to charter schools within their communities, the increased demand has effectively changed the landscape of Ohio’s education facilities. The National Alliance for Public Charter Schools reports that during the 2013-14 school year a record 119,533 students opted to attend one of Ohio’s 400 charter schools. Such a shift in our educational system has spurred increased scrutiny of the charter school industry and has prompted state leaders to call for increased organizational and financial transparency and accountability.

Slideshow: Top 5 Tips For Charter Schools


Top 5 Tips For Charter Schools – Created with Haiku Deck, presentation software that inspires

Charter Schools Continue To Grow In Popularity

Charter schools have proven their worth and show no signs of going away, which has fueled efforts to secure greater regulation and oversight over the institutions. So far this year there has been no shortage of charter school reform proposals – with the most recent one being introduced by State Sen. Peggy Lehner mid-April.

The charter school reforms that are being debated in Ohio’s legislature call for companies and organizations responsible for operating the schools to do so under “higher standards” of quality education. Proponents of reform cite a trend of lower test scores and point to the government funding charter schools currently receive to back a position of greater accountability and transparency.

“Charter schools can be examples of exceptional education,” Lehner told The Cleveland Plain Dealer in April. “But Ohio has been ‘extremely loose’ in its rules about who can run (manage) schools … and (has) ‘failed to put up the sort of guardrails’ that force the schools to be of high quality.”

According to the Cleveland publication, the National Association of Charter School Authorizers (NACSA) points to the success of many national charter schools as examples how communities and students can continue to benefit from properly managed privately-held institutions and point to the importance of outside agencies, namely school districts, state or city panels, colleges and non-profits, “to do a better job of making sure schools provide solid educations to children.”

The three proposals introduced so far this year all call for stricter oversight with regard to which entities are authorized to set up charter schools across the state.

How Are These Proposals Different?

 

Charter School Changes - Rea & Associates - Ohio CPA Firm

The more charter schools grow in popularity, the more attention they get in the legislature – especially in Ohio where during the 2013-14 school year a record 119,533 students attended one of the state’s public charter schools.

Gov. John Kasich’s budget proposal called for Ohio’s charter schools to receive two new potential funding sources while holding school sponsors to a higher standard of accountability. His proposal sought to generate a $25 million facilities fund, which would be available only to the highest-rated sponsors. Those highly-rated sponsors would also be allowed to seek local tax levies while advocating for the closure of poorly performing schools. Furthermore, he would:

  • Require all sponsors to be approved by the Ohio Department of Education and go through the state review and rating process.
  • Prevent sponsors from selling goods and/or services to the schools they sponsor in an effort to avoid conflicts of interest.
  • Mandate that all charter schools only employ treasurers, auditors and lawyers who are not affiliated with the school’s sponsor or management company.
  • Advocate for stronger rules for schools and operators that apply directly to the state for sponsorship.

The next charter school reform that was proposed, House Bill 2, was touted as a solution that would promote accountability, transparency and responsibility by:

  • Requiring all charter schools – including district-created dropout recovery schools – to be included in the Ohio Department of Education’s report card.
  • Mandating that all contracts between schools and sponsors include more detail about expected academic performance of the schools as well as details about the school’s facilities and rental or loan costs.
  • Preventing charter schools from frequently changing sponsors in order to appear as though they are in good standing.
  • Requiring the full disclosure of all conflicts of interest.
  • Calling for the annual disclosure of financial reports that allow sponsors to better monitor the school while advising it.
  • Instructing all management companies or organizations to begin reporting their performance.
  • Prevent sponsors from selling goods and/or services to the schools they sponsor in an effort to avoid conflicts of interest.
  • Prohibiting school district employees and vendors from sitting on the school’s governing board.
  • Ensuring that school treasurers will no longer be hired by the school’s sponsor.

State Sen. Lehner’s most current proposal reportedly “takes many pieces of [the other proposals] and adds additional controls – and benefits.” The Cleveland Plain Dealer states “the bill does not have the state directly close poor-performing charters quickly … instead [it] takes the more indirect path that the charter school community prefers nationally. The bill pressures the ‘sponsors’ … to raise standards.” Her bill aims to:

  • Strengthen language that will prohibit “sponsor hopping.”
  • Increase the transparency associated with expenditures generated by operators.
  • Require all sponsors to have a contract with the Ohio Department of Education [ODE].
  • Incorporate Gov. Kasich’s charter school sponsor oversight proposal.
  • Limit the direct authorizing by the ODE and allows it to decline applicants.
  • Prohibit sponsors from spending charter funds outside of their statutory responsibly.
  • Encourage high performing schools with facilities by encouraging co-location and facility funding.

I am sure we will hear much more about this issue before it comes to a vote. But in the meantime, keep following these events and consider how changes might affect you. Email Rea & Associates to find out how we can help you overcome current challenges while preparing for the future.

By: Zac Morris, CPA (Millersburg office)

 

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