If you don’t have a buy-sell agreement, things could get hairy. Or if you developed one in haste and never update it, the buy-out probably won’t be fair to all parties. The hassles from litigation that result from faulty buy-sell agreements could last for years and negatively impact your business.

A quality buy-sell agreement should spell out what the value of the stock will be based on a triggering event and how the sale of the stock will be paid for. Discuss triggering events like death, disability, retirement, divorce or termination with or without cause, keeping in mind that the value of the stock paid could be different for each triggered event.

The buy-sell agreement should spell out the valuation process specifically. The following are some critical items that need to be addressed in the buy-sell valuation process:

• Should discounts be applied for minority interest?
• What is the standard of value?
• What is the effective date of the valuation?
• Does the valuation include any insurance proceeds?

The valuation process of many buy-sell agreements is formula-driven. Most companies’ situations are too complex to base any buy-out based on a simple formula. The best way to avoid costly litigation is for the shareholders to agree on the value of the stock at the beginning of each fiscal year based on an outside valuation.

Starting a business is exciting. You are living your dream, pursuing your passion and taking an exhilarating but calculated risk. And whether you are starting a business from scratch or thinking about expanding or growing an existing business, there are many things you should get in writing before you make a move. You don’t want to think of the potential downfall of your business, but you should.

Contact our Ohio business planning professionals

Are you starting a business?  Hoping for the best, but planning for the worst?  Need help creating your business prenup?  Contact Rea & Associates.  Our Ohio business planning team will help you to create the documents necessary to make sure that your future’s secure, no matter what happens with your business.

Actually, there are two types of Ohio tax amnesty running right now:

• Ohio General Tax Amnesty
• Ohio Consumer’s Use Tax Amnesty

Ohio’s Consumer Use Tax Amnesty program is for consumers who have outstanding use tax liability.  “Consumers” includes both Ohio based businesses and individuals, but does not include out of state sellers who are collecting use tax (that kind of use tax is actually a sales tax).  The difference is that consumer’s use tax is tax your business pays on its purchases and seller’s use tax is a tax your business collects from other people when it makes sales.  They are both called use tax but they are very different!

Consumers should consider filing for Use Tax Amnesty if they have outstanding use tax liability, which comes from purchasing goods and some services sales tax free when the purchase really should have been taxed.  Examples of purchases that may have generated use tax liability are products purchased from out-of-state vendors, over the internet, or from smaller Ohio companies which may not have charged sales tax on their sales of goods or select services.  Ohio’s Consumer Use Tax Amnesty program runs through the end of April 2013.  Businesses have a great incentive to take advantage of Amnesty – Ohio had identified 300,000 Ohio businesses without use tax accounts before the Amnesty program began, but have largely held off on actively pursuing them…for now.  Businesses that file for amnesty can get themselves off this list and start themselves off with a clean slate with the Ohio Department of Taxation.  Consumers can learn more about the program on the consumer use tax section of the Ohio Department of Taxation’s website or in our previous blog post about the program.

Ohio’s General Tax Amnesty is a program for those who have outstanding tax liabilities on taxes other than consumer’s use tax.  Note that seller’s (as opposed to consumer’s) use tax is eligible for the General Tax Amnesty, but consumer’s use tax is not (taxpayers must use the Consumer’s Use Tax Amnesty program for that).  Ohio’s General Tax Amnesty program hasn’t received as much attention as Ohio’s Use Tax Amnesty program, but it’s still a great opportunity for businesses.   General Tax Amnesty is for taxpayers who owe the following types of qualifying delinquent taxes:

• Individual Income
• Individual School District Income
• Commercial Activity Tax (CAT)
• Sales and out of state Seller’s Use (which is a version of sales tax)
• Employer Withholding
• School District Employer Withholding
• Corporation Franchise
• Pass Through Entity
• Estate
• Gross Receipts of a Natural Gas Company or a combined Electric and Gas Company
• Motor Fuel
• Cigarette or Other Tobacco Products
• Dealers In Intangibles

General Tax Amnesty runs for a much shorter time period than Consumer Use Tax Amnesty program – May 1 – June 15, 2012 only – so businesses should get started on the applications right away.  When taxpayers apply for amnesty, the Ohio Department of Taxation will forgive the penalty and one-half of the interest charges.  Need more information on General Tax Amnesty?  Read our previous blog post on the topic or visit the Ohio Department of Taxation’s page on the topic.

Contact our Ohio tax amnesty experts

Do you have outstanding delinquencies on any Ohio taxes?  Are you worried about the day when you finally have to pay up on those taxes – and potentially large interest and penalties?  Contact Rea & Associates for assistance filing for amnesty.  Our Ohio state and local tax specialists will help you to determine which programs – yes, you can apply for more than one! – are right for you.  We can also advise you as to whether a voluntary disclosure application might be a more tax advantaged way to report your liability.  The clock’s ticking… so contact Rea & Associates (soon!) to get started.  And remember, when you ask us about filing for Ohio tax amnesty, don’t be surprised when we say “Which one?”

Well, Social Security’s changed its system. Yes, it’ll still be taking money from each of your paychecks; but, in the majority of cases, it won’t be sending you statements through the mail any longer. Now, you can create a My Social Security Account to get access to your Social Security information online. My Social Security will give you access to all the information that you had been getting in your statements, and setting up an account is easy: just visit http://www.ssa.gov/mystatement/ and click on “Sign in or Create an Account.”

The account set-up process takes about five minutes and is more secure than many other online services; expect to verify information from your credit report. When you sign up, you have the ability to add an extra layer of security, which will notify you by text message whenever someone logs into your account.

Once you’re in your account, you can explore your estimated benefits and earnings record or download a copy of your full Social Security Statement, which you can save to your computer and/or print. The Social Security Administration suspended the mailing of paper statement to most people in 2011, so the website is now the easiest way get access to your Social Security information.

Once your set up on My Social Security, make sure that logging in isn’t just a one time thing.  You should check your statement every year to understand your changing Social Security taxes and benefits.

Contact our Ohio Tax Professionals

Think there’s some inaccuarate information on your Social Security statment?  Worried that you’re not paying the right amount?  Contact Rea & Associates.  Our Ohio tax team will review your records to make sure that you’re paying the right amount.

So, what is fraud? Merriam-Webster defines it as “intentional perversion of truth in order to induce another to part with something of value or to surrender legal right.” Fraud is not just embezzling funds; it is a term covering misrepresentation or concealment of material facts, bribery, conflicts of interest, theft of money and property and breach of fiduciary duty.

Fraud happens because of the three forces defined in Cressey’s Fraud Triangle: pressure/incentive, opportunity and rationalization. Pressures or incentives to commit fraud could include: loss of a job by a family member; reduced pay, benefits or insurance; additional responsibilities caused by a reduction in force; addictions and debt (potentially from mortgages, cars or credit cards). Cutbacks, or reductions in force, can create potential fraud opportunities. These opportunities happen because knowledge is lost, duties are less segregated, supervisory oversight is reduced, established controls are not used, IT security controls are overridden without detection and new vendors are not investigated. Fraud is often rationalized with thoughts like “they own me,” “I deserve it,” or “it’s not their money anyway.”

How do you identify potential fraudsters who are likely to be affected by these three forces? There are behavioral red flags, identified by The Association of Certified Fraud Examiners, which organization leadership can watch for. Leaders should pay close attention to employees exhibiting the following:

• Financial difficulties
• Living beyond means
• Control issues
• Wheeler-dealer attitude
• Unusually close association with vendor
• Job performance issues or suspiciousness
• Addiction problems
• Past employment-related problems
• Refusing to take vacations
• Complaining about inadequate pay
• Instability in life circumstances

Effective fraud deterrents can prevent fraud by limiting opportunities to commit it. Organizations should have written fraud policies that includes zero tolerance statements. All employees should review and sign-off on this policy and a copy of the signed policy should be kept in the employee’s personnel file. The fraud policy should include procedures for a reporting process including whistleblower protection and expectations of consistent and timely reporting of suspected fraud. Organizations should also have ethics and conflict of interest policies; these policies should be signed and stored in employee files as well. Fraud prevention also comes through training, including teaching employees how to recognize signs of fraud and how to handle dicey ethical situations. Policies are only effective if employees are expected to, and know how to, follow them.

Contact our Fraud Prevention Professionals

Worried that you may have some potential fraudster in your midst? Want to institute a fraud deterrent process, but don’t know where to start?  Contact Rea & Associates. Our audit team will help you to put the processes that you need in place.  Our certified fraud examiners will help you create effective fraud  policies.

The program starts today, so that means that you have a long time before you have to worry about it ending, right?  Wrong.  General Tax Amnesty runs May 1^st to June 15^th only, so it’s important to get started filing for amnesty right away.  Filing for General Tax Amnesty requires that actual returns be prepared and that you make full payment of past due amounts plus one half interest.  For specific information on the program, visit the  Ohio Department of Taxation’s website.

Contact our Ohio Tax Amnesty Professionals

You’ll probably be seeing a lot about General Tax Amnesty in the news in the next few weeks.  If you have any questions about the program, how to apply or if you qualify, please contact me or another member of the Rea tax team.  We’ll be happy to answer any questions here on the blog or to set up consultations to discuss your specific situation.

Under the program, the Ohio Department of Taxation will forgive the penalty and one-half of the interest charges when taxpayers own up to various types of delinquent tax obligations.  Sounds pretty great, right?  But, like all good deals, General Tax Amnesty is a limited time offer, running May 1, 2012 through June 15, 2012.

So, how do you participate?  The first step is that you need to make sure that you’re a registered tax payer.  You can register your business at http://business.ohio.gov/.  Until you do that, do not pass Go, although presumably the Department of Taxation will still accept your $200…

Once your business is a registered taxpayer, the process of filing for General Tax Amnesty is very simple.  First get out your tax folder and any previous year tax returns (or prepare them if you haven’t done so yet).  Then download the appropriate amnesty application (there are different ones for different tax types) from the Department of Taxation’s Amnesty website.  As far as tax forms go, the applications are very straightforward.

The forms basically request your identifying information and then they provide a space to report the tax periods and forms that you are reporting.  You might think of it as the executive summary page that goes on top of all your old returns. One point of advice: if you’re filing on behalf of your business, make sure to write your business’ federal identification number (rather than your personal Social Security number) in the top box.  Another trap for the unwary – if you are filing some years with refunds and some years you owe, you cannot net the two.  Refunds are issued separately.

The Amnesty website has instructions on how to fill out the forms and how to calculate interest.  Note that the submission is entirely paper based, even if you are otherwise required to file taxes in Ohio electronically, you must complete the amnesty application and copies of past tax returns in paper form and mail it in.  You’ll need to mail a check, money order, or cashier’s check (made out to the Ohio Treasurer of State) with your application as well…no partial payments are allowed!

Contact Our Ohio Tax Professionals

Do you have outstanding delinquencies on any Ohio taxes?  Worried about your complicated situation and want professional help filing for amnesty?  Our Ohio tax professionals can review your situation and help you apply for amnesty for all of your delinquent taxes.  But the clock’s ticking… Contact Rea & Associates (soon!) to get started.

Every taxpayer who submits a Use Tax Amnesty application must include a list of purchases with details on the dates of purchases and the vendors who sold the taxpayer the items without imposing Ohio sales tax.  Many times this is perfectly proper – some out of state and internet vendors don’t have to charge Ohio sales tax and some buyers mistakenly buy more items under a valid exemption certificate than they are entitled to. 

Through Use Tax Amnesty applications, Ohio is being given an electronic list of thousands of vendors who have not charged sales tax.  This list could be a great discovery and audit tool for Ohio to find vendors who are not properly charging Ohio sales tax on their sales.  So if you are providing a taxable service or product to Ohio taxpayers and not charging tax, watch out!  Have your clients reported your business on their Use Tax Amnesty filings?

If they have, or if you know about some period of time where you might have made some sales tax mistakes, there are ways to correct it in a tax advantaged way.  The General Amnesty Program, that runs from May 1 – June 15, 2012, is a great way to deal with specific incidents over a shorter period of time.  Have a longer period of sales tax issues to fix?  A voluntary disclosure may be a better program for you; and, unlike the general tax amnesty program, it has no formal end date. 

Need more information on amnesty?  Check out our other tax blog posts or visit the Ohio Department of Taxation’s website to learn more about the two amnesty programs and the voluntary disclosure program for sales tax.    

Contact our Ohio Tax Amnesty Specialists

Worried that your business might find itself in hot water over not charging the right sales tax?  Concerned that the Use Tax Amnesty program might have brought your business to the state’s attention?  Contact Rea & Associates (before the June 15^th deadline!) for help.  Our Ohio tax experts will review your situation and determine if amnesty or voluntary disclosure is right for you.

Recently, a client wrote a blog post on this very topic. Completely unbeknownst to anyone at Rea, he wrote about our very own Mike Taylor, and how Mike exemplifies all 12 of the quantities he wants in an accountant.

According to the client, the top 12 qualities your accountant should have are:

• Recognition that it’s not a popularity contest
• Genuine care about his or her clients
• The wisdom of experience and the knowledge of new developments
• Authoritative communication and bravery to ask the hard questions
• Commitment to his or her clients’ long-term success
• Experience helping clients plan for succession
• A foundation of strong relationships that can’t be broken by the newest pitch on the market
• An understanding of bankers and their rules of engagement
• A heart
• A backbone
• Interests outside of the office
• An understanding of the big tax picture

I’m glad to say that Mike exemplifies all of these qualities – his ability to blend technical skill with interpersonal competence is what makes him a truly bright accountant.

If your business is looking to hire an accountant, look for someone like Mike. Someone who you respect as a professional and like as a person. Someone who will be part of your business team for the long haul.

Contact our Ohio Accountants

Contact Rea & Associates to set up an appointment to speak with someone like Mike. Our Ohio Accounting team is made up of bright people who blend the professional and personal skills. We’ll find the perfect person, who exemplifies all 12 qualities, to work with your business.

Tax Planning

Your 2011 taxes have been filed and you’re probably thinking that you’ve got another year before you have to deal with them again.  Sorry to be the bearer of bad news… but tax planning is a year-round process.  Starting while your 2011 return is still fresh in your mind, you can plan to make your 2012 return easier.  Did you pay too much in taxes or receive a large refund in 2011?  You can adjust your withholdings to prevent that from happening in 2012.  Feel like you might have missed some potential deductions because you didn’t keep your receipts?  Make a commitment to be more organized in the year ahead.

It’s Not Just Taxes That Need Planning

If you own your own practice, you should also review your retirement plan documents to see if there are any changes that can be made. Look for ways to increase your contribution and/or reduce plan costs.

You know how annual check-ups benefit your patients. But, did you know what you can gain from an annual financial check-up with your advisors? By sitting down and discussing your current financial position and goals, you can make sure your advisors are on the same page and that you’re on track to hit your goals.

Financial Planning with our Ohio Medical Accountants

Could your practice use a professional opinion?  Are your finances a bit under the weather?  Contact Rea & Associates to learn about our medical tax and financial planning services.  Our Ohio Medical Accounting team will help you develop a plan to keep your practice healthy.

But, we all put our social security numbers on our tax returns.  So, what’s the big deal?  Unlike personal income tax returns, 990s are available to the public.  They’re regularly published by the IRS and shared with various grant-making organizations and the public.  Non-profits use 990s for a lot more than just filing taxes – often they submit copies of 990s with grant applications and make them available to donors.  A 990 can tell you a lot about the financial health of an organization; they’re considered the industry standard financial snapshot for non-profit organizations.

Using data mining software, Identity Finder reviewed 2,892,475 990s filed between 2001 and 2006 and found that 132,362 organizations erroneously included social security numbers in their 990s.  These social security numbers belonged to various groups associated with the non-profits, most commonly tax preparers, donors, employees and scholarship recipients.

Thankfully, it seems like the majority of these social security number disclosures may be in the past.  Changes to Form 990 and to the way that tax preparers identify themselves on the returns that they prepare mean that these slips are now much less likely to take place.

However, social security numbers that were released on returns years ago could still come back to haunt you.  Gaining access to social security numbers is often a crook’s first step in identity theft, a problem that can plague victims for years.  With increasingly sophisticated data mining software on the market, available to the good guys and bad guy alike, anything published online (even a social security number) is accessible to anyone who wants to find it.

How can you protect yourself from identity theft?  Like with most problems, the best medicine is preventative.  Take advantage of the opportunity to get a free credit report every year (remember to get it directly from https://www.annualcreditreport.com, not one of the scam sites that offers “free” reports with all kinds of strings attached), make sure to really read all the mail that you get from the financial institutions with which you work and, most importantly, if any thing seems weird, ask!  If your credit card bill contains purchases that you don’t remember making or you see references to an account that you don’t remember creating, talk to you financial professional.  It could turn out to be nothing – but it could also be the tip of an identity theft iceberg.

Contact our Ohio Not-for-Profit specialists

Do you work for a non-profit?  Worried that your organization may have compromised social security numbers?  Afraid that your Form 990 might be giving away too much information?  Contact our Ohio non-profit specialists.  They’ll work with you to make sure that your filings have all the information that they need, and none of the information that they don’t.  Contact Rea & Associates for assistance.