By this point virtually every business owner in Michigan has received a State mailing putting them on notice that they are looking for any unclaimed property businesses may hold. This can include uncashed vendor checks, uncashed payroll checks, customer overpayments, and inactive bank accounts, to name a few.

While this law has been on the books forever it’s only recently that the State has pushed to claim what, according to the law, is rightfully theirs. The reason is simple; they need the money.

For an excellent summary of the State of Michigan’s voluntary disclosure program see the following hyperlink.

Michigan Unclaimed Property

One of the existing rules under HARP is about to get a major rewrite during 2012. Currently homeowners whose loans are owned by Fannie Mae or Freddie Mac can refinance their underwater home if the loan to value (LTV) is less than 125% of the appraised value.

During 2012 as the major changes to this program are rolled out, the 125% LTV cap will be removed. This program could potentially allow more underwater homeowners to refinance at today’s historically low rates.

Susan Tompor’s article in the Detroit Free Press does an excellent job at summarizing the qualifications that a homeowner would need to meet to possibly qualify under HARP.

Please copy the following address in your web browser to access the article.

http://www.freep.com/article/20111110/COL07/111100506

Unless you operate on a cash basis, a common problem is getting paid within a reasonable time. Many reports by credit organizations confirm not only that the problem is widespread, but it seems to get worse every year and bad debts are the number one reason businesses fail!

While many small business owners gauge their success based on sales, after all “Nothing succeeds without sales” as the adage goes, any shrewd operator knows reducing costs can be far more profitable than increasing sales. For example, if the company sells a product with a 20% profit margin after all costs-product cost, salaries, overhead, etc.-$1,000 in sales (minus $800 in costs) produces a $200 profit. A 10% increase in sales increases profit by $20. But a 10% reduction in costs saves $80, which is four times as much. Thus, a reduction in costs of only 2.5% will produce as much profit as a 10% increase in sales.

The moral of the story is you need to manage the expense side of the equation and nothing is more critical than that of managing your bad debt expense.

Janet Attard, in her article “10 Steps To Getting Paid on Time” provides practical insights on how to do just that. See the hyperlink below for her article.

http://www.openforum.com/articles/10-steps-to-getting-paid-on-time

Here is the press release from Nancy Pelosi yesterday:

“We will continue discussions with the President and our Caucus in the days ahead. Democratic priorities remain clear: to provide a tax cut for working families, to promote policies that produce jobs and economic growth, and to assist millions of our fellow Americans who have lost their jobs through no fault of their own.”

While the tax cuts will most likely pass in a slightly tweaked form, the politicians are missing the point, since most of them have probably never run a small business. Here are a few points to consider.

1. The IRS does have a deadline for printing withholding tables and forms that employers will be using in 2011.  With Congress’ continued delaying tactics to score political points, if the publishing deadline is missed to revise the forms, the IRS will be forced to print outdated tables. The losers will be workers who will have higher taxes taken out of their paycheck in 2011 and the government who will have to pay to print the forms twice.
2. Business owners do not make spending decisions to hire or invest in their companies when no one knows what the tax laws will be. Investing in companies via equipment and other items means more money in the private sector which has been proven time and time again to be a better economic stimulus than monies spent by government.
3. The American voters fired the current leadership last month for not fixing the economy. Obviously the leadership didn’t get the message since they have decided to continue the choice of uncertainty that affects decisions that could improve the economy. See item 2 above.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

In her article “Last-Minute Business Tax Deductions for 2010” Barbara Weltman provides some “crisis” tax planning ideas for those of us that are less inclined to do the proactive tax planning, as recommended by our firm, through out the year.

In fairness to all business owners out there, if there were ever an argument to be made for “crisis” tax planning it would be this year. Why? Consider the headline of the WSJ this morning which reads “Tax Deal Within Reach.” Essentially Congress has put all business owners, and individuals for that matter, in a position where we have no choice but to be on “high alert” as to potential tax law changes.

Case in point, even though Ms. Weltman’s article is dated December 3, 2010 IF a deal is struck as the WSJ implies, some of the points made by the contributors for her article (E. M. Anderson, CPA and J. Zobel EA) are rendered invalid.

Regardless there is still time to create substantial tax savings if you act now and the article, if nothing else, should get you thinking! See the link below for more information.

Last Minute Business Tax Deductions for 2010 by Barbara Weltman

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

Normally the due date to file an individual income tax return for calendar year end taxpayers without an extension is April 15^th.However the date will be April 18^th next year, even though April 15^th falls on a Friday in 2011.

To find out the reasons why you are getting an extra three days you can read Kelley Phillips Erb’s blog from Wallet Pop titled Why Tax Day won’t be April 15 in 2011 or click the following link Why Tax Day won’t be April 15 in 2011.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

Please be advised that the IRS does not send emails to taxpayers. All of these emails are phising scams and should be deleted immediately. Do not click on any of the links that are in these emails.

The IRS website provides the following email address phishing@irs.gov if you wish to report this EFTPS phishing email or any other tax related e-mail scams.

Below is an example of the EFTPS phishing email. There is also a newer version of this where the subject line states “Second Notice Your Federal Tax Payment Has Been Rejected”.

From: EPS Tax
Sent: Thursday, September 09, 2010 6:31 AM
To: NAME
Subject: Re: NAME: Federal Tax Payment ID: NUMBER has been rejected.

Your Federal Tax Payment ID: NUMBER has been rejected.

Please, check the information and refer to Code R21 to get details about your company payment:

Information valid till 11/09/2010.

EFTPS: The Electronic Federal Tax Payment System PLEASE NOTE: Your tax payment is due regardless of EFTPS online availability. In case of an emergency, you can always make your tax payment by calling the EFTPS

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

“Do you want to eat well or sleep well?”

In this economic environment most business want to cut costs (“eat well”) versus investing additional dollars in professional services. However a great certified public accountant will not only allow you to eat and sleep well but will usually be able to deliver savings that exceed the increase in professional fees.

A few examples of how the right CPA can help your business are as follows:

CPA prepared financials enjoy the following benefits from bankers and lenders over client prepared documents. 1) Greater comfort in CPA financials, 2) higher loan approval rates, and 3) typically lower interest rate.

Tax projections for you and your business:

We have always encouraged our clients to have tax projection. Some of the reasons for this are to avoid any last minute surprises at April 15, as well as doing some tax planning before year end, i.e. changing your accounting method, placing assets in service etc. Projections are extremely important this year due to the higher tax rates that will be in place on January 1, 2011.  Is your CPA doing a projection for you and the necessary tax planning? If not they could be costing you big money.

Harnish’s article does mention a few ideas on how to find a good accountant such as referrals from clients, attorneys and bankers. These are great ways to find a good accountant however you also need to check their background with the various state accountancy boards and license divisions. In Michigan you are able to find out the license status and whether there have been any disciplinary actions taken against the CPA or the CPA firm. To check the status of a CPA in Michigan please click the follow Michigan Department of Energy, Labor & Economic Growth link Verify a License.

To read more from Mr. Harnish’s article please click the following link Accountant 101 Finding the Right Match.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

President Obama’s goal of “spending this country’s way to wealth” has failed miserably and can only add to the “EU effect” here in the United States. Locally we can expect a similar effect as our soon to be Ex Governor’s management style has been equally irresponsible.

Taking this to the private sector for a minute, when a client of ours leverages by borrowing so that they can continue to invest in the business, if the return on investment which is driven by sales isn’t there, the client must cut costs, including payroll and related benefits, in order to survive. The client simply cannot “deficit spend its way to prosperity” forever. Its bank, at some point, will stop “papering over” the deficits with more money and the client will ultimately be bankrupt. When there is no longer an adequate return on investment and as a result positive cash flow, the private sector does what it must to survive; manage the expense side of the equation. Our clients understand “The only way they can take you out of the game is if you run out of cash.” State of Michigan under its current leadership has been more about taxing and spending versus cutting.

In addition to the federal government funding which has been used to feed the insatiable appetite of the unions in this state, the other source of funding which is drying up is debt sold by the State and its Municipalities. More and more, sophisticated investors are less and less inclined to buy what is quickly becoming regarded as junk bonds from either source. Case in point: Two months ago we were charged with investing one million dollars for a client in Michigan Municipals. However, the market has become so fragile that the money remains in cash as we look to a safer venue.

Morris points out, just as Athens has turned to Berlin, bankrupt states like Michigan will turn to the federal government to guarantee their debt. That my friends will be a pivotal point in this great country’s future in that it will determine whether we become financially responsible going forward by just saying NO or continue as we have recklessly “spending our way to wealth.”

Morris is literally on the money on his analysis and recommendations regarding what the next steps should be and what they mean to the United States of America. This is an excellent piece well worth the read.

To read the entire article please click the following link The Next Big Economic Crisis.

This article was written by Gary Field, CPA at Numerico, PC. Click here to view Numerico’s website.

The IRS has an excellent list of things you should know about when receiving a notice in IRS Summer Tax Tip 2009-22.

Item 8 from the list is extremely important. In practice there have been numerous times that clients have had to send in the requested items two or even three times due to paperwork being misplaced at the IRS, a different agent being assigned or that the case has been transferred to a different office.

You should also send any response to a notice via certified mail to prove that you have submitted your response by the specified timeline in the notice.

To access the list please click the following link from the IRS’ website. IRS Tax Tip 2009-22

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.