Happy Holidays

From everyone at ThomasYork, we would like to wish you a Happy Holiday Season.

Please note that our office will be closed from Noon on Thursday, December 24th, until Friday, January 1, 2010. We will resume our normal business hours on Monday, January 4, 2010.

It's December 10th, Have You Paid Your Property Taxes

As a gentle reminder most property tax payments are due today. Make sure you have paid your 1st installment. Payments must be postmarked today or you will be assessed a late penalty.

2009 Best Accounting Firms to Work For

During the summer everyone at TY participated in the 2009 Best Accounting Firms to Work For survey. We are proud to announce that we ranked #14 out of 20 in the Small Firm category (15-24 employees). Accounting Today’s Top 100 Best Accounting Firms to Work for rankings are available online at www.AccountingToday.com. The rankings will also be published in the December 14th issue of Accounting Today. Companies from across the country entered the two-part survey process to determine the Best Accounting Firms to Work for. The first part consisted of evaluating each nominated company's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration, survey and analysis process and determined the final rankings.

IRS Announces 2010 Standard Mileage Rates

The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

Tips for increasing profit and cash flow

The Journal of Accountancy provides nine suggestions for builders and contractors to increase profits, including:

• Take every available tax credit.
• Save on workers’ compensation insurance with safety programs.
• Update overhead percentages.
• Hold a weekly collection meeting.
• Manage subcontractors and material suppliers to the project schedule.
• Partner with subcontractors and suppliers to win bids.
• Set up a rolling cash flow projection.
• Close out pending change orders and backcharges weekly.
• Take advantage of the U.S. Small Business Administration’s new American Recovery Capital (ARC) Loan Program.

The full article is available here. Previous posts on Small Business Administration loans are available here:

SBA training on winning federal contracts Subcontracting to Snag Stimulus Dollars How to Win Federal Contracts 6 Tips to Speed up SBA Loan Approval Recovery Funded Ultra-Low Interest Loans The ABCs of SBA Lending Interest-free SBA Loans

Newsletter on Year-End Tax Planning

Our firm sends an occasional e-newsletter on such topics as tax planning, current tax developments, and important compliance matters. Our most recent e-newsletter on year-end tax planning for 2009 includes discussion about such items as:

• Expiring opportunities in depreciation.
• Expiring deduction for sales tax on new car purchase.
• Extended carryback period for business losses.
• Extended & Expanded Homebuyer Credit.
• Energy credits.
• Charitable donations.
• 401(k) contributions.
• Health savings accounts (HSAs).
• Health flexible spending accounts.
• Dependent care FSAs.
• Self-employed plans.
• Retirement income.
• IRA conversion.
• Capital losses.
• Income Deferral.
• AMT Considerations.
• Gift tax.
• Kiddie tax reminder.

If you would like to read the full newsletter, or subscribe for future newsletters, you may visit our Newsletter Archives.

Expansion of 5-year carryback election for NOLs

On Nov. 6, 2009, President Obama signed the “Worker, Homeownership, and Business Assistance Act of 2009” (the 2009 Assistance Act) into law. The Act includes tax changes for businesses, the most significant of which are liberalized rules for certain net operating losses (NOLs). If your 2008 or 2009 tax return results in a net operating loss, you may benefit from this provision.

A net operating loss (NOL) is the excess of business deductions (computed with certain modifications) over gross income in a particular tax year. The loss can be deducted, through an NOL carryback or carryover, in another tax year in which gross income exceeds business deductions. In general, NOLs may be carried back two years and forward 20 years. The NOL is first carried back to the earliest tax year for which it's allowable as a carryback or a carryover, and is then carried to the next earliest tax year. A taxpayer may elect to forego the entire carryback period for an NOL and instead carry it forward. The 2009 Assistance Act provides an election for most taxpayers (not just small businesses) to increase the carryback period for an applicable NOL to 3, 4, or 5 years from 2 years. An applicable NOL means the taxpayer's NOL for any tax year ending after Dec. 31, 2007, and beginning before Jan. 1, 2010. This means the election may be made for a tax year beginning or ending in either 2008 or 2009. Taxpayers electing a 5-year carryback can use the NOL to offset up to 50% of the available taxable income for the 5th tax year preceding the loss year, and 100% of all taxable income in the remaining 4 carryback years. The amount of the NOL otherwise carried to tax years after the 5th preceding tax year is adjusted to take into account that the NOL could offset only 50% of the taxable income for the 5th year. In addition, the Act suspends the 90% limitation on the use of an NOL deduction for alternative minimum tax purposes, for alternative tax NOLs attributable to carrybacks for which the extended carryback is elected. We will work with our clients individually to determine whether they might benefit from this new provision.

National Association of Women in Construction (NAWIC)

Linda Martins (an Audit Manager here at TY) and I have become members of the National Association of Women in Construction (NAWIC). NAWIC offers a great support system for women who are in the construction industry. Through NAWIC, we have increased our knowledge of the industry by networking with other members employed in the construction industry. It has also enabled us to broaden valuable contacts for our firm and build lasting relationships. The NAWIC meetings are always educational and related to the construction industry. NAWIC Background: NAWIC is a professional Association comprised of women working in construction and related industries. It was established in 1955 by 16 founding members. Today, approximately 5,800 women in approximately 170 chapters across the United States are NAWIC members. Members of the Association are business owners/managers, executives, subcontractors, accountants and estimators. Members are also employed in construction trades, including welding, carpentry, plumbing and electrical work. You can visit the NAWIC website, www.nawic.org, for more detailed information. If you are interested in learning more about our personal experiences and how you can benefit from NAWIC please contact us and we will be happy to answer any questions you may have. Linda Martins - LMartins@ty-llp.com Lisa Silva - LSilva@ty-llp.com We would like to invite you to our next meeting so you can see for yourself how beneficial and supportive this group is for women. Our next meeting will be on Thursday, January 21, 2010 in San Ramon at 5:30pm. If you are interested in attending, or know someone who is, please let us know so we can provide you with more information.

California SDI amounts for 2010

California announced that the State Disability Insurance (SDI) rate for 2010 will remain the same as the prior year at 1.1%. However, the the taxable wage limit and corresponding maximum amount increase as follows:

	2009	2010
Taxable wage limit	$90,669.00	$93,316.00
Maximum SDI amount	$997.36	$1,026.48

For January, please be sure to update your payroll programs to reflect the changes!

Newly Extended & Expanded Homebuyer Credit

On November 6, the President signed into law H.R. 3548, the ''Worker, Homeownership, and Business Assistance Act of 2009.'' The new law extends and generally liberalizes the tax credit for first-time homebuyers. The following is a summary of these tax provisions. Homebuyer credit basics. Before the new law was enacted, the homebuyer credit was only available for qualifying first-time home purchases after April 8, 2008, and before December 1, 2009. The top credit for homes bought in 2009 is $8,000 ($4,000 for a married individual filing separately) or 10% of the residence's purchase price, whichever is less. Only the purchase of a main home located in the U.S. qualifies. Vacation homes and rental properties are not eligible. The homebuyer credit reduces one's tax liability on a dollar-for-dollar basis, and if the credit is more than the tax you owe, the difference is paid to you as a tax refund. For homes bought after Dec. 31, 2008, the homebuyer credit is recaptured (i.e., paid back to the IRS) if a person disposes of the home (or stops using it as a principal residence) within 36 months from the date of purchase. Before the new law, the first-time homebuyer credit phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Revised homebuyer credit. The new law makes four important changes to the homebuyer credit: (1) Extension. The homebuyer credit is extended to apply to a principal residence bought before May 1, 2010. The homebuyer credit also applies to a principal residence bought before July 1, 2010 by a person who enters into a written binding contract before May 1, 2010, to close on the purchase of the principal residence before July 1, 2010. In general, a home is considered bought for credit purposes when the closing takes place. So the extra two-months (May and June of 2010) helps buyers who find a home they like but can't close on it before May 1, 2010. They can go to contract on the home before May 1, 2010, close on it before July 1, 2010, and get the homebuyer credit (if they otherwise qualify). Note that certain service members on qualified official extended duty service outside of the U.S. get an extra year to buy a qualifying home and get the credit; they also can avoid the recapture rules under certain circumstances. (2) Expansion of qualifying homes. The homebuyer credit may be claimed by existing homeowners who are “long-time residents.” For purchases after November 6, 2009, you can claim the homebuyer credit if you (and, if married, your spouse) maintained the same principal residence for any 5-consecutive year period during the 8-years ending on the date that you buy the subsequent principal residence. For example, if you and your spouse are empty nesters who have lived in your suburban home for the past ten years, you are potentially eligible for the credit if you “move down” and buy a smaller townhome. There's no requirement for your current home to be sold in order to qualify for a homebuyer credit on the replacement principal residence. Thus, the replacement residence can be bought to beat the new deadlines (explained above) before the old home is sold. For that matter, you can hold on to your prior principal residence in the hope of achieving a better selling price later on. The maximum allowable homebuyer credit for qualifying existing homeowners is $6,500 ($3,250 for a married individual filing separately), or 10% of the purchase price of the subsequent principal residence, whichever is less. (3) Expansion of eligible taxpayers. The homebuyer credit is available to higher income taxpayers. For purchases after November 6, 2009, the homebuyer credit phases out over much higher modified AGI levels, making the credit available to a much bigger pool of buyers. For individuals, the phaseout range is between $125,000 and $145,000, and for those filing a joint return, it's between $225,000 and $245,000. (4) Limit on home price. For purchases after Nov. 6, 2009, the homebuyer credit cannot be claimed for a home if its purchase price exceeds $800,000. It's important to note that there is no phaseout mechanism. A purchase price that exceeds the $800,000 threshold by even a single dollar will cause the loss of the entire credit. The new purchase price limitation applies whether you are buying a first-time principal residence or are a qualifying existing homeowner purchasing a replacement principal residence. Other homebuyer credit changes. The new law includes a number of new anti-abuse rules to prevent taxpayers from claiming the homebuyer credit even though they don't qualify for it. The most important of these are as follows:

• Beginning with the 2010 tax return, the homebuyer credit can't be claimed unless the taxpayer attaches to the return a properly executed copy of the settlement statement used to complete the purchase of the qualifying residence.
• For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed unless the taxpayer has attained 18 years of age as of the date of purchase (a married person is treated as meeting the age requirement if he or his spouse meets the age requirement).
• For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed by a taxpayer if he can be claimed as a dependent by another taxpayer for the tax year of purchase. It also can't be claimed for a home bought from a person related to the buyer or the spouse of the buyer, if married.
• Beginning with 2009 returns, the new law makes it easier for the IRS to go after questionable homebuyer credit claims without initiating a full-scale audit.

Please feel free to contact us if you think you may benefit from the homebuyer credit.

Is Facebook Right For My Business?

Everyone seems to be jumping on the social media bandwagon, but if you are like me, you are wondering if it is the right thing to do for business and how. Experts in all industries are encouraging businesses to use social media to help create business or additional exposure for your business. One of my questions has been how to bridge the gap from personal use of social media to business use. I think most of us use Facebook for a primarily personal focus, but I found an article (excerpt below) that helps bridge the gap and provides some thoughts on using Facebook for your business. Hope you find this helpful. Is Facebook Really a Good Tool for Business? Ann Handley (MarketingProfs) Nov 10, 2009 - In a recent article on MarketingProfs, Paul Chaney identified what he sees as the “big three” social networks for business: Twitter, LinkedIn and Facebook. The first two I understand… but Facebook? It seems to me that lots of companies set up Fan Pages or Groups. They use them to collect friends like a squirrel hoarding nuts for winter. They even might post a few photos or press releases or blog posts. But then, the pages languish. So is Facebook really a good tool for business? Paul says, unequivocally: Yes. The author of The Digital Handshake: Seven Proven Strategies to Grow Your Business Using Social Media, Paul schools me and (I hope) you in how businesses can leverage a presence on Facebook. Click here to read the full article

California Governor announces 5 new stimulus projects

Governor Arnold Schwarzenegger’s California Recovery Task Force announced this month that $53 million in American Recovery and Reinvestment Act (Recovery Act) funding has been allocated by the California Transportation Commission (CTC) to five additional transportation projects in California, located in:

• San Luis Obispo County
• Santa Barbara County
• Santa Clara County
• Alpine County
• Inland Empire

A comprehensive list of all projects that received allocations of this funding is available here.

Tax Credits Help Homeowners Winterize their Homes

The IRS reminds taxpayers of tax credits available for energy-saving improvements. The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit. (1) Nonbusiness Energy Property Credit: This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count. By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result. (2) Residential Energy Efficient Property Credit: Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property. Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits. Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return.

Free Webinar on Employee vs. Contractor Issues

The issue of classifying workers as employees or contractors continues to be of top concern to the IRS and FTB. Intuit is offering a free webinar on Nov. 4 about deciding when to hire an employee vs. a contractor, including a discussion of the necessary forms to file for each (W-2s, 1099s, etc.). If interested, you can click here for more information.

Happy Halloween!!!

This year along with decorating the office and showing off our costumes, the TY team participated in a Pumpkin Decorating Contest. Everyone was given a pumpkin last week and encouraged to let their imaginations run wild. And here are the results...

1st Place - Barbara Toland

2nd Place - Tricia Millena

3rd Place - Teresa Karlson

Other creative entries...

New Publication for Unemployed

The IRS has released a new publication titled "Tax Impact of Job Loss," which discusses tax issues connected to severance pay, unemployment compensation, pension plans, job search expenses and moving costs. If you or someone you know is dealing with unemployment, you may find some useful information in the publication, available online here.

Leading the Way - Top 100

The list of the top 100 most influential people in the accounting industry was recently released. ThomasYork, LLP would like to congratulate our friends and associates that have made this prestigious list. We are proud to have worked with and learned from some of these fine people and look forward to using their experience and knowledge to assist us in creating a leading edge CPA firm. If you are interested you can use the link below to review list.

Look Inside >> Top 100 People - 2009

AFRs for November

The Applicable Federal Rates (AFRs) for the most of November are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.71%	0.71%	0.71%	0.71%
Mid-term (> 3 years but ≤ 9 years)	2.59%	2.57%	2.56%	2.56%
Long-term (> 9 years)	4.01%	3.97%	3.95%	3.94%

SBA training on winning federal contracts

The SBA has released its newest online course for women small business owners, titled: Winning Federal Contracts: A Guide for Women Entrepreneurs. This training is free and includes numerous resources. The SBA also has an online training program related to the American Recovery and Reinvestment Act of 2009, titled Recovery Act Opportunities: How to Win Federal Contracts. This program is also free, and includes resources to help you understand and engage in the government’s contracting process. The program is fully automated and indexed so you can review all or only the parts you are interested in.

Governor Signs Four Critical Bills for CPAs

Glen Thomas, who is on the statewide CalCPA Society Accounting Education Committee (AEC), has been working very hard over the past three years with fellow members for the passage of SB 819. According to the CalCPA:

After 33 years, California is no longer the problem child when it comes to CPA licensing. Sunday night, Gov. Schwarzenegger signed SB 819 into law, which will require all California CPAs licensed after 2014 to have 150 hours of college education prior to licensing. CPAs licensed prior to 2014 will be grandfathered in as substantially equivalent. California should now be considered a substantially equivalent state, likely easing mobility for California CPAs providing services in other states that have adopted the new mobility provisions consistent with the Uniform Accountancy Act. Those provisions allow out-of-state CPAs to provide temporary services in those states without notifying the board of accountancy or paying a fee. This is a really big step for California CPAs. "While some of the details of the bill remain to be worked out, the passage of this legislation is historic and at long-last puts California CPAs on a level playing field with CPAs from other states who have been considered substantially equivalent for years," says CalCPA CEO Loretta Doon. "We owe a tremendous debt of gratitude to our government relations team lead by Bruce Allen and Jeannie Tindel, and Paul Regan, our Government Relations Committee chair.” Doon also praised the multitude of members from students to seasoned partners who participated in CalCPA’s grassroots efforts. Those members met with legislators in their district offices, and in the Capitol, to discuss the importance of substantial equivalency and other key legislation. Additionally, the governor signed AB 138, which requires mandatory peer review for CPA firms. The peer review requirement will start in 2010, but firms don't have to provide their peer reviews until the 2011 renewal for firms with the last digits 1-33. The new law will use a phased in implementation over a three-year period. Also signed into law were AB 117, which requires license status disclosure for inactive CPAs, and AB 129, which reinstates a taxpayer privilege provision. Visit CalCPA's website to learn more about these important new laws that will pave the way for the future of the profession in California.

IRS releases Retirement Plan Navigator

WebCPA reports:

The Internal Revenue Service has created a new Web-based tool to help small-business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance. The IRS Retirement Plan Navigator aims to provide employers with an online guide for choosing, maintaining and correcting a plan. The navigator does not suggest which plan may be best for a specific employer, but instead lays out the options to allow small-business owners to choose a plan that best fits their situation. Options include 401(k) plans, plans with individual retirement accounts, defined-benefit plans and tax-exempt plans. The navigator includes a side-by-side comparison of the various types of pension plans and their requirements. The navigator also provides a checklist and suggested resources for maintaining compliance. It offers suggested options to employers seeking to correct errors and bring their plans back into compliance.

If you are interested in more information on retirement for you or your employees, you may want to give this new tool a try.

TY Helping the Victims of Typhoon Ketsana (Philippines)

On September 26, 2009, Typhoon Ketsana (a.k.a .Ondoy) brought a month's worth of rainfall to Metro Manila and nearby areas in just a few hours, causing severe flooding which resulted in the loss of many lives and the displacement of hundreds of thousands of people. No power supply, limited communication and transportation, no foods, no medicine, no clothing and no clean water running in the affected areas by typhoon Ondoy. The ThomasYork team, led by Tricia Veneracion-Millena, started a food and clothing drive to provide assistance to the typhoon victims. The expectation of receiving one to two bags of donations was surpassed when in less than a week's time our team amassed a van full of clothes and canned goods. The team also received generous cash donations to purchase canned soup and medical supplies. Typhoon Ondoy victims in the Philippines are in dire need of your help. If you would like to help you can drop off used clothing, food or cash here at the TY office in San Ramon. Our donations will be shipped early next week. Listed below are numerous other ways you can help the typhoon victims. Donate Online

• ABS-CBN Foundation: http://www.abs-cbnfoundation.com/donate.php
• Ateneo Alumni Northeast, Inc: http://www.atenista-usa.org/site/featured-articles/help-for-ondoy-victims/
• Ayala Foundation: http://af-usa.org/donate_now_form.asp (select AFI-Typhoon Relief Fund in drop down menu)
• eBay: http://donations.ebay.com/charity/event.jsp?NP_ID=-45#donatenow
• Gawad Kalinga: http://www.gk1world.com/give.html
• Global Giving: http://www.globalgiving.com/projects/philippines-flood-disaster-fund/
• HOPE Worldwide: https://www.hopeww.org/NetCommunity/SSLPage.aspx?pid=1227&srctid=1&erid=162143
• Music for Relief: http://musicforrelief.ning.com/page/donate-1
• Operation Blessing International: http://www.ob.org/_programs/disaster/news/2009/dr_2009_0927_ketsana_philippines.asp
• PhilippineAid.com: http://www.philippineaid.com/
• Philippine National Red Cross: http://www.redcross.org.ph/Site/PNRC/Default.aspx?S=48&SS=972
• PayPal: PayPal is also accepting donations now. Please send to give@redcross.org.ph.
• Thomson Reuters Foundation (total sum donated by October 16 will be matched by the company): http://www.trust.org/trust.org/page/files/philippinestyphoon2009.html
• TXTPower (Paypal): http://technology.inquirer.net/infotech/infotech/view/20090927-227196/Help-Ondoy-victims-via-Paypal
• UNICEF USA has an anonymous donor that will match all donations (up to $100,000) before October 6. https://secure.unicefusa.org/site/Donation2?df_id=5960&5960.donation=form1
• Xavier School Alumni (NY): http://xs4ondoyny.chipin.com/ondoy-flood-victims
• Xoom: http://ronaldredito.org/blog/321/ondoy-donation-using-xoo/
• World Food Programme: https://www.wfp.org/donate/ondoy

Donate by Phone Call the American Red Cross at 1-800-435-7669. Please choose the 3rd option (International Donation), then tell the operator that your donation is for the Ondoy (Ketsana) typhoon victims in the Philippines. Donate Through Your Community There might be people in your community gathering relief goods and donations.

• Burlingame: MANILA BOX USA is now accepting donations in kind & will provide FREE shipping to Manila. Items will be sent by sea cargo and will delivered to the Whitespace Relief Center/Mar Roxas Headquarters in Cubao. Please drop donations off at their warehouse: 361 Beach Road Burlingame, CA 94010 or call (650)342-2858. Please pack them in boxes for easier handling. Business hours Mon-Fri 9am-6pm
• Hayward: Fil-Am Invitational Basketball League(FIBL) will send relief goods to typhoon Ondoy victims. If you want to make a donation (clothing, canned goods or money) please bring it on Sunday, October 4 to El Rancho Gym 541 Blanche St. Hayward, CA from 2:00 – 6:00 pm. Please visit their website for directions - http://www.leaguelineup.com/location.asp?sid=584979555&url=fibl&locationid=300348.
• Daly City: Liwanag Cultural Center, Hillside Park Clubhouse, 222 Lausanne Ave., Daly City‎, CA‎ 94014. Hours: Monday - Thursday 3:30 - 6:00 p.m.
• Oakland: Asian Pacific Islander Youth Promoting Advocacy & Leadership. Attn: Armael Malinis, AnakBayan-East Bay. 310 8th Street, Suite 215. Oakland, CA 94710
• San Francisco: Stanford’s Pilipino American Student Union (PASU) is also collecting donations to be sent to the Philippines to help victims of Typhoon Ondoy (international name Ketsana). If you would like to make a donation, please contact AV David at avhdavid@stanford.edu or (650) 491-4561.
• San Francisco: Manila Forwarder will provide free box shipment to the Philippine National Red Cross, churches and other government agencies directly responsible with relief operations. Please drop off relief goods at Manila Forwarder Northern California, 5750 Mission Street, San Francisco, CA 94112. Tel: 510-750-3036 / Tel: 209-3499576 / Tel: 415-239-9576
• San Jose: Filipino Youth Coalition and Filipino Community Support. Corner of Kenesta Way and Clarice Drive, San Jose.

The most urgent needs are listed below - Food items: Rice, noodles, canned goods, sugar, iodized salt, cooking oil, mongo beans and potable water Medicines: Antibiotics, analgesic, oral rehydration salts, multivitamins and medications to treat diarrheal diseases Non-food items: Bath soaps, face towels, shampoo, toothbrush, toothpaste, plastic mats, blankets, mosquito nets, jerry cans, water containers, water purification tablets, plastic sheetings and laundry soap Rehabilitation Programs: Shelter materials for house repair Thank you!

TY Recruiting

This year instead of attending the CSU Chico and Saint Mary's College Career Fairs, we decided to do things a little differently. So we participated in the Meet the Firms which is an event specifically tailored to accounting students. Since there were only a handful of firms present at these events we were better able to engage one on one with potential candidates. The turnout of accounting students at both colleges was great. Our goal is to find an Entry Level Staff Accountant and a possible summer Intern for May 2010. Many students were eager to learn more about our firm and some had already heard of us or had visited our website. Our next step will be On-Campus Interviews in October where we hope to find the next great addition to the TY team.

2009 Best Accounting Firms to Work For

ThomasYork was recently named as one of the 2009 Best Accounting Firms to Work for. The annual list of “Best Accounting Firms” was created by Accounting Today and Best Companies Group. This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting industry, benefiting the nation's economy, its workforce and businesses. The Best Accounting Firms to Work for list is made up of a total of 100 companies, split into three groups: 20 small-sized companies (15-24 employees), 65 medium-sized companies (25-249 employees) 15 large-sized companies (more than 250 employees). ThomasYork has been named one of the Best Accounting Firms to Work for in the small category. Companies from across the country entered the two-part survey process to determine the Best Accounting Firms to Work for. The first part consisted of evaluating each nominated company's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration, survey and analysis process and determined the final rankings. Our ranking will be unveiled and publised in the Dec. 14th issue of Accounting Today.

AFRs for October

The IRS has released the Applicable Federal Rates (AFRs) for the month of October:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.75%	0.75%	0.75%	0.75%
Mid-term (> 3 years but ≤ 9 years)	2.66%	2.64%	2.63%	2.63%
Long-term (> 9 years)	4.10%	4.06%	4.04%	4.03%

New Use Tax Registration Requirements

The California State Board of Equalization (BOE) announced that thousands of California qualified purchasers are now required to register with the BOE and file use tax returns by April 15 of each year, reporting all purchases subject to use tax from the previous calendar year, beginning with purchases made during the 2009 calendar year. A qualified purchaser is a business that meets all of these tests:

• Is not required to hold a seller’s permit with the BOE;
• Is not required to be registered or otherwise register with the BOE;
• Is not a holder of a use tax direct payment permit; and
• Receives at least $100,000 in gross receipts per year from business operations.

The BOE has begun notifying 184,000 businesses of this requirement by letter.

More information is available on the BOE website

Subcontracting to Snag Stimulus Dollars

From the Wall Street Journal last week: For small business owners trying to find a way into the lucrative market for federal contracts, subcontracting can provide a back door. With billions of extra federal dollars being offered though the economic stimulus package, many small business owners have set their sights on winning contracts directly from federal agencies. For those with no previous experience, this may be aiming too high. By subcontracting, business owners can boost their profits and learn about the many requirements of government work without the requirement to meet all of them. At the same time, they can provide the prime contractor with expertise and resources they may lack. Attending meet-and-and greets held by federal agencies, trade shows, conferences and other networking events, such as those sponsored by the U.S. Small Business Administration and industry-related associations, can help get in front of prime contractors and decision makers at federal agencies. Entrepreneurs can also post their profiles online and network with contractors through Web sites such as the Federal Contracting Network at www.tfcn.us and at www.mySBX.com. (Some charge fees, although basic services and listings are often free.) Small businesses can also sign up with large prime contractors through their corporate Web sites. Browsing sites, such as the SBA's Subcontracting Network (www.sba.gov/subnet), where prime contractors post opportunities, can be a way to identify key players.

Remembering

The team of ThomasYork remembers and honors those who lost their lives 8 years ago, their families, and the brave men and women who put themselves in harm's way to save strangers. They will never be forgotten.

How to Win Federal Contracts

Today, the Small Business Administration (SBA) launched a new online training course titled "How to Win Federal Contracts." From the press release:

“Government contracts can play a key role in helping small businesses turn the corner in terms of expansion and job creation,” SBA Administrator Karen G. Mills said. “But make no mistake, the benefits the government receives are equally as impressive – working with small businesses allows the federal government to work with some of the most innovative companies in America, often with direct contact with the CEO.” “The SBA online training course can help businesses access the federal purchasing system and position themselves to compete for the commercial opportunities offered by government contracting,” Mills continued.

The course is available at the SBA website.

6 Tips to Speed up SBA Loan Approval

Last week, the Wall Street Journal reminded small business owners that time is running out to get fee-free SBA loans.

Barring another act of Congress, SBA-backed loans will revert to their pre-Recovery Act status by the end of November or December. November is more than two months away, but given that the SBA loan approval process can take as long as 120 days, applicants had better get cracking, says Dave Mulcahy, the director of the Small Business Development Center at Lamar University in Beaumont, Texas.

The article recommends the following 6 tips to speed up the loan approval process:

• Update your financials
• Tax a preferred lender
• Ensure the lender is the right fit
• Hedge your bets with a backup lender
• Offer more backup with your application
• Get help

AFRs for September

The Applicable Federal Rates (AFRs) for September are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term	0.84%	0.84%	0.84%	0.84%
Mid-term	2.87%	2.85%	2.84%	2.83%
Long-term	4.38%	4.33%	4.31%	4.29%

IRS reminder of worker classification issues

The issue of worker classification, meaning the issue of is whether you treat someone as an employee or as an independent contractor, remains a key focus of the IRS. As we've posted here and here, the government is looking to close the tax gap by going after businesses who treat workers as contractors that should really be treated as employees. Last week, the IRS again reminded taxpayers of the need to consider this issue carefully, publishing the following Ten Tips for Business Owners:

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.

2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.

3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.

4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.

7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

8. Workers can avoid higher tax bills and lost benefits if they know their proper status.

9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.

10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link.

For more information on the topic, please visit the FAQ section of our website.

Hobby or business?

Taxpayers often wonder if they can deduct expenses related to an activity that is a mixture of both business and pleasure. If an activity is truly a business, you can deduct a net loss, which can offset income from other sources such as wages or investment income. But if an activity is really a hobby, you cannot deduct a net loss. This is a murky area in the tax law, and one that is closely examined by the IRS. Here's a few key points from the information sheet the IRS published this week titled Eight Important Questions for Hobbyists: Summer is a time many Americans take their fishing poles and gardening tools out of storage. Hobbies – such as woodworking, stamp collecting and scrapbooking – are often done for pleasure, but can result in a profit.

Here are eight questions that will help determine if your activity is a hobby or a business.

1. Is the purpose of your activity to make a profit?
2. Do you participate in your activity just for fun?
3. Do you depend on income from the activity?
4. Have you changed methods of operation to improve profitability?
5. Do you have the knowledge needed to carry on the activity as a successful business?
6. Have you made a profit in similar activities in the past?
7. Does the activity make a profit in some years?
8. Do you expect to make a profit in the future from the appreciation of assets used in the activity?

Good to Great

The Construction Contractor's Digest provides a summary of Jim Collins' best selling book, Good to Great - Why Some Companies Make the Leap and Others Don't. Matt Stevens applies the book's in-depth study and conclusions to construction contractors and their challenges.

Worker's Comp rates likely to rise

From the Sacramento Bee: Get ready for another round of workers' compensation insurance premium increases next January. An influential group controlled by the insurance industry Wednesday recommended a 22.8 percent rate increase. The Workers' Compensation Insurance Rating Bureau of California, in arguing for the higher rates, said rising medical costs are largely the reason. The findings are advisory but generally set the pattern for the industry. Insurers raised rates nearly 10 percent on average in July after the bureau called for a 23.7 percent increase. Rates generally are set twice a year, in January and July. Workers' comp is a hot-button issue for many employers and is often blamed for the state's reputation as an expensive place to do business. Backlash against sky-high premiums prompted the Legislature to overhaul the system twice, in 2003 and 2004, and rates are about 60 percent lower than in 2003. But as rates have begun to creep back up, economic development officials from states such as Nevada have been pointing to workers' comp costs in their efforts to lure companies from California.

Recovery Funded Ultra-Low Interest Loans

Here's an excerpt from a press release yesterday from the Office of the Governor: Public Energy Efficient and Renewable Energy Projects Eligible The California Recovery Task Force today announced that one percent interest loans funded through $25 million in American Recovery and Reinvestment Act (Recovery Act) funds are available for eligible public energy efficient and renewable energy projects in California. Available through the California Energy Commission, the loans will help local jurisdictions stimulate their economies and job growth while investing in energy efficiency and reducing greenhouse gas emissions - all in a cost effective manner. Cities, counties, special districts, public schools, colleges and universities, public care institutions, and public hospitals are eligible to apply. For more information and criteria about low interest loan programs or other energy-related Recovery Act funding and programs go to the California Energy Commission’s Recovery page at http://energy.ca.gov/recovery/index.html

FTB Notices sent to Head of Household Taxpayers

Last week, the Franchise Tax Board (FTB) sent more than 140,000 audit letters to pre-selected individuals who used the “Head of Household” (HOH) filing status on their 2008 state tax returns.

The HOH filing status generally provides a lower tax assessment for unmarried taxpayers who cared for a dependent for over half the year and paid more than half the cost of maintaining their home. Taxpayers who do not qualify will have their tax reassessed at either a single or married-filing-separate filing status. More than 2 million California taxpayers use the HOH filing status each year.

FTB advises taxpayers who received an audit letter to promptly submit a completed questionnaire by using any of these methods:

• Go to FTB’s website ftb.ca.gov and use the HOH Audit Letter Web Response page. Taxpayers will need their Social Security number and the “FTB ID number” listed at the top of the questionnaire letter.
• Fax pages 3 and 4, and any supporting information to 866.223.8195.
• Mail the questionnaire using the pre-addressed envelope provided with the audit letter.

Failure to respond could result in a penalty. FTB provides an HOH “self-test,” answers to many frequently asked questions, and Publication 1540, “CA Head of Household Filing Status,” in English and Spanish on its Website at ftb.ca.gov. Feel free to contact us for additional information.

The ABCs of SBA Lending

This week, the AICPA published "The ABCs of SBA Lending", which discusses the key benefits of recent law changes, reasons to apply for an SBA loan, and the application interview process. Information is also available at the SBA website. Related posts:

• Interest-free SBA Loans
• Obama proposal for small business lending
• Treasury to focus on small business
• Funds for Small Business

IRS Alerts Public to New Identity Theft Scams

The scammers continue to abound, and the IRS warns people to beware of identity theft scams, including these three: (1) fraudsters ask recipients to register their account information with a fake web address to obtain a tax refund or a refund of the Making Work Pay Credit; (2) recipients receive an email claiming to come from the Treasury Department stating that they will receive millions of dollars in recovered funds, lottery winnings, or cash if they provide certain information; or (3) fraudsters modify a genuine Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding) to request personal and financial information. The IRS reminds taxpayers that it does not discuss tax account matters by email, and the only genuine web site is www.irs.gov.

5 Tips to Prepare for Next Year’s Tax Season

Few people enjoy thinking about taxes during the summer. But those who are willing to do a little prep work throughout the year can find tax time a bit less taxing. www.mylifeROI.com recommends these 5 Tips to Prepare for Next Year’s Tax Season:

1) Pretend You’re a Fortune 500 Company. Divide your year into quarters, or if it’s easier to keep track of, seasons:

• Summer – In the summer, you should start organizing your records. As of a few months ago, you actually filed your taxes. And what a relief that was. However, taxes never stop. You should make sure your filing system is intact and ready to go with the new year’s tax records, starting back in January. Make sure that the past 6 months look good and that you are ready to go for the rest of the year.
• Fall – Begin estimating your end of year annual income and taxable income. You should have a pretty good idea of your salary, hourly wages, commissions, bonuses, etc. This obviously won’t be exact, but you should have an approximate. This will let you know if you are behind or ahead on tax payments.
• Winter – The year is practically over (or is over depending on what part of winter it is!). Start preparing to file your taxes. Get all of your documents ready to go. Start gathering the different tax forms you will need. Separate receipts you will need from ones you won’t need.
• Spring – Actually file your taxes, now. If you have kept up to date over the past 3 seasons, you should be able to file relatively quickly! But, it’s not over. Continue on to “summer” and do it again!

2) Practice Good Record Keeping

What kinds of documents should you keep extra secure?

• Birth certificates for you and your family members
• Any wills that have been drafted or published for you (and your spouse)
• Stock and/or bond certificates for large holdings
• Deeds to any real estate holdings

3) Adjust Your Withholding on Your W-4

As discussed in the linked article, you usually want to adjust your w-4 to maximize your earnings, which in tail minimizes your refund or payment. The closer you can get to $0 owed the better.

There are a few thought processes:

• A tax refund is an easy way to save. It is, in a way, a forced savings plan. You probably wouldn’t have the willpower to save the money otherwise, so getting it all in one lump sum may help you apply it towards debt or towards a goal.
• A tax refund means you threw money away. Had you received the money you would have put it in an investment vehicle that pays interest. You gave the government a tax-free loan.

In the end, do what’s right for you.

4) Keep Your Receipts

The linked article will give you a lot more depth. But the gist of the article is that you should keep all important tax records filed for up to 7 years (different times for different kinds of documents).

An overview of a few of the forms you need to keep on file:

• Paycheck stubs
• W-2 Forms/1099 Forms
• Receipts for any items you can deduct if you plan to itemize
• Insurance and medical records
• Charitable records

5) Pay Your Taxes Before You File

You are required to pay your taxes. If you don’t believe me, click on the above link and see the awesome picture of Wesley Snipes.

Adjust your withholdings accordingly and make sure you pay your tax rates all throughout the year.

ABC Releases Construction Backlog Indicator

From the Associated Buildings and Contractors website:

ABC June 22 released its inaugural Construction Backlog Indicator (CBI), a forward-looking measurement reflecting the amount of work to be performed by contractors in the months ahead. A high backlog value a large amount of work is due to begin in the near term, leading to a positive economic impact, and a low backlog value indicates fewer projects are under contract, leading to a more uncertain economic impact. 'Commercial and industrial construction is a major part of the American economy. We have developed this new, innovative measurement not only to track the level of commercial and industrial construction activity, but also to look into the future for signs of recovery,' said ABC Chief Economist Anirban Basu. 'Significantly, we are able to track backlog by region as well as by industry sector and company revenue to paint a complete picture of this critical economic segment on an ongoing basis.' The overall CBI in the nation’s nonresidential construction industry, which includes industrial, infrastructure, and commercial/institutional segments, rebounded in May to 6.3 months, up from 6.2 months in April, but is still down by roughly 0.8 months since November 2008, when ABC began collecting data. During the past seven months, nonresidential backlog is down by an average of 24 days. To read the view the full report, including charts and graphs, and to learn about the methodology, visit www.abc.org/backlog. To sign up to receive the Construction Backlog Indicator every two months, visit www.abc.org/subscriptions.

Where is all of Obama’s stimulus money going?

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA). The Act explicitly lists the following five purposes of the Act:

• To preserve and create jobs and promote economic recovery.
• To assist those most impacted by the recession.
• To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
• To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
• To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.

Federal, state, county, and city resources are now dedicated to ARRA opportunities (all of the websites noted below use the term "opportunities" to describe projects funded by ARRA).

Federal business opportunities are available at FBO.gov, which provides extensive search options to find Federal contracts. A simple search for California opportunities as of today resulted in 160 projects that many of our clients may be interested in bidding on. Opportunities that are funded by ARRA are noted as such.

California's governor and the city of San Francisco have created dedicated agencies and websites that provide information about the impact of ARRA. Contra Costa County and local cities have also added links and information to their existing websites about ARRA opportunities.

Governor Schwarzenegger has created the California Recovery Task Force, which will be tracking ARRA funds. The Task Force's website provides information so that Californians can access the stimulus money. The site includes information on how to bid for contracts, apply for grants, and get some tax relief . We highly recommend that you check out this site.

San Francisco's Office of Economic and Workforce Development provides information for small businesses owners. Its website is jam-packed with business assistance information such as tax credits and incentives, construction development in the pipeline, neighborhood revitalization projects, and workforce development. The site has links to other city resources that may be helpful to you and your business.

Contra Costa County has expanded its website to provide information about ARRA. For the most part, the site encourages you to search for local opportunities at FedBizOpps.gov and Grants.gov. However, we found that individual cities in Contra Costa County, such as Walnut Creek, are predominately displaying RFPs for ARRA projects on their homepages, rather than making you go search for them.

If you become aware of other resources that provide local ARRA opportunities, please email them to lsilva@ty-llp.com and we will get them posted for all of our readers to explore.

AFRs for August 2009

Applicable Federal Rates (AFRs) for August are...

	Annual	Semiannual	Quarterly	Monthly
Short-term	0.83%	0.83%	0.83%	0.83%
Mid-term	2.80%	2.24%	2.23%	2.23%
Long-term	4.26%	4.22%	4.20%	4.18%

Builder confidence on the rise?

BusinessWeek reports that "U.S. homebuilders seem to be coming out of hibernation as the gloom over the housing market begins to lift. " A National Association of Home Builders/Wells Fargo Housing Market Index reported a slight increase in builder confidence, as the index measuring builder confidence in the current market for newly built single-family homes rose 3 points. Another index measuring the traffic of prospective buyers rose 1 point.

This level of confidence is the highest it's been since September 2008, so perhaps things really are starting to turn around. We can certainly hope.

Will Your Company Be Eligible For Federal Contracts?

If your construction company is planning on tapping into that vast pot of stimulus money offered by the federal government you need to be aware of the newest obstacle which you will need to navigate in order to be eligible for federal contracts. See below: "Department of Homeland Security (DHS) Secretary Janet Napolitano today strengthened employment eligibility verification by announcing the Administration’s support for a regulation that will award federal contracts only to employers who use E-Verify to check employee work authorization. The declaration came as Secretary Napolitano announced the Department's intention to rescind the Social Security No-Match Rule, which has never been implemented and has been blocked by court order, in favor of the more modern and effective E-Verify system....." After a careful review, the Administration will push ahead with full implementation of the rule, which will apply to federal solicitations and contract awards Government-wide starting on September 8, 2009. If you haven't already signed up for the E-Verify system and you want to be eligible for federal contracts you should consider signing up now. Entire article can be found at http://www.dhs.gov/ynews/releases/pr_1247063976814.shtm More information about E-Verify can be found at www.uscis.gov/everify

7 Tips When Starting a Business

Last week, the IRS published the top seven things it wants you to know if you plan to start a new business:

• First, decide what type of business entity you are going to establish.
• Identify which taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
• Obtain an Employer Identification Number (EIN).
• Implement a good recordkeeping system.
• Determine your company's tax year end.
• Determine your accounting method for calculating income and expenses. The most commonly used accounting methods are the cash method and an accrual method.
• Visit the Business section of IRS.gov for resources to assist entrepreneurs with starting and operating a new business.

The page includes links related to starting a business, operating a business, and closing a business. As unexciting as these issues seem, it's a good idea to take care of them. When it comes to taxes, an ounce of prevention is worth a pound of cure - and then some.

We Made it Through Our First Peer Review!

Yesterday was the last day of our peer review process and we are very pleased with our passing results. Since we are a newer firm and this was our first peer review, we were uncertain of what to expect. By subjecting ourselves to the peer review process we can ensure that we are consistently providing services in compliance with the latest standards and requirements of our industry. The AICPA defines the program as follows: "The Peer Review Program is dedicated to continually enhancing the quality of accounting, auditing and attestation services performed by AICPA member in public practice. To protect public interest, the AICPA's Peer Review Program is driven by adherence to the highest possible professional standards and understanding of changing business and regulatory environments." As soon as we recieve our peer review report from the independent reviewer we will post a copy on our website.

Important issues when selling a business

CPA and Tax Attorney Peter Pappas suggests 10 important issues to consider when selling you business:

1. Asset or Stock Sale
2. Employee Retention
3. Vendor Relationships
4. Non-Compete Agreement
5. Indemnification and Hold Harmless Clauses
6. Consulting Agreement
7. Allocation of Sales Price
8. Unpaid States Sales Taxes
9. Owner Versus Third Party Financing
10. Intangible Assets

He further lists the basic legal documents required in a typical asset sale transaction:

• Asset Sale and Purchase Agreement
• Bill of Sale
• Promissory Note (if partly financed by seller)
• Non-Competition Agreement
• Employment/Consultant Agreement
• Security Agreement
• Lease assignment or sublet agreement

In closing, he advises: "Finally, you should never try to sell your business or buy a business without first consulting with an experienced business transaction lawyer."

How healthy are your finances?

As the big banks undergo stress tests, we are reminded that our personal finances could always use a check-up. If you're interested in a short pop quiz, CNNMoney provides a simple online stress test for your personal finances.

California issues IOUs

California taxpayers who are waiting on refunds will continue to wait. The Franchise Tax Board has announced: "all requests for direct deposit of a State income or franchise tax refund will be issued as a paper registered warrant." If you receive a registered warrant in lieu of payment, the State Treasurer will not redeem it for cash until it matures on October 2, 2009. However, some banks will accept registered warrants as cash, so you may be able to deposit it into a bank account (and let the bank deal with redeeming the warrant in October). FAQs about registered warrants are available on the State Controller's website.

IRS Construction Industry Guide

The IRS recently published a current version of their Construction Industry Audit Technique Guide to the IRS website. Here is a link to view the guide. www.irs.gov/businesses/small/industries/article/0,,id=208324,00.html The guide is "intended for examiners conducting audits in the construction industry and as information for taxpayers and practitioners associated with the construction industry". If you are curious about the processes the IRS uses when auditing a construction company or are a construction company faced with an audit the guide may be helpful to you. The guide's effective date is May 2009 and includes all current law related to Internal Revenue Code Section 460, Special Rules for Long-Term Contracts. Happy reading.

Shareholder Agreements - Do You Have One?

I recently read the following blog entry from Open Forum Blogs. It was a great reminder of why you need to have an up to date shareholders agreement and things that should be included in your agreement. I think this is a great summary of goals and necessities of a good shareholders agreement. If you have a business that is not a corporation the concepts still apply and can be included in partnership agreements and operating agreements.

Shareholder’s Agreement: What It Is and Why You Need to Review Your Own Nora Dunn for Wisebread June 29th, 2009 - 03:11 PM When you get into business with a partner or partners (be they a friend, family member, or simply a business acquaintance), you do so with the best of intentions. As such, in many cases, the apparent need for a Shareholder’s Agreement goes unnoticed. In fact, you may be embarrassed to bring up the idea since it seems like a complicated legal mess that screams of a business version of a “pre-nup”: something that protects your interests if the business relationship goes belly up for some reason.

But a Shareholder’s Agreement is so much more than just something to deal with the breakdown of a business relationship. Life happens while we are busy making plans, and sometimes life’s happenings can throw us curve balls that will affect not only our relationships, but the business. Disabilities, untimely deaths, marriage breakdown, and simple falling-out between partners can mean disaster if these scenarios (and others) have not been given due consideration.

Also known as a Buy-Sell Agreement, a Shareholder’s Agreement is designed to help you and your business navigate life’s tricky twists and turns. Although the reference to “shares” implies it is limited to corporate ventures, similar partnership agreements can be drawn up for other business structures.

Among other things, a Shareholder’s Agreement will contain terms that come into play when a partner:

• Wants to sell their share of the business.
• Becomes disabled.
• Dies.
• Has life changes that affect their personal estate plan.

Advantages of having a well-drafted Shareholder’s Agreement include:

• Having a road map to follow when an unexpected change happens.
• The value of the business is preserved.
• Taxes are minimized.
• Surviving (or remaining) owners are protected, as is the business.
• Elimination of miscommunications and discord between surviving family members (of a deceased or disabled partner) and the other business partners.

10 common clauses found in a Shareholder’s Agreement

1. Valuation
2. Restrictions
3. First Right of Refusal
4. Shot-Gun Clause
5. Disability
6. Death
7. Retirement
8. Marriage Breakdown
9. Funding
10. Payment

As with any legal agreement, a Shareholder’s Agreement is something that requires a lot of conversation and thought prior to walking into your lawyer’s office. This is not conversation that will likely come easily or naturally to you and your partners, and so your financial planner or accountant may be able to help you discern the issues that are of importance.

Life’s curve balls do not have to have tragic consequences. Review your current Shareholder’s Agreement for viability, and if you don’t have one – well then, you know what to do.

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CA home buyer credit going, going...

As we posted in March and April, California offered a tax credit for new home purchases between March 1, 2009 and February 28, 2010. (More info on the credit is available on our website.) The credit is first-come, first-served. As predicted, the money is running out fast -- and may actually have run out. The FTB updated their website today with the following information: "We have reached $100 million in new home credit applications. Because many of these are duplicates, revised, or invalid, we plan to receive 12,000 applications. This will ensure we have more than enough valid applications to allocate the full $100 million. These additional applications will be subject to the availability of remaining credits." As of Wednesday, the FTB had received10,633 applications claiming $102,638,616. Builders have asked the state to increase funding for the credit. We'll see how that goes.

AFRs for July

AFRs for the month of July...

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.82%	0.82%	0.82%	0.82%
Mid-term (> 3 years but ≤ 9 years)	2.76%	2.74%	2.73%	2.72%
Long-term (> 9 years)	4.36%	4.31%	4.29%	4.27%

Debates on Health Care Reform

For those following the developments related to the President's proposed health care reform, Slate magazine post an interesting Q&A interview with The White House's Peter Orszag. We will be watching this issue closely as it makes its way through Congress. What are your thoughts on the issue of health care reform?

Interest-free SBA Loans

The Small Business Administration has begun offering interest-free loans of up to $35,000 to small businesses through SBA-approved lenders. The loans are made under the America’s Recovery Capital Loan Program ("ARC"), and can be used to make payments on one or more existing, qualifying small business loans for up to six months. ARC loans carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA. Eligibility information from the SBA website includes the following:

ARC loans are available to viable, for-profit small businesses in the U.S. that have qualifying small business loans and are experiencing immediate financial hardship.

Your small business must be:

• an established business
• have financial statements demonstrating it was profitable in one of the past two years, and
• be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval.

If your business does not meet these criteria, you can discuss your eligibility with your lender. ARC loans are not designed for start-up businesses.

ARC loans are designed to help businesses experiencing immediate financial hardship for reasons such as:

• Loss/reduction of customer base
• Increase in cost of doing business
• Loss/reduction of working capital and/or loss/reduction of short term credit facilities
• Inability to restructure existing debts due to credit restrictions
• Loss/reduction of employees (intellectual capital)
• Loss/reduction of major suppliers (major suppliers out of business)

For more information on the program, please visit the SBA website.

Voluntary Disclosure of Foreign Bank Account Reports

In an attempt to garner voluntary compliance, the IRS is granting penalty abatement and agrees not to prosecute Taxpayers who voluntary disclose their offshore bank accounts by September 23, 2009. If you have (or had) foreign bank accounts, we can assist you with filing the correct forms so that you can take care of this matter. Foreign countries are disclosing more information to the United States than ever before, so we strongly encourage Taxpayers to take advantage of this opportunity. For more information, please take a look at the Internal Revenue website or contact us directly and we'll be happy to assist you.

Tips for Self-Employed

If you are considering starting a new business, you may want to read Tax Attorney Peter Pappas' 59 tips for self-employed individuals, which provides tips on:

• Getting started
• Getting the right attitude
• Public relations
• Personal development
• Operations
• Maximizing revenue
• Minimizing costs
• Accounting and bookkeeping

If your new small business requires bookkeeping services, please feel free to contact us to consult with our bookkeeping and payroll specialists with Martins Accounting. Finally, if you are launching a new business, we wish you the best of luck!

Consider electronic payments for June 15

Many Americans are required to make quarterly estimated tax payments throughout the year. If you are one of those "lucky" taxpayers, you may want to consider going electronic. Tax author Kay Bell, who pays quarterly estimates herself, provides helpful information about electronic payments (as well as links) in a recent blog post. She points out that: "Once you're set up, you can schedule all four estimated payments -- if, like mine, they are all the same amount -- in just one session. Then you're done with them for the year." Whether you opt to pay electronically or by check, be sure to get those estimates in by June 15 to avoid penalties.

HSA amounts for 2010

The IRS released the following inflation-adjusted amounts related to Health Savings Accounts (HSAs) for 2010:

	Self-only coverage	Family coverage
Maximum contribution	$3,050	$6,150
Minimum deductible	$1,200	$2,400
Maximum out-of-pocket	$5,950	$11,900