(Inspiration for this post: I just met my FOURTH health insurance agent that did not enroll their small business employer client in a SHOP Marketplace plan. And this client is a not-for-profit that was counting on the credit. It’s thus far been one of my major sources of stress this tax season.)
PUBLIC SERVICE ANNOUNCEMENT — The small business health insurance credit is ONLY available in 2014 & 2015 IF the small business buys employee health insurance through SHOP. Please check with your agent for 2015 to avoid any unpleasant surprises.
See if you qualify to purchase insurance through SHOP, here:
We’re talking about a 35-50% credit for what you paid for employee health insurance. Insurance agents are often not doing this on behalf of clients; be proactive. And please spread the word to your small-business-owner friends: https://www.healthcare.gov/small-businesses/provide-shop-coverage/shop-marketplace-overview/ .
Also — The U.S. Small Business Administration has numerous articles and webinars on the Affordable Care Act for small business owners. A great resource for non-tax-professionals. More SBA resources and a link to an archived audio recording on the topic, here: https://www.sba.gov/content/affordable-care-act-training-materials .
It breaks my heart when I have to tell small business owners that they don’t qualify; then they put me in touch with their agent, who acts defensively and tells me to stop telling them how to do their job, instead of a being a partner to their client. All I’m saying is I’ve seen it too many times and I’m not arguing with any more brokers. I’m just sending them to this post.
For the record, I understand that there are other reasons than a tax credit to choose a particular health insurance plan, and that’s fine — if the client is informed that they will not qualify for the credit, and chooses to get a non-SHOP plan for other reasons, that’s fine by me. But they need to know what they’re giving up to do it.
The keynote speakers for June’s big Intuit education conference in New Orleans, Scaling New Heights, have been announced, and schedules and track listings are now updated.
In case you’re not sure what this conference is all about, please see my blog post on QuickBooks-related training from a couple months ago. This conference is one of the biggies!
Scaling New Heights 2015 Keynote Speakers Announced – intuitiveaccountant.com.
Illinois CPA Society – “Illinois Supreme Court Upholds Accountant’s Privilege”
Fascinating update on an important court case for Illinois CPAs. The Illinois Supreme Court recently upheld that:
1) The accountant is the holder of what is known as Accountant’s Privilege (similar to attorney-client privilege), not the client;
2) That a particular common law exception — which for attorneys permits a breach of the privilege — does not breach the accountant’s privilege; and,
3) That the accountant’s privilege can be waived when the accountant discloses information to a party. This means that if subpoenaed, CPAs must carefully consider from the beginning whether to disclose documents, as it could lead to inadvertently waiving the privilege.
Thanks to the Illinois CPA Society for bringing this important Regulatory Bulletin to my attention. It’s big news!
In Last Minute Move, IRS Spares Small Employers Big Affordable Care Act Penalties For 2014.
This article is almost a month old, but it’s still the best one I’ve seen out there on the “critical takeaways” from IRS Notice 2015-17, and the relief it’s bringing to small employers. It also explains a few confusing bits about why these penalties are of concern in the first place: for example, how old “health insurance reimbursement plans” are not compliant with ACA rules, and how it’s taken a while for the IRS and DOL to get on the same page about it. It also confirms that S-Corp >2% single-shareholder health insurance is going to be treated the same as it always has — for the time being — but not if there’s more than one person (2% shareholder or not) on the policy. Considering that the prior ACA guidance in these areas common to small businesses was either vague or conflicting (or both), this is welcome relief, indeed.
UPDATE 2/25/17 — please don’t confuse partnerships with S-Corps. The home office deduction for partnerships is completely different than what I’ve outlined below. There’s a fabulous blog post about partnership home office deductions here, by an excellent CPA firm in Oregon.
As you may know, many small businesses take a “home office deduction” on their personal return. But that doesn’t include S-Corp shareholders. Those business owners cannot take the home office deduction because they are considered employees of the business, as well as owners, and as such, they would be restricted under the same “2% of AGI” floor that regular employees are when they try to deduct unreimbursed employee expenses.
They also aren’t allowed to charge themselves rent — or if they do, they can’t deduct expenses against it, making that arrangement costly.
However, they can get reimbursed by the S-Corp for their out-of-pocket expenses. It’s called an “Accountable Plan”, and it’s really quite simple. Just keep decent records — which you’d have to do if you were claiming the home office deduction anyway. Substantiate the portion of the space used by your business, divide it by the total square footage, and there you have your business-use-percentage. Now multiply that by the expenses related to running an office out of your home — keeping in mind that you have to follow the same rules as sole proprietors: the space has to be used BOTH regularly and exclusively for business. I have a couple of clients who wrote up an accountable plan (stating that the company would reimburse the shareholder-employee for these substantiated home office expenses) and attached a floor plan of the office space as further support for which portion is personal and which is business-use. Nice touch.
I was really impressed by this lovely article that a CPA firm out in Colorado wrote on the topic, and they link to a “sample accountable plan reimbursement form” that’s quite nice (they even update it annually). If you’re looking for a CPA in that area, I must say I was pretty impressed with their resources, offerings and pricing.
Pull Money Out of the S-Corp, Accountable Plan – Watson CPA Group- Tax KnowledgeBase and FAQs.
I just got word in the latest edition of the “Intuitive Accountant” newsletter (one of my favorite resources) of an upcoming webinar on how to determine an accurate cash position in QuickBooks. It’s designed by QB ProAdvisors for QB consultants, but I think it looks like a good resource for any small business owner who has a hand in doing his/her own bookkeeping as well.
Not only do they plan to walk through common issues with figuring out how much cash is “in the bank”, and how to fix them, but they also will discuss “adjusting entries and other reporting options for income tax preparation and GAAP-compliant financial reporting”, making it a worthwhile investment of time for staff accountants and bookkeepers.
If you decide to register for and take the webinar, let me know in the comments how you liked it, what you learned, and what you’d recommend for improvements.
The webinar will be offered twice on the same day — March 11 — at noon and 5 pm Chicago-time. Click here for more information and to register: Determine an Accurate Cash Position in QuickBooks – intuitiveaccountant.com.