Hersman Serles Almond BEACON

2012-01-12T08:45:00.000-08:00

We have an upcoming seminar! The topic is Business Succession Planning on January 26th from 4:00-5:30PM and January 27th from 8:00-9:30AM. See the flyer for more details.

'Tis The Season

2011-12-08T08:21:00.001-08:00

The week of Thanksgiving, I, along with others at our office, had theopportunity to visit KITH and help them with their fall mailings. KITH, whichstands for Kirkland Inter-faith Transitional Housing, is a 501(c)(3) non-profitorganization (more about that later) that provides transitional and longer termhousing, case management and practical support for individuals and families inEast King County. They are a truly great organization who last year helped 126individuals facing a crisis of homelessness. Sitting in their conference room,listening to the stories of the people they have helped, I was reminded howblessed I am. I have a job. I have a home and food to feed my family. And Ihave wonderful, supportive friends and family to help me along the way.

This time of the year, most people are thankful for thesethings too and are reminded of those who do not have as much. In fact,according to a 7 year study by Network for Good (www.networkforgood.org), up to 33% ofannual giving occurs in the month of December compared to the rest of the year!Not only does this help out charitable organizations but there is also a tax benefit todonating as well. If you donate to a non-profit organization, like KITH, you can claim a deduction on your tax return!While this is limited by certain other items, such as your own income, it is stilla great way to lower the amount of taxes you owe while at the same time helpingpeople in need.

So, in the spirit of the season, Hersman Serles Almond willdonate $1 to KITH for every new follower we get on Twitter or new ‘like’ we geton Facebook through the end of the year. To find the links for these social media pages visit our new website’s Newspage (http://www.cpahsa.com/news.php).We currently have 118 Twitter followers and 12 Facebook ‘likes.’

To find great organizations for your company orfamily to donate to during this holiday season, check the Network for Goodwebsite. Also, it is always a good idea to double check the IRS website to makesure that the money you are giving to an organization is deductible (http://www.irs.gov/app/pub-78/).

Happy Holidays! ~Andy Bauerle

Common Pitfalls with 401K Plans

2011-08-19T07:38:00.000-07:00

In light of our upcoming seminar on retirement planing, (Thursday, August 25th: noon or 4pm at our offices) here is some information on common pitfalls with 401K plans. This information has been posted before, however the information is just as timely now as it was then.

Here is is...

Common Pitfalls with 401K Plans

Setting up a 401K plan is a great way to provide employee benefits and at the same time create some great tax deferral opportunities. However there are some things that need to be considering when starting up a plan. Many of these are items that your plan provider usually does not mention.

1. Fiduciary Responsibility: As a trustee of a 401K plan, you have a fiduciary obligation to the plan. Meaning that you are personally liable for this obligation. As the investment adviser to the plan you are have a responsibility to the participates, to providing the tools for investment advice, monitoring of the plan, replacement of money managers and selecting the funds the plan will have. This is a major responsibility that most 401K plan trustees have no idea about. Since the liability is a fiduciary responsibility a plan trustee is putting their own personal at risk by developing a 401K plan.

2. The Middle Men: It is important to know which organization are responsible for what with respect to the plan. Every plan usually has multiple companies involved. They are the plan administrator: the company that handles the record keeping of the plan. The custodian: the company that holds custody of the plan assets. The money managers: these are the organizations that are handling the actual investment funds. The plan advisors: This is organization that provides the guidance and investment knowledge for the participants and the trustees. It is important to know who is who and understand what each of the companies are actually doing for the plan and what their fees are. If you are paying fees to a plan administrator, but you do not know who they are or what they are doing – then you have an issue! You need to maximize the services that you receive since the plan is paying for them!

3. Tax Filings:Who is preparing the 5500? And do you know when it is due? This is a big concern as the IRS penalty for a late Form 5500 filing is $15,000. That is a big number. You need to know who is preparing the form (typically this is the plan administrator) and when they are mailing it to you for signature and filing. People would be shocked to learn about the number of companies that have a completed Form 5500 that is unsigned and not filed sitting in an old stack of mail because the plan trustee was not expecting the 5500 nor did they even know that they had a filing requirement. The IRS is making a point to crack down on non-filers and is being aggressive with issuing out penalties.

4. What are those 12b-1 fees? A 12b-1 fee is an extra fee charged by some mutual funds. The fees are used to cover promotion and marketing expenses related to the funds. The concept was that if the fund was advertised more and more people invested in the fund, the overall fees would drop and thus make it cheaper for everyone. However in practice, this theory has not been substantiated. Mainly these fee is used to reward intermediaries for selling a fund’s shares, thus they do nothing to enhance the performance of the fund. Some companies will credit this fee back to the plan in order to reduce the overall costs of the plan.

Seminar Series:

2011-08-10T14:38:00.000-07:00

SEP, 401K, SIMPLE: What is the best plan for me?

Join Us on the 25th at Noon or 4pm!

HSA Upcoming Seminar! Trusts 101 July 28th

2011-07-14T13:14:00.000-07:00

Please Join Us for our Upcoming Seminar: Trusts 101

Thursday July 28th @ noon and 4pm

Please Join us for our Upcoming Seminar!

2011-06-07T13:07:00.000-07:00

Retirement Planning Seminar

2011-05-16T08:59:00.000-07:00

Hersman Serles Almond, PLL presents our first seminar in our "Planning for the Future" Seminar Series:

Retirement Planning:

Avoiding Pitfalls & Creating Successful Strategies

Join us to learn how to be retired and stay retired:

· How to determine if my retirement plan is sustainable
· How to manage distributions from retirement funds
· Effectively allocate retirement funds for long term success
This promises to be an entertaining and informative presentation!

Two Sessions:

Tuesday, May 24th, 2011

Noon-1pm (Lunch will be provided)Or
4-5 pm (Appetizers and wine will be provided)

The offices of Hersman Serles Almond, PLLC520 Kirkland Way, Suite 300, Kirkland, WA 98033RSVP: (425) 822-6557 or info@cpahsa.com

Please RSVP as space is limited

MARK YOUR CALENDARS! UPCOMING HSA WINTER SEMINARS!

2010-12-03T12:01:00.000-08:00

Business Valuations: Exploring Some Common Myths

2010-11-11T09:44:00.000-08:00

The HIRE Act.

2010-07-20T11:00:00.000-07:00

Maximizing Performance while Mitigating Risk - Things you'll need to know about your 401(k) Plan

2010-06-03T15:44:00.001-07:00

Common Pitfalls to 401k plans

2010-02-09T16:13:00.000-08:00

Setting up a 401K plan is a great way to provide employee benefits and at the same time create some great tax deferral opportunities. However there are some things that need to be considering when starting up a plan. Many of these are items that your plan provider usually does not mention.

1. Fiduciary Responsibility: As a trustee of a 401K plan, you have a fiduciary obligation to the plan. Meaning that you are personally liable for this obligation. As the investment adviser to the plan you are have a responsibility to the participates, to providing the tools for investment advice, monitoring of the plan, replacement of money managers and selecting the funds the plan will have. This is a major responsibility that most 401K plan trustees have no idea about. Since the liability is a fiduciary responsibility a plan trustee is putting their own personal at risk by developing a 401K plan.

2. The Middle Men: It is important to know which organization are responsible for what with respect to the plan. Every plan usually has multiple companies involved. They are the plan administrator: the company that handles the record keeping of the plan. The custodian: the company that holds custody of the plan assets. The money managers: these are the organizations that are handling the actual investment funds. The plan advisors: This is organization that provides the guidance and investment knowledge for the participants and the trustees. It is important to know who is who and understand what each of the companies are actually doing for the plan and what their fees are. If you are paying fees to a plan administrator, but you do not know who they are or what they are doing – then you have an issue! You need to maximize the services that you receive since the plan is paying for them!

3. Tax Filings:Who is preparing the 5500? And do you know when it is due? This is a big concern as the IRS penalty for a late Form 5500 filing is $15,000. That is a big number. You need to know who is preparing the form (typically this is the plan administrator) and when they are mailing it to you for signature and filing. People would be shocked to learn about the number of companies that have a completed Form 5500 that is unsigned and not filed sitting in an old stack of mail because the plan trustee was not expecting the 5500 nor did they even know that they had a filing requirement. The IRS is making a point to crack down on non-filers and is being aggressive with issuing out penalties.

4. What are those 12b-1 fees? A 12b-1 fee is an extra fee charged by some mutual funds. The fees are used to cover promotion and marketing expenses related to the funds. The concept was that if the fund was advertised more and more people invested in the fund, the overall fees would drop and thus make it cheaper for everyone. However in practice, this theory has not been substantiated. Mainly these fee is used to reward intermediaries for selling a fund’s shares, thus they do nothing to enhance the performance of the fund. Some companies will credit this fee back to the plan in order to reduce the overall costs of the plan.

KNOW WHAT YOU DON'T KNOW!!

2010-01-21T14:33:00.000-08:00

starting out, business owners realize that they need to be very knowledgeable – experts even – in their own industries or professions. However what they may not be aware of is that, they also need to be lawyers, accountants, human resource managers, bankers, counselors, IT engineers, and on and on. The list of things that business owners need to know and understand in order to succeed is endless. The problem is that we are all only given 24 hours in the day! Not to mention that the business owner still has to actually run the business. This is where leveraging is important. By forming an advisory board, a business owner can fill the gaps by using the talents and resources of a carefully chosen group of professionals. They do not need to be an experts in all areas, but can rely upon others to help them deal with issues that fall outside of their knowledge base. It goes along with the old saying that two heads are better than one. The business owners now have several knowledgeable people working to address issues facing their company.

“It’s not about what you know, it’s about whom you know” is a common business phrase that we all have heard. The reality of the matter is that it is true! A business advisory board helps to provide a business with a huge resource pool. Often times the solution to a problem is more about knowing the right person or company to fix the problem than understanding all of the ins and outs of the problem. Business owners who use advisory boards will quickly find that often times their advisors have already dealt with the same issue and have a solution to the problem. Having a larger resource pool through an advisory board is an enormous asset to a business. That is a reason why large companies seek high powered individuals to be on their boards – not only do they want to use that persons vast knowledge, but they also want to benefit from the connections and resources that person brings to the table.

Along with a resource pool, advisory boards help to provide collaboration. Typically most decisions that impact a business affect multiple facets of a business. Business deacons are made all the time that have unexpected, inadvertent consequences. Sometimes it can take years for these issues to arise and when they do they can be large issues. The advisory board helps to eliminate these types of problems by bringing multiple viewpoints to the forefront. Now in one meeting a business owner can look at all sides of decisions. Nobody ever wants to look back and say, “I wish I would have run that by my CPA and not just my attorney” or visa-versa. Nothing is done in a vacuum and it is critical to make sure that decisions are made with full knowledge of its impact.

Business owners need to know what they know and know what they don’t know. It is important to not only understand their strengths, but to also recognize they cannot possibly be experts in everything. Therefore use of an advisory board is essential to meet the needs of a successful business and its owner.

Written By Senior Tax Manager, David Heyting

Small Steps to Big Rewards

2009-12-03T14:50:00.000-08:00

As we continue to weather the current economic crisis that has been affecting us all, it reminds us to take a deeper look at our businesses and how we conduct things on a day to day basis. Especially during these times, businesses need to be proactive with their management and are making the correct decisions to ride out the storm. We all require the correct tools to make those decisions.

Here are a few examples of small steps that businesses can take to generate big rewards in tough times.

Cash is King: Many of us have heard this statement before, however it rings very true in today’s market. Even in good times, profitable companies can go out of business due to a lack of cash. One solution is to develop a cash flow forecast. This can be an eye-opening experience that will help alert the business of pending concerns. In this type of economy, customers are slower to pay, which can place large demands on a company’s cash. Being able to forecast this and have strategic plans in place to navigate during these downturns is the key to survival. A great example is the contrast between two people. The first is the person who foresaw a pending cash crisis and arranged for a low interest loan to help them get through a difficult period. By planning ahead, they are able to have a low-cost, high success plan in place. On the flip side is the other person, who did not plan, is in a cash crunch and now finds themselves standing in line at the local check cashing store paying extremely high fees for an extremely short term solution. Remember that banks are great at helping out when times are good, but not as helpful when a business is struggling. Thus waiting until the business hits a difficult stretch to look for cash flow solutions from their bank typically leaves a company with little options. The cash planning needs to happen when things are going well so that a company is prepared when things become more difficult. Having good ongoing cash forecasts allows businesses to formulate the best strategies during good and difficult times.

Know what segments are profitable: It is surprising to hear how many businesses do not know which segments of their business are the most profitable. Businesses need to protect the higher margin components of their business and know where to focus their limited resources. As markets tighten, customers become much more discerning in their decisions and are taking the time to do additional research and legwork prior to choosing a vendor. This has led to businesses now being required to spend more time trying to land new customers. Knowing where to spend that extra time is now extremely critical. If a business has one line that nets a gross profit of 20% and another that nets 8% and each require the same amount of time, it is obvious which line they should work on – the more profitable one. If a company does not know which segment is more profitable, an informed decision is not possible. It might also be the time to look at shutting down those unprofitable segments that have been dragging down the overall numbers. If a business doesn’t analyze each department, how do they make the right choices?

Mange in real-time: Too often, businesses react to information two to three weeks after month-end. Reacting to changes in this business environment requires timely information for gross margin management, product line profitability analysis and administrative cost controls. With today’s computer systems, data can be collected and reported on a daily basis, allowing management the ability to react in real-time to deteriorating gross margins or unexpected market changes. Businesses need to know the condition of their financial statements at all times (ie - accrual vs. cash method vs. cash flow analysis).

By applying some of these strategies, business can ensure that they have the financial strength to navigate through the choppy waters of today’s business climate.

To switch or not to switch: Roth IRA conversions?

2009-11-23T13:33:00.000-08:00

One of the questions we have been asked a lot lately is what is the deal with Roth IRA’s and 2010?

The new 2010 details:

Beginning in 2010, two important changes are scheduled to take effect for converting an IRA (traditional SEP or SIMPLE) or other eligible qualified retirement plan to a Roth IRA. First, the income limit for Roth IRA conversions will no longer be in effect, allowing more people to take advantage of a Roth IRA. However, income limits for Roth IRA contributions will remain in effect. Second, none of the income from the Roth IRA conversion will be included on your 2010 personal income tax return (unless an election is made). Instead, half of the income from the conversion will be reported on your 2011 personal income tax return and the other half will be reported on your 2012 personal income tax return.

For those of you who don’t know….what is a Roth IRA?

Unlike traditional IRAs, contributions to a Roth IRA are never tax-deductible. However, the money in your Roth IRA, including earnings, can be withdrawn tax-free after the later of age 59 ½ or five years.

Should you convert from a Traditional IRA to a Roth IRA?

In order to answer that question we would need to know your total financial situation, for example:

Do you have enough money outside of your IRA or employer plan to pay the taxes?
Do you wish to eliminate having to take Required Minimum Distributions from these
funds during your lifetime?
Do you expect to be in a different tax bracket when you retire?
Will you be leaving the IRA to your heirs or a charity?

Please contact us so that we can help you in making the right decision.

2009-10-29T14:15:00.000-07:00

Thanks to all of those who attended our Open House last Tuesday Evening!
We had a successful event and hopefully everyone had as good of time as we all did here at Hersman Serles Almond!

Estate Planning Seminar

2009-10-19T08:28:00.000-07:00

click to enlarge

Open House...

2009-10-01T14:10:00.000-07:00

The Adventure Continues...

2009-10-01T13:38:00.000-07:00

Please Find our Ad in the Puget Sound Business Journal:

Hersman Serles Almond, PPLC

2009-08-05T17:42:00.000-07:00

Welcome to the Beacon!

Your source for tax information and the latest happenings of HSA.

We will be using the Beacon to post current information on the latest tax developments as well as providing information about upcoming events and seminars.

Stay tuned to keep informed!

FBAR LETTER

2009-08-05T17:30:00.000-07:00

Dear Valued Clients:

If you have a foreign bank account, you may have an IRS disclosure filing requirement. The IRS requires all taxpayers to file a separate form if they have bank accounts that have a balance of at least $10,000 at any point during the year. Although the form is strictly a disclosure form, it carries some large penalties for non-filing. The greater of $10,000 or 50% of the assets of the account. There are no taxes associated with filing this form.

Currently the IRS is offering relief in the form of a voluntary disclosure program. The program runs through September 23, 2009. Under the program taxpayers are being allowed to file prior year forms, without being subject to penalties. Therefore any taxpayer who may be impacted by the foreign bank account disclosure requirements should take a look at this issue immediately in order to take advantage of this grace period.

We are happy to review your situation to determine if you may have a filing requirement. We strongly encourage everyone who has any foreign bank accounts to contact us to get caught up with the filing requirements in order to avoid large penalties and IRS scrutiny in the future.

Please let us know if you have any questions or concerns about foreign bank accounts and the filing requirements.

Sincerely,

Your Hersman Serles Almond PLLC Team