Tax-Free Employer-Provided Health Coverage

I think this is a good thing.

Tax-Free Employer-Provided Health Coverage Now Available for Children under Age 27


IR-2010-53, April 27, 2010

WASHINGTON — As a result of changes made by the recently enacted Affordable Care Act, health coverage provided for an employee's children under 27 years of age is now generally tax-free to the employee, effective March 30, 2010.

The Internal Revenue Service announced today that these changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit.

IRS Notice 2010-38 explains these changes and provides further guidance to employers, employees, health insurers and other interested taxpayers.

“These changes give employers a unique opportunity to offer a worthwhile benefit to their employees,” IRS Commissioner Doug Shulman said. “We want to make it as easy as possible for employers to quickly implement this change and extend health coverage on a tax-favored basis to older children of their employees.”

This expanded health care tax benefit applies to various workplace and retiree health plans. It also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return.

Employees who have children who will not have reached age 27 by the end of the year are eligible for the new tax benefit from March 30, 2010, forward, if the children are already covered under the employer’s plan or are added to the employer’s plan at any time. For this purpose, a child includes a son, daughter, stepchild, adopted child or eligible foster child. This new age 27 standard replaces the lower age limits that applied under prior tax law, as well as the requirement that a child generally qualify as a dependent for tax purposes.

The notice says that employers with cafeteria plans may permit employees to immediately make pre-tax salary reduction contributions to provide coverage for children under age 27, even if the cafeteria plan has not yet been amended to cover these individuals. Plan sponsors then have until the end of 2010 to amend their cafeteria plan language to incorporate this change.

In addition to changing the tax rules as described above, the Affordable Care Act also requires plans that provide dependent coverage of children to continue to make the coverage available for an adult child until the child turns age 26. The extended coverage must be provided not later than plan years beginning on or after Sept. 23, 2010. The favorable tax treatment described in the notice applies to that extended coverage.

Information on other health care provisions can be found on this website, IRS.gov.

If you are a small employer (business or tax exempt) that provides health insurance coverage to your employees there is a simple 3-step form to determine if you qualify for the new Heath Care Tax Credit for Small Business. It can be found on our website at Tax Talk.

Twitter for Small Businesses

I have been asking myself the question, "Do we want to jump into Twitter?" For me it is a question of time. Do I have the time? My answer is no. I don't think I could do it credit right now but I am definitely interested in what it has to offer and moving in that direction. This is an article that I came across that I  found informative. For those who are ready to jump on the twitter train this article will tell you how to get started.

Twitter for Small Businesses

2010 | Apr 21 

By Caitlin Childs

photo credit

At last week's Chirp Conference, the official Twitter developer conference, Twitter founder Biz Stone announced that Twitter has over 105 million registered users from around the world and they are adding more than 300,000 new users every day. With staggering numbers of people communicating through this new medium, it should beg the question: have you jumped on the Twitter train yet? And as a business owner, should you?
That's a question that really needs to be answered by your overall marketing strategy. You need to look at how your target market operates and make sure that Twitter is a viable and useful channel to reach them.
To read full article:  Twitter for Small Businesses

Cybercriminals Crack the Code to Your Business Accounts « Beancounter Ramblings

I came across this article while checking out some of the links on one of my favorite sites. I was surprised to find out that business bank accounts are not protected in the same way individual ones are. If you are a business owner and do online banking you should read this article.

Have you ever had your credit card company reverse a charge on your card because it was not you? Sounds reassuring, right? Well, if you are a business owner, those same protections do not extend to you. Cybercriminals know this! Business owners are a prime target of cybercriminals. The cybercriminals target your business using hundreds of thousands of computers in their control, often called bots, short for robots.
It is a business owner’s worst nightmare...
Cybercriminals Crack the Code to Your Business Accounts « Beancounter Ramblings

Getting Started

Courtesy of the New York Times

Small-Business Guide
How to Register a Start-Up
By KERMIT PATTISON
Published: March 31, 2010

Think registering your business sounds like a perfunctory and insignificant task? Think again.

The registration process forces you to confront a battery of questions that should be part of the bedrock of your business plan. Too often, new business owners regard registration as just another bureaucratic ticket to punch, and they fail to focus on important related steps like claiming a business name, choosing a structure and securing all of the requisite permits. This sort of rush-to-the-wedding approach has become more tempting now that online services allow businesses to do these tasks with little thought.

Unfortunately, these matters can rear up later as trademark disputes, tax problems, bureaucratic snags or costly name changes. “If you treat this as paperwork and box checking, you’re missing some of the issues that will be critical to your business,” said Therese Flaherty, director of the Wharton Small Business Development Center at the University of Pennsylvania. “You ought to be inquisitive about that. If you’re not, it will come back and bite you later.”

Here are some issues you should think through before you register.

THE NAME GAME There are many examples of companies that picked a name without doing the proper due diligence and then were forced to change. This can be costly: You may have to throw out product, packaging, signs, stationery, business cards and all of your branding and marketing efforts. Or you may become embroiled in costly litigation and have to pay damages.

“The first thing you should think about is the name,” said Esther Barron, clinical assistant professor at the Northwestern University School of Law and director of its Small Business Opportunities Center. “Are there going to be trademark issues? Is somebody going to sue you for using that name? Can you stop other people from using it?”

Even small local businesses can be tripped up if they do not get the name right at the outset. Debbi Ramsey, the owner of a spa in Philadelphia, has gone through six names in two years. One choice had been taken. She switched to Bodyworks but customers said it reminded them of an auto body shop. Next she tried One Touch Body and Spa, but she got dirty looks when she went to the city for a permit. “They’re looking at me over their glasses with this ‘touching body’ in there,” she said. “I tried to explain that I do therapeutic massage and guys were coming up to the counter and saying, ‘Yeah, right, where’s your place?’ ”

Eventually, Ms. Ramsey settled on a more wholesome name: Natural Wellness & Spa. But getting the name right cost her more than $1,000 in expenses plus innumerable annoyances. “I had no idea,” she said of the ordeal. “It just added to the drama of starting a business.”

Do an Internet search. Check the United States Patent and Trademark Office database to see if your name is already trademarked. Scan trade association directories in your industry. Check with your county clerk’s office, state department of revenue and secretary of state to see whether your name is similar to that of an existing business. Search your state’s database of corporations and limited liability companies.

If you plan to do business interstate or on the Internet, consult registries in other states. If you plan to have a Web site — and you do plan to have a Web site, don’t you? — check to see if the domain name or something close is available.

In simpler cases, a layman can do the tasks associated with researching a name. good business or university librarian can help immensely. When more is at risk, you may want to hire a business or intellectual property lawyer to assure that an expert has turned over all the right rocks.

Peri Pakroo, a small-business consultant in Albuquerque and author of “The Small Business Start-Up Kit” (Nolo, 2010), suggests that businesses ask themselves a simple question: How disastrous would a name change be? If a change would be catastrophic, you should err on the side of more thorough search and consider hiring a lawyer and trademark protection.

PICK YOUR STRUCTURE Another central question to confront is your type of business entity. The choice should be a fundamental part of any business plan, something you think through before you register.

You must declare your form of entity (sole proprietorship, partnership, corporation or limited liability company) when getting a federal tax identification number and some business licenses. Different types of entities have different regulatory and tax requirements. In general, corporations, limited liability companies and limited partnerships must file with their state. Businesses that do not form corporations may be deemed sole proprietorships or general partnerships by default and have unlimited liability.

OBTAIN A FEDERAL TAX ID Most businesses will need a federal employer identification number — even if they do not have employees. Sole proprietors and some single-person limited liability companies can use their Social Security numbers.

You will typically need an employer identification number for local tax registration forms, federal tax returns and local business licenses. Happily, obtaining an E.I.N. is fairly easy and can be done online or over the phone.

REGISTER A FICTITIOUS NAME Any company with a trade name that does not include the legal names of owners (for sole proprietorships and general partnerships) or the registered name of a corporation, limited liability company or limited partnership name must file for what is known as a fictitious business name (sometimes known as a trade name or DBA). Depending on the jurisdiction, this may be done at the state or county level.

Do not neglect this step. “That’s an important thing, because a lot of times you won’t be able to open a bank account without it,” Ms. Pakroo said.

Again, do your due diligence to avoid name disputes.

FILE REGISTRATION AND PERMITS Now comes the part you have been waiting for — registration. In most areas, businesses must register with the city or county tax collector. This step goes by several names including business-tax application, tax registration or business-license application. This basically allows local governments to keep track of businesses they intend to tax. You will have to pay a fee and, in some jurisdictions, you may have to pay estimated taxes.

In many states, businesses that sell tangible goods must also obtain a seller’s permit that allows them to collect sales tax from customers (service businesses may be exempt). “Do not blow the sales permit off,” said Rich Stim, a lawyer and co-author of “Wow, I’m in Business” (Nolo, 2008). “That would be a big mistake. You’re dealing with tax people, so it will get ugly quickly.”

Some businesses may face additional requirements like planning and zoning boards, regulatory agencies or professional licenses.

ASK QUESTIONS AND LEARN Unfortunately, these processes can be confusing. Ms. Flaherty of Wharton suggests that entrepreneurs view registration and all the related questions as part of the learning and networking of building a business. With that mind-set, a founder will add value to the venture.

“It’s tempting to just think this is a bunch of meaningless paperwork and bureaucracy,” she said. “But it’s a mistake to treat it like that. A little bit of inquisitiveness is important.”