News & Tech Tips

Two Clients Honored by Conway Center for Family Business

Many of our firm’s clients are family-owned businesses so we were delighted to learn that two clients were recently honored by the Conway Center for Family Business at its 15th annual awards program.

Joe Dager, chairman of the board of Velvet Ice Cream, Inc., received the organization’s Lifetime Achievement Award, which recognizes a family business leader who has made a significant contribution to his or her industry or the central Ohio business community.

Receiving the organization’s Communication Award was Laser Reproductions and the Bordner family. The award recognizes family businesses that have developed effective communication within their family business or with family members regarding the business.

Located in Utica, Ohio, Velvet Ice Cream has been a family-owned and operated business for nearly 100 years. Founded in 1914 by family patriarch Joseph Dager, Velvet has been run by four generations of the Dager family. Each year Velvet produces more than five million gallons of ice cream, which can be found in freezer cases throughout the Midwest. The historic Ye Olde’ Mill, which houses the company headquarters, an ice cream museum and restaurant, attracts more than 150,000 visitors a year.

Over the years Dager family members have worked together to contribute to the growth, success and sustainability of Velvet Ice Cream, and today is no different. While third-generation family member Joe serves as chairman, his three daughters, Luconda, André and Joanne run day-to-day operations with the goal of carrying on their grandfather’s dream. Their mother Tatla serves as board treasurer.

Laser Reproductions is a leading provider of rapid prototyping, manufacturing, product development and stereolithography services to industrial design firms, original equipment manufacturers, inventors and architects.

Paul “Jerry” Bordner, CEO and board chairman, fed his entrepreneurial spirit by starting his company, Bordner & Associates, as a plastics molding manufacturers sales agency in 1982. His technical creativity fostered many innovations and led to the inception of Laser Reproductions in 1994 to produce three-dimensional prototypes from computer designs. Jerry retired in 2007.

Sons Paul and Bret, president/CEO and vice president/COO, respectively, encouraged their father to break into the rapid prototyping industry and have been involved with the company for more than 25 years. They continue to stay true to their father’s founding principles and core values while merging innovation and technology.

In 2012 the company received the Conway Center’s Milestone Achievement Award for 30 Years in Business.

The Conway Center for Family Business provides educational, networking and professional development opportunities to many of the leading family businesses in central Ohio. Velvet Ice Cream has been a Conway Center member for more than 10 years, and Joe says that Velvet relies on the Center as a great resource for networking with other family business leaders who understand the unique challenges and issues facing family businesses.

Paul Border appreciates the access to expert resources that the Conway Center provides. Their advice has led to substantial savings for the company.

Year-end tax planning for your investments

Tax MoneyWhile tax consequences should never drive investment decisions, it’s critical that they be considered — especially this year: Higher-income taxpayers may face more taxes on their investment income in the form of the returning 39.6% top short-term capital gains rate and 20% top long-term capital gains rate and a new 3.8% net investment income tax (NIIT).

Holding on to an investment until you’ve owned it more than one year so the gains qualify for long-term treatment may help substantially cut tax on any gain. Here are some other tax-saving strategies:

  • Use unrealized losses to absorb gains.
  • Avoid wash sales.
  • See if a loved one qualifies for the 0% rate.

Many of the strategies that can help you save or defer income tax on your investments can also help you avoid or defer NIIT liability. And because the threshold for the NIIT is based on modified adjusted gross income (MAGI), strategies that reduce your MAGI — such as making retirement plan contributions — can also help you avoid or reduce NIIT liability.

Questions about year-end tax planning for your investments? Contact us today!

 

Image courtesy of freedigitalphotos.net

Employers to Pay More FUTA on 2013 Returns

Because Ohio has failed to repay outstanding federal loans related to the state’s unemployment insurance for the past four years, employers throughout the state will be unable to claim the maximum state unemployment tax credits on their 2013 federal unemployment tax (FUTA) return.

While the statutory tax rate for FUTA is 6.2 percent of the first $7,000 of employee’s wages, all states receive a credit from the federal government for maintaining state unemployment funds, reducing the standard FUTA rate to .6 percent. However, for states that have outstanding loans from the federal government to meet their state unemployment liabilities, this credit is reduced.

Employers in Ohio will now have an additional liability due by January 31, 2014, with their year-end Form 940 filing. Because this is the third year that Ohio has unpaid loans, the credit reduction has increased from .6 percent in 2012 (up from .3 percent in 2011) to .9 percent in 2013. The additional tax “penalty” translates to as much as $63 extra per employee.

The FUTA rate will continue to increase by .3 percent for each year that Ohio does not pay in full its outstanding loans.

Smart timing of business income and expenses can save tax — or at least defer it

Now LaterBy projecting your business’s income and expenses for 2013 and 2014, you can determine how to time them to save — or at least defer — tax. If you’ll be in the same or lower tax bracket in 2014, consider:

Deferring income to 2014. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services.

Accelerating deductible expenses into 2013. If you’re a cash-basis taxpayer, you may make a state estimated tax payment before Dec. 31, so you can deduct it this year rather than next. Both cash- and accrual-basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when the credit card bill is paid.

But if it looks like you’ll be in a higher tax bracket in 2014, accelerating income and deferring deductible expenses may save you more tax.

Accurately projecting income and expenses can be challenging. For help, please contact us. We can also provide additional ideas for timing business income and expenses to your  tax advantage.

Beware of the AMT when doing year-end tax planning

As year end approaches, you may be trying to accelerate deductible expenses into 2013 to reduce, or at least defer, tax. But you must beware of the alternative minimum tax (AMT) — a separate tax system that limits some deductions and doesn’t permit others, such as:

  • State and local income tax deductions,
  • Property tax deductions, and
  • Miscellaneous itemized deductions subject to the 2% of adjusted gross income floor, such as investment expenses and unreimbursed employee business expenses.

Accelerating these expenses could trigger the AMT, because you must pay the AMT if your AMT liability exceeds your regular tax liability.  The American Taxpayer Relief Act of 2012 (ATRA) set higher AMT exemptions permanently, indexing them — as well as the AMT brackets — for inflation going forward. This will provide some AMT relief, but higher-income taxpayers could still be vulnerable.

We’d be happy to help you determine whether accelerating deductible expenses will reduce your 2013 tax bill — or could trigger the AMT.