Currently, if your eligible medical expenses exceed 7.5% of your adjusted gross income (AGI), you can deduct the excess amount. But in 2013, the 2010 health care act increases this “floor” to 10% for taxpayers under age 65.

Eligible expenses can include health insurance premiums, medical and dental services and prescription drugs. Expenses that are reimbursed (or reimbursable) by insurance or paid through a tax-advantaged health care account (such as a Flexible Spending Account or a Health Savings Account) aren’t eligible.

To potentially be able to deduct more health care costs, consider “bunching” nonurgent medical procedures and other controllable expenses into alternating years. For example, if your year-to-date medical expenses already exceed 7.5% of your projected 2012 AGI and you’re anticipating elective surgery or major dental work in early 2013, you could instead schedule it for this year. Or you could stock up on prescription meds (to the extent allowed) and buy new contact lenses or glasses before year end.

Bunching expenses into 2012 may be especially beneficial because of the scheduled floor increase. But keep in mind that, for alternative minimum tax purposes, the 10% floor already applies. Also, if tax rates go up in 2013 as scheduled, your deductions might be more powerful then. Finally, be aware that the floor increase could be repealed by Congress.

The partners of Whalen & Company – Laura Wojciechowski (WPO Chapter I) and Lisa Shuneson (WPO Chapter II) – are looking forward to attending this year’s Women Empowering Women Luncheon on September 21^st at the Hilton Hotel in Easton.  The event will be hosted by the Women Presidents’ Organization (WPO) and 450-500 women entrepreneurs are expected to attend.

This year’s luncheon will be honoring professor Linda Meeks as the empowered woman.  Linda actively supports other women business owners and entrepreneurship.  The charities being honored will be the Children’s Hunger Alliance and Simple Suppers.

The WPO is a non-profit membership organization for women presidents of multi-million dollar companies.  Through global, confidential and collaborative peer learning groups, the WPO facilitates business growth, enhances competitiveness, and promotes economic security. It is the ultimate destination for successful women entrepreneurs.

Now more than ever it is important for owner/operators to have effective cost controls in place at their restaurants. Food costs have been steadily rising, and short-term beef costs are expected to remain high due to the limited supply and availability of beef. In addition, labor costs are also rising. In some states, including Ohio, minimum wage increases went into effect at the start of 2012.

Food and labor costs are obviously the two largest controllable expenses that appear on your income statement. It is essential to implement the proper cost controls in conjunction with possible menu price increases to weather the storm in 2012. For every 1 percent that costs increase as a percentage of sales, the typical restaurant will lose $25,000 in cash flow. The message here is to be proactive in controlling rising food and labor costs before these expenses present a cash-flow problem for your organization.

The good news is that the “Food Away From Home” Consumer Price Index (CPI) shows an increase of only 3.1 percent for the 12 months ending February 2012.  By comparison, the “Food At Home” CPI shows an increase of 4.5 percent for the same period. The higher percentage increase in home food costs should help to continue to drive restaurant sales. This enthusiasm may be tempered, however, by a 12.6 percent increase in gasoline prices for the same period, which could negatively impact restaurant sales.

Restaurant groups provide numerous tools to help owner/operators control food and labor costs. Your CPA firm may also be of assistance. For more information on finding ways to control these costs, contact Bruce Berry.