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Expertorial

Obama Care for the Executive Office World

Published Wednesday, July 17th, 2013, by Roy F. Glassberg, CPA.

The Small Business Health Care Employer Mandate has been Delayed till January 1, 2015


What does the Employer Health Care Mandate mean for Executive Suite Owners?
For businesses with less than 30 full time employees or 50 full time EQUIVALENT employees (Full Time for this Mandate is defined as an employee that works equal to or greater than 30 hours per week) there are no potential penalties.

Multiple Location Owners be aware:
For purposes of sections 401, 408 (k), 408 (p), 410, 411, 415, and 416, under regulations prescribed by the Secretary, all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer. Make sure to confirm with your CPA, but it appears that if you have more than one location under common ownership, you will need to look at the number of employees in all locations, as if they were one company.


What is the affect in 2015 for your business(es) if you have more than 50 Full time equivalent employees?


  • 1. You will have to offer health insurance coverage for your employees, whereby the employee portion of the premium does not equal more than 9.5% of their wages, or you can be subject to a per employee penalty on all employees above 30. The coverage will need to cover the employee and their dependent children up to age 26, but NOT their spouse.
  • 2. You will pay a penalty if one or more of your full time employees receives a government subsidy; An employee can receive a government subsidy if you do not offer insurance or the insurance you provide costs the employee more than 9.5% of the employee’s wages.
  • 3. If you offer insurance, and you have an employee that receives a subsidy from the Health Insurance exchanges, you will pay a penalty equal to the LESSER of $2,000 for every full time employee above 30, or $3,000 per subsidized employee.
  • 4. If you do NOT offer insurance, you will pay a penalty of $2,000 per employee, though there is not any penalty on the first 30 full time employees.

It appears that most small Executive Center owners will not be subject to any of the potential penalties. But for owners with multiple centers, from 2015 and beyond, there will be interesting planning opportunities

- See more at: http://www.officingtoday.com/2013/07/obama-care-for-the-executive-office-world/#

Expertorial
Can Executive Office Centers Avoid Paying Sales Tax on Their Largest Purchases?

 
Published Friday, September 14th, 2012, by rglassberg.

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Other than a security deposit, the largest outlay most Executive Office Centers will have is for the purchase of furniture and telephone equipment. And, if you have to pay sales tax on these purchases, that can add an additional 1-10%, depending on what State/County, your Center is located.

The question came up recently, “Do I have to pay sales tax on equipment I rent out to my tenants?”

Most States in The USA have a resale certificate that a purchaser can give to the seller of equipment. By giving the resale certificate to the seller, this will allow you to avoid paying sales tax on the purchase…but you are not reselling the equipment, so is this accurate?

It has come to this CPAs attention that some States include in the definition of “Resale”, the rental of the furniture and equipment, and thus you may be able to avoid the sales tax on your largest purchases.

As with all tax questions, you should contact your CPA to see if this large savings is applicable in your State, or you can simply contact our office.

Have a great month.

Roy F. Glassberg, CPA


Business Entities: Under Which Type Should You Own Your Business Center? Is it too Late to Change it?

Published Wednesday, October 31st, 2012, by Roy Glassberg.

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By Roy F. Glassberg, CPA

One of the most frequent questions I get asked as a CPA for Executive Office Centers is “Under which type of entity should I form my Center?” Interestingly, most persons first ask their attorney. These days most attorneys suggest an LLC, which is not always the best answer, at least not from this CPA’s point of view.

My quick answer is that, unless you are non-US individual, you should NOT own your Center in either a Regular Corporation or as an “Unincorporated” entity. (Non US persons should contact your CPA for other alternatives.)

So the choice remains: should you form an LLC or a Sub Chapter S Corporation?

  • If your Center(s) are owned solely by one person, then my first thought is to use a Sub Chapter S Corporation. The reason for this is that it gets your business Income and Expenses off of your personal tax return. 

Fact: A business reported on a personal tax return has historically had the highest chance of being audited, and unless you have a fetish, and like audits, I would discourage you from being a Single Member LLC.
  • If you have more than one owner, then the reporting of the detail income and expense tax information is not on your personal tax return. There are, however, still some tax differences between the two: 
The main difference in taxation of a shareholder of a Sub Chapter S Corporation versus a “member” of an LLC is self employment tax:
  • If you are a member in an LLC you pay self employment tax on 100% of your allocated Net Income
  • If you are a shareholder in a Sub Chapter S Corporation you pay social security tax ONLY on your salary, NOT on your Net Income after your salary.

This difference in Self Employment Taxes can be significant every year! Here’s an example:

The above shows an annual savings of $8,030. Of course the salary sample shown above may be higher or lower for you, so review this with your CPA.

Now for the second question: “Is it too late to change my Entity?” The answer is: NO! As a matter of fact, by simply filing the two forms (Possibly three, depending on what State you are in) you can convert the taxation of your LLC to a Sub Chapter S Corporation.

As with all tax questions, you should contact your CPA to see if this large savings is applicable in your situation, or you can simply contact our office.

Have a great month.
Roy F. Glassberg, CPA
 

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