Blogsight: Insight, Oversight and Foresight for Your Mid-Sized Business

Growth Capital, Exit Alternatives Among Top Concerns at M&A Insight 2012

If you missed our fourth annual M&A Insight panel discussion on May 3, be sure to check out our press release highlighting results of our attendee poll, the current environment for business sellers, tax implications and tips for determining when to sell.

Exit alternatives ranked behind growth capital as a top concern among our nearly 100 attendees, a result being driven largely by impending tax changes, said Tim Moore, managing partner and leader of the Houston investment banking arm of Doeren Mayhew firm TR Moore & Company.

“Capital gains tax rates set to increase from 15 percent to 20 percent at the end of 2012, paired with the potential Medicare tax of 3.8 percent, could mean nearly $90,000 in additional tax on every $1 million in proceeds,” Moore said.

Read the full release.

New YouTube Screencast: Devising a Growth Plan That Boosts Value & Creates Buy-In

TR Moore & Company has launched a new YouTube channel! Check out our first video − a screencast of Consulting Partner Jennifer Mailhes‘ discussion on strategic growth planning from our March 6 business growth boot camp. In this 15-minute screencast, Mailhes shares real business owner stories, processes and tools for developing a growth plan, plus numbers to watch as you grow, pitfalls to avoid and more.

Stay tuned for more boot camp clips on YouTube, and visit our Events & Seminars page for more information on the remaining sessions in our 2012 Boost Your Business Value Boot Camp series.

Business Profitability Boot Camp Results in $4,000 UH Scholarship

Business owners explored profitability potential and budding entrepreneurs benefited on May 10 at our second Boost Your Business Value Boot Camp! Designed to help business owners tackle their most pressing challenges, the series is completely underwritten by sponsor dollars, which also fund scholarships for students at the University of Houston’s Wolff Center for Entrepreneurship. A big thanks to our May 10 sponsors InsperityBank of Texas and Iscential, who helped make $4,000 in scholarships possible!

Interesting in attending or sponsoring our next session? Read more about Boost Your Business Value Boot Camp: Building a Sellable Business on our website, and contact Geoff Gallo or Melinda Genitempo for more details.

 

Pictured from left: Bank of Texas' James Ogonosky and Christopher Gerow; speakers Jennifer Mailhes of TR Moore & Company and CJ Coolidge of Insperity; and Iscential's Warren Barhorst

Hurricane Season 2012: Business Disaster Prep Check

by Jennifer Mailhes, CPA, Consulting Partner, TR Moore & Company

With hurricane season officially a month away, have you reviewed the disaster recovery plan for your business? What’s that … you don’t even have a disaster plan in place? If you think you don’t need to plan for a disaster, welcome to the comfortable majority. In Symantec’s annual survey of small to mid-sized businesses, half of respondents did not have a plan in place to ensure business continuity following a disaster.

Have you thought about how the following forms of disaster might impact your business?

  • A fire, flood, hurricane, tornado or ice storm that damages, destroys or isolates your business’ premises.
  • A power surge that fries your computer systems and the intellectual property it contains.
  • A virulent computer virus.
  • A power failure that leaves a warehouse full of perishable goods susceptible to decay.
  • A business disaster, taking the form of a sudden bankruptcy of a major client or supplier, or a sudden and serious illness to a key team member who has irreplaceable knowledge.
  • The direct or indirect effects of a terrorist attack.

All together, the odds of being affected by a disaster at some time in your business life are not insignificant. Neither are the costs – the 2011 study cited the average cost of downtime during a disaster at $12,500 per day.

Analyzing the Business as a First Step

When considering financial matters, your accounting firm can help you analyze your business to determine insurance needs as well as how much to spend on disaster recovery.

Insurance can cover not only your loss of property, but also the costs related to income interruption. This will depend on, for example, the financial consequences of catastrophic failure in various parts of your operation.

With your CPA, work out the amount of time you can afford to be shut down, which will give you a better idea of how to invest in procedures to get your business up and running again.

Planning to Ensure Your Business Can Navigate a Crisis

How quickly your company can get back to business after a disaster depends on emergency planning done today. Ready.gov offers the following considerations when devising your plan:

Which staff, materials, procedures and equipment are absolutely necessary to keep the business operating?

  • Identify operations critical to survival and recovery.
  • Include emergency payroll, expedited financial decision-making, and accounting systems to track and document costs in the event of a disaster.
  • Establish procedures for succession of management. Include at least one person who is not at the company headquarters, if applicable

Which suppliers, shippers, resources and other businesses must you interact with on a daily basis to run the business?

  • Develop professional relationships with more than one company to use in case your primary contractor cannot service your needs. A disaster that shuts down a key supplier can be devastating to your business.
  • Create a contact list for existing critical business contractors and others you plan to use in an emergency. Keep this list with other important documents on file, in your emergency supply kit and at an off-site location.

What will you do if your building, plant or store is not accessible?

  • Consider if you can run the business from a different location or from your home.
  • Develop relationships with other companies to use their facilities in case a disaster makes your location unusable.

How will you ensure payroll continuity?

What will your crisis management procedures be, and who will carry them out?

  • Make sure those involved know what they are supposed to do.
  • Train others in case you need back-up help.

With whom do you need to share your plan?

  • Ensure the plan is communicated to all staff, with emphasis on those with responsibilities within the plan.
  • Meet with other businesses in your building or industrial complex.
  • Talk with first responders, emergency managers, community organizations and utility providers.
  • Plan with your suppliers, shippers and others you regularly do business with.
  • Share your plans and encourage other businesses to set in motion their own continuity planning and offer to help others.

As the Consulting Partner at Doeren Mayhew firm TR Moore & Company, Jennifer Mailhes  is a Houston CPA who guides business owners and their management teams in areas such as strategic planning, CFO services and accounting analysis, and business advisory services. For more information, contact us.

Focus on Foreign Accounts: FBARs Due June 30

According to the IRS, you may be required to file an FBAR on June 30, 3012, if you own or have authority over a foreign financial account, including a bank account, a unit trust, mutual funds or other types of financial accounts. Even if you’re not a signer on the account, your status as an officer or manager for the entity that controls it could make you responsible for disclosure.

Mutual funds, the IRS states, include partnership interests in hedge funds, private equity funds and other investments that are organized under foreign laws. These entities may be owned directly or indirectly through a U.S. fund that has invested in a foreign fund.

Why is it necessary?

Anyone who is a citizen of or resident in the United States, or has a business there, is generally allowed to own a foreign account. But the FBAR is a tool to help the federal government identify those who may be using foreign financial accounts to circumvent various U.S. laws.

Investigators use FBARs to help identify, or trace, funds used for illicit purposes — or to identify unreported income kept or generated abroad. Here’s an overview of what the form requires.

Who must file — and when?

Specifically, you’re required to file the report if:

  1. You or your business has either a financial interest in or signature authority (or something comparable) over one or more accounts in a foreign country, and
  2. The aggregate value of those accounts exceeds $10,000 at any time during the calendar year.

The law applies to most areas outside the United States, Puerto Rico and U.S. territories and possessions, such as the U.S. Virgin Islands and Guam.

FBAR reports are normally due annually on June 30 and cover the previous calendar year. So, for example, a report for the period of Jan. 1, 2011, to Dec. 31, 2011, is due on June 30, 2012.

The IRS is responsible for investigating possible civil violations, assessing and collecting civil penalties and issuing administrative rulings. The Department of Justice is responsible for criminal violations.

Penalties vary by severity, but can climb to $100,000 for willful civil infractions ($10,000 for nonwillful infractions) and to $500,000 and 10 years in prison for criminal violations.

Where can I find out more?

Visit the IRS online, and contact a Houston CPA firm such as TR Moore & Company for help assessing your particular situation.

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