Thursday, February 26, 2015

Affordable Care Act – A Human Resources Consultant’s Perspective

Quite a few years ago, I was working with a few clients during their annual healthcare coverage negotiations.  These companies paid between 75% and 100% of the premium for single coverage and between 50% and 75% for family coverage for their employees.  They treated them well. 

When the all insurance companies came in with between 30% to 50% increases, it was heartbreaking to see those same business owners stare into space with sticker shock trying to figure out how the company and the employees would be able to afford to have medical insurance.  So, like every business that is questioning costs, my company did an analysis of the employees who signed up for medical coverage.  What we found was that a great majority of the employees under 40 years old opted out of the coverage.  The employees with young families and larger expenses said the cost of medical coverage was too high.  Even though the companies paid a great majority of the premiums, the deductibles and other out of pocket expenses caused employees in this age bracket to do without coverage.

We also found that people who had medical issues signed up for the insurance coverage. They had no choice but to pay a higher price.  Since the healthier employees with little or no claims opted out of the coverage, the resultant claims were higher than the premiums paid – year after year after year.  Insurance companies lost money and had to raise the premiums - causing more people to opt out of coverage - resulting in high loss ratios - resulting in higher premiums – I think you get the drift. 

The downward spiral was out of control. 

It suddenly occurred to me that small businesses – those with between 50 and 150 employees and the lifeblood of the United States economy, would soon be in jeopardy of becoming priced out of the healthcare marketplace.  This inability to provide medical insurance to their employees would place these business people at a disadvantage in recruiting and retaining employees. 
Fast forward to present day, and we now have the Patient Protection and Affordable Care Act (ACA).  It is imperative that small businesses understand the reporting requirements, method of determining the size of their workforce, and tax credits. Additionally, as the ACA is put in to place, the inevitable  changes will occur during implementation. This can be a bit burdensome and difficult to keep up with for smaller businesses. 

It is a concern for many industries. Including lawyers, accountants, benefits brokers, human resources professionals to stay on top of any changes or updates to the ACA.

As it stands now in 2015, only those companies with more than 100 full time equivalent employees have to comply by offering medical coverage to their employees.  Currently, a full time employee is one who works 30 hours or more per week on a regular basis. However, of significant note, is the US House of Representatives just passed a bill increasing this to 40 hours per week.  But keep in mind, we have to wait to see how the Senate votes and whether the President will sign the bill if is passed by the Senate. Employers with 50 or more employees will be required to offer coverage in 2016.  However, that may change. We will just have to wait and see. 

Employers under 50 employees will not have to offer coverage – ever – at least under current regulations.  Aside from the obvious recruitment and retention advantages of offering medical coverage to employees, there may be great tax advantages for a small employer to offer medical benefits to their employees.  On the other hand, it may be less expensive for employers to get coverage through the exchange.  Employees may qualify for tax credits if they obtain medical coverage through the exchange.  Business owners must conduct an analysis to determine their best option. 

At this point, we know what we have to do to comply today.  We don’t know what the future will bring. Stay tuned.

Bob McKenzie

President, McKenzieHR

With over 30 years of human resource management experience, Bob’s background includes a wide range of hands-on HR practices including training and development, Equal Employment Opportunity, Affirmative Action Plan Development, development of performance management and compensation systems, recruitment, employee relations, union avoidance and labor contract negotiations. His working experience encompasses a wide range of industries. 

Tuesday, February 24, 2015

FSBDC at UNF Client of the Month: Optimum Spring Solutions

When Optimum Spring Solutions was established in 2007, owners Andrea de Palma and Marco Fortini had years of experience in the business because of their involvement with de Palma’s family who had been manufacturing springs in Argentina since 1970. The company, located in Ponte Vedra, manufactures compression, extension, torsion springs, and spring conduits composed of specialty alloy wire suitable for operating under high temperatures and in corrosive environments.  Additionally, Optimum Spring Solutions delivers design assistance, rapid prototyping, sampling, and delivery planning to offer the highest quality and most precise product. 

In the early days of their business, Andrea and Marco imported their goods from Argentina, but shipping delays, rising cost of gas, and securing a large contract from the US Navy prompted them to begin manufacturing for export in St. Johns County in 2009. The business has grown steadily since then, with about 20% annual sales growth over the past three years.  Andrea and Marco own and operate the company, employing two additional personnel to support manufacturing and order fulfillment. 

After experiencing a few years of successful business, Andrea and Marco decided it was time to strategically grow their company.  They decided that exporting was the way to go. 
Optimum Spring Solutions had been exporting throughout Asia, The Americas, South Africa, New Zealand, Germany, and Turkey, but it was more reactive in nature and resulted in unpredictable sales volume. They wanted to identify stronger foreign markets that would generate large recurring orders of specialty alloys springs.  Additionally, they wanted to develop international expertise, whether in-house or through a team of outside experts, in order to ensure long-term success in international sales.  This includes solving existing export questions, creating support strategies for international clients and providing education to key staff members. 

They heard of the FSBDC at UNF and enrolled in the International Trade Certificate Program (ITCP), a six-week series designed for small and mid-size businesses interested in exporting goods or services. During this program, attendees learn the steps to become competent in all trade aspects including marketing, documentation, payment and legal matters.  Using the information they learned from the ITCP, the team from Optimum Spring Solutions began to focus on exporting their product.
In early 2014, Andrea and Marco returned to the FSBDC to meet with Katie Arroyo, International Trade Specialist.  They were interested in an Export Marketing Plan (EMP), a program provided by the Florida SBDC Network, in partnership with Enterprise Florida, Inc. and the U.S. Commercial Service.  Participants in the EMP program are qualified Florida manufacturers and service providers who are interested in overseas growth strategies. A customized EMP is written by the International Trade Specialist at the FSBDC.  A limited number of EMPs are available and are the result of a confidential, in-depth business assessment.

The EMP uncovered a potential buyer in Finland, and the partnership with Enterprise Florida is helping build the connection.  Another result of the EMP was the need for a revamped website to cater to an international audience and to generate qualified leads.   Andrea and Marco met with FBSDC Consultant Jared Bailey, who provided a personalized Search Engine Optimization Report to help the duo understand how to increase their company’s online presence. 

 In addition to the EMP, Marco and Andrea attended FSBDC workshops including: “Hire your first employee”,” Build your brand DIY Workshop”, and “Entrepreneur’s Roundtable Forum-LinkedIn:  How to generate leads”.  Each workshop offered information and resources to help them more effectively run their company.  

Monday, February 23, 2015

Affordable Care Act: What a CPA wants you to know

This year we add new Affordable Care Act (ACA) forms to the tax filing process. This change isn’t minor—for many, your 1040 will include the filing of Form 8962 or 8965—or both— and it isn’t voluntary. Under the ACA, your 2014 income tax return is the tool you’ll use to report your compliant health insurance coverage.

2014 Changes Affecting Individuals
  •          For individuals with qualified group insurance coverage at work, which includes all of your household members, check the box stating you’re in compliance.
  •          Checking the box also applies to those with any myriad government-issued plans, including Medicare, Medicaid, VA, TRICARE, etc.
  •          If you’re covered with a personal policy that carries “minimum essential coverage” (MEC), then you’re good as well.
  •          If you’re covered by a plan purchased through a state exchange you’re also OK…but there’s likely more work involved while preparing your return. If you qualified for a subsidy during your purchase, watch for an interesting reconciliation on your return to determine your settlement with the IRS (that is, whether you received too much or too little advanced financial help).
  •          If you or other members of your household received multiple sources of insurance—or if you lacked coverage for two or more months in the tax year—you must supply the IRS with the information needed to determine if you’re liable for a “shared responsibility payment,” otherwise known as a penalty.
  •         This penalty ranges from $95 per person to 1% of your gross income, whichever is greater. The penalty will rise in 2015 and beyond, so know your options and insured status to lessen your aggravation in complying with this new requirement. You may even qualify for one of the laundry list of other exceptions. For more information, a slightly more detailed explanation exists in “Profit Statements,” on our website: under Helpful Resources tab, labeled Profit Statements.
2014 Changes Affecting Business
  •          The business side of the ACA depends on the number of your full-time equivalent (FTE) employees. If you employ fewer than 50 FTE’s (loosely based on a 30-hour week definition), you aren’t required to offer a group plan compliant with the MEC definitions (or which qualifies as grandfathered).
  •          If you do offer a group plan, you must ensure it’s not discriminatory. Most group insurance providers will not write a discriminatory policy, but it can happen.
  •          Potential tax credits exist for small employer premiums, but we find few employers qualify.
  •          The requirements are much higher for employers with 50 or more FTE employees, including a likely penalty of up to $3,000 per non-covered employee. You may find that penalty less costly than the premiums for your staff, but premiums are deductible expenses and the “shared responsibility payment” is not.
You face a $100 penalty per day for a non-compliant plan, so this fine isn’t small potatoes. Further, medical reimbursement plans, even premium-only plans—other than those with a Health Savings Account or Flexible Spending Account— generally are classified as non-compliant plans, and also subject to that daily penalty.

Typical group insurance plans, however, are generally just fine. Companies with a single employee—not part of a group of closely held companies—shouldn’t experience a problem either, but the official guidance is still very weak.

Section 125 “Cafeteria” plans should be OK when the business includes premiums for add-on policies such as vision, dental, cancer, etc. IF an underlying group health plan exists. Please contact us for more information if you’re affected, because the penalties are too high to ignore.

We’re in this ACA Boat Together
These additional ACA forms and provisions will add to your return preparation a bit, require more work and perhaps incur slightly more cost to complete your return. But it’s one of the final Affordable Care Act paradigm shifts of the last nearly five years. We’re all in this together and your Patrick & Robinson CPAs crew is always here to help you stay on course.

About the Author: Mark Patrick has amassed thirty-five plus years of public accounting experience with four different CPA firms, with the last twenty-five of those years as either partner or stockholde, most recently Patrick and Robinson, CPAs.  Mr. Patrick received a Bachelor of Science Degree in Accounting and a Master of Science degree in Business Administration, and has taken further post graduate classes.  He is a member of the Florida Institute of Certified Public Accountants, American Institute of Certified Public Accountants, the National Society of Tax Professionals, Small Business Resource Network, and his firm is the only member in Jacksonville of CPAConnect, a national association of CPA firms. To learn more about Patrick and Robinson CPAs, go to

Thursday, February 19, 2015

Don’t Forget the Third Sector

Nonprofits, Non-government organizations, charitable organizations.  All of these are names for business organizations that serve a special public purpose and enjoy special treatment under the law.  Even though these corporations are called “non-profit” and cannot be designed primarily for profit-making, they should operate using sound business principles and ensure that their expenditures do not exceed their income.

I like to call these organizations “mission-based organizations.”  For profit corporations (the “private sector”) exist to make money for their owners.  If they don’t do this, they will not survive.  Mission-based organizations (MBO’s), however, exist to fulfill their mission.  If they do a good job of fulfilling their mission, they will often be entrusted with more resources from their stakeholders to continue fulfilling their mission.

MBO’s are required to have a board of directors.  While it is not illegal to compensate board members, most MBO boards are comprised of volunteers.  Because of this, the MBO board often struggles with vacant positions, board members with little time, and lack of missional focus.  An effective MBO board establishes and maintains the mission of the organization, selects the executive director, provides financial oversight, ensures adequate resources are available to accomplish the mission, maintains organizational accountability, participates in the planning process, recruits new board members, advocates for the organization in public, and assists the executive director in his work. 

Most MBO’s regularly review their mission and their effectiveness in accomplishing that mission on a regular basis.  Part of this process is planning how the organization will continue to accomplish this in the future.  This plan is called the strategic plan.  Your Small Business Development Center (SBDC) consultant can facilitate a strategic planning session for your MBO.
The executive director of the MBO is the face of the organization.  He is responsible for implementing and managing the strategic plan adopted by the board.  While the executive director is often tasked with raising funds for the organization, it is equally important that he be the “friendraiser” of the MBO.  The most important work of an executive director may be moving people along the “Loyalty Ladder” with respect to the MBO.  While many folks begin as suspects and prospects of an organization, the executive director can help them progress into friends, advocates and fans of the MBO.

This is important because MBO’s are dependent upon the great spirit of volunteerism in the citizens to accomplish their mission.   Americans volunteer almost 8 billion hours per year and give in excess of $335 billion dollars to MBO’s. 

In addition to time and treasure, MBO’s and their boards are also in need of people who can offer talent and “tribe” to the mission.  Some of the most productive time spent by the board and the executive director is time spent seeking and developing friends of the MBO.  Everyone has something to offer.  Is there an MBO that you can help with your time, talent, tribe or treasure?

Want to know more? Make an appointment at the FSBDC near you.  You can find locations here. Additionally, the FSBDC at UNF offers a blog specifically for nonprofits.  Check it out here.

Mark Yarick is a professionally, certified consultant with the Florida Small Business Development Center (SBDC) in North Central Florida and is hosted by the University of North Florida in the offices of the Suwannee County Chamber of Commerce.

Friday, February 13, 2015

Businesses We Love: Lion's Den Karate School

Jose Leno is a 25 year veteran of martial arts and has studied under several world renowned masters. He is proud to have served in the US Army and completed Airborne and Air Assault School while in the armed forces.  After the armed services, Jose had a number of jobs in restaurants but always thought something was missing in his life.  It was his passion to help children build self-confidence, create leaders and bring families closer together which led him to open the Lion’s Den Karate School in 2006.

Like any business, Lion’s Den Karate School has had its ups and downs over the years.  It was very common for people to see Jose’s car at the business at 9 a.m. knowing that he teaches until 9 p.m. Jose was always getting asked what he is doing all that time. Being the owner of a small business Jose has to teach, train and market as well as anything else that comes up in a normal business day.

In 2009, Jose decided to go to the FSBDC and talk with consultant Marge Cirillo on all aspects of business assistance. Over the years they have discussed and implemented marketing and social media ideas as well as budgeting and financial information to free up some of his time for his own family.  Jose has said that he has learned he is not alone in this venture and there is assistance for business owners in St Johns’ County through the SBDC.  The school has grown to 125 students and nine employees and now has an after school program run by Barbara Bennett who has a degree in Childhood Education. The program has a waiting list and after martial arts training Barbara and assistants work with students to complete homework and computer assignments.

When asked about starting his own school Jose stated, “You better love it because it is not always easy. But with the help of the SBDC, I am making it.”

Tuesday, February 10, 2015

Businesses We Love: Gavotte School of Music

Showing even more love to some SBDC clients....

It was February of 2014 when Kimberley Hunt came in to talk to SBDC consultant Kevin Monahan about opening a music school in Ponte Vedra. Initially, Kimberley sought help with finalizing her business plan so that she could submit it to a lender in hopes of receiving a business loan.

Financing a new business can be a challenge for most start ups, conventional funding seemed unlikely, but finishing a plan made sense on a lot of levels including providing a road map for creating the school, testing the viability of Kimberley’s ideas and a tool to use with potential investors while tightening up her required start up budget.

The plan came out very well and Kevin provided demographic research that reinforced her idea that the area could support a music school.  Kimberley was so determined to do this that she negotiated for space and did most of the leasehold improvements herself. She monitored her expenses very carefully throughout the opening phase.

Gavotte School of Music
Her biggest worry was getting enough students on board early to ensure sufficient cash flow. She went to local schools and networked within the community to create visibility and credibility for what was now the Gavotte School of Music. A gavotte is a French folk dance. 

Kevin submitted her business for consideration as a project for a UNF graduate class in social media, and a team of students worked with Kimberley at no cost to create a workable plan for Gavotte.

Kimberley had a successful grand opening and is currently ahead of projections for students of the school. She has a very talented cadre of independent musicians teaching at Gavotte which has enhanced the school’s reputation.

Her website is attractive and she has a number of great testimonials on her site.

Friday, February 06, 2015

Businesses We Love: Edible Arrangements

Another business we love gets especially busy at Valentines Day. Here is their story:

Trish Kapustka is a public relations and marketing professional.  In her company, TLK Communications, she uses her more than 25 years of experience in public relations, branding, advertising, marketing and media to help businesses build a brand and attract attention.  As the owner of three Edible Arrangements franchises, Trish applies this marketing expertise to promote her own businesses.

Edible Arrangements stores offer artistically designed fresh fruit bouquets and chocolate dipped fruit gifts to celebrate all of life’s special moments.  The Kapustka family, including Trish, her husband Steve and daughter Natalie Sims opened their first franchise location in Gainesville, FL in 2008.  They celebrated the grand opening of their second location on Duval Road in North Jacksonville in April 2014.  And in October 2014, they purchased an existing franchise located in Ocala. 

Trish knew about the FSBDC at UNF through her participation with the Florida Public Relations Association where she met Stephanie Royal, FSBDC at UNF Marketing Director.  In November 2013, she met with Cathy Hagan, Area Director and consultant at the SBDC.  Cathy helped Trish address some challenges she was having in finalizing the financing for the opening of the store in North Jacksonville.  In April 2014, soon after the grand opening, Cathy and Stephanie visited the store. 
The North Jacksonville location, next to Publix and across from First Coast High School, is two miles east of River City Marketplace. While this area is rapidly growing, residential and commercial activity is still in its infancy in comparison to other parts of Jacksonville.  This location, in contrast to Trish’s other two franchises which are located in well-established areas, has provided new marketing challenges.   Despite her marketing expertise, Trish felt it was important to get an outside perspective, so she again turned to Cathy at the FSBDC at UNF.  Together, they brainstormed on ways Trish could not only drive traffic to the store, but also reach out to more small businesses and corporate accounts.  They identified some areas that were not saturated by similar offerings and  Trish left with a new perspective on ways to expand her customer base.

“It’s often said that the cobbler’s child has no shoes,” said Trish.  “At first, it didn’t occur to me to seek advice on marketing from FSBDC given what I do for a living in my communications company.  But, as always Cathy was extremely helpful in getting me to step outside my current thinking.  She helped me consider new ways to get attention for the store and made some great suggestions on how to reach out to small business owners who send gifts to clients. Most importantly, Cathy holds me accountable for the goals I set, which is invaluable for any business owner.  I look forward to tapping into other resources at the SBDC in the future. It is a tremendous resource for any small business.”

We recently caught up with Trish to discuss how she gets ready for busy times like Valentines Day, here is what she had to say:

Wednesday, February 04, 2015

Businesses We Love: Boys & Girls Club of Citrus County

Just in time for Valentines Day, we thought we would highlight just a few of the businesses we love working with.  

“The Boys and Girls Club has achieved favorable results in a short time as a result of our relationship with SBDC.  We have a stronger board, stronger financials and enhanced clarity in our short and long term planning. Every small business can benefit from the wealth of knowledge available at SBDC and I encourage others to take advantage of SBDC’s great services.”

Boys and Girls Clubs of Citrus County is a nonprofit organization providing affordable before and after school enrichment programs for local children and youth ages 5-18 at three convenient locations in Citrus County. Cindi Fein assumed the role of Executive Director in February 2014, motivated by the opportunity to work in an organization that empowers local youth. Cindi is passionate about the mission of the clubs and the value they add to our community. Her passion is inspired by her personal experience as a divorced mother juggling a full-time job and full-time parenting of two children, in a community that did not have a Boys & Girls Club. 

Cindi was familiar with the Florida Small Business Development Center (SBDC) and met with Mike Orlito soon after assuming her new role. Mike recommended as a first step that SBDC provide financial analysis using University based research and analysis tools. Mike reached out to SBDC colleague Peter Rivera who prepared the reports and presented results of the financial analysis. Regarding this process, Cindi says “Peter Rivera’s financial analysis presentation provided us a clear understanding of our financial strengths, weaknesses and where we needed to make changes. Our financial health is already stronger as a result of this process.”

Cindi Fein, Executive Director
and Chad Halleen, President/CVO

Boys & Girl’s Club’s staff of professionals and volunteers provide members with concrete character building and educational programs in health and life skills, education and career skills, the arts, fitness and recreation, and character and leadership development. One of the educational programs, “Project Learn” has recently resulted in a 75% or higher improvement in reading and math scores for our members.

Boys & Girls Clubs of Citrus County have been delivering, evaluating and enhancing meaningful programs for more than 20 years. The programs are designed to enhance educational experience and results through homework help and tutoring, create a sense of belonging to where every member feels like they “fit in,” engage member’s feelings of usefulness through opportunities to help others, empower members to be heard and influence decisions, and build a sense of competence by instilling the feeling that they have something of value for others.

It’s been a busy year for Cindi and the board, staff and volunteers, and moving forward Cindi plans to pursue other SBDC recommendations in the areas of board development, business planning and strategic planning. Cindi says “SBDC has more to offer us and we plan to exhaust all the possibilities of how SBDC services can guide us toward a stronger future.”

Monday, February 02, 2015

Export Compliance Session at International Trade Certificate Program

Taking your business global is largely about risk mitigation.  Exporting from the U.S. is a right, not a privilege, with every transaction and product being accountable to at least eight different federal government agencies or regulations.  In some cases, just one export violation can yield fines of over $100,000, and can even include civil or criminal charges.   If your business is new to exporting, how can you ensure that you are following all the rules? 

The export compliance session of the International Trade Certificate Program will give attendees an overview of their responsibilities and how to develop an appropriate export compliance management program.  See speaker bio below.  

James M. Anzalone – Global Trade Compliance Professional
James Anzalone is the president of Compliance Assurance LLC, a firm specializing in global trade compliance solutions. Mr. Anzalone has consulted firms of all sizes throughout the United States on the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), Office of Foreign Assets Control (OFAC), Foreign Trade Regulations (FTR) and Customs & Border Protection (CBP) regulations.

For over 18 years, James has developed comprehensive compliance programs including commodity classification, license determination, ‘know your customer’ checks, development of corporate policies and procedures and employee training programs. As an independent consultant, he has assisted companies with their Directorate of Defense Trade Controls (DDTC) registration, technology control plans, brokering activities, commodity jurisdiction, encryption control reviews, government mandated and internal audits and training, DDTC, BIS and OFAC licenses and a myriad of other import and export compliance challenges.