Rising Health Care Costs and What to do About It

It’s not great news for business owners or households around healthcare costs.

A recent report by Kaiser/HRET Employer Health Benefits forecasts that the average family health care plan will cost $18,142, up 3.4% from 2015.

A recent ccn.com story went on to share that overall workers are paying more for healthcare deductibles with single coverage health insurance plan carriers paying $1000 or more in deductibles costs. This represents a 31% increase from 2011.

The big news in 2016 was that Americans are paying more for insurance, pharmaceuticals and doctor appointments. The increased costs late in 2016 represented the biggest increase since 1984.

Until lawmakers and the health industry can work together to create a plan to slow down increasing costs and charges, businesses and individuals will need to plan the best they can for healthcare.

Now is a good time to plan for the year ahead. Our office is happy to meet and discuss strategies for your household or your business. Give us a call.

Fall Planning Could Mean Saving Money Later

We all have heard of spring cleaning but I want to encourage you to take a little time this fall to do some fall planning that could make a big difference for your 2016 taxes. A quick check in with your CPA can make sure you are taking advantage of all opportunities to minimize your tax bill. You may want to fine tune charitable contribution planning, retirement investment or other business investments that could positively impact your 2016 tax return AND your company or organization’s bottom line this year. Our team is constantly reviewing tax code and opportunities to make sure you can take maximum allowable expenses. Is some instances there are additional write offs available after you hit your maximum. There are also opportunities around health benefits and office equipment. Taking time now to review your expenses to date around business travel, Bank, ATM, credit card fees, professional development, books, workshops, conferences, association memberships will save time and hopefully money during tax season.

Our office is always ready to meet with you and review your current financials to help forecast for next year’s tax return, it’s one of the benefits of having a CPA as your business partner.

Business Manager or CPA? You be the Judge

As a real estate agent you are busy wearing a multitude of hats, from home and neighborhood expert, to chief marketing officer, market analyst and therapist. You cannot expect to know the ins and outs of tax codes and deductions and other tax related obligations. As an entrepreneur you want to be able to manage your finances efficiently, retaining as much profit as possible. You may not have thought of a CPA as one of your best financial partners but a CPA can offer insight to your business structure, help provide protection from financial and tax obligations. In some cases CPA’s can even help you manage your own real estate investments.

Investing in a CPA is one of the best business decisions you can make. It will relieve you of unnecessary stress and worry. They can partner with you as a business manager helping you manage payroll and your tax obligations.

You should spend some time to interview CPA’s to find the best match for you and your business. Be ready with a handful of questions:

  • What type of accounting do you specialize in? Who are some of your current clients? How long have your clients stayed with you?
  • Do you offer tax preparation?
  • How often are you available to meet or talk with me? How can I best reach you?
  • Can you assist in various phases of real estate investment, acquisition or sale of property?
  • What advice do you have for my business bookkeeping?
  • What is your fee structure?

2016 Finance Planning – 3 Challenges to Local Fire and Water Districts

Just because you cannot control Mother Nature or bureaucratic red tape doesn’t mean you cannot control your fiscal planning. A CPA just might be the secret to helping you manage through the current conditions in the state of California.

Challenge #1 The Drought

It goes without saying, California needs water! Thankfully this year we are seeing storm systems pass through but we are a long way from being out of a drought. Through my audit work this year, I saw the tough realities of the drought, cost of water, reduced revenues, crops that cannot be planted because there is not enough water. These are all actual factors that must be worked through in order to successfully financially manage local services. Our firm works closely with its small district clients all year long. We work together to forecast best and worst case, looking at all the financial angles for the district to create a workable and successful plan.

Challenge #2 Benefits and Pensions

In 1999 Governor Davis was informed by CalPERS that increases in income would not pose any problems for the long term when it came to retirement, pensions and benefits. Well, looking in the rear view mirror, we know that revenue has not kept up and now tough discussions have become the norm across the state.

Many special districts have had to take on long term debt and issue bonds to cover current benefits. Adding pressure to the situation is the strength of the labor unions and their need to continue benefits at the same level for their members. All of this ends up in a very serious discussion about government being able to fund nothing other than benefits and no longer be able to fund basic public infrastructure like parks and potholes.

The media often exacerbates the situation by accusing government of being secret organizations, behaving in a non-transparent manner and behaving in an unregulated manner.

And sometimes it’s true. Some cities are paying outrageous salaries but what is more often the case is that for every city out of bounds on salary, there is a dozen small communities trying to make things work with volunteer elected officials working for the public good with no health or pension benefits. Adding complexity to the matter is sometimes state oversight is involved adding costs to the bottom line.

Challenge #3 LAFCo (Local Agency Formation Commission)

The broad goals of the Commission’s directive in 1963 to ensure the orderly formation of local governmental agencies and consolidate services was a great goal at the time but the recent work to further consolidate has the potential to ruin a true democratic process making it difficult for people to get involved through service by getting involved in boards and commissions. There are looming discussions around fire departments and other first responder services like ambulances. The consolidations and planning obviously impact the finances of special districts.

There is HOPE!

A beginning point to solve all of these challenges is financial reporting. Financial reporting should not be an annual event, it should occur all year long. There should be quarterly reviews. Boards should have regular access to accurate financial statements that include a discussion about the current rates and service costs, cash on hand in the bank, pending costs of benefits and infrastructure upgrades. Many of our counties have overwhelming challenges in front of them but the first step to solving them is by confronting the true financial picture. It boils down to the simple principles of planning and not being afraid to tackle the issues.

CPA’s are a great resource to give insight to the true financial picture and offer ideas and fresh perspectives.