Category: Blog

8 Ways to Negotiate Medical Bills

Negotiate Medical BillsAccording to statistics from the Society for Human Resource Management (SHRM), employer-budgeted healthcare costs increased to an average of $12,792 per employee in 2021. Employees can help keep employer healthcare costs – and their premiums – down by planning ahead and negotiating fees for service.

Call Before Your Treatment

When you’re busy, sending an email might expedite your request. However, it’s best to stop, take a little time to pick up the phone and talk to a real person. Ask for the hospital’s billing department and get an estimate of how much your procedure might cost. (Write down the name of the person you speak with, plus the day and time.) Send this to your insurance provider to find out what your plan will cover. Then contact the hospital and let them know how much you can afford. When you’re recovering, you’ll have less worry about how to pay.

Offer to Pay in Full Up-Front

If you have the resources to do this, go for it. Consumer Reports estimate that you could save 20 percent off your bill. Ask to speak to someone who has the authority to grant you this deal and again, jot down the details of your call. However, if the treatment is more than you can afford, you might consider medical debt consolidation.

Shop Around for Less Expensive Providers

Insurance companies usually offer cost estimates for treatments. Some companies like UnitedHealthcare and Blue Cross Blue Shield even have cost comparison tools. If your insurance provider doesn’t offer this, try third-party sites like Healthcare Bluebook and GoodRx to shop and compare. Remember that though important, cost should never be the top consideration when deciding on a facility for your healthcare.

Understand What Your Insurance Covers

And what it doesn’t. Ask for a Summary of Benefits and Coverage from your provider to find out exactly what’s what when it comes to coinsurance, deductibles and more. Being prepared is always a good idea.

Ask for an Itemized Bill

After your treatment, you’ll receive an Explanation of Benefits (EOB) from your insurance company. This isn’t a bill and might be updated while your claim is being processed. But the first thing to do when you receive these are to check them for errors – humans make them!

Make Sure Services are In-Network

Before your procedure, check to see that all your labs, anesthesiologists and other services are in-network. Some states prohibit out-of-network providers from charging out-of-network prices when performing care at an in-network setting. Learn about your state’s level of protection at The Commonwealth Fund.

Seek Assistance Programs

Ask your healthcare provider – the hospital or lab’s billing department – about financial assistance and/or charity programs. Thankfully, hospitals have a standard procedure for helping those who are unable to pay their bills. Some hospitals even have discounts for people who don’t have access to medical insurance. You might also ask your provider about medical debt forgiveness. If this is an option, you’ll be asked to share tax returns and other relevant documents. Other resources to help you navigate your healthcare expenses are the Patient Advocate Foundation or the PAN Foundation.

Get on a Payment Plan

Generally, healthcare providers offer no-interest payments and are available to anyone who needs it. Better still, you won’t have to meet eligibility requirements like you would with payment assistance programs. But when setting something like this up, make sure you agree to a plan that you can stick with. Otherwise, your bill might be turned over to a collection agency.

As you know, your health is your most precious asset. Make sure you’re fiscally prepared to care for it.

Sources

https://www.lendingtree.com/personal/how-to-negotiate-medical-bills/

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/health-plan-cost-increases-return-to-pre-pandemic-levels.aspx#:~:text=Budgeted%20health%20care%20costs%20increased,of%205.2%20percent%20from%202020.

Medical Debt Consolidation: Using a Loan to Pay Medical Bills (lendingtree.com)

State Balance-Billing Protections | Commonwealth Fund

2022 U.S. Tax Legislation Forecast

2022 U.S. Tax Legislation ForecastNo one knows for sure what 2022 will bring in the form of tax legislation, but there is certain to be some action. Top tax analysts think there are several topics that are likely to come up in 2022. Most predict that a lot of potential changes that were discussed but never made much traction in 2021 will be revisited.

Rolling Back Corporate Tax Rates

Back in 2017, then-President Trump’s Tax Cuts and Jobs Acts (TCJA) reduced corporate tax rates. While a bid raise them again failed in 2021, many believe there is a good chance that Democrats will try again in 2022. Most believe a 2022 proposal would try to raise the current 21 percent corporate tax bracket up to between 25 percent and 28 percent, but opinions vary. While most analysts see a push to raise rates, no one predicts a push to go back to pre-2017 rates, which were as high as 35 percent. Republican opposition to any such measure is expected to be strong.

The Billionaire Tax

New spending proposals in 2021 saw the backing of a billionaire tax as a method to help finance them. While no such tax made its way into law during 2021, many analysts believe that a billionaire tax is likely to resurface once again in 2022.

The name is a bit of a misnomer, as the most recent proposals applied to more than just billionaires; they were set to impact taxpayers with more than $1 billion in assets as well as those with over $100 million of income for three years in a row. Under these thresholds, the tax would only impact approximately 700 to 800 people in the United States.

Proposals from 2021 included a controversial provision that is a major deviation from current tax law: taxing unrealized gains. Currently, with few exceptions for professional traders who can elect to mark-to-market for example, tradable assets such as stocks are taxed only on realized gains once the asset is sold. Iterations of the billionaire tax proposed to change this and require such assets to be valued annually and taxed according to the unrealized portion as well. The rationale is that the ultra-wealthy can take loans against their assets and avoid ever selling or realizing the gains – and therefore avoid taxes as well.

Finally, it’s important to note that this particular form of billionaire tax is not the same as a wealth tax. This tax focuses on unrealized gains only and not the taxpayer’s total wealth.

A True Wealth Tax

Another tax law that made its way into the national spotlight during 2021 and is likely to get another try in 2022 is some form of a wealth tax.

Typically, a wealth tax is a flat tax percentage placed on a taxpayer’s total net worth annually; say one percent, for example. Unlike essentially all forms of taxation in the United States, a wealth tax would see someone owing money year-after-year even if they never made any more money.

One of the biggest non-political problems with a wealth tax is logistics. Taxing net worth means that every asset a taxpayer owns needs to be valued annually, including real estate, cash, investments, business ownership and other assets. This creates a huge administrative burden and leaves a lot of room for interpretation between valuation professionals as well.

No analyst foresees any wealth tax proposals applying broadly. Instead, most see it being targeted at the ultra-wealthy – those with a net worth over $50 million. This makes it politically palatable as the vast majority of taxpayers are exempt; however, there are many who oppose any such tax either due to ideological reasons or because they feel it represents a slippery slope to eventually capture more and more taxpayers with lower net worth thresholds.

Tougher Regulations on Cryptocurrency

One of the most unclear areas for potential 2022 tax law proposals involve cryptocurrencies. The reality is that most of Congress simply doesn’t understand the market and the IRS itself is mired in technical rules on how to treat various sectors of the emerging financial arena.

While some analysts predict there will be proposals to differentiate the tax treatment from more traditional assets, others believe the moves will be largely regulatory and focus on compliance and minimizing tax avoidance within the asset class.

Conclusion

Many of the above tax provisions are highly partisan in nature. As a result, it is likely that congressional gridlock will ensue and little if anything will get passed through legislative channels. This leaves many analysts predicting that tax changes, to the extent possible under our system, may see more executive actions than usual. Regardless, with the current economic uncertainty, high inflation and geopolitical instability, the topics above may or may not come up this year. One thing is certain however, taxes won’t be going away or getting any simpler.

Importance of Cloud Accounting Certification

Cloud Accounting CertificationCertifications are not a new thing in the accounting industry. However, with new technology trends, accounting departments are faced with the challenge of taking courses in technology in order to carry out their tasks. Many businesses are ditching desktop-based accounting software and turning to cloud-based software. This requires that the users be well-versed with necessary skills to use the cloud accounting solution.

What is Cloud Accounting?

Among the cloud-based solutions that businesses have adapted is cloud accounting. Cloud accounting has all the functionalities of desktop accounting. However, in cloud accounting all processes are carried out online where the data is stored on cloud servers.

Cloud accounting offers businesses various benefits, such as the ability to access the system anytime and from anywhere as long as there is internet access. It also offers access to real-time information, online payments, latest software versions, easier compliance and scalability, among others. At the same time, cloud accounting solutions also allow remote working.

As businesses strive to gain from the benefits offered by cloud accounting solutions, a new challenge arises: lack of skilled employees. Hence the need to upskill.

Why it is Important to Have Cloud Accounting Certification

As cloud accounting becomes highly adopted, there is no doubt that there will be an increase in demand for certification for individuals as well as for organizations.

For individuals, this is important as it will indicate they have the competence to use the cloud accounting software. This is an added advantage to retaining a job or for individuals looking to take up jobs in the accounting field. Employers also could look for certification as proof that an employee already has skills on the type of cloud systems the business uses.

A certified employee will be able to set up the initial business data on a cloud accounting system. They also will know how to handle daily transactions online such as payments, receipts, and invoices, among other tasks. Other important transactions handled by cloud accounting solutions include bank reconciliations, reporting, payroll administration, and budgeting.

Since cloud accounting uses advanced technology like artificial intelligence, the employees will acquire more advanced skills, including financial analysis and cash flow forecasting.

Certified employees will have a better understanding of security levels in the cloud, considering that security is one of the most important issues to businesses.

Apart from learning new skills, certification will enhance workplace performance, as users will be required to complete courses and exams before getting certified.

Again, employees who upskill are less likely to worry about being replaced and, in any case, new knowledge gives employees a chance to negotiate higher pay.

When it comes to businesses, having certified employees means that they can handle projects or tasks successfully as they have a common understanding of cloud accounting systems. This ensures a business of efficiency and reduced operational costs as it can implement a standardized system. Furthermore, customers prefer working with qualified professionals – and this can be demonstrated through certification.

Since cloud computing is a core competency for businesses today, a certification is not only suitable for bookkeepers and accountants, but also for business owners, managers, CFOs and anyone who will be using cloud accounting solutions.

And with trends such as remote accounting and cloud-based accounting services, the certification helps to become future-ready.

Conclusion

The benefits offered by cloud accounting promise to transform the accounting industry through bookkeeping efficiency and streamlined financial administration, as well as provide real-time information. However, the success of these cloud-based systems depends on the users having the appropriate skills. As new technologies emerge, there is a fear of been replaced. But by upskilling, businesses can attend to clients while employees not only get to retain their jobs, but also offer more value.

What’s the Future for Measuring Employee Performance?

Measuring Employee PerformanceYearly performance evaluations just might be heading out the door, according to a recent WorkHuman Analytics & Research Institute Survey. Findings reveal that these appraisals are less than effective and used less often. Based on select findings, 55 percent of employees responded that yearly evaluations don’t help them become better in their role. Almost as many, 53 percent, indicated that annual reviews recognize an employee’s complete workload. The survey also found that only 54 percent of businesses used annual reviews in 2019, compared to 82 percent of workers saying their employer used annual reviews in 2016.

According to Gallup, only 14 percent of workers responded positively that performance reviews motivated them to get better at their skill set. It also found that among businesses with 10,000 workers, time taken for performance evaluations reduced employee productivity by at least $2.4 million and up to $35 million. It also found that one-third of workers’ output and quality declined.

When it comes to traditional performance reviews, many employees believe they are run by managers with little regard to any employee input whatsoever. However, there are other ways to evaluate an employee: the worker can evaluate themselves; their co-workers can appraise them; or a combination of a self-, peer- and manager-focused assessment.

As Harvard Business Review explains, since traditional performance reviews are mutually stressful for managers and their subordinates, there are a few recommendations to attempt to make it a more productive experience.

The first recommendation is to set initial, mutual expectations for manager and employee. When the year begins, the business’ performance requirements should be detailed for the employee so that expectations are clear. By setting performance objectives with the employee, the manager and business will ensure that employees are answerable for their performance.

The second step is to prepare for the in-person evaluation as it gets closer to the meeting. Two weeks before the in-person evaluation, HBR recommends that workers and managers review their past accomplishments – good, bad, etc. Managers could also ask for objective co-workers’ assessments of the employee’s work to garner different perspectives on their performance.

Before a face-to-face meeting, give the employee the assessment to let them internalize it and let their emotions settle before the discussion. From there, the atmosphere should be established by the manager. When it comes to competent, high performers, managers should keep the reviews on the workers’ accomplishments and progression at the company, along with concerns they might have in their role. For poor performers, putting the focus on accountability and improved results is the recommended route.

Asking employees what’s working and what’s not working can be helpful for both manager and employee. It’s also recommended to point out what specific actions, not generalities, employees should take to keep improving.

Based on the evolution of how and where work is being conducted, it seems that the annual performance review needs to be re-evaluated and updated. Only time will tell how it will change, but based on what’s not working, it will evolve as the workplace moves deeper into the 21st century.

Sources

https://www.workhuman.com/press-releases/White_Paper_The_Future_of_Work_is_Human.pdf

https://hbr.org/2011/11/delivering-an-effective-perfor

Pursuing Voting Rights, Critical Therapies, VA Online Education Benefits and Condemning Forced Labor

John R. Lewis ActFreedom to Vote: John R. Lewis Act(HR 5746) – This act is comprised of two previous bills that were combined and passed in the House using a procedural workaround, then sent to the Senate where it did not pass under current Senate rules. A Senate bipartisan committee is taking action to draft another bill containing components of this one, but it is yet to be seen. This Freedom to Vote Act was designed to expand voting access, standardize voting election laws across the country, and restore provisions of the Voting Rights Act of 1965. Other key provisions include:

  • Making Election Day a federal holiday
  • Online, automatic and same-day voter registration
  • A minimum of 15 days of early voting, including during at least two weekends
  • No-excuse mail voting
  • Ample access to ballot drop boxes
  • Online ballot tracking
  • Streamlined election mail delivery by the USPS
  • Requiring states to accept a wide range of forms of non-photographic ID
  • Restoring voting rights to formerly incarcerated people convicted of felonies
  • Making it harder for states to remove eligible voters from rolls
  • Providing more protections and resources for disabled, overseas and military voters
  • Strengthen voting rights and protections for voters in Native American Indian districts
  • Greater federal protections and oversight for voting in U.S. territories
  • Improve voter registration resources and outreach
  • Reauthorize and strengthen the US Election Assistance Commission
  • Require states to use standardized criteria when drawing new congressional districts
  • Require states to use voter-verifiable paper ballots and conduct post-election audits
  • Strengthen cybersecurity standards for voting equipment
  • Prohibit local election officials from being fired or removed without cause
  • Make interference with voter registration a federal crime, with stricter penalties for the harassment, threats and intimidation of election workers
  • Enhance transparency disclosures for campaign financing
  • Require campaigns to report foreign interference

Accelerating Access to Critical Therapies for ALS Act (HR 3537) – This bill authorizes grant programs to be awarded by the Department of Health and Human Services (HHS) for scientific research utilizing data from expanded access to investigational ALS treatments for individuals who are not otherwise eligible for clinical trials. Furthermore, the Food and Drug Administration (FDA) shall award grants to cover the costs of research and development of drugs that diagnose or treat ALS and other rare neurodegenerative diseases, and publish a five-year action plan to foster the development of drugs that improve or extend the lives of people living with these diseases. The bill was introduced by Rep. Mike Quigley (D-IL) on May 25, 2021, passed in the House on Dec. 8 and in the Senate on Dec. 16. It was signed into law by the president on Dec. 23.

REMOTE Act (HR 5545) – This act was introduced by Rep. David Trone (D-MD) on Oct. 8, 2021. In light of the pandemic and many college classes moving online, Congress passed this bill to ensure veterans making the transition to virtual classes would still receive full benefits. These education benefit protections, which include allowing the VA to make payments or extend eligibility periods for students who can’t participate in school, work-study or vocational rehabilitation programs that were closed as a result of COVID-19, will be extended through June 1. The bill passed in the House on Dec. 8, the Senate on Dec. 15 and was signed into law on Dec. 21.

To ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China do not enter the United States market, and for other purposes. (HR 6256) – The purpose of this legislation is to ban imports produced using forced labor in China, particularly in the Xinjiang Uyghur Autonomous Region. It also expands existing asset- and visa-blocking sanctions for foreign individuals and entities responsible for serious human rights abuses in connection with forced labor. The bill was introduced by Rep. Jim McGovern (D-MA) on Dec 14, 2021. It passed in the House on Dec. 16, the Senate two days later and was enacted by the president on Dec. 23.

Create a Healthcare Plan for Retirement

Create a Healthcare Plan for RetirementIf you pay $250 a month for cable and premium channels, that’s $3,000 a year. Over a 30-year period, the total cost would be $90,000. We don’t tend to think about how much we pay in regular expenses over the long term.

However, that’s how various industry analysts report the cost of healthcare during retirement. Recent estimates for a retiring 65-year-old couple fall between $300,000 and $400,000 to cover healthcare expenses in retirement. At first glance, that’s an intimidating number and implies that pre-retirees need to have this much saved by the time they retire.

Fortunately, when you break down the numbers, that’s not the case. First of all, that estimate includes premiums for Medicare with prescription drug coverage, which are typically deducted from Social Security benefits before they ever hit your bank account. According to T. Rowe Price, Medicare premiums account for 76 percent to 82 percent of most retiree’s healthcare expenses, so a large portion of these costs are paid for outside of your household budget.

The true cost of retiree healthcare expenditures is based on how healthy you remain during retirement. And actually, that’s not necessarily related to savings – it’s more a combination of genetics and peoples’ penchant for healthy living before and during retirement. However, it’s always best to prepare for the worst, so the more money you save and earmark for healthcare expenses, the better off you’ll be.

One way to control your monthly premiums in retirement is to shop and compare Medicare plans each year during open enrollment. It helps to keep a running tab of your out-of-pocket expenses each year so that you can increase your Medicare coverage if your costs start trending higher. Higher coverage might mean higher premiums, but that will lower out-of-pocket costs each year.

The following guide was developed by T. Rowe Price. It estimates how much retirees spend based on different types of Medicare plans using 2021 premiums and data from the Health and Retirement Study (HRS). Among retirees who enroll in either (1) Medicare Parts A, B and D; (2) Medicare Advantage HMO and Drug Plan; or (3) Medicare Parts A, B, D and Medigap:

  • 25 percent will pay less than $500/year in out-of-pocket expenses
  • 50 percent will pay less than $1,200/year in out-of-pocket expenses
  • 25 percent will pay more than $1,900/year in out-of-pocket expenses
  • 25 percent will pay more than $3,900/year in out-of-pocket expenses

As for paying those out-of-pocket expenses, remember that you pay them over time, so it’s not as if you’re paying a large lump sum all at once. One strategy is to fund a savings account with enough money to pay out-of-pocket expenses for the year, based on your prior year’s spending. Then replenish this account each year from other funding sources, such as an annual required minimum distribution (RMD) from a retirement account.

If you have access through your current health plan, pre-retirees can save for healthcare expenses with a health savings account (HSA). Contributions are tax deductible and, over time, you can invest your savings for earnings accumulation. These funds, including investment gains, are never taxed as long as they are used to pay eligible healthcare expenses. The account is particularly useful if you don’t tap it until retirement, when the money can be used to pay for things like dental and vision care, hearing aids, long term care insurance premiums and nursing home costs.

 

Despite those alarming projections about how much healthcare will cost you in retirement, remember that it can be manageable because it is paid out over time. 

How to Get Your 2022 Finances in Order

How to Get Your 2022 Finances in OrderBelieve it or not, the New Year is here. If you’re trying to wrap your head around everything that’s ahead, one of the best things you can do is prepare yourself financially. Here are a few tasks you can get started on right away.

Look Back at 2021

Depending on how in-depth you want to go, this could take a couple hours or more. That said, ask yourself these questions: Did you spend as planned? Where do you want to adjust, increase or decrease spending thresholds? What kind of unexpected expenses came up? How did you handle it? Think about what you’ll do for the upcoming year. When it comes to money, the cliché “hindsight is always 20/20” will often ring true.

Tackle Your Debt

If you want 2022 to be the year you become debt free, it can happen. We’re talking about consumer debt, not your mortgage, rent, car payments or any other necessities. A good strategy is to make a list of your credit cards, balances and interest rates. Start with the account balances that are the highest and create a payment plan, then move down the list until you’re finished. Balance transfers to cards with zero interest (for a limited time) are a smart idea, too. Then freeze your spending for 30 days, or however long you need. It might take some time, but these days, financial freedom is well worth it.

Increase Your Retirement Funds

Good news: the maximum contribution limit for your 401(k)s increases by $1,000 in 2022 compared to 2021, for a total of $20,500. If you’re 50 or older, the limit is $27,000, which is great for those closer to retirement. If you can’t max out your contribution, just increasing it by one percent can have an incredible effect. According to calculations from Fidelity Investments, if you’re 35 and earning $60,000, this tiny bump could yield an additional $85,000 to your retirement fund over a 32-year period. That’s equal to putting aside $12 per week (how easy is that?), assuming a 5.5 percent return and consistent salary growth.

Create a Back-Up Plan

This probably isn’t something you want to think about, but it’s necessary should something happen to you. Take few minutes to update your beneficiaries on all your financial accounts, including retirement, investment and benefits accounts. Next, make sure you have a durable power of attorney, someone you trust to take care of all your monetary affairs. After this, designate a health-care proxy or power of attorney, who can speak for you if you become incapacitated. Finally, update your will. Decide who will inherit your assets. If you have children, you can even assign guardians for them. In the long run, if the worst-case scenario unfolds, you’ll save your loved ones a lot of time and trouble.

Carve Out Time for a Life Audit

This task might sound big, but it’s necessary if you want to achieve your dreams – financial or otherwise. Start with a pen or pencil, about 100 sticky notes, a journal and a large space, perhaps a door, board or wall. Turn your phone off, then get started. Look back at your life. Assess where you’ve been, where you are and where you’d like to go, then brainstorm. Do you want to save a certain amount of money this year? Put away some cash for a dream trip? Learn a language? When you think you’ve finished, then organize your goals into three categories: personal, work/career and money. After that, further divide them short-term and long-term goals. Take a photo of your notes and keep it near to remind yourself of what you’re trying to accomplish. More often than not, your dreams involve money, which is directly related to your priorities and how you budget.

Budget for 2022

Now that 2021 is in your rearview mirror (and perhaps you’ve even done a life audit), take what you’ve decided upon and create a budget you can live with. Then, download a budget app to keep you on track. If last year’s budget worked well and you’re already on your way to living your dreams, just hit “repeat.” If not, make necessary changes. That said, no matter the status of your finances, it might be a good idea to increase your emergency fund, given all the uncertainty we’re facing in our world.

If you think about it, taking time in January to look closely at your finances is kind of like going to the doctor for your yearly checkup: You want to make sure there are no red flags you need to address. After all, your fiscal health might be as important as your physical health.

Sources

https://www.cnbc.com/2021/11/17/use-this-checklist-to-get-your-finances-in-order-before-2022.html

https://www.cnbc.com/2020/01/23/why-you-should-increase-your-401k-or-ira-contributions-by-1percent.html

https://www.fidelity.com/viewpoints/retirement/save-more

https://www.nerdwallet.com/ca/personal-finance/resolutions-dealing-with-debt

The Risks of Using Self-Directed IRAs

The Risks of Using Self-Directed IRAsSelf-directed IRAs (SDIRAs) are becoming more and more popular as IRA holders look to enter alternative investments. While SDIRAs can open up a world of investment options, the rules around them are complicated and compliance can be tricky. Below, we’ll look at a couple of relevant court cases that illustrate some of the potential pitfalls.

Self-Directed Equals Higher Fees

A SDIRA can own an investment in pretty much any type of asset except life insurance or collectibles. The downside to accessing investments beyond stocks, mutual funds, ETFs and bonds is that it is more expensive.

The SDIRA custodian usually charges an annual fee as well as per transaction fees. The assets also need to be valued at the end of every year for reporting purposes so there is usually a custodial appraisal or valuation fee. These fees and structures often lead to SDIRA owners taking shortcuts to save money or ease administration.

Side-Stepping Rules is Looking for Trouble

One recent case that went before the tax court involved a taxpayer whose SEP-IRA owned an LLC where he was the only owner and manager, with a national bank as the custodian. The taxpayer opened a checking account for the LLC at the same bank.

The taxpayer took distributions from his SEP-IRA and put the money into the LLC account. He then used the money to fund loans on real estate to third parties. The loans paid back over time and the repayments, including interest, were deposited back into the IRA.

The bank issued a Form 1099-R reporting the distributions as taxable events; however, the taxpayer included this income on his tax return. The IRS taxed distributions, plus the 10 percent penalty because he was under 59½. The case went to tax court with the taxpayer claiming he never actually took distributions because the money went from the IRA custodian to the LLC checking account.

The tax court found in favor if the IRS for several reasons. Most important of which is that the taxpayer held full control of the funds that were distributed. Another mistake was that he owned the LLC, which held his checking account and not the IRA. As a result, the bank as IRA custodian no longer held legal control over the money.

In the end, the taxpayer didn’t want to change custodians from the national bank, which held his SEP-IRA, because he didn’t want to pay the fees associated with setting-up a proper SDIRA. If he had, then he could have structured the investments to be made via the LLC, with the IRA as the owner of the LLC and avoided the taxable distributions completely. In the end, it cost him far more than the fees ever would have.

Collectibles Versus Property and Possession

In another case that went before the tax courts, the taxpayer opened an LLC owned by her IRA where she was the sole managing member. The IRA then purchased American Eagle gold coins, which she took physical delivery of and held in her possession.

IRAs are not allowed to own collectibles, with gold bullion and coins generally considered collectibles. There are exceptions however, with gold American Eagles being one of them – so no issue here.

The problem centered on whether the taxpayer took physical possession of the coins. The tax code says that exempt precious metals can held in physical possession by an IRA custodian. As a result, the taxpayer taking physical possession of the gold was deemed a distribution.

Conclusion

These two cases show that LLCs created to invest through a SDIRA must follow all the IRA rules. This is because the IRA is the entity considered to be engaged in all transactions executed by the LLC. Further, the IRA owner shouldn’t be the managing member of the LLC or take physical possession of the assets. It should always be the IRA custodian who holds the assets and maintains control.

2022 Technology Trends for The Accounting Industry

Technology Trends for The AccountingTechnology has had a major impact on the accounting industry. Gone are days when technology was a second thought and accountants preferred the traditional methods to which they were accustomed. As we start another year, technology is also progressing rapidly. The recent business disruption by the COVID-19 pandemic also has contributed to the acceleration in tech adoption. A major lesson learned from the events of the past two years is the need for digital transformation and prioritizing technologies that will help businesses remain relevant.

Since the accounting industry plays a crucial role in running businesses, it is important to be aware of relevant technologies that will impact their future work.

Remote Accounting 

Remote work is picking up, and accountants have not been left behind. This creates a need for the accounting department to rethink their workflow and optimize hybrid arrangements that combine working in the office and remote work. Embracing hybrid arrangements will help avoid losing employees and enable access to a pool of employees with specialized skills as they can work from anywhere.

Cloud-Based Accounting Services

Cloud-based accounting solutions have enabled accounting services to be provided virtually. This has grown exponentially with the COVID-19 pandemic. Software solution providers are expected to continue developing innovative solutions that will enable remote accounting.

The need for cloud-based accounting services also will be heightened as more businesses seek to cut operational costs. With cloud-based solutions, they can pay for only what they use and not necessarily make heavy investments.

Increased Automation of Accounting Tasks

Automating accounting tasks has helped replace many time-consuming aspects of an accountant’s daily work. It is expected that more tasks beyond just data entry and calculations will be automated. As more accountants realize the benefits of automation, such as reducing errors in payments, ease of invoicing, less ambiguity, enabling compliance, etc., providers will develop more automated solutions.

The accounting industry has not yet fallen victim to the great resignation witnessed last year, where the labor department reported millions of people quitting their jobs or leaving the workforce entirely. Such occurrences will increase robotic process automation (RPA) to include more efficient automation for critical functions such as payroll, purchases, invoices and payments.

Cryptocurrency and Blockchain Technologies

Although cryptocurrency and blockchain technologies have been around for a while, they are still difficult for most to figure out. However, there is an increased uptake of these technologies. Some countries already have allowed cryptocurrency as a legal transaction currency. As this trend continues to grow, accountants and auditors are tasked to understand these technologies so that they can offer sophisticated service to their firms or clients who invest in cryptocurrencies.

In other areas, blockchain technologies will continue being utilized in validation services such as audit and risk analysis, and balancing and sustaining accounting records.

Advanced Artificial Intelligence (AI) and Machine Learning 

According to a CNBC TEC survey, 90 percent of executives surveyed agreed that machine learning is critical for companies in 2022, with 20 percent saying they would be willing to invest money in this technology.

There will be more adoption of sophisticated AI solutions that offer better insights, help make data-driven decisions, and carry out basic tasks that take up a lot of an accountant’s time.

Machine learning will be used to develop algorithms that learn patterns in accounting tasks to help reduce mistakes early and avoid wasting time looking for errors. It also will be useful for audits and predictive analytics to forecast future trends.

Although AI and ML may not work well in areas that require creativity and intuition, they can help aid decision-making.

Data Security

All the advanced technologies mentioned above offer promising benefits. However, they also present a new problem in data security. For instance, remote accounting adds a vulnerability that allows cybercriminals to gain access to a company network. Considering that the accounting department holds crucial financial data that attackers target, security is critical for any business.

With cybercriminals using advanced technologies such as artificial intelligence, it is now more important than ever to harden access to corporate data. Therefore, there will be more defensive cybersecurity services to handle the rise in security issues that come with technology growth.

Conclusion 

As we forge ahead in the new year, one thing is certain: Technology will continue to be a main driver in the accounting industry. This creates a need for upskilling to evolve with new accounting roles. It also helps to be conversant with technologies that will help meet client demands. 

How Businesses Can Combat Inflation’s Toll

InflationAccording to the U.S. Bureau of Labor Statistics (BLS), the Producer Price Index (PPI) or the increase in prices, goods and services that producers experienced for their input costs, saw a substantial rise, according to its latest report issued on Dec. 14.

For November 2021, the PPI grew by 0.8 percent. For the past year ending in November 2021, it rose by 9.6 percent on an annualized basis. According to the BLS, this is the hottest PPI reading since this metric originated in November 2010. With costs not appearing to abate anytime soon, how can businesses combat rising costs?

Figure out Financial Priorities

Harvard Business Review (HBR) details steps that companies can take to evaluate and make adjustments to mitigate the rising cost of inflation. The first decision is to determine “high-resolution spending visibility,” which means a fully transparent documentation of how much money is spent, in what way it’s spent and how effective such spending is in the organization.

When it comes to effectively deploying capital, HBR recommends reducing expenses and/or investing capital to grow and maintain a businesses’ market edge. If there’s a unique customer experience that would suffer, that might not be the right area to cut. However, HBR cites an energy business that conducted an audit of its operations and determined a savings of $10 million was possible if it temporarily suspended 80 business operation expenses.

Analyze Past Spending for Future Efficiency

After a business understands spending patterns and how they impact profitability, this can be analyzed to see how to work around inflation. HBR gives the example of how “external groups” beyond the decision makers on new build projects cost certain companies more than $400 million and six months of time. By using “cross-functional collaboration,” costs that could be cut or work that could be done differently gave the company a way to realize greater efficiency.

Reduce Choices for Consumers

As the competition among employers to find and retain workers is tough, including the pressure to raise wages, simplifying what a company offers can help reduce costs.

Mondelez International, a global producer of comestibles, reduced the number of products it offered to customers by 25 percent when the COVID-19 pandemic started. Similarly, hotels began reducing the need for housekeeping by asking guests, especially during the pandemic, if they needed their rooms freshened up during stays.

Selectively Digitize Tasks

When it comes to businesses fighting for their survival, one silver lining of the pandemic is automation. Many companies discovered the benefits of automation, including higher profits, gains in output, etc.

HBR explains that processes on data for products, such as weight, size, images, etc., can be automated, freeing up human workers for higher level tasks, such as analysis and projections. Citing the example of David’s Bridal, through its Zoey messaging concierge service during the beginning of 2020, appointment and communication center expenses fell by 30 percent. This helped shift human workers to devote more time to in-person assistance.

While there’s no magic recipe to combat inflation, by analyzing a company’s books and keeping up with trends, there are many ways to affect cost savings.

Sources

https://hbr.org/2021/09/6-strategies-to-help-your-company-weather-inflation

https://www.bls.gov/ppi/