Online newsletter for April 2018
SMALL-BUSINESS QUARTERLY Empowering Jacksonville’s Business Community, One Business at a Time
John Miller on Business and Family On the Pulse of the Heartbeat of America
There came a point in my career when I knew it was time to be the captain of my own ship. I had served as an associate attorney at a few downtown firms, but I decided it was time to break away to do my own thing. I had developed a philosophy of serving clients, and I wanted to put it into practice.This was 25-plus years ago.Today, serving our clients remains our top priority. I love working with entrepreneurs and business owners. Small businesses are the heartbeat of the American economy. Small-business owners are responsible for the creation of 99 percent of U.S. businesses.That’s incredible! I love that I get to help business owners grow and support the economy. I get to be a part of that heartbeat. Early on, I realized a lot of what I was doing on the business representation and real estate side of things tied back into estate planning.These concepts were inextricably linked. I decided to bring these areas of practice together for the benefit of my clients. When it comes to real estate law, I’m proud to be a part of the rich heritage of real estate lawyers in America.There was a time when most people weren’t
allowed to own their own home.The idea of homeownership wasn’t an everyday concept.As America developed, homeownership became the ultimate test of the American dream — an idea which is very much alive today. The American dream is also closely tied to the legacy many of our clients want to leave behind for their families.When it comes to estate planning, for instance, documenting your wishes for your family and heirs is another way for them to celebrate your legacy. That’s at the core of estate planning. When the individual passes away, it takes an immense burden off the shoulders of the family, allowing them to focus on what truly matters. In recent months, we’ve been working on a special business- and estate-planning package for clients. It’s a package to help the nonlicensed spouses of licensed professionals, including doctors, lawyers, and a variety of specialists. We created this planning package to answer this question:When the licensed professional can no longer work, what is the nonlicensed spouse supposed to do?
They cannot own the business or take over in a practical capacity. Options can be very limited. To address this issue, we’ve been working on an excellent strategy that will help families in this situation.To learn more, you can give Rock Solid Law a call, or be on the lookout for more information in the very near future. Of course, my endgame is to help my clients’ lives be better, regardless of their situation.When you leave my office, I want your life to be improved in some way, big or small.Your future means everything to us.
–John Miller
ARGALLUS FINANCIAL GROUP, INC.
Richard R. Dwyer Argallus Financial Group 904-800-7299
Kimberly Deas SellYourBusinessFlorida.com 904-263-5546
Lisa Pilgrim BMWCPA.com 904-694-4275
John McE. Miller RockSolidLaw.com 904-241-1113
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Markets Rise Like an Escalator AND DROP LIKE AN ELEVATOR
The markets have been on a tier since March of 2009, when the S&P hit a low of 683. On Jan. 26, 2018, the S&P 500 was at 2,872, a total gain of 2,189 points for an average annual growth rate of approximately 17 percent. Of course, this was preceded by a massive drop from 1,561 in October of 2007 to 683 as the low 18 months later, a drop of 56 percent. The bottom reached in March 2009 brought the S&P to its lowest level since August 1996.The worst part of the decline occurred between May 2008 and March 2009, when the S&P dropped from 1,423 to 683, a 52 percent drop in 10 months. There’s a saying onWall Street:“Markets rise like an escalator and drop like an elevator.” Because investor fear of loss is so powerful, market corrections are much more intense than market rises. Recently, ARGALLUS FINANCIAL GROUP, INC.
we had a pullback that made some investors nervous, with some wondering if this was the beginning of the end or normal activity. The S&P 500 as of Dec. 31, 2017, was 2,673, and as of the close on March 1, 2018, was 2,677, a gain of four points, or a gain of 0.15 percent, basically 0 percent growth. However, on Jan. 26, 2018, the S&P 500 hit a high of 2,872.72, and on Feb. 8, 2018, it reached a low of 2,581, for a total top-to-bottom decline of 291.72 points, or down 10.9 percent.This is the first 10 percent pullback since early 2016, and it’s the longest period without a 5 percent pullback in 20 years.The market is also showing increased volatility with bigger swings in prices in both directions.
in, and the economy showing no signs of trouble, this is probably a normal pullback. As has been seen many times in the past, it is impossible to know at this point if this is a pullback or the start of a correction. We don’t get the answer to that question until afterward. Make sure your portfolio is aligned with your risk tolerance. Doing so enables you to go through these events with less stress. If you aren’t sure what your risk tolerance is, let us know, and we’ll email you a link to find out. Speak with your financial advisor to discuss your account and concerns and make any adjustments as needed. If you don’t have a financial advisor and would like to discuss your portfolio, call us to schedule a meeting.
What does this mean?With interest rates still low, the recent tax cuts just kicking
–Rick Dwyer
The process of selling a business may seem straightforward, but each deal has twists and turns that many sellers and buyers do not expect. We recently worked with a seller who wanted to retire, and they hired Murphy Business and Financial Services to sell the business. They listed the business with an out- of-area brokerage firm (with a large marketing fee) that made huge promises. After a year, there were still no buyers. At Murphy Business, we carefully review each company and their financials to ensure the business is ready to be sold with accurately prepared financials and records. Due to errors in bookkeeping, a change from seven days a week to five days a week, and many other small
issues, it took us four months to prepare the business for sale.
• Prepared a complete equipment list with estimated values
Once we listed the business, we had a buyer within a few days and closed the deal within 47 days. Here are some of the steps we took to get this business owner the best price and to sell the business quickly: • Pre-qualified the business with several banks to assure bank financing
• Prepared a complete inventory list
• Reviewed the appraisal of the real estate being sold with the business to assure fair market value
• Created a comprehensive
marketing package with all the critical information for a buyer to make a quick decision • Marketed the business on over 300 sites and leveraged networks to find a buyer
• Full review of financials (and
recasting to adjust for the change from seven days to five days)
–K im Deas
• Worked with the accountant to
clean up the P&L and make it easier to read, and corrected gross errors
MEET OUR TEAM
Rick Dwyer, Financial Advisor “After running the Donna Half- Marathon and the Gate River Run, I plan to train this spring and summer for my first triathlon. For business, I plan to launch a series of ‘lunch and learns’ for business owners on succession and retirement planning.”
Lisa Pilgrim, CPA “My plans for spring are rest, relaxation, and a few trips around the country to visit family. Then I will regroup, continue to grow the practice, and improve our processes in order to better meet our clients’ needs.”
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CHECKLIST OF 2018 TAX CHANGES FOR BUSINESSES
Standard Mileage Rates — In 2018, the rate for business miles driven is 54.5 cents per mile.
Section 179 Expensing — The Section 179 expense deduction increases to a maximum deduction of $1 million of the first $2.5 million of qualifying equipment placed in service during the current tax year.The deduction was enhanced to include improvements to nonresidential qualified real property, such as roofs; fire protection; alarm and security systems; and heating, ventilation, and air-conditioning systems. Bonus Depreciation — Businesses can immediately deduct 100 percent of the cost of eligible property in the year it is placed in service, after which it will be phased downward over a four-year period: 80 percent in 2023, 60 percent in 2024, 40 percent in 2025, and 20 percent in 2026. Work Opportunity Tax Credit (WOTC) — Extended through 2019, theWork Opportunity Tax Credit has been modified and enhanced for employers who hire long- term unemployed individuals (unemployed for 27 weeks or more) and is generally equal to 40 percent of the first $6,000 of wages paid to a new hire.There was no change to this tax credit under TCJA. Research and Development Tax Credit — Starting in 2018, businesses with less than $50 million in gross receipts can use this credit to offset alternative minimum tax. Certain start-up businesses that might not have any income tax liability will be able to offset payroll taxes with the credit as well. Employee Health Insurance Expenses — For taxable years beginning in 2018, the dollar amount is $26,700 ($26,200 in 2017).This amount is used for limiting the small employer health insurance credit and for determining who is an eligible small employer for purposes of the credit. Employer-Provided Transportation Fringe Benefits — If you provide transportation fringe benefits to your employees, the maximum monthly limitation for transportation in a commuter highway vehicle as well as any
transit pass is $260 in 2018, and the monthly limitation for qualified parking is $260.
Individual Standard Deduction — In 2018, the standard deduction increases to $12,000 for individuals (up from $6,350 in 2017) and to $24,000 for married couples (up from $12,700 in 2017). Alternative Minimum Tax (AMT) — In another tax change for 2018,AMT exemption amounts increase to $70,300 for individuals (up from $54,300 in 2017) and $109,400 for married couples filing jointly (up from $84,500 in 2017). ‘Kiddie Tax’ — For 2018, the net unearned income for a child under the age of 19 (or a full-time student under the age of 24) who is not subject to “kiddie tax” is $2,100. Penalty for Not Maintaining Minimum Essential Health Coverage — The penalty has been eliminated under the TCJA as part of the tax changes for 2018. AGI Limit for Deductible Medical Expenses — In 2018, the deduction threshold for deductible medical expenses is temporarily reduced to 7.5 percent of adjusted gross income (AGI). Eligible Long-Term Care Premiums — Premiums for long-term care are treated the same as health care premiums and are deductible on your taxes, subject to certain limitations. Medicare Taxes — The additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married, filing jointly), which went into effect in 2013, remains in effect for 2018, as does the Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (AGI) more than $200,000 ($250,000 joint filers).
Kimberly Deas, Business Broker “As the Small-Business Leader of the Year for the Entrepreneurial Growth Division, I look forward to seeing the various chambers this spring and summer and sharing why every business owner needs to have an exit plan from their business.” – Lisa Pilgrim
John Miller, Attorney “I’m looking forward to our new combined business- and estate-planning program for licensed professionals, to resolve the problem that spouses of those professionals, such as doctors and lawyers, cannot own their business after they’re gone. We are pleased
with the outlook of helping these many families. Regarding my own family, I am looking forward to a spring break camping trip with my wife and children.”
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PRST STD US POSTAGE PAID BOISE, ID PERMIT 411
ARGALLUS FINANCIAL GROUP, INC.
INSIDE
page 1
John Miller on Business and Family
page 2
Markets Rise Like an Escalator
page 2
Case Study
page 3
Checklist of 2018 Tax Changes for Businesses
page 4
Local Events
Things to Do This Spring
Yappy Hour Spring Fling Where: The Jacksonville Landing When: Sunday,April 15 Website: jacksonvillelanding.com/event/ spring-fling It’s an event for you and your pup! Enjoy activities, music, and plenty of giveaways. You and your dog are sure to have fun. Jacksonville Jumbo Shrimp vs. Pensacola BlueWahoos Where: Baseball Grounds of Jacksonville
Jeff Dunham’s ‘PassivelyAggressive’ Where: Veterans Memorial Arena When: Friday,April 27 Website: jaxarena.com/events/2018/jeff- dunham---passively-aggressive Jeff Dunham is back, along with his motley crew of characters.Who knows what they’re up to this time? JamesTaylor and Bonnie Raitt Where: Veterans Memorial Arena When: Tuesday, May 8 Website: jaxarena.com/events/2018/ james-taylor-and-bonnie-raitt Listen to the classic vocals of legendary singer-songwriter James Taylor, on tour with Bonnie Raitt. It’s a two-for-one concert you won’t want to miss.
Post Malone and 21 Savage Where: Daily’s Place When: Thursday, May 10 Website: dailysplace.com/events/detail/ post-malone-and-21-savage Speaking of two-for-ones, if you love hip-hop and rap, Post Malone is on tour with 21 Savage. Enjoy this show of chart- topping songs and more! Steely Dan and the Doobie Brothers Where: Daily’s Place When: Sunday, May 13 Website: dailysplace.com/events/detail/ steely-dan-the-doobie-brothers Yet another twofer! This time it’s American rock legends.They’re all on tour, and they’re better than ever.
When: Thursday,April 26 Website: jaxshrimp.com
Take the family to the ballpark and delight in America’s pastime.We recommend you
enjoy a few hot dogs during the seventh-inning stretch.
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