It is tax season, and while much of spring is spent discussing what must be paid out in taxes, it is also a great time to take advantage of savings opportunities.

For small businesses, one of the greatest expenditures, healthcare, can now offer additional savings this tax season. The Affordable Care Act (enacted March 2010) intends to help small businesses and tax-exempt organizations afford the cost of providing healthcare to their employees. In particular, the credit is focused on helping employers with low and moderate income workers, and encouraging employers to offer health insurance for the first time or maintain the coverage that they already have.           

The Small Business Healthcare Tax Credit provides a credit worth up to 35% of eligible small businesses’ premium costs through 2013. Even if a business did not owe tax in 2011, the credit can be carried back or forward for other tax years. Non-profits are also eligible to receive a tax credit of up to 25% of the cost of the organization’s premium through 2013. Even if a business has no taxable income, they may be eligible to receive the credit as a refund. This is particularly beneficial to tax-exempt organizations. In 2014, the rate increases to 50% for small businesses and 35% for non-profits. 

To be eligible, a business or tax-exempt organization must meet the following requirements: 

  1. The employer must cover at least 50% of the premium for healthcare coverage based on the single employee-only rate.
  2. The employer must have less than the equivalent of 25 full-time workers (for example, an employee with fewer than 50 half-time workers may be eligible).
  3. The employer must pay average annual wages below $50,000. The credit will gradually phase out for businesses with average wages between $25,000 and $50,000.

Continue Reading Healthcare Tax Credit for Small Businesses and Tax-Exempt Organizations

In the past few months, Pennsylvania has experienced several tragic losses of teenagers through vehicle crashes. Unfortunately, most of us can think of one specific accident that hit close to home. Maybe it was a group of teens in a nearby town, from the local high school, or a friend or family member. If it seems to happen all too often, that is because it does. Motor vehicle crashes are the leading cause of death among 16 to 20-year-olds.

In its 2010 Crash Facts and Statistics Report, Pennsylvania Department of Transportation notes that 17- and 18-year-old drivers are more than twice as likely to get in accidents than drivers over the age of 30. 16-year-old drivers, however, are much less likely than 17- and 18-year-olds to get into accidents due to the mandatory six month waiting period between obtaining a Learner’s Permit and a license. Recognizing this positive correlation between reduced accidents and extended learning periods for new drivers, Pennsylvania enacted a new teen driving law, Act 81 of 2011.

The table below outlines the stated objectives of Act 81 and the corresponding changes that went into effect on December 27, 2011:

Continue Reading Pennsylvania’s Teen Driving Laws Seek to Reduce Accidents and Fatalities

Downtown Lancaster is currently experiencing a growth spurt in terms of businesses starting or moving to the area. This growth is in part fueled by the arts, which has helped downtown Lancaster retailers see a boom in business. Retailers see a tremendous amount of traffic due to the popularity of Lancaster’s First Friday events. Downtown Lancaster has established itself as a trendy place to shop for unique and stylish products, such as eco-friendly bicycles, organic food, gourmet chocolates and vinyl records. For some business owners or entrepreneurs starting a new business, the image that Downtown Lancaster has created presents a great opportunity for growth in a slumping economy.

If you are considering a downtown location for your business you should consider a variety of factors before making a decision.

  • First, create a business plan with Downtown Lancaster as your location. What type of customers do you serve or plan on serving? Are they the type of customers who will frequent Downtown Lancaster? Will transportation be an issue for these type of customers? Visit the shops in Downtown Lancaster and see if your product or service fits in with other retailers and offers similarly unique and stylish qualities as other shops.
  • Second, how will rent compare to where you are currently operating or other areas where you would consider operating? Base rent should not be the only types of comparison. If you’re communicating with a broker, ask for a draft of the lease. Is the lease gross or net? A basic gross lease only includes base rent, while a standard net lease includes operating expenses and real estate taxes. In addition, some landlords (such as those in shopping centers) will charge a percentage of net income as additional rent. You may find that provisions of a lease for a downtown location are more ideal for a start-up business.
  • Finally, if you’re considering moving downtown you should attend First Fridays, if you haven’t been attending already. First Fridays are immensely popular and it’s important to understand what you’re getting into. These events are a great opportunity for businesses to funnel traffic into their spaces and familiarize potential customers with their products and services.

Continue Reading Is Downtown Lancaster the Right Location for Your Business?

This two part series will cover the most common mistakes people make when trying to form a Limited Liability Company (LLC) themselves. The first part of this series will address the importance of an operating agreement. The second part of this series will address potential problems when filling out a Certificate of Organization.

I work with a lot of new businesses and I understand saving money is important to a business. Cutting costs ultimately adds to the bottom line, which is extremely important for new business owners, so I can understand why people would want to try to form their LLC on their own. As an attorney I try to provide the maximum value to each client. While some people might feel that it’s significantly more cost effective to form an LLC on their own, my clients know that I will work diligently to identify and correct issues that may cause unforeseen problems. The value of retaining an experienced lawyer is that I have seen firsthand the types of things that can go wrong. I am able to bring that experience to my clients who are new business owners and ask questions that may have significant implications to how they should structure an LLC.

Continue Reading Mistakes to Avoid When Forming a Limited Liability Company (LLC), Part 1: Operating Agreement

I came across an interesting question recently regarding the personal information required for the Small Business Administration’s (SBA) loan application process. SBA has a business loan requirement checklist on their website and in the personal information section it states,

"Either as part of the loan application or as a separate document, you will probably be asked to provide some personal background information, including previous addresses, names used, criminal record, educational background, etc."

So let’s say you have a criminal record and would like to apply for an SBA loan, are you immediately disqualified for a loan?

To answer this question you first need to understand the role of SBA in lending. SBA directly lends money to small business owners. SBA guarantees loans offered from participating lenders, such as banks and credit unions. The idea is that private lenders will be more likely to provide small business owners a loan if SBA is willing to stand behind a loan and pay if the borrower does not. Both SBA and the lender will have their own requirements to approve you.

Continue Reading Does a Criminal Record Disqualify me from an SBA Loan?

A few months ago I participated in a presentation in conjunction with Edward Jones called Key Life Decisions: Are You Prepared? I spoke about estate planning documents, such as wills, financial powers of attorney and living wills. One of the topics covered by another presenter was long-term care insurance. After the presentation it became clear to me that individuals might not be aware how long-term care can affect their estate planning wishes, and more importantly, cause their estate planning to not be carried out because assets are not left over after the cost of long-term care is paid.

Long-term care insurance policies were designed to deal with the significant costs associated with personal-care services, ranging from home care to skilled nursing facility care. Without long-term care insurance to pay for these services, most individuals spend all of their assets until they qualify for Medicaid. After Medicaid begins to cover the cost of long-term care, it generates a lien against the person’s estate. Therefore, when someone passes away who was receiving long-term care paid for by Medicaid, the person’s estate will receive a claim from the Department of Public Welfare equal to what was spent for the care. This means if there are any assets remaining in the estate, they will go to administering the estate and paying back the state for the care paid for by Medicaid. This is called Medicaid Estate Recovery.

Continue Reading Long-term Care Insurance Could Protect your Estate Plans

Being a landlord can be a very rewarding investment if you have great tenants that pay on time and take care of your property. When the wrong tenant moves in, however, if can be a nightmare. If you’ve ever had a tenant not pay, you probably know how things usually go. You give notice, file a complaint with the local District Justice, follow all of the required procedures to evict the tenant and get a judgment. It doesn’t take long to realize this judgment is only as valuable as the tenant’s ability to pay. In addition, trying to track down the tenant to collect on this judgment is costly and time-consuming. What you might not realize is a landlord in Pennsylvania can attach a tenant’s wages directly from his or her paycheck to pay the judgment, but doing so requires planning at an early stage.

Pennsylvania law allows a landlord to attach ten percent (10%) of the net wages from a tenant’s paycheck. The Prothonotary will contact the tenant’s employer who will send the check for the attached wages to the Prothonotary, which passes on the money to the landlord and reduces the judgment.

Continue Reading Tenant Wage Attachment, a Rarely Used Landlord Remedy

Estate planning is something most people know is important but it’s often something that they put off for a later date, likely because it brings with it unpleasant thoughts about disability and death, but also because of misconceptions about what happens if you die without a will. Some people think that if they die without a will their property will automatically pass to their spouse, which is what many people want, and for that reason they don’t think a will is necessary. Others think that if they don’t have a will the state will take all of their property. Both of these scenarios are usually not true.

The reason a will is so important is that it allows you to do two very important things: (1) decide what happens to your property, and (2) decide who is in charge of managing your estate. 

What Happens to Your Property Without a Will?

If you don’t have a will your property which is subject to probate will pass "intestate." Probate property does not include insurance policies, pensions or property owned as "joint tenants." If you die without a will, the law decides who gets your real and personal property rather than you.

Continue Reading What Happens if you Die without a Will?

The United States Small Business Administration (SBA) recently took a step toward helping small businesses refinance their commercial loans. Many loans to small businesses have balloon payments where a large portion of the amount borrowed becomes due at the end of the loan. Usually these loans are refinanced so the balloon payment is never made but, in light of the Great Recession, these options may be limited or unavailable to small businesses. I saw an article in the Central Penn Business Journal that local economic development corporations (EDCs) were pushing the opportunity to refinance under the SBA 504 lending program, which historically was only available to new purchases of property and equipment. Under the new program, however, eligible small businesses will have the benefits described below of the 504 program to refinance existing loans.

Continue Reading Small Business Administration (SBA) Expands 504 Loans to Refinances, Giving Greater Financing Options to Local Businesses