CFOWise

10% Increase in Health Care Costs in 2008

According to the USA TODAY Moneyline on 17 June 2008, employer health care costs will rise about 10% in 2008 and 9.6% in 2009 (study was done by PriceWaterhouseCoopers). The two main reasons for the increase: an increase in the expenses those with insurance are bearing for those without, and a hospital building surge to replace facilities and increase the number of private rooms and outpatient facilities.

The emerging and medium-sized businesses will feel the brunt of this more painfully than most. They are already at a disadvantage because they are trying to attract a talented workforce that has grown to expect Fortune 500 level benefits. But they have little negotiating and buying power in the health insurance markets where the products offered are state regulated and one health issue in their relatively small pool of risk can cause a maximum rating – meaning a family premium cost for a decent medical plan can exceed $2,000.

There are things employers can do to curb these cost increases. They can switch to a high deductible plan that has a health savings account option. They can also pass some of the increased premium cost on to their employees. While this may not be popular, it can sometimes have very little impact on the employee’s net take-home pay, especially if the premiums are deducted from the employees paycheck on a pre-tax and pre-FICA basis – which is allowed through a Section 125-C Premium Only Plan (POP).

A CFO Advisor can assist you in deciding on the proper health care plan you can offer your employees that will also help with your business operations.

These represent just a few suggestions to consider.

Do You Need an Estate Plan?

YES, especially family-business owners need estate plans! We understand that the largest deterrent to putting one in place is the difficulty of making it happen. We understand that you may not want to dedicate the time it takes to the process. We understand that there are costs involved and tough decisions that have to be contemplated and made. But we are witnesses to what happens if you do not make time to make the tough decisions, deal with the complexity, and pay the fees – someone else makes different decisions for you that you would never have made and it always costs your estate a bundle more than the fees you would have incurred to get the planning done in the first place.

If it isn’t obvious, we strongly recommend that our clients implement their estate plan and review it at least annually with a CFO Advisor and lawyer to make sure it is still accomplishing its intended purposes. Your estate plan covers the entire gamete of all that you own, including your business. Without a plan and a commitment to execute it, we can guarantee one thing – you will not end up where you intended to go!

(The chart above appeared in the USA TODAY on 24 June 2008 in the Money Section)

IRS Raises Mileage Reimbursement for Second Half of 2008

This just does not happen every day! According to the USA TODAY, the IRS usually sets the mileage reimbursement rate in the fall for the entire upcoming calendar year. With gas prices surging, they have raised the mileage reimbursement rate to 58.5 cents from 50.5 cents for the second half of 2008 (http://www.usatoday.com/money/perfi/taxes/2008-06-23-mileage-rates_N.htm).

The new rate will apply to miles driven between July 1st and December 31st of 2008. For self-employed individuals as well as owners of small to medium-sized businesses, this can create a huge opportunity to create extra deductions in your business and generate tax free income to yourselves and your employees.

In general, you either deduct your actual vehicle ownership expenses (including depreciation or lease payments) or you reimburse yourself at the allowable IRS rate. This works the same for your employees. We have seen several scenarios where employers and employees have saved significant tax liability by correctly structuring this part of their compensation package.

If you would like to learn more about our CFO services , please Contact Us.

What Employers Are Doing About Rising Fuel Costs

Gas prices continue to have a significant impact on emerging and medium-sized businesses in our country. This survey that almost half of the companies are raising their mileage reimbursement to the IRS maximum of 50.5 cents per mile.

Depending on the company’s prior mileage reimbursement amount, this could significantly decrease the bottom-line.

In most businesses, fuel is considered a variable cost - meaning this cost fluctuates firm’s sales. In my experience, fuel often seems more fixed than variable. While many companies are seeing revenues decline, they are corrected simultaneously seeing their total fuel costs increase. Unless you have the opportunity to raise your prices to your customers to cover for the increased cost in fuel, this could create a somewhat harsh reality. About 1/4 of companies surveyed are offering flexible work schedules to help reduce their and their employees’ fuel costs. Four 10-hour days per week reduce travel requirements, but may not be practical. As we have mentioned before, since necessity is the mother of invention, we feel our current fuel crisis will foster creative and unique ways to solve our country’s dependence on oil. Our CFO Consultants can help you decide what needs to be done about rising fuel costs.

CFOwise CFO University Launch

Premier Chief Financial Officer (CFO) firm founds first-ever educational initiative

PLEASANT GROVE, Utah, June 2, 2008 – CFOwise announced the launch of its cutting-edge education initiative - CFOwise CFO University. Focused on the issues that CFOs face in start-up, emerging, and middle-market companies, this University, which is the first of its kind, is offered exclusively to CFOwise CFOs for now.

CFOwise Founder and CEO,Ken Kaufman, has finally seen his vision begin to materialize. “The launch of our CFO University is a major milestone in the progression of our firm,” he said. “It provides the medium whereby we can offer our staff a proprietary and growing knowledge-base that serves as a catalyst for unparalleled continuing education and limitless value addition to our clients.”

Delivered primarily through online resources to CFOs around the country by internal and external subject experts, some of the major areas of study include (this list is certainly not comprehensive):

• Legal, Tax, and Operational elements of C-Corps, S-Corps, LLCs and Sole-Proprietorships
• Corporate Bankruptcy
• Key Industry Ratios and Analysis
• Major Elements of Forecasting Cash Flow
• Flash, KPI, and Dashboard Reporting
• Advanced Cash, Accrual, and GAAP reporting
• Working Capital Issues
• Internal Controls
• Business Plans and Presentation to Sophisticated Investors
• Advanced Estate Planning, Asset Protection, and Business Continuation
• Advanced Corporate Benefits
• Business Exit Strategies and Value Maximization
• Advanced Employee Compensation and Incentive Mechanisms 

“We record on video and digitally store each session on our Intranet so our current and future CFOs can benefit from each value-packed session,” remarked Ken. “This is just the beginning. Our University will raise the standard for professionals who want to be in our industry.”

About CFOwise
With over a century of senior-level executive experience, CFOwise is the premier provider of permanent part-time CFO services in the United States. For more information, please visit: www.cfowise.com.