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Volume 5, Issue 9, September 2007

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Succession Planning – A Must for Small Business
Owners

For small business owners, and especially for sole practitioners, the time to begin thinking about a succession plan is now. Whether you are two or 20 years from retirement, a succession plan customized to your particular business can go a long way in turning your business into a considerable asset when it is time to retire.

With sole practitioners, there is always the fear that the business will lose its value when the person who has nurtured it from its humble beginnings decides to hang up his or her hat. With careful planning, however, the hours you have spent carefully growing your business need not be wasted – it is possible to sell your business for a price that reflects all of your hard work.

Because it can take time to successfully transition the business from your hands into the hands of a new owner, it is important to plan in advance of the changeover. It may be necessary for you to stay with the company for a period of time after the change takes place in order to ease your clients into the process. Keeping clients happy during this time is especially important, as unsatisfied customers will translate to lost value, lowering the amount of money you receive from your buyer.

Business valuation is an important part of succession planning, and there are a number of factors that can determine the value of your business – the size of your business and the size of your prospective buyer, your business field, physical assets (real estate, buildings, machinery, equipment, etc.), and intangible assets such as goodwill, employee loyalty, customer base, and patented technologies. Determining the value of your business requires knowledge and experience in accounting, tax, finance, economics, and litigation support and should be undertaken by an experienced professional.

The certified public accountants and consultants at Kemper CPA Group LLP can help you develop a succession plan that best suits your business and your financial needs. Our business valuation professionals are available to answer any questions about business valuation that you might have. Contact us today.

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Telephone Scam Targets Taxpayers in Indiana
and Kentucky

Individuals in Indiana and Kentucky have recently been the recipients of telephone calls, purportedly from the IRS, but really from scam artists wanting personal information and bank account numbers. During the call, the scam artist, posing as an IRS agent, tells the individual that the IRS will be issuing a tax refund and medical card if the taxpayer provides some personal information.

The scammer tells taxpayers that a tax refund will be issued for the next six months, and that a medical card, which can be used by the taxpayer’s entire family, will be sent.

The IRS is urging taxpayers not to provide personal or financial information in response to these calls. Anyone who receives a questionable phone call that is allegedly from the IRS can report to the Treasury Inspector General for Tax Administration (TIGTA) via a toll-free hotline at 1-800-366-4484.

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Some Tax Tips for Farmers…

Net Operating Loss

If you had a loss as a result of farm operations for the year, and that loss exceeds the amount of your other income, you might have what is known as a Net Operating Loss (NOL). Alternatively, if you had either a business-related or personal casualty that exceeded your income, you might also have a NOL.

It is possible to carry a NOL to, and deduct it from, a previous year. You can use the NOL to either obtain a refund of taxes paid for that previous year, or apply it to reduce your taxes in the future.

Carrybacks

Usually a NOL is carried back to the two tax years prior to when the NOL occurred, and the deduction is taken from income earned in those two years. You can also choose to only carry forward a NOL as well. Specific rules apply to the amount of the NOL that may be deducted in each affected year. IRS Publication 536 provides additional information.

Refigured Tax

When a NOL is carried back, your associated tax deductions, credits, and taxes for that specific year will be refigured as a result. If your recalculated tax obligation is less than your original tax paid, you may apply for a refund for each year in which the NOL is applied.

There are additional rules with regard to determining a NOL and applying it either to past or future tax years. The friendly professionals at Kemper CPA Group LLP are here to help with your farm’s tax and accounting needs. Contact us today.

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Indiana Joins States that Allow Credit Freezes

Effective September 1, 2007, a new law allows residents of Indiana to restrict access to credit information by placing a freeze on their credit reports. The law waives the fees associated with requesting, lifting, or removing a freeze in Indiana.

Written requests must be sent to each of the three major

credit reporting agencies: Equifax, Experian, and TransUnion.

Sample request letters can be found here. The credit reporting agencies will be required to place a freeze on a consumer’s credit report within five days of receiving a written request to do so. Generally, the information needed to request a freeze includes:

Full name and, if applicable, former name(s)

Current address and former address if you have moved in the last 5 years

Social Security Number

Date of birth

Copy of driver’s license, state ID card, or other form of government-issued identification

Proof of current residence (copy of utility bill, bank statement, or insurance statement)

Copy of investigative report, police report, or complaint filed with a law enforcement agency (for victims of identity theft)

Additional information about the new Indiana law is available from the Indiana Attorney General’s website. The majority of other states, including California, Florida, Illinois, and Kentucky, also allow citizens to place a freeze on their credit, although fees are assessed in some states. The following chart summarizes the fees associated with placing a credit freeze in these states.

¹Fee to temporarily lift the freeze for a specific creditor in CA is $12.
²KY and IL victims of identity theft must provide a police report to obtain a free
 credit freeze.

Additional state-specific information about placing a credit freeze is available through the Consumer’s Union.

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Loose Change

The September/October 2007 issue of the “Loose Change” Newsletter includes the following articles:

Contact Kemper Capital Management LLC for all of your investing needs.

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities officered through Securities America, Inc., a registered broker/dealer. Member NASD/SIPC. Thomas A. Moore, John D.
Porter, Shawna D. Horne, Jeffery C. Holt, CA insurance Lic. #0E38034, Sheila Lautenbacher, Jessica Daugherty, Joseph M. Mendes, CA Insurance Lic. #0C62535, Gregory Meador, Marcia Elder, Registered Representatives. Insurance services offered through KCPAG Insurance Services LLC. Kemper Capital Management LLC and its subsidiaries are not affiliated with Securities America.

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Network Security – Managing Your Risk

It is not uncommon to hear about large-scale security breaches at major national companies, as those wide-spread problems often impact sizeable groups of people and make headlines on the evening news. But smaller-scale security breaches occur in small businesses every day, and although they can have serious consequences for these businesses, rarely do they make headlines.

A web security policy that governs the actions of your employees can help protect your business, but only if it is properly enforced, and even the most stringently-enforced employee web security policy won’t protect you if the breach occurs externally. External breaches can occur if your network is compromised by hackers, but they can also happen as a result of customers, suppliers, or corporate partners accessing your network to perform routine activities.

Because it is difficult to ensure that all devices used to access your network externally are secure, it is important to utilize an identity management system that protects the user, regardless of the type of device used. Access to your network should be limited so that users are only able to get into areas specific to their needs. Restricting access in this manner will help to reduce your risk and reassure your customers, suppliers, and corporate partners that your network is secure.

Understanding all of the factors surrounding the security of your network can be a challenge. The IT professionals at Kemper Technology Consulting can help you evaluate your network and determine which specific risks pose a potential threat to your business. Protecting your valuable computer equipment and networks is essential to keeping your business up and running – let us show you your risks. Contact us today to set up an appointment with one of our certified IT specialists.

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com

Evansville, IN  •  Indianapolis, IN  •  Paducah, KY  •  Effingham, IL

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Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.

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