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Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Please note: Our offices will be closed on May 20th for IT upgrades. Limited availability from May 21-24 due to team training. We may experience short delays in accessing records and responding to inquiries.
Summer hours are in effect: Our offices close at NOON on Fridays from May 17th to July 12th
Please note: Our offices will be closed on May 20th for IT upgrades. Limited availability from May 21-24 due to team training. We may experience short delays in accessing records and responding to inquiries.
Colorado Springs, Colo. – Stockman Kast Ryan + Co, LLP (SKR+CO), the largest locally-owned certified public accounting firm in Southern Colorado, announces ten professional staff promotions:
Audit Department
Courtney has a Bachelor of Science in accounting from Adams State University and a Master of Accounting from University of Washington, Tacoma. She has been in public accounting since 2017.
Katie has a Bachelor of Science in Accounting from Marquette University and a Master of Accounting from University of North Carolina, Chapel Hill. She has been in public accounting since 2017.
Rob has a Master of Accounting from University of Colorado, Colorado Springs. He has been in public accounting since 2017.
Tax Department
Amy has a Bachelor of Accounting from Columbus State University and has been in public accounting since 2006.
Grant has a Bachelor of Accounting from University of Colorado, Colorado Springs and has been in public accounting since 2017.
James has a Bachelor of Science in Business with Emphasis in Accounting and Finance from University of Colorado, Colorado Springs and a Master of Business Administration with Emphasis in Accounting from University of Colorado, Colorado Springs. He has been in public accounting since 2016.
Jennifer received her bachelor’s from Columbia College and has her Master of Business Administration with Emphasis in Accounting from University of Colorado, Colorado Springs. She has been in accounting since 2018.
Jessica has a Bachelor of Science in Accounting from University of Colorado, Colorado Springs and has been in public accounting since 2017.
Justin has a Bachelor of Science in Accounting from University of Colorado, Colorado Springs and has been in public accounting since 2018.
Ramses has a Bachelor of Science in Accounting from University of Colorado, Colorado Springs and has been in public accounting since 2017.
About Stockman Kast Ryan + Co
Stockman Kast Ryan + Co, LLP (SKR+CO) is Southern Colorado’s largest certified public accounting firm providing a variety of in-depth business services. Tax services for individuals include businesses, fiduciaries and nonprofit organizations, audit and accounting services. SKR+CO also offers outsourced accounting and bookkeeping services – customized to clients’ needs – estate planning, small/emerging business advisory services, contract chief financial officer services, business valuations and litigation support services. SKR+CO is a member of DFK International/USA, a worldwide association of independent firms. For more information on SKR+CO visit skrco.com.
Look beyond day-to-day financial management.
Many business owners reach a point where managing the financial side of their enterprise becomes overwhelming. This is usually a good thing; the company has grown to a point where simple bookkeeping and basic financial reporting no longer suffice.
If your business has similarly expanded past its capacity, it may be time to add a chief financial officer (CFO) or controller – on either a full-time or part-time basis. Before taking the leap to hire, consider whether your payroll can take on this high-paying position as a full-time employee, or if hiring a part-time CFO consultant is a better fit. Read more to understand exactly what services you are paying for and what makes the most business sense for your company.
The broad role
The role of a CFO or controller is to look beyond day-to-day financial management to more holistic, big-picture planning of financial and operational goals. CFOs take a seat at the executive table and serve as a higher level of support for all matters related to the company’s finances and operations.
CFOs go far beyond merely compiling financial data. They interpret the data to determine how financial decisions will impact all areas of your business. These individuals can plan capital acquisition strategies, so your company has access to financing, as needed, to meet working capital and operating expenses.
In addition, a CFO or controller will serve as the primary liaison between your company and its bank to ensure your financial statements meet requirements should you require help negotiating any loans. Analyzing possible merger, acquisition and other expansion opportunities also falls within a CFO’s or controller’s purview.
Specific responsibilities
A CFO or controller typically has a set of core responsibilities that link to the financial oversight of your operation. This includes making sure there are adequate internal controls to help safeguard the business from internal fraud and embezzlement.
The hire also should be able to implement improved cash management practices that will boost cash flow and improve budgeting/cash forecasting. They should be able to perform ratio analysis and compare the financial performance of your business to benchmarks established by similar-size companies in the same geographic area. A controller or CFO should analyze the tax and cash flow implications of different capital acquisition strategies — for example, leasing vs. buying equipment and real estate.
Major commitment
Make no mistake, hiring a full-time CFO or controller represents a major commitment in both duration of the hiring process and dollars to your payroll. These financial executives typically command substantially high salaries and attractive benefits packages. Another option is to outsource this role to a part-time or fractional CFO consultant who provides business advisory services for a set amount of time. Starting with a part-time CFO may help you assess your current processes and internal controls, then help your company to transition to a full-time CFO position down the road.
Regardless of the route you choose, contact your trusted advisor to help you assess the financial impact of the idea.
If your organization anticipates raising big amounts with a raffle at your next fundraising event, you might want to step back and revisit your assumptions. States vary, but in the State of Colorado you must apply for a State Bingo-Raffle License. The IRS has new rules related to unrelated business income (UBI) and raffle income may be subject to UBI tax. Learn what you need to know before you place all your bets on this event.
The Children’s Hospital of CO sought a property tax exemption for its day care center, which gave tuition discounts to some clients. The CO Court of Appeals affirmed the Board of Assessment Appeals’ denial, stating the center didn’t meet the statutory requirements for an exemption. One reason: It wasn’t used strictly for charity. Also, tuition discounts were the same for everyone below the federal poverty line, and not “on the basis of ability to pay.”
For some business owners, succession planning is a complex and delicate matter involving family members and a long, gradual transition out of the company. Others simply sell the business and move on. If you are leaning toward a business sale, here are eight ways to prepare:
1. Develop or renew your business plan. Identify the challenges and opportunities of your company and explain how and why it is ready for a sale. Address what distinguishes your business from the competition and include a viable strategy that speaks to sustainable growth.
2. Ensure you have a solid management team. You should have a management team in place who have the vision and know-how to keep the company moving forward without disruption during and after a sale.
3. Upgrade your technology. Buyers will look more favorably on a business with up-to-date, reliable and cost-effective IT systems. This may mean investing in upgrades that make your company a “plug and play” proposition for a new owner.
4. Estimate the true value of your business. Obtaining a realistic, carefully calculated business valuation will lessen the likelihood that you will leave money on the table. A professional valuator can calculate a defensible, marketable value estimate.
5. Optimize balance sheet structure. Value can be added by removing nonoperating assets that are not part of normal operations, minimizing inventory levels and evaluating the condition of capital equipment and debt-financing levels.
6. Minimize tax liability. Seek tax advice early in the sale process — before you make any major changes or investments. Recent tax law changes may significantly affect a business owner’s tax position.
7. Assemble all applicable paperwork. Gather and update all account statements and agreements such as contracts, leases, insurance policies, customer/supplier lists and tax filings. Prospective buyers will request these documents as part of their due diligence.
8. Selling in the future? Plan to use your time wisely. If you are considering selling in the short or long term, it is a good idea to have your trusted business adviser conduct a “check-up” on your company’s financial statements . From this, your adviser can help create an improvement plan designed to better position your company for sale down the road, within a time frame that meets your business needs.
Succession planning should play a role in every business owner’s long-term goals. Selling the business may be the simplest option, though there are many other ways to transition ownership.
The kids are back to school and life is a little slower now. It’s a good time to look at your year-to-date federal and Colorado withholdings to make sure that you won’t have either a large balance due at year-end or a large overpayment on April 15, 2018.
Did you get a large refund with your 2016 return? Are your work and tax circumstances about the same for 2017? If so, perhaps you should reduce your withholding for the remainder of 2017. The ideal payroll withholding situation is to have just enough tax withheld to (1) avoid underpayment of estimated tax penalties and (2) avoid a large balance due on your 2017 tax returns.
Just stop by your payroll office and submit a new Form W-4 to change your withholding.
If you receive income that is not subject to withholding, you may need to either increase your withholding for 2017 or make estimated tax payments. If you make estimated tax payments, now is a good time to reassess your third and fourth quarter estimated tax payments or determine if you need to make additional estimated tax payments. This will allow you to avoid underpayment of estimated tax payments or to make sure that you don’t overpay your taxes for 2017.
You tax advisor can help you determine the amount of required withholding and/or estimated tax payments for 2017.
We’ve previously published several articles in our blog, Practice Elevations, related to the need for adequate internal controls to prevent theft in medical and dental practices. Because of evidence that theft is increasingly common in small businesses, including professional practices, with the amount of losses also on the rise, we are returning to this subject again this month.
The 2016 report of the Association of Certified Fraud Examiners (ACPE) share reveals some sobering statistics:
Medical and dental practices are particularly susceptible to fraud and theft. It is estimated that fraud and theft account for three to 10 percent of total health care costs in the United States. Why are medical and dental practices particularly susceptible? In many cases, the practice, due to limited staffing resources and the existence of long-term employees and centralized accounting functions, has not implemented or deemed internal controls to be necessary in the past.
What practice and business circumstances lead most frequently to employee theft? Here are three elements that are usually present when employees commit theft:
What are some financial red flags that could indicate possible fraud or theft in your medical or dental practice?
What basic internal controls are a must for every medical and dental practice?
Where are the potential weak spots in your practice that need internal controls and extra attention from practice management?
Below are basic internal controls for each of the areas that need controls and extra attention from management:
Front desk internal controls:
Billing and collections internal controls:
Accounts payable internal controls:
Payroll internal controls
Stockman Kast Ryan + CO can help you take fraud prevention a step further by conducting an external review of internal controls. In addition, an operational audit may be commissioned to help ensure that the practice is enjoying efficient operations while minimizing the risk of fraud loss.
Contact our office today to learn more.
Collections are the lifeblood of any medical or dental practice. But do you really know if you’re doing a good job of collecting receivables? Find out for sure by monitoring these three collections performance indicators:
To find out how long it takes to collect a day's worth of gross charges, add up the charges posted for a specific period of time and divide by the total number of days in that period. Then divide the total accounts receivable by the average daily charges.
For instance, if you have charged $640,000 in the past 12 months, or 365 days, your average daily revenue is $1,753. Then, if your total accounts receivable today are $80,000, the days in accounts receivable is 45.6. That means it is taking an average of 45.6 days to collect your payments. Note that if this number is consistently high — or you notice a jump in the number of days outstanding from one month to the next — it could be sign of problems caused by anything from coding errors and incomplete documentation to claims rejections caused by patient registration errors.
Recommendation: We recommend that you use a rolling average of 12 months of charges for this computation. The results will vary by specialty and payer mix, but a typical goal for days in accounts receivable is 35 to 40 days.
Action: Determine how your practice’s days in accounts receivable compares with other practices using a source such as the Medical Group Management Association (MGMA) annual Cost Survey Report or Performance and Practices of Successful Medical Groups Report.
The practice’s aging report, based on date of entry and NOT ”re-aged,” should be reviewed monthly. Obviously, the longer an account remains unpaid the higher the risk of it becoming uncollectable. So, it’s critical to measure the percent of your accounts receivable in each “aging bucket.”
Recommendation: We recommend that you review a separate aging report for both insurance and patient receivables monthly, paying particular attention to outlier payers in the insurance aging report to spot any developing trends. Credit balances in accounts receivable should be investigated and manually added back to each aging “bucket” to get a clear picture of accounts receivable aging. An acceptable performance indicator would be to have no more than 15 to 20 percent total accounts receivable in the greater than 90 days category. Yet, the MGMA reports that better-performing practices show much lower percentages, typically in the range of 5 percent to 8 percent, depending on the specialty.
Action: Consider establishing a target AR range for your practice. For example, you might shoot for having 60 percent of receivables fall into the 0-30 days bucket, 20 percent in 31-60 days, 5 percent each at 61-90 days and 91-120 days, and 10 percent falling over 120 days.
This is the bottom-line number that reveals how successful you were in collecting the money you are entitled to collect. Add up your total collections and divide by adjusted charges (charges less contractual adjustments) to determine how much you have actually collected. For example, if your practice only collected $50 on a procedure contracted for $75, your net collection rate would be 67 percent (50 divided by 100 minus 25).
Recommendation: We recommend that you use a rolling average of 12 months of net charges and receipts for this calculation. In general, a net collection percentage of 97 percent or higher will help ensure a healthy bottom line for the practice.
Action: If your net collection rate is lower than this, drill down and calculate the net collection rate by each of your payers to determine if the problem is coming from a particular source. If net collection percentage is consistently down across all of your payers, you’ll know that the problem is internal (e.g. your front-end billing process is resulting in rejected claims).
Contact our office today for help in monitoring your practice’s collection performance.
Stay on top of filing and reporting deadlines with our tax calendar! Our tax calendar includes dates categorized by employers, individuals, partnerships, corporations and more to keep you on track.
Every business has some degree of ups and downs during the year; however, cash flow fluctuations are much more intense for seasonal businesses. If your company defines itself as such, it’s important to optimize your operating cycle to anticipate and minimize shortfalls.
A high-growth example
To illustrate: Consider a manufacturer and distributor of lawn-and-garden products such as topsoil, potting soil and ground cover. Its customers are lawn-and-garden retailers, hardware stores and mass merchants.
The company’s operating cycle starts when customers place orders in the fall — nine months ahead of its peak selling season. So the business begins amassing product in the fall, but curtails operations in the winter. In late February, product accumulation continues, with most shipments going out in April.
At this point, a lot of cash has flowed out of the company to pay operating expenses, such as utilities, salaries, raw materials costs and shipping expenses. But cash doesn’t start flowing into the company until customers pay their bills around June. Then, the company counts inventory, pays remaining expenses and starts preparing for the next year. Its strategic selling window — which will determine whether the business succeeds or fails — lasts a mere eight weeks.
The power of projections
Sound familiar? Ideally, a seasonal business such as this should stockpile cash received at the end of its operating cycle, and then use those cash reserves to finance the next operating cycle. But cash reserves may not be enough — especially for high-growth companies.
So, like many seasonal businesses, you might want to apply for a line of credit to avert potential shortfalls. To increase the chances of loan approval, compile a comprehensive loan package, including historical financial statements and tax returns, as well as marketing materials and supplier affidavits (if available).
More important, draft a formal business plan that includes financial projections for next year. Some companies even project financial results for three to five years into the future. Seasonal business owners can’t rely on gut instinct. You need to develop budgets, systems, processes and procedures ahead of the peak season to effectively manage your operating cycle.
Distinctive challenges
Seasonal businesses face many distinctive challenges. Please contact your business advisor about overcoming these obstacles and strengthening your bottom line.
The Colorado General Assembly has reinstated funding for the Senior Property Tax Exemption, also known as the Senior Homestead Exemption, for tax year 2017, payable in 2018.
Consequently, some senior citizens may qualify to have 50 percent of the first $200,000 of the actual value of their primary residence exempted from property taxation.
1) The qualifying senior must be at least 65 years old on January 1 of the year he or she applies;
2) The qualifying senior must be the property owner of record for at least 10 consecutive years prior to January 1; and
3) The qualifying senior must occupy the property as his or her primary residence and have done so for at least 10 consecutive years prior to January 1.
Applications for the Senior Property Tax Exemption are due no later than July 17.
Contact your financial adviser to see if you qualify.