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Retirement controlled by the State?

Posted on June 20, 2016 at 11:50 AM Comments comments (0)

I've heard horror stories about social security not being available when I reach retirement age. The thought of working all my life and having no sustainable source of income to carry me further is frightful. Clearly the political minds of the world have thought the same thing.

While reading my monthly newsletter from American Institute of Professional Bookkeepers I read an interesting fact that I needed to research for my present and future clients.

"Must a firm have a retirement plan? Almost 25 states have or are considering laws that require small employers that do not offer retirement plans to enroll employees in state-run retirement plans."

The long and short is yes and no, if you are a part of the 25 states then yes otherwise, just hold tight, because the change will be coming soon. This got me thinking about my lovely state of Illinois and this is what I found from and confirmed by the Illinois General Assembly.

SB 2758 establishes a payroll-deduction IRA for workers whose employers do not offer any other retirement savings vehicle. The bill requires all businesses in existence for at least two years with 25 or more employees to automatically enroll their employees in the Secure Office Savings Program unless they offer another retirement options to their workers.

This article is for information purposes only. The more small business owners know the better they can plan for sustainability and success. This is just another factor to consider when developing your business plan.

Separation is Key!

Posted on June 24, 2015 at 7:50 PM Comments comments (0)

I was reading an article from dated back in 2010. This may seem like a dated article but the information in it was and is very real to this day for many small business owners. The topic at hand is about mixing business and personal finances together.

Important Fact: The IRS frowns upon this type of activity.

Important Fact: Some form of legal entity should be established.


A few other points that were discussed in the article to help get you organized were:

1. Open a bank account for your business

2. Maintain up-to-date records on an accounting software or Excel

3. Open a business credit card


In a more recent article written for by Madison Garcia, she speaks on the same items mentioned but also a few other important things to consider:


Hobby vs. Business

Maintaining a separate business account helps the IRS understand that your work isn't just a hobby. This is especially important if your business has posted losses in recent years.


Appearance of Professionalism

Keeping your personal finances separate from your business lends to your branding, credibility and professional image. Customers may question your level of commitment and professionalism if they're forced to make personal payments to you. Bookkeepers and accountants might get confused about what your invoice is for, which could delay your checks.


From a tax preparation standpoint, this is also another obstacle when intermingling business with personal funds that need to be mentioned, the IRS website had this Q&A:


Question: I am a sole proprietor and pay personal expenses out of my business bank account. Should I include the money used for personal expenses as part of my business income? Can I write these expenses off?


• You would include the money used to pay personal expenses in your business income when your business earned it.

• You would not write off these expenses as business expenses because they are not ordinary and necessary costs of carrying on your trade or business.

• Personal, living or family expenses are generally not deductible.

• It is a good idea to keep separate business and personal accounts as this makes it easier to keep records.


Moral of the story….yep you got the point. Separation is key!


Chase and other banks

Posted on January 24, 2015 at 9:15 AM Comments comments (0)

Have you tried to deposit cash into a bank account that is not yours? Have you been asked for ID or "are you a signor on this account? Couldn't make the deposit, could you? Well here is why.

Chase and other banks are sighting the Bank Secrecy Act for their changes to cash deposits. Per the regulation page about the Bank Secrecy Act, "The Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970 (31 U.S.C. 5311 et seq.) is referred to as the Bank Secrecy Act (BSA). The purpose of the BSA is to require United States (U.S.) financial institutions to maintain appropriate records and file certain reports involving currency transactions and a financial institution’s customer relationships." 

The initial purpose of this Act was as stated by the Act itself, "The implementing regulations under the BSA were originally intended to aid investigations into an array of criminal activities, from income tax evasion to money laundering. In recent years, the reports and records prescribed by the BSA have also been utilized as tools for investigating individuals suspected of engaging in illegal drug and terrorist financing activities."

Under Section 326 of the USA PATRIOT Act, which is implemented by 31 CFR 103.121, requires banks, savings associations, credit unions, and certain non-federally regulated banks to implement a written Customer Identification Program (CIP) appropriate for its size and type of business. Although this provision pertained to opening a new account, it doesn't limit how the banks use this requirement. Under the Bank Secrecy Act banks are encouraged to develop policies in accordance to this act, the USA Patriot Act and the Anti-Money Laundering Compliance program. 

An article written by Matt Egan for, addresses JP Morgan Chase's change in their cash deposit policy. It also mentions other attacks on the banking industry that has fueled the necessity of banking deposit changes.  Review his article here