We hope you continue to enjoy our quarterly newsletters.  We value your business and our goal is to continue to provide you with relevant and useful information.

Increased Volatility in the Investment Markets

Each week, it seems there is something in the news regarding the swings in the market or a disruption within our economy.  How does this affect you?  The answers depend on your particular situation, which magnifies the need for the personalized care we provide to our wealth management clients.  As a client, you have both a personalized WealthCare Plan and an Investment Policy Statement.  These key documents help guide both your short-term and long-term strategies. 

We research, read, discuss, attend, and analyze.  Constantly.  We are here making sure that we are doing the absolute best job to help you achieve your goals and keep up with everything happening in the markets.  The most recent declines in the equity averages did not necessarily come as a surprise as the market averages had recently flashed many signs of being overbought in the short-term and appeared overdue for a correction that has not occurred since the March 2009 bottom.  A true correction is defined as at least a 10% decline in the equity averages.  Since the March 2009 bottom, there have been four short pullbacks that have averaged between 6% and 7% with the worst decline being 9%.  Still, the suddenness of the declines and the dramatic fashion in which they occurred was shocking and made many investors flash back to the declines that occurred in 2008. 

For now, we are confident that the equity markets are likely undergoing an overdue correction and are not poised to crash as they did in 2008; however, the current situation requires close monitoring.  The alternative investment strategies we have implemented within individual investment plans are well-suited to deal with and benefit from this type of volatility and to adjust to short-term market conditions.  Utilizing these strategies will help us better achieve our long-term objectives as we continue to navigate volatile markets.

New Tax Credits Can Add Up

Even though tax season is over, our federal government is continuing to work hard at keeping tax preparers employed with all of the new tax legislation that is being discussed and made into law.  As a tax client of Veros, you are continually updated on the new legislation as we review, analyze, and summarize it for you.  You might hear in a commercial or from a salesperson that if you buy a certain item, you will get a tax credit or deduction for it.  But keep in mind that there are always limitations and criteria to meet. 

If you are a business owner, there are a few new tax credits available this year that can add up to some real substantial savings.  These credits include the federal HIRE credit, the federal small business health insurance credit, and the Indiana New Employer Tax Credit.  Here are a few key questions that can help determine if any of these credits apply to your business:

• Have you hired anyone since February 3rd, including part-timers or interns, who hadn't worked more than 40 hours in the 60 days prior to their hiring?
• Do you pay for 50% or more of your employees' health insurance premiums?
• Are you a new Indiana business starting in 2010?
• Will you be expanding the operation of your business location in Indiana, resulting in at least 10 new employees during 2010?

If you can answer yes to any of these questions, then one of these credits may be available to you.  If you are considering hiring or offering health insurance to your employees, perhaps these credits will be an additional incentive in doing so.  These credits could result in some substantial savings.  For instance, if you hired a new employee on March 1st at $60,000 salary who hadn't worked in 2010, your company could save over $3,000 in 2010 for this one hire with the HIRE credit.

If you think one of these credits could be available to you or you would like to learn more about them, contact one of our business consultants.  Or if you are wondering about a credit on a recent purchase for your individual tax return, we are always available to answer questions and proactively plan throughout the year as it applies to your situation(s) so that you can maximize your cash and minimize your tax bill.

S-Corporation Alert

S-corporation owners beware!  There is a great chance you may be paying more in taxes next year. 

In recent proposed legislation, Congress has included a provision to close the "S-corporation loophole."  In other words, one of the primary benefits of being an S-corporation for many small business owners -- no self-employment tax on taxable earnings --  will go away.  This piece of legislation will not apply to all S-corporations.  It will apply to ones that provide professional services, including a laundry list of industries like accounting, architects, consultants, engineers, health, and many more.  In addition, the legislation includes a provision that could stand to be better explained.  It states the new law would apply to S-corporations "if the principal asset of such business is the reputation and skill of 3 or fewer employees."  Questions arise then as to what this means... we will be closely monitoring this to better understand it as it is more narrowly defined 

This proposed legislation is part of the tax extenders bill that is likely to pass sometime after Memorial Day.  If it passes, many S-corporation owners will be paying self-employment taxes next year.  We will keep you apprised of this as it applies to so many of you and can be quite substantial.