For Sale By Owner Keeping Schools Safe Spring...For Sale By Owner Selling a business is a lot like...

BWDA R e h m A n n P u b l i c At i o n V o l . 1 5 | S P R i n G 2 0 1 3

Business Wisdom Delivered

[8] For Sale By OwnerSelling a business is a lot like selling a home … except when it isn’t

[14] Keeping Schools Safecampus security and learning institutions’ obligations

[20] SkyBooksleverage the cloud to work smarter, respond faster and remain competitive

Rehmann chief investment officer Jeffrey Phillips understands the juggling act required in today’s financial landscape.

You outgrew such things long ago.Life has gotten more complicated since then. Fortunately, we’re here to help.

Changes to the tax landscape make big news nowadays, as the reverberations they cause may be felt by many people. Whether those changes involve private households or major corporations, one thing is certain: dealing with them requires skill and experience.

At Rehmann, our tax advisors stand ready to help you address the impact of such changes. Plus, our innovative Rehmann Experience means you’ll also have access to a full portfolio of potential solutions for every challenge facing your business … no matter how complicated.

Contact me to learn more.

Cindy Cattran, [email protected]

rehmann.com

Spring 2013 | BWD 3



A letter from The Publisher

Not just information: the information you needFocusing on making a difference to your business today

i don’t have to tell you that we live in an age of information overload: you likely see it, firsthand, every day. but the scope of this overload — the breadth of which cannot be taken in by the naked eye — is remarkable. For example, every 60 seconds:

• Nearly170millionemailsaresent• Approximately600videosareuploadedtoYouTube• Morethan6,600picturesareuploadedtothephoto-sharingsiteFlickr

What’s more, as of December of last year there were 634 million websites, 51 million of which were added during the year. Google clearly has its hands full — in recent months, the search engine handled in the neighborhood of 11 billion searches per month.

to help you cut through this overload, we redesigned our website, rehmann.com, to make it easier to find the information you need. Without casting aspersions on the other 633,999,999 or so other websites out there, we’re thrilled with the way it turned out and welcome you to visit today. indeed, several of the articles contained in this magazine come with bonus Web content.

(learn more about the new rehmann.com on page 5.)

As incredible as the internet is, however, there are many questions that simply cannot be answered online. that’s because while there is a great deal of valuable content there, the proper context is more difficult to come by. Getting to that proper context can be challenging, which is why your relationship with Rehmann can be so vital: our professionals help you cut through the mass of data floating around out there and get you to the most important information you need.

We follow the same approach with this very magazine, carefully curating the content to have the greatest possible applicability to the work you do each and every day.

included in this edition:

• Whatyouneedtodotoprepareyourcompanyforapotentialsale(page8).hint: in some ways, it’s surprisingly similar to preparing to sell a house.

• Howtorespondtoamalwareattack(page10).Anotheruncomfortablesubject, but don’t ignore this one.

• Whysecond-to-dielifeinsuranceissomethingyouneedtoworryaboutnow(page 18). What seems like an uncomfortable subject to address can be one of the most important things to take care of right away.

there’s plenty more, of course, both within these pages and at rehmann.com.

Iinviteyoutospendsometimewithbothofthem;those170millionemailscanwait.

You outgrew such things long ago.

Steven D. Kelly, cPAchairman and ceo

BWD Staff:Publisher: .................................Steven D. KellyAssistant Publisher: ..................mitchell Renomanaging editor: ......................Steve tschirhartcopy editors: ...........................claudia brim miranda Stempiencreative Director: .....................marcy meinkecover Photography: .................John martinSubscriptions/circulation: ........teri Stora

Contributors:Kirk balcomSharon bermanStephen W. blannJim carppbryan Kearisbill Kowalski mike mccarthyJeffrey Phillipslaura Reindelbill Stewart

Subscriptions & Circulation:Send inquiries to: Rehmann – bWD1500 big beaver Rd, 2nd Floortroy, mi 48084248.952.5000 | [email protected]

8

16

13

18

IN THIS ISSUE

[05] The All-New rehmann.com

[06] Nuggets of Wisdom

[08] For Sale By Owner

[10] Successfully Combating a Malware Attack

[12] Tax Gut Check

[13] GASB’s New Pension Standards

[14] Keeping Schools Safe

[16] Nonqualified Deferred Compensation

[18] Second-to-Die Policy Provides “Legacy Insurance”

[20] SkyBooks

[22] Carpp’s Book Corner



Spring 2013 | BWD 5

We’re proud to present the all-new rehmann.comEasy-to-usenavigation,enhancedfunctionality and everything else you need to access Rehmann in

today’s24/7world.

Some website revisions are the digital equivalent of slapping a fresh coat of paintonthesameoldstructure.Weoptedforafull-onremodel.Checkoutthe new rehmann.com today for a completely reimagined site that features:

• AcomprehensiveportfolioofRehmann’sservices

• VideointroductionstoRehmannassociates,alongwithfullbios

• Businessnews,articlesandoverviews

• Taxguidesandupdates

• Acalendarofeventsandregistrationoptions

Designedforfaster,easier-to-usenavigationandburstingwithcompellingcontent,rehmann.comisthewebsiteyouneedinour24/7world.Andit’sallpresentedinadevice-friendlyformatsoyou’realwaysjustasmartphoneortablet away from the business wisdom you need to gain an edge in today’s competitive economy.

Visitthenewrehmann.comtoday.You’lllovewhatwedidwiththeplace.

6 BWD | Spring 2013

Nuggets of wisdom

Americans tapping retirement funds pre-retirement According to a recent study, over 25 percent of u.S. workers participating in a 401(k) plan will access their 401(k) savings before they reach retirement. the study analyzed consumer finance data from the Federal Reserve and the u.S. census bureau. Among the study’s findings:

• Oneoutoffourparticipantsin401(k)retirementprogramswilleithercash-outtheirsavingsbeforeretirement — incurring substantial penalties and taxes — or forfeit them to loans.

• 26percentof401(k)participantsnowusetheir401(k)savingsfornon-retirementneeds.

• 75percentreportthattheybreachedtheirsavingsbecause of basic money management problems.

• Workersnowwithdraworbreachover$70billionannuallyoutoftheir401(k)sfornon-retirementneeds.

• Penalizedwithdrawalsincreasedfrom$36billiontoabout$60billionbetween2004and2010.

• Workersintheir40saremostlikelytobreachtheirsavingsfornon-retirementneeds.

(Source: HelloWallet)

Pet owners not prepping properlyWhat happens to a pet when its owner dies? Pet owners might not be making proper provisions to answer that question.

• Only17percenthavetakenlegalaction(awill,atrust fund or some other legal document) to plan for the care of any of their pets should they die.

• Dogownersaremorelikelytotakelegalstepstoplanfortheirdogs(17percent)thancatownersare to plan for their cats (11 percent).

• Evenpetownerswhohavetakenlegalstepsto plan for their own death in general have not necessarily included their pets in that planning. of those who have completed a will for themselves (42 percent of cat or dog owners), only 18 percent have included their pets in that will.

• Themostcommonformofestateplanningforthe care of pets is speaking to a friend or family member about caring for a pet (53 percent of dog or cat owners have done so), followed by creating a pet portfolio containing the information needed for someone else to care for a pet (39 percent have created one).

(Source: The American Society for the Prevention of Cruelty to Animals)

Spring 2013 | BWD 7

Personal life comes first for single professionalsOppositesattract…sortof.Anewdatingsurveyrevealsthat70percentofrespondents prefer to date someone who works in a completely different industry. other notable findings:

• 44percentpreferpost-workcocktailsasanidealfirstdateoverthemore traditional “dinner and a movie,” which saw a mere six percent choosethatonce-popularoption.

• 47percentthinkbusinessdiscussionisinterestingfromtimetotime,but prefer to discuss other things. (only four percent love talking about business during dates and find it interesting.)

• 41percentalwaysmaketimefordates,andonlytwopercentoftencancelondatesforwork-relatedissues.

• 42percentwouldconsiderdatingoneoftheircompany’sclientsorpotential clients if the situation felt appropriate.

(Source: It’s Just Lunch)

clients or

we like teams, we hate teamsClearly,wehavealove-haterelationshipwithteams.Theycanbeaninvaluablemeansofdeliveringtop-notchresults...

• 95percentofthosewhohaveeverworkedonateamsayteams serve an important function in the workplace.

• 65percentsaythatcollaborationandteam-buildingareamong the necessary skills for students coming out of school today.

… or a real pain in the butt.

• Only24percentofthosewhohaveeverworkedonateamprefer to do so.

• 36percentwouldprefertoworkaloneallthetime.

not helping matters? the fact that a whopping 68 percent — nearly7in10—admittheywerepartofadysfunctionalunit.

(Source: University of Phoenix)

Highly qualified? So what?Ifyou’reahard-workingpeopleperson,youmightwant to keep that to yourself. Senior managers were asked to identify the most overused terms on resumes. their list included:

• Highlyqualified

• Hardworker

• Teamplayer

• Problemsolver

• Peopleperson

• Self-starter

the problem? none of the terms provide important details — resume writers need to provide specifics, not clichés.

(Source: OfficeTeam)

8 BWD | Spring 2013

the scene is a familiar one on any number of cable television’s housing

programs: pensive home sellers listen intently as hosts and remodeling experts

alike expound on the efforts necessary to prepare their property for market.

the advice isn’t too far afield of what awaits a business owner preparing for

a sale: it’s important to be brutally honest about the current condition of the

business, address potential trouble spots and make sure finances are in order.

For saleBy OwNerselling a business is a lot like selling a home … except when it isn’t

By Mike McCarthy, CPA, CfP®, Mst

Spring 2013 | BWD 9

Prospective buyers aren’t going to be worried about the number of bedrooms and bathrooms, or the color of the paint in the master suite. Instead, they’ll focus on matters such as determining the value of the business, any risks involved in its purchase and whether or not it is complying with the proper regulations.

Investing in the time and effort it takes to address these issues can help ensure the selling process is a smooth one that nets a higher final price. So let’s borrow a page from the home selling process and look at some of the steps you can take as part of the business selling process.

Begin with the end in mind.It’s not just a habit of highly successful people; Stephen Covey’s advice is something that home sellers consider at the very beginning of the sales process. After all, they’re not just moving from somewhere: they’re also moving to somewhere. So, where is it that you plan to move? What do you hope to achieve from the sale of your business? If the goal is to sell but remain with the company in a management capacity, you’ll likely focus on a few different aspects than if you plan to retire. For example, you might be happier taking a percentage of annual revenue than maximizing a one-time payout.

Go with a pro.Everyone thinks his or her house is special. There are a lot of memories there; a lot of hard work, too. But the fact of the matter is that those memories and that hard work don’t matter to a prospective buyer. Cold, hard facts matter. Objectivity matters. Which is why having a business valuation may help identify the market value of your business. Like a residential real estate professional, a valuation professional will help you see beyond the rose-colored glasses of ownership to something much closer to reality.

enhance your curb appeal.I’m not talking about mowing the lawn, trimming the bushes or slapping on a fresh coat of paint. But just like those measures can make a house more appealing from a distance, selling your business requires a few steps to make sure prospective buyers don’t drive right on by. One of the first things a prospective buyer will request is the financials. High-level, full-disclosure financial statements will make the impression the business is well run. One such step is a financial audit or review. Some businesses conduct annual compilations rather than incur the expense of a full audit or a review, but now’s the time to incur that expense. (Depending on your business, an annual audit might be required, in which case you’re a step ahead of the game.) The audit isn’t just for prospective buyers; it can help uncover any issues you should address whether or not there’s a sale at all.

Referring to a due diligence checklist at this point is also a good idea. The checklist can help you gather up necessary documents and information, including internal management reports and memoranda, policy and procedures manuals, legal and regulatory compliance paperwork, and contracts and arrangements for supplies or services. This is comparable to homeowners having a home inspection conducted prior to placing their house on the market so that problems can be resolved before the buyer’s home inspector discovers them. Visit rehmann.com/BWD to download a convenient due diligence checklist.

Be prepared to fall in love again. It happens. Once all of this work is done, you might decide that the issues you’ve addressed, along with any changes you’ve made, have made the business more appealing to you again. Even if it turns out that you simply could not get the asking price you wanted, the aforementioned steps have likely left you in a better position than you were in at the beginning of the process and able to more confidently lead your business into the future, with you still at the helm.

For saleBy OwNerselling a business is a lot like selling a home … except when it isn’t

Youwon’tfindanycabletelevisionprograms

about how best to prepare a business for sale,

but the next time one of those housing shows

comes on, look a little closer: there might be

some business tips for you there regardless.[ ]

ABOUT THE AUTHOR

mike mccarthy is a Principal in our Ann Arbor office and is a member of the tax team.

mike began his public accounting career in 1983 and specializes in trusts, estates, and employee benefit plans, as well as individual and business taxation. he is involved in research, analysis, planning, review, tax return preparation and compliance with the increasingly complex requirements of state and federal law.

contact mike at [email protected].

Bonus ContentVisit the all-new rehmann.com/BWD for additional info.

10 BWD | Spring 2013

take charge of your defense today for a more secure tomorrow

it’s 1982 and one of the earliest recorded computer viruses is running amok.

called “elk cloner,” the code displays a message after the 50th time an

infected computer booted up. the message, in part:

Elk Cloner: The program with a personality

It will get on all your disks

It will infiltrate your chips

Yes it’s Cloner!

the virus is not malicious, but rather a relatively harmless joke perpetrated

bya15-year-oldprogrammer.Thenatureofviruses—andthedamagethey

cause — will change rapidly in the coming years.

Successfully combating a malware attack

By Bill Kowalski, JD

Spring 2013 | BWD 11

Today, malware — which includes viruses, spyware, worms and other nefarious software loaded on a user’s computer without their approval — is leveraged in attacks against banks, credit cards companies and consumers. Increasingly, they’re also involved in battles between nations. They strike without warning and can propagate extremely fast.

If your organization finds itself in the unfortunate situation of combating malware that has infected your network, the following suggestions will help you protect your organization, reduce the damage and recover from what can be a very traumatic experience.

Incident response team Form an incident response team and assign one individual to manage the team. This person should have decision-making, organizational, delegation and communication skills. The person should also have the authority to make critical decisions since time is of the essence and there is little time for debate. If you believe your company’s IT department is not large enough to handle the threat themselves, bring in outside resources to bolster your incident response team. You may also want to consider engaging an experienced incident response consultant to assist your in-charge person. Having a documented incident response plan already prepared will make responding to an incident faster, easier and more efficient.

Command center Establish a command center for the incident response team with all the necessary resources to address the threat and communicate to incident response team members in other locations.

Communications Ensure that you have a means to communicate with all your employees as normal methods such as email, IP phone, VPN, company website, etc. may not be functioning or available. You may also need a communication channel to reach customers or the media — controlling the message and ensuring consistent information is critical. If there has been a breach of non-public personal information, you’ll need to comply with data breach notification laws and may be required to engage an attorney who specializes in data breaches before making any announcements or decisions.

Threat identificationIdentify the malware, its attack vector (how the malware infiltrated your system) and any other available information. Communicate the characteristics of the malware to your anti-virus vendor. Understanding the malware and what it does/wants will help you contain it and reduce the damage.

ContainmentTake steps to limit the spread of the malware to other segments of your network. Do not focus on remediation early on — focus on limiting the spread of the malware and safeguarding your data and systems. Isolate infected systems until remediation methods are available. Document your containment efforts and review periodically to ensure you have covered everything. Don’t forget about your mobile devices and cloud services; if the malware collects user IDs and passwords from a Web browser, you might have to temporarily terminate access to any vulnerable cloud services.

DocumentationIt is critically important to document all major actions taken during the incident. Things will be very chaotic and, despite your best intentions, you will not remember all the details. Create a timeline of events which will help during the response and investigation.

RemediationDevelop a remediation plan that ensures all systems are scanned and protected. Document your actions. No consideration is too minor; on large, decentralized networks with mobile users it is very easy to forget something. Take the time to walk through every possible avenue available to the malware to ensure your systems are safe and secure.

Logging and monitoringIf you did not have logging and network monitoring turned on, turn it on as soon as possible. Network monitoring allows you to see what traffic is on your network. This is important for a couple of reasons, not the least of which being that malware has to generate outbound traffic in order to communicate with hackers and/or send your compromised information. Having that information could help you identify the malware’s behavior and determine additional security measures to implement.

Postmortem analysisShortly after the crisis is over, meet with all incident response personnel involved to review the event, note lessons learned and improve your security and incident response plan.

Thousands of viruses have followed Elk Cloner and thousands more are still to come. Such attacks are no joke, but the right preparations can make a tremendous difference with who has the last laugh.

ABOUT THE AUTHOR

bill Kowalski is the Director of operations for Rehmann corporate investigative Services.

bill began his investigative career in 1983 as a Special Agent with the Federal bureau of investigation (Fbi) where he received numerous awards and letters of commendation duringhis25-yearcareer.

contact bill at [email protected].


Play the long game. If you’re used to making your financial plans in 12-month increments, get used to taking a little longer view of things. Rehmann’s Chief Investment Officer, Jeffrey Phillips, says that doing a two-year tax projection may be more helpful. When paying your winter property tax bill, check to see if paying this year versus next year is more advantageous. Also consider whether additional deductions (such as accelerating charitable contributions) could have a bigger impact on your marginal tax bracket in 2013 versus 2014.

Be flexible. A flurry of rate changes took effect on the first of the year, including those on income and estate tax; get ready to roll with the punches. Load up on 401(k) contributions because of the possible tax rate effects and use nonqualified deferred compensation if you’re maxing out your 401(k).*

Familiarize yourself with the increased capital gains tax rate. A capital gain occurs when a capital asset is sold or exchanged at a price higher than its basis. Rehmann Principal Bryan Pukoff reminds us that no tax is currently paid by those in the lower tax brackets (10 and 15 percent) on most long-term capital gains, while investors in the higher tax brackets previously faced a 15-percent tax rate. While those who are currently paying no tax on capital gains will continue to experience that tax rate, the rate will increase from 15 to 20 percent for many others.

Consider your options. While the estate tax exemptions remain unchanged, the tax rate on estates has increased. If your taxable estate is valued over $5 million, Phillips suggests revisiting the liquidity levels in your estate to address the potentially higher tax rates. These individuals may want to move their existing insurance into an irrevocable trust or purchase additional insurance to address the increase.

Pay it forward. Individuals over 70 1/2 years old can direct up to $100,000 of qualified charitable distributions (QCD) from their IRA to a charitable organization through the end of 2013. In order to make a QCD, ask your advisor to make a distribution directly from your IRA to a qualified 501(c)3 charity. If you file a joint return, your spouse may also exclude up to $100,000 in QCDs.

According to the chinese calendar, 2013 is the

year of the snake. it’s an appropriate analogy given

how changes to tax rates and exemptions will

require many Americans to shed certain financial

habits. because planning for yourself and your

family may take more scrutiny than ever before,

here are a few tips on how to help prepare.

TAX gut check2013 is rolling along; are you doing everything you can to improve your tax situation?

additional insurance to address the increase.

Pay it forward.$100,000 of qualified charitable distributions (QCD) from their IRA to a charitable organization through the end of 2013. In order to make a QCD, ask your advisor to make a distribution directly from your IRA to a qualified 501(c)3 charity. If you file a joint return, your spouse may also exclude up to $100,000 in QCDs.

here are a few tips on how to help prepare.

*Learnmoreaboutnonqualifieddeferredcompensation onpages16-17.

By Laura Reindel

change can be intimidating — especially when there’s money involved —

but taking the time to prepare now can help you meet the changes with

confidence and help make 2013 the year of you.

GASB’s approachPension benefits are essentially a form of compensation earned by employees during their working lifetimes, and paid out after retirement. Accordingly, the GASB believes that the cost of those benefits should be accounted for in the years when that work was actually performed. In the case of defined contribution pension plans, that is fairly simple. However, the process of projecting how much future pension benefits will cost in a defined benefit plan is more complicated.

Using the work of an actuary, governments are required to project the future benefits that will be paid out of their pension plans. This process involves extensive estimation and actuarial assumptions. Once that is done, future payments have to be discounted to reflect assumed investment growth over time and allocated over the assumed working lifetime of each employee. The final result of these actuarial calculations is a number known as the government’s total pension liability.

Under the new pension standards, governments will then compare their total pension liability to the amount currently held in trust to pay pension benefits. Any shortfall will be recorded on the government’s statement of net position (balance sheet) as a net pension liability.

in a move aimed at increasing financial transparency for

state and local governments, the Government Accounting

Standards board (GASb) recently made sweeping changes

to the way public sector pension plans are accounted for

byissuingStatementsNo.67and68.

the GASb uses such statements to set generally accepted

accounting principles for state and local governments.

sweeping changes may have dramatic effect

GASB’s new pension standards

Impact to local governmentsWhile much information about pension plans currently exists within governmental financial statements, historically there has been no single place that an interested reader could look to get the complete picture. That’s because governments have previously taken a “funding” approach to their pension benefits, which focused on a long-term strategy of setting aside funds in trust to pay future pension benefits. As long as a government was “on track” to set aside resources over time, there was no requirement to record a liability for any current shortfall. At a time when many of even the healthiest governmental pension plans are only 75-80 percent funded, this significant new liability could have a dramatic effect on their financial statements.

However, because of the dual focus found in governmental financial statements (showing both long-term economic condition and short-term fiscal liquidity), this information will still only be presented in certain parts of the financial statements. For example, the general fund of most municipal governments will not be affected by Statements No. 67 and 68 at all (unless their elected officials decided to make larger contributions to the pension plan to help cover any accumulated net pension liability). As with any new accounting standard, it will take users of the financial statements some time to adjust to the new way this information is reported.

Looking aheadGASB Statement No. 67 becomes effective for public pension plans in 2014. GASB Statement No. 68 becomes effective for the governments participating in those plans a year later. While these new standards currently focus exclusively on pension benefits, the GASB is working on developing similar standards for other post-employment benefits (such as retiree healthcare) that are expected to follow within the next two years.

ABOUT THE AUTHOR

Stephen W. blann is a Principal with Rehmann Robson, and serves as the firm’s Director of Governmental Audit Quality. he’s one of several Rehmann associates available to help governing boards address this complicated topic and may be reached at [email protected].

By stephen W. Blann, CPA, CgfM, CgMA


Bonus ContentFor more information on GasB statements No. 67 & 68, including an archived webinar on the topic, visit rehmann.com/BWD.


Recent events highlight the critical importance of campus and school security —

for higher education institutions as well as high schools and elementary schools.

universities and colleges have a dual obligation: to provide a safe and secure

learning and living environment, and also to report crime and safety information

under the clery Act and other federal laws.

Campus security and learning institutions’ obligations

By Kirk Balcom, CIA, CIsA, Cfe and Bill Kowalski, JD

KeePING SCHOOLS SAFe


Failure to comply with the Clery Act can be costly. The U.S. Department of Education recently raised the maximum penalty to $35,000 per violation. To date, the largest penalty imposed under the Clery Act has been $350,000, and that was before the increase. In that case, among other violations, the university was cited for failing to notify the campus community that a student had been murdered in a dormitory room and that the perpetrator was still at large.

what’s requiredThe Clery Act, formerly the Campus Security Act, is part of the Higher Education Act (HEA). Together with other sections of the HEA, the Clery Act requires colleges and universities to:

• PublishanAnnualSecurityReport(ASR)describingsecuritypolicies and procedures (including emergency response plans) and providing statistics on the following crimes: criminal homicides, sex offenses, robbery, aggravated assault, certain burglaries, auto theft and arson

• Issue“timelywarnings”aboutcrimesthatposeaseriousorongoingthreat to students and employees

• Developanemergencyresponseplantoinformthecampuscommunity of situations that involve an “immediate threat to the health or safety of students or employees”

• Establishpoliciesandproceduresforhandlingmissing-studentreports

An institution’s reporting obligations extend to off-campus crimes on property owned or controlled by the institution or public property “within the same reasonably contiguous geographic area of the institution.”

Navigating the gray areasOne of the biggest compliance challenges is dealing with the law’s “gray areas.” For example, does a particular incident constitute disorderly conduct, which isn’t included in campus crime statistics, or does it rise to the level of aggravated assault, which is included? Is a threat significant or immediate enough to trigger the institution’s timely warning or emergency response obligations? Was a crime committed on public property close enough to campus to require disclosure?

To avoid running afoul of the Clery Act, institutions should develop clear policies and procedures detailing how — and by whom — these decisions are made. When incidents occur, institutions should document the decision-making process. In the event of a violation, the authorities will likely consider school officials’ good-faith compliance efforts as a mitigating factor prior to a decision on the imposition of penalties.

Assessing the riskKeeping the campus community informed of incidences is extremely important, but it’s even more important to take steps to prevent those events from occurring. Physical security systems — including alarms, cameras, lighting, locks, guards and other measures — are essential. But while access control is a key component of campus security, too often institutions underestimate the threat posed by people with legitimate access, such as new employees or service providers. That’s why thorough background checks can be as vital a preventative tool as any other.

There’s little question that safety is of paramount importance to anyone administering a learning institution. With the proper support and careful attention, Clery Act compliance can help contribute to just such a secure environment.

Keeping the campus community informed

of incidences is extremely important, but it’s

even more important to take steps to prevent

those events from occurring.[ ]

ABOUT THE AUTHORS

Kirk balcom and bill Kowalski are part of Rehmann’s team of advisors and corporate investigators that can help schools assess their risk, evaluate their security systems and practices, and meet their reporting obligations. in addition, they also provide independent validation of compliance with reporting requirements of the clery Act.

contact them today at [email protected] and [email protected].


OnNewYear’sDay,Congresspassed

the American taxpayer Relief Act of

2012, narrowly averting a “fiscal cliff”

ofacross-the-boardtaxhikesand

automatic spending cuts. but while

theactpreservesthe“Bush-era”tax

cutsformostpeople,high-income

earners will face significantly higher

tax bills in 2013. in this environment,

nonqualified deferred compensation

(nQDc) plans are an attractive option.

Nonqualified deferred

compensation taking the sting

out of higher taxesBy Jeffrey Phillips, CfA, CPA

& Bryan Kearis, CPA, CgMA, Ms

ABOUT THE AUTHORS

Jeffrey Phillips is chief investment officer and Director of operations for Rehmann Financial and serves clients out of the troy office. he leadsallfirm-wideresearcheffortsandassistsadvisorsandclientswith portfolio construction and management.

bryan Kearis is a Principal with Rehmann and is located in the FarmingtonHillsoffice.Withover17yearsofexperienceintax,assuranceandclosely-heldbusinessconsulting,heprovides corporateandpersonaltaxpreparationservicestobothmedium- andlarge-sizedclients.

contact them today at [email protected] and [email protected].

Winter 2012 / 2013 | BWD 17

For those who did not receive an extension of tax rates following the American taxpayer Relief Act of 2012, here are some of the ways your taxes may go up this year:

• Thetopincometaxbracketisnow39.6percent(upfrom35percent)forindividualswithtaxableincomeabove$400,000.Thethresholdis$450,000forjointfilersand$425,000forheadsofhousehold.

• Thetoptaxrateforlong-termcapitalgainsandqualifieddividendsisnow20percent (up from 15 percent) for taxpayers in the highest bracket.

• Itemizeddeductions(withcertainexceptions)andpersonalexemptionsarereduced when adjusted gross income exceeds the following thresholds: $250,000forindividuals,$300,000forjointfilers,$275,000forheadsofhousehold,and$150,000formarriedtaxpayersfilingseparately.

• Individualswithmodifiedadjustedgrossincomeabove$200,000arenowsubject to an additional 3.8 percent medicare tax on net investment income — including capital gains and dividends — to the extent their income exceeds the threshold.Thethresholdis$250,000forjointfilersand$125,000formarriedtaxpayers filing separately.

Bydeferringaportionofyoursalaryonapre-taxbasisintoanNQDCplan,youcanreducetheimpactofthesetaxes.Youmayevenbeabletoeliminatethembybringing your 2013 income below the applicable thresholds.

NQDCplansareidealforhighly-compensatedemployees.They’resimilarinmanyrespects to 401(k) plans, but they’re not subject to contribution limits and other restrictions placed on qualified plans. For example, employee deferrals to 401(k) plansarecurrentlylimitedto$17,500peryear($23,000foremployeesoverage50).

Ifyou’reanemployer,considersettingupanNQDCplanforyourhighly-compensatedemployees.Intoday’shigher-taxenvironment,itcanbeapowerfulrecruiting and retention tool.

By deferring a portion of your salary on a

pre-tax basis into an NQDC plan, you can

reduce the impact of these taxes. You may

even be able to eliminate them. ][

Securities offered through Royal Alliance Associates, member FinRA/SiPc. investment advisory services offered through Rehmann Financial, a Registered investment Advisor not affiliated with Royal Alliance Associates.1500 W. big beaver Rd, troy, mi 48084 248.952.5000

Ready …Behind every success story, there’s a team.

Whether the venue is a sports arena or an office building, the ultimate prize is attainable only with the right team — individuals brought together to reach a common goal.

At Rehmann, we understand that success stories require teams to achieve their happy endings. It’s why we offer The Rehmann Experience, an innovative team-based approach to providing the wisdom and experience you need, precisely when you need it.

Contact us today. We’re ready to help.

Bonus ContentFor more information about NQDC plans, see www.rehmann.com/BWD.


Second-to-diepolicy provides “legacy insurance”

Foryears,marriedcoupleshaveusedsecond-to-die

(or “survivorship”) life insurance to provide liquidity for

estate taxes and other expenses. Without it, their heirs

might be forced to sell off real estate, business interests

orotherilliquidassets—oftenatfire-saleprices—to

pay these expenses.

Nowthatthe“fiscalcliff”legislationhasmadethe$5

million gift and estate tax exemption “permanent,”

fewer families are affected by estate taxes. but even if

taxesaren’taconcern,asecond-to-diepolicycanbe

ahighlyeffective,low-costtoolforprovidingyourfamily

with financial security.

][Because second-to-die

insurance is relatively

inexpensive, it’s ideal for

meeting financial needs

that won’t arise until after

the second insured’s death.

By Bill stewart, CLu®, ChfC®


As the name suggests, a second-to-die policy insures the lives of two people — typically a married couple — and pays a death benefit when the second person dies. Its value comes from “leveraging” the premiums: insuring two lives reduces the insurer’s risk, so premiums are significantly lower (as little as half the cost of two individual policies). And it’s available even if one person is uninsurable, so long as the other is in good health.

Because second-to-die insurance is relatively inexpensive, it’s ideal for meeting financial needs that won’t arise until after the second insured’s death. Examples include:

• Protectingminorchildren.Second-to-dieinsuranceisaneconomicaloption for protecting your minor children in the event that both you and your spouse die. If one of you has a serious medical condition, it may be the only affordable option.

• Ensuringfinancialsecurity.Second-to-dieinsuranceofferspeaceofmindby providing a guaranteed source of funds for your surviving children, even if your other assets are depleted.

• Providingforchildrenwithspecialneeds.Ifyouhaveadisabledchild,you can use second-to-die insurance to fund a special needs trust that will provide care for the child after you and your spouse are gone.

• Makingcharitablegifts.Second-to-dieinsuranceisacost-effectivewaytosupport charities without reducing the amount of wealth available for your family.

• Fundingestatetaxliability.Thefederalestatetaxexemptionisnowsetpermanently at $5 million (an inflation-adjusted $5.25 million in 2013), limiting the tax to only the largest estates. Couples whose estates fall into this category should consider second-to-die insurance as a liquidity tool.

It’s a good idea to name a trust as beneficiary of a second-to-die policy. Although trusts are often associated with minimizing estate taxes, they provide significant benefits even if your estate is well under the exemption amount. Among other things, a trust can protect the assets against creditors’ claims and establish conditions for distributing assets to your heirs. If estate taxes are an issue, you should establish an irrevocable life insurance trust as owner and beneficiary of the policy to keep the proceeds out of your taxable estates.

Under the right circumstances, a second-to-die policy can be a powerful tool. To be effective, however, it needs to be integrated into your overall estate plan. Your advisor can help you determine whether this option is right for you.

… Set …A team of professionals, ready to help.

“Buy low, sell high.” It’s an axiom you don’t hear too much anymore. That’s because the world has become a lot more complicated than that.

Today, successfully managing your portfolio, building for retirement and planning your estate requires a broad swath of experience and wisdom. Rehmann’s wealth advisors can provide the support you need to make informed decisions that will allow you to face your future with greater confidence.

Contact us today. We’re all set to help you.

ABOUT THE AUTHOR

bill Stewart is a Principal and Financial Advisor for Rehmann Financial and located in the troy office. Since 1988 bill has provided financial planning, investment consulting services and retirement planning to high net worth individuals, families and business owners.

contact bill today at [email protected]

ill Stewart is a Principal and Financial Advisor for Rehmann ill has

provided financial planning, investment consulting services and retirement planning to high net worth individuals, families and

Securities offered through Royal Alliance Associates, member FinRA/SiPc. investment advisory services offered through Rehmann Financial, a Registered investment Advisor not affiliated with Royal Alliance Associates.

4086LegacyParkway,LansingMI48911|517.316.2400

Time managementrunning a small business takes extraordinary commitment … and a lot of precious time. skyBooks makes it easy for you to check on your finances when it best fits into your busy schedule.

reclaim your time right now.

Peace of mindIt’s an unfortunate fact of life that catastrophes strike businesses on a regular basis, whether through fire, flood or other disaster. In such situations, important financial data can be lost. With skyBooks, your data is safe in the cloud, housed in redundant U.s.-based data centers and protected by the same data encryption used by

banks on servers protected with biometric security.

SkyBooks:Leverage the cloud to work smarter, respond faster and remain competitive

BWD spoke with Sharon Berman, Rehmann’s chief SkyBooks evangelist, about SkyBooks.

So, SkyBooks is accounting software I can access through the Internet?

It’s much more than that. You can access your accounting information, in real time, from any computer connected to the Internet. You can access it from your iPad or other tablet device, too. But using SkyBooks also means you’ll receive guidance from a dedicated Rehmann advisor. The SkyBooks team can help you streamline your accounts payable process, and transactions interface directly with whatever general ledger solution you are currently using.

SkyBooksisRehmann’scloudaccountingsolution,aWeb-basedservicethatcombines

the omnipresent strength of cloud computing and the seasoned wisdom and industry

experienceofRehmann’sdedicatedadvisors.Theresult:24/7accesstothekey

financial metrics you need to run a successful business, presented via clear and easy

dashboards that you can view on your computer, smart phone or tablet device.

How SkyBooks can impact your business today


sharon Berman, CPa, CGMarehmann Prinicpal


StaffingIf you are relying upon a staff member to handle bookkeeping duties as well as other important tasks, skyBooks will help you alleviate their workload so they are free to focus more on projects

that help your bottom line.

real-world solutionsoptional support from one of rehmann’s CFo executive advisors — professionals with extensive financial and consulting experience — can help you identify cost-saving strategies

and potential future markets.

Whether that’s QuickBooks, Peachtree –

– or Intacct. Exactly. And you have access to all of this information through customizable online dashboards. It’s a robust system controlled entirely by the business owner. They can review their entire financial landscape, approve the payments quickly and easily, and more.

Who was SkyBooks developed for?

SkyBooks is so scalable that it can work for a wide array of companies and organizations, but we do think it’s especially relevant for business owners who have to be sensitive to staffing efficiencies. As an example, let’s talk about a fictitious company. Alexander Architecture is a small firm with a staff of five, and one of the administrative support people also handles accounts payable. This takes up 75 percent of her time, though she’s really needed for a wide array of support. Using SkyBooks, Alexander Architecture can offload that work and free up her time to focus on other important efforts more closely related to the business’ core competency. And the information is being entered by a CPA firm, which helps ensure greater accuracy of data. What’s more, the owner now has immediate access to real-time accounting information; if it’s one thing small business owners need, it’s that kind of prompt information about finances.

SkyBooks essentially adds the capabilities of another staff member without many of the related costs.

Right. It alleviates overhead costs such as health care, training, and office and computer equipment.

What do you say to folks concerned about security? It’s on the Internet, after all. Isn’t it vulnerable?

This is a remarkably secure system. It utilizes the same data encryption used by banks, the data is backed up in redundant U.S.-based data centers, the servers are protected with biometric security and there’s a detailed audit trail of every approval and payment.

This seems like just the kind of edge a business would be looking for.

We truly believe it is and are very excited to offer it. You could say the sky’s the limit.

Thank you for your time, Sharon.

You’re welcome. SkyBooks is cool and I love talking about it.

sharon has over 20 years of experience in public accounting at local and national firms, as well as experience in private industry. Want to learn more about Rehmann’s skyBooks service? Contact her today at [email protected].

… Go!With the right help, you can achieve the right results.

Rehmann’s corporate investigators can help you avoid the traps you might face along the way with solutions such as background investigations, digital forensics, and fraud and risk management.

Contact us today. We’re ready to go.


Built to Last Jim Collins and Jerry I. Porras

Built to Last focuses on the question, “Why are some companies able to achieve and sustain success?” Jim and Jerry explore the concepts of clock building; big, hairy audacious goals; the genius of the and; cult-like cultures; and good is never enough. If you are interested in sustaining your organization’s performance, this one is well worth your time.

Good to Great Jim Collins

Here, Jim grapples with the concept of whether a good company can become a great company. He opens with the statement that “good is the enemy of great,” then goes on to explore Level 5 leadership, first who then what, confront the brutal facts, the hedgehog concept, and the flywheel and doom loop. If your goal is to take your organization’s performance to the next level, start here.

How the Mighty FallJim Collins

In How the Mighty Fall, Jim explores the five stages of decline, which include: hubris born of success, undisciplined pursuit of more, denial of risk and peril, grasping for salvation, and capitulation to irrelevance or death. Despite the apparent tone of these stages, the book is not alarmist; rather, it was written as a response to the following question: “When things are going well, how do you know if you might already be on the path to decline?”

Great by Choice Jim Collins and Morten T. Hansen

“Why do some companies thrive in uncertainty, even chaos, and others do not?” is the central question in Great by Choice. JimandMortendeveloptheconceptsof10Xers, 20 mile marches, firing bullets before cannon balls, leading above the death line, Specific and Methodical and Consistent (SMaC) as well as summing it all up in the concept of return on luck. The concepts are thought-provoking and will challenge you to potentially rethink your strategy.

in any business endeavor, it can be difficult to chart and

sustain a course. With that in mind, we are taking a look

at some of the body of work by Jim collins, a noted

academic and author. the books are insightful, challenging

andpotentiallygame-changing.Ifyouarelookingtobuild,

enhance and sustain your organization’s performance, i’d

pick up and devour all four. Good reading!

carpp’s Book Corner

Jim Carpp, CISA/CIRMDirector of consulting

JIM CoLLINs

One. Great. Team.Looking to do more than simply cross the finish line? We can help.

rehmann.com

We built Rehmann on the principle of providing a full range of exemplary services.

This means our team is well-positioned to help your team reach its full potential.

Contact us today to learn more.

Fred Schaard, CFP®

President, Rehmann [email protected]

Sharon Berman, CPA, [email protected]

Bill EdwardsDirector of Financial [email protected]

Securities offered through Royal Alliance Associates, member FinRA/SiPc. investment advisory services offered through Rehmann Financial, a Registered investment Advisor not affiliated with Royal Alliance Associates.

4086LegacyParkway,LansingMI48911|517.316.2400

866.799.9580

rehmann.com

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