The Clock Is Ticking! It’s Time to Prepare for PPACA Reporting Requirements!

GCG Financial Logo_2015

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees. The additional reporting is intended to promote transparency with respect to health plan coverage and costs. It will also provide the government with information to administer other ACA mandates, such as the large employer shared responsibility penalty and the individual mandate.
To read the rest of this article, please download ACA Reporting_GCG_April 2015

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President’s Message – April 7th, 2015

This is a bit of a divergence for me and this space, but I’m compelled to share this. We are blessed to have within our ranks many people that volunteer their time and experience to our working committees, the success of which you benefit from every day that you’re a CFBC member. I want to share with you the strategic mission of each of those committees, so that you will know what and why we’re doing the things that we do. It’s good for all of us to know what’s fueling our actions. Each of these statements is found within the Members-Only section of the CFBC website along with the minutes of each committee meeting. Next time you’re curious about our direction, I invite you to spend a few minutes within those files.

CFBC Mission
The CFBC exists to help family businesses and other closely held companies achieve their business goals through a unique peer support system and related educational programs that provide growth strategies for chief executives, their employees, their families and their businesses.

Finance Committee Mission
The mission of the Finance Committee is to safeguard the Chicago Family Business Council through auditing, planning, and advising the First-Vice President and the Executive Director in preparation of the quarterly and year-end financials. The committee has a fiduciary responsibility to the organization and the members of the council regarding all funds.

Marketing Committee Mission
The Marketing Committee is dedicated to developing and implementing marketing initiatives to increase awareness of the CFBC which will in turn attract new members. The committee is responsible for developing the yearly marketing plan, strategies to achieve objectives identified by the Strategic Planning committee and work in cooperation with the events planned by the Program Committee and the initiatives of the Membership Committee. All marketing activities will be in accordance with CFBC marketing standards for branding.

Membership Committee Mission
The Membership Committee is devoted to the expansion of the CFBC through recruitment of new members and the retention of existing members.

Programming Committee Mission
The Program Committee plans educational and social events for members, guests and prospective members that are timely, educational, and relevant to the diverse interests of the CFBC community.  In collaboration with the Marketing Committee, the Program Committee will set the focus (tone) of each program by identifying topics, speakers, formats and venues.

Young Leaders Committee Mission
The mission of the committee is to engage members of the CFBC community that identify as next gen leaders through educational and social events. The committee will identify program topics, speakers, venues, and the event structure that will appeal most to young leaders. With the support of the CFBC staff, the Committee Chair and co-chair will oversee the planning and implementation of the events while adhering to the approved annual budget. The committee will draw on the requests of the membership and consult with other CFBC committees in developing educational workshops, program sessions, panel discussions and social events. 

“If you want to go fast, go alone.  If you want to go far, go together.  CFBC, 20 Years Deep”

Bob Carmody President Signature 2014

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President’s Message – March 3rd, 2015

Do you agree with the following statement? “You don’t know what you don’t know – and that can bite you very hard.” Worse is when you think you know and you’re wrong. Have you ever been in that situation? I’ve gathered a file of situations like that and plan to share them with you over the next several months. My intention is to insure that you know that as members of CFBC you have the most amazing resources at your service: CFBC Strategic Partners. Their mission is to help you. They’ll ask what’s your situation with your will or how about the details of your pension plan. They’ll inquire about what you’re doing about your employee health insurance setup, about your company’s digital systems, about your social media and much, much more. Then – and this is the good part – they’ll help you to know what might be about to BITE you and how to avoid it. That’s a mighty great tool.

The easiest way to use them is simply to invite them to your forum meeting. Ask your Forum chair to invite them one hour before the formal start of your Forum meeting. You just won’t believe how much of what you don’t know really could bite you. But they do know. And they can help you and your Forum members avoid those costly “didn’t knows” that can quickly turn into nightmares.

Please send me your own nightmares and I’ll share them too.

If you want to go fast, go alone. If you want to go far, go together. CFBC, 20 Years Deep.

Bob Carmody President Signature 2014

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To Capitalize or Expense…That is the Question

Cray Kaiser

Businesses buy supplies, materials and equipment constantly.  Repairs and maintenance on existing assets also recur frequently.  How does your accounting department handle these outlays?

The Internal Revenue Service (IRS) finalized regulations in September 2013 regarding whether expenditures were considered immediate tax deductions or should be capitalized.  The regulations are applicable to tax years beginning after 2013; so calendar year businesses are now on task with applying these new rules on their 2014 income tax returns.

The regulations are vast as you would expect with a complicated set of questions.  Additionally, the rules are fluid; new Revenue Procedures continue to be issued in order to clarify certain aspects of the regulations.  The key takeaway for closely held businesses is that with this guidance, businesses should be reviewing not only their current capitalization policy but also looking at their depreciation schedules to see if there is an opportunity to write-off old assets under the regulations.

SMALL BUSINESS RELIEF – Before recent relief was provided, every business wishing to make an accounting method change was required to formally request the change with the IRS.  The form to request the change (Form 3115) is complex and time-consuming for the preparer.  Under new guidance, qualifying small taxpayers are no longer required to complete Form 3115 in order to request certain accounting method changes.  Small taxpayers are defined as businesses having (for each separate trade or business) assets totaling less than $10,000,000 or average annual gross receipts of $10,000,000 or less.

MATERIALS AND SUPPLIES – The regulations establish that purchases falling into this category include item purchases costing $200 or less and have an economic useful life of less than 12 months.  The cost of materials and supplies can be expensed in the year they are first used or consumed.

DE MINIMIS SAFE HARBOR – An annual election is available to taxpayers that do not have an “Applicable Financial Statement” to immediately expense a unit of property that costs less than $500 per invoice (or $500 per item if substantiated on the invoice) if such a policy exists at the beginning of the tax year.  For taxpayers with an “Applicable Financial Statement” (generally an Audited Financial Statement), the threshold is $5,000 per invoice (or $5,000 per item if substantiated on the invoice).  The capitalization policy must be in writing for those taxpayers with an “Applicable Financial Statement”.  The De Minimis Safe Harbor is available without an accounting method change.

REPAIRS – The regulations are helpful in describing what a repair is not.  Any amount that is a restoration, adaptation or improvement must be capitalized.

ROUTINE MAINTENANCE SAFE HARBOR – The regulations provide that amounts paid for routine and recurring amounts paid to keep a unit of property in working condition may be treated as repair costs.  Under the routine maintenance safe harbor, the business needs to segregate amounts paid for real estate and other property.  If the amount is paid to maintain real estate, the amount can be expensed if the business expects to perform the repair more than once during a ten-year period.  If the amount is paid to maintain other property, the amount can be expensed if the expense is expected to recur more than once during the property’s class life.

REAL ESTATE SMALL TAXPAYER SAFE HARBOR – For those real estate businesses with average annual gross receipts of less than $10,000,000 and real estate with an undepreciated cost basis of less than $1,000,000, a small taxpayer safe harbor is available.  Under this safe harbor, an annual election can be used to immediately expense the total amount paid for repairs, maintenance and improvements up to the lesser of $10,000 or 2% of the basis of the real estate.

The regulations provide for additional guidance on acquisition and facilitative costs, complete or partial dispositions of property, spare parts, and defining units of property.

We hope this information is helpful.  If you are interested in speaking with us about how the above regulations affect you and your business, we’d be happy to discuss. Please contact Karen Snodgrass or Deanna Salo from Cray, Kaiser Ltd. (630-953-4900), a strategic partner with the Chicago Family Business Council.


Karen Snodgrass CPA                                       Deanna L. Salo CPA
Cray, Kaiser Ltd.                                                Cray, Kaiser Ltd.

1901 S. Meyers Road                                        1901 S. Meyers Road
Suite 230                                                            Suite 230
Oakbrook Terrace, IL 60181                           Oakbrook Terrace, IL 60181
Phone: (630) 953-4900 x248                         Phone: (630) 953-4900 x210
Fax: (630) 953-4905                                        Fax: (630) 953-4905                                             Email:    Email:

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Cray Kaiser Testimonial by Ken Pavett

It was the summer of 2010. Flexografix was still recovering after the losses we experienced during the 4th quarter of 2008, which extended to the company’s poor financial performance in 2009 and into 2010.

When I first joined the CFBC, Judy discussed the CFBC Partners and I asked her for an accounting firm recommendation.  My previous accountant was okay, but I realized I had more to learn after our downturn.  I needed better resources to learn from and to advise me.  Within a short period of time, Deanna Salo and Roger Reitz with Cray Kaiser were in my office.  I responded immediately to Deanna’s combination of knowledge, experience, confidence, positive energy and sincere interest in helping me.  It was a good first meeting.  We established a plan, and I quickly felt comfortable engaging with Cray Kaiser as a client.

Deanna and Amy Langfelder made the conversion reasonably easy and instantly became my go-to team, extending to all financial areas of my life.  Since that first meeting, my company has expanded in the areas of our manufacturing capabilities, capacity and technical value to our customers.  Each time, before I made a major investment decision, I met with Deanna first and we strategized together.  I want to have the benefit of her experience, review the expected impact in a financial planning model together, and have another viewpoint to consider before moving forward.

In one example, thanks in great part to Deanna’s involvement, Flexografix invested in advanced manufacturing equipment with the support of significant income tax savings to offset the costs.  Then, two years ago, we were approached by a $4B prospective customer to produce printing plates for a completely new product; a product no one in the world had much experience manufacturing for this application.

It required research and benchmark testing leading to the purchase of new, unfamiliar equipment and establishing a relationship with a new raw materials supplier.  Then came the manufacturing fire drill.  The equipment was literally hooked up on a Thursday and orders started pouring in the following Monday.  We learned how to both control and tune the manufacturing process of that new product, while filling orders on the fly.

The value of the pricing model Deanna had previously built for me was measured by the attractive profits that new product added to our Net Income in 2014.  And when my initial time studies proved to be inaccurate to our early production experience, Deanna cleared time in her schedule to quickly help me revise the original predictive model.  During that meeting she offered me input and confidence, which resulted in a successful price increase to our customer – to offset our additional manufacturing costs.

More recently, Deanna built a planning model so I could estimate both the business and personal financial impact of the new building my company is purchasing – before I made the decision to purchase it.  We also just completed a compensation impact model for our new Director of Sales, who started his career with Flexografix on February 16th.

Since working with Deanna and the Cray Kaiser team, I am better informed and make better business investment decisions.  I have made more money and have retained more of the Net Income my company has generated – making my business more valuable.  I want to point out that the fees my company has paid for the services I have received from Cray Kaiser are insignificant compared to the value this knowledge has provided to me and my business.

-Ken Pavett, Flexografix

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President’s Message – February 3rd, 2015

At CFBC, we’re all about shared experiences, right?  This month I’m sharing one of my personal experiences, the prayers that I keep with me all the time. I wish that I knew who wrote it first, but I don’t know who to credit. I do know that for me, it is good medicine.

People are often unreasonable, irrational and self-centered. Forgive them anyway.
If you are kind and forgive people, some may accuse you of selfish ulterior motives. Be kind anyway.
If you are successful, you will win some unfaithful friends and some genuine enemies. Succeed anyway.
If you are honest and sincere, people may deceive you. Be honest and sincere anyway.
What you spend years creating others can destroy overnight. Create anyway.
If you find serenity and happiness, some may be jealous. Be happy anyway.
The good you do today will often be forgotten. Do good anyway.
Give the best you have and it will never be enough. Give your best anyway.
In the final analysis, it is between you and your God. It was never between you and them anyway.

“If you want to go fast, go alone. If you want to go far, go together. CFBC, 20 Years Deep.”

Bob Carmody President Signature 2014

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Understanding the Impact of the Cash Conversion Cycle

American Chartered Bank

Optimizing the Cash Conversion Cycle (CCC) affects your companies bottom-line, your cash flow and influences the amount of external funds needed to run your business. While many concentrate solely on revenues and expenses to manage cash flow, it’s usually not optimizing of the CCC that often leads to a cash crunch in your business.

The CCC is equal to the time it takes to sell inventory and collect from customers less the time it takes to pay your vendors. Effective CCC management is the result of a company selling what people want to buy, resulting in cash cycling through the business quickly. If too much inventory builds up, cash is tied up in goods that cannot be sold, causing a business to slash prices and reducing profit margins. If there is difficulty in collecting payments, essentially creating a loan to the end customer, cash is not available to re-invest in the business whether in the form of investing or paying down a loan and reducing loan expenses.

Companies also benefit from slowing down the payments to vendors, as it allows them to make use of cash longer. As a business owner this is a Catch 22, slowing down your payables while hoping that others pay you quickly.

To read the full article, please click here: Understanding the Impact of the Cash Conversion Cycle

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Top Three Marketing Trends of 2015

Prism Insights LogoTime for goal-setting, projections, resolutions and the proliferation of Top “Name Your Number” Lists for the coming year. It is a little known fact that we marketers actually take a secret oath to create at least one obligatory Top Prognosis list every January. Don’t fulfill this obligation and one risks being kicked out of the marketing club and sent to the mail room. (Do companies even have mail rooms anymore?)

So it is with glee that the team here at Prism shares our Top Three Marketing Factoids for 2015…and what they mean for your business.

Click here for the full list: Prism Insights: Marketing Trends of 2015

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President’s Message – January 6th, 2015

I’m contemplating forums and how they work over time; specifically the benefits that I get from my CFBC Forum. It’s a huge cornucopia (like that scrabble winner?). It’s more than I could have ever imagined before getting involved with the Chicago Family Business Council. It’s what we talk about when “outsiders” ask what we’re all about. Peer-to-Peer support, person-family-business experienced as one. Could we get more? Could we expect more?

Most of our more established (older) forums seem to be comprised of birds of a feather. Folks in similar situations and positions within their lives and businesses. The commonalities and similarities of our opportunities and problems are comforting, enlightening, and useful. Very cool, but consider this:

Something very different is happening and proving to be even more useful in our newer forums. Diversity. And the results that we’ve seen are surprising and amazing. These people are contributing in their forums the same way we all have learned, the EI way, but from very different backgrounds and points of view. And the insights and experiences shared are broader and more thought provoking. Diversity, it’s very intriguing. I wonder how we can inject some of that into our well-established forums. I wonder if it would be more beneficial than disruptive. I wonder. What do you think?

Bob Carmody President Signature 2014

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President’s Message – December 2nd, 2014

I like writing about the things that I’m thinking about.  I’d truly enjoy hearing back from you on these things or anything else that we should ponder.  I’m seem to be talking over the canyon and have yet to hear an echo!

Emotional Intelligence and CFBC involvement have changed me and my life in unmeasurable ways.  I can’t imagine how I got along before.  But I’ve begun to struggle.  The rest of the world doesn’t know EI!  While we’re all practicing disciples living by example, we’re otherwise without tools to share with the non-initiated.

What happens in forum stays in forum.  How precise is that concept when it comes to sharing the EI philosophy and practice outside of CFBC and our safe haven forums?  Our families could benefit, don’t you agree?  Your brothers and sisters?  How about other friends or workmates?  What have we got for them?  Not enough I think.

Let me know what you have to say about this thought:  As part of the work of CFBC and each one of us, should we develop and implement the EI extension plan (by any name you like) for the outside world?

I’m writing this a few days before Thanksgiving and I’d like to share one of the things that I’m thankful for.  Every experience that I’ve had with each of you in the CFBC. Happy Thanksgiving!

“If you want to go fast, go alone. If you want to go far, go together. CFBC, 20 Years Deep.”

Bob Carmody President Signature 2014

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