Part II:  Why Michael Gerber deserves to have a statue on Main Street

After insulting the backbone of America by saying there is no such thing as a “born businessman,” Michael Gerber concedes that it is nonetheless possible to be a successful businessman.  It is his observation that a successful businessman is one who employs systems to get the work of his business accomplished, and much of the actual content of the E-Myth books is actually demonstrating this point.  Indeed, Mr. Gerber’s consulting business essentially entails helping folks develop their own systems.  While it is a shame that he had to take a nasty swing at entrepreneurs in general in order to get our attention, his focus on systems has been good for pretty much everyone.

Part I:  Why the book made me mad

A friend recommended I read Michael Gerber’s The E-Myth, and so I did.  The book has received great press over the years, in a sort of wow-I-never-thought-of-it-that-way bewilderment of praise.  While it cannot be denied Gerber put voice to a little-observed phenomenon, I believe the way he did it did a disservice to entrepreneurs, and people in general.

Essentially, Gerber’s E-thesis is, like leprechauns and the tooth fairy, there’s no such thing as a natural-born entrepreneur.  What he calls an ‘entrepreneur’ is really just an ordinary — albeit technically proficient — person who suddenly realizes he doesn’t like his boss and/or could do things better than his boss.  In that fit of pique, the ordinary person quits his job, sets up his own shop, and proceeds to fail.  Why does he fail?  Because despite being technically proficient, he doesn’t know how to run a business!

…when the Employer reimburses the Employee for health insurance costs

This is not a joke.  It is from IRS Notice 2013-54, in reference to a long-held practice whereby employers could simply reimburse employees for health insurance secured directly by the employees.  Prior to 2014, such an arrangement was an acceptable alternative for smaller employers for whom group coverage was impractical.  The employee secured the insurance and the employer either paid the premiums directly, or reimbursed the employee for the premiums.

The tax consequences were favorable.  The employer got a deduction just as if it were regular group health insurance, but the employee did not recognize income.  (A similarly beneficial arrangement was in place for S-Corp owners.)

Review of acceptable medical expenses for tax purposes

It may be hard to go a complete year without spending money for health purposes.  However, not everything we consider “healthful” counts as a medical expense!  Generally speaking, the IRS only considers expenses specifically related to the medical community to be acceptable, and the states follow suit.  That is, joining a gym, taking vitamins, and even putting Band-Aids® on boo-boos are not deductible for tax purposes.

What kinds of expenses count?
In Publication 502, page 2, the IRS defines medical expenses as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease…and payments for legal medical services rendered by physicians, surgeons, dentists and other medical practitioners…to alleviate or prevent a physical or mental defect or illness.  They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.”  (Yes, that is a direct quote from the IRS publication.  Apparently, someone has a sense of humor.)

Staying on top of the Medical Expense Deduction

Along with charitable contributions, state tax expense, mortgage interest, and real estate tax, many folks have been able to include a little something for medical expenses on their Schedule A: Itemized Deductions, but this is changing.

Here’s how it used to work:  figure out your Adjusted Gross Income(AGI), take 7.5% of your AGI, and any medical expenses in excess of this amount get included with your itemized deductions.  Basically, this meant that the government figured you should be able to afford to spend up to 7.5% of your available income on medical expenses, and anything beyond that merited special consideration, namely, a tax deduction.

Our annual open house

Once again, we held a scrumptious, delicious, finger-licking, fun-filled open house…Cake Day!  And the cakes were out-of-this-world awesome.

The winner?  Sweet Eats!  2 of our 6 cakes were from Sweet Eats, and those 2 cakes ruled the day.  Several people exclaimed the Vanilla Strawberry Cake was absolutely perfect because it was so fresh and not overly sweet.  It featured 3 layers of yellow cake with 1 layer of fresh cut strawberries in a strawberry glaze, and 1 layer of vanilla pudding, iced with white whipped cream and vanilla cookie crumbles.  And who doesn’t like chocolate?!  The Chocolate Silk featured 4 layers of chocolate cake and 3 layers of chocolate mousse, with a chocolate buttercream icing and dark chocolate shavings.

The Apple Cinnamon Streusel from the local Dutch Wagon Market is always in demand!  But the other entries could hardly keep up.

Folks enjoyed cake and coffee.  Conversation ranged from exotic vacation cruises to a cute little Yorkie named Ruby who had her picture on the news during the recent blizzard – she was wearing pink snow boots!  If only she’d been there to model them for us live…  And some folks even dropped off their tax paperwork so we could get started on the work.

Sweet Eats is a Voorhees bakery with a new location in Marlton at the Crispin Square Shopping Center.  They are not my client, but when you’re so good you win 1^st place on Cake Day twice at the same time, you deserve a shout out!

Why do services cost so much?

Did you hear the one about the heating contractor/washer repairman/lawn mower guy?  The homeowners, at wit’s end, finally call for help to get the system back in action.  The contractor shows up, listens to the tale of woe, inspects the equipment, considers the noises being made, then takes out a hammer, and whack! hits the equipment soundly in a particular place.  The system immediately comes back online, no weird noises, no vibrations.  The homeowners express amazement and gratitude.  The contractor presents an invoice.  The homeowners gasp.  “But you’ve only been here 5 minutes!” they cry.  “All you did was hit it with a hammer!  We could have done that ourselves!”  “Yes,” replies the contractor, “but I know where to aim.”

Experience.  A large part of why a service costs so much is the sum total of the experience of the service provider. 

Obamacare Paperwork for the 2015 Tax Season

By now, everyone should know there are new tax forms relating to your health insurance, and that you need these new forms in order to do your 2015 income taxes.  You also need these forms in order to avoid (what is essentially) a fine for not having minimum essential health insurance!

The Forms are 1095 A, B, and C.