1. The $20,000 Tax Dilemma How to Eliminate $20,000 of Annual Tax Liability Presented by Walter Hines Bison Business & Technology Solutions You can pay yourself, or you can pay the IRS. Walter Hines

2. Problem Overview You can pay yourself, or you can pay the IRS. Walter Hines Owner of a Dental Practice has an annual IRS tax liability of $20,000 FACT: Owner is in her early 30s Earning between $100,000 - $150,000 per year Practice has two full-time employees, the owner, and 1 part-time employee All employees are under age of 30 No benefit plans for staff S - Corporation 3. Solutions You can pay yourself, or you can pay the IRS. Walter Hines High Deductible Health Insurance Plan (HDHP) Health Savings Account (HSA) Safe Harbor 401(k) Plan Professional Overhead Expense Insurance (P.O.E.) Executive Bonus Plan (Disability Insurance) 4. High Deductible Health Insurance Plan (HDHP) You can pay yourself, or you can pay the IRS. Walter Hines Definition- (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. Being covered by an HDHP is also a requirement for having a Health Savings Account. Tax Deductible Voluntary Benefit under IRS 5. Employer contributes $175 per month in premiums x 2 employees, = $525 per month or $6,300 per year 6. You can pay yourself, or you can pay the IRS. Walter Hines High Deductible Health Insurance Plan (HDHP) - $6,300 Solutions 7. You can pay yourself, or you can pay the IRS. Walter Hines Health Savings Account (HSA) Definition - A health savings account (HSA) is a tax-advantaged medical savings account available employers and employees who are enrolled in a high-deductible health plan (HDHP).The funds contributed to an account are not subject to federal income tax at the time of deposit. Funds deposited into the account roll over and accumulate year to year if not spent. Funds must be spent on legitimate health expenses or will become taxable. IRS Code Section 223 Plan contribution limits - $3,250 per Individual and $6,450 per Family 8. Employer contributes $1,000 per year x 2 employees, = $2000 per year + $1,200 for self-contribution = $3,200 9. You can pay yourself, or you can pay the IRS. Walter Hines High Deductible Health Insurance Plan (HDHP) - $6,300 Health Savings Account (HSA) - $3,200 Solutions 10. You can pay yourself, or you can pay the IRS. Walter Hines Safe Harbor 401(k) Plan Definition - An employer-sponsored retirement plan that combines the benefits of a 401(k) with a profit sharing plan. Safe Harbor plans are very advantageous to companies with a few highly compensated employees (HCE) who are limited to how much they can contribute to a 401(k) because regular wage employees are not participating or contributing enough money to the plan. Key benefits: HCEs can maximize contribution to plan each year if lower paid employees contribute very little Employers MUST contribute 3% of employee salary plus 50 cents on the dollar for the next 3% - 5% of salary EVEN IF EMPLOYEES DO NOT CONTRIBUTE TO THE PLAN IRS code Section 401(k)(12) & 401(k)(12)(B) 2013 maximum employee contribution - $17,500 2013 maximum employer self-contribution - $51,000 11. Employer contributes $1,500 per year x 2 employees = $3,000 per year *Assuming highest paid employees earns $40,000 or less per year 12. You can pay yourself, or you can pay the IRS. Walter Hines High Deductible Health Insurance Plan (HDHP) - $6,300 Health Savings Account (HSA) - $3,200 Safe Harbor 401(k) - $3,000 Solutions 13. You can pay yourself, or you can pay the IRS. Walter Hines Professional Overhead Expense Insurance (P.O.E.) Definition - Professional Overhead Expense Insurance (P.O.E.) reimburses a business owner for business expenses during an injury. It covers fixed cost, loans, and salaries of employees. Key benefits: Covers fixed costs Employee salaries Insurance premiums Outstanding business loans Tax Deductible under Revenue Rule 55-264, 1955-1 C.B. 11 14. Employer pays approximately $4,000 per year for $120,000 of coverage ($10,000 per month for expenses) 15. You can pay yourself, or you can pay the IRS. Walter Hines High Deductible Health Insurance Plan (HDHP) - $6,300 Health Savings Account (HSA) - $3,200 Safe Harbor 401(k) - $3,000 Professional Overhead Expense Insurance - $4,000 Solutions 16. You can pay yourself, or you can pay the IRS. Walter Hines Executive Bonus Plan (Disability Insurance coverage) Definition An Executive Bonus Plan allows a business to provide life and/or disability income insurance to key executives (or shareholders) using tax deductible dollars. The insurance policies are owned by the executives and are paid for through cash bonuses. *Owners of 2% or more of S-corporations are not considered employee **Bonuses paid to owners of S-corporations must be added as income to W-2 Tax Deductible under IRS Section 162 17. Employer covers up to the 60% of her income (maximum amount) approximately $60,000 - $90,000. *Estimated cost - $3,500 - $5,000 annual premium 18. You can pay yourself, or you can pay the IRS. Walter Hines High Deductible Health Insurance Plan (HDHP) - $6,300 Health Savings Account (HSA) - $3,200 Safe Harbor 401(k) - $3,000 Professional Overhead Expense Insurance - $4,000 Executive Bonus Plan (Disability Insurance) - $3,500 Total Estimated Amount of Tax Deductions -$20,000 Solutions 19. Wheres the Owners Retirement? Our Suggestion : Contribute at least $5,000 annually to 401(k) Estimated Savings = $419,343 (30 years@ 6% interest) Contribute at least $5,000 annually to an Index Universal Life Policy** Death Benefit = $752,411 at age 65 Cash accumulation = $581,949 (32 years@ 7% interest) *LIBR/Annual Income = $91,849 from age 65 -100 *As of 2013, Business Owners can contribute up to $51,0000 annually to a 401(k) or 100% of income up $51,000 **Index Universal Life policies offer guaranteed returns, increasing death benefits, chronic, and critical illness protection 20. Contact Walter Hines, Benefit Specialist Owner & CEO Bison Business & Technology Solutions 20209 Nestor Ave. Carson, CA 90746 Ofc. (310) 631-1106 Mobile (310) 346-0850 Website: www.bisonbiz.com Email: walter@bisonbiz.com You can pay yourself, or you can pay the IRS. Walter Hines