Page 22 – North Central News, November 2012
TAKING CARE OF BUSINESS MONEY MATTERS
Small Business Financing – To Lease Or Not To Lease
Early withdrawal has consequences By Harvey Amwake, C.P.A.
In a tough economy, where traditional financing remains elusive for many small businesses, equipment lease financing is a viable, but little understood alternative. However, it is important to enter into a lease for the right reasons and with the right structure. Consider the following to help determine if equipment leasing is right for your business. Advantages of Leasing. An equipment lease is generally easier to obtain and more flexible than traditional financing. When structured properly, it may provide a small business with certain unique benefits, such as: By: Matthew H. Sloan
Partner 602.234.7858 mhs@jhc-law.com
s %XPANDED CREDIT AVAILABILITY n ,EASE DEBT MAY NOT NEED TO BE s ADDITIONAL BORROWING WHERE GENERALLY EQUIPMENT LESSORS DO NOT s &LEXIBILITY OF STRUCTURE n ,EASES CAN BE STRUCTURED TO ACCOMMODATE
s 3MALL INITIAL CASH OUTLAY n 5NLIKE MOST LOANS EQUIPMENT LEASES GENERALLY DO NOT REQUIRE A DOWN PAYMENT R TO OBTAIN OFTEN SIMPLY BY COMPLETING s AN APPLICATION Disadvantages of Leasing. Generally equipment leasing can be used most effectively by businesses that are growing and profitable and least effectively by those businesses that are shrinking or suffering losses. Disadvantages to consider are:
s /VERALL #OST !N EQUIPMENT LEASE MAY BE MORE EXPENSIVE THAN OT TAX IMPLICATIONS ARE NOT CONSIDERED s #OMMITMENT OF TERM -OST EQUIPMENT LEASES MAY NOT BE TERMINATED BEFORE THE ORIGINAL TERM IS COMPLETED s OR UNTIL A LESSEE EXERCISES AN OPTION TO PURCHASE s TAXES AND -AINTENANCE -OST LEASES REQUIRE THE LESSEE TO PAY ALL PROPERTY TAXES MAINTAIN PROPERTY DAMAGE AND CASUALTY INSURANCE AND GENERALLY MAINTAIN THE EQUIPMENT IN ACCORDANCE WITH THE MANUFACTURER’S RECOMMENDED SCHEDULES AND PROCEDURES If the tax benefits of an equipment lease are important to your decision, be sure that you review the general lease terms with your accountant or other tax adviser. The IRS may disallow your treatment if they conclude that you lease is really a conditional purchase. Equipment leasing is not for every business or for every situation. However, for businesses that utilize equipment that may be obtained through lease financing, it is not just an alternative to a bank loan or credit card debt; it’s a deliberate financing strategy.
About the author: Matthew H. Sloan is a partner with Jennings, Haug & Cunningham. Herepresents clients, including small, medium and large businesses in resolving disputes surrounding contracts, business partnerships, construction issues, credit issues, lease agreements, insurance claims and liability. Matt has been a resident of North Central Phoenix for more than 30 years, and can be contacted at MHS@JHC-Law.com or 602.234.7858.
www.JHC-LAW.com 2800 N. Central Ave s Suite 1800 s Phoenix, AZ 85004 s 602.234.7800
In case of emergency, you may need to withdraw funds from one of your retirement accounts. What are the tax consequences? It depends on several factors, including your age, the type of account, and the use of the funds. Here are the basic rules. Distributions from traditional IRAs and qualified plans, like a 401(k), are taxable at ordinary income rates. The tax applies to the portion of the distribution representing deductible contributions and earnings. Currently, the top federal income tax rate is 35 percent, but it’s scheduled to increase to 39.6 percent in 2013. In addition, if you’re under age 59½, you will owe a 10-percent penalty tax on top of the regular income tax, unless a special exception applies. The following exceptions apply to both IRAs and qualified plans: • Payments made due to death or disability. • Substantially equal periodic payments for the longer of five years or until you reach age 59½. • Withdrawals to pay deductible medical expenses. • Distributions to satisfy an IRS levy. Some exceptions are available only for IRA distributions. This includes withdrawals used to pay first-time homebuyer expenses (lifetime limit of $10,000), higher education expenses, or health insurance for the unemployed. The exceptions limited to qualified plans includes distributions made after age 55 if employment is terminated and distributions made under a “qualified domestic relations orderâ€? in divorce situations. Finally, separate rules apply to Roth IRA distributions. Qualified distributions from a Roth at least five years old are completely tax-free. For this purpose, “qualified distributionsâ€? include those made after age 59½, due to death or disability, or to pay first-time homebuyer expenses (lifetime limit of $10,000). Otherwise, distributions are taxed under special “ordering rulesâ€? with tax-free contributions treated as
coming out first and taxable distributions last. The tax rules on early distributions are complicated. For more information about the tax consequences of taking withdrawals from your retirement accounts, give us a call. This article is for general information only and does not constitute financial advice. If you have any questions about financial matters, consult a professional tax adviser. Harvey Amwake, CPA, is a tax and small business consultant with the accounting firm of Arthur Spoon & Company, Ltd., at 1130 E. Missouri Ave., Suite 820. He can be reached at 602-264-6500 or by e-mail at Harvey@ArthurSpoon.com.
Business Briefs Renovated business celebrates new look B & B Appliances, 331 E. Dunlap Ave., will celebrate its recently completed commercial rehabilitation project with the city of Phoenix at 9:30 a.m. Wednesday, Nov. 14. District 3 Councilman Bill Gates will attend the event and ribbon-cutting ceremony. Originally constructed as the PIX Theater in 1947, the lot has housed many businesses over the years, not to mention a clothing store, boat shop and even a skateboard park. It is now the home of B & B Appliances, a family-owned business that has been serving the Sunnyslope community since 1981. Participating in the city of Phoenix Neighborhood Services Department’s Neighborhood Commercial Rehabilitation (NCR) Program has allowed business owners Mike and Donna Bollig to make substantial improvements to this aging landmark. The NCR program focuses on blight elimination and the correction of code violations, using Community Development Block Grant (CDBG) funds to assist qualified commercial property owners with façade and site improvements in targeted areas. The Bollig family worked closely and patiently with city staff throughout the site planning and improvement process, which included a redesigned storefront entry, brick perimeter fencing, site repaving, roof enhancements, an upgraded fire suppression system, landscaping and vertical signage as a take on the old PIX Theater spire. In conjunction with the B & B rehabilitation, the Neighborhood Services
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North Central News, November 2012 – Page 23
TAKING CARE OF BUSINESS
Department partnered with the Street Transportation Department to make infrastructure improvements through its Street Modernization Program. Street upgrades were made between 4th and 7th streets along Puget Avenue that included additional streetlighting and new asphalt, curbs and sidewalks. The commercial rehabilitation of B & B and the infrastructure improvements, combined with the city’s earlier acquisition of land to the south and west for future residential development, is the last phase of the redevelopment strategy for the city’s Village Center Neighborhood Initiative Area. For more more information on the city’s Neighborhood Commercial Rehabilitation Program, call 602-4950846 or e-mail robin.anderson@ phoenix.gov.
Comic store marks 31st anniversary Alan and Marsha Giroux, owners of All About Books and Comics, and their staff are celebrating 31 years of business on Saturday, Dec. 1. Located at 5060 N. Central Ave.,
All About Books and Comics has been at the forefront of small business in central Phoenix for more than three decades. Several generations have grown up on comics at this familyowned specialty shop in the heart of Phoenix. For more information, call 602-277-0757 or visit www.AllAbout Comics.com.
Jonathan was told he’d never walk again. Today, there’s only one handicap he’s worried about. You wouldn’t know it by looking at him, but just over a year ago Jonathan was told he would
Cannedy celebrates anniversary all year
never walk again after suffering serious injuries in a car accident. But thanks to John C. Lincoln
Cannedy Performing Arts Centre, located at 6222 N. 7th St., marked its 25th anniversary on Oct. 1 and will be celebrating the occasion over the next 12 months with special events and classes. For the first time in its 25-year history, Cannedy will have an entry in the VA Veterans Day Parade on Nov. 12. The “FireUp Freedom Fire Truck” features Cannedy dancers and the Cannedy Big Band & Singers. In addition, Cannedy will present an original Holiday Program at Phoenix Theatre on Sunday, Dec. 16. This performance is open to the public.
Hospitals and their advanced technology and surgical expertise for patients with brain and spinal injuries, he’s back on course. And back in the swing of things. To read Jonathan’s story, visit JCL.com/Jonathan.
JCL.com
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Page 24 – North Central News, November 2012 ADVERTISEMENT
North Central Survivors
TAKING CARE OF BUSINESS
Sponsored by the Lieb Group and Title Management Agency of Arizona
Orthodontic practice and coffee entrepreneur find formula for long-term success Welcome to my monthly column honoring North Central businesses that have been around for at least 20 years. I am a true believer in spending our money locally and we have some of the Valley's finest retailers and restaurants in our neck of the woods. If you know of any of our area businesses that have been around for at least 20 years, please email me at boblieb@aol.com. There is absolutely no
charge for me promoting your company because your SURVIVAL helps me to sell homes––clients move here because of you! This month I am proud to introduce Dr. Paul Serrano and Hava Java. I appreciate Title Management co-sponsoring this monthly column with me.
Local orthodontist builds healthy smiles
Where everybody knows your name ...
As one of the top orthodontists in Arizona for three decades, Dr. Paul Serrano has made his home and raised all three of his children in the heart of North Central Phoenix. And he believes in giving back to the community that has supported him for nearly 30 years. Between the Madison School district, Phoenix Union, Creighton, Sunnyslope, All Saints, Phoenix Country Day, Xavier and Brophy, Dr. Serrano has created thousands of beautiful smiles. He has patients and now children of former patients who he serves in every school in Phoenix. Dr. Serrano has coached in local school districts, donated to and supported fundraisers in all of the local schools. His son Andrew currently is in his second year of dental school at A.T. Still University in Mesa and plans on staying in the community. Sarah will graduate this year from USD and plans on a career practicing law, while Emily, his youngest, is a senior at Xavier Preparatory High School. Dr. Serrano and his team are committed to providing friendly, convenient, leading-edge orthodontic care with exceptional results. Their motto is; "Changing lives, improving self-confidence. Since 1982." Dr. Serrano's orthodontic experience ranges from building healthy smiles using the latest technologies to treating craniofacial abnormalities. He also is a sleep dentist, treating patients for sleep apnea and obstructive sleep apnea at Arizona Sleep Apnea Solutions. You will find Dr. Serrano at 1515 E. Missouri Ave. building one smile at a
Hava Java began in Phoenix on February 27, 1992. From humble beginnings, Justin Shafer ("Mr. Hava Java") had a dream of a friendly place, where the world's best coffees, from the finest beans were served in a family atmosphere. He started his dream outside with the only state-of-the-art gourmet coffee cart in Arizona and went on to build a coffee business that became a legend. Hava Java is now the longest-running gourmet coffee company in Arizona. Hava Java uses only the finest roasted coffee beans and the most select ingredients to achieve the highest-quality products. Bottom line, you can't buy or make a better cup of coffee than Hava Java. And Justin’s gourmet coffee cart is still a Hava Java trademark. Hava Java is open 365 days a year from 5 a.m. until late night. The baristas know your name and your order. With its robust, high-quality beans, it is no wonder Hava Java is awarded year after year for outstanding coffee. Justin's motto is "Serve customers only the very best product possible, as expediently as possible, in a clean environment and make them your friends. Not only do I treat my customers the way I like to be treated, but I also treat my Crew Members with respect. I never forget where I came from!" With a tenaciously loyal clientele, Hava Java is a tasteful and immaculate store serving the best coffees, teas and baked goods. Quality, speed, cleanliness, friendship and respect - it's the Hava Java formula for success. Visit Hava Java at 3166 E. Camelback Road or call 602-954-9080.
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The Lieb Group Bobby Lieb, Associate Broker HomeSmart Elite Group 602-761-4646 (office) 602-376-1341 (mobile) boblieb@aol.com centralphx.com For all your escrow and title insurance needs, contact Kathy Zobel Assistant Vice President/ Branch Manager 5225 N. Central Ave. #103 Phoenix Arizona 85012 (602) 595-5545 • (602) 595-5404 (fax) kzobel@tmaaz.com • www.tmaaz.com
CENTRE continued from page 23
Tickets will be available at Cannedy Performing Arts Centre. Pam Cannedy opened her center on 7th Street and Rose Lane in 1988. Her vision was to create a studio in the heart of a strong community where she and her team could teach dance, develop a love of performing arts and inspire and teach life skills that lead to success. At Cannedy, it’s not just about dance, but about the development of the person. The philosophy at Cannedy Performing Arts Centre is to promote and build strong and healthy minds, bodies & souls, as well as a strong, positive character and integrity that will carry students successfully and confidently in all they choose to accomplish. For more information call 602-2650227 or visit www.cannedyperforming arts.com.
Health care reform explained for businesses With key milestones in health care reform coming in 2013, the Greater Phoenix Chamber of Commerce offers “Health Care Reform: What’s the Prognosis for Your Business?” This is an industry expert panel discussion on the implications of health care reform measures for small and large businesses. It will take place 8-9:15 a.m. Wednesday, Nov. 14 in Whiteman Hall at the Phoenix Art Museum, 1625 N. Central Ave. Check-in begins at 7:30 a.m. The next few months will require action by business owners and this informative program will provide the groundwork for making high consequence decisions about employee health insurance coverage. The discussion will focus around key milestones
and how they will impact businesses, as well as weighing the pros and cons of providing health insurance to your employees versus paying a penalty to participate in the state exchange. Cost is $25 for chamber members and $45 for non-members. A continental breakfast will be provided. For more information and to register for this event, visit www.phoenixchamber.com/ healthcare. Questions, call 602-4952182.
Tennis pro shop opens in Sunnyslope First Strike Tennis is a small pro shop that recently relocated to 8823 N. 3rd St. First Strike provides tennis racquets and bags at discounted prices, and stringing of racquets is available onsite. First Strike offers group and private tennis instruction by formerly nationally ranked player, Paul Sanchez. Currently, there is an intermediate class of players with an NTRP rating of 3.0 to 4.5, but Sanchez welcomes all beginner and intermediate adult players. Tennis instruction is conducted at a private location near 7th Street and Coral Gables. Hours of instruction for group classes are from 8 to 10 a.m. Saturday and Sunday. Contact First Strike Tennis for information regarding private lessons. For additional information and pricing, call 480-276-4366 or visit www.firststriketennis.info.
Struggling family can win new air conditioner Louis Hobaica, owner of Hobaica Services, announced the fourth annual kick-off of the “Business Entities Getting Involved in our Neighborhoods” (BEGIN) Program campaign for the
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North Central News, November 2012 – Page 25
TAKING CARE OF BUSINESS
2012 Holiday Season. The program is a grassroots community development program founded by the team at Hobaica Services that specifically targets homeowners who are in need of a new air conditioning and heating system for their home and their families but are unable to afford it on their own. Candidates are selected and announced every week in November and December. Eligibility is fairly simple and requires the candidate to own their home and reside in that home in Maricopa County. Nominations can be submitted on line at www.hobaica.com or by calling 602-235-0235. Hobaica Services offers a challenge to all other business owners to do the same with their products and services and assist multiple families at this very special time of the year. For businesses interested in becoming part of BEGIN, call Paul Hobaica at 602-235-0235.
Seminar to assist nonprofit groups “Making Your Nonprofit Work” is the topic of a workshop set for 3-5 p.m. Tuesday, Nov. 6, at the SSC Boring Building, 1951 W. North Lane. This interactive seminar focuses on the definition, importance and objectives of nonprofits as well as how they differ from for profit organizations. The roles and responsibilities of the board and the executive director will be clarified. Avenues of fund development will also be explored. The cost is $25 per person. The workshop is presented by the Greater Phoenix SCORE and the North Mountain Business Alliance. For details or to RSVP, call 602-745-7250 or visit www.greaterphoenix score.org.
Urban Cookies rebrands, expands Urban Cookies, a Phoenix-based gourmet bakery, last month debuted its new brand in celebration of the company’s seventh anniversary on Nov. 1. In addition to its slightly new name—Urban Cookies Bakeshop— and new logo, the company also remodeled its shop and launched a new holiday menu, all in an effort to emphasize the bakery’s focus on its fresh-baked menu utilizing local and organic ingredients. “As our business has grown, we have continually worked toward giving our customers what they really want from our bakery,” said co-owner Shaun Breese. “It’s become clear that what our customers really want is more gourmet pastries on our menu, in addition to our popular cookies and cupcakes.” Urban Cookies last month began rolling out its expanded fall and holiday menu with the debut of its roasted pear shortbread, a German chocolate cupcake, a pumpkin cupcake and Halloween ghost cupcakes. In November, pumpkin bread and ginger molasses bread will be showcased, as well as a ginger molasses cookie and Thanksgiving pies. Its December menu will include festive holiday cookies and cupcakes, as well as pies, cakes and breads. “Since winning Food Network’s Cupcake Wars last summer, our bakery has been on an all-new trajectory,” said co-owner and Cupcake Wars participant Brady Breese. The bakery’s building also is benefiting from a much-needed makeover. A photographic account of the rebrand and remodel progress, as well as the bakery’s new holiday menu can be found at www.urbancookies.com/growing.
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