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    Hosting Effective Online Meetings

    Video conferencing has quickly become the primary mode of communication used in our day to day lives.

    With the uptick in usage being directly linked to current world events, it is even more so important that we make business meetings using video as engaging and lively as what we are used to when we meet in-person. The best method of keeping people interested in what you are talking about is making sure that they not only hear what you are saying, but also feel connected to it. In fact, one of the main advantages to holding your meetings virtually, is the potential to prevent your audience from tuning out. Hosting an engaging and effective virtual meeting, however, all starts with what is done before the meeting is called.

    In order for employees to use popular teleconferencing platforms like Zoom, Google Hangouts and Microsoft Teams, they need proper training on how to actually operate the software. Although more people are using these online tools than ever before, many are not technologically advanced causing some problems.

    In our experience, these problems can usually be summarized under employees not fully understanding how to efficiently and effectively utilize the platform. Luckily, most video conferencing platforms provide online tutorials on their website and social media that can be easily shared with your team. Alternatively, you can host hands-on mock meetings to give inexperienced members of your team time to learn how to use at least the basic features correctly.

    The basic features each team member should be comfortable with include: the mute button, directing which participants can speak, turning on and off video, the screen layout options, screen sharing, and private and public chat.

    By investing in your team’s technical skills and thus making them feel comfortable with virtual meeting technology, you allow them to focus less on whether or not everyone can hear them and more on their presentation skills and the actual meeting taking place.

    One of the challenges of working from home is ensuring that you maintain the same level of professionalism as you did while working in office and this is an area of hosting online meetings that many people are still concerned about.   We are all trying to adjust to the new normal and with everyone working from home we have to make concessions to the fact that each of us has a different situation at home. As such, don’t be too unyielding about how and from where the video conference will take place and also put out some guidance for them to consider.

    One way you can instantly boost your home environment’s appeal is by carefully selecting what will be in your background, also known as the backdrop, during the video. Backdrops make a big difference – even a blank wall is better than seeing someone’s entire living room or worse behind them. Many of the video conferencing platforms offer virtual backgrounds, which present a viable solution over another in home alternative.

    Many people are also concerned about how they look on camera. To create a picture perfect setting try putting a lamp or other light source in front of you (instead of behind) to illuminate your face while sitting with a wall close behind you. Don’t focus too much on being photogenic, however, as it would be better to just show your humanity -, let’s face it, this is not the time to be absolutely perfect.

    We also encourage everyone to practice video meeting presentation skills by recording yourself presenting on video, most of the platforms offer a recording feature. Use the recording to see what you may want to remedy before the actual meeting takes place.

    We recommend that you follow usual meeting protocols to best undertake virtual meetings. just because your meeting is online doesn’t mean that you should overlook traditional meeting best practices like scheduling and reminder messaging, supplying relevant documents and an agenda beforehand, handling administrative issues such as questions and time limitations early on. The less traditional online meeting issues include things like who is muted, highlighted, and can share their screens.

    Work toward keeping your video meetings lively and think of opportunities to engage attendees. This will lead to success and positive feedback. The more active participation you can include, the more you can keep others from tuning out.

    The video conferencing platforms offer many extra features to make video meetings more dynamic and interactive, including polling (for when you want to quickly gauge views on an issue), breakout rooms (for when you want a video meeting to break into subgroups) and emoji reactions.  Workto familiarize yourself with these and incorporate them when it makes sense.

    Here are a few video presentation skills to train your team on:

    • Looking into the camera when talking.
    • Smiling when talking—and listening—to portray a friendly, engaging image.
    • Using gestures when appropriate, making sure the people on video can actually see them.
    • Moving through presentations quickly, aiming to spend no more than two minutes on each slide.

    As video conferencing takes on a larger role in the business world, you will want to make sure you and your team become pros at it.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    How to Manage Your Building’s Restricted Cash During COVID-19

    So you have a reserve fund, but with the various challenges presented by COVID-19, do you really know if it is reasonable? In these times you have to ask yourself if that amount will be enough when unit owners are not able to pay or worse yet, the commercial space your budget relies upon does the same or becomes vacant.

    To have a well-dressed annual financial statement during the COVID-19 era you need to have more than just the minimum. In the past roughly $2,000 per unit held in the reserve fund was an acceptable minimum, but now we believe that you need to double that to $4,000.

    We suggest doubling the amount because your reserve funds must be available to cover more than just the minimum. Think about it, if you have the minimum by spending any of those minimal amounts you would be forced to lose the designation of meeting the minimum.  We all must be prepared to spend reserve funds, thus the concept that you may need to double the minimum amount to have a reasonable reserve fund in uncertain times should not be surprising.

    In this era your board needs to think beyond what is available in the existing fund. Let’s face it, properties have unexpected events happen all the time and also need long term repairs. So it’s not just about ’what we have now‘, but ‘what we need in the future‘.   Further, the amount of future costs cannot be predicted so it is best to err on the side of caution. Prospective purchasers will want to see an adequate cash reserve fund and although from time to time unexpected bills may show up or reserves may be dwindled down by operating losses without notice, it is imperative that you periodically monitor the activity in the cash reserve fund. This is more important now than ever.

    There are three aspects of your restricted cash to consider: what you need to offset the loss of revenue and increased expenses from the COVID-19 pandemic; what’s left in the account(s) after that, and how much needs to be spent on improvements over the next few years. Your board can window dress your finances by focusing on where those funds come from which means that the receipts from owners of any specific assessments will all make it there.

    There are a number of actions other than assessment that can enhance the reserve fund. If you don’t take adequate steps to protect your property you may find that after surviving COVID-19 issues,  coupled with increased spending,  it is quite easy to get to the point where any previously reasonable reserve fund becomes inadequate.

    It is important for your board to work together on the level of reserves and the plans to replace them as needed during the COVID-19 era. By working together to window dress the reserves on your annual financial statement, you can enhance the financial success of your property.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    Planning Next Year’s Budget with COVID-19

    Many unit owners would consider the annual financial statement, which is audited by an external accountant, to reign supreme but to many the annual operating budget seems to be the most important financial document. This is because the operating budget determines the amount of monthly charges to unit owners for the next year and the need for any assessments to supplement revenue. In the COVID-19 era there are several significant risks to your annual budget:

    1. Will unit owners be able to pay on time and in full each month?
    2. Will the commercial or parking space no longer be able to pay rent or worse yet become vacant?
    3. Where will the funds for the inevitable added costs of dealing with COVID issues come from?

    At Czarnowski & Beer we have been advising our clients that this year is time to start looking at the operating budget a little earlier. We suggest that you start by getting together with your financial analyst to commence the usual Fall budget process much earlier this year, this summer if possible. This will allow you to investigate what obstacles your property is encountering due to COVID-19 and you can then move to determine which of those past costs will impact the property in the new year. After these evaluations are complete you can transition into a thorough review of where the property is so far this year – this evaluation of the present situation also allows you to establish a benchmark for year-end results. By planning for the rest of the year you cement your future. You will learn now, as opposed to in December, whether you need an increase and also have adequate time to plan for it. While no one wants to pay more, as a board member with fiduciary responsibilities you really need to understand the property’s COVID age finances now.

    Research is key here. Do you really know for sure what your property’s costs of the initial shut down were? We suggest that you make it your business to find out. If there is the expected second wave planning for at the least those amounts a second time in 2020 is prudent. Let’s face it, we don’t know if a second wave is coming, or if the costs will be more or less than this Spring, but there is no better time than now to evaluate what  increased costs are caused by the crisis. Do you really want to sit still and be reactive to the news that there is not enough money coming in? Short of drawing on loan facilities, the only place the funds will come from is cash reserves so do your due diligence.

    One aspect of added costs may be the property’s payroll. We suggest you compare the costs that occurred during the shutdown with a period before the crisis. Certain added costs for coverage can be hidden in payments to security or concierge services as well reimbursement for the managing agent. Small amounts may be hidden as payments to individuals along with repairs or administration. Looking into overtime is a great way to find where money might not have needed to go. When looking at these costs it is best to have dealt them dealt with by year end to avoid financial statement deficits as best you can.

    If your property has commercial space, you will need to appropriately evaluate what is now vacant as well as the ability of your remaining tenants to pay. Allowing reopened businesses to not pay rent, even if only a diminished amount, is something that should not occur. We suggest continuing to monitor any rent arrears on these units and dealing with them as soon as there is a shortfall. Remember, every dollar lost will either need to be borrowed or paid by the unit owners. Knowledge is power in accomplishing an accurate operating budget going forward.

    Certain, hopefully limited in number, unit owners who cannot pay because of employment issues also need to be considered. While we all feel for those suffering in these times, the board took on the fiduciary responsibility to make sure the bills get paid. While a lender is much more likely to step in for a cooperative unit should arrears occur, the risks are pronounced for condominiums. You need to be prepared to only collect token amounts from lenders and then only some monthly common charges. Careful negotiation through this situation is vital and the best way to accomplish that is using future budgets and constant monitoring by the board.

    Take the time to talk to your property manager and/or building’s Superintendent about what is going on. Realistically understanding your financial situation and moving to resolve the issues impacting your property from COVID-19 is essential to your financial success. Let’s make sure that we move swiftly to determine our position and structure a plan to assure we understand where we are going.  Only by getting started on this exercise now can you hope to use the budget to plan for the latter half of 2020 and have comfort knowing that you understand 2021 as it approaches.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-19 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    Why You Should Take a Closer Look at Your Financials During COVID-19

    Prospective purchasers and lenders to cooperatives and condominiums utilize both the annual budget and financial statements as the basis for their perception of your property’s financial health.

    In the era of COVID-19 the seasonal publication of those documents creates a situation where the ability to rely on them is quite different now. You see, these documents will now need to chronicle how things have changed, which is why you should take a closer look at your financials during COVID-19.

    With the stay at home order and the reboot of the usual time frame to publish an annual financial statement many properties have just now, or will soon, published their 2019 financial statements. This means that the shortest interval for annually updated documents will be nine months if we return to the usual timing of publication. We suggest that boards prepare certain information about their property’s COVID-19 effects to be at the ready for those who will inquire. However, the annual operating budget is a document that can be more easily updated to demonstrate the effects of COVID-19 to those needing financial information.

    Effects on Your Operating Budget

    On the financial statement side of the COVID effect on finances is the amount of property reserves. In the past, reserve funds were generally viewed from a distance with a range of ideas on the topics from accepting what is there to structured plans for future capital costs that are planned to be needed. While there have always been questions as to what the reserve fund balance is, now during the period between financial statements these will be more common and will have urgency added. The concerns include how much was required to be utilized to get through the crisis to pay bills; were the added costs of COVID-19 dealt with in the budget; how the shutdown impacted commercial tenants’ ability to pay rent; and what was the mix of the population of unit owners who suffered severe enough personal financial issues that they can’t pay their monthly charges.

    Any updated operating budget information will demonstrate plans to solve the latter two questions, but only potentially painful financial actions by the board can offset the funds used for the crisis and the added COVID costs. Your board needs to consider the aspects of the reserve fund that are not only important in the near term, but also for the future.  Only by having complete knowledge of what has occurred can you expect to keep your reserve funds appropriately replenished and be ready to present a viable financial recuperation plan from this event. The need to take a closer look at the finances of your property during the COVID-19 pandemic and work with your auditor on how the finances will look when the next financial statements are published is paramount.

    Extra Working Capital Versus Restricted Cash

    Cash on a cooperative or condominium financial statement has always been king, but now this is more important than ever. While cash always had a positive association of being available for emergencies there now needs to be an enhanced level of amounts, not just for that but also for the usual reserve fund for future capital projects that everyone looks for.  The better option is to have two funds, one for major repairs and replacements and a “working capital” excess fund for emergencies. The amounts sought will tend need to be roughly twice the amounts in the past, we are now suggesting $4,000 per unit and a bare minimum amount of $200,000. If your accounts have been depleted planning now to attempt to recover lost ground can be vital to creating the best possible post COVID financial statement.

    Using Restricted Cash to Fund Operations

    We mentioned having cash for emergencies earlier and another aspect of this is determining how much was been needed during the Spring and potentially how much will be needed in the second wave of shutdowns. This leads us to ask how much the deficit (maybe deficits if there are multiple waves) was, how much cash was utilized, and might it have been cash restricted for capital projects. You will need to know if the cash was designated in order to avoid income tax consequences to unit owners, and if so that use needs to be accounted for as a ’loan’ from reserves and a plan needs to be adopted to return those funds to the restricted fund. Appropriate planning for the inevitable questions and tracing the funds that might have previously been designated for capital projects is of utmost importance.

    How to Make Your Financial Statement Presentation Picture Perfect!

    Working together with property management and the auditor can help you create the best possible financial documents. We urge you to get started with the 2021 operating budget process NOW. Many of the operating budget models utilized by property managers include a current year projection as well as the future operating budget. Having that information available can be quite helpful to quell concerns in the off-season of financial documents your property produces.

    By starting this summer as opposed to the usual timing in late Fall you can have the financial information ready for those who need it. You also can communicate any future substantial increases to unit owners well in advance or if working capital is needed, implement a COVID increase or assessment in a proactive as opposed to reactive manner.

    Obviously no one wants to pay more, and many simply are not able to, but in this situation, knowledge is power, and people need to know. Only by fully understanding how funds were needed can you ever hope to best window dress the reserves that your next financial statement will present. Covering both financial aspects before their usual timing allows you to enhance the financial situation of your property.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    Capital Contributions

    Not a piggy bank for everyday funds

    Making sure your building’s finances present well can be challenging in the best of times. But doing so in the COVID-19 era adds a layer of complexity. Here are areas that need special attention:

    FINANCIAL STATEMENTS
    A lot of boards don’t like to look at the financial statement because they think it’s complex. Financial statements can be challenging to look at, but we try to make sure that they are clear and explainable to the shareholder or unit-owner.

    RESTRICTED CASH
    Money comes into the buildings, and the biggest question is: “Where is it being spent?” Coops and condos have an operating account, which is used to pay bills. It’s the reserve account where there’s a lot of scrutiny. What are those funds for, and are they being used correctly?

    One of the things that gets put into the reserve fund are assessments. And a lot of times those assessments are done either for specific projects or to build up reserves for future projects. When we perform an audit, we make sure that if a board is collecting money for a specific purpose, that it’s set aside for that purpose.

    Many times we’ll find when we’re doing a year-end audit, or even an interim, a board will say, “Oh, we needed some money to pay utility bills or legal bills that came up.” But the money was set aside as a capital contribution, and apartment owners can add this capital contribution to their basis when they sell their apartment. Plus, the association probably did not pick up the capital contribution as revenue for tax purposes. So using restricted cash for operating purposes is a problem.

    BUDGET CHALLENGES
    This is something that is pertinent not only with the pandemic going on but also in general. Most budgets assume everyone’s going to pay their maintenance or their common charges.

    But now let’s say that in June you have a couple of units where owners lost their jobs or the owners passed away, and you’re not collecting monthly fees. In a bigger building, it might have less of an effect because you’re dividing that among 350 units. But in a smaller building, that could be a significant amount of revenue that the building’s relying upon.

    Now you get into the fall, and you’re doing your budget. If the same owners are still not paying, that’s six months of nonpayment. And now you have a continuous issue that’s going into 2021 that you need to take into account. On the financial statements and in your monthly management reports, that’ll be reflected as a receivable. But you’re going to have to find a way to deal with this shortfall.

    Because most budgets are prepared to break even, if you’re not getting an anticipated $20,000 in revenue, either you hope and pray that you have an expense category that’s down $20,000 – which does happen – or you take money out of reserves. Or you don’t pay the bills, which is another option. The other option, which is not my favorite, is to tap into a line of credit. Lines of credit usually are set aside for emergency capital projects. But if buildings don’t have the operational revenue, or if the unit-owners or the shareholders can’t afford to pay an assessment, the board might tap into the line of credit to pay bills.

    DEFERRED PAYMENTS AND ASSESSMENTS
    A lot of boards might defer payments for other expenses because the revenue is not coming in. If you’re behind on your bills because people aren’t paying maintenance because of the situation with COVID-19, a special assessment would not be the wrong thing to do.

    Especially if you’re telling shareholders that they don’t have to pay their maintenance. So that’s something to look into when you’re doing your current budget.

    PLAN NOW FOR NEXT YEAR
    I always tell boards to look at their budgets throughout the year. You’re getting updates every month in your management reports. See how you’re doing. If things are not going in the right direction, you need to act now. Otherwise, it’ll get to be October, November, and you’re not going to be able to pay real estate taxes or your utility bills. You want to look at it in time. We look at the audit a couple of times a year, in different stages, then call our clients and say, “Do you realize you’re over budget in this category?

    What are you doing about it?”

    This article was originally published in Habitat Magazine’s ‘June’ issue, which was free to access for everyone in the co-op/condo community. Click here to read the original version.

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    How to Effectively Conduct a Virtual Annual Meeting

    With the stay-at-home orders issued in the tri-state area, we are all adapting to a new reality. As social distancing works to slow the spread of the virus, we are all trying to get back to something that feels normal. For cooperative and condominium boards who are looking at the rapidly approaching annual spring meeting season the decision so far has been to postpone, postpone, postpone. However, we all know this is not a sustainable strategy.

    With an eye on finding a resolution we gave some thought to how a cooperative or condominium can run an effective meeting without owners being physically present to participate. Doing so benefits almost everyone as those most susceptible to the virus should not be in the presence of anyone other than their household members and most everyone else would appreciate the chance to practice social distancing. Board members should not have to risk exposure to fulfill their volunteer duties, building staff have put their lives on the line enough already and the potential risks to outside professionals should be considered as well.

    The Light at the End of the Tunnel

    As we heard Governor Andrew Cuomo mention in one of his briefings, we should try to see this situation in some small positive ways – like how it has nudged us into more fully embracing available technology, which is something we honestly should have already been doing. In fact, the pandemic has made it clear that we should have all had the complete ability to work from home, just as we are finding our children are also able to learn virtually too.

    We suspect that beyond when stay-at-home orders are lifted in New York, Governor Cuomo will extend the portions of New York on PAUSE that suspend specific requirements for annual ownership meetings. The suspended requirements include that prior notice must be given and that the meeting must be held at a physical location. These changes mean your board has the option to conduct a virtual annual ownership meeting. The idea of conducting the meeting virtually should not be something foreign to board members as more people have been using technology to tele-work and home school than ever before. After your first try, we think you will find that the annual meeting is enhanced and more effective in numerous aspects by going virtual.

    Preparing for Your Meeting

    The notice of the meeting, which is usually sent by hard copy, can be sent by e-mail to all necessary owners who have designated an e-mail address to receive notices. The notice should mention that the annual meeting will be held online in accordance with the governor’s executive order and good social distancing practices. Afterwards send virtual invitations containing the required links and related login information by electronic means to ensure everyone has access. These days it is almost expected that all owners and professionals can effectively use technology to join the meeting but be ready to provide assistance to anyone who requires it. You, or your property manager, probably already know who those persons are so do not hesitate to reach out them with offers to help if you think that may be appropriate.

    As for the official and legal requirements of notifying owners of the meeting, boards can use any form of communication (post, e-mail, BuildingLink, or even your building’s Facebook group) to keep owners up to date.

    We have also seen success with clients who have setup a way for owners to submit questions in advance of the meeting thus reducing the amount of back and forth that can sometimes derail it. Virtual meetings should not be run any differently. We recommend providing owners with the topics of board interest and asking them to submit comments and questions up to seven days before the meeting. That way, the comments and answers can be reviewed during the meeting instead of completed during the meeting, ultimately saving time.

    To err on the side of caution, legal counsel should be consulted to ensure the meeting is held in accordance with by-laws and statutory requirements.

    Technology Requirements

    Using software like Zoom, ScreenLeap or Google Hangouts allows you to host your virtual annual meeting with ease. These programs have browser enabled use ensuring you won’t have to download a new program or application, allow for audio only participation via phone call so owners can participate even if they don’t have a smartphone, PC or laptop; and have a highlight feature that shows whoever is speaking. However, an experienced meeting host is the real key to running an effective and efficient meeting.

    The host has control over attendees – they can mute everyone while reports are given, conduct elections, recognize (and un-mute) individual owners during a designated Q&A, exclude a participant who was not invited or is not supposed to be attending, and otherwise ensure the meeting runs as smoothly as possible. The effective use of the mute function is one of the most useful tools at the host’s disposal as it reduces annoying background noise and other interruptions that more unfamiliar users of teleconferencing may run into.

    When choosing the software you want to use for your meeting carefully consider your objectives and whether or not the features offered will best help you meet them. We generally recommend Zoom because it has a lot of great features like the gallery view which allows you to view up to 25 faces on a PC or laptop, the ability to vote and more. If you choose Zoom, be careful to setup the meeting with a password as there have been reports of “Zoombombers” who, when they find a meeting ID posted publicly, join meetings and become disruptive. However, Zoom (and most other meeting platforms) provides additional safeguards, including requiring users to be authenticated so that should not be too much of a problem.

    To allow owners access to the meeting, do not forget to post reminders with the meeting’s web address, including the meeting ID as well as the passwords.

    Host Dress Rehearsal

    Just like a regular annual meeting, board members will want a virtual meeting to run as smoothly as possible. No one wants to have long breaks spent trying to figure out technology issues. Therefore, we recommend that boards have a dry run in advance of the official meeting to test any security settings (passwords, authentication, etc.) and have the designated host practice muting, unmuting, giving another presenter control, and screen sharing; along with properly executing voting through the chat feature.

    Zoom has best practices on their website, so take a look and see what else they recommend.

    Conducting the Virtual Meeting

    On the day of the meeting we suggest initiating the video conference 15 minutes before the scheduled start time. This should be included in the meeting notice and will provide time to iron out any access issues participants may have. Then start the meeting on time – everyone appreciates a well-run meeting and starting on time is important.

    Boards should consider recording the meeting, something easily done with the programs we mentioned above and many others. If the meeting is going to be recorded, this should be mentioned prominently in the meeting notice, again in any reminders and other notices, as well as at the beginning of the meeting and when the recording actually starts. Note that recordings may become part of the legal record of the organization, with all the attendant record keeping and archival requirements.

    Other thoughts to consider while preparing for your virtual annual meeting include

    • Consider using a registration form or other means of taking attendance, such as a roll call or acknowledgement of each participant.
    • Turn off the chat feature except during Q&A and voting. This eliminates cross talk and allows presenters and the host to stay focused on the agenda.
    • The agenda and any other material to be shared during the meeting should be included in a PowerPoint or similar presentation and screen shared by the host and any other presenters.

    Special Considerations for Elections

    While for many annual meetings board elections are a quick formality, this is not true for all. To ensure compliance with board election policies and procedures, attendees must be given an opportunity to put forth nominations “from the floor”. Decide in advance how this is to be done – we recommend allowing chat and audio and including the chosen procedure in the meeting notice. The usual process includes all those on the ballot offering a brief statement of their background, qualifications, and vision for the building. Allowing nominees to take questions, while not an unreasonable approach, can significantly slow the process. The host should remain firmly in control during this part of the meeting and not allow it to get out of hand. When it comes time to vote, attendees should be directed to the chat room which allows them to privately cast their votes.  A great benefit of Zoom is that chat room voting is automatically recorded. Setting the privacy parameters before starting the vote limits the disclosure of individual votes. The votes should also be directed to the designated inspectors of election. Again, ensuring these procedures run smoothly is a primary objective of the practice session(s).

    It’s best to allow each participant to cast their vote privately. For those who will either not be participating via videoconferencing or are uncomfortable voting that way, we suggest enabling voting privately by e-mail to a designated e-mail address during the voting period. This will, of course, be necessary for telephone participants. Texting to a designated cellphone is also an option. Account for any ballots or proxies obtained before the meeting as the inspectors of election tally the results. Normal completion of the certification, and the announcement of results can follow.

    Conducting virtual meetings can be beneficial on multiple levels. Costs of room rentals are eliminated and professionals (attorneys, accountants, engineers, architects, etc.) can easily participate in your meeting without wasting time traveling or waiting around for the relevant portion of the meeting to begin.

    Most importantly, during these difficult times not subjecting staff and at-risk unit owners to a physical meeting helps us all.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    The Cash Flow Checklist: Actions Your Board Can Take to Protect Against Shortages

    The novel coronavirus, COVID-19, has definitely shaken things up in the cooperative and condominium industry. With all non-essential businesses shutting down and the added sense that we have no idea how long this will continue, funds are running low and people are getting worried.

    While it is ultimately best to consult a trusted Certified Public Accountant to help you navigate your way forward, The Cash Flow Checklist outlines ways you can prepare for disruptions to your property’s cash flow and significantly help you manage your property’s financial during these uncertain times.

    • Start with a monthly escrow for real estate taxes so you can pull that amount out each month.
    • Cease any reserve fund contributions.
    • Postpone capital improvement projects wherever possible.
    • Consider the option to draw down on existing line of credit facilities, but keep in mind that lenders may withdraw all or a portion of the available line in difficult times. Consider the effect on monthly costs of taking drawings.
    • Reach out to commercial tenants to best understand rent payments that they will be able to make.
    • Review unit owner listings and contact those who you feel might have difficulty keeping up with usual monthly payments. Call on your fellow Board members, the superintendent and neighbors to help identify others.
    • It is not clear if cooperatives and condominiums can qualify for SBA Economic Injury Disaster Loans (EIDLS) as well as Paycheck Protection Program (PPP) Loans, however, existing lenders generally need to approve additional financing. Just in case, gathering the required information and being ready to apply once final guidance is received would be prudent.
    • Condominiums without existing debt can consider obtaining new debt secured by working capital. Refinancing existing debt may make sense although consider upfront costs and early payment penalties and the anticipated lag of at least 90 days from initiation to closing.
    • Reach out the NYC Water Board to see if they have any programs available to defer payment without interest.
    • Inform vendors that payments will only be able to be made as funds are available.
    • Suspend reimbursement for abatements and Senior Citizens Rent Increase Exemption (SCRIEs).
    • Resist covering a deficit by increasing monthly charges or imposing an additional assessment, options that are likely increase the financial stress already placed on residents.
    • Avoid the courts at all cost. Neighbors who for years may have dutifully paid their monthly charges deserve better.

    Should cash become tight:

    Consider borrowing money from reserves to operations with appropriate documentation in the minutes of board meetings and include a clear plan to replenish those reserves.

    Contact the mortgage holder and request forbearance for at least 90 days.  

    Prioritize bill payment as follows:

    – Payroll

    – Fuel oil

    – Supplies/Repairs

    – Insurance

    – Office expenses

    Seek deferral acknowledgements for:

    – Mortgage (focus on interest only)

    – Gas/Electric

    – Real Estate Taxes

    – Water and Sewer

    Pay as best as possible:

    – Professional fees

    – Management Fee

    – Corporate Taxes

    Consider temporally using security deposits held against monthly charges for buyers who did not meet the board’s requirements at purchase.

    The Czarnowski & Beer team is dedicated to providing timely, accurate information on all aspects of the CARES Act and the current economic crisis that affect our clients. If you’re interested in reading our full summary of the provisions outlined for coops and condos in the Act, download our guide here.

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    Why Coops and Condos Should Apply for an Economic Injury Disaster Loan

    By now, you probably have read about the aspect of the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress at the end of last month which gives until June 30, 2020 to file an application under the Paycheck Protection Program (PPP). Although the PPP is intended to help with the impact of the COVID-19 pandemic on employers of fewer than 500 persons, much of the commentary regarding the loan program indicates that only with legislative relief will it be afforded to cooperatives and condominiums.

    While we often look to legal counsel to direct our clients, the intent of the Act and the vagueness of the regulations within it seem to leave room to consider filing so long as the bank you have lending relationship or bank account will accept the application or use a third party service that works directly with another Small Business Administration (SBA) lender.

    Regardless of your Board’s decision if your property is experiencing injury, most likely from commercial tenants either indicating that they can’t pay their rent, staffing vacancies which need to be filled by quite expensive security services, or numerous unit owners not being able to pay their monthly charges; then you may want to consider another aspect of the Act, a SBA Economic Injury Disaster Loan (EIDL).  We do have cooperative and condominium clients with SBA disaster loans, so it seems that the requirements appear to be different for EIDLs.

    Until the Act, situations like the one we are currently experiencing did not qualify for disaster loans. However, everything about the current events should be considered disastrous and thus now, disaster loans are available for coops and condos.  The EIDL is quite different from the PPP, in that the amount of the loan is subject to the amount of your losses and there is presently no provision for forgiveness. However, at 3.75%, for properties in need of cash, they provide an option without the longer approval process of standard commercial loans.  You will be assigned a revolving lender by the SBA so there is no need to verify if a bank you have a relationship with are accepting applications.  Presently, that is one of the important barriers that properties are dealing with presently as they decide whether to process PPP applications.

    High demand for the EIDL has led to important changes limiting the size of the payouts for small-business owners. The Massachusetts District Office of U.S. Small Business Administration announced that, nationwide, the SBA has decided to implement a $1,000 cap per employee on the up to $10,000 maximum advance. So, a business with three employees, for example, would be eligible to receive only $3,000 up front, as opposed to the originally stated $10,000.

    Other aspects that are beneficial are that the loan term is 30 years and it can be repaid early at any time or in any partial amount.  The downside is the application process needs to be with a lender that doesn’t know you and even though the intention of Congress was ease in documenting need and qualification.  There has not been enough feedback on this program to conclude whether those aspects are in place.

    The initial application is online, and even though the loan is non-recourse, the application does require personal information of at least an individual.  Taking the first step of filing the application is quite easy, although there has been a lag in excess of the intention turnaround of several days.  When appropriate, Cooperatives and Condominiums, and their managing agents should consider moving forward with preparing these applications, and not necessarily wait too long and possible see the program run out of allocated resources.

    Overwhelming interest in the program has slowed the process which makes it difficult to estimate when applicants will be able to expect their advance. Additionally, as of April 16th the SBA indicated it is currently unable to accept new applications for both the EIDL and PPP programs based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

    The Czarnowski & Beer team is dedicated to providing timely, accurate information on all aspects of the CARES Act and the current economic crisis that affect our clients. For more information on how you can prepare for cash flow disruptions see our latest blog post here. If you’re interested in reading our full summary of the provisions outlined for coops and condos in the Act, download our guide here.

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    Everything You Need to Know About the Paycheck Protection Program

    The world that we live in today is quite different to the one we started off the new year with and in it new heroes have emerged. Instead of our usual caped crusaders, we’re now celebrating medical personnel, police and firefighters who are on the frontlines of the pandemic and out there preserving our lives. These brave professionals are the ones who rush to help when everyone else seems to be hiding away, doing whatever they can to assist the sick and maintain our society. Not to be left out, many other professionals are working hard to ensure that things remain as “business as usual” as possible. Teachers search for methods to continue to invest in children and we can also look at our elected representatives with admiration for the two, usually dueling, parties have come together with a $2 trillion coronavirus economic stimulus bill referred to as the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

    There has been a lot of publicity concerning the Paycheck Protection Program (PPP) which is designed to help individuals and businesses survive by maintaining cash flow. Appropriately named, the PPP is a Small Business Administration (SBA) loan which will turn into a grant if the funding is used to pay employees that you had prior to the pandemic. Congress allocated just under $350 billion towards preventing layoffs and business closures while workers stay home during the outbreak for companies with 500 employees or less. This will be done through small business loans through local lenders and given for 2 and a half times the average monthly employee payroll costs.

    Most any business, including a qualifying nonprofit organization, is eligible to apply for a PPP loan if it meets the applicable North American Industry Classification System (NAICS) code-based size standard and has an employee headcount that is lower than generally 500 employees. Further, sole proprietorships, independent contractors, and self-employed individuals are also eligible.

    All or part of this loan may be forgiven so long as it is spent during the first eight weeks after the loan is received to fund the same number of persons you had employed just before the crisis. The loan needs to be utilized for payroll costs (excluding pro-rated amounts for individuals) with compensation for an individual being no greater than $100,000; for leases in force before February 15, 2020, then rent as well; and using that same date: expenses in effect prior to then for electricity, gas, water, transportation, telephone, or internet access expenses, and group health insurance premiums and other healthcare costs.

    For the portion not forgiven, payments are deferred for six months and the maximum interest rate is 4% with a loan term of up to 10 years. There is no personal guarantee or collateral needed for the loan.

    One of the most advantageous features of this program is that the loan could potentially be forgiven in full. The program was made for those operating under uncertainty of current economic conditions which make it difficult to support ongoing operations. The potential shortfall of revenue should unit owners, and more importantly commercial tenants; be unable or unwilling to pay their monthly charges is one that none of us can foresee. At this point we don’t know what the costs will be of securing relief employees so it may be better to play it safe.

    Most of our clients keep enough operating funds available to handle an emergency, but this is an economic crisis and no one can truly forecast what will happen in the future. It would seem to be venturing a guess to say just how long operating reserves might last. While capital improvement funds can be borrowed, in order to maintain the beneficial individual income tax status as additions to apartment basis when paid they need to be utilized solely for capital, not operating expenses. Further, this situation tends to have lenders withdraw a portion or entire existing credit facilities, thus your use of a line of credit might be limited.

    If you talk to 20 business owners they’re all hearing something different from their banks. In general, properties are submitting applications to the banks that they either have existing financing with or that they maintain their bank accounts with. A further barrier to getting an application moving is that banks are choosing varying methods to service existing clientele to the extent that those with existing loans come first.

    There is a basic application on the SBA website, but many lenders are requiring you to access their own application portal and in many cases further information than asked for in the SBA document is being requested. It is best to check your lenders website to determine their requirements and see if there is an option to print the application out before you attempt to fill it in. We do not recommend that you put a lot of time into completing a partially completed application nor destroy the information that you’ve accumulate to prepare without assuring the work you invest can be saved and updated.

    As part of the application process, SBA is expecting you to be able to certify the following:

    • Current economic uncertainty making the loan necessary to support your ongoing operations.

    • Assurance the funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments.

    • You have not and will not receive another loan under this program.

    • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan. Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities.

    • All the information provided in your application and in all supporting documents and forms is true and accurate.

    • Acknowledgement that the lender will calculate the eligible loan amount using the tax documents you submitted.

    • The tax documents provided are identical to those you submitted to the IRS. And that you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives.

    • Whether or not the business, any of its owners, or any business owned or controlled by any of them has ever obtained a direct or guaranteed loan from SBA or any other federal agency that is currently delinquent or has defaulted in the last 7 years and caused a loss to the government.

    • Whether or not the business has common management with any other business? If yes, attached a listing of all affiliates and describe the relationship.

    • Whether the business has received an SBA Economic Injury Disaster Loan between January 31, 2020 and April 3, 2020? If so, provide the details.

    You will need to complete the PPP loan application and submit it with the required documentation to an approved lender that is able to process your application by June 30, 2020.

    While there is with no certainty that we can state the benefits from the PPP will be available to cooperatives and condominiums anytime soon; accumulating information, verifying the process that your bank is following, verifying legal issues with Counsel and preparing an application are certainly worth pursuing. Some are recommending filing as the guidance is unclear and the worst that happens is that loan is not granted or the federal government requires it to be paid back with little interest. This lack of clarity should in itself create a defense against any assertion of penalties and leaves no basis to assert any kind of fraudulent behavior occurred by filing the application.

    The SBA website uses the verbiage, “when in doubt, apply.” Further, there appears to be no reference in the regulations that an entity needs to be materially impacted or even details the extent of the effect that is necessary before a loan can be applied for. This means that boards of directors/managers need to consider when and how they have been affected, the most common indicators are a reduction in revenue receipts and the cost of relief workers as opposed to union staff should an employee not be able to or chooses not to report to work due to the situation.

    While significant benefits might be available to cooperatives and condominiums, the details as to the benefits available under the program cannot be confirmed until the SBA finishes publishing and implementing final regulations. However, the interim guidelines published on April 2, 2020 indicate passive entities such as apartment buildings do not qualify and thus the National Cooperative Bank (NCB) has come out to indicate that cooperatives and condominiums do not qualify. We all hope for legislative relief by Congress to this oversight as part of future stimulus packages.

    Although the current $350 billion to be distributed by the program seems like a lot of money, with so much economic burden one would rightfully be concerned that at some point the demand might exceed the supply. We believe that cooperatives, condominiums, and their managing agents, should consider moving forward with preparing their applications and not necessarily awaiting the final regulations to be prepared. Keep in mind that to file you must be experiencing economic hardship which will interfere with paying your employees, which shouldn’t be hard as most non-essential businesses have seen their revenue deteriorate, if not evaporate.

    The CARES Act contains numerous other important benefits which we plan to chronicle over the coming months. While the Act has two emergency loan programs available you may be hearing less about the Economic Injury Disaster Loan (EIDL), which is a second opportunity for receiving emergency funds to keep your business afloat in these trying times and provides protection from the effects caused by present economic situation.

    As of April 16th the SBA indicated it is currently unable to accept new applications for both the EIDL and PPP programs based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

    All things being considered, after you review your situation if feel you have or will have an imminent financial problem we advise that for now it may be best to gather the relevant information, keep it on hand for future use, and await legislative relief.

    The Czarnowski & Beer team is dedicated to providing timely, accurate information on all aspects of the CARES Act and the current economic crisis that affect our clients. For more information on how you can prepare for cash flow disruptions see our latest blog post here. If you’re interested in reading our full summary of the provisions outlined for coops and condos in the Act, download our guide here.

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    Preparing for Disruptions to Your Property’s Cash Flow

    The cooperative and condominium industry is entering unfamiliar territory as a result of the effects caused by the novel coronavirus, COVID-19. With all non-essential businesses shutting down and the added sense that we have no idea how long this will continue, tensions are high and people are getting worried.

    Adding to the uncertainty, many unit owners were already living from paycheck to paycheck and are now finding themselves temporarily furloughed or laid off. It is expected that unemployment benefits will only cover basic living costs, so monthly carrying charges are way down the list. The simple fact is that whether the resident experiences a temporary or permanent work disruption, the impact on their ability to pay monthly charges will fall on the board of the property to work through. In times like these we should treat our financially challenged neighbors the way we would want to be treated.

    Let’s face it, in addition to managing unit owners who are behind on their maintenance charges, we also need to plan for commercial tenants not being able to pay their rent anytime soon. Lately we are mostly receiving queries from properties with commercial tenants, as a business needs to be operating in order to pay its rent for retail space, in addition to properties in moderate income neighborhoods where unit owners are already seeking relief. The Czarnowski & Beer team wants to support our clients in any way we can which is why we created this list detailing options for board members to manage cash flow and handle bulging budget deficits.

    The scenarios playing out in our present-day reality are so daunting they create an extremely challenging situation for cooperative and condominium boards who are required to operate on a balanced budget. Any significant interruption of any source of income will force a budget into a deficit, but fear not, we have identified a few action steps available to you:

    Reach out to residents and commercial tenants to gain a better understanding of their specific needs. Reaching out to these valued members of your community about their situation fosters a sense of good will, allows you to have better knowledge of the magnitude of the board’s situation, and affords you the opportunity to plan. Accumulate information on the anticipated income disruption and, where possible, gain data on its likely duration. Continued communication allows for budgets to be adjusted sooner rather than later.

    Draw on the available balances of lines of credit line. Make sure to update cash flow projections for the added cost of interest and required amortization, where necessary. Do your best to document a plan to pay back the line over time. We recommend this step as during past financial crises, lenders have often capped lines of credit at existing draw levels or terminated unused lines. Better to draw funds now and not need them than to need the funds later and line not be available.

    Refinance (or for condominiums obtain a loan). With current historically low interest rates, paying an early prepayment penalty might make sense. Consider a new credit line or a second mortgage.  Depending upon the magnitude of any prepayment penalty, consider a simultaneous credit line borrowing. If a building has a mortgage with a relatively high interest rate, even just borrowing the same principal amount can result in significant savings in debt service. Some condominiums might consider placing a mortgage on the resident superintendent’s apartment. Keep in mind these actions have an up to a 90-day period of lost time up to closing.

    Loan money from your property’s reserves to put towards operations. Maintain appropriate documentation of these occurrences in your board meetings minutes and include a clear plan to replenish the reserves when possible.

    Postpone capital improvement projects wherever possible.

    Resist covering a deficit by either increasing monthly charges or imposing an additional assessment. These options will likely increase the financial stress already placed on residents, thus making a bad situation worse

    Defer payments wherever possible by entering /forbearance agreements. Debtors are aware that it is best to establish and have both parties agree to revised payment arrangements as, when someone signs an agreement, they are far more likely to honor the terms of a deal. Only where there is extreme financial hardship should you contact existing lenders and try to arrange for some forbearance in payment obligations. However, do not unilaterally stop making mortgage or escrow payments as some lenders might quickly place the mortgage into foreclosure mode. The bank that loaned you the money may quickly package and sell the loan to institutional investors that might not be as accommodating as one would hope.

    Converse with your vendors and contractors. You and your managing agent have influence over these relationships and arrangements will need to be accomplished.

    Resist your commercial tenant’s request to apply some or all of their security deposit against current rent.  If the tenant does not survive you have lost money that could cover the building while trying to find a replacement tenant. Additionally, where you have a guaranty of any type applying security gratuitously reduces the liability of the guarantor.

    Avoid the courts at all cost. Neighbors who for years may have dutifully paid their monthly charges deserve better. Let us all see ourselves as in this together and act with compassion.

    While it is recommended that you consult an accountant to help you navigate your way forward, the points outlined here can show you how to prepare for disruptions to your property’s cash flow and significantly help you manage your property’s financial during these uncertain times.

    The Czarnowski & Beer team is dedicated to providing timely, accurate information on all aspects of the CARES Act and the current economic crisis that affect our clients. If you’re interested in reading our full summary of the provisions outlined for coops and condos in the Act, download our guide here.

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    Is “Handyman” Work Traded for Rent Bartering?

    Did you know that “handyman” work traded for rent is bartering? For some co-op and condo unit owners this sounds a lot like the superintendent or resident manager who performs a number of roles and lives on premises, but that is not the case.  In 2018 the tax court once again determined that handyman services in exchange for rent is considered bartering and therefore taxable. In the ruling a handyman traded work for the rent he owed his landlord and was required to pay tax on the value of the work performed that was applied to his rent. So why would it be different for your superintendent or resident manager?

    This is because your superintendent or resident manager falls under the convenience-of-the-employer exclusion. This rule means that an employee may exclude from gross income the value of lodging provided free by an employer if the employer does so for a substantial non-compensatory business reason.   It must occur on the business premises and since New York City requires either an on-site person or one in close proximity to the property this shows  that the housing is for the employer’s rather than the employee’s convenience and the employer must require the employee to accept the housing as a condition of employment. Thus, in order to satisfy local and federal taxation laws, the employee must live in the lodging to be able to perform the duties of their employment.  This allows for your board to provide a wonderful quality of life to your unit owners at a lower cost.

    With over 35 years of experience serving co-ops and condos, the Czar Beer team can outline specific steps you should take to minimize taxes, maximize loan eligibility, and enhance the value of your property.

    For more information, contact us at info@czarbeer.com or (212) 397-2970.

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    Teaching Financial Statement Basics

    As part of our commitment to providing superior service and ensuring that our clients receive representation that will protect them from unit owner scrutiny, the Czarnowski & Beer team recently hosted an informative presentation on financial statement knowledge at The Andrews Organization (TAO).

    On December 17, a group of over 50 engaged property managers packed the conference rooms at TAO for two sessions of interactive discussion on how to read a financial statement; how to compare financials; how to compare actual expenses to the budget report; ways to make audits easy; and new items in the industry.

    The event’s speaker, and Partner at Czarnowski & Beer, Avi Zanjirian offered his insights and experience as well as trends and actionable solutions on the most important aspects of a co-op or condos financials including innovative ways to make the audit process easier and how to make “annoying people” (auditors!) go away.

    “It was such a pleasure to work with TAO to organize this event and we are happy to be able to offer the group such useful information,” he said. “For this year’s presentation our goal was to leave property managers with a better understanding of what needs to be done to keep their property’s financials in order and I definitely think we achieved that.”

    The crowd was double the size of the previous year’s presentation, and filled with dynamic professionals who listened attentively and asked numerous questions.

    “I was very impressed with the presentation,” said TAO Financial Analyst, Roma Licas. “Format, content, visual aid, all outstanding. It was very informative.”

    To learn more about the training and educational resources we offer at Czarnowski & Beer, contact us at info@czarbeer.com.

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    The No.1 Tip to Successfully Completing Your IRS Audit

    Many people dread the mere thought of an Internal Revenue Service (IRS) audit.  However, these days, you’re most likely to receive a “desk” audit whereby a missing income item or proper documentation for a deduction is requested. Sometimes this happens because the taxpayer doesn’t receive or misplaces a source of income and they don’t have an alternative source of knowledge about that income, so an adjustment is necessary.  In cases like this, the matter is then easily resolved through a payment by the taxpayer, while the IRS is successful in finding money for the government.

    At Czar Beer, we sometimes work with some clients who reveal that while they have deductions, the record keeping burdens can create a situation where the deduction amount is correct but adequate documentation is not readily available.

    We are not suggesting that everyone should drop everything else that goes on in their lives to invest a huge amount of time into meeting the IRS requirements, but we would like to take this opportunity to remind you that taxpayers are required to maintain adequate documentation for certain deductions on certain forms.   Additionally, be mindful of the fact that several tax court cases came down to negative conclusions not only for the tax due but also for not maintaining adequate records and the court upheld the accuracy-related penalties assessed by the IRS.

    To avoid this you should discuss contemporaneous record requirements with your tax professional to assure that you only spend required time, but still have the documentation needed to meet the IRS’ minimum requirements.

    Whether you are a business, individual, or non-profit, we can outline specific steps that you should take to minimize taxes, maintain appropriate records and successfully defend your deductions if you are audited.

    For more information, contact us at info@czarbeer.com or (212) 397-2970.

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    Why Choosing A Good Accountant Should Be Your Top Priority

    One of the most important decisions that you will make as a small business owner is choosing an accountant and tax advisor. In addition to being important, is can also be one of the most intimidating because this is a relationship that extends beyond just bookkeeping and will provide guidance and advice as your business grows.

    You should acquire an accountant as soon as you start your business in order to set up the proper legal structure. An incorrect legal structure can wind up costing you a lot in taxes and legal fees to correct. If you are buying a franchise or other small business, an accountant’s evaluation of the financial records is absolutely necessary.

     

    Don’t make the mistake of delaying to involve an accountant until tax time. Working with an accountant to set up the proper procedures for record keeping and financial projections can help you to avoid costly tax problems.

    Research and Interview

    Your relationship with your accountant is a relationship that deserves your time and attention. Even solo entrepreneurs will benefit from establishing a solid relationship with an accountant who can aid in setting up the business correctly and assist with questions as you grow.

    As a small business owner, you should interview small accounting firms that can provide you with the personal time and attention that you will need. Beware solo accountants who may not be able to spend time answering many of your questions because of their own workload. Regardless of whomever you choose, you need to make sure that you feel comfortable as you will be dealing with sensitive personal financial information.

    Some strategies that will help you choose an accountant or firm that best suits your needs are:

    Marshall Persky, a SCORE mentor and former chairman advises “…to build a shortlist of accountants that you would consider ‘partnering’ with because that is exactly what you are doing by hiring a business accountant.”

    • Interview in person so you can gauge your level of comfort.
    • See if they have experience with your specific industry. Accounting metrics can vary substantially by industry so you’ll want to hire a firm that has substantial experience in your are. It is also imperative that the accountant or firm has experience handling small businesses.
    • Verify credentials. A CPA (Certified Public Accountant) designation is preferable and they should have access to current tax information. The AICPA (Association of International Certified Public Accountants) maintains a directory of accounting companies that you can choose from or try to get a referral from another local small business that you trust.  The SBA (Small Business Association) suggests inquiring with your local Chamber of Commerce for networking events. Your business bank may also be able to aid you with suggestions.

    In addition to assisting you in legally structuring your business, an accountant can also be very helpful in dealing with your bank’s loan officer and the bank’s requirements for particular financial reports.  When choosing your accountant ensure that they are always available to answer your questions with clear explanations – no technical jargon.  It is imperative that you understand what you are doing financially and why you are doing it.

    Make sure you keep yourself updated.  The accountant should be accessible during the year to guide your financial decisions in growing your business and understanding your cash flow.

    Define Your Needs

    Be honest about how much time you can devote to preparing, updating and maintaining your financial records. Can you maintain your own accounting software? If not, you will need to keep organized records –  and no that doesn’t mean shoeboxes of receipts. See if your accountant can provide some training for you.

    Remember that your main responsibility is to run your business so don’t take on more than you are capable of handling. If necessary, Make a list of requirements that you would want the accountant to handle because records that are not maintained correctly can be costly.

    If you are handling the daily accounting, allow your accountant access to your cloud payroll and accounting services. This will enable the accountant to keep updated and will reduce the costs physical meetings and printing reports.

    Make Sure You Are Covered For Taxes

    Tax season is particularly hectic for both the small business owner and the accountant.

    Avoid the last minute tax crunch. Schedule a meeting with your accountant at the start of the year and supply all the relevant files and documents as early as possible.

    Find out how your accountant handles a government audit. These can be very costly in time, money and stress. In the event you would need one, it is essential that you have a good accountant to assist you.

    Use your accountant to aid in tax planning so you can avoid unexpected tax bills.

    What Are the Costs?

    The costs associated with hiring an accountant or accounting firm are very important to discuss, especially for the small business owner. Very often, you may not be able to afford a retainer structure. Even if that is the case, you will hopefully be able to develop a relationship with the accountant or accounting firm you choose that will allow you to utilize their services strategically as you grow. Efficiency with your record keeping and timely updates will help toward keeping  costs down. The expense is still worth your time as good accounting is needed to run your business effectively and avoid costly financial errors.

    Taking the time to establish a solid business relationship with an accountant who you are comfortable working with will pay off in time and money. Now that you’ve bought into the need for an accountant, stay tuned for more tax tips and tricks as tax season approaches!

    Whether you are a business, individual, or non-profit, we can outline specific steps you should take to minimize taxes, maximize loan eligibility, and enhance the value of your property.

    For more information, contact us at info@czarbeer.com or (212) 397-2970.

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    The No. 1 Mistake Co-ops and Condos Can Make During Tax Season

    At Czarnowski & Beer, we always have answers when you need them- it’s just a part of the Czarnowski & Beer KARES culture! Whether you are a client, prospective client or an avid reader of our blog, we are here for you! In case you were wondering, KARES is not misspelled, it is an acronym that outlines our firm’s philosophy.  We use our Knowledge, Advisory and Resources to go the Extra mile and provide Services that go above and beyond.

    Summer is ending and you know what that means- tax estimates and tax returns will be due very soon (9/16 for estimates & 10/15 for balance dues on tax returns). While e-filing has made filing tax payments and estimates easier, occasionally something can go wrong, which can then lead to penalties and interest.

    In our experience, the typical reason a Co-op or Condo will miss a tax payment is if they switch their operating bank account in between the time when they submit the signed e-file authorization forms and the scheduled date for electronic withdrawal upon the returns being e-filed by their accountant. Accountants are supposed to confirm bank account information with the Co-op and Condo for this reason. However, if the account information is changed after the accountant has confirmed the account information present on the tax documentation, problems will likely occur (i.e. your return can be completed in July but the payments aren’t scheduled to be withdrawn until they are due on 9/15 & 10/15).  Therefore, just as a reminder, if your building has switched operating bank accounts, immediately notify your accountant so that they will be able to advise you on your best next steps.

    If the firm has not submitted the return or estimates for e-filing, then there is still time for the accountant to change the account number to the correct one. If the return and estimates have already been submitted for e-filing, there are two ways to rectify the situation: 1) notify your accountant and if the bank account is already closed, they will advise you on how to use alternative payment methods, including manual payment; or 2) notify your accountant and leave the bank account open with enough funds to be withdrawn on the scheduled payment date(s).

    Whether you are a business, individual, or non-profit, we can outline specific steps you should take to minimize taxes, maximize loan eligibility, and enhance the value of your property.

    For more information, contact us at info@czarbeer.com or (212) 397-2970.

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