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January 10, 1997     Cape Gazette
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January 10, 1997
 

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36 - CAPE GAZETTE, Friday, January 10 - January 16, 1997 BusiNEss & REAL ESTATE Milton Chamber, Main Street woes could lead to merger Same day meetings result in groups airing problems, seeking solutions By Rosanne Pack Citing most of the ills that plague non-profit agencies trying to sur- vive in small towns, the Milton Chamber of Commerce and the Milton Main Street each face decisions regarding their future existence or lack there-of At meetings that coincidentally took place within hours of each other on Jan. 7, board members of the two organizations heard of and dis- cussed a litany of problems and potential solutions that must be exam- ined, whether or not they continue to operate. And, dissolution of both organizations is a possibility. The Milton Chamber owes $5,000, and the group has no ready means of paying those bills. The Main Street organization has approximately half a dozen people who come out for meetings and projects; that board will meet next month to determine if they will continue as an organiza- tion. Members of each organization are dealing with burn-out of enthu- siasm, poor participation on the part of volunteers and fund raising and bill paying issues. However, there are members of the Chamber and Main Street who definitely want their organizations to continue. And, one solution could be to unite. Although many Milton residents and business people are active in both organizations, the two groups have not always acted in extreme cooperation. There have been some conflicts and dissatisfaction with the lack of support of one group for the other. But, as they face the pos- sibility of the town losing two organizations that should be committed to promoting and revitalizing the town, some individuals are willing to look at combining efforts, office space and staff Chamber of Commerce President Frank Gordy said that he would be contacting representatives of the Main Street group within the week to discuss a merger. Some members of Main Street said that they are also willing to consider joining forces. However, each group has serious decisions to face with their individual boards before an official step can be made to combine the two. After more than a year of fre- quent changes in staff and board officers, the Chamber finds itself heavily in debt and short of ideas of how to raise the necessary mon- ey. Newly hired Cham- ber staff, Cheryl Bossert said she spent the first weeks of her new job wading through records left BOYD-HERON by the previ- ous two staff members. She said that things are falling into place and becoming easier; however, what she has learned is that there are $5,000 in outstanding debts and approximately the same amount in uncollected money owed to the Chamber. "This is the amount of unpaid annual dues and money owed on Milton Clipper ads; and some of these go back to 1994," Bossert said. "I plan to start sending out a new round of bills this week." One instant money saving move on the part of the Chamber was the decision to not publish the Milton Clipper in January and February, saving more than $1,000 a month. Members agreed that the monthly publication is an excellent promo- tional and informational tool, however, it would have to be put on hold until the financial situa- tion is cleared up. The confusion of unpaid bills and records not kept up to date began to surface in December when an accountant's report on the Chamber's books showed poor record keeping. As recorded in minutes of a Dec. 12 meeting, Tom Sombar said that there was no improper conduct, however, the organiza- tion should insist on a monthly financial report. At the December meeting, the Chamber decided to have out- standing bills read at each month- ly meeting and to pay bills once a month. Included in the accountant's findings was the fact that a previ- ous employee, Carol Virnelli, had written payroll checks to herself for the amount of her gross pay, without keeping out the appropri- ate amount of tax. The employee expressed the intent to reimburse the Chamber for the withholding, but, the Chamber could be respon- sible for penalties for late pay- ment. By the Jan. 7 meeting, Bossert had deciphered enough of the I I back records to know the extent of debts owed by and to the organi- zation. In looking at what the Chamber faces in reorganizing and getting out of debt, Gordy rec- ommended considering a merger with Milton Main Street. He said the two groups could both benefit from sharing GORDY office space and staff as well as combining efforts for pro- jects. He said, "We have been strug- gling this year. We are trying to find events to raise money. We have all the tools; but we have to grow together." Bossert agreed, and said, "A small town can only support so many non-profit groups raising funds and needing volunteer help. We are all going to the same places asking for money." To encourage attendance and participation, the chamber board decided to alternate between after- noon and evening meetings each month. The next scheduled meet- ing is set for Tuesday, Feb. 18, 7 Continued on page 38 Consider new law in year-end tax planning Recently, Congress passed a package of tax measures in the Small Business Job Protection Act as part of its legislation increasing the national minimum wage. The bill included a number of small- business tax cuts that could help you cut your tax liability begin- ning in 1997. Major provisions of the bill included: Increases in how much can be contributed to some employee benefit plans. Creation of a new kind of retirement plan. An increase in tax deductions for the purchase of business equipment. Tax credits for hiring welfare recipients and youth from low- income families. Renewal of some expiring tax credits. As we review these new provi- sions, you may want to jot down those you think might be appropri- ate for your business and make it a point to discuss them with your financial consultant and tax advis- er as part of your year-end tax p/anning. Employee Benefit Plan Con- tributions. Several changes under the law increase how much can be contributed to employee benefit plans. Three major provisions are: Elective deferrals: Starting in plan years after Dec. 31, 1997, elective pretax employee contri- butions to 401(k) plans and flexi- ble spending (cafeteria) plans will count as eligible pay when figur- ing the "25 percent of pay" limit on total(k) and other defined com- tribution plan contributioras. Under existing law, these conmi- butions could not counted as eligi- ble compensation. Family aggregations rules: Currently, the compensation of a spouse or "family member" of a company owner and certain highly compensated employees is consid- ered part of the owner's or employee's compensation. This FINANCIAL FOCUS rule limits the amount that can be set aside in retirement plans, since the amount of compensation that can be taken into account in deter- mining contributions of benefits under qualified retirement plans is capped at $160,000. Repeal of this rule at the start of 1997 could allow family members to con- tribute more. Defined benefit and defined contribution plan limits: If an indi- vidual participates in, or has ever participated in, both a defined benefit plan and a defined contri- bution plan offered by a n employ- er, an overall limit on benefits and contributions applies. Effective for limitation years starting after Dec. 31, 1999, this law is repealed, allowing the potential for some participants to increase their contributions and their even- tual benefits. SIMPLE Plans. One provision of the bill that will interest small businesses will permit a new type of retirement plan, one having less extensive requirements than cur- rent Salary Reduction Simplified Empf0yee Pension (SARSEP) plans and 401(k) savings plans. Under the new law, which takes effect Jan. 1, 1997, many employ- ers with 100 or fewer employees may find it easier to offer their employees a retirement savings plan. SIMPLE plans are free of cer- tain complex compliance rules now required for a plan to qualify for tax advantages. Small busi- nesses that meet the new require- ments will be able to fund a SIM- PLE plan through IRAs for each eligible employee of as part of a 401(k) plan. The law permits SIMPLE plan participants to contribute up to $6,000 of their compensation annually, which can be combined with a matching employer contri- bution of up to $6,000, for a maxi- mum annual contribution of $12,000. Employers must con- tribute to employee accounts under one of two required formu- las: Matching contribution formu- la: The employer matches employee elective contributions dollar-for-dollar up to three per- cent of the employee's compensa- tion. A lower percentage of no less than one percent of each employ- ee's compensation in up to two of five years is allowed under a SIM- PLE plan funded through IRAs, provided employees are notified. Non-elective formula: Alter- natively, an employer must make contributions of two percent of each employee's compensation, up to $160,000. SIMPLE contributions general- ly are tax deductible by the employer for the year in which they are made. Regardless of employee participation and saving levels, a business owner can con- tribute up to $12,000 a year to his or her own account. SARSEP Plans. Until Dec. 31, 1996, you could have set up a SARSEP retirement plan gov- erned by law in effect before the new tax bill. The bill grandfathers SARSEPs in existence before the end of 1996. SEP plans without a salary deferral feature will contin- ue to be available. If you already have a SEP plan without a deferral feature, you may want to consider adding the SARSEP feature. Equipment Purchases. Until now, businesses could expense, or deduct, up to $17,500 of the cost of new equipment in the year it is purchased. The new limit will gradually rise, starting in the 1997 tax year, to $25,000 in the year 2003 - an increase of $7,500. Whether it's best to buy or lease new equipment still depends on a number of factors, including the expected life of the equipment. You should consider the factors Continued on page 40 Daniel D. Tidwell