Editor’s note: Dan Roda, J.D. and LL.M, is general counsel of Rock Capital Group LLC, based in Little Rock, and also represents startups and other small businesses statewide through his firm, The Roda Group PLLC.
Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of Talk Business & Politics.
Ah, March Madness. It’s an annual rite of Spring. It’s a shared and unifying experience for people from coast-to-coast representing the full spectrum of political persuasions, cultural experiences and economic standing. To many, March Madness conjures up thoughts of brackets, careful analyses of performance and making informed decisions, some of which have significant financial implications. For some, March Madness brings about “coulda, shoulda” frustrations and 20/20 hindsight about choices made and opportunities missed.
Think I’m talking about basketball? Well, you’re wrong.
For tax professionals such as CPAs and attorneys, March Madness refers to another annual rite of Spring: tax season, and all the analysis, decision-making, and financial implications that go along with it. As an attorney catering toward our region’s business community, I need to stay informed so that I can make informed recommendations to my clients about their taxes, with the goals of increasing savings and decreasing frustration. It’s my job to do this regardless of my personal views on policies and politics.
Perhaps no issue has been more politicized in recent years than that of employee health insurance plans. Most of the conversation seemed focused on employers that would be compelled to offer health insurance – those with larger than 50 employees. But, here in Arkansas, more than 90% of businesses employ fewer than 25 people. For these small businesses, there is a new option available, one that could help mitigate their future tax liability while providing health benefits that employers may not have thought they could afford.
Arkansas SHOP is a component of the Arkansas Health Insurance Marketplace, which was established in 2013. Arkansas SHOP is the state’s small business health exchange through which qualifying small businesses can offer health insurance to their employees.
Participating businesses may be eligible for a tax credit of up to half of the amount they contribute to employee premiums on health insurance offered through Arkansas SHOP. Precise amounts of tax credits are based on several variables, including number of employees, their average salaries, and the amount an employer contributes toward employees’ premium costs. I encourage small business owners to visit www.myARinsurance.com where they can learn more about Arkansas SHOP, estimate their potential tax credit, and tap into a statewide network of hometown brokers and agents who can help them move forward.
It is true that small businesses employing fewer than 50 workers are generally not required to offer health insurance. However, there can be no question that availability of health insurance is increasingly important to those considering employment options.
In a local economy with a declining unemployment rate and a burgeoning startup scene, greater competition is emerging among employers when it comes to recruiting and retaining top talent. In that respect, offering health coverage and contributing to premiums offers a double-sided benefit: tax credits on one side, and a more competitive benefits package on the other.
While taxes are perhaps only on your mind for a month or two each year, businesses can enroll at any time throughout the year, not just during an established enrollment period. Coverage for a small business enrolled by the 15th of the month is effective on the first of the following month, and tax credits generally flow to the current year’s tax return.
The bottom line is this: Small businesses looking for ways to mitigate their tax liability in tax year 2016, as well as a way to gain a competitive advantage in the fight to attract and retain high-quality employees, should take a close look at Arkansas SHOP. It could be the difference maker when it comes to putting together a great team and a winning season… and avoiding some March madness this time next year.