SBN Staff

It used to be that only very large companies were doing business overseas. As more small and midsize companies enter the international marketplace, they must learn how to navigate tax laws related to conducting business in foreign countries.

“These tax laws are often broad and complex, and companies need to know how to minimize their combined taxes,” says Richard J. Nelson, CPA, director of Tax Strategies at Kreischer Miller.

Smart Business spoke with Nelson about what companies need to consider and how to manage the tax implications of doing business overseas.

What do companies need to consider in terms of taxes related to international business?

The first, and most important, decision is what to do regarding profits and cash from overseas operations. Are you planning to bring profits back to the United States right away or will you seek a deferral strategy that will leave cash and profits overseas for the time being? The answer to that question determines how overseas operations are structured.

A deferral structure is preferable when you want to keep profits offshore for a significant time and the foreign tax rate is lower than the U.S. tax rate. In order to defer U.S. tax, the foreign entity must be treated as a corporation for U.S. tax purposes. The goal is to move as much income as possible to this entity, and to defer U.S. tax until earnings are brought back here.

What problems do companies encounter with the deferral strategy?

Some pitfalls include matching of foreign tax credits, Subpart F rules and transfer pricing rules.

Proper planning is needed to ensure foreign taxes paid are credited to offset U.S. taxes. Subpart F rules, if applicable, make foreign profits taxable in the U.S., even if the earnings are not repatriated. Poor planning in these two areas could result in paying a higher overall effective tax rate on the same income.

Transfer pricing rules are designed to ensure that the transfer of goods from the U.S. company to the foreign company are priced fairly so the U.S. collects its fair share of taxes on the profit. If the Internal Revenue Service challenges your pricing, you could face significant penalties.

Does a non-deferral strategy pose pitfalls as well?

In a non-deferral strategy, the tax implications are not nearly as complicated. Generally, the foreign company is established as a ‘pass through’ entity, or you can check a box to have it treated as a disregarded entity or pass through entity. With this structure, the U.S. taxes the income of the foreign corporation and foreign tax credits are available to offset any U.S. tax on current profits. There are no additional U.S. taxes when the money is repatriated.

Under this scenario, you don’t need to be concerned about transfer pricing rules, at least from a U.S. perspective, or Subpart F rules. This structure provides the most flexibility and is well suited to U.S. companies that are S corporations with overseas operations.

Are there tax incentives for a U.S. company doing business overseas?

If you are selling products overseas that are manufactured in the U.S., you may be able to take advantage of an Interest-Charge Domestic International Sales Corporation (IC-DISC). You set up a separate corporation that makes an IC-DISC election and is, by law, exempt from federal income tax. A commission agreement is entered into between the related exporter and the IC-DISC. The related exporter pays the commission to the IC-DISC, which gets a 35 percent tax deduction. The IC-DISC then pays the commission to its shareholders, who are individuals, as a qualified dividend, which is taxed at 20 percent. The overall savings is 15 percent.

Can companies manage the various tax scenarios internally?

Because of the many complexities involved in doing business internationally, there is a lot of expertise required in planning a strategy to minimize the company’s overall effective tax rate. Seeking competent advice is crucial to avoid the many pitfalls that you may encounter when venturing overseas.

Richard J. Nelson, CPA, is a director of Tax Strategies at Kreischer Miller. Reach him at (215) 441-4600 or rnelson@kmco.com.

Learn more about tax strategies at Kreischer Miller

Insights Accounting & Consulting is brought to you by Kreischer Miller

Recently, I had the privilege of attending the EY World Entrepreneur Of The Year conference in Monte Carlo. I’m back to report that entrepreneurship is alive and thriving around the globe! 

It was a whirlwind of a trip, packed with networking, thought-provoking panel discussions and personal interviews. We heard from a remarkable panel of speakers including Kofi Annan, former Secretary General of the United Nations and Nobel Peace Prize recipient; Sir Timothy Berners-Lee, inventor of the World Wide Web; John Cleese, award-winning actor, author, humorist and Monty Python legend; and many more. 

I also had the opportunity to sit down with some of the world’s most accomplished entrepreneurs. These business leaders come from more than 60 countries that combined represent a staggering 94 percent of the global economy.

In this issue and in the months to come, you’ll learn what the world’s greatest entrepreneurs have to say about leadership, innovation, overcoming challenges, bringing their visions to life and much, much more. You’ll also hear from the leadership at EY as to the importance of celebrating entrepreneurship.

 

Transforming vision into reality

 

“Be careful about making assumptions. Those assumptions can lead you down a pretty dangerous path. It is OK to make assumptions and have confidence but you had better do your due diligence as well. An assumption is having those critical for the business make sure it is happening. I am very trusting of people and in the past have had some unfortunate instances where I did make assumptions about something and they were completely the wrong assumptions.”

Dr. Alan Ulsifer, CEO, president and chair of FYidoctors

 

“Growth obviously continues to be a challenge. The markets demand growth if you are a publicly traded company, and growth is a metric of how the business is doing. If you want to continue to attract the best people, attract the right sources of capital to your business, you have to demonstrate that things are going well and growth is one measure that people look to. I think that if you are a business in an established market, growth can be a challenge because those markets by and large are growing more slowly. So in order to get more rapid growth, many companies are looking at emerging markets and trying to figure out what their strategy should be for emerging markets, those that have double-digit growth potential.”

Bryan Pearce, Americas Director, Entrepreneur Of The Year and Venture Capital Advisory Group EY

 

“One of the toughest things for me was that people have a certain image of my country, Colombia. They don’t trust a company there to have good quality and do good work, but I am very proud to offer those qualities from Colombia. It is not easy but it is something that you can accomplish. I have been down a lot of times, but the good thing I have noticed is that every time something like that happened, I have been able to obtain positive things out of it. I have been broke multiple times, but from being broke I have been able to learn from it and rebuild.

Mario Hernandez, founder and president, Mario Hernandez

 

Jim Turley leaves his post as Global Chairman and CEO for EY with deep admiration for the entrepreneurs who continue to use their vision and spirit of innovation to change the world.

“They have got this wonderful ability to think outside themselves, to look at the world outside these windows and see the needs that exist out there,” says Turley, who officially retired on July 1.

“Then they’ve got a vision to create a product or service or an idea to meet the need they have seen. They have got the courage to risk everything and they are as persistent as can be. Most of them fail the first time out. But they get up, clean themselves off and do it again.”

 

“Work carefully with a few people who get a twinkle in their eye. If you talk about your idea, some people will respond with excitement because they get it, but not everybody. Maybe you talk to 300 people and three people will get it. Work with those three people. The web took off because a few people all over the world got it. You get the support from a few people who get it and then it builds from there.”

Sir Tim Berners-Lee, creator of the World Wide Web

 

Corey Shapoff has a job that many would envy, booking well-known musical acts such as Maroon 5, Katy Perry, Christina Aguilera and Kelly Clarkson for live concerts and private corporate events. But he doesn’t take much time to stop and think about all the famous people on his call list.

“I’m a grinder,” says Shapoff, president and founder of SME Entertainment Group. “I’m the kind of guy who is always looking to what’s next. You’re only as good to me as your last deal.”

It’s that instinctual drive to always try to do it better that is embedded in the true entrepreneur and allows the next vision to become a reality.

“It’s hard for me to turn it off and say, ‘That’s great,’” Shapoff says. “I’m always thinking about tomorrow. You just can’t take things for granted in our business.”

 

“The skill sets of an entrepreneur involve understanding how to create business. So if you’re going to give back, why not work with kids who need it the most and actually teach them and help them to be entrepreneurs. That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”

Amy Rosen, president and CEO, Network for Teaching Entrepreneurship

 

“When you’re an entrepreneur you feel like you have never met a deal that you didn’t like. You only have limited resources and limited time to be successful. You have to stay disciplined and focused and being able to say what we are not is every bit as important as being able to say what we are.”

Jim Davis, president, Chevron Energy Solutions

 

“It’s important that you have teamwork and all your top players are well motivated with passion, principles and values. We make sure that people know where we are going and what our main objective is for that year. We promote teamwork inside and outside the company. Our directors have to make sure they are sharing our company values and principles with each of their team members.”

Lorenzo Barrera Segovia, founder and CEO, Banco Base

 

“For entrepreneurs you get a great idea, you start your business and then you have to keep focused. Keep executing that idea if that idea is big enough. Never fall into the temptation of getting out of your business or change it unless it’s strategic. Secondly, try to get financing as late as you can. Never get financing as soon as you can. Thirdly, create a great team and culture, because that’s what will prevail and create value for shareholders and your community. That’s how you scale your business. The last one is to dream big.”

Martin Migoya, CEO, Globant

 

“It was nothing but a gut feeling. The only thing I knew was there was a big opportunity in yogurt. I grew up with yogurt. Being from Turkey yogurt was a big part of our diet. I wasn’t sure if I could do it – break through in the world of yogurt in retail.

The category was owned by two major companies; Dannon and Yopliat owned about 70 percent of the market, and they had been there for years. As a startup you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level then you go to the big retailers.

I didn’t want to do that. I wanted to go to the big retailers and be in the regular dairy aisle. That was a crazy idea and nobody thought that would go, but at least we tried. When we tried, we convinced one retailer in New York, ShopRite. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt, I knew it wasn’t going to be about selling, it was about making enough.”

Hamdi Ulukaya, founder, president and CEO, Chobani Inc.

Thursday, 01 August 2013 16:00

Networking like a pro

Networking is a critical best practice for business owners regardless of their company’s size. When you are just starting out, the effort you put in to making and nurturing contacts can directly impact your revenue and the future success of your business.

Smart Business spoke to Elisabeth Fraser Au-Yeung, vice president of marketing at Sensiba San Filippo LLP, about tips and tools that can help you become a polished and eloquent networking expert.

How can business owners prepare for a networking event?

Savvy networkers always have a plan in place before attending an event. A plan may include evaluating the event — is the event of high value to attend? What are your goals for attending? Will your target audience be in attendance?

Try to obtain a list of attendees and any sponsor firms prior to the event. Use the list to build a prioritized list of ‘target’ attendees you want to meet and speak with. You can take it one step further and create goals for each person you want to meet, as well as speaking points that you have thought out and practiced for when you meet that person. You can even search online for photos of the individuals you want to meet so you can more easily find and recognize them.

In addition, you need to have a few tools including business cards, a practiced and polished elevator pitch, and even marketing collateral that you can hand out. Have a pen so you can make notes on the back of the business cards you receive. Note any significant details that the person you met shared so when you follow up, you can mention this and make it a more impactful and personalized connection.

When you arrive, how do you start a conversation?

It can be more comfortable to arrive to an event early, as the room will be less crowded. Do not wait for someone to approach you. Be the master of your own destiny. Approach a person or a group and ask if you can join them. When you meet someone, make eye contact, have a firm handshake and smile. By doing so, you will look and feel more confident.

As you are speaking with people, listen to what they have to say and be cautious about interrupting. When it is your turn to speak, ask open-ended questions about the people with whom you’re speaking, such as what brought them to attend the event? What makes them passionate about their business or industry? What are they doing for the summer? People enjoy discussing the things they are passionate about, including their business and personal interests.

How should business owners ‘pitch’ themselves and their business?

When asked about your business, have a brief and easily understandable description of what you do. Be sure to incorporate into your description the ‘so what’ factor — what it is that makes you or your company different and why the person you are speaking with should be interested in hearing more about your business.

What are the most important tips for success in networking?

Networking is all about relationship building — having rapport and building chemistry over a period of time with people you meet. A relationship will not be built at just one event. It is something that needs to be nurtured.

Remember to ask everyone you meet for a business card. After the event, send an email and a LinkedIn invite to connect with them within 48 hours. Reference something you discussed by checking your notes on the backs of the business cards so your contacts have a recollection of your conversation. Make yourself ‘valuable’ by offering to send a white paper or thought-leadership piece. Follow up with your contacts every 30 days to keep in touch, and even offer to meet for coffee or lunch to further strengthen your relationship.

Elisabeth Fraser Au-Yeung is a vice president of marketing at Sensiba San Filippo LLP. Reach her at (925) 271-8700 or eauyeung@ssfllp.com.

For more market insights, visit Sensiba San Filippo's blog.

Insights Accounting is brought to you by Sensiba San Filippo LLP

There’s a good reason why the old adage, “a jack-of-all-trades, master of none,” has remained in our lexicon hundreds of years after it was coined. It’s because we recognize that almost no one — especially those of us in the world of business — can maintain an equal level of excellence across every single business function without some outside help.

That’s why the world’s leading corporations, even those with hundreds of thousands of employees, have embraced the concept of outsourcing many of their key business processes to cut costs, reduce overhead, conserve capital resources and focus on their core activities.

The good news is there’s no reason why midsized companies can’t enjoy the same benefits that larger corporations have in recent years. 

Let’s look at the three platforms that are common to nearly any type of business and why they lend themselves in particular to outsourcing:

Supply management

This can comprise both procurement of goods and services and spend management, which focuses on when you buy and how much you buy. Unless you run one of those leading corporations I referred to above, you’re on your own. And even with your toughest negotiators, you’ll find it nearly impossible to get the same prices for supplies that those companies do. 

By aligning your organization with the right business process outsourcing company (BPO), your firm and the other customers of the BPO can leverage your combined purchasing power, thus enjoying pricing consistent with national or global companies.

It’s important to look for a BPO that cannot only deliver the best prices, but also provide information on making smart purchasing decisions. Spend management tools can enable midsize companies to take a fresh look at strategically managing purchasing decisions that may have been previously based on the simple assumption, “That’s the way it’s always been done.”

Managed services

There are a number of non-core services that can usually be outsourced quite effectively while enabling your company to continue focusing its resources on its core activities. These include asset financing, remarketing and transportation. In each instance, the partnership with the BPO will elevate the level of activity to that of a much larger corporation. 

For example, the right BPO often has access to flexible and multiple financing solutions that a smaller company on its own might not be able to capture. When it comes time to divest your company of inventory or outmoded company equipment, the same BPO should be able to handle the planning, marketing and execution of the sale, freeing up your employees to pursue core functions.  

Financial process automation

Finally, by outsourcing time consuming back-office functions like accounts payable, accounts receivable and credit and collections, midsize companies can stay on the leading edge of technology without investing heavily in IT resources and talent, cutting down on labor, improving accuracy and dramatically improving customer service.

Cash flow is the lifeblood of businesses. The faster your payments, the healthier your business can remain.

Here is one final bit of advice to midsize companies considering outsourcing. Choose a BPO that takes the word “partner” seriously. Look for a BPO with a culture that aligns with yours. Look for one that can prove it can deliver exactly what it promises to do — reduce costs.

Doug Clark has served as president, CEO and a director of AmeriQuest Business Services, a business-process outsourcing company, since founding it in 1997. His professional experience includes stints in public accounting, investment banking and as a transportation entrepreneur. AmeriQuest Business Services assists more than 1,500 customers throughout North America. For more information, visit ameriquestcorp.com.

An exclusive partnership between Huntington Bank and Cleveland State University will bring new customers to the bank — and $1.2 million to CSU for scholarships and academic programming over a 10-year period.

“It is hugely significant for Huntington in that we partnered with one of the most important institutions in Cleveland,” says Dan Walsh, Huntington Bank Greater Cleveland Region president. “I think it underscores our commitment to the community.

“This extraordinary university contributes significantly to the vibrancy and economy of our city.”

CSU will receive $50,000 in scholarships, a minimum of three paid Huntington internships per year and $250,000 to support the university’s Allen Theatre Project, the “Power of Three.” In addition, the bank will work with CSU to develop a financial literacy program for students in order to help build a financial foundation in their lives.

Huntington hopes to target incoming freshmen as well as the 90,000 CSU alumni.

“We are very bullish on the growth going forward,” Walsh says. “And we will continue to grow our relationship. We are very excited about this going beyond the next 10 years.

“Huntington will be tracking those alumni who open accounts so we can monitor our deal with Cleveland State. We can give extra credit if we see this threshold of new customers or profitability.”

Huntington, with its launch of branches in Giant Eagle grocery stores, has the largest branch network of Cleveland banks. A full-service branch is now open on the CSU campus, and a new Huntington Bank Vikings debit card will be issued to customers.

CSU President Ronald Berkman welcomed the relationship, which was finalized after a competitive bidding-type process to become “The Official Bank of Cleveland State University.”

“The scholarships and internships Huntington will provide will be invaluable to many of our students,” Berkman says. 

As the business partner who remained in the office, leading the company and being charged with keeping the train on the tracks, I developed my own critical advice to plan for and survive an unexpected crisis like this one.

I had no idea that a phone call saying, “Mike’s in the hospital with a fever,” would turn into a four-month absence, leaving the company we had run together for 12 years solely in my charge.

Here are four valuable lessons I learned:

Over-communicate

Once I knew that Mike was going to be out for a significant amount of time, possibly weeks, months or years, I needed to take action. We pride ourselves on a culture of commitment and transparency, so it was only natural that I began to communicate to the team on a regular basis, sharing whatever latest information I knew about his condition and updates on what was happening across the organization.

In a vacuum of information, people will fill it, and the last thing you need is for employees to start thinking that the business is falling apart because they’re not hearing anything from the top. 

Cross-train

This may seem like very basic business advice, but it’s amazing how often it’s overlooked in today’s fast-paced environment. In general, as owners, we have a lot of key client and project knowledge in our heads. Assuming that we’ll always be around, this information is rarely shared with others, much less documented. This is a bad idea.

This goes for other employees as well. There shouldn’t be just one single person capable of doing any mission-critical tasks. At the same time, key customers should have multiple points of contact. Key company accounts like banking and insurance shouldn’t be in one person’s name, as it creates a problem when trying to gain access during a crisis.

Get comfortable with uncertainty

About three months into Mike’s absence, I faced a choice about a critical hire for the organization. If Mike were going to return, I would not need to make the hire. If he were going to be out for even a few more months, I would need to make the hire. I had no idea what would come next.

I looked at my internal resources and determined whether we could keep picking up the slack for just a little longer. We did, and he returned soon enough. The bottom line is that you have to be OK with trusting your gut and rolling the dice.

Prepare for re-entry

During Mike’s absence, by necessity, life had moved on — people had new roles, and there were new ways of doing things. One thing I wish we had done was to have a minimum two-week grace period after he returned dedicated to his transition back.

We could have had a summit with the entire organization about what had happened, who picked up which roles and what had changed. Then we could have scheduled individual sessions with each person who now owned a piece of Mike’s role and allowed them to take him through that on a specific level.

Every business is only one phone call away from a crisis. The company should be set up and prepared to perform under uncertain circumstances. At the same time, when a crisis does strike, remember to trust your team, because they are more talented than you may think. They will rise to the challenge and will be willing to help out.

 

William Onion is the managing director at Briteskies, an eCommerce design, development and integration firm, and can be reached at (216) 535-4099 or www.briteskies.com.

It’s an unfortunate fact of business — over the last 20 years, lawsuits brought on by a company’s employees are up 400 percent. Businesses are constantly striving to stay ahead of the game as it relates to employer-employee relations, seeking information and tools to protect the business from getting into long, expensive legal battles with employees.

The Ohio Chamber of Commerce is answering the needs of the Ohio business community through the expanded HR Academy. Launched last year by providing HR Academy webinars, the program has expanded this year to provide even more human resource services. Businesses often don’t have the means to employ an HR professional or navigate the complicated HR laws themselves. So the Ohio Chamber’s HR Academy gives employers the tools to help them stay compliant. 

Knowing your rights as an employer is essential to protecting your business. Business owners need someone on the inside with a broad understanding of the legal issues that can affect employer-employee relations. The HR Academy is the perfect tool for business owners to make sure their HR staff is well-informed.

In addition, the HR Academy helps human resource professionals and employment lawyers stay up-to-date on the issues that can affect employer-employee relations. The HR Academy curriculum is accredited by the Society of Human Resource Management and is delivered through a series of online webinars and in-person symposiums. Participants of the program receive HR Certification Institute credits (for human resource professionals) and Continuing Legal Education credits (for lawyers).

Other products offered through the HR Academy include the following:

HR Symposiums: Held in cooperation with local chambers throughout the state, these monthly symposiums offer a variety of topics from social media in the workplace to the latest in employment law. The symposiums are presented by sponsoring HR Academy law firms.

Ohio HR Manual: Produced in conjunction with Squire Sanders, an Ohio-based law firm with employment law expertise, we now offer a comprehensive HR Manual packed with information about employment law and human resource-related matters, all presented in an easy-to-understand manner.

Employment Law Posters: Ohio law says that every employer must have its NLRA Employment posters displayed in an easily accessible area in a place of business. Failure to do so can result in a fine by the state. Business owners can make sure they are in compliance by purchasing posters from us.

Also, for the first time, we will be offering businesses an opportunity to brand the NLRA posters. A perfect “thank you” gift for anyone you do business with — clients, vendors, distributors, etc. — the posters can be branded with your company name and logo.

The HR Academy can be purchased as a yearly subscription for $1,200 that can be billed monthly and includes webinars, human resource symposiums, employment law posters, HR Books and access to HR legal experts. Items can also be purchased individually by visiting www.hracademyohio.com. 

The HR Academy webinars and symposiums are presented by sponsoring law firms with employment law expertise from around the state. The current HR Academy sponsors include Squire Sanders (Presenting Sponsor) and Baker Hostetler (Cornerstone Sponsor). Innovator Sponsors include Dinsmore & Shohl, Eastman & Smith, Jones Day, Roetzel & Andress, and Steptoe & Johnson. Fishel, Hass, Kim and Albrecht is a Partner Sponsor.

 

Beau Euton is vice president of membership for the Ohio Chamber of Commerce. For more information on the Ohio Chamber’s HR Academy, contact Michelle Donovan at mdonovan@ohiochamber.com.

 

 

However, companies taking a “wait-and-see” approach to deal-making as economic uncertainty persists, may be missing out on growth and value opportunities.

Many companies have looked to divestments to offset cash and credit challenges and to free up capital to drive growth. But this short-term thinking is shifting as companies plan for the long term and take a more strategic approach to divesting.

In a recent EY divestment study that surveyed almost 600 executives, 77 percent said they planned to accelerate divestments within the next two years, and 46 percent are planning to divest in the same time frame. As companies signal an increased appetite for divestitures, it’s important they understand and implement the appropriate steps to achieve greater value for shareholders.

Evidence from our study, combined with our work with clients, has shown that there are five leading practices that companies should follow in order to execute a successful divestment:

Conduct rigorous and regular portfolio management

Review your portfolio regularly. Companies can assess whether assets are contributing to strategic goals or if capital can be better used for other purposes.

Companies that use divestments as a strategic tool to enhance shareholder value or focus on core business strategies, rather than considering them as a reactive move to free up cash or pay down debt, tend to improve their divestment results.

Consider the full range of potential buyers

There is an intense amount of competition from buyers today for good, high-quality assets and they’re ready to transact. Appealing to a broad group of buyers can garner a price that exceeds expectations.

Companies should think about the buyer universe for a potential asset sale differently than they might have in the past, considering potential foreign buyers, buyers within different sectors and private equity firms. Each buyer may have different information needs that require a different planning process.

Articulate a compelling value and growth story

Sellers should provide tailored information about how an asset fits with the buyer’s business to help achieve strategic objectives. Develop an M&A plan for the asset or provide a view of synergy opportunities to buyers.

Prepare rigorously

Effective ongoing preparation can instill buyer confidence. As a result, companies can better control the process and realize greater speed and value. Half of the executives surveyed admit that certain changes to the preparation process could have made a significant difference during divestment.

Understand the importance of separation planning

Probably the most crucial aspect of a divestment is separation planning, yet 56 percent of respondents identified a clear separation road map as the most complex part of the divestment.

Other separation challenges include decisions regarding the completion mechanism, tax planning, estimating stand-alone costs and negotiating transition services agreements.

Every day a company waits to evaluate its capital strategy, someone else is making a change and gaining an advantage.

In heeding these five key practices, companies can take a more strategic and ultimately successful approach to divestments to ensure they get the most value possible and grow the bottom line.

Paul Hammes is the Divestiture Advisory Services Leader for Transaction Advisory Services at EY. Reach him at www.ey.com.

Every day more than 10,000 baby boomers turn 65, and during the next 15 years it’s expected that more than 1.3 million home health and personal care aides will be needed to accommodate them. In addition, in-home care can be costly. On average, a caregiver or client will spend $18,000 a year for 20 hours a week of care.

“Long-term care insurance can fund home care that will allow you to remain at home where you are most comfortable, with safety and independence,” says Tim Able, client advisor and life sciences specialist at SeibertKeck Insurance.

Smart Business spoke with Able about how to maximize your long-term care insurance for home health care.

Do people mistakenly associate long-term care with nursing homes?

Yes, but the opposite is also true. According to the American Association for Long-Term Care Insurance, 7.6 million individuals currently receive care at home because of long-term health conditions, permanent disability or terminal illness, but there are just 1.8 million individuals in nursing homes. Many buy long-term care insurance just so they can receive care in their own home.

Who typically uses home health care?

Every day, guardians, care managers and family members make long-term health care decisions for their clients and loved ones. Home health care can be an appropriate solution for those who wish to age at home.

However, it’s important to understand the differences in home care providers to make informed decisions. The Agency for Health Care Administration licenses home health care agencies following a comprehensive survey. A home health agency can assist with personal care and offer skilled nursing services including medication management. Certified nursing assistants or home health aides provide all personal care, and home health agencies are required to have a nurse available 24/7. A home health agency is a good choice when you desire nursing involvement or assistance with daily living.

What’s key to know when hiring a caregiver?

Here are some steps to follow:

  • Look for a home caregiver from a reputable agency, where he or she is licensed, bonded and insured. Also, check that the caregiver is covered by workers’ compensation insurance.
  • The caregiver should be supervised by a licensed professional who makes unannounced visits.
  • When hiring, review two to three references and require a recent criminal background check, as well as random drug tests, TB tests and a recent physical exam. The caregiver should have a minimum of two to three years of experience.
  • If the position involves driving, determine that the caregiver’s driver’s license and car insurance are current and valid.

How does long-term care insurance cover home health care?

Activities of daily living (ADL) refers to what we do on a daily basis to care for ourselves, including bathing, dressing and using the bathroom. Individuals with chronic diseases often have trouble performing some of these ADL, so the measure is used to assess long-term care insurance benefit eligibility.

Depending on your policy, you might have a waiting period before you can access your funds. Does your policy allow you to start collecting benefits on the day you begin receiving assistance, or are you subject to a waiting period of anywhere from 30 to 120 days? It’s important to get advice from your broker when deciding which policy is best.

Also, seriously consider when you can initiate a claim. The waiting period often corresponds to the benefit period, or the maximum amount of time that the insurance company will pay benefits. The longer the waiting period before benefits begin, the longer the company may pay for care. Benefits typically last three to five years.

When is a good time to buy?

Many people don’t realize the significant benefits to purchasing long-term care insurance earlier in life. For the same policy, yearly premiums for policies purchased at age 50 are notably less than premiums at 70. Also, the earlier you purchase, the more likely your application will be approved. By planning ahead, you will be best prepared to secure an affordable policy that helps you stay at home when the time comes.

Tim Able is a client advisor and life sciences specialist at SeibertKeck Insurance. Reach him at (330) 294-1363 or table@seibertkeck.com.

Visit SeibertKeck on Twitter @SeibertKeck or online at www.SeibertKeck.com/page/skmedical.

Insights Business Insurance is brought to you by SeibertKeck

When Lisette Poletes joined up with her mother, Hortensia Albertini, to help lead Global LT in 2009, she did so with an air of curiosity.

“Probably for the first eight or nine months I was here, I took an approach where I really just watched what was going on,” Poletes says. “I had to build my own ideas of what I thought was working and not working coming from a different background.”

The numbers show it was time well spent. Global LT, a language training and translation provider, closed 2009 with just more than $9 million in revenue. When 2012 wrapped up, that figure had risen to more than $20 million.

“We’ve had one of the worst economies ever, and we’ve managed to not only survive but thrive,” says Poletes, the 101-employee company’s owner and CEO. “I’m very proud of what the team I work with has done. It’s to their credit.”

Earn employee trust

Poletes joined Global LT with extensive sales and marketing experience from her education at Michigan State University and her prior work experience with Pfizer. But she had not been a part of Global LT, so she had to earn employee trust.

“I wasn’t coming in to take it apart, to sell it, to bring a venture capital firm in,” Poletes says. “I was in it for the long haul.”

Words are one thing, but Poletes backed it up with action.

She invested in new accounting systems and customer relations databases and elevated employees who had worked hard into management positions. She also instituted a profit-sharing program for employees.

“We basically put a plan in place where I don’t take a dividend out of the company if they don’t all get paid,” Poletes says. “It’s fostering that environment where we all feel like we’re in this together.”

Make use of good ideas

Poletes does not need to be the lead voice on every new idea at Global LT.

“We’ve done a lot of different things based on someone saying, ‘This process doesn’t work,’ or, ‘This works in my department,’” Poletes says. “My response is, ‘Let’s make it a best practice and see if we can make it work across all departments.’”

A great example is the suggestion that was made to bring together the people who recruit teachers and translators around the world for the company’s language training department under one leader.

“It was something that had been tossed around in the past, but she came up with a great proposal and a great plan, and we said, ‘Let’s try it,’” Poletes says. “That’s probably been in place the last two or three months and seems to be working well. It may be that we move all our talent to do the entire recruiting under one giant umbrella instead of just for language.”

Keep pushing ahead

As Poletes looks to the future, she sees endless growth opportunities for Global LT’s language services in emerging markets such as China and Brazil. She also sees opportunity in the government sector.

“We just obtained our GSA certification, which allows us to go after government contracts,” Poletes says. “That will be a brand-new focus that has a ton of potential growth.”

And you can be sure that her employees will be part of the pursuit of those new opportunities.

“If it doesn’t work, you can always go back to the way it was,” Poletes says. “But you can’t move forward unless we try these new ideas and who better to come up with them than the people who do the work every day?”

How to reach: Global LT, (888) 645-5881 or www.global-lt.com