St. Louis (751)

Computing personal property taxes can be a chore for businesses, particularly if the company’s locations cross various state and local jurisdiction boundary lines. Each state has its own statutes, due dates, assessment ratios and instructions that must be adhered to for a company to be considered “compliant.” These property tax requirements vary greatly and most often have late penalties for missing deadlines. However, digging into these very statutes and instructions can also provide an opportunity to minimize your company’s tax burden.

“Many will run the fixed asset ledger right out of the system and that’s what they’ll report,” says Jenna R. Kerwood, CMI, a principal in Tax Services at Brown Smith Wallace.

However, that usually results in paying more taxes than what is owed because not all assets are taxable. Often, fixed assets are capitalized at a project level, which results in inaccurate reporting for property tax purposes. There may be costs that are not taxable or components of the cost that should be removed. The taxability of these assets can be determined by examining the state and county websites, statutes, assessor manuals and return instructions.

Smart Business spoke to Kerwood about what constitutes personal property and why it’s worth the effort to keep an accurate track of assets.

What is the difference between real estate and personal property?

Real estate refers to land and buildings. Personal property is defined as tangible property that’s movable. It can be difficult to distinguish between the two, especially with manufacturing facilities, and each state has different rules and instructions.

Most states have a three-prong test:

 

 

  • Can the item be moved without destroying the real estate?

 

 

 

 

  • What is the primary purpose the item serves? The more special its use, the more likely that it will be considered personal property.

 

 

 

 

  • What was the owner’s intent?

 

 

The key is whether it would destroy or cause permanent damage to the building if you were to remove the item.

What is the basis of property tax assessments?

The basis of value for real estate and personal property is fair market value — the amount a willing buyer would pay in a market when there’s no duress, such as a bankruptcy or foreclosure. Fair market value is subjective, which gives you an opportunity to analyze all of the capitalized cost to determine how best to reflect the ‘fair market value’ of the asset.

When reporting assets for property tax purposes, you need to understand their physical life, use, maintenance schedules, etc., in order to depreciate correctly. Items with a short life have faster depreciation. Manufacturing equipment might have computerized components that can be placed on a shorter life with a more reasonable depreciation schedule.

How can businesses lower their tax burden?

Start with fixed asset accounting records. When filing personal property tax returns, you report the original cost of the asset by year of acquisition. Companies might have a retirement policy by which they dispose of, melt down or cannibalize an asset, but that’s not reflected on the books.

It’s best to address problems on the front end. Review the asset ledger for listings that don’t look right — focus on the high dollar items or assets with ‘miscellaneous’ as the description. Scrutinize asset invoices and review them with the people who know them; it might be the plant manager for the manufacturing facility, facilities person for the furniture and IT people for the computer asset listing. Another area to consider is depreciation. The county will tell you the rate, but that may not be accurate and is negotiable.

How much can be saved?

Conservatively, businesses can lower personal property taxes by 20 percent. Most state rates are at 2 percent. When you tell a company that cleaning up asset lists can save $30,000 or more, it gets their attention.

Jenna R. Kerwood, CMI, is a principal, Tax Services, at Brown Smith Wallace. Reach her at (314) 983-1360 or jkerwood@bswllc.com.

For more on this and other tax topics, visit Brown Smith Wallace's Tax Insights.

Insights Accounting is brought to you by Brown Smith Wallace

Sunday, 30 June 2013 20:00

Entrepreneurs change the world

Written by

STL Ernst & Young Entrepreneur of the Year 2013

Recognized as one of the world’s most prestigious business award programs, the Ernst & Young Entrepreneur Of The Year Awards celebrate gravity-defying innovators who build and run great companies. This June, we gather here and in 25 cities across the U.S. to honor all of our regional finalists and welcome the class of 2013 into our Hall of Fame.

Entrepreneurs change the world and make it a better place to work and live. We honor them for their fortitude and resilience, and we celebrate their ability to forge new markets, navigate uncharted territory and fuel economic growth.

Congratulations to this year’s finalists and winners for their unyielding pursuit of business excellence. We are honored to share their inspiring stories with you.

 

Randy Buseman, partner, Kansas City Ernst & Young Office

Mike Hickenbotham, partner, St. Louis Ernst & Young Office

 

Here are the 2013 Ernst & Young Entrepreneur of the Year finalists and winners:

 

Agriculture and Plant Sciences

Winner – J. Larry Sanders, Ph.D., president and CEO, Specialty Fertilizer Products, LLC

 

Engineering & Consulting

Winner – David Raboury, president and CEO, Terracon Consultants, Inc.

 

Entertainment

Winner – Robb Heineman, owner, president and CEO, Sporting Club

 

Industrial Products

Winner – J. Joseph Burgess, president and CEO, Aegion Corporation

 

Manufacturing

Winner – Joseph Suhor III, chairman and CEO, Suhor Industries, Inc.

 

Retail

Winner – Jim Schwartz, chairman and CEO, NPC International, Inc.

 

Technology & Business Services

Winner – Daniel Reed, CEO, UnitedLex

 

Transportation & Logistics

Winner – Artur Wagrodzki and Tomasz Tokarczyk, presidents, Artur Express

 

Turnaround

Winner – T. Michael Riggs, chairman, Jack Cooper Holdings

 

Finalists

-          Matthew J. Condon, CEO, ARC Physical Therapy

 

-          John H. Kramer Jr., president and CEO, Cambridge Engineering, Inc.

 

-          Jeffery Keane, founder and CEO, Coolfire Media, LLC; Coolfire Originals; Coolfire Solutions

 

-          Robert D. Taylor, chairman and CEO, Executive AirShare Corporation

 

-          Mark R. Bamforth, president and CEO, Gallus Pharmacueticals, LLC

 

-          Gary Jaffe, CEO, GL Group, Inc.

 

-          Stephanie Leffler, CEO, and Ryan Noble, president, Juggle.com

 

-          Cary T. Daniel, CEO, Pivot Employment Platforms

 

-          Mike O’Neill, CEO, John Nickel, president, and Kevin Quigley, executive vice president, Switch: Liberate Your Brand

 

-          Lenora Payne, president, Technology Group Solutions, LLC

 

-          Lisa Nichols, co-founder and CEO, Technology Partners

 

-          Geoff Coventry, COO, Rob Freeman, CEO, and Matt Gilhousen, chief development officer, TradeWind Energy, Inc.

 

-          Robert Griggs, president, Trinity Products, Inc.

STL Ernst & Young Entrepreneur of the Year

Technology & Business Services

Winner

 

Daniel Reed

CEO

UnitedLex Corp.

 

For Daniel Reed and UnitedLex Corp., the root of excellence is passion. Cultivating passion and creating highly motivated, accountable and committed professionals is the secret of UnitedLex Corp., and the reason the company has driven transformation within the global legal profession.

Daniel Reed is CEO of UnitedLex and an innovator who is changing a legal industry that has historically been slow adapters of technology.

Recognizing a new opportunity to change the legal profession by leveraging technology and process improvements, Reed co-founded UnitedLex, a consulting, technology and outsourcing provider of legal services in 2006. The company’s lightning bolt moment came after several collaborative discussions with the leadership team of Hewlett Packard, which became UnitedLex’s first client, and recognition of gaps in the global legal system.

The mission that emerged was to transform the global legal industry by providing a single point of knowledge and capability in those support areas most critical to law firms and law departments in becoming efficient business operations. The biggest obstacle for Reed was that no one had ever executed such a strategy before.

Rather than adopt a law firm or BPO model for the delivery of legal support services in the areas of litigation, intellectual property, contracts and immigration, UnitedLex created a model that has a management consultancy front end, a technology development and integration enablement group and a centralized resource outsourcing engine for delivery execution. Within five months of starting, UnitedLex was providing legal services to IBM, Microsoft and Marriott Hotels in addition to HP.

By maintaining focus on current business lines, UnitedLex expects to continue to see significant growth in the future. The company is in a position to grow without cash constraints, and given the receptivity and strong demand of an international client base, UnitedLex will continue to invest in areas of core differentiation.

How to reach: UnitedLex Corp., www.unitedlex.com

STL Ernst & Young Entrepreneur of the Year

Finalist

 

Robert Griggs

President

Trinity Products, Inc.

 

Since founding Trinity Products, Inc. with two partners in 1979, Robert Griggs has been taking huge personal risks. At its inception, Trinity had only a rented office space with four telephones, one employee and a borrowed debt of $15,000.

The company began primarily as a steel pipe supplier and then branched into fabrication. Adding fabrication services increased value to customers and allowed Trinity to diversify its customer base. This expansion brought about the addition of new product lines, high-rise sign structures and billboard and sign pole fabrication.

Because of Griggs’ tenacity and intense drive to succeed, the company has continued to be successful over 34 years. In this time Griggs has heavily invested in new equipment and technologies in order to facilitate the growth of the company’s different business units. In 2002, Trinity completed the construction of a 10,000-square-foot coating facility which allowed Trinity to diversify into painting and coating steel pipes.

Griggs’ vision was not finished. He focused on becoming vertically integrated by building his own steel mill with capabilities of producing spiral weld pipe. Production of the plant started in 2004 and was not completed until 2007, when the mill began to roll pipe. This created new challenges as the company not only learned how to roll pipe, but had to assume management of more employees. The risk of expanding services on the brink of the global economic downturn proved to be fortuitous, as the diversification allowed Trinity to remain nimble.

Additionally, the company broadened its expertise by investing in industry certifications like the American Institute of Steel Constructors facility approval, and obtained quality approval from states regulatory agencies in California, New York, New Jersey and the Army Corps of Engineers. Today, the company is the second largest producer of large structure pipe in the United States and currently has a larger market share than it had before 2008.

How to reach: Trinity Products, Inc., www.trinityloprofile.com

STL Ernst & Young Entrepreneur of the Year

Finalist

 

Rob Freeman

CEO

TradeWind Energy, Inc.

 

Matt Gilhousen

chief development officer

TradeWind Energy, Inc.

 

Geoff Coventry

COO

TradeWind Energy, Inc.

 

What do a technology entrepreneur, a musician turned engineer and a corporate attorney have in common? They lead TradeWind Energy, Inc., one of the largest developers of wind energy projects in the U.S. However, the company hasn’t always been in that position.

In the early years, TradeWind positioned itself to be a wind power development company headquartered in the Midwest. The development process began by identifying key locations and then negotiating leases on the locations in order to build site inventory. Although Rob Freeman, Matt Gilhousen and Geoff Coventry had the drive necessary to succeed, TradeWind had an uphill battle from the beginning.

One early setback stemmed from the actions of a founding member who, having left the company, criticized the traditional sources of energy such as coal and nuclear. Unfortunately, TradeWinds’ customer base at the time comprised these same utility companies, and the local utility companies saw hostility in the gesture.

It was evident that a change was necessary in order for the company to survive. As TradeWind reached an inevitable breaking point, Gilousen, chief development officer, and Coventry, COO, met with Freeman and determined that the business had a future with Freeman at the helm as CEO.

TradeWind made a strategic decision to focus its efforts on getting control of some of the highest wind resource sites in the country. The strategy has been to focus on developing the lowest possible delivered cost of electricity from wind rather than focusing on markets that have had policy directives for wind power. This strategy has proved to be a key to TradeWind’s success.

TradeWind also secured transmission rights for physical delivery of wind power from Kansas, Oklahoma and Nebraska to the southeast U.S. The company expects growth will come from innovative combinations of technologies in natural gas, wind and solar.

How to reach: TradeWind Energy, Inc., www.tradewindenergy.com

STL Ernst & Young Entrepreneur of the Year

Engineering & Consulting

Winner

 

David Gaboury

President and CEO

Terracon Consultants, Inc.

 

David Gaboury doesn’t rest on Terracon Consultants, Inc.’s success, though it could be tempting to do so given Terracon’s history of profitable growth. Instead, since becoming president and CEO 11 years ago, he has continually evaluated changes in Terracon’s market, its clients’ expectations and its business operations, challenging employee owners to embrace a culture of continuous improvement.

He is not afraid to make changes, even big changes, if they will make the company better. Gaboury’s unique ability to take a very complex situation and reduce it to the most fundamental question, the question that will define the outcome, is a rare talent that allows him to make difficult decisions efficiently and effectively.

When Gaboury joined the firm in 1997 as COO, Terracon was a successful Midwest consulting engineering company. The entrepreneurial opportunity and challenge was to scale this up and profitably grow the firm to become a national leader. As an outside hire, his first challenge was to strike a balance between showing appreciation for the firm’s success to date, fitting in and building relationships, while concurrently bringing in new ideas and vision.

This was accomplished by a central emphasis on building strong consensus around the strategic direction for the firm and developing and implementing clear, concise strategic plans. The entrepreneurial building blocks he used to consistently and profitably grow the firm were to build and strengthen Terracon’s existing services while adding adjacencies; emphasize the balance of internal and acquisition growth; build into a core competency of identifying, making and integrating acquisitions; and develop corporate services consisting of best in class corporate functions.

Today, Terracon is the national leader in its market space. In Terracon’s recently completed Strategic Plan 2017, the firm is taking on three key base entrepreneurial strategies for the future — greatly expand adjacencies related to its four core service lines; excel at employee safety, well-being, and engagement; and grow its presence outside the U.S.

How to reach: Terracon Consultants, Inc., www.terracon.com

STL Ernst & Young Entrepreneur of the Year

Finalist

 

Lisa Nichols

Co-founder and CEO

Technology Partners

 

While it may not have been her career aspiration to be an entrepreneur, Lisa Nichols knew an opportunity when she saw it. She had worked in corporate accounting and sales and marketing, and both Lisa and her husband Greg had subpar experiences with IT departments at corporations. This sparked their desire to change the way IT staffing is conducted.

Using Lisa’s financial and sales skills and Greg’s IT background, they co-founded Technology Partners in 1994. Lisa makes that sure employees understand and follow three core values — conducting business ethically and with integrity; delivering on commitments both internally and externally; and practicing the Golden Rule and always respecting diversity of opinion.

Her genuine belief in doing the right thing, which may not be the most profitable thing, and her desire to continually challenge herself and her employees, is a model to which companies today may well want to imitate.

Technology Partners employs more than 350 employees and has brought innovative methods to the IT staffing industry. The company uses a flat, hourly margin — the spread between client bill rates and employee pay rates — and discloses this margin to both the customer and its employees.

Conventional wisdom says this disclosure was ill advised for business; however, the company’s business model now serves to be a competitive advantage. Forbes magazine has taken notice of Lisa’s innovative business model and chose her to appear in the Most Powerful Women issue of the magazine in June.

Using a board of advisers to counsel her in major decisions to help grow the company, Lisa has chosen board members with various backgrounds and experiences within different industries.

With a collaborative approach in managing its employees, Lisa actively encourages her workers to avoid “silos” and to voice any desires to change positions if desired. Many employees have worked in all or many of the company’s main operational roles.

How to reach: Technology Partners, www.technologypartners.net

STL Ernst & Young Entrepreneur of the Year

Finalist

 

Lenora Payne

President and CEO

Technology Group Solutions, LLC

 

Lenora Payne says she leads by example, priding herself on being upfront and honest with her customers, communicating clear expectations to customers and ensuring that she follows through.

The president and founding CEO of Technology Group Solutions, LLC, a provider of technology infrastructure and services solutions, for the past eight years, Payne owns 51 percent of TGS, thereby allowing the company to be certified as a minority and woman-owned company.

Payne places a large focus on attracting and retaining clients. Her success in retaining clients is heavily related to her concentration on certifications and the ability to offer a wide range of services to customers. She believes that larger companies often just take orders from customers and deliver the product without providing added value. TGS makes sure it has a full understanding of customer needs in order to find the right solution.

Customers value Payne’s approach; the company has never lost a single customer. She routinely receives positive feedback from customers describing their satisfaction. The company’s commitment to “doing what we say we are going to do” has tremendously impacted customer retention.

TGS has been selected as a minority business enterprise supplier of the year. The company’s phenomenal growth within the last few years has been to a large part because Payne continued to maintain working relationships with clients in order to keep abreast of business ventures her clients are making. This ensures she is aware of how her client’s business will impact TGS and possible future business.

As a new business, TGS was challenged with gaining the confidence of customers. It started by taking small projects and worked to exceed expectations on every project. Payne has had to use her personal savings, including a mortgage on her house, to fund the operations. Eventually, TGS obtained certification with original equipment manufacturers, which helped demonstrate credentials in the business and has led to growth and more financial stability.

How to reach: Technology Group Solutions LLC, www.tgs-kc.com

STL Ernst & Young Entrepreneur of the Year

Finalist

 

Mike O’Neill

CEO

Switch

 

John Nickel

President

Switch

 

Kevin Quigley

Executive vice president

Switch

 

In early 2002, Anheuser-Busch communicated its interest in selling Busch Creative Services to the management team of Mike O’Neill, John Nickel and Kevin Quigley. On Oct. 16, 2002, the three consummated the purchase, naming the company Switch.

Switch: Liberate Your Brand, is an independently held, experiential marketing agency, locally owned in equal shares by O’Neill, CEO, Nickel, president, and Quigley, executive vice president. The three partners believe breaking off from Anheuser-Busch greatly helped them focus more on the business, the employees and its customers.

Though the company had more than $30 million in revenue and offices in Chicago, Seattle and Atlanta, 80 percent of revenue was from Anheuser-Busch. Immediately following the acquisition, and to ensure long-term stability, the owners set their sights on drastically diversifying and growing their client base.

Recently celebrating their 10th anniversary as an independent agency, Switch ended the 2012 fiscal year posting the best financial year in the company’s 32-year history. 2012’s sales showed a 15 percent increase over 2011 but even more impressive is that 2012’s sales were 32 percent above 2010 sales. During this same time, Switch also increased its full-time staff to 130 from 90 and its field marketing staff to 1,300 from 600 across the U.S.

The company has very successfully diversified its client base with only 12 percent of its current revenue coming from Anheuser-Busch. Thanks to the addition of clients like 5-hour Energy, Elsevier, Covidien Health, Essence Healthcare, Clif/Luna, Muscle Milk, Coca-Cola, Primerica, Enterprise Rent-A-Car, blu eCigs and Junior Achievement, Switch has grown into a nationally recognized experiential marketing powerhouse.

In 2010, Switch consolidated six U.S. office locations into a single St. Louis facility, putting the agency’s creative/strategic, administrative, operational, experiential, digital and design departments, print/screen shop, motion graphics and fabrication studios all under one roof.

In celebration of its 10th anniversary of independence, Switch ownership created a roadmap for the next 10 years of business growth.

How to reach: Switch: Liberate Your Brand, www.liberateyourbrand.com

STL Ernst & Young Entrepreneur of the Year

Manufacturing

Winner

 

Joseph Suhor III

Chairman and CEO

Suhor Industries, Inc.

 

With $50,000 in capital and loans totaling $7.5 million, Joseph Suhor III bought the controlling stock of struggling company Sloan Enterprises in 1987, and Suhor Industries, Inc. was launched. At that time, the company employed 150 and had 16 locations in four states.

Since then Suhor Industries has acquired more than 50 companies in the funeral service and precast concrete industries. The company employs 735 with 80 locations in 20 states. Despite this success, the initial years were difficult with restructuring and onerous debt. However, the company learned discipline and immediately shared performance information with line managers.

That philosophy, led by Suhor III who has served as chairman and CEO for 26 years, created a culture that persists today. Decentralized management with total transparency of financial information to each location’s management is one hallmark to SI’s success. The other is the ability to purchase companies and assimilate the assets, employees and culture into SI.

The vision was clear early on to grow principally through acquisition. Suhor took advantage of some of the aging owners in the industry and offered structured exit strategies to allow growth without large cash outlays. The company’s reputation of fairness and follow-through provided professional capital to continue that growth. SI was expanding when others did not see the advantage.

Today, Suhor Industries is principally a funeral services provider, manufacturing concrete burial vaults and other funeral products. Secondarily, the company is a precast concrete producer of manholes, septic tanks, storm shelters and retaining walls. The burial vault industry has lost 30 percent of its market to cremation services in the last 12 years.

To combat that decline in revenue, SI further diversified in the funeral service industry across product lines allowing more opportunity for cross-selling and better utilization of the sales force. Vaults, caskets, cremation, memorial products and graveside services are now all part of SI’s offerings.

How to reach: Suhor Industries, Inc., www.suhor.com