News Briefs

Every year PCOC puts on a Leadership Academy. The event is designed to train future leaders in our industry and is an invaluable opportunity to develop skills that transcend involvement in PCOC. In fact, I believe it is one of the most important things that we do as an association. This year it will be held May 31 to June 1 at the Catamaran Resort in San Diego. Each district sends its Chairman and Vice Chairman for the upcoming year. Attendees come away with abilities and ideas that they can use for the rest of their lives. Here are some of the topics that we cover:

• History of PCOC and its structure, bylaws and decision-making process.
• District bylaws.
• Preparing and conducting a district meeting.
• Finding good speakers.
• Officers' duties and responsibilities.
• Robert's Rules of Order.
• Public speaking.
• Benefits of membership in PCOC and NPMA.
• The legislative process.
• District growth.
• Your transition meeting.

We should all be proud of this significant event, put together by YOUR association...I know I am honored to be a small part of it. The other faculty members for this year are Curtis Good, Joe Gatto, Travis Swope and Josh Adams.

The 2013-2014 Legislative Session of the California Legislature is in progress. Click here for PCOC's Legislative Agenda.

15 SMALL-BUSINESS TAX DEDUCTIONS

Opportunities abound for small businesses to cut their tax bills. The key is understanding what's deductible for your business. As you look through the 15 deductions listed, note that association dues can be written off as a business expense. That means that mainly for small pest companies, you can write your PCOC dues or a portion of them off at the end of the year.

A good tax preparer can guide you, but it is your responsibility to save receipts throughout the year.

"Organization and good record keeping are the keys to lower tax preparation fees and painless IRS audits," says Sam Fawaz, a certified financial planner and certified public accountant with Y.D. Financial Services in Franklin, Tenn. "Bringing a shoe box to your CPA or accountant and saying, 'Here are my tax records; please prepare my return' will undoubtedly cost you more in compilation and accounting fees to arrive at tax return numbers."

Here's a rundown of expenses to track in preparation for tax day.

1. Auto expenses: You may deduct mileage, parking fees and tolls for business use of your car. Most people take the standard mileage rate deduction because the record keeping requirements are less burdensome, but actual expenses often yield a larger deduction, says Fawaz. Keep track of the mileage, odometer start and finish for each trip, destination, the starting point and business purpose. "The actual expense method often yields a higher deduction, including repairs, insurance, maintenance and depreciation for the business portion of use," Fawaz says.
2. Equipment, furniture and supplies: Look at your purchases and ask your tax preparer to run the calculations to see if you should expense it or depreciate it. But don't overdo it, says Clare Wherley, a certified financial planner and certified public accountant with Lassus Wherley in New Providence, N.J. "I've often had to caution the entrepreneur that buying a piece of equipment just to get a tax deduction isn't good business sense."
3. Professional and legal expenses and association dues: Professional and legal expenses are deductible, but if the costs are part of startup expenses, you may need to amortize the cost over 60 months. Association dues can be written off as a business expense. Any portions included for political contributions may not. PCOC puts this portion under the voluntary PAPCO contribution on your dues statement every year. Fawaz notes that the association must disclose this amount or percentage.
4. Expenses to start up or expand your business: The biggest mistake in deducting expenses to start up or expand your business is failing to make an election to amortize or deduct these expenses in the first year. A paper election is required to be attached to the return, stating your intention to amortize them, Fawaz says. Otherwise, the expenses become nondeductible until you sell or liquidate the business.
5. Professional publications and software: Here again, the common error is taking the cost as an expense instead of amortizing, Fawaz says. Software licensing fees, for example, should be capitalized and amortized over 60 months unless they have a life of only one year, such as an annual maintenance agreement. Professional publications should be amortized over the subscription period if prepaid.
6. Gifts and advertising: Client gifts are deductible up to only $25 per gift. And if you advertise, deductions taken for costs that cover multiple-year contracts must be spread over all the contract years, Wherley says.
7. Home office: If you have a legitimate home office, don't be afraid to deduct it. To qualify, the room must be used exclusively for business. It can't double as a spare bedroom or toy room for your kids. You can deduct a portion of rent, utilities, insurance, taxes, maintenance, professional cleaning, depreciation and interest. State tax deductions will vary.
8. Telephone and internet: Any dedicated services for your business are deductible. If you use your home or personal cell phone for business, you may only deduct the portion used for business purposes.
9. Education and training: You may deduct the cost of continuing education or certification for the business you're already in, but education that qualifies you for a new line of business is not deductible, Fawaz says.
10. Bad debts: A bad debt is only deductible if the income has been declared. Wherley offers this example: A business owner bills a client in December 2009 and declares that income on his 2009 return. By the end of 2010, he realizes he will not be paid by that client. So in 2010, he can take a bad debt deduction for the income previously declared. If that income was not declared, he can't take the bad debt deduction.
11. Interest on loans: You can fully deduct interest on loans for your business. If you have a loan from a relative, make sure it conforms to IRS rules.
12. Entertainment and travel expenses: Keep excellent records here, and keep a log of who you met, why, where, when and for what business purpose. "Only 50 percent of meals and entertainment costs is deductible, and none of the costs associated with country club memberships is deductible," Wherley says.
13. Taxes and Social Security: State taxes paid are a healthy deduction; just don't allow yourself to be surprised by how high Uncle Sam's bill may be. "I often advise setting aside 50 percent of net income to cover everything," Wherley says. "If there is something left over, the refund is that much sweeter."
14. Insurance: Insurance premiums for the business for one year or less are deductible currently, while excess prepaid premiums are deductible in subsequent years, Fawaz says.
15. Charity: Save all your receipts, and don't forget to keep track of contributions of inventory or property.

Pennsylvania State University has been working on new research on a fungal parasite that infects ants. When infected, an ant exhibits zombie-like symptoms. It will leave the nest and have compulsive behavior. The ant may walk randomly for hours in the forest. The ant will climb to the underside of a leaf, bite into the vein of the leaf and hang upside down to die for about six hours. Even after death, the parasitic fungus makes the ant hold onto the leaf. From the head of the dead ant will sprout spores that can infect other ants.

BECOME AN ASSOCIATE CERTIFIED ENTOMOLOGIST! Training and testing for becoming an ACE with the Entomological Society of America are scheduled May 14-15, 2013 at Univar's Los Angeles offices. There may also be a future class in Sacramento. Contact Laurie Jo Jensen, BCE for information: laurie@bugwizzards.com, 949-412-8773 or http://www.bugwizzards.com/.

Dow AgroSciences will be sponsoring the 2013 Fumigation Banner Contest. The rules are the same as last year, and we have provided a link for you to view the complete set of rules here. The contest will run from March 1 through May 31, 2013. There will be four winners again this year.

Please email submissions to josh@pcoc.org.

The board has resumed testing for Branch 2 & 3 field representatives. After the initial test, the board has decided to make adjustments to the exams. They are hoping to resume operator exams for branch 2 & 3 toward the end of April. They also plan to resume testing for all Branch 1 licenses toward the end of May. Continue to check the board's website for updates.

Welcome to a new section of Newsbriefs! Here we will be giving news from our members: new hires, retirements, etc. If you have some news you would like to share, please send a short sentence or two to jenai@pcoc.org.

Visit http://www.naylornetwork.com/cpc-nwl/pdf/Endorsed_Programs.pdf to view the full article online.

Workers' compensation may seem complicated, but only two factors affect your costs: your employees' job classifications and your experience modification factor.

You can't change job classifications: if an employee performs the duties of a roofer, then your insurer will classify him/her as a roofer. But you do have control over the other variable that affects your workers' compensation costs: your experience modification factor, often referred to as an ex-mod.

An ex-mod is simply a multiplier that reflects your claims experience. By multiplying the base rate for your job classifications by your ex-mod, an insurer can reward or penalize you for past claims experience. In most states, premiums must exceed a certain minimum amount for the ex-mod to apply. If you do not pay enough in premiums, your organization will have a "minimum premium policy."

The state's rating bureau calculates ex-mods based on your paid claims and incurred losses for the "experience period," generally the three years prior to the last policy renewal date. To calculate your ex-mod, take your total actual losses for this period and divide by the total expected losses, or average losses by $100 of payroll per job classification. An employer with actual losses of $253,563 and expected losses of $352,051 would calculate the experience modi­fication as follows:

253,563 ÷ 352,051 = 72%

However, not all losses are weighted equally. Rating bureaus use "weighting values" and "ballast values" to arrive at ex-mods that more accurately predict your company's losses.

Following is the actual formula for calculating an experience modification factor:

What do these terms mean?

• "Primary losses" = the first $5,000 of any loss; "excess losses" = all loss amounts over $5,000. Losses up to $5,000 are included in full. Losses over $5,000 are included on a discounted basis. This means smaller losses have a bigger relative impact on your ex-mod than larger ones.
• The "ballast value" and "weighting value" correct for the size of the risk. In statistics, the larger the pool sampled, the more accurate the sample is. With ex-mods, the larger the payroll base, the more accurately you will be able to predict your losses.

The resulting experience modification factor generally ranges from .75 to 1.75. An experience modification of 1.00 indicates your losses reached the expected dollar amount. A higher number indicates that your risk of loss is greater than average, while an ex-mod lower than 1.00 indicates your risk is better than average.

Keeping Ex-Mods Low

Focus on controlling the smaller, more frequent losses—they will impact your ex-mods more than less frequent, larger losses. You'll also want to review your payroll and claims information for accuracy. Make sure your payroll data are accurate and your ex-mod calculations include data from the proper years. And keep tabs on loss reserves—unused loss reserves affect your experience modification.

We can develop strategies to help control your ex-mod and workers' compensation costs. For more information, please contact the PCOC Insurance Program department of Jenkins Insurance Services at (877) 860-7378 or, email us @ ProPest@Leavitt.com.

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PCOC website password for 2012-2013 effective July 1, 2012: "killbugs"

For an additional charge, you may access a 24-hour hotline providing consultation by qualified medical doctors on pesticide-related medical emergencies. This service is provided free of charge to Peacock Group insureds.