Newsletter

Membership is the backbone of any organization. Our current membership is 140. Normal attrition will reduce this some so we all need to constantly work on bringing in new members and get them involved with the objectives of the association. If you would like to serve on the membership committee or have any suggestions please call Ralph Jones, Chairman (804) 769-2788

Reservoir

In 1999 you association voted to oppose the King William Reservoir Project because if was a BAD BUSINESS DECISION. This position has not changed. Please contact your Senator and Delegate to express your views.

In this issue of the newsletter we have asked several of our directors to write articles about their businesses that include information that should be helpful to our members. We hope to expand this and start including informative articles from all of our members. Let us know your opinion and if you would like to contribute an article for future issues.

Wesley Walker 1^st - Vice President

The following is the percentage of furniture made in foreign countries and purchased by people in the United States for the years 2002 and 2003. China made 52% of our furniture, Canada, 12%, Mexico 9% and other foreign countries made about 5%. This furniture is marked made by the United States company that imports it, but most is shipped in panels and assembled in the United States. Due to all the foreign made furniture, the Appalachian region of the east coast has lost approximately 79,000 jobs. More than half of its furniture manufacturing plants have closed or import furniture from foreign plants.

Next we will see the kitchen cabinet industry take the same route as the furniture market. About 70% of our grade hardwood lumber is going overseas. All of this is a result of the free world trade (WTO). The United States cannot compete against labor at twenty-six cents ($.26) an hour.

All vehicles are designed to use regular unleaded fuel with an octane rating of 87. At service stations, the octane rating is displayed in a label on the pumps. 1.) Always use a fuel with an octane rating of 87, even if it is sold as a mid-grade or premium. 2.) In some regions, regular grade fuels are sold with octane ratings of 86 or lower. This is commonplace in areas of high altitude. 3.) Using a fuel with a lower octane rating can cause persistent and heavy knocking, which can damage the engine. It is not recommended to use such fuels. 4.) Do not be concerned if the engine sometimes knocks lightly when driving up a hill or when accelerating. Service may be required if, when using a fuel with the specified octane rating: a. The engine knocks heavily under all driving conditions. b. The engine knocks lightly while being driven at cruising speed on level roads. 5.) It is not recommended, nor is it necessary in most cases, to use a premium grade of fuel with an octane rating of higher than 87. 6.) If the engine has difficulty starting, rough engine idle or hesitation when the engine is cold, it may be caused by fuel with low volatility; Trying a different grade or brand of fuel may solve the problem.

We live in a very mobile society. Statistics show a large number of people move every 7 to 10 years. The self-storage industry was created to meet this very demand. It also provides a practical alternative choice for gaining needed space when dealing with special situations. Situations such as a reliable moving in a changing domestic situation or just when you decide to reclaim your garage or attic space.

As for business owners it provides a wonderful way to expand your business without incurring the expense of constructing more buildings. You can use a self-storage facility to stockpile inventory to meet changing market demands of your business or even if you just want to organize your office.

If you’re ever in a position to rent a storage unit, there are a few things you should remember: 1.) Is the facility owner involved? If so you can feel confident that things will be run right. 2.) Is the facility secure? You’ve worked hard for it; so don’t let someone else help themselves. 3.) Is the facility well kept? This will allow you to go home at night and know your property will be well cared for.

Like most businesses, Schools & Barnette started out small. We (Cecil Schools and Crystal Barnette) spent 5 years working in a small at home office. We started with just a handful of clients, but thanks to their referrals and word of mouth, we quickly out grew our office. In 2003, Schools & Barnette PLC, moved to The Commins Place at 5468 Richmond Tappahannock Highway. To our amazement, our once two-room office quickly took over the 1^st floor of The Commins Place.

None of our success would have been possible if not for our clients and their referrals. THANK YOU!

Schools & Barnette is a casual, yet professional CPA firm. We enjoy working with small business owners, helping them make their business grow. Our services include income tax preparation for individuals and businesses, bookkeeping, payroll processing, consultation and other services (retirement plans, business startups, etc) that help our clients reach their goal of a successful business and/or tax savings. If we can be of any help to your and/or your business, please do not hesitate to call 804 769 2883.

With the New Year comes our (and surely your) favorite time of the year when everyone’s thoughts turn to "how the heck can I avoid (legally) paying any income taxes for last year". You may also be thinking how you can get your tax information better organized and to your tax preparer early this year to make it easier for them to prepare your tax return.

When organizing your tax information for your tax preparer, set up folder or envelope and put all tax information that you receive in it as it comes in ( W-2s, mortgage interest statements, donations receipts, cancelled checks, etc.). If you have had any major changes since the prior year (marriage, divorce, additions to the family, stock sales, change of residence, etc) inform your tax preparer when you meet with them. If you are self-employed get all of your receipts, income and expenses grouped together by category and totaled. Take everything (important papers) to you preparer, it is better to have information that is not needed than to lose a tax deduction because the information was not provided.

We will review, very briefly some items of interest to most taxpayers in this article but we do advise that the taxpayer discuss all questions with a qualified tax professional before preparing their income tax return each year. As you all know the Internal Revenue changes a lot of the rules each year and when they "simplify" anything it adds more pages and questions on how to prepare your return. The information we have provided in this article is not intended to be a complete guide to tax preparation and does not completely cover information mentioned. Please contact a qualified tax preparer for full details as they apply to your tax situation.

The Section 179 depreciation deduction was increased to $100,000 in 2003. This allows businesses to elect to depreciate (write off) up to $100,000 of property used in a trade or business or held to produce income. This amount remains the same for 2003 through 2005, in 2006 it is scheduled to return to the $25,000 amount.

Amounts expensed under Section 179 are subject to recapture rules, if the equipment or vehicle is sold at a gain depreciation expensed will be considered ordinary income. The total cost of property that may be expensed for any tax year cannot exceed the total amount of taxable income derived from the active conduct of any trade or business. (Can not create a loss, income must exceed the 179 deduction).

A truck or van (including a sport utility vehicle is eligible for the Section 179 election if its gross vehicle weight is over 6,000 pounds and the vehicle is for business

use (not personal use).

Retirement Plans are a great way to save taxes and invest for your retirement.

The Roth Individual Retirement Account (IRA) contributions limit for 2003 is $3,000 and you can increase this by $500 for catch up contributions. A catch up contribution is allowed for an individual who will be at least age 50 by the end of the tax year.

The Roth contribution is subject to some adjusted gross income limitations and is a non-tax deductible (after tax) contribution. The income earned is tax free so after 5 years the withdrawals from a Roth are tax-free.

Traditional IRAs for years 2002 through 2004 the maximum combined contribution to this and a Roth is generally limited to $3,000, a catch up contribution in the amount of $500 can be made to a traditional IRA also.

For 2005 through 2007, the maximum contribution will be $4,000 and in 2008 it will be $5,000. After 2005 the maximum catch up contribution will be $1,000.

The ad on television that states that you can use your IRA to save for the purchase of a residence is correct-this is for first time homebuyers only, and the withdrawal for the purchase is subject to income tax but not the 10% penalty for withdrawals before age 59 ½., and is limited to $10,000 (any amount over this would be subject to penalty).

There are other retirement plans for business owners like the SIMPLE IRA, which has to be established by October 1^st of the tax year, Simplified Employee Pensions (SEPs) which can be established by the due date of the tax return, Simple 401K plans, 401Kplans, Profit Sharing plans, etc. All of these are very good in certain situations--you should consult your tax advisor and investment advisor before deciding on a plan.

Child tax credits is a for 2003 and 2004 is $1,000 per child, for 2005 through 2008 it will decrease to $700. Remember that those eligible for the credit in 2002 should have already received $400 of the 2003 credit, the remaining $600 will be claimed on their 2003 tax return. The notice received with your advance refund should be given to your tax preparer, if you did not retain the notice for your records inform them if you did or did not receive your refund.

Education Credits for 2003 are the Hope and Lifetime learning credit. These credits may be claimed by individuals for tuition expenses incurred by students pursuing college or graduate degrees or vocational trainings. The Hope scholarship credit provides a maximum of $1,500 per student for each of the first two years of post-secondary education. The lifetime credit allows a credit of 20 percent of qualified tuition expenses paid by the taxpayer for any year the Hope credit is not claimed up to a maximum allowable credit of $2,000.

Health Insurance premiums are deductible as medical expenses, subject to the 7.5% of adjusted gross income limitation by individuals.

Self employed individuals may for 2003 deduct from gross income 100% of amounts paid during the year for health insurance for themselves, spouses, and dependents. The deduction is limited to the taxpayer’s net income derived from the trade or business and other limitations. Not deductible is spouse can obtain health insurance coverage for self-employed individual thru spouse’s employees group policy.

If Schools & Barnette, PLC can be of any assistance in helping you (legally) avoid paying taxes please give us a call 804 769 2883. Best of Luck in 2004.

Union Bankshares is the second largest independent bank in Virginia. Founded in 1902 as Caroline County Bank, Union Bank & Trust is headquartered in Bowling Green, Virginia. Our affiliates include Union Bank & Trust, Northern Neck State Bank, Rappahannock National Bank, Bank of Williamsburg, Mortgage Capital Investors and Union Investment Services Inc.

Union Bank & Trust has twenty branches stretching from Richmond to Fredericksburg, with offices in Henrico, Hanover, King William, Caroline, Spotsylvania, Stafford and King George Counties. As one of the largest community banks, Union Bank & Trust is large enough to offer many products offered by the super-sized banks, and small enough to give our customers personalized service.

Union Bank & Trust offers a wide range of consumer and commercial products and services. Our business checking accounts are designed to meet your needs whether you are a large corporation, a start-up company, a partnership, or a non-profit civic organization. Union Bank & Trust offers Business Checking, Business Interest Checking and Business Account Analysis Checking accounts. All of our products are very competitive in the market.

Our Business Checking account is designed for the small or medium sized business that does not deposit or cash a large number of checks, but want a lot of extras such as image statements, business check cards and online access. Some businesses may prefer a Business Interest checking account, which offers the same features as our Business Checking account plus the added benefit of a competitive interest rate. If your business has a high volume of transactions, including checks written, deposited items, or electronic transactions, then our Business Account Analysis Checking may be the account for you. It allows your balances to pay for these transactions, giving you the opportunity to eliminate a monthly charge.