PostHeaderIcon Obamacare, number of employees, ownership groups, and potential workarounds

What If?

What if I form other businesses to keep my number of employees below 50 or 25 to get around Obamacare? If I start another related business with a different ownership group will the government look at these related but separate businesses as one?  These are the million dollar questions of the day and here is deal, as of today.

There are many unknowns here and the people with some knowledge about it recognize that any loopholes in Obamacare could be addressed and closed by the government.  So if you are wondering how your business can avoid the additional costs associated with this law you would need to take a very close look at any possible workarounds and the related costs and complexities they would add and the very real possibility that the regulations will be changed to close any perceived loophole(s).  I do not see where anyone knows if the government would look at related business with similar but different ownership groups as one combined business for the sake of determining the number of employees as related to Obamacare .  It seems the speculation is that the workforces could be combined for the purposes of the health care law.  Repeat, could be, for emphasis that there are so many unknowns that we are dealing with here.

 

Here are some articles I looked at for my research and relevant highlights:

http://www.entrepreneur.com/article/225559

Relevant Quote:

‘On a recent webinar on Obamacare, for example, Bob Graboyes of the NFIB Research Foundation advised participants that entrepreneurs may not be able to avoid the large-employer fines by splitting their companies into smaller, separate businesses. Even an entrepreneur with completely separate companies may find his or her workforces combined for the purposes of the health law, he said.’

 

http://www.thepublicinsuranceoption.com/2011/reform/small-business-tax-regulations.html

Relevant Quote:

“This difference of opinion will set-up a court battle, and frankly, I wouldn’t bet against the government on this one.  A better solution to the problem of keeping the total number of employees under the 25 employee threshold would be for a business of 90 employees to be split-up between 4 or more owners, but with each owning a ‘baby’ business individually, rather each of the 4 owners owning 25% of 4 different ‘baby’ businesses.  I realize that will create a whole new set of problems, such as equitable division of the parent company, but I have faith in Americans’ ingenuity.”

 

Here is an article addressing what seems to be a work around.  However, it is acknowledged in the article that regulations could change to close any loopholes.

http://www.huffingtonpost.com/2013/01/30/small-business-obamacare_n_2581653.html

Relevant Quote:

 “We’re dealing with things that don’t exist but have the theoretical possibility of existing,” Christiansen adds. “Right now, we have as the default employer-employee relationships, but that whole paradigm is potentially problematic as we have more and more restrictions imposed by government.”

 

So the answer to your question is likely unknown and even if it is known or becomes known it is likely to change so be careful about decisions that lock you into added costs and complexity.  My faithful readers know I value lifestyle choices that minimize complexity and stress.  But that is just me.  For you make sure you count the cost and know the existing and possible new risks moving forward.  And that is all I have to say about that…for now.

 

Jeff Haywood, CPA
The CPA Superhero
972-439-1955
jeff.jhtaxes@gmail.com

 

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

 

 


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In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

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