PNW Presentation by SMBR Certification Team — original pdf
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PERSONAL NET WORTH (PNW) FORM TRAINING CITY OF AUSTIN SMALL AND MINORITY BUSINESS RESOURCES (SMBR) HTTP://AUSTINTEXAS.GOV/SMBR 512-974-7645 2 PNW Historical Data Who is Considered Economically Disadvantaged Personal Net Worth Exclusions Supplemental Documents DBE/ACDBE PNW Differences Counselors Research M/WBE PNW Form M/WBE Alternate PNW PNW Completion Tips Agenda PNW Historical Data 3 PNW Ordinance was adopted June 8, 2006 Began as certification requirement January 1, 2007 The amount is indexed annually based on the South Region Consumer Price Index published by the US Department of Labor, Bureau of Labor Standards The PNW limit has increased each year - Initial PNW $900K - Current PNW $1.583M Who is Considered Economically Disadvantaged: 4 An economically disadvantaged individual is a business owner whose Personal Net Worth (PNW) does not exceed: $1.583 million for the MBE/WBE program* *May change annually $1.32 million for the DBE/ACDBE program An individual’s personal net worth includes only his or her share of assets and liabilities held separately AND/OR jointly Exclusions from the PNW 5 An individual’s PNW includes only the applicants share of all assets held separately and/or jointly, or as community property. The following may be excluded: Individual’s ownership interest in the applicant firm and/or assets titled to the firm Individual’s equity in his or her primary residence Tax and interest penalties that would accrue if retirement savings or investments (e.g., pension plans, Individual Retirement Accounts, 401(k) accounts, etc.) were distributed at the present time The value of an asset or liability not shared/co-owned by applicant The asset value of a vehicle you are leasing Supplemental Documents Required 6 Full Copy of your most recent Personal Tax Return(s) (include all schedules) Bank Statement Printouts – within 30 days of your PNW date Trust Documents: Trust, Bill of Sale, Trust Tax Returns Attachments for PNW Sections, as needed Certification staff may request additional documents if required All information provided by the applicant is CONFIDENTIAL and protected by the state’s Open Records Act. DBE/ACDBE PNW Differences: 7 Both Programs require PNW at Initial Application and upon request, usually upon a major financial change IF applying for both programs, applicant should ONLY complete the DBE PNW Form Layout: PNW Calculation Section & Section 6 Section 6: Other Personal Property breakdown You do not have the ability to indicate if an asset or liability is joint or separately owned or foreign or domestic. Your personal residence IS listed but is NOT included in the Net Worth calculation. The balance of your automobile loans is NOT included in the Notes Payable section, it is in Section 6. You do not have to list other sources of income or contingent liabilities The M/WBE PNW asks for additional information related to Other Business Investments/ Businesses Owned Counselors Research 8 Texas Secretary of State County CAD information Personal Tax Returns Personal Bank Statements Other IRS documents if applicable Application and documents All information provided by the applicant is CONFIDENTIAL and protected by the state’s Open Records Act. 9 M/WBE PNW Form What is an Asset & Liability? (A & L) 10 All Foreign and Domestic Assets and Liabilities must be included on the PNW In financial accounting, net worth is the difference between the assets and liabilities of a person or business. In financial accounting, an asset is an economic resource. Anything tangible or intangible that can be owned or controlled to produce value and that is held to have positive economic value is considered an asset. In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. Completing the M/WBE PNW 11 Complete the M/WBE Form if: Applying for M/WBE Certification* A major financial change has occurred Who should complete the PNW form: Each socially disadvantaged proprietor, Each socially disadvantaged limited and general partner whose combined interest totals 51% or more Each socially disadvantaged stockholder owning 51% or more of voting stock. *If applying for DBE Certification at the same time, only complete the DBE PNW. *An Alternate PNW is also available for MBE/WBE Program A: Cash on Hand, Cash Equivalents, Cash In Banks or CDs 12 Include the following: Combined cash value of ALL accounts owned separately Value of monies you own in a joint account(s) You can check separately owned AND jointly owned if you have both types of accounts A: Current Market Value of Vehicles 13 List the total current market value of all vehicles TITLED to you Vehicles titled to the applicant business are NOT included Use an auto value estimating website as a guide Indicate Separate or Jointly Owned A: Other Personal Property 14 List the combined total value of non-real estate property owned separately and/or jointly. This includes; art, electronics, RV’s, boats, tools, furniture, collectibles, jewelry, clothing, …anything that could be sold for a value. Indicate if Separately AND/OR Jointly owned A value must be provided A: Balance of Loans & Notes Receivable 15 List total value of documented loans, promissory notes, and shareholders loans owed to you A: Life Insurance – Cash Surrender 16 Value Usually part of a Whole-Life or Universal-Life policy The cash surrender value is the amount of money you can take out of the insurance policy, NOT the payout value, and use for personal expenses, a down payment, etc. Since a life insurance policy is assigned to one SSN, there is no joint If you are unsure if you have a cash value, call your insurance policy ownership provider A: Retirement Accounts 17 List the total value of retirement account, without withdrawal penalties, assigned to your SSN. Foreign/Offshore account MUST be included. We review the FBAR & Sched. B form from your personal tax returns. Jointly held retirement accounts are listed under “Other” List the value of items held by a Trust. A: Retirement Accounts Cont’d. Trust Documents 18 Can be Revocable (changeable) or Irrevocable (un-changeable) Revocable trusts typically allow a trustee to manipulate the assets held at any time. This can be important if an asset has recently been transferred to you or from you to the trust. Items that can be held in a trust: personal property, jewelry, art, collectibles, real estate, etc. We will ask for the trust document, the bill of sale (if applicable) and the tax return for review. A: Stocks & Bonds 19 Provide the values as indicated for the stock and brokerage You can provide printouts of the accounts accounts you own if that is easier A: Other Business Assets 20 Provide the asset value you have in other businesses. To include Sole Proprietorships, LLCs, LLPs, and INCs Fill in the information related to other business ownership We are looking to gauge the asset but also determine if this firm is a possible affiliate A & L: Business Affiliate Defined 21 Applies to M/WBE and DBE Program Rules Affiliate business tax returns must be provided on a yearly basis A business affiliate for SMBR purposes is defined by the Small Business Administration: SBA’s regulations on affiliation are contained in 13 CFR § 121.103, available at www.sba.gov/size Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Control may arise through ownership, management, or other relationships or interactions between the parties. A & L: Other Real Estate Owned 22 A: Other Real Estate Owned, Con’t. 23 Only list your ownership percent and the values related to that percent owned Properties deeded to you, even if used for the applicant business, are included Type of property includes: Rental, Land, Farm, Vacation Home, Commercial, etc. We will verify property owned under each County Appraisal District website Please break properties up by parcel Please include foreign and domestic properties L: Accounts Payable 24 List value of all shareholder loans, promissory notes that you are paying to another individual, entity or company L: Balance of Auto Loans 25 List the owed amount remaining of all auto loans for vehicles TITLED to you NOT included leasing Vehicle loan balances of vehicles titled to the applicant business are List the total value of lease payments remaining for vehicles you are L: Balance of Loans from Life Insurance 26 If you have taken the Cash Surrender Value out of your Whole-Life or Universal-Life Policy, you will have a loan agreement to pay it back List the value of the remaining balance of the loan associated L: Balance of Unpaid Mortgages 27 Only list your the amounts owed related to your percent owned From Section 5, insert the total value of unpaid mortgages you have on the other real estate owned L: Balance of Unpaid Personal Tax 28 This value should not include contingent tax liabilities or anticipated taxes for a current year L: Balance of Notes Payable 29 Include all accounts that you owe money towards and carry a balance on Credit cards that are paid off each month should not be included Do NOT include loans associated with the applicant firm Include amounts owed for other businesses owned L: Any Other Liabilities 30 Include the payoff value of any other liabilities you have. Examples: Other business liabilities Student loans Other loans L: Transfer of Assets 31 Indicate “Yes” if you have also transferred to and from a trust, another entity and/or an individual If “Yes” is checked, please provide an attachment describing the transfer as indicated Exclude the transfer types listed in the note above 32 Alternate M/WBE PNW Alternate M/WBE PNW Form Only applicable to the City of Austin M/WBE 33 program Must be completed by a Texas CPA in good standing with the Texas State Board of Accountancy Supporting documents provided to CPA can be requested and viewed by an SMBR Certification team staff member. Personal Tax Returns are not typically due with the Alternate PNW form PNW Completion Tips 34 Read the instructions BEFORE you begin to fill out the PNW Provide attachments dated within 30 days of the date you complete the PNW, unless otherwise noted in the instructions. If you are unsure about an item, contact the lender, bank, account manager, policy issuer, county appraisal district, etc. Make sure to leave nothing blank We have a free notary service at SMBR Call us or come in and meet with us if you have any questions