Infrastructure law sunsets Employee Retention Credit early
The Employee Retention Credit (ERC) was a valuable tax credit that helped employers survive the COVID-19 pandemic. A new law has retroactively terminated it before it was scheduled to end. It now only applies through Sept. 30, 2021 (rather than through Dec. 31, 2021) unless an employer is a “recovery startup business.” The Infrastructure Investment and Jobs Act, which was signed by President Biden on Nov. 15, doesn’t have many tax provisions but this one is important for some businesses. If you anticipated receiving the ERC based on payroll taxes after Sept. 30 and retained payroll taxes, consult with us to determine how and when to repay those taxes and address any other compliance issues.
4 red flags of an unreliable budget
Creating a comprehensive, realistic budget enables businesses to identify potential cash shortages, constraints on your capacity to fulfill strategic objectives and other threats. Here are four red flags to watch out for when creating or reviewing yours: 1) It’s based on last year’s results; historical data is a good starting point, but many costs are variable. 2) It lacks companywide consensus; seek input from managers and employees who are on the front lines. 3) It’s unrealistic; targets must be attainable, based on current economic and industry trends. 4) It ignores cash flow; an unexpected shortfall can seriously derail your budget, so be sure to forecast cash flow weekly or monthly.
Remember to use up your flexible spending account money
Do you have a tax-saving flexible spending account (FSA) with your employer to help pay for health or dependent care expenses? It’s a good time to review 2021 expenses and project amounts to be set aside for 2022. A pre-tax contribution of $2,750 to a health FSA is permitted in 2021. This is increasing to $2,850 for 2022. To avoid forfeiting your health FSA funds because of a “use-it-or-lose-it” rule, you must make eligible medical expenditures by the last day of the plan year (Dec. 31 for a calendar year plan), unless the plan allows an optional grace period. Like health FSAs, dependent care FSAs are also generally subject to a use-it-or-lose-it rule. Other rules and exceptions may apply.
Businesses can show appreciation — and gain tax breaks — with holiday gifts and parties
The holiday season is just around the corner. Your business may want to show its gratitude to employees and customers by giving gifts or hosting parties after a year of forgoing them due to the pandemic. It’s a good time to review the tax rules. Gifts to customers are generally deductible up to $25 per recipient per year. De minimis, noncash gifts to employees (such as a turkey) aren’t included in their taxable income but are deductible by you. In general, holiday parties are 100% deductible. And for 2021 and 2022, there’s a temporary 100% deduction for expenses of food or beverages provided by a restaurant. So you can treat your on-premises staff to some meals and get a full deduction.
Competitive intelligence can give your marketing campaigns an edge
A marketing campaign should focus on the strengths and benefits of the products or services in question. But don’t overlook pointing out how your offerings are superior to those of competitors. That’s where competitive intelligence comes in. Competitive intelligence is the process of legally and ethically gathering and analyzing information about competitors. This includes their financial positions, business practices, and of course products and services. To gather such data, you can actively network, scan news sources, visit competitors’ websites and social media pages, and collect collateral such as sales brochures and annual reports. The end result: a more fine-tuned marketing message.
Feeling generous at year end? Strategies for donating to charity or gifting to loved ones
Planning to donate to charity this year? Normally, if you take the standard deduction and don’t itemize, you can’t claim a deduction for charitable gifts. But for 2021, you’re allowed to claim a limited deduction for cash contributions made to qualifying charities. For cash donations made this year, you can deduct up to $300 ($600 for married joint filers). What if you want to give gifts of investments? Don’t give away stock in taxable accounts that is currently worth less than what you paid for it. Instead, sell the shares and claim the loss on your tax return. Then, give the proceeds from the sale to charity. Plus, if you itemize, you can claim a full tax-saving charitable deduction.
Many factors are involved when choosing a business entity
Are you planning to launch a business or thinking about changing your business entity? If so, you need to determine which entity will work best for you — a C corporation or a pass-through entity such as a sole-proprietorship, partnership, limited liability company (LLC) or S corporation. There are many factors to consider and proposed […]
Factor in taxes if you’re relocating to another state in retirement
Are you considering a move to another state when you retire? While you’re thinking about how many square feet you’ll need in a new home, don’t forget to factor in state and local taxes. It may seem like a state with no income tax is a smart choice, but you also have to consider property and sales taxes, as well as any state estate tax. If you make a move to a new state and want to escape taxes in the state you came from, it’s important to establish legal domicile in the new location. How? Take steps such as changing your mailing address, registering to vote and getting a driver’s license in the new state. We can answer any questions you have and file any required tax returns.
Would you like to establish a Health Savings Account for your small business?
With the increasing cost of employee health care benefits, your business may be interested in establishing an employer-sponsored Health Savings Account (HSA). For eligible individuals, HSAs offer a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. To be eligible, an individual must be covered by a “high deductible health plan.” For 2021, a “high deductible health plan” is one with an annual deductible of at least $1,400 for self-only coverage, or at least $2,800 for family coverage. (These amounts will remain the same for 2022.) An HSA provides a number of tax benefits for your business and its employees. Contact us if you have questions.
What business owners should know about stop-loss insurance
Many businesses opt for a self-insured (self-funded) health care plan rather than a fully insured one. Although stop-loss insurance isn’t required for self-insured plans, companies often find it beneficial. Why? It protects the business against catastrophic claims that greatly exceed the amount budgeted to cover costs. Stop-loss insurance doesn’t directly pay participants’ benefits; it reimburses the company for certain claims properly paid by the health care plan above a stated amount. Therefore, it’s critical to line up the coverage terms. We can help you determine whether stop-loss insurance is right for your business or whether your current policy is cost-effective.
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