Employers: Be aware (or beware) of a harsh payroll tax penalty
If payroll taxes withheld from employees’ paychecks aren’t remitted to the IRS, a severe tax penalty can be personally imposed on “responsible” individuals. The IRS can assess a penalty of 100% of the unpaid tax amount on shareholders, owners, directors, officers, employees and others. The Trust Fund Recovery Penalty (or “100% Penalty”) is assessed when there’s a willful failure to collect and pay over to the IRS taxes that are withheld from employees. Unlike some liability protections that a corporation or company may have, business execs can’t escape personal liability for payroll tax debts. Contact us for information about making tax payments.
Targeting and converting your company’s sales prospects
Identifying and converting a steady flow of prospects can safeguard a business against sudden sales drops or, better yet, push its profitability to new heights. How can you accomplish this? First, continually work on lead generation. Actively involve your marketing department and consider customer relationship management software. Qualify prospects according to criteria such as fulfillable needs and a timely desire to buy. Develop questions to encourage prospects’ interest, and devise well-researched solutions to their problems. Contact us for more information.
Tax-smart domestic travel: Combining business with pleasure
You may be going on a business trip in the United States this summer that you can tack some vacation days onto. If you’re a business owner or self-employed, you may be able to deduct some of your expenses. Transportation costs to and from the business activity location may be 100% deductible if the primary reason for the trip is business. Out-of-pocket expenses for business days are generally fully deductible. Examples include lodging, meals (subject to the 50% disallowance rule), seminar and convention fees, and cab fare. It’s important to keep good records in case you’re audited. Additional rules and limits apply. Contact us if you have questions about your situation.
The chances of IRS audit are down but you should still be prepared
The IRS just released its audit statistics for the 2018 fiscal year, and fewer taxpayers had their returns examined compared with prior years. Overall, just 0.59% of individual tax returns were audited (down from 0.62% in 2017). This was the smallest number of audits conducted since 2002. However, even though a small percentage of returns are being chosen for audit these days, that will be little consolation if yours is one of them. The easiest way to survive an IRS audit is to prepare. On an ongoing basis, systematically maintain documentation (invoices, bills, canceled checks, receipts, or other proof) for all items reported on your returns. Contact us if you receive an IRS audit letter.
Hire your children this summer: Everyone wins
If you’re a business owner with children, hiring them for the summer can provide many benefits. One is tax savings. By shifting business income to a child as wages for services performed, you can turn your high-taxed income into tax-free or low-taxed income. You may also be able to realize payroll tax savings (depending on the child’s age and how your business is organized) and enable retirement plan contributions for the children. Everybody wins! Many rules apply. Contact us to learn more.
Selling your home? Consider these tax implications
Depending on where you live, you may see “for sale” signs dotting the landscape. Spring and summer are the optimum seasons for selling a home. So it’s a good time to review the tax implications. If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain, so long as you meet certain tests. For example, you must have owned the property for at least two years during the five-year period ending on the sale date. A loss generally isn’t deductible, but if part of your home is rented out or used exclusively for your business, the loss attributable to that portion might be. Contact us with questions.
It’s a good time to check your withholding and make changes, if necessary
Did you receive a refund this year that was smaller than you were expecting? Or did you wind up owing additional tax when you filed your return? That might mean it’s time to check and adjust your withholding. This might be necessary due to changes in the Tax Cuts and Jobs Act or because something in your situation is different this year (for example, you got married, divorced, purchased a home or had changes in your income). The IRS has a withholding calculator where you can perform a paycheck checkup. You can access the calculator at https://bit.ly/2aLxK0A. Contact us if you need help determining whether you should adjust your 2019 withholding.
Build long-term relationships with CRM software
Customer relationship management software can help you build long-term relationships with those most likely to buy your products or services. These solutions are generally designed to gather and organize customer data and then integrate it with other systems and platforms (including social media). The right product can help you track leads, forecast and track sales, and assess marketing effectiveness. But, to get these benefits, you’ll need to properly train employees and encourage buy-in throughout your organization. We can help you decide whether to buy or upgrade.
The simple truth about annual performance reviews
Keeping up with the latest approaches to employee performance reviews can be overwhelming for employers. If your commitment to the process ever starts to falter, remember the simple truth: Annual reviews provide employees with feedback, set objectives for the year ahead and create written performance records critical to limiting legal exposure. When conducting reviews, ensure supervisors are using consistent documentation, consulting all relevant parties, informing employees of what the review will cover and following up appropriately. Contact us for more info.
Consider a Roth 401(k) plan — and make sure employees use it
If you want another retirement savings option to add to your company’s benefits package, consider a Roth 401(k). But make sure employees use it. The Plan Sponsor Council of America found that Roth 401(k)s are available at 70% of employer plans, but only 20% of participants who had access to one in 2017 made contributions to it. These plans have traits of both Roth IRAs and employer-sponsored 401(k)s. Contributions to an employee’s Roth 401(k) account are made with after-tax, instead of pretax, dollars. But after five years, qualified distributions are exempt from federal income tax (the same as with a Roth IRA). In contrast, regular 401(k) distributions are taxed at ordinary-income rates of up to 37%.