Look to a SWOT analysis to make better HR decisions
For many businesses, an often-overlooked area of both opportunity and trouble is HR. One way to better manage strategic HR decisions is to conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis. Start by identifying internal strengths and weaknesses that affect performance in core HR competencies such as hiring, benefits administration and employee support. Next, look at external conditions (opportunities) that could lead to worthwhile improvements, such as broadening your benefits package. Finally, pinpoint external threats that could inhibit performance, such as regulatory changes. Ultimately, a SWOT analysis can help you set advisable, feasible HR objectives.
Retirement plan early withdrawals: Make sure you meet the requirements to avoid a penalty
Most retirement plan distributions are subject to income tax and may be subject to an additional 10% penalty if you take a withdrawal before age 59½. Fortunately, there are some exceptions to avoid the penalty but there are strict rules. In one case (TC Memo 2023-9), a taxpayer lost his job and took a 401(k) plan distribution before reaching age 59½. He had been diagnosed with diabetes, which he treated with insulin and other medication. The U.S. Tax Court ruled he didn’t qualify for an exception to the 10% penalty due to total and permanent disability. The reason: He had been able to work up until the distribution. We can help determine if you qualify for an exception to the penalty.
Many tax limits affecting businesses have increased for 2023
An array of tax-related limits affecting businesses are indexed annually, and due to high inflation, many have increased more than usual for 2023. For example, the Section 179 expensing limit has gone up to $1.16 million from $1.08 million. Also up are the income-based phase-ins for certain limits on the Sec. 199A qualified business income deduction for owners of pass-through entities. And most limits related to employer-sponsored retirement plans, such as 401(k)s, are higher this year. This includes employee contributions to 401(k) plans, which are up $2,000 this year to $22,500. Contact us if you have questions about the tax limits that will affect your business in 2023.
3 ways your business can uncover cost cuts
Every business wants to find clear and substantial ways to cut costs, but it’s usually not easy. Obvious places to slash expenses, such as labor and overhead, often aren’t a viable option. Here are three ideas to consider: 1) Identify your top suppliers and determine whether you can consolidate spending with them to put yourself in a stronger position to negotiate volume discounts. 2) Explore environmentally friendly actions that can save you money; for example, selling off unneeded equipment or upgrading building energy systems. 3) Look at the feasibility of outsourcing and tech upgrades; though these entail initial costs, they could lower expenses in the long run. Contact us for help.
Why you might want to file early and answers to other tax season questions
The IRS opened the 2023 individual income tax return filing season on Jan. 23. Even if you usually don’t file until closer to the mid-April deadline (or you file an extension), you may want to file early. It can potentially protect you from tax identity theft. In these scams, a thief uses another person’s personal information to file a fraudulent return early in the filing season and claim a bogus refund. Another benefit of early filing is that if you’re getting a refund, you’ll get it sooner. This year, the filing deadline to submit 2022 returns, file an extension and pay tax owed is April 18 for most taxpayers. If you’re requesting an extension, you’ll have until Oct. 16 to file.
Tax-saving ways to help pay for college — once your child starts attending
If you have a child or grandchild in college, there are tax breaks you may be able to claim after the child begins attending. For example, you can take the American Opportunity Tax Credit of up to $2,500 per student for the first four years of college, a 100% credit for the first $2,000 in tuition, fees, and books, and a 25% credit for the second $2,000. You can take a Lifetime Learning Credit of up to $2,000 per family for every additional year of college or graduate school — a 20% credit for up to $10,000 in tuition and fees. Both credits are phased out for married joint filers with modified adjusted gross income between $160,000 and $180,000, and for singles between $80,000 and $90,000.
Is now the time for your small business to launch a retirement plan?
Is it time for your small business to offer a retirement plan? The federal government is offering incentives for you to do so. The SECURE 2.0 Act, recently signed into law, enhances the small employer pension plan start-up cost tax credit. SECURE 2.0 makes the credit equal to the full amount of creditable plan start-up costs for employers with 50 or fewer employees, up to an annual cap. The previous 50% cost limit still applies to employers with 51 to 100 employees. Also, certain employer contributions for a plan’s first five years now may qualify for the credit, and the act fixes a technical glitch related to multiemployer plans. Contact us for more info.
Commercial Clean Vehicle Credit
For Businesses and tax-exempt organizations looking to purchase new commercial clean vehicles in 2023, you may qualify for the New Commercial Clean Vehicle Credit The credit is offered to Businesses and Tax-exempt organizations There is no limit to the number of credits used by the business The credit is non-refundable The credit can be carried […]
Secure 2.0 Update
SECURE 2.0 is an expansion of the SECURE Act of 2019. Its purpose is to improve retirement laws on saving accounts and increase retirement planning for Americans of all ages and all stages. While the Act was signed into law on December 29, 2022, the changes that will reflect vary over the coming years but […]
How the new SECURE 2.0 law may affect your business
If your small business has a retirement plan, and even if it doesn’t, you may see changes and benefits from a new law. Provisions in the SECURE 2.0 law will kick in over several years. For example, 401(k) plans will be required to automatically enroll employees when they become eligible, beginning with plan years after December 31, 2024. Employees will be permitted to opt out. Also in the new law are better retirement coverage for part-time workers; higher catch-up contribution limits for some 401(k) participants; provisions for small businesses with no retirement plan and much more. Contact us if you have any questions about how the new law affects your situation.
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