Businesses with employees who receive tips may be eligible for a tax credit
Are you an employer who owns a business where tipping is customary for providing food and beverages? You may qualify for a valuable tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. You claim the credit as part of the general business credit. It’s equal to the employer’s share of FICA taxes paid on tip income in excess of what’s needed to bring your employee’s wages up to $5.15 per hour. In other words, no credit is available to the extent the tip income just brings the employee up to $5.15 per hour, calculated monthly. Other rules may apply. If you have any questions, don’t hesitate to contact us.
Business owners, do you need to step up your internal communications game?
Whether because of “the Great Resignation” or continuing pandemic-related anxieties, the labor market remains tight. This is putting pressure on business owners trying to keep and hire workers. One element that can make or break your employer brand is internal communications. Do you need to step up your game? Start by listening. Solicit employee feedback through a suggestion box or anonymous online tool. Hold town hall meetings in which you directly answer questions. Visit different departments or facilities to stay visible. Consider shadowing various employees for a day to learn about their jobs. Above all, manage your internal profile like the critical asset that it is.
Are you eligible for a medical expense tax deduction?
You may pay out a bundle in out-of-pocket medical costs. But can you deduct them on your tax return? It’s possible but not easy. Medical expenses can be deducted only to the extent unreimbursed costs exceed 7.5% of your adjusted gross income. Plus, medical expenses are deductible only if you itemize, which means that your itemized deductions must exceed your standard deduction. Eligible costs include hospital and doctor bills and many others. For example, they include: health insurance premiums, eyeglasses, hearing aids, most dental work, prescriptions, smoking-cessation programs and some costs of transportation to get to medical appointments. We can assess if you qualify for a deduction.
Defer tax with a like-kind exchange
Do you want to sell commercial or investment real estate that has appreciated significantly? One way to defer a tax bill on the gain is with a Section 1031 “like-kind” exchange where you exchange the property rather than sell it. With real estate prices up in many markets (and higher resulting tax bills), the like-kind exchange strategy is attractive. A like-kind exchange is any exchange of real property held for investment or for productive use in your trade or business for like-kind investment, trade or business real property. Like-kind exchanges can be a great tax-deferred way to dispose of real property. Contact us if you have questions or would like to discuss the strategy further.
Commission fraud: When salespeople get paid more than they’ve earned
Many employees receive part of their compensation from sales-related commissions. Unfortunately, some of these workers occasionally may be tempted to abuse the commission system by falsifying sales or rates. Generally, this takes one of three forms: 1) invented sales, 2) overstated sales and 3) manipulated commission rates. This last scheme often involves the collusion of accounting employees, which makes segregating duties essential. Companies also should analyze commission and sales data for outliers, monitor employee emails and set realistic and achievable sales goals. Contact us for help.
Review your strategic plan … and look ahead
The end of one year and the beginning of another is an optimal time for business owners to look back on the preceding 12 calendar months and ask a deceptively simple question: How’d we do? Even if your strategic plan isn’t a detailed document replete with spreadsheets and pie charts, you can still review actual performance against it by assessing three areas: 1) HR, specifically, how has “the Great Resignation” affected your turnover rate? 2) Sales and marketing, for example, did you meet monthly sales goals and get good ROI on marketing efforts? 3) Production, for instance, is product quality slipping or customer satisfaction dropping? Contact us for help with strategic planning.
Gig workers should understand their tax obligations
The number of people engaged in the “gig” or sharing economy keeps growing. In an Aug. 2021 survey, the Pew Research Center found that 16% of Americans have earned money at some time through online gig platforms. Generally, if you receive income from being a rideshare driver, delivering food or providing other services, it’s taxable. That’s true even if the income comes from a side job and you don’t receive a 1099-NEC or other form reporting the money you made. You may need to make quarterly estimated tax payments because the income isn’t subject to withholding. Your business expenses may be deductible on your tax return, subject to the normal tax limits and rules. Contact us to learn more.
Will the standard business mileage rate go up in 2022? Yes!
The optional standard mileage rate used to calculate the deductible cost of operating an automobile for business will be going up in 2022 by 2.5 cents per mile. The IRS recently announced that the cents-per-mile rate for the business use of a car, van, pickup or panel truck will be 58.5 cents. The increased tax deduction partly reflects the price of gas. On Dec. 21, the national average price of a gallon of regular gas was $3.29, compared with $2.22 a year earlier, according to AAA Gas Prices. This mileage rate is useful if you don’t want to keep track of actual vehicle-related expenses. But you still must record certain information, such as the mileage, date and destination for each trip.
The fundamentals of a solid salesperson
As your business heads into 2022, think about whether your sales staff is up to the challenge of meeting the strategic objectives you have set. Does each member have the fundamentals of a solid salesperson? For starters, look at whether someone is a natural or needs additional or specialized training. A sales aptitude test can help. Identify the most valuable sales tactics of your top sellers and share those approaches with the rest of the staff through ongoing training. Finally, sales is a results-oriented profession. Assess your staffers’ respective success using carefully chosen metrics. We can help you set sales goals and accurately measure progress throughout the year.
There’s a deduction for student loan interest … but do you qualify for it?
If you’re paying back college loans for yourself or your children, you may wonder if you can deduct the interest you pay on the loans. The answer is yes, subject to certain limits. The maximum amount of student loan interest you can deduct each year is $2,500. Unfortunately, the deduction is phased out if your […]
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