• Spring Cleaning: Have You Considered the Benefits for Your Business?
    “It was one of those March days when the sun shines hot and the wind blows cold: when it is summer in the light, and winter in the shade,” said Charles Dickens. It’s the start of Spring and a time that’s ideal for cleaning things in your business. It’s a subject I write on just about every year because I’m usually in the thick of my own Spring cleaning. Compelling reasons for Spring cleaning You may think that this activity is just another tedious chore. But if you keep in mind the benefits for your business to be derived, you’ll be highly motivated to proceed. For example, Staples has offered these reasons for maintaining a clean workspace: Higher productivity and accuracy Fewer injuries Lower absenteeism Accurate supply inventories Proper document and storage retention Cleaning up systematically Spring cleaning for a business isn’t confined to sweeping out dirt and perhaps adding a coat of paint on your walls. It’s a systematic way of checking each aspect of your business. Your customers --  How are your customers feeling about you? Consider asking them to take a survey so you can learn what they like or dislike about your company. Review your customer lists to remove inactive ones. Your employees -- It’s not too early to begin thinking about their summer vacations. You may want to start scheduling vacation time now. Your marketing -- Review your marketing materials to make sure everything is up to date. If you have inventory that hasn’t moved in a while, consider having a Spring sales event or donating items to charity. Your technology -- Delete unneeded email messages and move those you want to keep into folders for easy access. Consider moving projects from your desktop into the cloud. Final thought on Spring cleaning Amelia Earhart said: “The most effective way to do it, is to do it.” Or as Nike’s tagline says: “Just do it.” The post Spring Cleaning: Have You Considered the Benefits for Your Business? appeared first on Barbara Weltman. Read more »
  • How to Craft a Good Company Driving Policy
    It seems that today, just about everything involving your business needs a special policy. This includes driving on company business. Having a vehicle and drivers’ policy for your staff can enhance employee safety and avoid costly accidents. Here are essential considerations for crafting a good company driving policy.   Basic rules Because the company may be financially liable for accidents, whether the vehicle is owned or leased by the company or belongs to the employee driving on company business (see this TimeSheets article on point), be sure to have a solid vehicle and drivers policy. Your policy should reiterate to employees what is common sense: Obey traffic laws, making allowances for weather and traffic conditions Wear seatbelts Do not drive when impaired by medication, alcohol, or drugs Report any mechanical difficulties in a company vehicle (e.g., low tire pressure) Maintain a valid driver’s license Following up on vehicle recalls The Department of Transportation has released a booklet on automated driving systems, which shows that self-driving vehicles aren’t science fiction anymore. Obviously, when self-driving cars and trucks come into use, you’ll need to adapt your policy. Distracted driving OSHA suggests that you make it company policy to bar actions that contribute to distracted driving (e.g., texting while driving). Did you know that “reaction time is delayed for a driver talking on a cell phone as much as it is for a driver who is legally drunk”? Actions following an accident If an employee is involved in a motor vehicle accident while driving on company business (whether in a company vehicle or a personal one), your policy should dictate the protocol for the employee to follow. This can include: Remaining at the scene of the accident for police to arrive Completing an accident report Having drug or alcohol analysis immediately following the incident Furnishing a copy of the report to the company Enforcement Make sure employees understand your driving policy. You can print it out and have each employee sign it. Also be sure they understand the consequences for violating the policy. This can include disciplinary action and up to termination. Final thought You can find a number of company vehicle and driver safety policies online that you can adapt for your use. Here’s one posted by an insurance agent. The post How to Craft a Good Company Driving Policy appeared first on Barbara Weltman. Read more »
  • Time Wasters: Identifying Them and Finding Potential Solutions
    The last time you had to deal with a utility, how much time did you have to spend on resolving an issue? Recently I had to change carriers and the matter should have taken only a few minutes. It wound up taking hours and hours, wasting more than half a work day (not to mention the aggravation involved). This prompted me to think about all of the time wasters we face in business and what we could do about them. Various sources have found that employees waste hours each work day, and it’s not because they’re lazy; there are time wasters eating up precious work time. Think of what this means to your bottom line! Meetings Meetings may be inevitable, but are often identified as big time wasters. This doesn’t have to be so. Solution: If you must hold meetings, make them effective. Email How much time do you devote each day to reading and responding to email? It’s been suggested that the time spent on work email each year is equal to the time spend climbing Mount Everest twice! In fact, a worker spends an estimated 28% of the workweek managing email. Much of this is from internal communications among co-workers and managers. Solutions: There are many suggested ways to handle email and minimize the time wasted. For example, some suggest NOT checking first thing each day but devoting that initial time to completing a necessary task. Personally, I check email first to see if there’s anything I need to address immediately and mark emails I want to get back to later in the day. Choose the option that works better for you. Internal email can be curtailed and wasted time eliminated by using social technologies. But McKinsey & Company said “To reap the full benefit of social technologies, organizations must transform their structures, processes, and cultures: they will need to become more open and nonhierarchical and to create a culture of trust.” Disorganization If you need to find a document, sales slip, or a copy of any other thing but have to search through clutter, you’ll waste a lot of time. Solutions:  Just declutter (obviously easier said than done for many people). Keep your desk organized, use a filing system that’s easy to access, create folders for email, and clear out or relocate old computer files. One of the best tools these days is scanning receipts and other written materials… Read more »
  • 10 Tax-Related Questions About a Company Vehicle
    Most businesses use vehicles—cars, trucks, or vans—to conduct their activities. For example, on Schedule Cs for self-employed individuals in 2015 (the most recent year for statistics), deductions for car and truck expenses was nearly $90 billion! There are numerous tax-related issues for using vehicles in your business. Here are 10 of them: 1. Should you buy or lease the vehicle? The decision involves not only tax considerations, but also financial ones. Leasing usually allows you to use a more expensive vehicle for less cost than buying. But if the vehicle is going to be driven more than 15,000 miles a year, leasing may not be practical. Taxwise, the full lease cost is deductible (minus an “inclusion amount” for expensive vehicles). In contrast, depreciation for a vehicle that’s purchased may be limited to a set dollar amount (e.g., dollar caps on depreciation apply when vehicles purchased in 2018 exceed $50,000). 2. Who should own it? Should a business vehicle be owned by the business or an owner? In a corporate setting, the corporation usually should have title to the vehicle because the owner cannot tax any deduction for employee business expenses (e.g., vehicle-related costs) through 2025. For a partnership or LLC, a different answer may apply; owners here may be able to take their unreimbursed costs as a write-off on Schedule E of Form 1040. But business-owned vehicles may have higher insurance costs. 3. Which vehicle should you get? Obviously, you need to choose the type of vehicle suited to its use in the business. For example, a tradesperson may want a pickup or van to handle tools for the job. Special tax rules apply to heavy SUVs (those weighing more than 6,000 pounds but not more than 14,000 pounds). These write-off rules permit the cost to be fully deducted in the first year, regardless of the cost of the vehicle. Consider that a plug-in electric powered vehicle may entitle you to a federal tax credit for the purchase. However, the amount of the credit for Teslas and GMs is being phased out. 4. Should you use the IRS mileage allowance? In figuring the tax deduction for use of a business vehicle, you can deduct the actual expenses or use an IRS-set mileage rate. The IRS rate for 2019 is 58¢ per mile. Which option is better depends on factors such as the cost of the vehicle, the miles driven, and… Read more »
  • Developing Leadership Qualities -- Listening and Communicating
    One of the top complaints from employees is that their leaders do not communicate well. They don’t give clear directions or offer constructive criticism. Some refuse to talk to subordinates or even know their names. If you want to be a good leader, you need to learn to listen and communicate more effectively. As Lee Iacocca said: “You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.” Communication skills Success has identified 6 key communication skills to master in order to be a better leader: Know yourself (i.e., self-awareness) Know your audience so you can adapt how you communicate Be direct, specific, and clear Pay attention to nonverbal communication Listen more than you speak (see below) Be positive and respectful Listening Listening is a skill, and to be a good leader, you have to master this skill. This involves listening to what is said as well as what hasn’t been said. An article a few years ago in Psychology Today listed the 7 elements to better listening: Comprehend what’s said Notice important things not said Recognize changes in tone and body language Consciously decide whether to add input Accurately determine whether to think ahead Think before responding Know when it’s wise to interrupt Fast Company points out that most of us are bad listeners, but can learn to be better. This article reminds us that when listening we must strive to get the big picture. Handling conflict Your communication skills are in high demand whenever there is conflict. This can involve conflict with employees, customers, vendors, or others (e.g., your telephone provider). Obviously, the first step in resolving conflict is to listen effectively and understand what the conflict is about. Another aspect of handling conflict is to ask the right questions in order to undercover the problem (which isn’t always what has been stated) and what it will take to resolve. Final thought Keep this in mind: “The art of communication is the language of leadership.” James Humes, author and former presidential speechwriter. This is the third in a 12-part series on Developing Leadership Qualities. Last month’s blog concerned confidence, courage, and inspiration. Next month’s blog on developing leadership qualities addresses integrity and honesty.   The post Developing Leadership Qualities -- Listening and Communicating appeared first on Barbara Weltman. Read more »
  • Double Dip Tax Breaks for R&D
    If your business conducts research and development (R&D), you may be eligible for certain tax breaks. This is so whether you’re creating a new product or merely working on new internal-use software to run things better within your company. These tax breaks are significant and greatly reduce the financial cost of your R&D activities. Expensing of R&D costs From a tax perspective, research and development (R&D) costs can be treated in one of 3 ways: Deduct all costs currently Elect to treat the costs as deferred expenses, amortizing them over a period of at least 60 months Elect to amortize them over 10 years beginning in the year the costs are paid or incurred You’d think that taking deductions upfront would be the best alternative. However, a company may prefer to spread them out to better offset future income resulting from R&D efforts. And there are alternative minimum tax considerations for owners of businesses that are not C corporations. What are R&D costs? R&D costs are those in the experimental or laboratory sense (i.e., they are for activities intended to discover information that would eliminate uncertainty concerning the development or improvement of a product).  Uncertainty exists if the information available to the taxpayer does not establish the capability or method for developing or improving the product or the appropriate design of the product. The amount of qualified research expenses that can be taken into account for the deduction is reduced by the amount of any research credit (discussed next). R&D costs don’t include: The ordinary testing or inspection of materials or products for quality control; Efficiency surveys; Management studies; Consumer surveys; Advertising or promotions; The acquisition of another’s patent, model, production or process; or Research in connection with literary, historical, or similar projects. Note: Starting in 2022, the option of taking an immediate write-off for R&D costs no longer applies. Instead, these costs will have to be amortized (deducted ratably) over 5 years (15 years for foreign research expenditures). Tax credit for R&D costs In addition to deductions for R&D, businesses may also qualify for a federal tax credit. In 2013 (the most recent year for statistics), this credit totaled $11.3 billion in tax savings for businesses. And use of the credit isn’t limited to large drug companies or multinational corporations; small businesses are at the heart of innovation. According to the SBA , 4% of small businesses are in… Read more »
  • COBRA and Mini-COBRA: What You Need to Know
    If you have a group health plan in your company, you better know about a federal law called the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA. This law requires employers that have a group medical plan and 20 or more employees who work more than 50% of business days to extend an offer for coverage after a qualifying event (e.g., termination of employment for any reason other than gross misconduct). The majority of states have enacted mini-COBRA laws to impose a similar requirement on small employers (those with fewer than 20 employees). Collectively these are referred to as health continuation benefits. What’s your obligation? COBRA Under COBRA, if you have (1) 20 or more employees and (2) a group health plan, then when a qualifying event occurs, employees, their spouses, or dependents, must be given notice of their eligibility to continue in the group plan. Employers do not have to pay for this coverage; those who choose to continue in the group plan pay their premiums, plus up to 2% for an administrative charge. COBRA provides for continuation in the group plan for 18 months in most cases. But this is conditioned on the individual’s continued timely payment of premiums (plus the administrative fee). Many large employers use a third-party administrator to handle COBRA arrangements. Mini-COBRA Most states now go beyond the federal law by requiring smaller employers to act similarly to federal law. Check whether your state has a mini-COBRA law. For example, Arizona’s mini-COBRA law became effective January 1, 2019. Check on the permissible administrative fee that can be charged. While federal law caps this at 2%, states may allow a higher rate (e.g., 5% in Arizona). And some states bar any administrative fee (e.g., North Dakota doesn’t allow one in the case of termination). Check on required length of continuation coverage. Most mini-COBRA laws mimic federal continuation coverage (i.e., generally for 18 months; longer for disability). But some have shorter periods (e.g., the District of Columbia’s and Georgia’s period runs for 3 months; Delaware’s period runs for 9 months; Maine’s and Virginia’s periods are 12 months). Notice requirements If you are subject to COBRA, or mini-COBRA, be sure to give required notice to employees. Federal law sets the notice period at 30 days following a qualifying event. You can use a COBRA Model General Notice form (find it under “regulations”) to give this required notice.… Read more »
  • Smart Speakers in Your Business
    Maybe you have Alexa or other digital helper in your home. There are now many choices from Amazon, Apple, Google, and more. PC Magazine listed the best smart speakers for 2019. But have you considered whether such devices can be helpful in your business? A look at the future and smart speakers According to Computerworld, “voice technology will re-shape business.” Consider these facts: 20% of all web searches are now done by voice (and it’s expected that 30% of searches within 2 years will be done without a screen) Three-quarters of businesses are going to invest in customer-facing voice systems using Cortana, Google Assistant, or Alexa; more will use IBM’s Watson, Apple’s Siri, and Samsung’s Bixby. Voice-based note-taking frees meeting participants to listen. Customers don’t have to be trained on voice technology. Expect manufacturing and distribution centers using keyboards to convert to voice technology, enabling workers to accomplish more What to do now concerning smart speakers in your business Review what tasks within your company could benefit from the addition of voice technology. Is it interacting with customers? Training employees? Explaining their benefits? Enabling employees to work more efficiently? Learn what options are currently on the market. More are debuting all the time. For example, Infor launched Coleman-AI voice-activated digital assistant in October 2018. Budget for voice technology. Determine whether to invest in it now, and how much. Work with tech experts to determine which devices best suit your needs, and your budget. Final thought As Anne Morrow Lindbergh said: “The wave of the future is coming and there is no fighting it.” Just go with the flow! The post Smart Speakers in Your Business appeared first on Barbara Weltman. Read more »
  • Unraveling Conflicting Tax Rules for Active versus Passive Business Owners
    It is commonly accepted wisdom that tax rules are complicated. This belief is well supported by the conflicting tax rules that apply to business owners, depending on their participation in the business. Let me try to make some sense of these conflicting rules. Overview Business owners may be active in their business. This means they are hands-on and are involved in day-to-day activities. Other business owners may be mere investors, adding their capital but not their labor. The following are various rules that take into account whether owners do or do not work in their businesses. Qualified business income deduction The 20% deduction for qualified business income (QBI) applies to owners of pass-through entities. There is no requirement that they do or do not participate in the daily operations of the business in order to claim this personal deduction based on their share of business income. If they participate (e.g., they are an S corporation shareholder who receives a salary), this factors into the QBI determination. For example, salary to an S corporation shareholder is not an item allowed in determining QBI, but the salary does count as wages for purposes of W-2 wages used in the formula for the QBI deduction. Net investment income deduction The 3.8% net investment income (NII) tax depends entirely on an owner’s participation in the business. Only income from a business in which the taxpayer does not materially participate is treated as investment income and potentially subject to the NII tax. The determination of material participation is made using the passive activity loss rules (below). Passive activity loss rules Under the passive activity loss rules, losses from a business activity in which an owner does not materially participate are not currently deductible (sorry for the double negative but it’s the best way to explain this limitation). Suspended losses can be carried forward and used to offset passive activity income in the future. The determination of whether an owner is passive or active is based on 7 tests. An owner is treated as materially participating (i.e., active) and is exempt from the passive activity loss rules if he or she meets any of these tests: The owner participated in the activity for more than 500 hours. The owner’s participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who didn’t own any interest in… Read more »
  • Home-Based Employees: A Work Arrangement that Can Work
    When the polar vortex shut down offices and various government activities (including postal delivery in some mid-West states in late January), it prompted some businesses to allow employees to work from home. If it worked during this bad weather, couldn’t it work just about any time? It’s clear that technology has enabled employees to work remotely. The question to answer is whether this is a good idea and, if so, how to make it work. A business decision Some businesses…retail stores, restaurants, hair salons…can’t offer employees the opportunity to work from their homes. But many other types of businesses can. Is this advisable? Global Workplace Analytics has statistics on the costs and benefits of “agile work strategies.” For example, statistics show that two-thirds of people want to work from home. The following are some highlights that I’ve extrapolated from this source and others. Pros for allowing remote work arrangements Employee preference. In today’s tight job market, permitted employees to work from home on a full-time basis or periodically may be a way to retain qualified workers. Many (although not all) employees like this work arrangement because it saves on their work-related expenses, enables them to organize their work-life balance, and likely reduces their stress. Cost savings. To the extent you don’t have to provide space for employees on the premises, you can reduce your required square footage (perhaps subletting what you already lease if this is permissible). Finding talent. If you don’t need workers on site, you have access to a wider pool of workers and stand a better chance of hiring exactly who you need. Environmental concerns. The fact that employees don’t have to commute is a benefit to the environment. Cons for allowing remote work arrangements Reduced productivity. There is a concern that employees working remotely may be distracted by personal matters and not devote complete attention to work. Challenges with collaboration. In today’s business environment where there’s an emphasis on team work, seeing that this happens with remote workers presents problems. Increased administrative issues. Permitting employees to work remotely may involve payroll issues if they are based in another state. And companies with workers in another state also need to address workers compensation and other insurance matters. Effectively managing remote workers Take it from someone who’s worked from home for more than 35 years, some of which time was as a remote employee…working from home can work… Read more »
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