Year End Small Business Tax Tips: Jeff Fleming

As you make your holiday shopping list, don’t forget about Uncle Sam.  It hardly seems like the time to think about business taxes, but planning before year end could save you a lot of money.  So, consider stuffing these tax tips in your holiday stocking: 

1. Defer Income:  Assuming your business is a cash basis taxpayer, any income that you can postpone until January 1st will defer the tax bill nearly thirteen months, whereas income received prior to December 31^st will be paid in March or April of the following year.  Postpone sending your invoices if your cash flow permits. 

2. Increase Expenses:  Buy any items your business may need in the near future to maximize the deductions for this year.  Pay for goods and services you foresee needing early in the new year, if cash flow permits. For instance, consider the following expense items:

   Ø      Office Supplies: Stock up on fax paper, printer cartridges, stationary, and other office items.

   Ø      Pay Bills Early: Pay monthly bills such as phone, cellular services, subscriptions, rent, insurance, and utilities before the new year.

          Ø      Equipment Purchases: If you will be buying new office equipment, consider purchasing now before year end.  You will have to decide whether an immediate write off is best or spread out the depreciation over years. Consult with an accountant to examine your circumstance and company structure to maximize your deductions.

          Ø      Other Items: This category includes: pre-payment of subscriptions, travel bookings, equipment repairs and maintenance.  

3.  Contribute to a Retirement Plan:  Make payments to your retirement plan or set one up before the year-end to reduce your income for this year.  There are many types of plans to choose from including a 401(k), Roth IRA, SIMPLE or SEP.  Contributions not only reduce your current income taxes, but earnings are also deferred. 

4.  Plan now for next year.  Establish your budget for next year while you are reviewing your financials for this year.  This strategy may not help you with this year’s taxes, but it will certainly help you set your course for next year. 

These year-end tax tips will apply differently to each business owner’s situation and accounting method. Take the time to review the best strategy with a professional advisor and make the most of the year-end for your business.

Are Your Workplace Policies Up-to-Date in This Electronic Age?

- Dealing with Cell Phones, Email and the Internet in the Workplace.

By C. Wayne Hippo, Jr. Esquire

Computers, whether through email or the internet, as well as cell phones and other technological breakthroughs have revolutionized the way many of us do business.  Many tasks are far easier and more efficient than they were even just ten years ago.  Our employees now enjoy laptops, PDA and cell phones that seem to have more and more features with each passing day.  The power of these devices has made our lives easier, and, it may be argued, has made the need to have a physical office almost obsolete.  In short, your employees are basically able to take your office and all of its information with them when they walk out the door each day.                                                                   

The benefits of the electronic age also bring new and often unexpected risks to business owners.  These include: 

-         Disclosure of confidential company and employee information.

-         Employees importing pornography into the workplace.

-         Employees disseminating pornography to others (often by forwarded email).

-         Decreased employee productivity due to personal internet and cell phone usage.

-         Increased likelihood of trademark or copyright infringement.

-         Privacy issues with employee monitoring 

as well as numerous other issues. 

You can increase employee productivity and reduce the chances of facing a lawsuit by updating your old employment policies, or even creating new ones, to address your company’s use of electronic technology in workplace.      

All employers should strongly consider implementing policies covering email, internet usage, electronic security, cell phone usage and employee monitoring. 

Well written email, or “electronic communication” policies will address issues such as appropriate levels of professionalism and decorum, prohibit disclosure of confidential information and trade secrets.  Email policies should also address a no tolerance stance on pornography and harassment.  Keep in mind; many employee email addresses contain your company name.  Do you want your company name on a piece of email that is disseminating pornography and which can be forwarded throughout the world within a matter of minutes? Your policy should also implement procedures to minimize the chances of your company’s computer systems being corrupted by computer viruses. 

As for internet usage, you company policy needs to prohibit the viewing, downloading, storage and dissemination of pornography.  The policy also needs to educate employees about their responsibilities toward copy written material they encounter on the internet.  Your confidentiality and trade secrets policies need to reviewed and often modified to include electronic communications.  Lastly, personal use issues need to be addressed in order to improve employee productivity. 

Cell phones also need to be addressed in company policies in order to better protect employers in the electronic society.  Remember an employer can be liable for the negligence of an employee engaged in the furtherance of the employee’s duties. So if your employee is driving while distracted on a cell phone and is involved in an accident, both the employee and your company could be held legally responsible.  Your cell phone policy should prohibit or greatly restrict personal calls on cell phones.  Such policies not only save money and increase efficiency, they also help eliminate discourteous cell phone behavior by employees in front of customers or vendors.   

Lastly, you need to consider what level of monitoring your company wishes to undertake with respect to all of these electronic communications.  Monitoring can, and often should be done in order to address quality control issues as well as to prevent harassment, discrimination, defamation and copyright infringement. While the law clearly allows employers a lot of room to monitor employees in the workplace in order to achieve a legitimate business purpose, there are boundaries that need to be honored and policies need to clearly define what type of monitoring will take place. 

At Hippo & Fleming Law Offices, we would be happy to meet with you and review your policies in order to make certain that you are addressing these areas and protecting your business in this electronic age.

Sexual Harassment – Do You Have A Policy And Prevention Program?

When Congress enacted Title VII of the Civil Rights Act of 1964, it did not define sexual harassment as a form of discrimination. The term “sexual harassment” is not even mentioned in the statute or the legislative history. 

Nevertheless, the Equal Employment Opportunity Commission (EEOC) issued guidelines in 1980 declaring sexual harassment to be a form of sex discrimination in violation of Title VII. These guidelines (i) established criteria for determining when unwelcome conduct of a sexual nature constitutes sexual harassment, (ii) defined the circumstances under which an employer may be held liable, and (iii) suggested affirmative steps an employer should take to prevent sexual harassment. 

The United States Supreme Court gave credence to the EEOC’s position in 1986 and formally construed Title VII prohibitions against sex discrimination to include sexual harassment in the case of Meritor Savings Bank v. Vinson. This landmark decision set off a flood of litigation that continues to this day by enabling victims of sexual harassment to sue their employers for monetary damages. 

Does your business or organization have a policy and prevention program regarding sexual harassment? The EEOC reports that over the last seven years, it has received approximately 14,000 complaints of sexual harassment annually. These cases have resulted in monetary benefits of close to fifty million dollars ($50,000,000) annually. This amount does not include damages obtained through litigation. 

Sexual harassment is serious business and if not understood by those who manage employees, it can result in serious consequences. 

The bottom line is that if you don’t have a sexual harassment prevention and training program and if you don’t have a clear policy that is communicated to and understood by all employees, now is the time to take action by contacting our law firm for assistance in preparing and implementing an effective policy.

Set Up a 2007 Business Retirement Plan Now!

Did you know…

                       

• That retirement can last for 30 years or more?
• That a common rule to follow is that retirees will need up to 80 percent of their annual income today to retire comfortably?
• That the average amount paid monthly by the Social Security Administration in the form of a

benefit is $962.70[1]?

There is still time to establish a retirement plan before 2007 ends. A retirement plan allows you to invest for the future while providing many benefits for you, your business and your employees. As a bonus, you and your employees may receive significant tax advantages and other incentives.

Benefits for Your Business:

• Employer contributions made on behalf of eligible employees are tax-deductible.
• Businesses may receive a tax credit of 50 percent on the first $1,000 in administrative and/or education costs.
• Assets in the plan grow tax-deferred.
• A retirement plan can attract and help retain good employees, consequently reducing your cost of training new employees.

Employee Benefits:

• Federal income tax on contributions in the retirement plan is deferred until distributed.
• Investment earnings that accumulate in the plan are not taxed until distributed.
• Retirement assets are eligible for rollover to other employer plans.
• Contributions can be made automatically through payroll deductions.
• A tax savers credit up to 50 percent is available to individuals within certain income limits.
• In many cases, long-term retirement goals are more likely to be met through early and full participation in a retirement plan.
• Qualified contributions reduce employees’ taxable earned income.

If you need any assistance please do not hesitate to contact our law firm.

 

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[1] U.S. Social Security Administration Office

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[1] U.S. Social Security Administration Office

Starting a Business?- The IRS has a new process to obtain an EIN

           

         New businesses are no longer required to file a Form SS-4 with the Internal Revenue Service to obtain an Employer Identification Number (EIN).  Instead, you may complete the more user-friendly, interview-style application found on the IRS website.  By completing the online application, you will receive an EIN immediately to use for the purposes of opening a bank statements, applying for business licenses, and filing a tax return by mail.

             Some people cannot use the new online application.  If you are a third party filing the application on behalf of the business owner, the business owner must first complete a Form SS-4 and the third party must keep the application on file.  Single-member LLC’s with employees where the owner is an individual who does not already have a sole proprietor EIN cannot use the new application.  Likewise, if the business was incorporated outside the United States, the new application is not available.             If you fall into any of the excluded categories, or are a traditionalist, you may still request an EIN by mailing a completed Form SS-4 to the IRS.  To access the online application, click here or contact our law firm for assistance.

New Supreme Court Term

The Supreme Court will begin its new term on October 1, and employers should pay close attention to the docket.  This year, the Court will hear several employment law cases, and in particular several ADEA matters. 

The Age Discrimination in Employment Act of 1967 protects workers age 40 and over from employment-related discrimination.  As your workforce ages and new generations start working (and supervising), make sure you understand at least the basics of the ADEA.  A great place to start is the Age Discrimination part of the EEOC website at
http://www.eeoc.gov/types/age.html
.

Drug-Free Workplace Advisor from the Department of Labor

Ronald Reagan has been quoted as saying: “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’”

The truth is that both the state and federal governments offer a wealth of free information, education, and tools for businesses of all sizes.

Last week we wrote about the Department of Labor’s Working Partners program to help businesses fight drug and alcohol abuse and the associated costs in their workplace.  The Working Partners website offers help to businesses of all sizes and in various stages of dealing with workplace substance abuse.

If you are in the early stages of developing a strategy to fight workplace substance abuse issues (or haven’t started yet), the Working Partners site has an area just for you.  The Drug-Free Workplace Advisor is an interactive tool that helps businesses build tailored drug-free workplace policies and programs and provides information about coverage and requirements of the Drug-Free Workplace Act of 1988.  The Program Builder offers tools to help business owners focus on Policy Development, Supervisor Training, Employee Education, Employee Assistance Programs, and Drug Testing Programs.