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.

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.

End Work Permit Worries

Summer is right around the corner!  For many businesses, that means beefing up their workforce with high school students.  While there are many benefits for both businesses AND their young employees, it’s essential that business owners know and understand the rules that regulate employment of minors.

Below are some frequently asked questions regarding one aspect of employing minors in Pennsylvania- work permits.

  Who is required to have a work permit?

Generally, every employee under the age of 18 needs to obtain a work permit before their first day on the job.

. . . 

My prospective employee says he is 17 and doesn’t need a work permit.  Is that true?

There is an exception to the general Pennsylvania regulations for “Emancipated Minors.”  These minors are at least 17 years old and have either graduated from high school or are no longer attending school and have reached their academic potential as determined by the school district.  In the later case, it’s advisable to ask your prospective employee to provide you with verifying documentation from the school district.

. . .

I’ve seen yellow permits, blue permits, and now a prospective employee has handed me a white permit.  Why all the different colors?

First and foremost – In Pennsylvania, original work permits are printed on either blue or yellow paper.  If your minor prospective employee hands you a white paper, it is most likely the application for the work permit.  Fill out the “employer” section indicating the type of work the minor will be doing and the hours anticipated.  After you give the application back to the prospective employee, they still must complete the application process.  DO NOT allow them to work before you have the actual, official permit!

The permit employers see most is the blue “Transferable” permit.  School districts issues these to 16 and 17 year olds.  These permits can transfer to a new employer if the minor employee changes jobs.

The yellow “Vacation” permit is issued to 14 and 15 year old students.  This certificate is employer-specific, so it’s important to make sure your company’s name is listed on the permit.  If a minor employee with a yellow permit obtains a different job, they must complete the application process for a new permit specific to the new employer.  The yellow permit is good until the employee turns 18, so if they stay with the same employer throughout high school no other certificate will be needed, although the school district will issue a blue transferable permit when the employee turns 16 if the student would like.

. . .

My minor employee’s parent wrote a note allowing us to schedule her child more hours than the law allows.  That makes it ok, right?

Nope.   The Pennsylvania Child Labor Law does not allow for a parental waiver. 

. . .

What about homeschooled children?

The U.S. Department of Labor has ruled that home schooling is not grounds for an exception to the federal Fair Labor Standards Act (FLSA) and thus all work by 14- and 15-year-olds is prohibited during the time the local public school is in session.  Since the FLSA does not cover 16-and 17-year-olds, the Pennsylvania Department of Education has ruled that home schooled students who are 16 and 17 may work during the time school is in session as long as they do not work more than 6 consecutive days in one week, or work more than 8 hours per day or more than 44 hours per week.   Those students may not work after midnight (Sunday through Thursday) during the school year. It would be helpful if the parent provides the employer with written verification that the student is being schooled at home.  (information from PA Dept of Education)

. . .

HOW CAN HIPPO & FLEMING LAW OFFICES HELP?

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  • Our staff can sit down either one on one or with all of your supervisors and review the need-to-know provisions of the PA Child Labor Law.  We can customize a training session to meet your audience and time restraint needs.

  • Our staff can review and revise your existing policies and procedures to ensure that you are complying with all aspects of the PA Child Labor Law.

 

Although employing high school students can be extremely rewarding for all involved.  It’s definitely worth your time as a business owner or manager to brush up on ALL areas of the Pennsylvania Child Labor Law, from hour restrictions, to recordkeeping requirements, and meal break rules.

For more information, visit the PA  Department of Education website, or the PA Department of Labor and Industry website.