If your small business doesn’t offer its employees a retirement plan, you may want to consider a SIMPLE IRA. Offering a retirement plan can provide your business with valuable tax deductions and help you attract and retain employees. For a variety of reasons, a SIMPLE IRA can be a particularly appealing option for small businesses. The deadline for setting one up for this year is October 1, 2018. The basics SIMPLE stands for “savings incentive match plan for employees.” As the name implies, these plans are simple to set up and administer. Unlike 401(k) plans, SIMPLE IRAs don’t require annual filings or discrimination testing. SIMPLE IRAs are available to businesses with 100 or fewer employees. Employers must contribute and employees have the option to contribute. The contributions are pretax, and accounts can grow tax-deferred like a traditional IRA or 401(k) plan, with distributions taxed when taken in retirement. As the employer, you can choose from two contribution options: 1. Make a “nonelective” contribution equal to 2% of compensation for all eligible employees. You must make the contribution regardless of whether the employee contributes. This applies to compensation up to the annual limit of $275,000 for 2018 (annually adjusted for inflation). […] Details
Once an employer identifies a prospect for an open position and sets up an interview, another great challenge arises: How do you effectively use the interview to determine whether this person is right for your organization? One way is behavioral interviewing — a technique in which you frame your questions to candidates to elicit real-world stories from previous work experience. The answers your interviewees give can offer a glimpse of what could be. Examples to consider It’s important to structure your questions so that the candidate can’t reply with only a “yes” or “no” answer. In some cases, your “questions” might not literally be questions. For example, if you’re looking for a customer service rep, you could say, “Tell me about a time you’ve had to handle a dissatisfied customer.” Look for detailed responses that appear honest and heartfelt. Or let’s say the open position is for a manager or executive. You might ask something along the lines of, “Talk about a situation in which you were asked to do something or tackle a strategic objective that tested your personal values. How did you react? What was the ultimate result?” Listen for how the candidate describes his or her value […] Details
The S corporation business structure offers many advantages, including limited liability for owners and no double taxation (at least at the federal level). But not all businesses are eligible – and, with the new 21% flat income tax rate that now applies to C corporations, S corps may not be quite as attractive as they once were. Tax comparison The primary reason for electing S status is the combination of the limited liability of a corporation and the ability to pass corporate income, losses, deductions and credits through to shareholders. In other words, S corps generally avoid double taxation of corporate income — once at the corporate level and again when distributed to the shareholder. Instead, S corp tax items pass through to the shareholders’ personal returns and the shareholders pay tax at their individual income tax rates. But now that the C corp rate is only 21% and the top rate on qualified dividends remains at 20%, while the top individual rate is 37%, double taxation might be less of a concern. On the other hand, S corp owners may be able to take advantage of the new qualified business income (QBI) deduction, which can be equal to as […] Details
Unfortunately, it’s not uncommon for good employees to battle personal problems, such as substance dependence, financial or legal woes, or mental health issues. These struggles can negatively affect their productivity and the working environment around them. Employers can help by offering an employee assistance program (EAP). An EAP helps assist at-risk employees in finding the professional help they need. An employee who enrolls in the EAP may, for example, immediately be put in touch with a counselor or social worker. A common problem faced by many employers who establish an EAP is lack of participation. Whether because of lack of awareness of the program or the stigmas attached to certain personal issues, employees often don’t actively pursue enrollment. Here are four ways to encourage use: 1. Put it in writing — everywhere. Update educational materials, both electronic and print, to highlight EAP services and the issues they address. Use bold graphics and clear, easy-to-read text. Don’t limit a description of your EAP to your employee handbook. Mention it regularly in other employee communications, such as benefits materials and your company newsletter. 2. Offer electronic entry points. Maximize the use of online technology so employees can discreetly gather information and understanding […] Details
The Tax Cuts and Jobs Act (TCJA) liberalized the eligibility rules for using the cash method of accounting, making this method — which is simpler than the accrual method — available to more businesses. Now the IRS has provided procedures a small business taxpayer can use to obtain automatic consent to change its method of accounting under the TCJA. If you have the option to use either accounting method, it pays to consider whether switching methods would be beneficial. Cash vs. accrual Generally, cash-basis businesses recognize income when it’s received and deduct expenses when they’re paid. Accrual-basis businesses, on the other hand, recognize income when it’s earned and deduct expenses when they’re incurred, without regard to the timing of cash receipts or payments. In most cases, a business is permitted to use the cash method of accounting for tax purposes unless it’s: 1. Expressly prohibited from using the cash method, or 2. Expressly required to use the accrual method. Cash method advantages The cash method offers several advantages, including: Simplicity. It’s easier and cheaper to implement and maintain. Tax-planning flexibility. It offers greater flexibility to control the timing of income and deductible expenses. For example, it allows you to defer […] Details
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