Talent Attraction: Hiring The Best Candidates
Feb 25, 2016
How can your company attract and retain top employees? It’s not always easy, especially for small businesses. Having a streamlined hiring process and ensuring that your salaries and benefits package are comparable to other, similar companies in your area can help make your company an attractive destination for high performers. Here are some pointers to jump-start your thinking.
Simplify the process
Make sure job responsibilities are clearly described when posting your openings. Candidates should be able to easily ascertain if they have the appropriate qualifications for a position. Also describe any documentation candidates may need to submit with their applications.
Be open and professional
Let candidates know early in the process, preferably in the job posting or during interviews, how much the position pays. Top candidates appreciate candor about such matters. Treat candidates professionally during every stage of the process — it sends a strong signal about your company’s culture.
Evaluate your benefits package
Compensation and benefits are important factors when it comes to attracting and retaining top talent. Salaries should be in line with what other companies in your region pay for specific occupations. Attitudes toward health and retirement benefits can influence employment choices and how committed and engaged employees are after they are hired. Your company will have a leg up on attracting and retaining the employees it needs to succeed and gain a competitive advantage if it can offer the benefit options top performers want.
If you are unsure whether your current benefits package is competitive, please contact your financial professional. An analysis of your current retirement and insurance benefits will help you identify areas that may need to be improved if you are to attract and retain the best employees.
Categories: Other Resources
Student Loan Tax Deductions
Feb 23, 2016
If you are paying interest on one or more student loans, you may be able to deduct up to $2,500 of the interest annually. The deduction is “above the line,” so you don’t need to itemize to claim it.
General Rules
To qualify, the debt must have been incurred by you, your spouse, or your dependent (as of the time the debt was incurred) for the sole purpose of paying tuition, room and board, and related expenses for post-high-school education. Certain post-graduate and vocational programs also qualify. The student must be a degree candidate carrying at least half the normal full-time course load.
The person claiming the deduction must be legally obligated to make the interest payments and not be another taxpayer’s dependent. Married couples must file jointly to claim the deduction. For 2016, the deduction is phased out if a couple’s adjusted gross income is between $130,000 and $160,000 ($65,000 and $80,000 for single filers).
Home Equity Loans
Taxpayers who choose to use a home equity loan for higher education expenses also may be able to deduct the interest on their loans. Generally, interest on a home equity loan may qualify for an itemized deduction if the underlying debt doesn’t exceed $100,000 ($50,000 for a married taxpayer filing separately) and all mortgages on the home do not exceed the home’s fair market value.
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The Flip Side of Low Gas Prices
Feb 18, 2016
The good news: gas prices, following a drop in the price of oil, have steadily declined over the last several months. In many places, gas is now well below $2.00 per gallon. No doubt, we all enjoy some relief every time we fill up, but it is worth considering the flip side to low gas prices.
The not-quite-as-good news: reduced standard mileage rates from the Internal Revenue Service. Gas prices are one of many components of the formula the IRS uses to determine the standard mileage rates for a given year. So, if gas prices fall, the mileage rates for business use of vehicles will also decrease. The IRS offers a standard mileage rate as a simplified alternative to tracking actual vehicle expenses.
The IRS recently issued Notice 2016-1 which outlines the rates for 2016:
- For the business use of a car, pickup truck, panel truck, or van, the rate for 2016 will be 54 cents per mile, down 3.5 cents from the 2015 rate of 57.5 cents per mile
- Mileage incurred for medical or moving purposes may be deducted at 19 cents per mile, four cents lower than for 2015
- Miles driven for service to a charitable organization are still deductible at 14 cents per mile, unchanged from 2015
- The depreciation component of the standard mileage rate also remains unchanged for 2016 at 24 cents per mile.
If you use the standard mileage rate, you are not allowed to claim additional deductions for actual costs of owning the vehicle, including depreciation, lease payments, repairs, maintenance, insurance, gas, oil, tires, and registration fees.
Also, you are not permitted to use the standard mileage rate if:
- You use 5 or more cars at the same time in your business
- You claimed a depreciation deduction for the care using any method other than straight-line depreciation
- You claimed a Section 179 deduction on the car
- You claimed the special depreciation allowance on the car
As always, be sure to keep track of your mileage, and check with your tax advisor to figure out the best ways to deduct your vehicle expenses.
By: Jake Freppel, CPA
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Chart of Accounts: Accuracy Vs. Comparability
Feb 17, 2016
I recently met with a business owner who is having issues determining his cash flow. He is worried if he pays a payable for $8,000 will he end up $8,000 short the following weeks payroll. He does not have a lot of comfort or tools to aid in his decision making. I offered the idea of a cash flow model which could help relieve some of his concerns. Typically, a cash flow model is an Excel spreadsheet built specifically to a client’s needs. It can function as a budget or a tool to aid in cash flow and overall business decisions. In this case, I suggested we would use the model as a budget and cash flow aid.
This client has several divisions within the business and in order to track each, he has created separate accounts. He admitted needing additional accounts to track each division, as a result he is constantly changing his chart of accounts. In fact, just as I began creating the model, he asked me to hold off change while he modified the chart of accounts. In my opinion, the use of separate accounts for each division is not nearly as useful as other alternatives. Instead, it proves to be difficult and time-consuming to run an income statement detailing specific accounts. Such a process would involve creating several filters, or manipulating data in Excel. If he was to utilize classes or another identifiable method for each category, he could run an income statement by class. This would only require a few clicks. To me, this would be more valuable as you could then determine your profit margin and net profit by category.
In addition, I advise against constantly change your chart of accounts because you lose comparability. If you are constantly changing the way you record an income or expense item, you no longer have the ability observe trends over a period of time. Older accounts no longer in use will have old information and a new account will only have the most current. Consistency in account usage allows for comparisons which aid in business decision making.
I am not advocating never making modifications to your chart of accounts or never considering other methods for accounting for items. If what you are currently doing is not functions, then it is certainly time to consider a review. Take your time to set up an efficient system to avoid possible issues in the future. Furthermore, accurate overhead allocations and correctly classified direct and indirect expenses are critical to your success. However, that is a blog topic in its own right!
Do you modify your chart of accounts frequently? Have you considered what it may look like if you did not? What kinds of decisions can you now make that you could not before?
Categories: Cost Accounting
Tax Responsibilities of An Estate Executor
Feb 16, 2016
Serving as the executor (“personal representative”) of someone’s estate can be a difficult job. Just identifying all the estate’s assets can be time consuming. Then there may be life insurance and employee benefit claims to file, appraisals to arrange for, property to manage, debts to collect, and final bills to pay. On top of everything, there are tax-related responsibilities an executor must address.
Decedent’s final return. An executor is responsible for filing the decedent’s final federal income-tax return covering the period from January 1 through the date of death.* Generally, a joint return may be filed with the decedent’s surviving spouse, but that’s not always the best choice. For example, more medical expenses may be deductible if a separate return is filed.
Estate’s income-tax return. An estate often receives income (interest, dividends, etc.) from the decedent’s holdings while the estate is being administered. A federal income-tax return must be filed for an estate in any year its gross income is $600 or more or if any beneficiary is a nonresident alien.* Whether to use a calendar or fiscal year for tax reporting purposes is one of the important decisions an executor has to make.
Estate-tax return. A federal estate-tax return is required if the value of the decedent’s gross estate at death (minus certain lifetime gifts) is more than the basic exclusion amount ($5.45 million for 2016).* An executor has several tax choices to make if a return is required. For example, it’s possible to value the estate on an “alternate valuation date” instead of the date of death. With fluctuating asset values, choosing the best date for estate valuation could be important in minimizing taxes.
The tax decisions an executor makes can affect what’s left for distribution to the estate’s beneficiaries. That’s all the more reason to consult a tax professional if you’re ever called upon to serve as an executor.
- A smaller estate also may require a return in order to transfer any unused exclusion amount to the decedent’s surviving spouse.
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