Was the Taxpayer Transparency and Fairness Act a Good Idea?

Was the Taxpayer Transparency and Fairness Act a Good Idea?

When Governor Jerry Brown signed the Taxpayer Transparency and Fairness Act into California state law on June 27th, 2017, the effective gutting of the Board of Equalization (BOE) into two separate tax agencies – the Office of Tax Appeals (OTA) and the California Department of Tax and Fee Administration (CDTFA) – garnered some mixed and apprehensive feelings from lawmakers and taxpayers alike. Today, this decision still leaves many wondering: was the Taxpayer Transparency and Fairness Act a good idea? What Is Different? Traditionally run by four elected officials, California’s BOE used to decide everything from standard tax appeal cases, to the administration of taxes statewide. And though sometimes a bit more of a sinecure, at least the officials elected often ruled more in favor of the taxpayer as a natural recourse towards reelection and securing a higher office. Today, it is the CDTFA handling sales, use, excise, and business tax administration, as well the assessment of state fees and business tax appeals, while the OTA oversees sales, use, and income tax disputes. Meanwhile, the BOE’s power has been minimized to merely managing public utility property taxes, adjusting local property tax assessments, reviewing insurance company taxes, and administrating the tax rates on alcohol and gas. Why the Change? It’s no secret that the public has been calling for changes within the BOE for a while now due to reoccurring scandals from misspending to nepotism, however, many now worry that the state Legislature’s decision to practically abolish the board – versus implementing a few audits and key policy changes – might have been potentially harmful overkill. The real reason for the...
The Spirit of Entrepreneurship Reaches New Heights

The Spirit of Entrepreneurship Reaches New Heights

Earlier, back in March, we covered the rising new trend of small business optimism as reported by the National Federation of Independent Business’s annual survey. Today, entrepreneurship takes a stand as – per the overall reflected health of the economy – the number of startups and self-made businesses are verging on record breaking numbers since the 2009 recession. In a report that reached D.C.’s “Small Businesses, Big Ideas: Entrepreneurship in Action,” this surge of optimistic new entrepreneurs was documented by Paychex in a study involving the payroll data of startups with 1-49 employees, combined with the responses of 500 surveyed small business owners of 1-500 employees. This data was then divided by industry, gender, age, and geography. According to the results: 64% of business owners thought that they would make a profit, while 58% were optimistic over their prospects for business growth; 71% claimed that the economy is either the same, or better than, when they first began their business, while an overwhelming 79% held that now was the time to begin one; and Business owners who started their company after the recession were 57% more likely to find the business environment improved, versus those who began their companies 20 or more years prior (32%). In addition to measuring entrepreneurial optimism, Paychex’s study also asked owners about some of the obstacles to starting and maintaining a successful business. The response was that: 90% felt concern over rising prices; 67% were worried about finding quality employees; 34% believed that the government should try to prevent these problems with more support, mentoring, training, and coaching programs; while 33% thought that the...
Is Your Small Business at Risk?

Is Your Small Business at Risk?

For a frighteningly large amount of small businesses, securing business insurance or having a risk mitigation backup plan is of a low priority – provided it’s even thought of at all. According to InsuranceBee’s Annual Risk Survey, out of the one-thousand small business owners interviewed, approximately 29% of those small businesses have zero contingencies in place; even though that same survey reflects 93% to have financial worries over their startup, while 47% reported to have anxiety over the economy causing their business to fail. From Errors and Omissions insurance to protect against legal action from a client, to General Liability insurance for accidental injuries, to Workers’ Compensation insurance safeguarding against employee lawsuits, “insurance policies are not ‘nice to haves’,” InsuranceBee’s Senior Advisor, Maureen Brogie, says. “They’re essential for small businesses. Without insurance, if someone makes a claim against them, all the blood, sweat and tears that went into building their business could just go to waste. For most, if not all, this should be a risk that’s simply not worth taking.” So, why are so many businesses taking that risk? Well, for one, many owners may not even be aware of business insurance as it’s such a rarely discussed necessity – especially for young startups. Another reason may be to avoid the monthly insurance bill in the name of saving. However, when one considers the fact that the average lawsuit for something as simple as a fall could cost upwards of $20,000? Purchasing insurance is actually the cost-effective option. And for that 28% of businesses who try to put away a rainy-day amount for just such emergencies? While something...
New Tax Law Says Entertainment Write-Offs are a No-Go

New Tax Law Says Entertainment Write-Offs are a No-Go

The nation has seen a lot of tax changes this year, but the latest ban on entertainment deductions might be the most disappointing for both prospective clients and business owners. While the previous tax code of 2017 held that treating a client to a Giants game or nice meal could be deductible by 50%, as long as the entertainment was used to discuss a business deal, as of the start of 2018, such write-offs are now reduced to zero. Exceptions to the Rule Though not many in number, there are a few exceptions to the rule. For one, meals purchased while on business trips will remain 50% deductible, though meals given to employees on the business premises will drop from a complete write-off to only half. Other exceptions that will not be affected by the tax change include: Expenses for entertainment goods, facilities, and services that are sold to customers; Entertainment, recreation, or amusement that is given to employees as apart of their W2 compensation; and Expenses for social and recreational activities – including facilities – for employees that do not qualify as Highly Compensated Employees (HCE). As of 2018, an employee is classified as an HCE if they make more than $120,000 or have a 5% share or higher in the company. The Impact the Change Will Have For many businesses, this “small” change in tax law could have a rather large impact. For instance, businesses that focus on entertainment – such as golf courses or club lounges – could see a dramatic drop in memberships and sales, as companies are forced to entertain their clients in another,...
Upcoming National Origin Regulations in July

Upcoming National Origin Regulations in July

2018 has been a big year for changes within California’s legal system, and the latest amendments to the state’s Fair Employment and Housing Act (FEHA) are no exception. Already approved by The Office of Administrative Law, California employers can expect a more detailed list of regulations that further expand the protections against discrimination – most notably those of national origin – to come into effect by July 1st, 2018. Though California already boasts several laws prohibiting prejudice amongst the workplace, this latest FEHA amendment was designed specifically to eliminate any “wiggle room” left by the previous version’s broad terminology forbidding the discrimination of “national origins” – protecting both employees and applicants, as well as undocumented immigrants. According to the law, the term “national origins” can include: Cultural, physical, or linguistic characteristics connected with a group of national origin; A spouse or association with a person of national origin; A name often connected to a national origin; Tribal affiliation; Participation with institutions of a national origin such as a school, church, mosque, or temple; and An association or membership to a group known to promote the ideals of a national origin. Under these same definitions, the FEHA amendment goes on to prohibit the construction or enforcement of any policies that might discriminate against persons of national origin, such as: Denying an applicant or employee work due to their accent, unless the employer can explicitly show that the accent would interfere with the job. Erecting language restrictions or English-only policies within the workplace, unless absolutely necessary for the function of the business – though even then, only in minute, situational adaptations....
California’s New Rule to Determining Independent Contractors

California’s New Rule to Determining Independent Contractors

In a recent move many think to be long overdue, California has now joined the list of states currently using the “ABC Test” to distinguish independent contractors from employees. Signing the ABC Test into law on April 30th, 2018, employers are now required to carefully examine all current and future hires of independent contractors to ensure that they can indeed be classified as such and are thereby ineligible for employee benefits such as healthcare or overtime. One missing point in the three-factor test, California lawmakers warn, and the worker must be acknowledged as an employee and treated as such. Which begs the question: what is the ABC Test and what caused the switch? Why Did California Choose to Adopt the Test? California lawmakers first discovered the need for further clarification between the distinguishing factors of an employee from an independent contractor after a recent lawsuit between the delivery company Dynamex and its drivers reached the California Supreme Court – the drivers claiming to have been wrongfully classified as independent contractors by Dynamex, and thereby denied employee benefits. During the trial, the court asserted that the drivers would win the lawsuit provided they could prove they were employees according to three points in the then-current Wage Order, holding that to “employ” means: to exercise control over the wages, hours or working conditions; to suffer or permit to work; or to engage, thereby creating a common-law employment relationship. It was when Dynamex countered, however, that such a broad terminology could apply to essentially anyone who does work for another at all, that the court was forced to define an independent contractor...
New Intern Test for Employers

New Intern Test for Employers

Summer is just around the corner, and with it many students often seek a business internship. As of January 5th of this year, however, the Department of Labor (DOL) has released a new classification test on the distinguishing factors between an employee from an intern – as well as when they’re allowed. So, for employers who are in the process of accepting or currently have interns positioned within their business, here’s the new “Seven Factor” test to ensure that all parties involved operate under accordance to the law. The Old “Six Factor” Test Sometimes, it’s easier to better understand change when you have a comparison; which is why you may recognize the following as the old “Six Factor” test previously used to identify when student workers are interns, rather than employees: The nature of the internship corresponds to an educational environment. The internship is for the benefit of the intern only, not for the employer or paid staff. The intern must work under close supervision of paid employees and should not displace existing staff. The internship does not grant the employer any immediate business advantage or profit. The intern understands that the internship does not guarantee a job upon completion of the program. Both the intern and the employer understand that the internship will be unpaid. The New “Seven Factor” Test Though not vastly different from it’s predecessor, the DOL’s updated “Seven Factor” test was born mostly out of a necessity to highlight the primary beneficiary for interns of for-profit businesses. The points are: Both the intern and the employer understand that the internship will be unpaid. The nature...
How to Switch from QuickBooks Desktop to Online

How to Switch from QuickBooks Desktop to Online

Whether you’re upgrading to QuickBooks Online to prevent losing your information to the sunsetting of an older desktop application, or just seeking to take advantage of cloud access QuickBooks Online has to offer, transferring your data from one version to another can be daunting. Luckily, Intuit makes it easy by providing these step-by-step instructions to help safely transfer all desktop data to your online account. Initial Considerations Before beginning the data import, there are a few considerations of which to take note to ensure the transfer not only goes smoothly but is, in fact, possible. To upgrade from QuickBooks Desktop (QBD) to QuickBooks Online (QBO), you must: Be the Administrator for both accounts. Have begun the transfer within the first 60 days of opening your QBO account, as any later will result in an error code (note: transferring will also overwrite all existing QBO data). NOT have Payroll previously activated within the QBO account. Have a QBD file with less than 350,000 targets on it, as any file over that number will be limited to importing lists and balances only (if over 350k targets, you can always try to condense your QuickBooks file here). Begin a trial of a newer QBD application if operating under an outdated version, before attempting to transfer data to a QBO account. All set? Great, let’s started! To Import QuickBooks Pro/Premiere Files First, open the file you wish to export and click Company > Export Company File to QuickBooks Online. If no export option appears: Select Help > Update QuickBooks. In the Update Now window, select all updates before clicking Get Updates. After all...
The Family and Medical Leave Act

The Family and Medical Leave Act

Have you or a family member fallen seriously ill? Are you pregnant and/or expecting a new addition to the family through adoption or foster care? Under the Family and Medical Leave Act (FMLA), you could be entitled to up to 12 weeks of unpaid, protected leave from your job. What is the FMLA? Established in 1993, the FMLA was designed to help workers bridge the gap between the need to financially provide for their families and the more pressing desire to be there for their loved ones, by giving eligible employees the right to an extended period of time off, without the risk of losing their job. Offering up to 12 weeks of leave per year to eligible employees (26 weeks for military or military caregivers), situations covered by the FMLA include: The care and birth of the worker’s newborn child; The addition of a new child to the household through adoption or foster care; The care of an immediate family member (spouse, child, or parent) with a serious medical condition; Medical leave for the employee’s own serious medical condition. An equal opportunity act, the FMLA applies to all genders, all races, and all eligible employees, while to accommodate this belief, a recent 2015 Department of Labor ruling changed the definition of an employee’s “spouse” to include same-sex partners as well. What Makes an Employee Eligible? Law requires all elementary and secondary schools (both private and public), public agencies, and companies with over 50 employees located within 75 miles of the business to uphold FMLA standards. As such, any employee that has worked at least 12 months at any...
California Sales Tax Prepayment Deadline

California Sales Tax Prepayment Deadline

After years of operating your rather successful retail business, steadily rising in profits, suddenly you receive a letter from the California Board of Equalization (BOE) (as of May 2018 now called the California Department of Tax and Fee Administration (CDTFA)) stating that your account is switched from a quarterly filer only to a monthly prepay account. First of all, congratulations, as this means that you’re making at least an average of $17,000 in taxable sales per month! Secondly, you may be wondering what a sales tax prepayment is and how to pay it. Well, worry no more! Here’s everything you need to know on prepayments and the deadlines. What is a Prepayment? While every business operating under a seller’s permit is required to pay sales taxes, as mentioned above, only businesses surpassing a threshold of $17,000 in monthly sales are required to pay through prepayments. Even then, eligible businesses should only submit prepayments if they are notified by the tax agency directly via mail. For the first, third, and fourth calendar quarters – as well as the first prepayment of the second quarter – all prepayments must be either 90% of the month’s tax liability, or 1/3 of the tax liability measure for the previous year’s quarterly period multiplied by the effective tax rate when the prepayment was made (provided you and/or your predecessor were in business during that quarter). For the second prepayment falling within the second quarter (based on sales from May 1st – June 15th), prepayments must equal either 135% of the tax liability in May, 90% of May’s liability plus 90% of the first fifteen...

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