New CA Split Shift Premium Update

New CA Split Shift Premium Update

While there has yet to be any official legal action to put it into IWC Wage Order, a recent update to the terminology regarding split shift premiums on the California Labor Commissioner’s Office website has many preparing for just such a change to take place in the near future. A split shift being the term used to describe a workday with a gap longer than one hour between those spent working – a shift from 8:00-12:00 and then 4:00-6:00 that same day, for example – under current wage law, employers are required to pay an additional hour’s worth of work as a premium, that is equivalent to at least the state minimum wage. However, with the recent change to the Labor Commissioner’s Office interpretation, that premium rate could expand to include paying the highest between the state or local minimum wage – thus potentially increasing an employee’s earnings on a split shift, depending on what the local minimum wage is. To provide an example of what should be given to an employee after working a split shift, the Labor Commissioner’s Office provides the following case study: Question: “My regular workday includes a split shift, however, I make $12 per hour and minimum wage is currently $11 per hour. I work six total hours in a workday, so am I entitled to a split shift premium?” Answer: “Yes, because you work six hours, and the minimum wage for your workday that includes a split shift is $77 (six hours times $11 plus an additional $11 for the split shift premium). If you are only paid $72 (six hours times $12),...
5 Payroll Fraud Ploys

5 Payroll Fraud Ploys

You may think payroll fraud to be nearly impossible to accomplish – after all, it’s money that visibly comes out of your account, passes your books, and should be obvious to detect, right? Wrong. While payroll fraud is more difficult to execute, unfortunately it’s complicated nature just makes it harder to catch, sometimes continuing on for months before detection and costing businesses thousands of dollars. Want to know what to look out for? Here’s 5 ploys employees use to commit payroll fraud. 1) The Non-Existent Employee More common amongst companies with a large staff, one version of payroll fraud is when an employee issues a check for another non-existent or previously laid-off worker, only to cash it themselves. Often, this can be prevented by policies that require management sign-off on each time card, while warning signs can include employees with the same address, multiple direct deposits to the same account, or social security numbers that are slightly altered or missing a digit. 2) Hours Inflation For those who pay their employees by the hour, unless sophisticated time tracking systems are in place, it can be easy for an employee to simply add hours to their time card, or clock in on days they never worked. Learn your employees’ shifts, or have your supervisors sign-off on each time card upon completion of the work day to prevent this scam. 3) Unsanctioned Pay Raise Under this scheme, employees in charge of payroll give themselves a raise in pay, extra commissions and bonuses, or unearned overtime. This can often be avoided by a payroll review policy, supervision, changing shifts of administrative duty, or...
New Per Diem Rates for Travel and Business Expenses

New Per Diem Rates for Travel and Business Expenses

Effective as of October 1st, the IRS has released their annual report of the updated per diem rates taxpayers may use for business and travel expenses. Used in the high-low substantiation method and to give taxpayers an idea of how much they can spend per day to leave them eligible for a deduction, the changed rates are as follows… For the special meal and incidental expense rate, those working in the transportation industry have a $66 allowance while within the U.S., and a $71 per diem for travel outside of the U.S borders. Local travel, however, has an incidental expense deduction of only $5. To set the limitations under the high-low substantiation method, travel to a high-cost area is set at a daily rate of $287, whereas a low-cost locality has a per diem of $195. Under those same two rates, a $71 allowance is given for meals in a high-cost locale, and $60 for meals in cheaper areas. When no meal or incidental expense rate applies, the per diem for travel to any high-cost locality within the U.S is $71, and $60 for travel to low-cost locales. Want to read the IRS release for yourself, or check which areas within the continental U.S are considered “high-cost”? Click here for the original notice, whereas our thanks goes out to Micael Cohn and this article for the summary...
7 Steps to Obeying Nanny Tax Laws

7 Steps to Obeying Nanny Tax Laws

Most of us when we think of the word “nanny” picture a twenty-something college student, watching the kids during the weekdays for cash before she heads home for the night. Rarely, if ever, do we think “employee, with payroll, a time-card, and W-2”. But did you know that under tax law that’s exactly how a nanny should be treated? If you’re about to hire a nanny, stop first to read just what’s required to be tax compliant. 1) Classify Your Nanny as an Employee As the IRS has consistently held that household workers are not independent contractors, but rather employees, not classifying a nanny as such can be labeled as felony tax evasion. After all, the family sets the rules, babysitting schedule, and provides the necessary equipment to keep the children fed and happy, meeting all the descriptors of an employee who should receive a W-2 at the end of each tax year. 2) Pay Overtime and At Least Minimum Wage Under federal law, all domestic workers are entitled to at least the federal minimum wage of $7.25 per hour, but many states and counties have higher minimums. Worker’s rights call for the highest minimum wage between state, local, or federal rulings to be paid, so be sure to check your area to see which rate applies. In addition, federal rules require overtime for any hours worked over 40 per week must be given to any nanny in your household – though some exceptions exist for live-in care and companionship. Failing to comply with either of these can result in costly lawsuits, so know what’s required of you as...
2018 Meal Entertainment Deduction Elimination

2018 Meal Entertainment Deduction Elimination

Are you a business owner that takes customers or potential clients out for dinner or entertainment? Or do you support your nonprofit organizations locally through their fundraising events? If so, please be aware that the write-off laws have changed in 2018. Where as in the past you used to be able to write off 50% of your entertainment or meal costs and 100% of your charitable donations, the new tax law has required that no entertainment be written off and only meals for travel are 50% deduction. And now charitable organizations would need to break out the total cost of the ticket price to show how much covers the actual event expense and how much is over and above, and only the amount over and above the expense is able to be written off. So if you’re counting on these tax deductions to help you save this coming year be aware that that’s not possible anymore. The only thing that you can do is if you have some special meal, such as in a celebratory event, you can still get a portion of that write-off as well. Or again, if you’re traveling for a seminar or things like that, you can still have that written off. But it’s really important for you to also make sure that the nonprofit organization gives you a breakdown for the ticket price so you can at least write off the portion over and above the expenses they incur for that deduction. It’s also really important that your bookkeeping would track all of this properly. If you just lump everything into a meals and...
Business Email Compromise and What to Look Out For

Business Email Compromise and What to Look Out For

Hopefully, by now we all know not to click on the links broadcasting free $100 Walmart gift cards that frequently litter our inboxes – most of us are on the lookout for phishing tactics and malware that just scream “spam”. But what about an email that by all accounts looks to come from your boss? Ever since the FBI started investigating them back in 2013, Business Email Compromise scams (BEC) have affected companies of all sizes, across all-states, and indeed the globe; costing businesses an estimated $3 billion in damages since 2015, while compromising sensitive company and personal data. According to FBI organized crime investigator, Special Agent Martin Licciardo,“BEC is a serious threat on a global scale. And the criminal organizations that perpetrate these frauds are continually honing their techniques to exploit unsuspecting victims.” What to Look Out For Today, scammers have gone far beyond offering free gift cards with questionable addresses. Using tactics such as malware, spear-phishing, identity theft, email spoofing, and social engineering, these criminals have become masters of deception, and as such are extremely hard to detect. A common strategy used by fraudsters, many will first gain access to company networks through viruses or spear-phishing, before spending weeks, sometimes months of time researching everything from the company’s billing practices and trusted vendors, to the CEO’s email style and travel schedule. After sufficient data has been collected, scammers will then wait until the perfect time – such as when the CEO is away on a business trip – before sending an email to the finance department under the guise of the CEO, asking for a money transfer....
Why Your Business Needs an Accountable Plan

Why Your Business Needs an Accountable Plan

Most employers are in the practice of reimbursing their employees for business expenses, but did you know that the form that reimbursement takes can now cost you in tax dollars? If you’re going to pay back any of your employees for work-related expenses this year – and every year after until 2025 – you should use an Accountable Plan to save both you and your employees money. Due to the Tax Cuts and Jobs Act, miscellaneous itemized deductions can no longer be written off by employees, which means that any reimbursement given to an employee outside of an Accountable Plan will be counted as income and subject to income tax withholding. Similarity, both the employer and the employee will also be charged an employment tax for any non-accountable reimbursements. So, what is an Accountable Plan? Essentially, an Accountable Plan is a prearranged amount set by an employer for his or her employees to use for work expenses, such as traveling to a company conference. The money must be used strictly for business expenses only, and any excess amount leftover must be promptly returned to the employer. Lastly, to prove to the IRS that you indeed do have an Accountable Plan in place, you must typically supply records with the amounts set in writing, while documentation such as receipts should be supplied to confirm the expense costs. According to the IRS, if all of these conditions are met, than the reimbursement is no longer taxable beyond a 50% deduction for meal expenses. Setting up an Accountable Plan is relatively simple, and doing so leaves a business with nothing to lose...
Bank Import vs Reconciliation

Bank Import vs Reconciliation

Are you an entrepreneur using QuickBooks Online and assuming that the import to QuickBooks from your bank means that your accounts are reconciled? I’ve worked with some people in the last couple months who’ve wanted to offload their bookkeeping and when I asked if their reconciliations are up to date, they’ve said yes. However, once we get in, we find out the accounts have never been reconciled. And I’m finding that it’s the understanding of the entrepreneur that a bank import is the same as a reconciliation when it in fact really is not. The bank reconciliation is where you match all the transactions from your bank statement to what is in your accounting software. And what we have found in the past is that sometimes the bank will import multiple times those transactions, or sometimes it misses a period altogether. So if you’re just counting on the bank import to have all of your transactions in there, you could have some errors. So it’s our recommendation that you always reconcile your statements every month with your bank statement to make sure everything’s accurate, and of course make sure that those postings are put to the right accounts as well. If you have questions, we’re here to help! 310-534-5577 or www.abandp.com Thanks so much. Have a great...
Check Your Payroll Withholding – Things Have Changed

Check Your Payroll Withholding – Things Have Changed

With the recent Tax Cuts and Jobs Act (TCJA) that was passed back in November of 2017, we’ve been dedicated to covering every available aspect of the new tax law as the information becomes available. Today’s topic? The small, but crucial changes to the rules of withholding, and why you should now always double-check your payroll to avoid possible blowback from the IRS. As the first, clear TCJA change explained by the IRS, everyone is excited that the tax rate for Individuals has been lowered – many reasoning that they’re likely over-withholding now with their income tax. However, what is easily missed by many taxpayers, is the accompanying fine print of similar alterations that comes with that lowered tax rate – these changes holding the potential for you to actually under-withhold! What’s Changed To make sure the correct amount of income tax is being withheld, here’s what provisions are different and how they could potentially apply to you: ● The standard itemized deduction threshold has now nearly doubled to $12,000 for single filers, and $24,000 for spouses filing jointly. ● The Child Tax Credit (CTC) has also doubled from $1,000 to $2,000, while $1,400 can be refunded. However, there is now a $500 credit for dependents who aren’t your children, that cannot be refunded. ● Personal exemptions – even for dependents and qualifying relatives – no longer apply. ● The State and Local Tax (SALT) deduction – including that for sales tax, local income tax, and both state and local property tax – is now reduced to $10,000 per year. ● The mortgage interest deduction has also been lowered...
Small Business Tips to Survive a Recession

Small Business Tips to Survive a Recession

It’s no secret that times are good in today’s economy. With small business optimism escalating to record heights, entrepreneurial spirit on the rise, and overall success for Main Street, a recession is likely the last thing on a business’ mind. But, if history has taught us anything, it’s that economies rise and fall – fluctuating with the times – while it’s up to small businesses to survive it all. If you’re a small business that’s just finding your feet in today’s prime economy, here are four tips on how to plan ahead for a possible recession. Always Be Open for More Work It’s easy to stop accepting new clients or avenues of growth when business is booming. After all, if the money is there, why take on more work than you can handle? While this line of thinking is understandable, it can be risky to not put your absolute all into growing your business should a time come when customers aren’t so easy to acquire. If the opportunity for more business is there, take it and hire new employees to handle the increased workload. That way should the economy take a downturn, your business will have the income to carry it through safely, while downsizing staff as necessary. Don’t Cut Your Marketing Budget It’s a sad truth, but should a recession arrive, it’s the well-known name brands who will survive, versus the quaint but obscure mom-and-pop establishments. When money becomes tight, marketing is often the first expense cut from a business’ budget. However, this can cause more harm than good in the end, as aggressive marketing is often exactly...

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