Tax Alert To All Employers Effective January 1, 2021
Income Tax Withholding
IRS will issue new withholding tables (Publication 15) to reflect changes as of January 1, 2021. When available, the new withholding tables can be obtained at the Internal Revenue website, www.irs.gov.
In addition to saving income taxes for the current and future years, effective tax planning can reduce eventual estate taxes, maximize the amount of funds you will have available for retirement, reduce the cost of financing your children’s education, and assist you in managing your cash flow to help you meet your financial objectives.
Tax planning strategies can defer some of your current year’s tax liability to a future year, thereby freeing up cash for investment, business, or personal use. This can be accomplished by timing when certain expenses are paid or controlling when income is recognized. Tax planning allows you to take advantage of tax rate differentials between years. However, if tax rates rise in a subsequent year, extra caution may be necessary.
The City of Philadelphia recently announced a COVID related relief option which includes the ability for Philadelphia based businesses to amend their 2019 BIRT if they overestimated their 2020 estimate and the ability for restaurants to amend their November & December U&O returns to exclude the dining area from the calculation.
If you are a Philly business impacted by the recently enhanced restrictions, reach out to your accountants ASAP to determine how these announcements impact you.
https://www.phila.gov/documents/coronavirus-tax-guidance/
Since the enactment of the Tax Cuts and Jobs Act (TCJA), an individual’s federal tax deduction for state and local taxes (SALT) paid during the calendar year is limited to $10,000. The SALT limitation impacted many individual partners and shareholders. Several states responded to this limitation by issuing workarounds to enact entity-level taxes for pass-through entities where the entity pays the tax instead of its owners and then deducts the full amount of state taxes paid, thus avoiding the $10,000 limitation at the individual level. It was uncertain whether the IRS would accept this entity-level tax workaround.
2020 Accounting Today’s Best Accounting Firms to Work for
Brinker Simpson & Co, LLC was recently named as one of the 2020 Accounting Today’s Best Accounting Firms to Work for. Accounting Today has partnered with Best Companies Group to identify companies that have excelled in creating quality workplaces for employees.
With the Presidential election 9 weeks away, we prepared the following guideline to illustrate where each of the candidates stand on certain tax laws. Biden’s proposed changes would repeal different aspects of Trump’s 2017 Tax Cuts and Jobs Act (TCJA). Please note, these are proposed changes and Congress often makes the final decision.
Benefits of Outsourcing
Business clients often ask us: Should we outsource our accounting needs? What exactly are the benefits we can expect?
In small businesses, we often see owners or employees who struggle to effectively balance several competing job responsibilities. Examples include an office manager who is forced to manage human resource and administrative functions while trying to do bookkeeping as well. Other situations include business owners who try to manage their company’s growth but don’t want to relinquish control over the finances.
The decision to outsource bookkeeping and accounting enables businesses to increase their bottom line and create more opportunities to focus on their core business. By outsourcing, businesses gain access to a team of devoted CPA experts who stay focused on the company’s financial well-being, which allows ownership to concentrate its time and expertise where it is needed.
Businesses can also save money on salary increases, employer payroll taxes, insurance and fringe benefits through outsourcing. Recently, Brinker Simpson was hired to replace the controller of a $3M business and saved the company over $50,000 in salary and fringe benefits.
When partnering with an outsourcing firm, business owners do not have to worry about the cost of employee turnover or spending time looking for new staff. According to the Society for Human Resource Management’s new Human Capital Benchmarking Report, the average cost to hire a new employee is $4,129 and the average time to fill a position is 42 days.
As small businesses grow and hire more staff, many CEOs do not have the time to focus on accounting. With the business growing at an accelerated pace, more advanced reporting is needed, and CEOs rely on a variety of financial information to make informed decisions. They need a consistent and trusted advisor. Outsourced Accounting firms can assist with a variety of functions including monthly and annual reporting, budgeting and forecasting, cash management, and bookkeeping. Business owners can take comfort when the work is backed by a team of CPAs who focus on instituting processes and controls to maintain the security of company assets.
Brinker Simpson offers a variety of flexible solutions to provide excellent service to fit your company needs. If you would like more details on how your business can gain access to our team of experts, including tax, audit, and advisory professionals, please contact Donna Stilwell , CPA, CFE at dstilwell@brinkersimpson.com for a discussion on how we can help your business with outsourced accounting needs.
Sadly, it did not take long for scammers to take advantage of the programs being offered to help individuals and businesses through this current situation. Don't let your guard down! Remember, the IRS and banks will not contact you for bank account information or to verify social security numbers or information on your tax return. Also, you should not pay anyone a fee to process your stimulus check. The Federal Communications Commission (FCC) is receiving reports of potential scams, warning on their website:
Overview
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for an emergency advance of $10,000 to small businesses and private non-profit organizations affected by COVID-19. In order to receive the advance, you must apply for the Economic Injury Disaster Loan (EIDL) and request the advance at the end of the application process. The loan advance funds will not have to be repaid even if the EIDL application is denied. The EIDLs are up to $2 Million with terms up to 30 years and interest rates of 3.75% for small businesses and 2.75% for non-profits. EIDLs requesting funds up to $200,000 can be approved without a personal guarantee and do not require real estate as collateral.
As mentioned in our previous email and blog post, on Friday President Trump signed a $2 trillion stimulus package. In a move designed to keep small businesses afloat, the CARES Act allocates $349 billion to loans the Paycheck Protection Program loans under the Small Business Administration. We provided details on the Program in a previous post.
Lenders are working out the final details with the Small Business Administration (SBA), but you can take steps now to prepare for the application process to avoid delays. Applications may be ready to be processed as early as next week. We suggest that you contact your bank and ask if they are qualified SBA 7(a) lenders and participating in the Payback Protection Program. Inform them of your interest in applying and ask how you can prepare. Please feel free to reach out to our team with questions.
