Blogs

Many businesses hired in 2017, and more are planning to hire in 2018. If you’re among them and your hires include members of a “target group,” you may be eligible for the Work Opportunity tax credit (WOTC). If you made qualifying hires in 2017 and obtained proper certification, you can claim the WOTC on your 2017 tax return.

Whether or not you’re eligible for 2017, keep the WOTC in mind in your 2018 hiring plans. Despite its proposed elimination under the House’s version of the Tax Cuts and Jobs Act, the credit survived the final version that was signed into law in December, so it’s also available for 2018.

“Target groups,” defined

Target groups include:

  • Qualified individuals who have been unemployed for 27 weeks or more,
  • Designated community residents who live in Empowerment Zones or rural renewal counties,
  • Long-term family assistance recipients,
  • Qualified ex-felons,
  • Qualified recipients of Temporary Assistance for Needy Families (TANF),
  • Qualified veterans,
  • Summer youth employees,
  • Supplemental Nutrition Assistance Program (SNAP) recipients,
  • Supplemental Security Income benefits recipients, and
  • Vocational rehabilitation referrals for individuals who suffer from an employment handicap resulting from a physical or mental handicap.

Before you can claim the WOTC, you must obtain certification from a “designated local agency” (DLA) that the hired individual is indeed a target group member. You must submit IRS Form 8850, “Pre-Screening Notice and Certification Request for the Work Opportunity Credit,” to the DLA no later than the 28th day after the individual begins work for you. Unfortunately, this means that, if you hired someone from a target group in 2017 but didn’t obtain the certification, you can’t claim the WOTC on your 2017 return.

A potentially valuable credit

Qualifying employers can claim the WOTC as a general business credit against their income tax. The amount of the credit depends on the:

  • Target group of the individual hired,
  • Wages paid to that individual, and
  • Number of hours that individual worked during the first year of employment.

The maximum credit that can be earned for each member of a target group is generally $2,400 per employee. The credit can be as high as $9,600 for certain veterans.

Employers aren’t subject to a limit on the number of eligible individuals they can hire. In other words, if you hired 10 individuals from target groups that qualify for the $2,400 credit, your total credit would be $24,000.

Remember, credits reduce your tax bill dollar-for-dollar; they don’t just reduce the amount of income subject to tax like deductions do. So that’s $24,000 of actual tax savings.

Offset hiring costs

The WOTC can provide substantial tax savings when you hire qualified new employees, offsetting some of the cost. Contact us for more information.

© 2018


Only certain trusts can own S corporation stock

Posted by Abacus on February 13, 2018

S corporations must comply with several strict requirements or risk losing their tax-advantaged status. Among other things, they can have no more than 100 shareholders, can have no more than one class of stock and are permitted to have only certain types of shareholders.

In an estate planning context, it’s critical that any trusts that will receive S corporation stock through operation of your estate plan be eligible shareholders.

Which trusts are eligible?

Eligible trusts include:

Grantor trusts. A grantor trust is eligible provided that it has one “deemed owner” who’s a U.S. citizen or resident and meets certain other requirements. Also, when the grantor dies, the trust remains an eligible shareholder for two years, after which it must distribute the stock to an eligible shareholder or qualify as a qualified subchapter S trust (QSST) or an electing small business trust (ESBT).

Testamentary trusts. These trusts, which are established by your will, are eligible S corporation shareholders for up to two years after the transfer and then must either distribute the stock to an eligible shareholder or qualify as a QSST or ESBT.

QSSTs. These trusts must meet several requirements, including distributing all current income to a single beneficiary who’s a U.S. citizen or resident and filing an election with the IRS. They cannot be used to benefit multiple beneficiaries or to accumulate income, although in effect there can be multiple beneficiaries if they’re treated as each owning a separate share of the trust. A QSST’s income is taxed at the beneficiary’s tax rate.

ESBTs. A trust qualifies as an ESBT if 1) all of its beneficiaries or “potential current beneficiaries” would be eligible shareholders if they held the stock directly, 2) no beneficiary purchases its interest and 3) the trustee files an election with the IRS.

If you have any S corporation stock that will be distributed to a trust, be sure to review its terms carefully to ensure it couldn’t inadvertently disqualify the S corporation. Contact us with further questions.

© 2018


Calling In Sick

Posted by barbie on August 28, 2017

Calling In Sick

When I turned 14, I was so excited to get a job and start earning money for myself. My first job was working at Danna’s Barbecue, a small restaurant in Branson, Missouri. One of the first things I learned was that jobs aren’t always a walk in the park. There were some days where I didn’t want to go to work, I just wanted to stay home and lounge around all day. However, my dad taught me the lesson of hard work and staying true to your word. If I was scheduled to work that day, I was going to work. He told me, “Don’t be the guy that calls in ‘sick’ on Mondays and Fridays.” He was a manager at several different businesses, and he told me that the employees that were the most successful were the ones that were committed to their job. The ones that consistently called in sick around the weekends did not last very long.

From the employer side of things, most businesses do not know how to react when an employee calls in sick. Taken from an article written by Alison Green of US News in which she spoke with attorney Bryan Cavanaugh, he states, “It is reasonable for a manager to ask an employee what is wrong. Otherwise, it would be a no-questions-asked sick leave policy, and that would quickly be abused. Asking what is wrong requires the employee to give a brief and general explanation about why he or she is absent, e.g., the employee’s child is sick, the employee has a general illness, or the employee has a major or minor injury.”

A key exception to this is if the reason for your absence is a medical condition that is protected under the Americans with Disabilities Act. The ADA offers protections to employees with physical or mental impairments that substantially limits one or more major life activities, such as seeing, hearing, speaking, walking, or breathing.

So what do you do about the employee that calls in every third Monday? Well, a business owner or manager cannot get into the business of deciding whose excuses are legitimate and whose aren’t. However, there can be policies put in place in an employee handbook to mitigate the abuse. For example, there can be a section added to the vacation/sick policy talking about frequency of sick days taken. Most employers will not let an employee take more sick time than they have accrued, and if they still take a sick day they agree to take the day unpaid. Another policy is that the employer can set a time frame for calling in sick, such as half an hour before the start of the workday. Lastly, employers could apply a progressive discipline policy. When an employee starts abusing their sick time, it could start with a verbal warning, followed by a written warning, then to suspension, and finally termination of the employee.

At Abacus CPAs, we can help your business, set solid procedures for events like these and many others found within the day-to-day operations. Contact us today at 417-823-7171 and let our team help you be prepared for whatever may come your way.

 

Kasey Bippert

Staff Accountant


The Abacus ALIGN Process

Posted by barbie on August 14, 2017

The Abacus ALIGN Process

by John Helms, CPA, CFE

 

I’ve heard it multiple times from new clients: “We felt like we had a closer relationship with the mail man than our CPA.  We would mail in our tax documents and a month or two later get a packet back with a bill to the IRS and a bill to our CPA.  There was no understanding, just a stack of papers”. 

At Abacus CPAs, LLC we want to have long-lasting, mutually profitable relationships with our clients.  We would never want our clients to feel helpless in their financial or income tax situation, so we created the Abacus ALIGN process to make certain that your relationship is with your accountant and not your local mail carrier.

There are four components to the Abacus ALIGN process:

Available:  Abacus CPAs, LLC works diligently to be available to our clients.  We realize that your financial needs may not fit neatly into an 8:00 am -5:00 pm Monday through Friday schedule.  We are available to you by appointment before or after hours and often on weekends.  We also realize that when you have a question you need a quick response.  Your Abacus team is standing by ready to answer your questions when you need them.

Listen:  Most of our meetings begin the same way, “Tell me what is going on.  Tell me about your goals and your concerns in your ability to achieve them.”  The most valuable part of a client-accountant meeting is the input of the business owner or individual, not the preconceived notions of the accountant.  We begin our sessions by letting you talk first.

Innovate:  Accounting has come a long ways since counting beans and recording financial history.  Abacus CPAs, LLC uses innovative strategies to help you achieve your financial goals.

Guidance:  After you have shared your goals, questions, and concerns, your Abacus associate will spring into action by providing you the best possible guidance so you can make smarter decisions.

Next:  So now what?  This year is in the books and now it is time to look ahead.  Your ALIGN session will conclude with a look to the future, and a discussion between you and your accountant on how you can be where you want to be, faster than you expected.

We realize that it is a busy time of year, but there is no better time to hold your Abacus ALIGN session than now.  Feel free to contact Abacus CPAs at 417-823-7171 or www.abacuscpas.com and we would be happy to assist you.


Great Apps for Business

Posted by barbie on June 27, 2017

In the fast paced world of today’s business, sometimes it can be hard to find the time to stay at your desk throughout the entire day. Thankfully, there is no shortage of apps that allow us to conduct business on the go. Here are a list of some the best apps for businesses.

• QuickBooks: Many businesses today use QuickBooks online as their primary accounting software, but many of those users are not aware that there is a phone app that is included in your subscription. This app has the same functionality as the online version, so you can pay vendors, view reports, and even upload pictures of receipts.

• Square: Does your business have a need to make sales remotely? Square allows you to do just that through the use of their app and a small card reader that you can attach to your phone. You just enter the amount to charge your customer, have them swipe their card, and the money will be deposited into your bank account after a 2.75% service fee. Another great feature of this app is that it can be linked to your QuickBooks to automatically post the sales as they are made.

• Trello: This app is great for organizing all of your projects in one place. You can create different cards that can be viewed by yourself, or by multiple members of a team. These cards can be edited with comments, attachments, pictures, and checklists to allow you to keep ideas or track your projects.

• Abacus Access (NetClientCS): This app, along with the version located on www.abacuscpas.com, allows you to safely and securely upload documents, supply payroll information, and even fill out a tax organizer to be sent directly to Abacus CPAs. The app version of Abacus Access also allows you to upload pictures of your documents, so you can quickly and conveniently provide us with all of your required information. Additionally, Abacus uploads your tax returns for you to view and print for your needs.

If you would like to learn more about ways Abacus CPAs can help your business grow, contact us at 417-823-7171 or at www.abacuscpas.com.


      © 2018 Abacus CPAs. All Rights Reserved. Login.