A Look Inside The New Tax Plan. The Standard Deduction vs. Itemizing

There has been so much hype about the new tax plan. I have received numerous calls and emails with concerns, so I thought I would cover a big piece of it for New Yorkers.

The first thing you need to consider before you worry is do you Itemize your deductions or have you been taking the Standard Deduction the past few years? If you have not been Itemizing in the past you are not likely to now - the amounts all doubled. If you file Single - it went from $ 6,350 to $12,200  if you file Head of Household $9,350 to $18,000 and if you file Married $12,700 to $24,400.  

This is not a huge break though because the Personal Exemption has been cut completely. In the past we could deduct from taxable income either the Standard or Itemized Deductions PLUS an exemption of $4050 (2017) for each member of the family. In two or three person households the amounts will equal closely to the new higher Standard Deduction – not much of a change for you…other filing combinations will be impacted differently. 
The overall issue is if you pay very high real estate taxes on your main home or vacation home you will likely loss deduction.  

Keep in mind – if the RE Taxes you pay are a business deduction - for example; - rentals or farming there is no loss at all. This rule only applies to personal property or that held for investment only. The main thing to remember is that the brackets have changed significantly for lower to mid-income taxpayers. The rates did not change a whole lot, but how they are applied did. In the analysis I did for people over the past month most came out fairly close to what they are paying now. 

Overall, as with anything else some will be helped and some will be hurt. We are too far gone to ever make this a truly fair system. Those of us in NY will not see much benefit at all, but I want to leave you with this thought. There are many (not living in NY or CA) that will be helped hugely by these changes. We need to get the GDP growing. I hope they have found a way.

Google vs. The Professionals

Don’t get me wrong I use google every day. The web has become a primary source of information. It provides us with research and access to more information than we ever thought we “needed”. I do see some danger though as people have become accustom to just flipping out their phone and fact checking everything as if it can replace trusted advice.

As a professional in the consulting business I am starting to see the trust in the internet grow. There are articles and blogs about taxes, business strategy, HR problems, valuation and business plans some of which are factual and well-written and with sound judgement and others not so much. 

My worry and purpose for this article is because people are now using Google to justify their decision making and actions. Instead of seeking sound individualized advice based on their situation they are finding the answer that they like best, meets their needs and going with it. Using it is as their defense for action. Yes, scary I know…

The danger as I see it is people are relying on advice that does not apply. Every state has different laws and regulations, the tax code overlaps and does not apply to every return the same way. The events of a similar situation can have drastically different outcomes based on where you are located.

The moral of my story is this, when something as important as your business is the subject of your google search back it up by confirming with a professional that has the knowledge and experience to adequately assess the facts and provide you with sound advice. Google is great, but can you really believe everything you read?

Planning and Projections

If you are a calendar year business, November should be your planning month. (Fiscal year companies – the advice is the same only the month may change.)

Regardless of the size of your company it is an excellent time to reflect on the first 10 months of the year and to look ahead to the next. You need to be deciding if this is the right time to purchase something to reduce taxes and how that purchase will affect cash flow.

So many people go see their Accountant for tax planning this time of year with incomplete and inaccurate books and no real plans. In order to get the best results for that time and money you really need to do your homework a little beforehand. I do advocate for doing a full budget process even in small companies; especially if you are planning to grow your business. It is not critical the process be executed fully to reap benefits from some of the steps.

At the very least do some analysis:
Look at your sales, expenses, margins and work force, make sure your financial house is in order. Determine if your assets are working for you or against you. Would replacing a piece of equipment increase productivity?

Set some goals for you and your team: Studies prove giving your team goals helps motivate them to Set goals for advertising and a related spending plan. Too many companies advertising in a vacuum, if you can’t measure the effectiveness of those dollars you may be wasting money. You may be surprised how spending a few hours can positively affect your bottom line and your cash flow.

Let us know if we can help you with any planning process or get you started on your way.

The Employee Handbook - Friend or Foe?

So many small businesses do not have Employee Handbooks. I hear a wide variety of reasons why, but the most common is that they just don’t get around to it. I have also heard it is too expensive and too hard to make one size that fits all for “their” employees. I suppose if you have only one employee then you likely don’t need one, but for those with two or more keep reading.

If you have one – GREAT – my question to you is – “Are you following it?”. If you have a 100+ page Employee Handbook and you don’t even know what is in there, you likely have a bigger problem than not having one at all. It may shock you, but having a Handbook and then breaking your own rules sets a precedent. The DOL is not too keen on allowing you to only apply the rules when it’s convenient for you as an Employer. My suggestion is to review your current book and either cut it down to something you can truly follow or eliminate the Employee Handbook and then opt for written Employment Agreements with each employee. Each can be customized for the position and the standard boiler plate parts you need added in to cover more adequately than a Handbook you ignore.

For those of you that do not have one yet. Do something good for your business and prioritize it. Most often I find that employees welcome having the rules given to them in writing - especially when they are followed by all. Make sure you get an Employee Handbook customized to your business and needs. Yes, some DOL rules apply to every employer and employee, but many rules are determined by the number of Full-time Equivalent (FTE) Employees you have working for you at one time. Other rules can really be what you want them to be, custom to the company.

Employers with sound Handbooks that are followed have a bit of insurance when dealing with some difficult employee issues. If you lay out the rules in writing and make sure they are followed by management then you may be able to save precious points on your unemployment rate when terminating a troublemaker. It also aids in hanging on to the good employees you want to keep. Rules may feel like your foe, restrictive and difficult when trying to get some things done, but rules are also a great friend, they are an equalizer and short road for unloading an employee who is not helping your bottom line.

By: Kimberly Manrow EA 

SENATOR NOZZOLIO ANNOUNCES $1 MILLION IN STATE FUNDING TO ASSIST NEW FARMERS

New York State Senator Michael Nozzolio announced $1 million in state funding to assist new farmers and New York State’s growing agriculture industry. Last year, the successful New York State New Farmers Grant Fund awarded $610,000 to 19 farms across the state. 

“Agriculture is the backbone of our economy, not only in the Finger Lakes but statewide. Virtually every business, family and individual in our region directly or indirectly depends on agriculture, the single largest job producing enterprise in New York State,” said Senator Mike Nozzolio.

The New Farmers Grant Fund will provide grants of up to 50 percent of the total project costs. Funds provided will be a minimum of $15,000 and maximum of $50,000, the remaining 50 percent of the project cost will be matched by the recipient of the grant. The Fund is open to New York farmers in the first ten years of having a farm operation of 150 acres or less.

“The New York State Farmers Grant Fund aids farmers who are just starting their businesses.  By providing new farmers with the resources they need to be successful, we can create opportunities for job growth and continue to expand our agricultural markets beyond New York State,” concluded Senator Nozzolio.

Complete details including the applications for the New York State New Farmers Grant Fund are available online at the Regional Economic Development Council’s website.  The deadline to submit an application is January 22, 2016. 

If you have any questions comments or concerns about this – please don’t hesitate to call us at (315) 258-8780 for more info.