No business is immune from the threat of employee fraud.  The checks and balances that are built into internal control for larger companies simply are not practical for the day to day operations of the smaller company.  We have seen cases when a bookkeeper stole by manipulating check disbursements and the underlying accounting documents.  On the payroll side, we have seen office help give themselves unauthorized raises or advances and attempt to cover it up through pension withholdings.  I realize that we cannot run our organizations without a certain amount of trust with our employees, but these cases of fraud make us pause and think.  I am not suggesting that your office manager is stealing.  I am suggesting the opposite.  I know most of them and they are honest, hardworking people with your best interest in mind at all times.  Something you can do to help put your mind at ease; contact your bank and payroll service company.  Request an additional copy of your bank statement and payroll report to be sent to your home.  Then examine the checks and payroll amounts to be sure they make sense to you.  If you have concerns, contact us and we will show you what the next steps are.

After being suspended for 2010, Estate Taxes are back with a vengeance in 2011.  There are new thresholds that will impact many who were not impacted before.  We now have an association with estate planning attorneys who offer free consultations to review your status.  It is more important than ever to go over your situation to be sure your wishes will be viable and your major assets are owned in the most appropriate manner so you can avoid probate.

My firm now offers Exiting Planning to help you move on when your time has come.  It is an exciting process that applies to businesses of any size as many of us have a large percentage of our net worth tied up in our businesses.

The Hiring Incentives to Restore Employment Act (HIRE), also known as the “jobs bill,” is a plan to create jobs by providing a temporary tax break to companies that hire the unemployed. The bill also extends federal highway programs through the end of the year.

Current Status

On March 18, 2010, the President signed the HIRE Act into law. The IRS is now outlining how to handle the Act’s provisions. We will continue to monitor the situation, and will update you as final details emerge.

The cornerstone of the HIRE Act is a federal program that will provide employers with incentives to hire and retain employees. HIRE will exempt an employer from paying the employer portion of Social Security taxes for the remainder of the year on new hires who are currently unemployed. If those workers stay on the payroll for at least a year, the employer would also get a $1,000 business tax credit per employee.

Social Security Tax Forgiveness

The 6.2% employer portion of the Social Security tax would be exempt for any qualified individual hired after February 3, 2010 and before January 1, 2011, for wages paid in 2010 to the $106,800 Social Security wage base. Qualified employers may begin claiming this tax credit on the second quarter 2010 Form 941.

A qualified individual meets the following requirements:

• Begins employment with a qualified employer after February 3, 2010, but before January 1, 2011.
• Has not been employed for more than 40 hours during the previous 60 days. The individual must sign an affidavit attesting to the employer that he was not employed in the previous 60 days, or was employed for no more than 40 hours total.
• Is not hired to replace another employee unless the previous employee was separated from employment voluntarily or for cause.

An employer can save up to $6,622 in employer Social Security tax for each qualified hire. There is no limit to the total amount of tax benefits or hires during this period, so employers will receive greater tax benefits by hiring individuals earlier in the year.

Note: The Social Security tax exemption can not be taken in conjunction with the Work Opportunity Tax Credit (WOTC). In other words, if the employer chooses to take the WOTC on a qualified worker, they cannot also take the Social Security tax exemption.

Business Credit for Retention

A business tax credit can be claimed by the employer for each qualified individual hired after February 3, 2010 who stays with the employer for 52 consecutive weeks. This business credit will be the lesser of $1,000 or 6.2 percent of the wages paid by the employer to the retained worker during the 52 consecutive week retention period.

For the employer to claim this additional credit, wages paid during the previous 26 weeks must equal at least 80% of wages during the first 26 weeks of employment.

News on the homebuyer tax credit.the House of Representatives has
approved legislation that would extend and expand the credit. The
House vote comes after the Senate voted yes on Monday night, and while there is more work to be done, word has it that an agreed upon bill should reach President Obama for his signature by the end of this
week.

Under the proposal, individuals with income up to $125,000 a year and
couples earning up to $225,000 would be eligible for the credit. The
extension would cover homes under contract by April 30th and closed by June 30th, 2010. And as we had also predicted, the tax credit will be expanded to non-first time homebuyers as well. There are a few tweaks for non-first time homebuyers – the credit is reduced from $8000 to $6500, and they must have owned a home for at least five of the past eight years. Remember – this is NOT final, and even if it is
approved, it could contain further changes.

The temporary incentives of the American Recovery and Reinvestment Act of 2009 are scheduled to expire at the end of 2009.  

Why you should buy equipment in 2009:

In 2009, the American Recovery and Reinvestment Act adds to the advantage by providing 50% bonus depreciation on eligible new 2009 equipment acquisitions.  This incentive substantially accelerates the normal tax depreciation benefit which results in increased economic benefits.  The type of property qualified for bonus depreciation is the same as that included in previous bonus depreciation packages (e.g., equipment, tractors, and computers). 

Increased Section 179 benefits endings soon

Depending on how much your company invests in capital expenditures during the year, for tax purposes you may qualify to expense the full cost (100%) of qualified capital assets (property and equipment) your company purchases in the year the assets are placed in service, within certain limits.  Last year, due to the Economic Stimulus Act of 2008, your business was allowed to expense a maximum of $250,000 with a phase-out threshold at $800,000 under Section 179.  This new stimulus legislation extends last year’s temporarily increased expensing limits through 2009.