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Give and Get: What Kinds of Gifts are Tax Deductible?

In Business,Taxes on June 14, 2011 by Sufen Wang Tagged: business gifts, father's day, gifts, tax deductions, tax-deductible

ties

Father’s Day is almost upon us, and you’ve probably already gotten something special for your dad (if you haven’t, you still have a few days left to be a good son or daughter). As you contemplate your gift, you may wonder: “Is this Father’s Day gift tax deductible?”

Unfortunately, the IRS doesn’t always reward us for being so generous. But there are certain circumstances in which you can claim the giving of a gift as a tax deduction.

If you give gifts to clients or business associates as part of your business, you can deduct up to $25 per person for the gifts you give every year. This includes gifts that are given to a company that are intended for the eventual personal use of individuals in that company, such as boxes of candy or cookies.

Gifts given to a customer’s family member must be considered an indirect gift to the customer unless you have a bona fide, independent connection with that family member.

Incidental costs of your gift-giving, such as wrapping paper, don’t generally count towards your $25 limit unless the cost of the incidental is significant compared to the value of the gift itself. For example, if you buy a basket for giving fruit to a customer, the basket would count because it’s worth a lot compared to the value of the fruit.

The Basket Case.

There are exceptions to this rule, however. You can’t claim promotional gifts on your taxes if they have your name clearly and permanently imprinted on them, or if they are items for wide distribution, like the kind of swag (souvenirs, wearables, and gifts) that you might give out at an industry convention.

If you give a customer tickets to an event that you do not also attend, you can decide whether you’d prefer to claim it as a gift or as an entertainment expense, whichever you prefer.

It’s nice to know that you could be rewarded for your generosity to your customers, clients, or business contacts. Truly, ’tis better to give than to receive.

On the Money,
Sufen Wang
Wang Solutions

Pay to Play in CA: Are Californians Entitled to Paid Holidays?

In Business on May 31, 2011 by Sufen Wang Tagged: ca, california, california department of industrial relations, holiday, holiday pay, overtime, paid time off, pto

closed for holiday

Holidays are a great time to get together with family and friends. They can be joyful celebrations of happy times or remembrances of momentous occasions in our nation’s history. People often get time off from work to be able to properly observe national holidays.

But this isn’t necessarily the case for Californians. Did you know that California law does not require an employer to provide employees with paid holiday time off?

In fact, according to this article, the California Department of Industrial Relations states that “hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week.” Furthermore, California legislation specifically states that no business is required to “close its business on any holiday, or that employees be given the day off for any particular holiday.”

This not only means that employers can require employees to work on national holidays, but also that they don’t owe employees additional compensation for working during these holidays. However, companies are still mandated by law to pay overtime at a minimum of time-and-a-half to employees for working more than forty hours per week, and that includes time worked during holidays.

Conversely, employers can also shut down business on any holiday without compensating employees for the loss of a day’s work. With so many Californians struggling financially, this can be a significant loss to some employees.

But there are still things to be thankful for. If you work for a California company that does offered you paid holidays off, this means that it’s the employer’s policy, and is not mandated by law. The same goes for holiday pay (usually time-and-a-half). If you work for a company that has a paid holiday time policy, be sure to thank your CEO the next time you see him.

On the Money,

Sufen Wang
Wang Solutions

Checks and Balances: Keep ’em Honest

In Business on May 24, 2011 by Sufen Wang Tagged: accounting, business, checks and balances, embezzlement, theft

money on the street

Everyone’s asked and been asked this age-old question: If you found money in the street, what would you do? Would you keep it? Try to find the owner? Give it away to somebody else? Burn it as a statement against “The Man?”

This question is supposed to show how honest you are (or aren’t). But even those who are adamant against keeping money found on the street may find themselves tempted when it comes to money found unguarded in the workplace. That’s why, as an employer, it’s a good idea to implement different checks and balances.

By segregating financial responsibilities, you can prevent theft and embezzlement in the workplace. If there’s only one person in charge of all of your accounting tasks, such as making bank deposits, receiving funds, issuing checks, and reconciling checkbooks, it can be easy and very tempting for that person to skim a little off the top for themselves. By assigning different people to different tasks, you ensure that they can keep one another accountable and honest.

There's a better solution than this.

If you don’t have enough accounting resources to be able to segregate responsibilities, then you should, at the very least, check the books regularly and make sure that your accounting person knows that you’re doing it. Here are a few ways for you to keep an eye on your finances:

Maintain a small petty cash fund for the office and reconcile it every week.

Review your credit card and bank statements regularly.

Take advantages of online services to keep tabs on your business finances.

Implementing checks and balances in your business will not only protect your business from theft and embezzlement, but it will also protect your employees from the temptation to act against their better judgment. In the end, they’ll thank you for it.

On the Money,
Sufen Wang
Wang Solutions

Going Rogue:

In Accounting & Finances,Business,Taxes on May 11, 2011 by Sufen Wang Tagged: 1099-MISC, contracts, independent contractor, insurance, Internal Revenue Service, liability, taxes

The Risks and Responsibilities of Hiring Independent Contractors

America: it’s the land of the free and the home of the brave. We Americans pride ourselves on our independence, and, now, with the economy still slowly making its way towards recovery, more businesses are hiring independent contractors than ever, and more people are working as independent contractors than ever.

I recently came across this article by Ronda Jones of Forrest T. Jones & Company. It’s all about what you need to know before you hire an independent contractor or accept work as an independent contractor. It’s a helpful article, and if you’re thinking about hiring an independent contractor, you should definitely give it a read. But here are some tidbits to whet your appetite.

If you’re thinking about hiring an independent contractor:

Consult an attorney and draw up a basic work contract. Make sure that it includes a “hold harmless” clause, a non-competition clause, and insurance clauses, and make sure that it addresses jurisdictional issues in your city and state.
Make sure that the independent contractor has adequate insurance to cover their work.
Consult your insurance agent to see how hiring an independent contractor will affect your coverage.
Request and retain invoices from your contractor.
You may also want to run a background check or even run an internet search to make sure that there aren’t any unpleasant surprises in store for you.
Make sure that you know how to issue Form 1099-MISC at the end of each tax year for your contractor.

If you are working as an independent contractor:

Review the company’s independent work contract. You may want to have your attorney go over it to make sure that it’s okay to sign. Make sure that you are only held accountable for liabilities resulting from gross negligence or willful misconduct. You may also want to insert a liability limitation cap so that you aren’t still held liable for errors or omissions that are discovered years down the line.
Ask the employer for copies of their certificates of insurance so that you can make sure that they have general liability and auto liability insurance, if applicable. You should also ask to be listed under their professional liability or errors & omissions insurance, if applicable.
Keep a log of the projects you’ve worked on, just in case your involvement is ever called into question.

Ask the contractor periodically to meet and review the terms of the contract to make sure that it adequately covers the work that you’re actually being required to do.Working with an independent contractor is a great way to save money for services you need, compared to hiring someone full-time that you don’t really need full-time. Working as an independent contractor is a great way to get work during times when work is difficult to find.

And if you go about it the right way, then neither party will have to hire Chuck Norris to take out the other.

On the Money,
Sufen Wang
Wang Solutions

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