Posts Tagged ‘wages’

Is Your Business A Family Affair?

Wednesday, November 16th, 2016

Top Tax Savings Strategies For The Family-Run Business

Family Business- Ohio Tax Planning

Instead of chores, how about give your children a job to do in your family-run business. The money they earn can go to their college savings account and the savings you accumulate can be reinvested to help your company find future growth. Read on to learn more.

There’s a certain freedom associated with being self-employed, but there’s also a lot of responsibility … and expenses. Fortunately, the family that’s invested in the success of the business, and is willing to roll up their sleeves and get to work, may be able to secure some significant tax savings.

Marriage Has It’s Benefits

If you’re married, chances are good that your spouse is already doing helping out in some aspect of your business. So why not extend a formal job offer? While you may be hesitant to bring them aboard (officially), there are several key reasons why it pays to add your spouse to the payroll.

  • Retirement benefits – Once hired, federal taxes will begin to be withheld from your spouse’s paycheck. That means that they will start receiving Social Security credits toward retirement. This alone is a pretty great (when it comes to retirement – every little bit helps), but the retirement benefits of hiring your spouse don’t stop there. If your business already offers employees a retirement plan, those benefits can be extended to your spouse when they opt in to the plan as well. Furthermore, contributions your company makes to the plan are tax deductible – up to 25 percent of compensation or $49,000, whichever is less.
  • Health Insurance – Business owners everywhere continue to struggle with the affordability of health care. But those who do offer this benefit to their employees, might be able to secure some additional savings by opting to cover their spouse as an employee rather than as a dependent. Especially if you consider the fact that your company can deduct the premiums it pays for employee health coverage. Then you may want to ask your tax advisor if you are also eligible to receive the health care tax credit.
  • Life Insurance – Because they are employees of your business, your spouse is eligible for the same benefits as all your other employees. That includes life insurance. And those costs are deductible as business expenses as well.

All Hands On Deck

Raise your hand if you had to do chores as a kid. We all did. It taught us work ethic and the value of a dollar. These days, families that own their own businesses can go a step further. Instead of paying your son or daughter a few dollars to mow the lawn, how about hiring them as a grounds keeper for your business? These days giving your kids a job in your business isn’t just a huge help when it comes to managing the day-to-day responsibilities of the company, it can be advantageous from a tax perspective. Business owners who welcome their kids to the family workforce, may be able to:

  • Deduct their children’s salary from the business’s income as a business expense.
  • Avoid paying FICA tax on their children’s salary.
  • Shift a portion of business income from your tax bracket to your child’s to significantly reduce your taxable income.

But, in order to make this strategy work, you must be able to prove that your children are legitimate employees and that their work is necessary. And don’t forget to fill out all the proper forms that go along with hiring any new employee (W-4, U.S. Citizenship and Immigration Services Form I-9, Employment Eligibility Verification, etc.). It’s also wise to keep track of their work and the time they put in by maintaining a time sheet. Also, while it may be tempting to pay your kids top-dollar for answering phones or cleaning the office, the IRS is on the lookout for unreasonable compensation practices. Don’t pay your son or daughter more than what you would pay a stranger for doing the same job and pay them regularly, as you would with any other employee. Your child’s paycheck can then be directly deposited into an account in your child’s name.

TIP: Get more out of your child’s earnings by opening a Roth IRA or 529 College Savings Plan in your child’s name and direct deposit their wages into the account and watch it grow.

Start taking advantage of the various strategies available for family-run businesses. Email rea.news@reacpa.com or ted.klimczak@reacpa.com to find out how.

By Ted Klimczak (Medina office)

Check out these articles for more tax tips and insight:

5 Tax Deductions To Ease Your Business’s Tax Burden

How To Drive For Business And Save On Your Tax Bill

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Building Bridges

Monday, July 18th, 2016

Closing The Gender Gap In The Workplace

Closing Gender Gap - Ohio CPA Firm

The percentage of women in the workforce increases every year, but that’s not necessarily reflected by the percentage of women in leadership positions. Additionally, women are often being paid less to do the same job as men, despite having equal qualifications and experience. Regardless of your gender or position within the company, we all have a responsibility to help close this gap.

We’ve certainly come a long way from the old days, when women in the workforce were expected to be seen and not heard. As anyone who has ever watched an episode of “Mad Men” (or worked during that era and lived to tell about it!) can attest, the workplace was exclusively a man’s world.

But despite our progress, the gender gap in the business community continues to be a hot topic these days. Shouldn’t men and women be paid the same to do the same job? Haven’t women proven that they are just as skilled, intelligent and driven as their male counterparts? Why does a gender gap still exist, anyway?

I’d like to think that no one intentionally denies their employees equal opportunities and fair pay for any reason, including gender. But, unfortunately, it does happen – even if it’s just on a subconscious level.

An organization is only as strong as its employees. Men and women are equal and integral parts of the equation. Successful companies recognize that diverse opinions and skill sets are invaluable assets to the modern business, and they have begun to hire and promote accordingly.

The percentage of women in the workforce increases every year, but that’s not necessarily reflected by the percentage of women in leadership positions. Additionally, women are often being paid less to do the same job as men, despite having equal qualifications and experience. Regardless of your gender or position within the company, we all have a responsibility to help close this gap.

LEADERSHIP: You Hold the Keys to Change

Even if your intentions are pure, your actions may fall short. Remember, your employees are following your lead, so be sure you’re setting the proper tone at the top. For help, survey your employees to find out how you’re doing in this area. You can also take the following steps to help close the gender gap in your business:

  • Ensure that women are represented at all levels of the company, and keep them involved in management decisions.
  • Pay women equally as their male counterparts.
  • Don’t assume that a woman with family obligations isn’t up for the challenge of a promotion or increased responsibility.
  • Take time to listen to the concerns of women within your organization and foster an environment of open communication.

MEN: You Play an Important Role, Too

It’s the job of every man in the company to respect and treat their female colleagues as equals. You can do this by:

  • Becoming aware of communication differences between genders and encouraging women to participate and offer their ideas.
  • Actively working to include your female colleagues in the same way you do other men.

LADIES: Support One Another

Women in leadership positions have a unique opportunity to support other females in the organization, both by serving as mentors and acting as “spokeswomen” for gender issues with upper management. Additionally,
women can:

  • Organize and participate in groups that address common issues women face in the workplace.
  • Be visible. Make sure company leadership sees your work ethic and initiative, and ensure your opinions are heard.
  • Find ways to connect with your male colleagues.

Men and women bring different yet equally valuable perspectives to the workplace, and all contributions should be respected. We’re on the same team, working toward the same goal — let’s ensure we always act accordingly.

By Lesley Mast, CPA, MAcc-Taxation (Wooster office)

Want more insight into this topic?

Check out Lesley’s podcast episode, “girls & glass ceilings: the gender gap,” on unsuitable on Rea Radio. You can listen to the podcast on iTunes, SoundCloud and at www.reacpa.com/episode-20.

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