As manufacturers look for every opportunity to cut costs, one important area to address is equipment downtime. A breakdown, even for just an hour, reverberates through the manufacturing process. It can slow or halt production, leave employees idle and play havoc with just-in-time delivery schedules.
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The IRS, taxpayers and tax preparers share a common enemy: identity thieves. We all have a part to play in the fight against tax-related identity theft. Your role starts by learning the mechanics and warning signs. From there, taxpayers can take proactive steps to protect their data online and at home.
Understand How Tax Fraud Happens
Dishonest individuals may steal taxpayers' personal and financial information from sources outside the IRS, such as social media accounts where people tend to share too many details or bogus phishing emails that appear to come from the IRS or a bank. Once they obtain an unsuspecting taxpayer's data, thieves may use it to file fraudulent federal and state income tax returns, claiming significant refunds.
Potential Risks of Joining Together
Proposals for Not-for-Profit Mergers and Acquisitions
In any company, making employees familiar with more than one job is critical to developing the business and dealing with the unexpected. A sure-fire strategy for coping with unforeseen circumstances is a cross training program.
- For 2014, the credit percentage increased from 35 percent to 50 percent of employer-paid premiums. For tax-exempt employers, the percentage increased from 25 percent to 35 percent.
- Small businesses may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.
- For 2014, the credit is phased out beginning when average wages equal $25,400 and is fully phased out when average wages exceed $50,800. The average wage phase-out is adjusted annually for inflation.
- Generally, small businesses are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit. Transition relief from this requirement is available to certain small employers.
- Consistently treat all workers performing similar tasks as either independent contractors or employees. If contractors must wear ID badges or use company vehicles, make sure their contracts explain why. For example, the policy was instituted after customers expressed safety concerns about deliveries in unmarked cars.
- Give outside workers considerable discretion about how and when they perform their duties. In general, independent contractors must control the way they get the job done.
- Send each contractor a Form 1099 showing non-employee income if you pay $600 or more in a calendar year.
- Don't supply freelancers with services you give employees. Some companies have run into trouble with the IRS for providing contractors with office space, computers, cars and other perks. Independents generally furnish their own tools and materials.
So what if you do rehire some laid-off employees as independent contractors? It's difficult -- but still possible -- to classify them as contractors. But don't let freelancers work in your office and give them new titles. For example, your retained employees might be staff representatives while your new workers are outside service agents.
There's nothing illegal about rehiring former workers as freelancers. You just have to make sure you structure the deals properly so you don't have the IRS breathing down your neck.
Now is a good time to evaluate your financial situation to determine if you are making progress toward your financial goals. To make this evaluation, prepare a net worth statement and analyze how your income is spent.
Net Worth Statement
A net worth statement lists all your assets and liabilities, with the excess representing your net worth. All assets should be included, such as vested balances in retirement plans and 401(k) plans, personal property, jewelry, and household items. Assets should be valued at the price you would obtain if you sold them now, not the amount you paid for them. Prepare a net worth statement at least annually so you can assess how much progress you made during the year. Ask yourself the following questions when reviewing the statement:
- Has your net worth grown by more than the inflation rate? To make progress toward achieving your financial goals, your net worth should increase by more than the inflation rate. If your net worth is not growing, determine why. If stock investments are a major portion of your assets, then your net worth may have fluctuated over the past three or four years.
- What is your ratio of assets to liabilities? A ratio of less than one indicates you have more liabilities than assets and a negative net worth. If that is the case, take active steps to reduce your liabilities. This ratio should increase over time, which indicates you are reducing debt.
- What is the trend in your liabilities? Review the amounts and types of debt you have. Mortgages are typically used to purchase items appreciating in value and are generally considered "good" debt. Credit card balances and auto loans are used to finance items that typically don't appreciate in value and should be kept to a minimum.
- What percentages of your assets are liquid and nonliquid? Nonliquid assets include items like your home, other real estate, jewelry, and works of art. Although they may increase in value over time, they can be difficult to sell quickly at full market value. Liquid assets, such as bank accounts and stocks, are more easily converted to cash. You want sufficient liquid assets to cover financial emergencies.
- How have your investments performed? Now may also be a good time to thoroughly analyze your portfolio's performance over the past year. Measure the performance of each investment, comparing it to an appropriate benchmark. This can help you identify portions of your portfolio that may need to be changed. Also calculate your overall rate of return and compare it to your targeted return. If your actual return is lower than the return you targeted when designing your investment program, you may need to increase your savings, select more aggressive investments, or settle for less money in the future.
Even if you don't feel the need for a budget, analyze how you spend your income. This analysis can help you identify ways to reduce spending so you can increase saving.
First, prepare a cash flow statement that details your income for the past year and your expenditures by category, which will reveal your current spending patterns. Looking back over an annual period will help you identify normal monthly expenses as well as periodic expenses, such as insurance premiums, tuition, and gifts. Canceled checks, credit card receipts, and tax returns can provide much of the needed information. However, you might want to keep a journal of all expenditures for a month or so if you are unable to account for large sums of money.
Divide the expenditures among fixed and essential expenses (housing, insurance, taxes, saving, etc.), variable and essential expenses (food, medical care, utilities, etc.), and discretionary expenses (entertainment, clothing, travel, charitable contributions, etc.). Analyze the statement to find items you can cut back on, allocating those sums to savings.
Your budget should incorporate your financial goals and serve as a guide for future spending. Some points to consider when preparing a budget include:
- Make conscious spending decisions. Don't just assume you'll spend the same amounts as last year.
- Prepare a flexible budget. Unexpected expenditures are bound to happen and your budget should incorporate the possibility of them happening.
- Budget for large, periodic expenditures, such as tuition or insurance premiums.
- Don't try to be too exact. All members of the family should have a reasonable personal allowance that can be spent without accounting for it.
- Periodically compare your actual expenditures to your budget to ensure you stay on track.
- Your budget shouldn't be a dreaded exercise, but a tool to help you achieve your financial goals. So keep it short, simple, and easy to implement.
These two tools can help you evaluate where you currently stand financially. Prepared annually, they can also help you assess your progress and keep you on track toward achieving your financial goals.
The Santa Clarita Valley Economic Development Corporation recently released the Economic Snapshot for data through December 2012. As a member of the SCVEDC Board of Directors, I welcome the opportunity to discuss any of the information provided.
Wisemen gathered at the foot of the manger during a live nativity performance at the First Annual Christmas Nativity Festival in Burbank at the Church of Jesus Christ of Latter-day Saints earlier this month. The festival featured about 350 nativities and a live nativity. KKAJ staff accountant Daniel Holbrook, along with his wife and 3-month-old child, portrayed Joseph, Mary, and Baby Jesus. See more pictures on the Burbank Leader's website: http://www.burbankleader.com/photos/blr-1201-nativity-pg,0,6480160.photogallery
Bud Alleman, Noon Lions Club treasurer and KKAJ partner, helped congratulate winners of the Lions Club International “Imagine Peace” poster contest at an awards ceremony in November at the Burbank Central Library. The posters were designed to portray the participant’s idea of peace.
Congratulations to winners Margo Akopov, Micayla Siemon and Tanishka Nair. Each winner received $25 and certificates from the Lions Club, City of Burbank, and offices of Representative Adam Schiff, State Senator Carol Liu, Assemblyman Mike Gatto, and Supervisor Michael Antonovich.
This event was the first step in the judging process, and winners will go on to the next level. The top prize of the global contest can win $5,000 and a trip to New York to attend Lions United Nations Day.