This month’s newsletter features important small business in Arizona statistics. We also cover a new Social Security Wage Base increase, an important HSA adjustment, and more! Read on for news from the Payroll, Human Resources, Accounting and Tax industries.
International Accounting Day is November 10th!
Market Update: Small Business in Arizona Statistics
Arizona’s entrepreneurs are largely excited about the state’s future prospects. Not only is Arizona’s economic growth stable and encouraging, the population is growing while unemployment is holding around 5.5 percent, and the state’s tax rates remain low and manageable. Small business owners across the state are taking notice of these healthy indicators, ready to seize new opportunities, and are eager to see if they continue to trend in the right direction.
The primary drawbacks in Arizona are difficulties accessing startup and growth capital, a problem that plagues much of the nation, and the state’s generally low per-capita personal income. While the cost of living is moderate in Arizona, personal income is much lower than the national average, meaning the average Arizonan has less disposable income to spend on small businesses’ goods and services. Still, neither of these factors have dampened entrepreneurs’ outlooks in the Grand Canyon State; the mood in Arizona is resoundingly optimistic.
Payroll Update: Social Security Wage Base Up to $128,700 for 2018
On October 13, the SSA announced that the 2018 social security wage base will be $128,700, an increase of $1,500 from $127,200 in 2017. All covered wages are still subject to the 1.45% Medicare tax. The maximum social security tax employees and employers will each pay in 2018 is $7,979.40, an increase of $93 from $7,886.40 in 2017.
Human Resources Update: Health Care Spending Accounts
Employees can put an extra $50 into their health care flexible spending accounts (heath FSAs) next year. For 2018, employees can contribute $2,650 to their health FSAs, up from the 2017 limit of $2,600. Just in time for open enrollment season, the IRS made the change in Revenue Procedure 2017-58, issued Oct. 19. Other inflation-adjusted benefits caps will also increase, if only slightly, such as for qualified transportation benefits and adoption assistance programs. The increase in the cost-of-living index is up 2.2 percent for the 12 months ending in September, which was enough to meet the statutory thresholds that trigger rate adjustments for these benefits.
Employers should communicate the higher cap to employees during open enrollment and include the new limit in their open-enrollment materials, even if they must, at this late date, do so through a printed or online addendum.
Accounting Update: Understanding Your Profit and Loss Statement
Most entrepreneurs start organizations because they are passionate about the primary work of the business, which usually isn’t accounting. This means that most entrepreneurs aren’t completely comfortable interpreting the monthly financial reports they receive.
We have met hundreds of entrepreneurs who never look at their profit and loss statements because they do not understand them and explanations have been too complicated. While we can’t teach you to be a CPA, we can give you some basics that will help you with this important financial tool.
Client Spotlight: Community Montessori School
Click here to read our recent blog which spotlights our longest client to date. For nearly 40 years we have been servicing Community Montessori’s accounting needs as they provide quality education to young children in Phoenix Arizona.