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PayTech February Newsletter

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Welcome to PayTech’s February Update

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Market Update

Just as the holiday shopping season neared, a toy company, Rokenbok Education, was navigating a nightmare situation: Its database files had been infected by malware.

Online criminals had encrypted company files, making them unusable, and were demanding a hefty ransom to unlock the data. Rokenbok, a California-based company that uses building blocks and even robotics to teach children how to think like engineers, lost thousands of dollars in sales in two days.

Rokenbok’s founder and executive director, Paul Eichen, was already struggling to adapt his seven-employee company to a fast-changing toy world. Even worse, the malware attack was not Rokenbok’s first. The company had been hit earlier with a denial of service attack that shut down the company’s website.

“I sweated that one,” Mr. Eichen said. “Customers’ first impressions are critical.”

Focusing on revenue over protection is far from unusual for small companies like Rokenbok. But it is an increasingly dangerous path, experts say. Limited security budgets, outdated security and lax employees can leave holes that are easily exploited by ever-more-sophisticated digital criminals.

The threat to small businesses is growing, some experts say. Sixty percent of all online attacks in 2014 targeted small and midsize businesses, according to Timothy C. Francis, enterprise leader of cyberinsurance at Travelers.

“Smaller companies are easier to hack,” said Clay Calvert, director of security at MetroStar Systems, a Virginia-based firm. “They don’t have the resources to set up protective barriers.” Big companies, which have the financial resources to upgrade their security, have become less vulnerable.

These days, businesses like Rokenbok are especially susceptible to a type of malware called ransomware, which holds data hostage in return for money. Data is slowly encrypted by criminals until the entire system is locked up. The process can take up to 42 days, Mr. Calvert said.

Rokenbok’s ransomware attack made its database files unusable. But rather than pay the ransom, the company reconstructed its key systems, a process that took four days… (read more)

Payroll Update

2016 Standard Mileage Rates for Business, Medical and Moving Announced

IR-2015-137, Dec.17, 2015

WASHINGTON — The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.  Notice 2016-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Accounting Update

Ratio – the term is enough to curl one’s hair, conjuring up those complex problems we encountered in high school math that left many of us babbling and frustrated. But when it comes to investing, that need not be the case. In fact, there are ratios that, properly understood and applied, can help make you a more informed investor. (Find out how this method can be applied strategically to increase profit. Check out Fundamental Analysis For Traders.)

1. Working Capital Ratio

Assessing the health of a company in which you want to invest involves understanding its liquidity – how easily that company can turn assets into cash to pay short-term obligations. The working capital ratio is calculated by dividing current assets by current liabilities.

So, if XYZ Corp. has current assets of $8 million, and current liabilities of $4 million, that’s a 2:1 ratio – pretty sound. But if two similar companies each had 2:1 ratios, but one had more cash among its current assets, that firm would be better able to pay off its debts quicker than the other.

2. Quick Ratio

Also called the acid test, this ratio subtracts inventories from current assets, before dividing that figure into liabilities. The idea is to show how well current liabilities are covered by cash and by items with a ready cash value. Inventory, on the other hand, takes time to sell and convert into liquid assets. If XYZ has $8 million in current assets minus $2 million in inventories over $4 million in current liabilities, that’s a 1.5:1 ratio. Companies like to have at least a 1:1 ratio here, but firms with less than that may be okay because it means they turn their inventories over quickly.

3. Earnings per Share

When buying a stock, you participate in the future earnings (or risk of loss) of the company. Earnings per share (EPS) measures net income earned on each share of a company’s common stock. The company’s analysts divide its net income by the weighted average number of common shares outstanding during the year… (read more)

HR Update

What Emerging Adults Want In a Job: 9 Key Requirements

Lauren Graves’ career reads like a page from the emerging adult playbook. She became an HR director at 27, but she took a circuitous route to get there. Like many emerging adults (EAs), she zigzagged her way through the job market, exploring her options and capitalizing on opportunities.

“Each time I changed jobs, it was because I wanted to leverage the skills and experience that I had acquired,” Graves said. “I need to be continually challenging myself and moving outside my comfort zone. Otherwise I get bored.”

Titles have mattered less to her than the job itself. She’s worked as a legislative aide, legal assistant and hospital social worker. She’s had four contract positions and three consulting gigs. Within HR, she’s worked as a recruiter, benefits analyst, generalist and director.

Welcome to the World of Emerging Adulthood

Psychologist Jeffrey Arnett, Ph.D., coined the term “emerging adulthood” to identify a new life stage that he described as “the long, winding road to adulthood.” Beginning in their late teens and extending deep into their 20s, EAs embark on an extended period of exploration and experimentation that often includes a “prolonged and erratic transition to stable work,” said Arnett, a research professor of psychology at Clark University in Worcester, Mass.

This new life stage transcends any specific generation. Millennials represent the current generational cohort. When they’re ready to take on greater responsibility and make longer-term commitments, Generation Z will take their place. To engage EAs throughout this transitional stage, it helps to know who they are and what they’re looking for.

Arnett’s research shows that typical emerging adults will change jobs seven times by their late 20s in an effort to figure out what they like, what they’re good at, and where they can fit in and stand out. To recruit and retain these candidates, it’s critical to understand the following nine key requirements they seek as they launch and advance their careers:

1. Provide continuous learning.

School may be over, but EAs want the learning to continue. Jann Iaco, a training specialist with Crate & Barrel in Northbrook, Ill., views continuous learning as key for engagement. She prizes affinity learning, which she defined as “engaging someone in a learning environment by including them in a conversation and allowing them to succeed or fail.”

One proven approach is to create space within an organization where employees can play with ideas, try on different roles and develop new capacities, says Pamela Meyer, Ph.D., author of From Workplace to Playspace: Innovating, Learning and Changing Through Dynamic Engagement.

“It’s actually the playspace that enables us to find out what kind of people we really are,” said Meyer, director of the Center to Advance Education for Adults at DePaul University in Chicago. She said playspaces are not job-specific, and that HR can take the lead in creating learning opportunities as the company’s “permission-giver.”

2. Help build career capital.

Career capital is the accumulation of skills, knowledge and experience people use to gain leverage in the job market. Rotational assignments, team projects, continuing education and professional training are building blocks of career capital.

When Liz Traines first joined Accenture in Chicago, she signed up for a three-year rotational assignment that allowed her to work in every part of the corporate finance group. It taught her how to adapt to new situations and people, and how to solve a variety of financial problems.

She then expanded her capital by creating an in-house program called Live Healthy!, which focused on motivating co-workers to eat healthy and exercise while traveling. That experience whetted her appetite for entrepreneurship and laid the foundation for the holistic health coaching practice she started after leaving Accenture.

Sometimes EAs can build career capital by reaching beyond their employer. Lauren Graves joined the Savannah Area Chapter of the Society for Human Resource Management (SHRM), and immersed herself in business and training opportunities. It wasn’t long before she was elected president of the membership committee.

“SHRM membership provided an environment for me to cultivate relationships with business partners, colleagues, potential employers and HR mentors,” said Graves, now a recruiter with the Memorial University Medical Center in Savannah, Ga… (read more)


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