Welcome to PayTech’s January Update
Below are 10 tips to help you do that and get on track in the new year.
How to Organize Your Small Business
Purge Your Office
Even if you don’t mind a little mess and dust, too much clutter can add to daily stress and chaos. Clutter exists because we think that everything is important. With the new year, toss out whatever is outdated, no longer relevant or a duplicate.
- Recycle the broken electronics you may have stashed in a closet.
- Delete all those old voice messages.
- Donate anything you don’t need or use.
- Keep the basics and anything you’ve used in the past year; all else can go.
When your workspace is clean and uncluttered, you’ll enjoy spending time at your desk and won’t waste time searching through junk or moving piles around…(read more)
Notice 2016-1 SECTION 1. PURPOSE This notice provides the optional 2016 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. This notice also provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) plan.
SECTION 2. BACKGROUND Rev. Proc. 2010-51, 2010-51 I.R.B. 883, provides rules for computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes, and for substantiating, under § 274(d) of the Internal Revenue Code and § 1.274-5 of the Income Tax Regulations, the amount of ordinary and necessary business expenses of local transportation or travel away from home. Taxpayers using the standard mileage rates must comply with Rev. Proc. 2010-51. However, a taxpayer is not required to use the substantiation methods described in Rev. Proc. 2010-51, but – 2 – instead may substantiate using actual allowable expense amounts if the taxpayer maintains adequate records or other sufficient evidence…(read more)
Flat Salary Increase Budgets Spur Promotions for Pay Raises
Performance-based bonuses and career advancement are ways to earn more
By Stephen Miller, CEBS 11/19/2015
Although the economy is improving and the job market is more robust, salary increase budgets for U.S. companies continue to show few signs of growth. That’s causing greater reliance on tying base pay increases to stellar performance, as well as turning to other reward methods—such as performance-related bonuses and career-advancement tracks that allow employees to increase base pay by getting promoted.
According to Mercer’s 2015/2016 U.S. Compensation Planning Survey, the average salary increase budget is expected to be 2.9 percent in 2016, up slightly from the average increase budget of 2.8 percent in 2015.
The survey includes responses from 1,504 midsize and large employers across the U.S. and reflects pay practices for more than 17 million employees.
As organizations look for enhanced ways to pay for performance, differentiating salary increases by employee performance continues to be the norm. Companies are rewarding top-performing employees with significantly larger increases than those in the lower-performing categories, Sardone said.
Mercer’s survey shows that:
- The highest-performing employees received average base pay increases of 4.8 percent in 2015 compared to 2.7 percent for average performers and 0.2 percent for the lowest performers, and this pattern is expected to continue in 2016.
- Salary increases for top-performing employees—7 percent of the workforce in 2015 and projected to be 8 percent of the workforce next year—will substantially outpace that of average performers, as companies continue to differentiate salary increases based on performance.
For Higher Pay, Get Promoted
“Employers are finding ways to deliver pay increases through other means like promotions, which reflects the growing trend of focusing on careers and sustained performance, not a one-year snapshot and reward,” said Mary Ann Sardone, a partner in Mercer’s talent practice based in the Atlanta area.
Promotional increases, which on average included approximately an 8 percent rise in pay this year, vary by job category but consistently rose for all groups:
- For executives, promotional increases rose to 9.1 percent of base salary, up from 8.4 percent last year.
- For professionals, promotional increases rose to 7.7 percent, up from 6.9 percent last year.
- 41 percent of organizations are now budgeting promotional increases separately from merit increases, up from 36 percent last year.
“As a supplement to rather low pay raises, we’re seeing a steady rise in the use of short-term incentives to reward performance,” commented Sardone. “Flat budgets have also created more reliance on other reward methods like developing career opportunities and creating meaningful work experiences that align with the company’s goals and support employees’ needs.”
To ensure employee engagement and better manage talent programs, companies are adopting career frameworks—a set of guidelines that shows employees how they can move between jobs within the organization. According to Mercer’s survey, 40 percent of organizations currently have a career framework and 30 percent of those that do not are planning to implement one.
Increasingly, “the goal of the annual merit increase is to keep people within market range on their base pay. It isn’t a method to reward people,” Eileen Adler, chief HR officer at PeopleFluent, a business software provider based near Boston, recently told SHRM Online. “Bonuses and other forms of variable, performance-based pay, career development and meaningful work have become a larger part of the value proposition,” she noted.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.
What Rock Is The IRS Looking Under Now?
- Underreported Tips: IRS is doing a nationwide survey of tipping practices in restaurants, hair salons and taxis. The last time they looked at this issue was 30 years ago, so expect a friendly valentine from the IRS in the future if you report less tip income as a percentage than the average tip percentage shown on credit cards.
- Treating Employees as Independent Contractors: The Department of Labor is getting aggressive with interpretations under the Fair Labor Standards Act. The new DOL rules say:
- Contractors can be treated as employees if their work is integral to the firm’s business.
- Workers who supply their own tools wont’ necessarily be treated as contractors.
- A permanent or indefinite worker relationship suggests the worker is an employee.
- The IRS Looks at three separate factors:
- Behavior: Does the company control or have the right to control what the worker does?
- Financial: Who Controls the economics. Items such as whether the worker is reimbursed for travel.
- Relationship: Does the worker get paid time off? Is the relationship permanent? Etc.
Look for this battle to heat up now that both IRS and DOL are after the contractor vs employee issue. Other items the IRS is looking at are the accumulated earnings taxes for C corporations and watch out for those who contact you and say they can offer a way to “create goodwill” for your business so you can then take a tax write off for that goodwill.