The law requires that employers provide the opportunity for employees to take at least a 30 minute uninterrupted meal break before the end of the fifth hour worked in a day. The employees must be relieved of all duties and be free to leave the premises if they choose.
If the employee’s shift will end with no more than six hours worked, the meal break can be waived. This must be agreed to by both the employee and employer. It’s best to have this agreement in writing, but not required.
If the employee is working more than six hours and does not waive the meal break, the employee must have the opportunity to take their meal break. However, if the employee chooses to work during their meal break, there is no penalty to the employer. You should have the employee sign their timecard for each day stating they voluntarily chose not to take their meal break. The employer cannot discourage the employee from taking their meal break.
The IRS has recently released the newly revised I-9 Form which is required to be completed by any employees hired on or after May 7, 2013.
Of course the new form now consists of more pages. Two pages for the actual form and seven pages of instructions. This new form, though it’s longer, it is also easier to understand. Please be sure to read the entire form and instructions to familiarize yourself with it and the requirements.
Section 1, the employee’s section, must be completed by the employee no later than the first day of employment, but not before they have accepted a job offer. MAKE SURE YOUR EMPLOYEES READ THE INSTRUCTIONS AND COMPLETE THIS SECTION CORRECTLY AND ON TIME.
Although Congress averted many of the consequences of a possible tumble over the fiscal cliff with last-minute action, you should be aware of the potential impact on your business of the American Taxpayer Relief Act of 2012. We encourage you to review the highlights of the new law below and call us if you have any concerns about how your tax situation will change as we prepare your returns for this filing season.
Several popular business tax provisions were set to expire at the end of 2012. For example, small business expensing under Internal Revenue Code Section 179 was increased retroactive to Jan. 1, 2012, and extended through 2013. The dollar limit that can be expensed in 2012 and 2013 is $500,000 and there is a $2 million investment limit. You also can make use of the 15-year recovery period for qualified leasehold improvements, retail improvements and restaurant property until the end of 2013.
Many other business tax benefits that had expired or were set to expire were extended through 2013, including:
Effective January 1, 2013, the State of California will be collecting a new 1% tax on the sales price of lumber products. AB 1492 signed into law September 11, 2012, imposes a tax on lumber products and engineered wood products. This tax will be separately shown on sales receipts and will be administered by the State Board of Equalization. This additional revenue pool will be used to review timber harvest plans within the state and spread the cost of forest regulation across all lumber used in California.
"This legislation helps our state's timber industry tremendously by putting more people to work here in California and getting more Californians to buy California timber," said Senator Tom Harman. "Today, seventy percent of our lumber is imported from nearby states and beyond, causing jobs to be exported outside California. This bill brings major reform to California's timber industry and much-needed relief to California businesses."
The assessment of this tax is basically for all products purchased that contain at least 10% wood. Regulations have been adopted by the Board of Forestry and Fire Protection which help clarify which products are subject to the tax. Examples of products subject to the tax include:
We are often asked what a client should bring to us in order to prepare their taxes. Bringing the right information can assist us in preparing the most accurate return possible, and help keep your fees reasonable. If we have to assemble data on a client’s behalf, that ends up costing the client more.
So here we go…
With the new year fast approaching there are some things you should be aware of. The elections are over but the House and the Senate have limited days in session before they break for the Christmas holiday, so it's not certain how some of these items will be decided. As we have more information we will keep you updated.
FUTA TAX: California is still listed as a credit reduction state which means they still have not repaid federal loans that help fund unemployment payments. This means we will see another .3% increase to the FUTA taxes this year. Added to last year's .3% increase makes the FUTA rate increase for 2012 be .6% bringing the total rate to 1.2% . The increase will likely be retroactive to January 1, 2012 which will require additional FUTA tax to be paid at year end.
Federal withholding is scheduled to increase for 2013 unless lawmakers extend the tax cuts before December 31, 2012.
Social Security "tax holiday", if not extended, will expire on December 31, 2012 which will make the employee portion of Social Security once again be 6.2%. It does not look like this will be extended.
State run retirement plans: In California, lawmakers recently passed initial legislation that could create the nation's first state-run retirement plans (SB1234) for private-sector workers. All employers would need to automatically set-up a 3% savings program unless the employee opts out. No information yet on when or if this will be effective.
When was the last time you considered your exposure to employee embezzlement and theft? Embezzlement deals with the misappropriation of a company’s funds by bookkeeping and accounting personnel and theft deals with the broader area of inventory shrinkage due to employee theft.
There are usually two major factors, which can cause an employee, who has otherwise been an honest and trusted employee, to suddenly become involved in an embezzlement or theft. The first is involvement with drugs by either the employee or one of the employee’s loved ones; the second is pressure created by an economic downturn.
Experience has shown that when a significant embezzlement or theft is discovered, it is usually a situation where the employee is a trusted person who has been with the company for an extended period of time. The employee has an exemplary work record, is dedicated, and is considered to be a “company person”. Additionally, if an employee did not have the implicit trust of the employer, the embezzlement or theft might not occur. The breakdown in internal control creates a situation where the dishonest employee can manipulate the system.
There seems to be considerable confusion concerning the new internet sales tax that went into effect on September 15, 2012. While it seems that there is a new tax popping up whenever we hear the news, in actuality this is not a new tax. All purchases on the internet have always been taxable if the same goods purchased from your local retailer would have been subject to the sales tax. Here’s ‘how’ and ‘why’ the new tax applies.
About 75 years ago California adopted a sales tax on retail purchases of tangible personal property, unless specifically exempted (i.e. most food). Almost immediately, retailers in towns bordering states without such a tax noticed dwindling sales as California customers crossed the border to avoid the new tax. California’s Legislature immediately responded by enacting the Use Tax Law. This new use tax was, and remains, the same rate as the sales tax and applies to the same transactions that would be subject to the sales tax if the goods were bought from a California merchant. The difference, however, is that the sales tax is imposed on the retailer and the use tax is imposed on the buyer.
For almost 75 years, anything purchased outside California that would have been taxed if purchased within California has been fully taxable and the customer was required by law to pay the tax to the State. Since the State of California does not have the resources to administer the identification and collection of the Use Tax from every California resident who buys goods outside the State, they required the out-of-state retailer to register, collect, and remit the customer’s Use Tax (if sufficient ‘nexus’ was determined). ‘Nexus’ is a term denoting a connection between the out-of-state retailer and the State of California. If this retailer uses California’s highways to deliver goods, or has salespersons, canvassers, repair persons, etc. that enter California, they are considered to be ‘engaged in business’ within California. Courts have repeatedly upheld the right of states to compel out-of-state retailers to comply with such laws. These out-of-state retailers who are engaged in business in California (or other states with similar laws), can be held fully responsible for the use tax owed by the buyers on all purchases either delivered by themselves or shipped common-carrier into California. If the buyer actually traveled to the retailer’s out-of-state location to pick up the goods, it would be solely the customer’s responsibility.
Estate planning is usually filled with uncertainty. As usual, Congress is to blame for the situation. For the balance of 2012 the estate and gift tax exemption is set at $5.12 million but is scheduled to fall back to the 2001 rate of $ 1 million with the minimum tax rate increasing to 55%. This doesn’t set well with planners.
At the $5.12 MM limit, a husband and wife with proper planning can pass an estate of over $10 million to their heirs estate and gift tax free. If the limit falls back to $1 million, now (the balance of 2012) would be the time to consider gifting to take advantage of the higher gift tax exemption. Gifting provides the opportunity to pass on highly appreciated assets (if there are any more of these) and have them removed from your estate. It is always best to give assets away that you would expect to rise in value. Also remember that you and your spouse can give $13,000 to anyone you choose this year without reducing your lifetime gift tax exemption or having to file gift tax returns. The exclusion is scheduled to go up to $14,000 next year.
The concept of good internal controls in an organization is not new, but it is a subject that is often overlooked in small entities with few employees. There are many reasons why owners, managers, or board members of small entities, like many of those in Siskiyou County, overlook internal controls. Below, I have discussed some of the more common reasons and how you can address them.
“I have known my employees for years and know they are very trustworthy”