All posts by Erin Mirante

How to make the most of your multigenerational workforce

Many of today’s businesses employ workers from across the generational spectrum. Employees may range from Baby Boomers to members of Generation X to Millennials to the newest group, Generation Z.

Managing a workforce with a wide age range requires flexibility and skill. If you’re successful, you’ll likely see higher employee morale, stronger productivity and a more positive work environment for everyone.

Generational definitions

Definitions of the generations vary slightly, but the U.S. Chamber of Commerce Foundation defines them as follows:

  • Members of the Baby Boomer generation were born from 1946 to 1964,
  • Members of Generation X were born from 1965 to 1979,
  • Members of the Millennial generation were born from 1980 to 1999, and
  • Members of Generation Z were born after 1999.

Certain stereotypes have long been associated with each generation. Baby Boomers are assumed to be grumbling curmudgeons. Gen Xers were originally consigned to being “slackers.” Millennials are often thought of as needy approval-seekers. And many presume that a Gen Zer is helpless without his or her mobile device.

But successfully managing employees across generations requires setting aside stereotypes. Don’t assume that employees fit a certain personality profile based simply on age. Instead, you or a direct supervisor should get to know each one individually to better determine what makes him or her tick.

Best practices

Here are just a couple best practices for managing diverse generations:

Recognize and respect value differences. Misunderstandings and conflicts often arise because of value differences between managers and employees of different generations. For example, many older supervisors expect employees to do “whatever it takes” to get the job done, including working long hours. However, some younger employees place a high value on maintaining a healthy work-life balance.

Be sure everyone is on the same page about these expectations. This doesn’t mean younger employees shouldn’t have to work hard. The key is to find the right balance so that work is accomplished satisfactorily and on time, and employees feel like their values are being respected.

Maximize each generation’s strengths. Different generations tend to bring their own strengths to the workplace. For instance, older employees likely have valuable industry experience and important historical business insights to share. Meanwhile, younger employees — especially Generation Z — have grown up with high-powered mobile technology and social media.

Consider initiatives such as company retreats and mentoring programs in which employees from diverse generations can work together and share their knowledge, experiences and strengths. Encourage them to communicate openly and honestly and to be willing to learn from, rather than compete with, one another.

A competitive advantage

Having a multigenerational workforce can be a competitive advantage. Your competitors may not have the hard-fought experience of your older workers nor the fresh energy and ideas of your younger ones. Our firm can help you develop cost-effective business strategies while utilizing a multigenerational workforce.

© 2020

Some basics facts about wage garnishment

The prospect of having to garnish an employee’s wages isn’t a pleasant thought, yet it’s a situation that many employers face. As with any onerous task, the more prepared you are, the better. Let’s look at some basic facts about the process.

Various types

The word “garnishment” is defined as any legal or equitable procedure through which an individual’s earnings are required, under a court order, to be withheld for payment of a debt. This may include:

  • Creditor garnishments,
  • Child support,
  • Garnishments to repay nontax debts owed to the federal government,
  • Student loan garnishments, and
  • Tax levies.

As a garnishment, wage withholding for child support usually takes priority over the other types.

There are both federal and state laws covering garnishment. For those issued at the state level, the law that’s most beneficial to the employee is generally followed. However, for garnishments issued at the federal level, state law typically takes a back seat to federal law. (Voluntary wage assignments aren’t considered garnishments and, therefore, fall outside the scope of federal law.)

Consumer Credit Protection Act

Title III of the Consumer Credit Protection Act (CCPA) is the federal law that controls garnishment. The law limits the amount of an employee’s disposable earnings that may be garnished in any one week. The CCPA also protects employees from discharge because of garnishment for any one form of indebtedness. The law’s purview includes city, county and state employees’ earnings — unless a state law exempts them from garnishment.

The CCPA defines “earnings’’ as compensation for personal services. This includes wages, salaries, commissions, bonuses or other compensation (including periodic payments from a pension or retirement program, or payments from an employment-based disability payment program).

For tipped employees, earnings also include cash wages paid directly by the employer and the amount of the tip credit claimed (if any) by the employer. Tips received in excess of the tip credit amount, or in excess of cash wages (if no tip credit is claimed or allowed), aren’t earnings under the CCPA. Lump sum payments may be included in earnings for garnishment purposes. Payments that don’t meet the definition of earnings under the CCPA aren’t protected by the law’s deduction limitations.

Important: As mentioned, the CCPA’s restrictions on garnishment are based on an employee’s disposable earnings. These are the portion of earnings remaining after deductions required by law have been made (not to be confused with “net earnings,” which is the amount left after all deductions have been made). Examples of these deductions include withholding for federal and state income tax, Social Security tax, state unemployment and disability taxes, and deductions required by state employees’ retirement systems.

Contentious undertaking

As you might well imagine, having to garnish an employee’s wages is an often-contentious undertaking fraught with legal risk. Consult an attorney before doing so. For further information about wage garnishment, contact us.

© 2020

Conflict-of-interest policies are too important for nonprofits to neglect

Does your not-for-profit organization have a conflict-of-interest policy in place? Do your board members, trustees and key employees understand how the policy affects them? If you answer “no” to either (or both) of these questions, you have some work to do.

A duty

Nonprofit board officers, directors, trustees and key employees all must avoid conflicts of interest because it’s their duty to do so. Any direct or indirect financial interest in a transaction or arrangement that might benefit one of these individuals personally could result in bad publicity, the loss of donor and public support, and even the revocation of your organization’s tax-exempt status.

This is why nonprofits are required to have a written conflict-of-interest policy. To stress the importance of this requirement, the IRS asks tax-exempt organizations to acknowledge the existence of a policy on their annual Form 990s.

Define and provide procedures

In general, conflict-of-interest policies should define all potential conflicts and provide procedures for avoiding or dealing with them. For example, to prevent a board member from steering a contract to his or her own company, you might mandate that all projects are to be put out for bid, with identical specifications, to multiple vendors.

It’s critical to outline the steps you’ll take if a possible conflict of interest arises. For instance, board members with potential conflicts might be asked to present facts to the rest of the board, and then remove themselves from any further discussion of the issue. The board should keep minutes of the meetings where the conflict is discussed. You should note the members present, as well as how they vote, and indicate the final decision reached.

Making it effective

As with any policy, conflict-of-interest policies are only effective if they’re properly communicated and understood. Require board officers, directors, trustees and key employees to annually pledge to disclose interests, relationships and financial holdings that could result in a conflict of interest. Also make sure they know that they’re obliged to speak up if issues arise that could pose a possible conflict.

For help crafting a thorough policy, contact us.

© 2020

401(k) plan highlights of the SECURE Act

Late last year, Congress passed, and the President signed into law, the Setting Every Community Up for Retirement Enhancement (SECURE) Act. Among its most notable rule changes are those pertaining to 401(k) plans. Here are some key highlights.

New tax credit

Starting in 2020, the new rules create a tax credit of up to $500 per year to employers to defray startup costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment.

The credit, available for three years, is in addition to an existing plan startup credit. Employers who convert an existing plan to a plan with an automatic enrollment design may also claim this tax break.

Auto-enrollment safe harbor plans

An annual nondiscrimination test called the actual deferral percentage (ADP) test applies to elective deferrals under a 401(k) plan. The ADP test is deemed satisfied if a 401(k) plan includes certain minimum matching or nonelective contributions under either of two safe harbor plan designs and meets certain other requirements. (Certain other required rights and features must also be met, as well as a notice requirement.)

One of the safe harbor plans is an automatic enrollment safe harbor plan. Starting in 2020, the new rules increase the cap on the default rate under an automatic enrollment safe harbor plan from 10% to 15%, but only for years after the participant’s first deemed election year. For the participant’s first deemed election year, the cap on the default rate is 10%.

Other safe harbor plan enticements

Under another type of 401(k) safe harbor plan, the plan either:

  • Satisfies a matching contribution requirement, or
  • Provides for a nonelective contribution to a defined contribution plan of at least 3% of an employee’s compensation on behalf of each nonhighly compensated employee who’s eligible to participate in the plan.

Starting in 2020, new rules eliminate the safe harbor notice requirement but maintain the requirement to allow employees to make or change an election at least once per year.

The rules also permit amendments to nonelective status at any time before the 30th day before the close of the plan year. Amendments after that time are allowed if the amendment provides a nonelective contribution of at least 4% of compensation (rather than at least 3%) for all eligible employees for that plan year. Also, the plan must be amended no later than the last day for distributing excess contributions for the plan year (in other words, by the close of following plan year).

Widespread impact

These are only some of the provisions of the SECURE Act that might affect your organization. The law’s provisions address not only 401(k) plans, but also defined benefit plans, IRAs and 529 plans. Contact us for help determining precisely how the act may affect your existing retirement plan or any you’re considering.

© 2020

Cost management: A budget’s best friend

If your company comes up over budget year after year, you may want to consider cost management. This is a formalized, systematic review of operations and resources with the stated goal of reducing costs at every level and controlling them going forward. As part of this effort, you’ll answer questions such as:

Are we operating efficiently? Cost management can help you clearly differentiate activities that are running smoothly and staying within budget from the ones that are constantly breaking down and consuming extra dollars.

Depending on your industry, there are likely various metrics you can calculate and track to determine which aspects of your operations are inefficient. Sometimes improving efficiency is simply a matter of better scheduling. If you’re constantly missing deadlines or taking too long to fulfill customers’ needs, you’re also probably losing money playing catch-up and placating disappointed buyers.

Can we really see our supply chain? Maybe you’ve bought the same types of materials from the same vendors for many years. Are you really getting the most for your money? A cost management review can help you look for better bargains on the goods and services that make your business run.

A big problem for many businesses is lack of practical data. Without the right information, you may not be fully aware of the key details of your supply chain. There’s a term for this: supply chain visibility. When you can’t “see” everything about the vendors that service your company, you’re much more vulnerable to hidden costs and overspending.

Is technology getting the better of us? At this point, just about every business process has been automated one way or another. But are you managing this technology or is it managing you? Some companies overspend unnecessarily while others miss out on ways to better automate activities. Cost management can help you decide whether to simplify or upgrade.

For example, many businesses have historically taken an ad hoc approach to procuring technology. Different departments or individuals have obtained various software over the years. Some of this technology may still be in regular use but, in many cases, an expensive application sits dormant while the company still pays for licensing or tech support.

Conversely, a paid-for but out-of-date application could be slowing operational or supply chain efficiency. You may have to spend money to save money by getting something that’s up-to-date and fully functional.

The term “cost management” is often applied to specific projects. But you can also apply it to your business, either as an emergency step if your budget is really out of whack or as a regular activity for keeping the numbers in line. Our firm can help you conduct this review and decide what to do about the insights gained.

© 2020

Congress rolls back burdensome UBIT on transportation benefits

A much-hated tax on not-for-profit organizations is on the way out. At the end of 2019, Congress repealed a provision of 2017’s Tax Cuts and Jobs Act (TCJA) that triggered the unrelated business income tax (UBIT) of 21% on nonprofit employers that provide employees with transportation fringe benefits. Unequipped to handle the additional administrative burdens and compliance costs, thousands of nonprofits had complained — and legislators apparently listened.

Same benefits, new costs

At issue is the TCJA provision saying that nonprofits must count disallowed deduction amounts paid for transportation fringe benefits such as transit passes and parking in their UBIT calculations. UBIT applies to business income that isn’t related to the organization’s tax-exempt function. Thus, simply by continuing to provide some of the same transportation benefits they’ve always provided employees, nonprofits were liable for additional tax.

For example, employers were forced to assign a value to parking spaces provided to employees. Such activities were time-consuming and burdensome, and the additional costs forced nonprofits to divert funds from pursuing their missions. Nonprofit coalition Independent Sector estimates that the transportation tax and related administrative costs set back nonprofits by an average $12,000.

Fortunately, the repeal of the UBIT provision will be retroactive. Although the details haven’t yet been hammered out, nonprofits that paid the tax on applicable transportation benefits in 2018 and 2019 are expected to get their money back.

Other developments

Repealing the UBIT on certain transportation benefits isn’t the only recent legislation of interest to nonprofits. Last month, Congress also streamlined the foundation excise tax. The current two-tiered tax that many foundations protested will be replaced with a 1.39% revenue-neutral tax.

Congress is likely to address other nonprofit demands — for example, for the introduction of a universal charitable deduction — in future sessions. We can help you stay current with the latest tax developments affecting nonprofits. Contact us.

© 2020

5 ways to strengthen your business for the new year

The end of one year and the beginning of the next is a great opportunity for reflection and planning. You have 12 months to look back on and another 12 ahead to look forward to. Here are five ways to strengthen your business for the new year by doing a little of both:

1. Compare 2019 financial performance to budget. Did you meet the financial goals you set at the beginning of the year? If not, why? Analyze variances between budget and actual results. Then, evaluate what changes you could make to get closer to achieving your objectives in 2020. And if you did meet your goals, identify precisely what you did right and build on those strategies.

2. Create a multiyear capital budget. Look around your offices or facilities at your equipment, software and people. What investments will you need to make to grow your business? Such investments can be both tangible (new equipment and technology) and intangible (employees’ technical and soft skills).

Equipment, software, furniture, vehicles and other types of assets inevitably wear out or become obsolete. You’ll need to regularly maintain, update and replace them. Lay out a long-term plan for doing so; this way, you won’t be caught off guard by a big expense.

3. Assess the competition. Identify your biggest rivals over the past year. Discuss with your partners, managers and advisors what those competitors did to make your life so “interesting.” Also, honestly appraise the quality of what your business sells versus what competitors offer. Are you doing everything you can to meet — or, better yet, exceed — customer expectations? Devise some responsive competitive strategies for the next 12 months.

4. Review insurance coverage. It’s important to stay on top of your property, casualty and liability coverage. Property values or risks may change — or you may add new assets or retire old ones — requiring you to increase or decrease your level of coverage. A fire, natural disaster, accident or out-of-the-blue lawsuit that you’re not fully protected against could devastate your business. Look at the policies you have in place and determine whether you’re adequately protected.

5. Analyze market trends. Recognize the major events and trends in your industry over the past year. Consider areas such as economic drivers or detractors, technology, the regulatory environment and customer demographics. In what direction is your industry heading over the next five or ten years? Anticipating and quickly reacting to trends are the keys to a company’s long-term success.

These are just a few ideas for looking back and ahead to set a successful course forward. We can help you review the past year’s tax, accounting and financial strategies, and implement savvy moves toward a secure and profitable 2020 for your business.

© 2019

Medicaid Transformation Suspended

Image result for NC dhhsThe North Carolina Department of Health and Human Services (NC DHHS) issued a press release Tuesday, November 19th, announcing that the implementation of Medicaid Managed Care had been suspended until further notice. Managed Care was set to go live February 2020 but the General Assembly adjourned without approving the necessary funding for the program. North Carolina has been on the road to Medicaid transformation since 2015, which aimed to move Medicaid from a Fee-For-Service program to Managed Care. With this suspension the transformation will no longer take place.

The news of suspension for Managed Care puts a halt to the preparations being made across the state by various healthcare providers who anticipated the program to go live in just a few short months. You can read more about the press release on the NC DHHS website here.

Stay up to date on news surrounding Medicaid and Managed Care by following NC DHHS or Benchmarks.

Does your team know the profitability game plan?

Autumn brings falling leaves and … the gridiron. Football teams — from high school to pro — are trying to put as many wins on the board as possible to make this season a special one.

For business owners, sports can highlight important lessons about profitability. One in particular is that you and your coaches must learn from your mistakes and adjust your game plan accordingly to have a winning year.

Spot the fumbles

More specifically, your business needs to identify the profit fumbles that are hurting your ability to score bottom-line touchdowns and, in response, execute earnings plays that improve the score. Doing so is always important but takes on added significance as the year winds down and you want to finish strong.

Your company’s earnings game plan should be based partly on strong strategic planning for the year and partly from uncovering and working to eliminate such profit fumbles as:

  • Employees interacting with customers poorly, giving a bad impression or providing inaccurate information,
  • Pricing strategies that turn off customers or bring in inadequate revenue, and
  • Supply chain issues that slow productivity.

Ask employees at all levels whether and where they see such fumbles. Then assign a negative dollar value to each fumble that keeps your organization from reaching its full profit potential.

Once you start putting a value on profit fumbles, you can add them to your income statement for a clearer picture of how they affect net profit. Historically, unidentified and unmeasured profit fumbles are buried in lower sales and inflated costs of sales and overhead.

Fortify your position

After you’ve identified one or more profit blunders, act to fortify your offensive line as you drive downfield. To do so:

Define (or redefine) the game plan. Work with your coaches (management, key employees) to devise specific profit-building initiatives. Calculate how much each initiative could add to the bottom line. To arrive at these values, you’ll need to estimate the potential income of each initiative — but only after you’ve projected the costs as well.

Appoint team leaders. Each profit initiative must have a single person assigned to champion it. When profit-building strategies become everyone’s job, they tend to become no one’s job. All players on the field must know their jobs and where to look for leadership.

Communicating clearly and building consensus. Explain each initiative to employees and outline the steps you’ll need to achieve them. If the wide receiver doesn’t know his route, he won’t be in the right place when the quarterback throws the ball. Most important, that wide receiver must believe in the play.

Win the game

With a strong profit game plan in place, everyone wins. Your company’s bottom line is strong, employees are motivated by the business’s success and, oh yes, customers are satisfied. Touchdown! We can help you perform the financial analyses to identity your profit fumbles and come up with budget-smart initiatives likely to build your bottom line.

© 2019

Employers can truncate SSNs on employees’ W-2s

 

The IRS recently issued final regulations that permit employers to voluntarily truncate employee Social Security Numbers (SSNs) on copies of Forms W-2 furnished to employees. The purpose of the regs is to aid employers’ efforts in protecting workers from identity theft.

Proposals and comments

On September 20, 2017, the IRS issued proposed regs on the truncation concept. A truncated taxpayer identification number (TTIN) displays only the last four digits of a taxpayer identifying number and uses asterisks or “Xs” for the first five digits.

Seventeen comments were submitted on the notice of proposed rulemaking and many recommended adopting the rules. Some disagreed and noted concerns of employees not being able to verify whether the SSN filed with the Social Security Administration and IRS is correct. Other comments indicated concerns that it would be more difficult for tax return preparers to verify the employee has provided the correct SSN.

But the IRS and U.S. Department of the Treasury determined that the benefit of allowing truncation outweighs the risk that unintended consequences could occur. Moreover, the agencies believed problems could be mitigated. For example, tax return preparers can use Forms W-2 containing truncated SSNs to verify employee information by using the last four digits of the SSN and the employee’s name and address.

Other considerations

Another objection noted an increased administrative burden on employers with employees who work in multiple states because the employer will have to determine the requirements for each state. (Some state and local governments may not allow truncation.) This, too, was rejected by the IRS and Department of the Treasury. The agencies explained that the rules accommodate potential burdens on employers by making truncation optional.

It was also suggested that a better way to protect employees’ identities is to require employers to furnish the employee copy of Form W-2 electronically. But this was outside the scope of the rule and, under existing rules, employers are permitted to furnish Form W-2 electronically if the employee consents.

Final regs

The final regulations amend existing regs to permit employers to voluntarily truncate employees’ SSNs on copies of Forms W-2 that are furnished to employees so that the truncated SSNs appear in the form of IRS TTINs. The final regs also:

  • Amend the regulations under Internal Revenue Code Section 6109 (supplying of identifying numbers) to clarify the application of the truncation rules to Form W-2,
  • Add an example illustrating the application of these rules, and
  • Delete obsolete provisions and update cross references in the regs under Sec. 6051 (receipts for employees) and Sec. 6052 (returns regarding payment of wages in the form of group term life insurance).

The final regulations took effect on the date of publication in the Federal Register: July 3, 2019.

Important role

Employers play an important role in the fight against identity theft. Consider whether truncation of employees’ SSNs on W-2s is a feasible step for you. Contact us for further information and assistance.

© 2019