No, I’m not saying that your spouse will work for less pay than someone else. I’m talking about making some tax advantaged moves in your business that will save you (as a couple) some additional money in taxes each year.
Recognizing that work is usually a family affair, your spouse is probably already a strategic advisor to your business anyway, or pitching in wherever help is needed for vacations, additional seasonal work or employee illness. This work should be compensated!
Here are some tangible benefits of putting your spouse on the payroll:
- Additional contributions to a retirement plan – Assuming your spouse meets the length of service and age requirements of your plan, the company can deduct the full amount of the contribution, and you can accumulate more money on a tax deferred basis until the contributions are withdrawn.
- More “mileage” from business trips – as I wrote in a previous post, one of the requirements for deducting expenses for companions travelling on business is that they must be an employee of the business.
- Turn health care coverage into a tax deduction – If you are a business that currently covers single policies only, and you are paying more to cover your spouse under the company health insurance plan, hiring your spouse shifts the expense to the company. The company can deduct the full cost of the health insurance paid for your spouse, just as it can for your other employees. This works even if you are self-employed!
- Provide deductible group insurance – this can be especially important if your spouse has a health history or other issues that make them an insurance risk, or uninsurable. Participating in group coverage could not only provide needed coverage, but also shift the expense to a pre-tax basis at the company level, and perhaps lower the premium that would otherwise be paid on an individual policy. In addition, the first $50,000 of group life insurance is tax-free to an employee. One Caveat – this won’t work for S Corporations.
- Further your spouse’s education - the cost of courses and seminars taken to improve job skills is a business deduction, and tax free to the employee!
- Other tax benefits – some states provide a tax credit if filing jointly, but require that both spouses have “earned” income in order to qualify. Generally, earned income means wages earned as an employee or from actively participating in a business other than real estate rentals.
- Shift income to a lower tax bracket – if you are operating as a C Corporation, there could be savings by paying the income as salary to your spouse if the corporate tax rate is higher than your combined personal tax rate. There are other considerations that play into this scenario, so consult your friendly CPA before jumping on this idea.
All of the tips above assume that your spouse is actually working for the business. While it’s a good idea to have written job descriptions for each employee in your organization, it’s especially important for your spouse so that the position responsibilities are well documented in case your friendly IRS auditor comes to visit.
Popularity: 1% [?]
If nothing else, hopefully the value of the Briefcase Project is for other business owners and professionals can learn from our mistakes and not repeat them. The story I am about to tell will hopefully help web professionals and business owners who are currently going through a website development project, to avoid this unhappy outcome. Here is where this website project went wrong:
- Live before its Finished - This was the first major mistake we made. The client went to a trade show early in the website development process and started handing out market materials with their new website address before they had even written the content for the site. No surprise, they started getting calls from folks that the website was down and they couldn’t go online to respond as they were told. We got a call late on a Saturday telling us to take the site live right away because of this problem. So we did some quick work to put the site together enough so people wouldn’t see half-finished pages. The reason this turned out to be a bad decision was the site went live before the project was finished which 1. made the final deliverable unclear and 2. the client had no incentive to ever finish the site because they already had something working. Eight months later we were still waiting for them to send us content.
- Employee Turnover – During the course of this project, our website contact was switched four different times; starting with the IT manager and finally ending with a summer marketing intern. The problem is: each person had a different vision of the website and as soon as we started working with a new person, we got a new site map. The reason for the switch was employee turnover within the company and with each switch, the business owner further disengaged from the project.
- Avoiding communication – One of the major things that bothered about this project was I could never get the person who hired us on the phone or any response to emails. When I did try to call the office one of the four “helpers” would answer the phone and would not put the owner on the phone. You can see the kind of message this sends as to how important the website was to this business if the owner wouldn’t take five minutes to talk to their webmaster.
- Figured out what the wanted AFTER site was built - The business owner finally got around to reviewing the website as dictated by their “helpers”, once it was 95% done. No surprise, it was not the site they wanted. At this point our contract had been fulfilled and the only choices were to finish the site they didn’t like or start over, which of course was going to cost more money.
The result of this project was a site that nobody liked and for the first time in my 10+ years building websites, I walked away from a project without finishing it. The key thing to learn here is that what we were experiencing had nothing to do with technical problems or technical capabilities, this was a leadership problem. From my perspective, we were the experts who had been through this process many, many times and should have taken more control of the process, instead of letting them dictate the timeline. On the client side, I believe it was a case of a business owner delegating something that they should not have to employees that didn’t have the decision-making power to see the project through.
If you are a business owner reading this, in the middle of a website project, you need to stop thinking of the website as a marketing project and start viewing the site as a member of your organization and treat it with the care of managing an employee.
If you are a web professional reading this, let me tell you it is OK to walk away from an impossible client. Our revenue stream was better for it. My employees were better for it and my stress level was better for it.
Do you have project warning signs? Or ideas where this project could have been turned around? Please share your advice and save others from this fate.
Carmen Krupar - Website Performance Architect -
www.cyberviselimited.com Popularity: 5% [?]
A lot of my clients want to send graphic design projects to online printers. Most of the time I cringe at the thought. Sure the price is pretty good. Sure the turnaround time is quick. But is it really worth it? Let’s take a look…
Online Printing
The up-side…
- most of the time it’s less expensive
- fast turnaround time
- they do offer a variety of services, a variety of printing options, papers, dies, etc.
The down-side…
- lacks personal one-to-one customer service–you are never working with the same rep so there’s no opportunity to build a business relationship
- your project is mass printed, in turn, you have a very short time frame to approve the online proof
- no hard copy proof is provided. So, I would get an online proof which pretty much looks like what I sent, but how do I know the color it accurate? How do I know the folding will be correct? How do I know other elements line up on a tri-fold brochure when all I’m seeing is a flat online proof?
- you have to prepay your total order along with shipping–you’re pretty much stuck with the bill if you’re not happy with the end result
Local Printing
The up-side…
- opportunity to develop business relationships
- one-to-one service–easier to communicate with reps, personal attention to details and free shipping
- easier to hand over graphic art files to local printers if you can’t upload files yourself
- high-resolution, hard copy proof provided–essential for quality, color and folding accuracy. You want to be sure your tri-fold brochure is folded correctly right!
- topping it off, you’re supporting your local business community
The down-side…
- process may take more time–sometimes printers can accommodate rush projects
- pricing may be higher then online printing–sometimes local printers will cut you a deal especially if you have several projects to get printed at once
In general, most printers are able to offer a variety of printing options and have become environmentally friendly: recycling as much as possible, readily available soy inks and recycled papers, and some printers have gone completely green!
So, which is better: online or local printing? Every project is unique and everyone has different priorities. For me, hands down, I’d rather work with local printers and it’s what I recommend to my clients. Being able to have a hard copy proof to go over with my clients, and letting them go over it on their own is so important. You’ve invested energy, time and money in your graphic design–in your branding. So it’s worth the extra time and few more dollars to work with a local printer and it supports your local community.
Diana Puppin, dpDesign
Popularity: 7% [?]
Tucked away in the Health Care Reform Bill enacted in March of 2010 is a provision for yet another round of paperwork for small business.
Beginning in 2012, all businesses (including non profits) will be required to report a wider range of payments to vendors, subcontractors and others through Forms 1099. In general, the current rules require 1099’s to be filed with the IRS to report service transactions with unincorporated business which amount to $600 or more in a calendar year. Electronic filing is required if more than 250 Forms 1099 are required to be filed in any year. Penalties for failure to file these returns range from $15 to $50 per form, and are applied based on the actual filing date of the late return(s). Look for these to be increased as a means of enforcement and “revenue enhancement”.
New rules would expand the required reporting to include ALL transactions to for profit businesses from other businesses, including payments for products as well as services, regardless of whether the business was incorporated or unincorporated. Most payments made by debit or credit cards would be exempt, however.
Earlier this month, the IRS requested comments that would allow the rules to be applied in a way “to minimize burden and avoid duplicative reporting”.
The IRS’ own Taxpayer Advocate estimates the new requirement will affect 40 million businesses, and criticized the requirement because the compliance burden of the new rules “may turn out to be disproportionate as compared with any resulting improvement in tax compliance”. Several Senators (all Democrats, by the way) have recognized the additional burden on small business, and have requested that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to the effective date of the new law in 2012.
So – stay tuned, and chime in! Now is the time to be heard, and respectfully express your true feelings, or even request repeal of the law. Your comments can be submitted via email to comments@irscounsel.treas.gov until September 29, 2010.
Popularity: 6% [?]
This past week Kentucky instituted a no texting while driving ban. That makes 30 States with laws forbidding texting while driving; Ohio currently doesn’t limit texting or cell phone use, although Columbus and Cleveland do, and Indiana provides limits statewide for those under the age of 18 – see all States.
Seems obvious enough – one can’t type while DRIVING. Of course I feel this way about: applying make-up, shaving and (couldn’t believe I saw this one) reading the newspaper. It’s just amazing to think about some of the absolutely idiotic things we try to do while driving a 4,000+ pound vehicle at 65 miles per hour (or faster). Yes – I talk on my cell phone while driving (no, not the safest thing to do), but I also “yell” at my kids sitting in the back of the car while driving…talk about a distraction! Oh and I also eat while driving – who doesn’t. But I think an activity were you’re eyes are on the road, if not your undivided attention, is “safer” than one were you aren’t even watching the road or cars around you. I can multi-task, but I’m not THAT good!
It’s easy to joke about (and justify our own need for) distracted driving, but in all seriousness employers need to take a hard look at their policies with regard to driving and cell phone use (and texting). While it might seem obvious for employers in the business of transportation to have policies for cell phone use in vehicles, it’s just as important for employers in other industries. Any employer can be held liable for accidents caused by an employee’s work-related cell phone use – even for work-related phone calls made outside of regular work hours. Having a cell phone use policy won’t totally protect you from liability, but offers better protection than no policy at all. Without an adequate policy, not only would you be liable for any damages resulting from your employee’s actions, but you could be cited for negligence.
Be sure to have a policy in place that addresses employees use of a cell phone (both personal and company-owned) for work-related business and outlines the use of cell phones while operating a vehicle (again, both personal and company-owned). Your policy should spell out the parameters in detail since it’s the work-related need for using the phone call that triggers the liability. Don’t forget to address texting in your policy. Many employers opt to require employees to adhere to State regulations, while others enforce stricter rules.
For another interesting article on texting and cell phone use on-the-job, read New Road Rules for Texting Workers.
Debbie Hatke, MA, SPHR - Talent Strategy Manager, strategic HR, inc.
www.strategichrinc.com Popularity: 9% [?]
