December 2012 Archives

We love Santa. The idea of a chubby old man shimmying down a chimney to bring toys to little girls and boys is awesome.

Santa is the freaking man.

He has flying reindeer, defies laws of space and time on Christmas Eve, and still maintains his rotund figure despite constant work-related stress. Additionally Santa possesses some sort of omniscience that allows him to determine the 'niceness' or 'naughtiness' of every living child. He also ages remarkably well and is able to coax the world's elf population to maintain a scalable enterprise without, apparently, much of a profit.

All of these things--and a host of others--make Santa really cool. Santa does all of this while maintaining a legendary secrecy. He is accountable to know one. Santa is a law unto himself.

It has come to my attention, however, that Santa hates call tracking.

Why?

Well, call tracking is about visibility. It is about allowing marketers to see into their performance. It is about holding marketing accountable and proving ROI. Call tracking is about determining if your marketing is actually making you money (or just wasting it).

Santa despises all these things. His so-called 'workshop' operation doesn't care about profits or losses. Nor does it care about ROI.

Santa only cares about creating toys for the world's children. Any tool that holds him accountable for his marketing spend is something that Santa does NOT support.

Are these appearances in malls actually useful marketing for Santa? Do they generate any new business for him? What about his occasional appearances in jewelry, Coca-Cola, or car commercials? Do any of these costly marketing efforts produce a Return-On-Investment?

Santa doesn't want to find out the answer to these potentially damning questions.

He wants the mall visits and the commercials to continue. He's treated like royalty when he makes these visits. Have you seen his gigantic throne at the mall? He gets free food and Mrs. Claus gets free swag. The attention and the rockstar treatment is addictive. Santa simply doesn't want to know if all of this so-called marketing is actually working.

He hates call tracking.

So, as much as we love Santa, we have to confess that we don't have much in common. We want to track the effectiveness of our marketing. We demand that every marketing tactic is measurable and quantifable with real data and real analytics. We don't engage in costly marketing activities and simply hope they work. We measure, optimize and improve.

Our clients don't have anything in common with Santa either. Sure they enjoy the jolly old elf as much as anyone, but when it comes to measuring marketing performance and proving ROI, our clients simply disagree with Santa. They don't understand his aversion to metrics.

Santa we love you but, you need to move into the new age of analytics. Ditch the 'brand and hope' strategy. Let's try to some real performance and metric based marketing.

Santa, stop hating. Please use call tracking to find out who has been naughty and nice. Don't play Scrooge and do read Our Secrets to Tracking Calls for Fun and Profit  (To conform with FTC regulations, Santa Claus did not write this post.  McKay Allen of LogMyCalls is responsible and you can contact me below.  Thanks.)

Michigan, last week, became the 24th state to pass right-to-work legislation. A bit of a misnomer, the term “right-to-work” does not guarantee anyone’s right to work per se. What it does guarantee is that when employees choose not to join a union, they cannot be compelled to pay any union dues or fees as a condition of their employment.

In contrast, a “closed shop” would require that all workers join the union, and hence pay dues, as a condition of being hired.

While such completely closed shops were outlawed decades ago, the modified form that exists today permits a mandated fee payment to the union by those who choose not to join.

An argument against right-to-work is that all employees enjoy higher wages and better benefits as a result of the union and thus should contribute. The counter argument, and basis for right-to-work laws, is that choosing to join a union and pay dues to it, or not, is each individual employee’s basic right.

The passage of the right-to-work law in Michigan, and one earlier this year in Indiana, is significant because the mid-West has historically been a stronghold for union activity.

Right-to-work laws tend to have a weakening effect on unions. Many companies have relocated jobs to states that have right-to-work laws; it has been argued that the laws, therefore, have a positive effect on the economies and unemployment rates in those states.

For further information on right-to-work laws, subscribers to HRSentry may simply type right to work in the Search Box from their dashboard.

Are you overpaying on your equipment purchases?

Because you didn't use the right tax planning device?

As we approach the end of 2012, now is a great time to start thinking about not just last minute equipment purchases, but also tax time.

So, if you're in need of any new kitchen equipment or a business vehicle, don't put off that purchase any longer - not only because 2013 is right around the corner, but also because the benefits of the Section 179 tax deduction is expected to reduce significantly at the end of the year.

What is Section 179? Section 179 probably sounds more complicated than it really is. It is a simple tax deduction in the IRS tax code that has been around since 1981 and was developed as an incentive for businesses to invest in their own growth.

While it has been revised numerous times over the years, the most recent changes took effect January 2, 2012 and allow franchisees to immediately deduct up to $139,000 on qualifying equipment and software purchases, with the maximum amount that can be spent being raised to $560,000.

This type of incentive can yield substantial cash savings for a franchise while helping to provide access to equipment that is needed for recommended equipment upgrades, an expansion, or to replace broken equipment. The deduction isn't automatic, however, and franchisees need to do the proper paperwork.

It's easy to take advantage of these savings, provided you know how to go about it. While we aren't tax professionals and you shouldn't consider this tax advice, we have learned quite a bit about Section 179 over the years.

Below are answers to some of the most common questions we hear regarding Section 179.

What Qualifies for Section 179? The best part of the Section 179 deduction is that it can be used for a whole host of qualifying equipment purchases, whether they're required or recommended upgrades, or to replace a broken or worn out essential equipment. From new soft serve ice cream machines, ovens, POS systems, or even computer hardware and software, almost any equipment purchase is included.

The catch is that the equipment must be purchased AND put into operation during the tax year. Some examples of qualifying purchases include:

• Capital Equipment
• Business Vehicles (gross weight in excess of 6,000 lbs.)
• Computers
• Software
• Ovens & Other Kitchen Equipment

How to Prevent Overpaying using the Section 179 deduction

You will need to complete Part One of IRS form 4562, a relatively simple form but one you'll need to track down on the IRS website.

Make sure to work with your tax professional to take advantage of this lucrative incentive for your franchise and ensure they have experience with Section 179.

How much is the section 179 deduction worth? For the 2012 tax year, businesses may take a 100% deduction on purchased or leased equipment, as long as the total is below $139,000. This is in contrast to previous years, when the total was as high as $500,000. We'll discuss this in more detail in the next section.

How was Section 179 affected by the various Stimulus Acts? The last six years have seen significant changes in the Section 179 Deduction due to various Stimulus Acts enacted by congress - most specifically related to the dollar limits of the deduction.

The limits by tax year:

2007 Deduction Limit: $125,000

2008 Deduction Limit: $250,000

2009 Deduction Limit: $250,000

2010 Deduction Limit: $500,000

2011 Deduction Limit: $500,000

2012 Deduction Limit: $139,000

Deduction decreases dollar-for-dollar after equipment purchase totals exceed the following:

2007 Total equipment purchases: $500,000

2008/2009 Total equipment purchases: $800,000

2010/2011 Total equipment purchases: $200,000,000

2012 Total equipment purchases: $560,000

How was Section 179 affected by the Tax Relief Act of 2010?

This act impacted the Bonus Depreciation available to businesses under Section 179.

In 2012, there is 50% Bonus Depreciation available for new equipment purchases once the $560,000 limit is reached (or for businesses reporting net losses in 2012).

What will happen to the dollar limits of the deduction 2013? The current law states that the deduction will decrease again to $25,000 in 2013.

This number could be changed by Congress if they tackle it in the next legislative session.

When can I take advantage of Section 179 deductions? The deadline for the purchase and deployment of eligible equipment is December 31, 2012. You will make the deduction as you are filing your tax return for the year. Remember, it's possible that the amount will decrease next year, so you'll want to take advantage of this deduction as soon as possible!

How do I determine my deduction? Let's take a look at some example savings, assuming an equipment purchase totaling $65,000.

Your Equipment Cost: $65,000 Section 179 Deduction (up to $139,000): $65,000 50% Bonus Deduction* (Equipment Cost - Deduction) x 50% *only for new equipment $0 Total First Year Deduction (Section 179 Deduction + Bonus Deduction) $65,000 Total Savings (Total Deduction x 35% Tax Rate) $22,750 Equipment Cost After Savings (Equipment Cost - Total Savings) $42,250  

In this example, you'd save a whopping $22,750. That's the kind of sizable saving that many franchisees miss by failing to file for this deduction.

Is it better to purchase or lease to take advantage of Section 179? Ultimately the buy vs. lease will depend on your businesses situation, but an important fact about leasing is this: with the Section 179 deduction, you can write off 100% (up to $139,000) of the price of your qualifying equipment but you don't have to spend 100%.

This means that with a properly structured lease, your tax deduction can actually be more than your first year of payments. Don't forget, the limits for this deduction have been dramatically decreasing over the years and will decrease again in 2013, likely to as little as $25,000. There is no guarantee that the total will increase above that in the future.

So, if you're thinking you may be in the market for some new equipment, now is the time to jump on it. For more information, be sure to contact your local tax advisor to discuss your specific situation.

Have other projects planned? Direct Capital also offers financing programs for remodels, new stores, relocations, equipment & technology upgrades and more!

With year end almost upon us, human resources and payroll professionals are busier than ever! Reduce your administrative headaches by preventing problems. Check the list below to make sure you’re on top of important requirements and changes in the new year.

1. Report health insurance costs on W-2s. The 2012 W-2s that you issue in January, 2013 must reflect the cost of employer-sponsored health insurance in Box 12 with a code of DD. Note that small employers, i.e. those who issued less than 250 W-2s for 2011, have been given a one-year reprieve but are expected to report the cost in their 2013 W-2s to be distributed in January, 2014.

2. New Health FSA limit. The employee contribution limit for health flexible spending accounts is reduced to $2500 per year for plan years beginning in 2013 and beyond. Be sure to update your plan document and let employees know of the change. (Note that dependent care accounts are not changed.)

3. Social Security Tax Rate. Unless extended by Congress, the 2% temporary reduction in the social security tax rate is about to expire. Most likely, therefore, effective January 1, 2013 the rate will revert to 6.2% of wages up to $112,300 (an increase from $110,000.)

4. Additional Medicare Tax. If you have employees who earn more than $200,000 per year, you are required in 2013 to withhold an additional 0.9 percent Medicare payroll tax (an increase from 1.45 percent to 2.35 percent) to the amount of their pay that exceeds $200,000.

5. Loss of Adoption and Education Assistance Tax-free Status. The income tax exclusion of up to $12,650 in qualified adoption assistance and up to $5,250 in employer-provided tuition assistance are set to expire on December 31, 2012 unless extended by Congress. If applicable to your organization, let employees know about these likely changes. Consider ways to assist employees with educational reimbursements that qualify as a business expense.

6. Minimum Wage Increases. Where the state minimum wage exceeds the federal rate, you must use the higher wage. States with minimum wage hourly rate increases in 2013 are:  Arizona $7.80; Colorado $7.78; Florida $7.79; Missouri $7.35; Montana $7.80; Ohio $7.85; Oregon $8.95; Rhode Island $7.75; Vermont $8.60; and Washington $9.19. The federal rate will remain at $7.25 per hour.

7. IRS standard mileage rate increases are as follows:
56.5 cents per mile for business miles
24 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations

8. Defined contribution retirement plan limits. Increased amounts for 2013 are:
Maximum elective deferral by employee  $17,000
Catch-up provision limit for ages 50+       $ 5,500
Total maximium (employer + employer)  $51,000

9. Health Savings Account/High Deductible Health Plan increases. Note the following HSA limits and related HDHP dollar amounts for 2013:
HSA contribution limit (employer + employee)  $3,250 individual   $6,450 family
HSA Catch up contribution limit (age 55+)          $1,000
HDHP minimum deductible amounts                   $1,250 individual    $2,500 family
HDHP maximum out-of-pocket amounts             $6,250 individual   $12,500

For a full year-end checklist, HR Made Simple subscribers may view the Year End Payroll & Benefits Checklist (under HR Topic Modules on the Knowledge Menu.)