All posts by Schutte Hilgendorf

FASB’s New Standard Aims to Improve Not-for-Profit Financial Reporting

In August, 2016, the Financial Accounting Standards Board (FASB) launched new reporting standards for Non-for-Profit Entities that will be effective for 2018 calendar year-ends or 2019 fiscal year ends. It is important to be familiar with the requirements ahead of time, but we are not recommending early-adoption, since you have to implement the entire standard.  Please call Schutte & Hilgendorf, CPAs with questions about the new standard and implementation.

Click on the link for a summary of the requirements:

 

New Non-for-Profit Reporting Standards

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


New Mandatory Sick Leave Under Prop 206 – Arizona law Effective July 1, 2017

REMINDER: Check your paid-time-off policies to include the new requirements under Prop 206:

In addition to the increased minimum wage in Arizona,the less publicized part of Prop 206 is the requirement for private and municipal employers to provide paid sick leave to all employees beginning July 1, 2017. Under Prop 206, all employees must accrue paid sick time at a minimum rate of one (1) hour of paid sick time per every thirty (30) hours worked (not confined to a work week or pay period). Employers with less than fifteen (15) employees, must provide and allow the use of twenty-four (24) hours of paid sick time per year, while employers with fifteen (15) or more employees must provide and allow the use of forty (40) hours of paid sick time a year.

Under Prop 206, earned paid sick time may be used by employees for the following reasons:

  • Employee’s own physical or mental illness;
  • Care for employee’s family member who has a physical or mental illness;
  • Public health emergency;
  • Absence due to domestic violence, sexual violence, or stalking of employee or employee’s family member

Implementing mandatory paid sick time may present challenges to employers given the many nuances of Proposition 206, including:

  • Part-time and temporary workers are considered “employees”
  • Employers must post a notice in the workplace that outlines employees’ rights and protections under Prop 206
  • Employers are required to retain payroll records for four (4) years
  • Employers must also provide employees either in or on an attachment to the employee’s paycheck: (1) the amount of earned paid sick time available to the employee, (2) the amount of earned paid sick time taken by the employee to date in the year, and (3) the amount of pay time the employee has received as earned paid sick time
  • Employers can require reasonable documentation from an employee after three (3) or more consecutive work days of paid sick time used
  • Employees may use earned paid sick time as soon as it is accrued; however, an employer may require an employee hired after July 1, 2017 to wait ninety (90) calendar days after the start of employment before using accrued earned paid sick time
  • Employers can include accrual and usage caps on paid sick time in accordance with the mandatory requirements
  • Paid sick time can be used in hourly increments or the smallest increment of employer’s payroll system used to account for absences or use of time, whichever is smaller
  • Employers cannot require employees seeking to use earned paid sick time to find a replacement worker to cover the employee’s absence
  • Employers cannot count the use of paid sick time as an absence that leads to discipline or termination
  • Employers are not required to pay out unused paid sick time upon termination

For further information, contact Schutte & Hilgendorf, CPAs at 928-778-0079.

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


IRS Small Business Tip – Employee or Independent Contractor??

Issue Number: IRS Small Business Week Tax Tip 2017-02
Inside This Issue
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Employee or Independent Contractor? Know the Rules

The IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor.
An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors.
Here are two key points for small business owners to keep in mind when it comes to classifying workers:
1. Control. The relationship between a worker and a business is important. If the business controls what work is accomplished and directs how it is done, it exerts behavioral control. If the business directs or controls financial and certain relevant aspects of a worker’s job, it exercises financial control. This includes:
• The extent of the worker’s investment in the facilities or tools used in performing services
• The extent to which the worker makes his or her services available to the relevant market
• How the business pays the worker, and
• The extent to which the worker can realize a profit or incur a loss
2.  Relationship.  How the employer and worker perceive their relationship is also important for determining worker status. Key topics to think about include:
• Written contracts describing the relationship the parties intended to create
• Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation or sick pay
• The permanency of the relationship, and
• The extent to which services performed by the worker are a key aspect of the regular business of the company
• The extent to which the worker has unreimbursed business expenses
The IRS can help employers determine the status of their workers by using form Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. IRS Publication 15-A, Employer’s Supplemental Tax Guide, is also an excellent resource.
Share this tip on social media — Employee or Independent Contractor? Know the Rules. https://go.usa.gov/x58ra#IRS


IRS Alerts

Borrowed via Checkpoint Newsstand – Thomson Reuters post 2/7/17
The following are some recent phishing scams and myths that the IRS would like you to be aware of :
Federal Tax Highlights

Washington Alert — Part I

IRS, joined by state tax agencies and the tax industry, has issued an “urgent alert” to all employers regarding the Form W-2 (Wage and Tax Statement) email phishing scam. (IR 2017-20) According to the agency, the phishing scam “has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits”. The W-2 scammers have been coupling their attempts to steal employee W-2 information with a scheme regarding wire transfers. As described by IRS, cybercriminals use a variety of techniques to make an email appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments and requests a list of all employees and their Forms W-2. In a new twist, the perpetrators follow up with an “executive” email to the payroll department or comptroller and ask that a wire transfer be made to a specific account. In some cases, companies have responded to this request. Noting that there has been “an upswing of [scam] reports in recent days”, IRS urged employers to immediately share this information with their payroll, finance and human resource personnel. They also should have an internal policy on the distribution of employee W-2 information and conducting wire transfers. “This is one of the most dangerous email phishing scams we’ve seen in a long time”, said IRS Commissioner John Koskinen. “It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns.” Additional information is available at irs.gov/uac/dangerous-w-2-phishing-scam-evolving-targeting-schools-restaurants-hospitals-tribal-groups-and-others

IRS has issued tips to taxpayers that refute several “myths” pertaining to tax refunds currently circulating. (IR 2017-16) The myths included the following – all refunds are delayed; calling IRS or a tax professional will provide a better refund date; ordering a tax transcript is a “secret way” to obtain a refund date; the “Where’s My Refund” tool must be incorrect because there is no deposit date appearing; and delayed refunds for those claiming the earned income tax credit or the additional child tax credit will be delivered on Feb. 15. Complete details can be found at irs.gov/uac/newsroom/irs-answers-common-early-tax-season-refund-questions-and-addresses-surrounding-myths

IRS has commenced publishing entries to its annual list of “Dirty Dozen” tax scams for the 2017 filing season. (IR 2017-15) Phishing schemes now lead the newest Dirty Dozen list. As of Feb. 3, IRS published two additional entries on its list – telephone scams and identity theft. It is expected that the agency will be announcing daily additions to the list. Updated information will appear at irs.gov/uac/newsroom/dirty-dozen

 

If you receive any suspicious emails, phone calls, or mail, contact us at  Schutte & Hilgendorf CPAs .

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.

 

 


Prescott becomes a Program City for Arizona Sales Tax

All Prescott and other cities’ sales taxes will now be reported and paid through the State of Arizona.

Effective January 1, 2017, the Arizona Department of Revenue (ADOR) will become the single point of administration and collection of transaction privilege tax (TPT).  Your sales tax return that is due in February will be the first required return to be filed using the new method.  The link for details on the new requirements for reporting sales tax is:  https://www.azdor.gov/News/tabid/74/newsid530/732/Centralized-Licensing-and-Reporting-of-Transaction-Privilege-Tax-TPT-Begins-Jan-1/Default.aspx?utm_medium=email&utm_source=govdelivery

The Arizona licensing fee was due on January 1, 2017.  If you have not renewed your license, you should log onto the aztaxes.gov website and renew.  Information on how to do this may be found at this link:   https://www.azdor.gov/Portals/0/TPTSimplification/license_renewal_fs.pdf

The City of Prescott requires a business license and registration with the city in addition to the required registration with Arizona/Prescott for a sales tax license.  Additional information on this can be found at this webpage:

http://www.prescott-az.gov/business/license/

Residential & Commercial Rental owners have had their license information submitted to the State of Arizona by the City of Prescott for processing.  Owners will receive a letter from the State containing the new Arizona license number and instructions on how to obtain an online account.  Further information from the City of Prescott for commercial and residential landlords and how to register with the state can be found at:  http://www.prescott-az.gov/_d/residential_and_commercial_rental_tips.pdf

Additional information on licensing for Arizona can be found at:  https://www.azdor.gov/Business/LicensingGuide.aspx

 

For additional information, contact Schutte &  Hilgendorf at 928-778-0079

Schutte & Hilgendorf, CPAs offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


HAPPY NEW YEAR – Important Announcements for Employers

HAPPY 2017!

This letter was sent to all of our business clients at year end with important Arizona and Federal announcements affecting employers in the new year.

Click the link:   Business-Year-End-Letter-2016

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


CITY OF PRESCOTT BUSINESS LICENSE REGISTRATION – MANDATORY AS OF 1/1/17

CITY OF PRESCOTT BUSINESS LICENSE REGISTRATION – MANDATORY AS OF 1/1/17

(passed May 2016)

Effective January 1, 2017, the City of Prescott is requiring anyone who engages in any business, occupation, or profession within the City to obtain an annual city business license.  This new requirement includes:  For-profit and nonprofit, home-based businesses, residential and commercial rentals, special event vendors and promoter/sponsors.  This also includes businesses located within the municipal limits of Prescott, and those that may be physically located outside of the limits but enter the city to engage in business activity.  If you have multiple locations, in the city limits, you will also need a separate license for each location.

The annual business license fee is $35 dollars with no proration. In addition, a $40 annual fire inspection will be required for all businesses located inside the Prescott City limits with the exception of home occupations and residential rental properties with less than three (3) dwelling units on one lot or parcel. License fees are paid online at the time of application.

There are additional fees for vacation rental and structured sober living homes which will be paid in conjunction with the business license application.

There are a few exemptions from the new ordinance that include schools, churches, governments, and employees of licensed businesses.

     For more information and to apply online, please visit the city’s  website at:

                     http://www.prescott-az.gov/business/license.

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079. www.prescottaccountants.com


New Law “Cures” Small Employer Health Insurance Dilemna

eTax Alert™ (Provided by Western CPE)

New Law “Cures” Small Employer Health Insurance Dilemma

The 21st Century Cure Act has passed Congress and the President has just approved and signed. The legislation provides for an exception from group health plan requirements for qualified small employer health reimbursement arrangements. Beginning in 2017, a small employer may again reimburse employees for individual health insurance premiums without fear of the onerous $100 per day per employee penalty assessed for violation of health care reform.

Plan requirements. To qualify as “a qualified small employer health reimbursement arrangement,” the plan must meet certain requirements.

  1. The plan must be provided on the same terms to all employees. Some employees may be excluded from the plan:
    • employees who have not completed 90 days of service,
    • employees who have not attained age 25,
    • part-time (less than 30 hours a week) or seasonal employees,
    • employees subject to collective bargaining.
  2. The plan must be funded solely by the employer and no salary reduction contributions may be made under the arrangement.
  3. The plan must provide, after the employee provides proof of minimum essential coverage, for the payment of, or the reimbursement of, medical expenses (as defined in §213(d)) of an eligible employee or the employee’s eligible family members.
  4. The plan must provide that payments and reimbursements for any year be no more than $4,950 for an eligible employee and $10,000 if the arrangement provides payment or reimbursement for family members.
    • In the case of an individual who is not covered for the entire year, the limitations are prorated. For example, an employee who is covered for nine months of the plan year may have payments and reimbursements of no more than $3,712.50 (9/12 of $4,950).

Small employer. An eligible employer is one that is not an applicable large employer under §4980H(c)(2). Thus, the employer may offer a qualified small employer health reimbursement arrangement if it has less than 50 full-time and full-time equivalent employees. An eligible employer may not offer a group health plan to any of its employees.

Tax-free fringe benefit. A qualified small employer health reimbursement arrangement payment or reimbursement is not excluded from gross income if, for the month in which such medical care is provided, the individual does not have minimum essential health coverage.

Premium tax credit. For an employee who is provided a qualified small employer health reimbursement arrangement for any coverage month, the premium tax credit for that month will be reduced.

Other rules.

  • The eligible employee must receive proper and timely notice of the plan availability (see §9831(d)(4)(A) for details).
  • The total amount of the permitted benefit must be reported on the employee’s Form W-2.
  • The transition relief provided in Notice 2015-17 is extended for any plan year beginning on or before Dec. 31, 2016.

Example. Sharon has three full-time employees working in her tax practice. She does not provide a group health plan. With proper notice to her employees, Sharon establishes a qualified small employer health reimbursement arrangement effective Jan. 1, 2017 to reimburse up to $4,950 (or a lesser amount if she wishes) of §213(d) medical expenses.

Action item. Small business clients should be advised that Congress, in a rare bipartisan effort, has granted relief to the small business that wants to help employees with insurance premiums and out-of-pocket medical expenses without going through the trouble or expense of adopting a group health plan.

© 2016 Sharon Kreider and Vern Hoven


2017 Standard Mileage Rates

From the IRS website:

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.   The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

 

Go to the following link for more information:

 

2017 Standard Mileage Rates for Business, Medical and Moving Announced

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.