Wilson Toellner CPA

Like so many things this year, the recommended practices for your annual end-of-the-year tax planning reflect the COVID-19 pandemic and its far-flung effects. The economic impact, as well as federal relief packages like the CARES Act, may render some tried-and-true strategies for reducing your income tax liability less advisable for 2020. Adding to the uncertainty is the outcome of the presidential election. It could result in new federal tax legislation that trims or even repeals the Tax Cuts and Jobs Act (TCJA). Regardless of the election results, here are some year-end tax planning issues and actions to consider. Income acceleration One common tactic to reduce taxable income has been to defer income into the next year. But this practice is advisable only when you don’t expect to land in a higher income tax bracket in the following year. Current tax rates are at their lowest in some time, but they may not stay there for high-income individuals. It might be wise to accelerate income t...

As your small business plans for payroll next year, be aware that the “Social Security wage base” is increasing. The Social Security Administration recently announced that the maximum earnings subject to Social Security tax will increase from $137,700 in 2020 to $142,800 in 2021. For 2021, the FICA tax rate for both employers and employees is 7.65% (6.2% for Social Security and 1.45% for Medicare).   For 2021, the Social Security tax rate is 6.2% each for the employer and employee (12.4% total) on the first $142,800 of employee wages. The tax rate for Medicare is 1.45% each for the employee and employer (2.9% total). There’s no wage base limit for Medicare tax so all covered wages are subject to Medicare tax. In addition to withholding Medicare tax at 1.45%, an employer must withhold a 0.9% additional Medicare tax from wages paid to an employee in excess of $200,000 in a calendar year. Employees working more than one job You may have employees who work for your business and who als...

The subject of payroll has been top-of-mind for business owners this year. The COVID-19 pandemic triggered economic changes that caused considerable fluctuations in the size of many companies’ workforces. Employees have been laid off, furloughed and, in some cases, rehired. There has also been crisis relief for eligible businesses in the form of the Paycheck Protection Program and the payroll tax credit, and many businesses have offered hazard pay to workers. Payroll recordkeeping was important in the “old normal,” but it’s even more important now as businesses continue to navigate their way through a slowly recovering economy and ongoing public health crisis. Four years Most employers must withhold federal income, Social Security, and Medicare taxes from their employees’ paychecks. As such, you must keep records relating to these taxes for at least four years after the due date of an employee’s personal income tax return (generally, April 15) for the year in which the payment was made...

As Zig Ziegler famously said, "if you aim at nothing, you'll hit it every time." So how should a business set its aim, you ask? Through the development and use of a detailed and realistic budget. If your business doesn't actively use a budget, our accountants and advisors in Sedalia, Marshall, and Osage Beach can assist you in creating one and understanding how to use it as a management tool. Through the use of historical and forecasted data, we help our clients establish a budget that lays out a path to success in the year to come. By observing actual business performance against budgeted performance, we create opportunities to gauge success and get back on track when things take a turn.  By now, some businesses have completed their 2021 budgets while others are still crunching numbers and scrutinizing line items. As you put the finishing touches on your company’s spending plan for next year, be sure to cover the finer points of the process. This means not just creat...

The year 2020 has taught businesses many lessons. The sudden onset of the COVID-19 pandemic followed by drastic changes to the economy have forced companies to alter the size of their workforces, restructure work environments and revise sales models — just to name a few challenges. And what this has all meant for employees is change . Even before this year’s public health crisis, many businesses were looking into and setting forth policies regarding change management. In short, this is a formalized approach to providing employees the information, training and ongoing coaching needed to successfully adapt to any modification to their day-to-day jobs. There’s little doubt that one of the enduring lessons of 2020 is that businesses must be able to shepherd employees through difficult transitions, even (or especially) when the company itself didn’t bring about the change in question. Why change is hard Most employees resist change for many reasons. There’s often a perceived loss of, or thr...