Category: Blog

How Businesses Can Leverage Data and Personalization for Targeted Campaigns and Growth

Data and Personalization, Targeted CampaignsMarketing efforts today depend on collecting, analyzing, and leveraging data to make informed decisions. Therefore, business owners need to understand how to harness the power of data and personalization to create targeted campaigns that drive growth.

Importance of Data and Personalization in Modern Business

Businesses today collect loads of data, enabling them to understand their customers’ preferences, behaviors and interests. The data comes from different channels, such as a business website, emails, or social media. It is then used to identify patterns and trends to make informed marketing decisions. This yields valuable insights that help craft highly personalized and effective marketing strategies.

Data is the foundation of personalization strategies. Personalization involves tailoring customer experiences to meet individual interests, needs, and preferences. It aims to build strong customer relationships, encourage engagement, and drive revenue and growth.

Personalization takes different approaches, such as recommendations based on previous purchases, creating unique landing pages, or sending emails based on customer browsing behavior. For example, e-commerce websites recommend products based on user browsing history and search queries.

Business owners can’t afford to ignore personalization since customers today are more informed, can easily access information, have more options, and have more control over purchase decisions. Furthermore, customers are more demanding and want to be recognized as individuals, expecting to receive personalized experiences. This has rendered traditional, one-size-fits-all marketing strategies obsolete.

How Businesses Can Use Data and Personalization for Targeted Campaigns and Growth

Using a data-driven approach, a business can create campaigns that deliver the right message to the right audience at the right time by doing the following:

1. Audience segmentation

Capturing the attention of a specific audience segment leads to higher conversion rates. To do this, a business can leverage data insights to segment the target audience. This means it is possible to categorize potential customers based on demographics, interests, or browsing behavior.

2. Crafting personalized content

Once segmentation is complete, it becomes possible to create tailored campaigns that resonate with each segment’s unique preferences. Aside from addressing customers by their names, it involves delivering content that speaks directly to their needs, interests, and pain points. This could include product recommendations based on past purchases or sending targeted offers that align with customer browsing history.

3. Omnichannel personalization

Customers interact with businesses using various channels, such as a business website, social media, emails, and mobile apps. A business can integrate data and personalization efforts to ensure a seamless journey for customers, regardless of where they engage. Additionally, it is crucial to deliver consistent and personalized experiences across these channels.

4. Continuous improvement in data-driven campaigns

Data insights also help guide businesses on the most suitable content and distribution strategies. They can analyze types of content performing well and in which channels. For example, a business can conduct A/B testing to compare campaign and content variations to identify the most effective approach for each segment.  

5. Measuring and analyzing results

To establish the effectiveness of personalized campaigns, a business will need to develop clear key performance indicators (KPIs) and measurement methods. One way to measure the impact of personalization is through customer engagement. This is done by measures such as click-through rates on personalized emails, customer retention rates, customer lifetime value, customer feedback, and number of sales.

It is worth noting that to make the most out of data insights. It is helpful to invest in advanced analytics tools or collaborate with data experts.

6. Adapting to changing trends

The digital landscape is evolving constantly, with new technologies and trends emerging regularly. Businesses must stay updated on these changes and adapt their personalization strategies accordingly. Remaining flexible and open to innovation ensures that the company’s targeting efforts are relevant and effective.

Data Privacy and Security

Although personalization in modern business is crucial, it must be balanced with privacy concerns. First, a business must be transparent about the data it collects and how it will be used. In addition, businesses need to be careful with the data they collect. They must ensure data security by safeguarding data storage and using safe transmission methods, have access control limits, and regularly audit data privacy policies and practices. Customers should be allowed to opt out of data collection and personalization efforts easily.

Customer data must be well protected to ensure compliance with relevant regulations. It also helps build trust with customers. Besides, a breach of trust can severely affect a business’s reputation and growth.

2021 Vs 2022 Vs 2023 Federal Income Tax Brackets

2020 Vs 2021 Vs 2022 Federal Income Tax Brackets

The US tax system is progressive, meaning that the more you earn the more you pay. For the years 2021-2023 there are seven different brackets for each year (2020 was the same structure as well). Which bracket you are in depends on your taxable income; however, your bracket does not equal your tax rate.

Tax brackets work so that you pay part of your income at each level bracket as you move-up in income. In other words, someone in the 32% marginal rate bracket will pay 10% on part of their income, 12% on another part, then 22% on another band of income, 24% on the next tranche and finally, 32% on everything else. In other words, moving into a higher tax bracket does NOT mean you pay higher taxes on all your income.

Below are comparative tables for the taxable years 2021 – 2023. This way you can not only see the tax brackets that apply 2023 taxable income, but the trend changes over time.

Updates to 2023 Tax Rates and Brackets

Over the 3-year period shown below, there are seven brackets with progressive rates ranging from 10% up to 37% and they are the same overall years.

Federal income tax rate brackets are indexed for inflation. The brackets are adjusted using the chained Consumer Price Index (CPI). There were no structural changes to the tax brackets in any of the periods, so the only impact are increases year-over-year due to the inflation indexing.

The inflation adjustment factor for 2023 was 7% for example, raising income thresholds applied to the tax brackets across the board.

Tax Rates and Brackets

Below are the 2021-2023 tables for personal income tax rates. Note, that the 2023 figures below are the amounts applicable to the income earned during 2023 and paid in 2024 when you file your taxes.

 

Tax Brackets & Rates

Single Taxpayers
2021 2022 2023
10% 0 – $9,950 10% 0 – $10,275 10% 0 – $11,000
12% $9,951 – $40,525 12% $10,276 – $41,775 12% $11,001 – $44,725
22% $40,526 – $86,375 22% $41,776 – $89,075 22% $44,726 – $95,375
24% $86,376 – $164,925 24% $89,076 – $170,050 24% $95,376 – $182,100
32% $164,926 – $209,425 32% $170,051 – $215,950 32% $182,101 – $231,250
35% $209,426 – $523,600 35% $215,951 – $539,900 35% $231,251 – $578,125
37% $523,601and Over 37% $539,901 and Over 37% $578,126 and Over

 

Married Filing Jointly and Surviving Spouses
2021 2022 2023
10% 0 – $19,900 10% 0 – $20,550 10% 0 – $22,000
12% $19,901 – $81,050 12% $20,551 – $83,550 12% $22,001 – $89,450
22% $81,051 – $172,750 22% $83,551 – $178,150 22% $89,451 – $190,750
24% $172,751 – $329,850 24% $178,151 – $340,100 24% $190,751 – $364,200
32% $329,851 – $418,850 32% $340,101 – $431,900 32% $364,201 – $462,500
35% $418,851 – $628,300 35% $431,901 – $647,850 35% $462,501 – $693,750
37% $628,301and Over 37% $647,851 and Over 37% $693,751 and Over

 

Married Filing Separately
2021 2022 2023
10% 0 – $9,950 10% 0 – $10,275 10% 0 – $11,000
12% $9,951 – $40,525 12% $10,276 – $41,775 12% $11,001 – $44,725
22% $40,526 – $86,375 22% $41,776 – $89,075 22% $44,726 – $95,375
24% $86,376 – $164,925 24% $89,076 – $170,050 24% $95,376 – $182,100
32% $164,926 – $209,425 32% $170,051 – $215,950 32% $182,101 – $231,250
35% $209,426 – $314,150 35% $215,951 – $323,925 35% $231,251 – $346,875
37% $314,151and Over 37% $323,926 and Over 37% $346,876 and Over

 

Heads of Housholds
2021 2022 2023
10% 0 – $14,200 10% 0 – $14,650 10% 0 – $15,700
12% $14,201 – $54,200 12% $14,651 – $55,900 12% $15,701 – $59,850
22% $54,201 – $86,350 22% $55,901 – $89,050 22% $59,851 – $95,350
24% $86,351 – $164,900 24% $89,051 – $170,050 24% $95,351 – $182,100
32% $164,901 – $209,400 32% $170,051 – $215,950 32% $182,101 – $231,250
35% $209,401 – $523,600 35% $215,951 – $539,900 35% $231,251 – $578,100
37% $523,601and Over 37% $539,901 and Over 37% $578,101 and Over

 

 

Conclusion

While the tax brackets are the same in 2023 as the prior year, the income thresholds increased 7% following hot inflation in the CPI. You can lower your marginal rate or at least reduce the amount of taxable income subject to it by optimizing itemized deductions.

How to Write an Awesome Accounting Bio

How to Write an Accountant Bio, How to write CPA Bio, How to write a Tax Preparer Bio, How to write a Bookkeeper bioEven though numbers are probably the biggest thing in an accountant’s wheelhouse, getting people in the door with the right words in your bio can make all the difference in the world. Here are a few tips to make sure that how you present yourself to the public via your wording is powerful, succinct, and engaging.

Make it Short and Engaging

Yes, attention spans in our world are woefully short, much like that of gnat. You have seconds to grab someone’s attention. Write your bio as if you were looking for an accountant. How would you word it? What would catch your eye? Of course, you’d start with your name and title, but what after that? Spend time thinking about this.

Don’t Use First Person

While social media is all about saying “I this” and “I that,” when it comes to bios, it’s best not to do that, use the third person as if you were talking about someone else. For instance, “John Davis is a CPA at Ernst & Young.” After that, you can launch into telling the world just how awesome you are.

Use Active Voice

And avoid passive voice. An example of this would be something like, “John’s team was involved in the overhaul of the payroll system.” For active voice, you’d write it like this:  “John’s team overhauled the payroll system.” See the difference? You’ve cut out extra words and adjusted your verb to be active. A quick way to check your writing for passive voice is to do a search in your document for an “of.” If you spot these babies, fix them right away.

Update Your Social Media Profiles

While most people use LinkedIn, many others who are looking for a job include their bios on their social media pages. In fact, you might update your bio on your LinkedIn page and then share it on Facebook, Instagram, or other platforms you use. This way, when employers are casually scrolling, you’ll appear in their feed. And if they’re looking for someone, all the better.

End Strong

The abbreviation in the marketing world is CTA, or Call to Action. You see it on nearly every digital ad as a button. But if you reimagine it in terms of the last sentence of your bio, it can leave a lasting impression and, hopefully, trigger a response. You might end your bio with a short, friendly statement, your email, and your phone number: “John is actively seeking employment, can be reached at [FILL IN INFO], and is just a ping or phone call away.” No matter what you choose to end with, it should reflect you and your personality.

If you need a little help to get started, here are two different samples:

Sally Smith is a CPA and a Senior Accountant at ABC Company, a full-service tax and bookkeeping firm in Home Town, USA.

John Jones joined ABC Company in 2000. In his current role, he is a seasoned tax preparer with a focus on international taxes. This involves staying up-to-date with current and future tax regulations for foreigners living and working in the United States and abroad, as well as state tax regulations in California and Florida.

Writing an accountant bio that will stand out from the crowd will take a bit of time, but it is well worth it. You want to present yourself in the best possible light to your audience. When you do this, you’ll get more traction and, in turn, more business.

How to Identify and Avoid Cash Flow Pitfalls

Cash Flow Pitfalls, Cash Flow problemsLooking at expenses for one’s business is essential to reduce cash flow issues. For example, it would show if there’s too much money leaving the business or what type of scenario the business might face if there’s an unexpected and large expense that guts the business’ cash position. Tracking expenses on a monthly basis is one way to determine a company’s financial health.  

Estimating sales by starting with last year’s month-by-month figures is one way to start. Looking at credit and cash sales from a business’ monthly income statements provides historical reference. Examining both fixed and variable past expenses, specifically, is a good starting point. However, it’s important when projecting future sales and reasonable increases to remember that the business could be impacted negatively by a new competitor or positively if one goes out of business.

Determining when payment will be received is a good way to project cash flow. If it’s cash, then it’s instant and no further calculation is necessary. However, if payment is conducted by invoices, credit lines, etc., businesses are encouraged to perform the Days Sales Outstanding (DSO) calculation. This calculates, on average, how long customers take to pay outstanding invoices.

DSO = (Monthly accounts receivables/Total sales) x Days in the month

This is a good way to measure how long customers actually take to pay invoices versus what terms are specified in contracts or invoices.

Another consideration is to look at fixed and variable expenses. While fixed expenses are just that, fixed, it’s important to monitor variable expenses because they can fluctuate. One example is inflation, which can increase the cost of input materials, salaries, overhead, etc. Depending on the volume of production or sales, electricity, commission, or similar costs can also vary.

Once this information is gathered, the current month’s projected cash flow can be calculated.

The formula is as follows: (Last month’s cash balance + Current month’s projected receipts) – Projected expenses.

Preventing Bad Debt from Happening Before Collections is Necessary

According to SCORE, there are many things a business can do to reduce the likelihood of customer debt default and increase cash flow. Businesses can check the creditworthiness of both individual and commercial clients before offering credit to determine the likelihood of defaulting. 

Similarly, if Net 30 is the standard timeframe to pay an invoice, offering a 5 percent discount if it’s paid within seven days is one way to encourage prompt payment. Businesses that get a deposit when signing the contract or before beginning work will generate a more consistent cash flow.

Operating Cash Flow Ratio Example

This looks at how easily a company can satisfy current liabilities from its cash flows that are produced from the business operations. If there’s negative cash from operations, a business might be relying too heavily on financing or selling assets to run its operations. If earnings are steady, but cash flow from operations is falling, this is a negative indication of a company’s health. It’s calculated as follows:

(Operating Cash Flow/Current Liabilities) = ($15 billion/$45 billion) = 0.33

Businesses with an operating cash flow ratio greater than 1 have produced more cash in an operating period than is necessary to satisfy current liabilities. Businesses that have a reading less than 1 did not produce enough cash to satisfy current liabilities. However, further investigation is required to ensure that it’s not taking some of its excess cash to reinvest in projects with the potential to create future rewards.

While there’s no way to predict future cash flow trends, making projections can help businesses compare actual results to projects and adjust their plans more efficiently.

Sources

https://www.score.org/resource/article/10-ways-improve-collections-and-cash-flow

2023 Sales Tax Holidays for Back-to-School Shopping

2023 Sales Tax Holidays for Back-to-School ShoppingNow that we are heading into the backend of summer, it’s time for many states to host their annual sales tax holidays for returning to-school shopping. Numerous states with sales tax (remember, not all states have a sales tax) provide the reprieve to help families with the cost of annual school supplies and clothing.

According to the National Retail Federation, nearly 80 percent of shoppers are expecting increased costs this year versus last year; so more than ever, consumers are looking for ways to save. Furthermore, about two-thirds of back-to-school shoppers take advantage of these tax-free shopping periods.

The vast majority of states offer some type of tax-free shopping for a limited time period, frequently taking place over a weekend. Below, we will look at each state that offers a sales tax holiday for back-to-school shoppers, along with their details. Note that several states, including Alabama, Mississippi, and Tennessee, have their programs in July – and those are excluded from this article due to the timing of publication.

State Programs

Arkansas: From Aug. 5-6, the following items are tax-free for shoppers: clothes and shoes under $100 per piece, fashion accessories $50 and less per piece, as well as electronics, art, and school supplies.

Connecticut: From Aug. 20-26, clothes and shoes priced at $100 or less per piece are tax-exempt. Fashion accessories and sports gear are fully taxable, though.

Iowa: Aug. 4-5, clothes and shoes priced at $100 or less per piece are exempt.

Maryland: From Aug. 13-19, clothes and shoes priced at $100 or less per piece are exempt.

Missouri’s back-to-school tax breaks come Aug. 4-6. Clothes that cost less than $100 per piece are exempt. Also tax exempt on a “per purchase basis” are school supplies under $50, software under $350, and PCs under $1,500.

New Jersey: From Aug. 26 to Sept. 4 all art supplies, instructional materials, school supplies, and sports equipment sold to individuals are sales tax exempt. In addition, computers priced at $3,000 or less are also tax-free.

New Mexico cuts its sales tax charges from Aug. 4-6. Included are clothes, shoes, and backpacks costing $100 or less per piece; school supplies costing $30 or less per piece; and computers costing less than $1,000.

Ohio’s back-to-school deals are during Aug. 4-6. Clothes costing $75 or less per piece; school supplies less than $20; and other instructional materials priced at $20 or less are all tax-free.

Oklahoma from August 4-6; only clothes and shoes costing $100 or less per piece are exempt.

Texas: During Aug. 11-13, clothing, footwear, school supplies, and backpacks priced below $100 per piece are exempt. The exemption applies to both brick-and-mortar sales and those made online or via catalog.

West Virginia: From Aug. 4-7, no sales tax is charged for clothing priced at $125 or less; laptops and tablets costing $500 or less; school supplies purchased for $50 or less; and also certain sports equipment costing $150 or less.

Expirations and Details

If you notice, most states have an exemption for clothes and footwear in a moderate price range. Some are more liberal with their exemptions, while others offer a tax break on a broader scope of items, such as electronics and supplies.

Keep in mind that a few states’ sales tax holidays are permanent, while others are temporary. Also, remember that certain states are very specific about what is exempt from sales tax, so visit your state’s tax revenue website for details. It’s also important to note that some states allow counties or towns to exempt themselves, so check for this provision as well.

Compensating Service Members and Establishing Rules and Procedures for Ethical Matters

S 467,S 777,S 30,S 822,S 829,S 359,HR 3831CADETS Act (S 467) – This bipartisan bill was introduced on Feb. 16 by Sen. Gary Peters (D-MI). The purpose of this bipartisan bill is to change the age requirements (previously limited to age 25 and younger) for the Student Incentive Payment Program. This program provides financial support to cadets of state maritime academies who enlist or commission in the Navy Reserve at the time of their graduation. The bill passed in the Senate on March 29 and in the House on June 14. It was enacted on June 30.

Veterans’ Compensation Cost-of-Living Adjustment Act of 2023 (S 777) – This bipartisan bill, which was signed into law on June 14, requires the Department of Veterans Affairs to increase the amount of wartime disability compensation by the same percentage as the cost-of-living increase benefits for Social Security recipients, effective on Dec. 1, 2023. The bill also authorizes a similar adjustment to compensation for people who have not received compensation for a service-connected disability or death. The bipartisan bill was introduced by Sen. Jon Tester (D-MT) on March 14.

Fiscal Year 2023 Veterans Affairs Major Medical Facility Authorization Act (S 30) – This Act authorizes the development of and funding for major medical facility projects by Department of Veterans Affairs during this fiscal year. The bill was introduced by Sen. Jon Tester (D-MT) on Jan. 24. The legislation was passed in the Senate on March 21, in the House on June 20, and was signed into law by President Biden on July 18.

Modification to Department of Defense Travel Authorities for Abortion-Related Expenses Act of 2023 (S 822) – Introduced by Sen. Joni Ernst (R-IA) on March 15, this bill would reverse the Pentagon’s new policy of paying for travel if a military service member goes outofstate for access to reproductive health care. The new rule was in response to recent state laws that functionally banned abortion in locations where military bases are located. Support for the Act is generally split among partisan lines, with Republicans advocating and Democrats opposing. A similar bill has been introduced in the House. The Senate bill is currently under committee review.

Disclosing Foreign Influence in Lobbying Act (S 829) – This bill was introduced in the House by Sen. Chuck Grassley (R-IA) on March 16. It mandates that registered lobbyists must disclose their relationship with any foreign countries or political parties involved in the direction, planning, supervision or control of the lobbyist’s activities. This bipartisan bill (co-sponsored by four Democrats, two Republicans and one Independent) passed in the Senate on June 22. It has been forwarded to the House for consideration.

Supreme Court Ethics, Recusal and Transparency Act of 2023 (S 359) – This Act is designed to strengthen the code of ethics to restrain inappropriate activities of U.S. Supreme Court Justices. Provisions of the bill include expanding circumstances under which a judge must be disqualified; adopting rules for the disclosure of gifts, travel and income received by the justices and law clerks; and establishing procedures to receive and investigate complaints of judicial misconduct. The bill was introduced on Feb. 9 by Sen. Sheldon Whitehouse (D-RI) and is awaiting a formal report out of committee.

AI Disclosure Act of 2023 (HR 3831) – This legislation, introduced on June 5 by Rep. Ritchie Torres (D-NY), would require that any content produced by AI (which includes ChatGPT) be accompanied by a disclaimer that reads: “This output has been generated by artificial intelligence.” The bill has yet to be assigned to committee for review.

Insider Threats: Identifying, Mitigating and Preventing Internal Security Risks in Organizations

Insider ThreatsOne of the most devious and often underestimated dangers in cybersecurity comes from within an organization. These dangers originate from individuals within the organization who have access to sensitive data and systems, making them potentially dangerous adversaries capable of causing significant harm. Understanding, identifying, mitigating, and preventing these internal security risks are paramount for safeguarding an organization’s assets and preserving its integrity.

What is an Insider Threat?

Insider threats are security risks posed by employees, contractors, vendors, or anyone who has access to an organization’s data or systems. Accidental or intentional insiders cause internal threats. An accidental insider could unknowingly cause breaches due to negligence, human error or falling prey to social engineering tactics. For example, an employee clicks on a link in a phishing email, causing a malware infection.

On the other hand, insiders can intentionally engage in data theft, sabotage, or intellectual property theft, driven by motives such as financial gain, revenge or espionage.

A good example took place in May 2022 when a Yahoo employee stole trade secrets after receiving a job offer from The Trade Desk, a competitor. Another example is that of an employee fired from Stradis Healthcare who hacked into the former employer’s network in March 2020 and deleted critical shipping data.

According to the 2023 Insider Threat Report by Cybersecurity Insiders, 74 percent of organizations say insider attacks have become more frequent. The same percentage of organizations also believe they are at least moderately vulnerable to insider threats.

Experts attribute the rise in insider threats to various factors, including the effect of economic instability leading to businesses focusing on revenue growth and leaving gaps in security investments. There also has been an increase in layoffs in the tech industry that can result in disgruntled ex-employees doing damage as they leave the workplace. Overworked employees also might cut corners that create security issues, such as configuration, system access or unused accounts. Insider threats are also made more complex as many organizations migrate their workloads to the cloud, introducing new challenges.

How to Identifying Insider Threats

Insider threats are difficult to detect. However, it helps to look out for compromise indicators such as inappropriate behavior. Here is a more specific list of red flags:

  • Unusual access and log in, especially from an insider who doesn’t have certain access rights to data or systems.
  • Abnormal network search activity for sensitive information on networks, intranets, databases, or applications.
  • Unusual copying or downloading of sensitive information to an unauthorized destination such as email or removable media.
  • Misuse of tools, either foreign or installed. Detecting unfamiliar tools on a system is a compromise indicator. However, a savvy insider may even use trusted enterprise tools to execute an attack. In such a case, behavior such as access to a system outside regular working hours or access from unusual locations could indicate a compromise.
  • Unwillingness to comply with security policies. Employees who consistently disregard security protocols and policies might pose a risk to the organization’s security.

Mitigating Insider Threats

Proactive measures that can help mitigate insider threats include:

  • Employee training and awareness: Conduct regular security awareness and training programs to educate employees about the significance of insider threats and their role in preventing them.
  • Role-based access control: Implement a robust access control model that ensures individuals have access to only the resources required for their specific job roles, reducing the potential impact of an insider breach.
  • Behavioral analytics: Employ advanced analytics tools to monitor user behavior and detect inconsistencies that could indicate suspicious actions.
  • Develop clear exit procedures: these include the revocation of access privileges and retrieval of company-owned devices and sensitive information from employees leaving the organization.
  • Continuous monitoring and adaptation: Insider threats keep evolving, necessitating ongoing monitoring and constant adaptation of new security measures.

Preventing Insider Threats

  • Conduct comprehensive background checks and verify references during the hiring process to minimize the risk of malicious insiders entering the organization.
  • Ensure employees have proficient skills in deploying and managing complex cloud solutions.
  • Encourage open communication, foster mutual trust, and support employees to reduce the likelihood of disgruntlement.
  • Extend security considerations to contractors, suppliers, and partners with access to the organization’s data or systems.
  • Implement endpoint security solutions to monitor and analyze activities on user devices such as workstations or laptops.

Conclusion

While staying alert for cyberattacks from outside is critical, organizations must not forget that the most significant risk can come from inside the business. Even with the most comprehensive cybersecurity defenses against external hackers, failing to create proactive measures for internal security leaves critical assets open to hidden dangers within the organization’s walls.

Organizations such as the Cybersecurity and Infrastructure Security Agency (CISA) provide information and resources to assist in developing new or improving existing insider threat mitigation programs.

7 Best Money Moves for 2023

7 Best Money Moves for 2023In light of our current economy, making sure your money works hard for you is one of the best things to do this year. Here are some ways you can navigate your financial situation, keep tabs on where you are, and adjust if you need to.

Shop for a higher return on savings. These days, every extra cent counts. That’s why it pays to look around for higher rates on savings accounts. Several places to check out are PNC (4.65 percent APY), Sofi (up to 4.4 percent APY), and American Express (4 percent APY). Here are a few others. Rates may increase even more with the Federal Reserve’s rate hike announcement on July 27.

Open an HSA account. When you have one of these, it will help you pay for expenses that your health insurance plan doesn’t cover. If you’re enrolled in a high-deductible insurance plan, you and possibly your employer can contribute pre-tax dollars into this account, from which you’ll use funds you’ve stocked away for qualified medical expenses. Whatever money you don’t use will roll over to the next year, unlike FSA accounts.

Consolidate debt. Why pay a bunch of different interest rates on all your credit cards? If you have debt, find one card with a very low-interest rate and do a balance transfer. Some credit cards offer 0 percent APR as an introductory rate, which will be a big savings to get a jumpstart on becoming debt-free. Here are a few good ones: Bank of America® Travel Rewards Credit Card now offers 0 percent APR for 18 months. Discover it® Cash Back offers 0 percent APR for 15 months. Find other great deals here.

Cut how much you pay on car insurance. Have you shopped around lately? We know this might seem like a pain, as it takes a lot of time, but here’s some good news, and it’s called The Zebra. This amazing site has done all the heavy lifting for you. Here, you’ll find dozens of real-time comparisons from many trusted companies.

Max out your 401K. This year, the maximum yearly contribution limit has been raised by $200 to $22,500 (up from $20,500 in 2022). Even better, if you’re over 50, you can set aside catch-up contributions of $7,500, allowing a total contribution of up to $30,000. This allowance lets older workers add as much as they can so that when they retire, they’ll be in a better financial situation.

Update your W-4. No one likes a shock when it comes to paying taxes. That’s why this is such a smart idea. And the IRS actually has a tool that can help you: The Tax Withholding Estimator. Go here to find out if your employer is taking enough money out for taxes. If you’re falling short, you’ll know. Better to learn and fix this before it’s too late.

Create a net worth statement. When you have a realistic idea of your assets and liabilities, you’ll be able to see whether or not you’re on the right track with retirement. This way, you’ll be able to set up new goals for yourself if you feel you need to.

Keeping up with your finances, while time-consuming, really pays off. If you try one (or all) of these hacks, you’ll be better off in no time.

Sources

https://www.moneytalksnews.com/slideshows/15-of-the-best-money-moves-you-can-make-in-2021/

How to Reduce Common Payroll Errors

Common Payroll ErrorsAccording to the Internal Revenue Service (IRS) and the National Federation of Independent Businesses (NFIB), almost one-third of companies see penalties due to payroll issues. Understanding a few examples, according to the NFIB, of how companies can better comply and avoid penalties is essential to smoother operations.

Underpayment of Estimated Tax by Corporations Penalty

As long as there’s a reasonable expectation of at least $500 in estimated taxes owed, corporations are required by the IRS to file. If, however, a corporation doesn’t satisfy its estimated tax payments or pays them after their quarterly submission deadline, the IRS will assess penalties. This can occur even if the IRS owes filers a refund.

The IRS recommends the easiest way to avoid the penalty is to pay the quarterly estimated taxes by the 15th day of April, June, September, and January of the following year (the following month after each quarter). If the 15th is on a weekend (Saturday or Sunday) or it’s a legal federal holiday, payment would be due on the next regular business day.

When it comes to assessing penalties for underpayment of estimated taxes, the IRS determines the penalty based on how much-estimated taxes are underpaid, the time frame of when the payment was due and underpaid, and the IRS’ current quarterly interest rates.

Based on 2023’s third-quarter data from the IRS, the federal agency charges a 7 percent penalty annually, compounded daily.

Failure to Deposit Penalty

Another payroll tax mistake businesses may make is the Failure to Deposit Penalty. The NFIB reported that nearly 50 percent of small businesses see fines on average of $850 annually because they’re late or missing payments. In order for businesses that must make employment tax deposits, it’s imperative to do so either on the IRS’ monthly or semi-weekly basis.

Required employment tax deposits cover Social Security, Medicare, and federal income taxes, along with Federal Unemployment Tax. Employers on the monthly route are required to deposit employment taxes on payments for the prior month by the 15th of the following month. For the semi-weekly route, deposits for employment taxes on payments made between Wednesdays and Fridays are to be made by the following Wednesday. For deposits done on a Saturday, Sunday, Monday, or Tuesday, employment tax deposits must be made by the following Friday.

Beginning with the due date of the employment tax deposit, the penalty is calculated by the number of calendar days the deposit is late.

Between one and five calendar days, there’s a 2 percent penalty on the unpaid deposit. Between six and 15 calendar days, the penalty increases to 5 percent of the unpaid deposit. If it’s late by more than 15 calendar days, the penalty is 10 percent of the unpaid deposit amount.

If more than 10 calendar days have passed after the first written contact from the IRS notifying the filer of failing to deposit their employment taxes or the day the business receives correspondence requiring immediate payment of employment taxes, the penalty increases to 15 percent of the unpaid deposit. It’s also subject to interest on the penalty.

While these are only two ways businesses can incur payroll-related tax penalties, it’s illustrative of how businesses need to keep on top of their federal (and state) obligations.

Sources

https://www.irs.gov/payments/failure-to-deposit-penalty

https://www.irs.gov/payments

https://www.irs.gov/businesses/small-businesses-self-employed/employment-tax-due-dates

https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2

https://www.irs.gov/payments/underpayment-of-estimated-tax-by-corporations-penalty

https://www.irs.gov/newsroom/interest-rates-remain-the-same-for-the-third-quarter-of-2023

https://www.irs.gov/payments/underpayment-of-estimated-tax-by-corporations-penalty

https://www.nfib.com/content/partner-program/money/are-you-guilty-of-committing-these-5-payroll-mistakes/  

Increased Tax Bills Hitting Private Companies Big and Small

Increased Business Taxes 2023, New Business Taxes 2023Private companies, both large and small, are feeling the tax pinch due to changes in the law. With rampant inflation, labor shortages, lingering supply chain issues, and increased borrowing costs due to rising interest rates, tax problems are the last thing struggling companies need to face.

While tax rates themselves remain largely unchanged, business taxable income is increasing due to changes in three main deduction areas: research and experimental (R&E) capitalization; interest expense deduction calculations; and a reduction in bonus depreciation. All of these provisions were made more liberal in the Tax Cuts and Jobs Act (TCJA) of 2018 but with a wind-down over a 10-year period.

Part of the problem is that these tax law changes can increase a business’s overall tax burden even though there have been no operational changes to the business, leaving less profits than prior years, with all other factors being equal. Below, we look at each of the three tax provisions, the changes coming, and the impact on businesses.

Stricter Interest Expense Limitations

Tax code section 163(j) limits the amount of business interest expense to 30 percent of adjusted taxable income. The 30 percent limit remains unchanged, but the basis of what constitutes “taxable income” as part of the calculation is becoming tighter.

From 2018 through 2021 year-end, businesses were allowed to add back depreciation, amortization, and depletion in coming up with their adjusted taxable income that underlies the calculation. As a result, for 2022 and onward, without these add-backs, the taxable income on which the 30 percent limit is applied will be lower, resulting in smaller interest deductions.

Given that borrowing rates have gone up substantially with increases by the Federal Reserve over recent years, businesses are now hit from two sides at once. They are likely to have higher interest costs but can take less as a deduction.

Research and Experimental Capitalization

At one point, business investments in research and experimentation under the TCJA were 100 percent deductible. Starting with 2022 and after, they need to be capitalized over a five-year period (15 years for foreign R&E).

Bonus Depreciation Decreases

Under the TCJA, bonus depreciation allowed immediate expensing and deduction of qualified investments in property and equipment up through the taxable year-end of 2022. Starting with property and equipment investments placed in service in 2023, however, bonus depreciation is reduced from 100 percent down to 80 percent and decreases by an additional 20 percent each year until the taxable year 2027. From 2027 onward, there will be zero bonus depreciations available. This will not only increase taxes, but it will also put a hamper on capital investments, rippling through the economy.

Conclusion

There is already chatter about extending some of these provisions, especially regarding bonus depreciation. Optimism on changes or extensions of these tax provisions should be taken cautiously, however. Many predicted that tax bill extenders would be in place before the end of 2022, but that never came to fruition. Right now, businesses are in a wait-and-see situation, with the threat of materially higher tax bills unless Congress does something.