12-7-2017, SBA -- According to Bank of America’s Fall 2017 Small Business Owner Report, 35%of small businesses plan to offer year-end bonuses. These bonuses are an important way to retain good employees, especially during this increasingly tight job market. The size of these bonuses varies by industry and company, as well as the way they are figured (tied to performance or a flat amount) and when they are paid to employees (this year or next). Here are 5 things to know about year-end bonuses.

1. Be fair, be clear

Unless an employee has an employment agreement spelling out any required bonus, it’s within the company’s discretion to give a year-end bonus. These holiday-time rewards are an expression of gratitude by the employer for a job well done. Companies want employees to be happy about receiving bonuses and not grumble that payments to some workers are unfair. Consider:

• Giving all employees the same type of bonus (e.g., a week’s wages).
• Fixing bonuses to performance. Be sure that employees understand how this works.
• Paying bonuses based on longevity with the company (e.g., a dollar amount per year of employment).

2. Pay what you can afford

Not every small business is giving bonuses this year. But with profits up for many companies, it may be easier this year than in recent years to give bonuses. Because bonuses are discretionary, companies don’t have to put themselves in the red just to be generous at holiday time. But with that said, don’t overlook the real cost of giving. In addition to the gross amount of the bonus, don’t ignore:

• Employer’s payroll taxes. Depending on what the total payments to the employee for the year have been, the employer share of FICA can be 7.65% of the bonus amount (e.g., $765 on a $10,000 bonus).
• Employee benefits keyed to compensation (e.g., employer contributions to a company’s qualified retirement plan)

3. Factor in payroll taxes

Bonuses are taxable compensation subject to income tax withholding and FICA. They’re treated as supplemental wages. This means employers can:

• Lump the bonuses in with regular pay and figure withholding in the usual way
• Withhold at a flat 25% (no other rate is allowed). However, for bonuses over $1 million (not likely in a small business), the flat withholding rate is 39.6%.

The rules for payroll taxes on bonuses are in IRS Publication 15.

4. Withholding for the additional Medicare tax

If a year-end bonus puts taxable compensation to an employee over $200,000, the employer must withhold for the 0.9% additional Medicare tax on earned income. This is so regardless of the employee’s marital status or whether he or she will ultimately owe this tax when the income tax return for 2017 is filed.

5. Declare now, pay later?

Calendar-year companies that are on the accrual method of accounting can declare year-end bonuses by December 31 and pay them later. As long as bonuses to rank-and-file employees are paid by March 15, 2018, they’re deductible on the 2017 return. But bonuses to owner-employees have different rules. For S corporations, bonuses aren’t deductible in most cases until actually paid (i.e., when owners have to include the bonuses in their income).

Read the rest of the story HERE.

11-27-2017, Life Insurance for SBA Loans -- There’s no doubt about it: growing a small business is no small challenge. No matter how amazing your idea or product, you’re bound to encounter some serious mountains.

According to aTD bank 2017 Business Survey, some of the key challenges that small US-based businesses face today are rising interest rates and rising healthcare costs, both of which can be at least partly attributed to uncertainty surrounding the state of political leadership.

And these days, more and more small businesses like startups areturning to credit cards and other forms of financing over bank loans than ever before. This is partly because someone in four businesses applying for credit were denied, and the ones who received financing did not get as much as they needed.

According to theFederal Reserve Bank of New York:

“… although many employer small businesses were profitable and optimistic, a significant majority faced financial challenges, experienced funding gaps and relied on personal finances. These issues were even more pronounced for the smallest firms, which were less likely to receive necessary funding and more likely to rely on personal finances to operate.”

Despite the fact that the vast majority of businesses in the United States are classified as small businesses – that is, they have employee bases of 500 or less – approximately half of all businesses fail in the first 5 years.

Many of these fail due to lack of funds and a lack of finances.

On top of that, even the businesses that succeed don’t even break even for 2 or 3 years, making financing at the outset crucial. The tricky part is that securing financing is also the most difficult part, which is why so many small businesses are denied financing. And owners are understandably frustrated.

Here are a few key reasons why small businesses are often denied funding.

An Uncertain Economic Climate

Uncertainty behind the local and regional economy is a basic stressor and reason behind the struggle many small businesses encounter. This very uncertainty is why so many businesses are likely to seek financing.

Unfortunately, this problem is also a reason why banks are less likely to give loans. When times are tight, lending is too. Banks aren’t inclined to lend when it’s possible the economy will take a dive, tanking many small businesses.

Because of this, many people are turning to personal savings, lines of credit, and even loans from family and friends.

Read the rest of the article HERE.

Mobile Electronics Alert - North Andover, MA – March 30, 2020:

The below link is for applying through the Small Business Association (SBA) for COVID-19 Economic Injury Disaster Relief. This is a short form (5 screens) that can be completed online in a few minutes. MEA recommends that all members that have been negatively impacted by the coronavirus apply for this relief.

You will need the following information:

1. Business Tax ID or Social Security number

2. Total Sales for the period from 2/1/2019 through 1/31/2020

3. Total COGS (Cost of Goods Sold - which is only what you pay for products for resale) for the same period (2/1/19-1/31/20)**

4. Total Operating Expenses (Total of everything else you paid not including the COGS) for same period (2/1/19-1/31/20)**

5. The date the business was established (usually date of incorporated) and current ownership is the same if it has not changed

6. Select “Automotive Repair” activity and “Automotive – Parts. Accessories” for detailed

7. Number of employees you had employed as of 1/31/2020

8. You will need the full name, address, DOB and social security number of each owner of the business and the % of ownership they have

9. Bank name, account number and routing number