Risk Management Saves Thousands in Litigation Fees

Posted on by TJ Van Voorhees

Overview

One of the key advantages of a successful Human Resource strategic plan is that it allows the company to minimize risk exposure with regard to its employees. Many companies overlook this very effective strategy. This point is well illustrated in the case of a large fitness company.

Client Introduction

The Client provides fitness services to the public. It was weighing the advantages and disadvantages of acquiring a competitor. The competitor had legal problems due to employee issues so severe that the competitor was forced to file for bankruptcy protection. The Client had to move fast to make sure that the competitors’ two-thousand employees were fully compliant with current employment laws to avoid additional litigation as well as government imposed penalties and fines.

Problems in the Infrastructure

The competitor had no Human Resource (HR) systems in place. They had very complicated payroll requirements because many of their employees were paid by the hour at different rates. The competitor did not keep accurate time keeping records. Employees were located in different states and were subject to different employment laws. Many benefit packages were not compliant with mandatory laws. Performance reviews were not given correctly, timely or properly documented. Break and vacation laws were not followed.

Solutions Were Implemented Right Away

The Pacific Crest Group (PCG) helped the Client create systems and strategies to build trust with its management and employees very quickly. PCG immediately organized all the employee data so it could be integrated into a complete Human Resource Information System (HRIS) to track every payroll function. All employment records were brought up to date and in compliance with applicable local, state and Federal laws. A team of five payroll specialists worked closely with the Client to train them on how to use their new system.

New employment contracts were created that were electronically signed by all employees. The agreements documented the employment offer, pay rate, “at will” termination clause and many other critical employment terms. Clear communication channels between management and employees were established. A twenty-four hour response time was instituted so that employees could get their employment questions answered accurately and quickly. A new employee benefit specialist was recruited and hired by PCG for the client. Employees felt that the new policies were fair, properly explained and applied equally to all.

PCG’s Unique Value Added

A process that would normally take at least one year was done in six months. Pacific Crest Group added specific value that only it can provide through its comprehensive Human Resource services. For example, the Client was trained on risk management strategies that resulted directly in saving thousands of dollars in additional litigation and government imposed penalties and interest charges.

Due to PCG’s special relationship between its HR and accounting departments, it was able to strategically advise the Client using its specialized business acumen in such a way that it had profound effects on the Client’s bottom line. PCG acted like a partner in the decision making process by considering the Clients’ needs first each step of the way.
Systems were installed that allowed the Client’s HR people to utilize PCG professionals to complete projects without having to rely on expensive temporary employment services. Pacific Crest Group acted like a full-time HR department on a part-time project basis. PCG assisted in hiring and training all new personnel. The Client was provided the extra service of helping their HR personnel by handling all payroll related questions before they became a legal issue. This saved them a great deal of money in potential legal fees.

Pacific Crest Group provides professional services that keep your business focused on your key objectives. They create custom made systems based on creative strategies that are always delivered with exemplary customer service.

A PCG professional is happy to meet with you to discuss solutions for your unique requirements to maximize all of your business opportunities.

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Proper Differentiation between Wage and Hourly Employees is Critical

Posted on by TJ Van Voorhees

Overview

How many times have you heard company executives say that it is less expensive to hire contract labor than employees? This is not always true. In fact, most often the opposite is true. Making sure there is a clear distinction between contract labor and employees in your company is imperative. The following case emphasizes this point.

Client Introduction

A TV show production company is very successful and growing. They have over one-hundred employees composed of two primary employee groups. One group is internal staff that consists of writers and editors. The other group is made up of production people who do set creation and onsite filming. The internal staff typically work eight hour days. Production people can work anywhere from eight to fifteen hour days or more depending on the required filming schedule.

Lack of Clear Employment Policies

The company’s employment manual was confusing and not in compliance with current employment laws and regulations. Ambiguous employment policies led to disagreements, bad feelings and tension between employees and management. There was a great deal of confusion about breaks and overtime payment rules. Day rates were being paid that did not include required overtime compensation.

Lack of proper overtime documentation created a huge liability for the Client. If even one employee had filed a claim and the company was audited, the Client would have owed overtime compensation going all the way back to the first instance for all their applicable employees at exorbitant rates.

In addition, if the company was found negligent in not providing proper times for legally required breaks, they would be subject to employee lawsuits as well as Federal and state penalties for failure to comply with mandated employment laws.

Comprehensive Pay Rates Were Created

The Pacific Crest Group (PCG) wrote two employee manuals. One manual was for the internal staff and a different one for the production employees. The new manuals clearly outlined the policies for each group. Distinctions between exempt and nonexempt overtime employees were made conclusive with examples and illustrations for each segment. Nonexempt employees were properly classified and contacted to let them know they would be paid overtime for all applicable work.

Day rates were calculated with both overtime and non-overtime pay rates. This made sure all employees were compliant with Federal and state overtime rules. PCG made sure both management and employees were confident that standard employment laws were being implemented.

PCG’s Unique Value Added

Every two weeks PCG professionals provide office hours for employees and management to answer questions about employment policies and procedures as well as changes in career paths. Joint training presentations are done with all personnel concerning employment rules and regulations that need to be followed to create a winning culture for everyone. Providing access to trained Human Resource (HR) professionals builds trust between employees and management.

The biggest success for this company was there were no employee claims filed. Management was instructed on how to communicate clear employment policies to employees in a very supportive environment on an ongoing basis. All personnel felt heard, appreciated and valued. Employees and management agreed that when the company as a whole does well everyone does well.

Pacific Crest Group provides professional services that keep your business focused on your key objectives. They create custom made systems based on creative strategies that are always delivered with exemplary customer service.

A PCG professional is happy to meet with you to discuss solutions for your unique requirements to maximize all of your business opportunities.

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How to Increase the Effectiveness of Your Company’s Culture

Posted on by TJ Van Voorhees

All companies have a culture whether they are aware of their culture or not.   Most company executives agree that culture is the key element of a company’s success.  Pacific Crest Group (PCG) puts a large emphasis on understanding, utilizing and improving the culture of your company.company-culture-hiring-managers

Culture can be best understood when you think of it in terms of the behavior of a Tribe.  “Tribes are groups of twenty to one-hundred-fifty people in which everyone knows everyone else, or at least knows of everyone else.”  Large companies consist of a “network of tribes.” (1)

The benefits of an effective company culture include high performance, outstanding innovation and unparalleled team work.  The achievement of a successful culture leads to a positive spiral that makes the team’s performance seem almost unfathomable to people outside the tribe.

The key to increasing your company’s performance is to first identify which stage of growth the culture of your company resides.  You can then begin to move your organization’s culture to a higher stage of growth and thereby increase its performance.

There are five stages of growth as shown below.  Stage two through four indentifies some key elements to move to the next level of growth.

Stage One:  Tribes whose members are hostile.  They gossip, create scandals, steal, lie and may become violent.   It is impossible for a business to survive in this type of culture.

Stage Two:  This is the dominant culture for about a quarter of most workplace tribes.  Members tend to be passively antagonistic, sarcastic and resistant to management’s objectives.  Recommended ways to move to a higher stage of growth include identifying each individual’s skills, offering progressive training with attainable goals and providing opportunities for members to use their skills to make contributions that are meaningful to them based on their values.

Stage Three:  Almost half of all workplace tribes are in this stage.  Behaviors include “knowledge hoarders” who want to outwork and outthink the people they perceive to be their competitors. Manipulation techniques are common.  Suggested ways to move to the next stage includes expanding the definition of success to include collaboration.  When people receive training, require that they share the training with other team members so those members can understand and apply it.

Stage Four:  Team members shift from thinking “I am great” to “we are great.”   People are happy to work together for the benefit of the company as a whole.  They understand that for each individual to be successful the company must be successful.  Moving from stage four to stage five requires eliciting feedback from all stakeholder groups including groups that the tribe does not normally communicate with.  The company must seek out best practices from different industries.  It focuses on global problems rather than just industry problems.

Stage Five:  Less than two percent of all tribes are in this stage.  Members who have made tremendous innovations in their fields use those skills and their future potential to make positive contributions on a global scale.

Pacific Crest Group (PCG) provides professional services that keep your business focused on your primary objectives.  They create custom made systems based on creative strategies that are always delivered with exemplary customer service.

A PCG professional is happy to meet with you to discuss solutions for your unique requirements specifically designed to maximize all of your business opportunities.

(1)  CultureSync’s book entitled “Tribal Leadership” is based on ground breaking research in the study of the culture of Tribes.  Please see www.culturesync.com for more information on tribal culture.

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Q&A How to Better Manage Your Small Business Cash Flow

Posted on by Franka Winchester

Cash flow is to business like water is for plants, both are critical for growth. While several small businesses may never experience these problems, others may experience the need to cut costs or look towards alternative funding just to make it past payroll. This can cause additional pressure for your business as loans become harder to obtain, and you may face the decision to ultimately close up shop. Bookkeeping Continue reading “Q&A How to Better Manage Your Small Business Cash Flow” »

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Tips for Creating a Financial Budget

Posted on by Franka Winchester

Regardless of whether your goal is to find investors or just better manage your business, financial forecasting and budgeting are essential in achieving short-term and long-term success.

As the year progresses, your operating plan and financial projections will evolve. You should be actively engaged in testing your assumptions and altering your actions as you go. Creating a financial forecast or budget allows business owners to determine whether they have sufficient resources to fund operations, generate personal income, grow the business, and adapt to change.

The task of creating your financial budget may seem daunting, but it is extremely beneficial for making important management decisions as well as applying for loans. The following tips can help you get started:

Tip 1: Create a spreadsheet to estimate the cost of resources and expenses. This includes suppliers for materials, rent, taxes, insurance, etc. Shopping around for quotes is a good idea before continuing on.

Tip 2: Factor in some slack. It is important to note that although you may estimate the rate of revenue growth or that some expenses will be fixed, these forecasts are not always set in stone. Make sure that you have enough capital set aside or coming in before expanding the business.

Tip 3: Cut costs where you can and wait to make purchases until the beginning of a new billing cycle. Making sure you get the best value of your costs and expenses will give you much needed breathing room and opportunity for expansion.

Tip 4: Review business performance regularly. Because small businesses can be unpredictable and unanticipated expenses can throw off projections, it is wise to keep adjusting your budget to insure all costs are covered while still generating revenue.

If you want to see examples of budgeting and financial forecasting, you can check out the Keep It Simple (KISS) Strategy and 5 Simple Steps to Creating Your Cash Flow Budget and Forecast.

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SWOT Analysis- Get Going on Growth!

Posted on by Franka Winchester

The New Year approaches and you want to make 2015 the year of growth. You want your business to expand, you want to hire more employees and you want to see even more profits. So, how do you get there? Consider putting together a growth plan.

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This doesn’t mean that you have to devote your entire weekend to creation of this plan; in fact you can probably do it in less than an hour! No, really! First, ask yourself, what are your goals for the coming year? Using SWOT analysis you’ll be able to strategize for 2015. What is SWOT?

SWOT is an acronym for:

Strengths

Weaknesses

Opportunities

Threats

It was invented by Albert Humphrey in the 1960s and focuses on these four areas as it applies to your goals and looks like this:
Strategy-management-diagram-SWOT-Analysis-Matrix-Template-Horizontal-b_w
By using this analysis method you are able to fully examine your business both internally and externally. The top boxes (strengths and weaknesses) applies to what is current with your business. The opportunities and threats address items outside your business. List your company’s strengths, weaknesses, opportunities and threats in the boxes by asking yourself questions for each box.

Strengths:

What does your business do well?
What advantages do you have that your competitors don’t?
What do your customers love about your business?
What resources or people do you have that are special?

Weaknesses:
In what areas could you improve? Consider your process, products and services.
What resources or people do you need?
What is causing you to lose business?
What are your competitors doing that you aren’t?

Opportunities:
Where could you improve?
What trends could you be taking advantage of (social media, laws, new tech)?
What areas of growth could you pursue?
Is there a new market you could expand into?

Threats:
What obstacles do you face from competitors or your market?
How do your competitors hurt your business?
What trends are occurring that could hurt your business?

Looking at the answers to your questions you can ask yourself:

  • How will you use your strengths to take advantage of opportunities?
  • How will you combat your weaknesses?
  • How will you address threats to your business?

There you go! By examining the above SWOT analysis you can address the areas that you really want to grow in and have a plan to implement changes. Having a strong team with you as you begin the New Year can make a difference. Pacific Crest Group helps businesses to find these team members whether it is a CEO, Accountant or Human Resources in order to help you make your business a success.

What can we do for you in 2015?

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Afraid of Being Audited? Don’t Be!

Posted on by Franka Winchester

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Are you preparing your 2014 taxes? Are you a small business or self-employed individual? Unfortunately the Internal Revenue Service audits these types of returns more than any other. These tax forms usually require a lot more information such as expenses and their categories and are therefore more complex.

Be aware that having an accountant to help you with your taxes will minimize your chances of being audited- but no one can guarantee that you will never be audited. All you can do is prepare for the chance that it may happen and have your books in order if it does.

What happens if you are audited by the IRS?

You will first receive a notice of an audit. It might look something like this:

IRS-Audit-Notice-4-1

You will want to make sure that you have all the documentation that they request such as receipts, invoices; basically anything that will support the claims you have made on your return. This is also an excellent time to call your accountant or tax advisor. There are different types of audits, and depending on which one your business is subject to you may want a tax professional on hand during the audit. The letter you receive will explain what type of audit you will be getting as there are three:

1. Correspondence audit: These are simple errors and corrected via through the IRS via the mail. In their notification to your business they will state the information they need corrected and usually will only deal with small issues.

2. Office audit: The IRS will send a letter with a list of questions that they need answered and is conducted in their office. This will allow you to prepare all necessary documentation as well as your CPA to the audit.

3. Field audit: This audit is done in your location by the IRS. The agent that comes to your location will look at your entire return as well as documents supporting your return.

How can you minimize your chances of being audited?

1. Make sure you or your CPA reviews your taxes thoroughly prior to submission.  This will minimize simple errors.

2. Be honest. While it may be difficult to shell out your hard earned profits, falsifying your return can be even worse as it can result in criminal and civil legal action.

3. Always keep personal and business records separate. This will ensure you are not mixing incomes and expenses.

4. Consider legal actions, like being incorporated instead of sole proprietor, as sole proprietors are more likely to be audited than corporations.

Additional red flags:

  • Consecutive years of business loss
  • High Expenses
  • Home Office and motor vehicle expenses
  • Large Charitable donations

You can navigate through the nerve wracking process of your business tax returns easily. Consider having a CPA on your side in order to minimize your chances of being audited! Not sure where to find a qualified candidate? Pacific Crest Group has the solution! Check out our services page and see which is right for you!

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Tax Tips Going Into the New Year

Posted on by Franka Winchester

With the year coming to a close and 2015 on the horizon, I’m sure many of you are wondering about tax tips to close out this year and start the next. Well you can get ahead of tax season by having a discussion with your CPA now to maximize your deductions and get your tax strategy in order. While the tips below may be helpful for some businesses, it’s important to remember that no two businesses are alike and we recommend discussing with your CPA and figuring out which tax strategies may apply to you.

The first thing to keep in mind is that it is difficult to provide sound tax advice when the underlying IRC is in flux and uncertain. A one year extender (HR 5771) was just passed, meaning extended through 12/31/14, for the many tax benefits that expired beginning in 2014. However, the Senate is expected to pass the legislation as well, but this will most likely happen in 2015. Unfortunately the tax filing deadlines remain the same, but the last-minute retroactive tax law changes then delays the IRS in releasing final tax forms and instructions.

What this means
This means that tax preparation software companies are delayed in releasing their final software updates, which in turn, delays tax preparers from completing client’s tax returns. An increase in tax returns going on extension will most likely be the result.
Click here if you’re interested in following HR 5771

Tax Tips Going Into the New Year

1. Although the business property expensing option is greatly reduced in 2014, don’t neglect to make expenditures that qualify for this option. For tax years beginning in 2014, the expensing limit is $25,000, and the investment-based reduction in the dollar limitation starts to take effect when property placed in service in the tax year exceeds $200,000.

Extended only through 12/31/14 – Sec 179 should be back to the $500,000 expense limit and the 50% bonus depreciation should also return. Sec 179 can be taken on new or used qualifying property; bonus depreciation can only be taken on new qualifying property (meaning, first owner of property). Also keep in mind that the property has to be purchased and placed into service on or before 12/31/14.

2. Businesses may be able to take advantage of the “de minimis safe harbor election”–the book-tax conformity election–to expense the costs of inexpensive assets and materials and supplies, assuming the costs don’t have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules. To qualify for the election, the cost of a unit-of-property can’t exceed $5,000 if the taxpayer has an applicable financial statement(AFS). If there’s no AFS, the cost of a unit of property can’t exceed $500. Where the UNICAP rules aren’t an issue, purchase such qualifying items before the end of 2014.

3. A corporation (other than a “large” corporation) that anticipates a small net operating loss for 2014 may find it worthwhile to accelerate just enough of its 2015 income to create a small amount of net income for 2014. This will permit the corporation to base its 2015 estimated tax installments on the relatively small amount of income shown on its 2014 return, rather than having to pay estimated taxes based on 100% of its much larger 2015 taxable income.

4. A corporation should consider accelerating income from 2015 to 2014 where doing so will prevent the corporation from moving into a higher bracket next year. Conversely, it should consider deferring income until 2015 where doing so will prevent the corporation from moving into a higher bracket this year.

C-Corps are taxed at 15% federal on the first $50,000 of taxable income; 25% federal on next $25,000. In general, CA taxes C-Corps at a flat 8.84%.​ Please make sure to keep this in mind when trying to maximize the utilization of tax brackets in an overall tax strategy.

5. Curious about year-end bonuses? In general, owner compensation is treated on the cash basis even if the company is on the accrual basis. So, for owner compensation/bonuses to be deductible in 2014 make sure that they are actually paid before 12/31/14. Employee (non-owner) bonuses can be accrued at year-end but then must be paid within 2.5 months of year-end to be deductible for 2014.

6. In general, retirement contributions can be accrued at 12/31/14 but do need to be funded until the due date of the return (including extensions). So you get the deduction in 2014 that does not need to be funded until many months later (September 2015, if on extension). This is a great tax benefit that is often overlooked.

As the old adage goes, “It’s better to get started sooner than later,” and this is the same for your tax strategy. While you may not be able to take advantage of the tips in this post, I do suggest bringing these topics to the attention of your CPA. Having a discussion of the different options and deductions that are available to you will help you gain a better understanding of effective tax strategies, and your CPA will know what will work best for your business. If you don’t have a CPA, feel free to send us a message and we can recommend one to you. And remember, the only bad questions are the ones not asked.

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Business Traveling & Taxes Tips & Tricks

Posted on by Franka Winchester

When you are traveling for business, it can be difficult to keep track of expenditures, but if you are not doing so you are missing out on some great deductions for your business.  To make sure that you are following the law when it comes to business tax deductions (especially with travel) make sure to consult your tax professional. The tips and tricks below are to get you started on the right path!

Always Keep a Record

The IRS requires that lodging always has a record to go with it. Many hotels have a digital check out feature (usually accessible through the TV) so make sure that you have a paper copy you can put into your records.  Make sure that it has the amounts, dates and what type of expense on it. One thing to note is that any in-room service (IE dining) is separate from your lodging bill and is deducted as “meal expenses” which have their own stipulations.

Keep an Expense Diary

You can download expense report software for your phone (often for free) so that you can keep detailed records of your traveling and expenses. Put in all the details so that you have a record and keep your receipts.  This includes cash (like for your morning coffee). Without details you don’t have an evidence chain to show on your taxes. Forgetting to write down your expenses can often result in you getting home and wondering what that $30 was from. The extra minute or two can go a long way in saving you money!

Meals

Meals can be tricky, and have certain requirements like they are only deductible if the trip is overnight or long enough that you need to stop for sleep/rest. Again, a record in the form of receipt is best instead of just having a ‘standard meal allowance’. Generally meals are only covered 50%, so it can be helpful to check before you travel to ensure that you have all the information and aren’t stuck holding the bill at the end of the year!

Hey Honey You are Coming With!

Unfortunately deductions are often denied for spouses unless they are an employee of your business or are traveling for a business person. This can be a large grey area, so again- check with your tax professional on this. When it comes to lodging, hotels often don’t distinguish between single to double occupant and same thing for vehicles. Meals or flights can be the tricky part as those are often where the extra expense is shown. Also check to see if there are other reasonable deductions for your partner to come with you, for example they might be able to deduct the cost of their travel on their own taxes.

Trying to figure out how to keep it all moving forward? PCG’s Strategic Consultants will help you take a step back from your business, laser-focus on the details of what’s working (and what isn’t) and take a big picture approach to creating your strategic solutions. With our help traveling for work doesn’t have to be such a chore!
Business-travel2

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Small Business Accounting Traps

Posted on by Franka Winchester

????????????????????????????????It is almost the end of the year! Is your business ready to move forward in 2015? Are you sure?  Many businesses, especially if they are new fall into accounting traps that can prove to be damaging to growth. This is completely understandable! Marketing, managing, accounting and helping customers? It is all very overwhelming!

What are these accounting pitfalls and what can you do to prevent them?

1. Staying on top of receivables

While this seems like common sense, often businesses are moving at the speed of light, sending out invoices and then drumming up more business. Things can get lost, or items not logged. Always marking invoices paid or unpaid will help you to have a better picture of where the company’s finances are.  Also, waiting till tax time can leave you with a lot of unknowns which could result in overpaying taxes. Having an accountant on hand to assist you on items like receivables can help with keeping it all in track. There are also many different kinds of money management software that have the ability to set reminders on invoices.

2. Expenses

Separating business expenses from personal can be confusing if you only use one account or card for purchasing items. Was that a birthday dinner or a business dinner?  Do you remember what that $50 charge was for? An easy way to solve this dilemma (and again- not mess up your taxes) is use different cards for expenses. A dedicated business expense card can help you keep it straight. Not to mention the different rewards that can come with certain business cards, like free travel or cash back!

3. Record where your cash goes

If you have petty cash, or use cash, a method of recording this will also help you when it comes to balancing the books. What is the big deal? If you aren’t keeping track of cash, you may be overestimating how much income (or underestimating) that your business is bringing in! There are apps for mobile devices that work like a paper check register (or even use your notepad feature or Evernote) to help remind you when you use cash!

4. Get a Tax Professional

Let’s face it; taxes are not the easiest thing to do. They can be very confusing, especially for businesses. There are many deductions that you may not realize you qualify for, not to mention state vs federal taxes. Finding a qualified tax professional that you communicate well with will help your business to be successful. Communication is the key factor here. You have to feel comfortable to ask sensitive questions about your finances and feel that you are getting all the information you need. Getting the help you need enables you to focus on your business.

Fortunately if you are looking for assistance in any of the topics above Pacific Crest Group has the infrastructure already in place to help you hit the ground running! Our Basic Accounting Principles Guide has more tips for your small business!

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