Month: April 2024

Understanding New York’s Tip Credit

Several states have already done away with tip credit for food service workers, and more are exploring the option, including New York. While the debate continues about whether this is a positive or a negative for restaurants and employees, New York has moved ahead with changes to wage theft laws, along with minimum wage increases starting this year and continuing in 2025 and 2026. This makes understanding how the tip credit works in New York even more important as mistakes can be costly and even result in criminal proceedings.

Here’s a quick review…

What is a tip?

Any amount of money a customer voluntarily leaves that’s above the ticket price plus tax is considered a tip.

What is a tip credit?

It allows employers to pay food service workers a rate that’s lower than minimum wage by including tips or a portion of them in wage calculations. Foodservice workers’ combined wage plus tips must equal at least the full minimum wage; otherwise, the employer must make up the difference.

Who owns a tip?

A tip belongs to an employee – not an employer. An employer is not entitled to take any part of a tip, except for a percentage of tips for a valid tip pool.

Who is considered a tipped worker?

While this isn’t defined under NY law, the FLSA applies and defines it as “a tipped employee is an employee engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.”

What about service charges?

Under the FLSA, mandatory service charges are the property of the restaurant as they’re not considered tips, but New York has a more generous policy so it takes precedence. It assumes service charges are gratuities and belong to employees. Employers must clearly let customers know when administrative charges like banquet or special event fees are not tips and, if the restaurant splits the charges with staff, they must let customers know the exact split rate.

What is New York’s minimum wage for tipped food service workers?

In NYC, Long Island, and Westchester, the cash wage is $10.65 and the tip credit is $5.35. For all other NY locations, the cash wage is $10 and the tip credit is $5.

What recourse do employees have if tip regulations are not followed?

They may report or file a complaint regarding hour or wage violations and are protected by law against retaliation. As of the end of last year, wage theft became eligible for criminal prosecution.

Are there tip recordkeeping and reporting requirements?

Yes! They help ensure compliance with state and federal wage and hour laws and serve as proof that you are upholding minimum wage requirements. Under NY Labor Law Section 196-d, employers are required to have daily records of the tips employees receive and those records are subject to DOL inspections. Also, employee wage statements must show how much of the pay is in tips and wages.

To help with recordkeeping and compliance, there are restaurant management systems to track and retain tip documentation. There are also applications allowing employees to self-report.

While the future of tip credits in New York is up in the air, right now they still exist. If you have any questions, we strongly encourage you to seek legal counsel.

Please remember RBT CPAs is available to meet all of your accounting, tax, audit, and advisory needs. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Note: RBT CPAs is not a law firm and the information provided herein should not be taken as legal counsel or advice. Any questions should be directed to your legal counsel.

Does My Small Business Need to File Beneficial Ownership Information?

Under the Corporate Transparency Act (CTA), certain businesses formed or operating in the U.S. must report information about their beneficial owners – the people who own or control them – to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This applies to most companies, including small businesses.

While it sounds like the stuff spy movies are made of, FinCEN Beneficial Ownership Information (BOI) reporting is real and is something businesses need to take seriously.

The U.S. adopted the law to protect against money laundering and related crimes while promoting national security. The willful failure to comply or the willful attempt to provide fraudulent information can result in fines of up to $591 each day a violation continues and criminal prosecution (imprisonment for up to 2 years and/or up to a $10,000 fine).

Earlier this year, the law was challenged in the Northern District of Alabama. The court ruled it exceeds Congress’ power and can’t be enforced against the plaintiffs (Isaac Winkles and companies for which he is the beneficial owner; the National Small Business Association, and its members. This is currently under appeal. For now, any covered entity other than those named in the suit are required to comply.

So, what is beneficial ownership information (BOI)? BOI is information about individuals who directly or indirectly own or control a company.

What companies are required to report BOI? According to the U.S. Chamber of Commerce, a reporting company is any privately held company – domestic or foreign – registered to conduct business in the U.S.

There is a list of 23 entity types that are exempt from reporting, including nonprofits, government authorities, publicly traded companies, banks/credit unions, and such. If your business is not considered exempt and it is a domestic or foreign reporting company, filing requirements and deadlines apply.

A business created or registered before January 1, 2024, has until January 1, 2025, to file. Otherwise, the business must file within 90 calendar days of receipt of the company’s creation or registration if it’s before January 1, 2025. Thereafter, the filing must occur within 30 days of creation/registration.

Full details and resources are available on the FinCEN website. Go there to file BOI information, see Frequently Asked Questions, and access resources for small businesses including a Compliance Guide.

As you take care of the many aspects of running a business – including BOI filings (if required), please remember RBT CPAs is available to meet all of your accounting, tax, audit, and advisory needs. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Note: RBT CPAs is not a law firm and the information provided herein should not be taken as advice. Any questions should be directed to your legal counsel.

Funding Opportunity & Comments on Proposed Rule with June Deadlines

We are always on the lookout for funding and advocacy opportunities to benefit our HUD clients and prospects. Following is information about a funding opportunity for community revitalization efforts and a proposed rule to reduce barriers to HUD-Assisted Housing. Here are the highlights…

FY24 Choice Neighborhoods Planning Grant

On April 9, the FY24 Choice Neighborhoods Planning Grant opened for applications. This funding opportunity is designed to support the development and implementation of a neighborhood revitalization strategy (a.k.a. Transformation Plan) with a focus on housing, people, and neighborhoods. The strategy/plan can then be used to guide the revitalization of assisted and/or public housing and the surrounding neighborhood to have a positive impact on families.

What’s more, grant recipients earn additional points and are given priority for future Choice Neighborhood Implementation Grants, which provide up to $50 million to implement a Transformation Plan.

The application is open to communities of all sizes. $10 million in funding is available, with a maximum grant of $500,000. About 20 communities will be selected for funding. The deadline for applications is June 10 at 11:59 p.m. Eastern Time. For additional information, here is the notice of funding opportunity.

Proposed Rule to Reduce Barriers to HUD-Assisted Housing

On April 9, HUD posted a proposed rule – “Reducing Barriers to HUD-Assisted Housing” – and is seeking public comment by June 10.

The rule proposes that people with a criminal record cannot be automatically terminated from or denied access to HUD-assisted housing, including Housing Choice Vouchers, public housing, and multifamily housing. Instead, owners of HUD-assisted multifamily housing and public housing agencies (PHAs) would be required to use an individualized assessment that considers criminal records relevant to endangering the health and safety of residents and staff, while also giving full consideration to mitigating factors and circumstances.

As a result, PHAs and assisted housing owners would have more discretion and provide direction for fair, effective, and comprehensive admission and termination policies. Ultimately, the proposed rule would help minimize unnecessary exclusions while maintaining a healthy and safe environment.

HUD invites all members of the public and interested parties to submit views, comments, and suggestions by June 10. As per the notice of proposed rulemaking on the federal register, comments can be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov or via mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500.

While you consider grants and proposed rules, please remember RBT CPAs is here to help with all of your accounting, tax, audit, and advisory needs. Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

What’s the latest on AI regulations in New York?

In the absence of Federal legislation governing AI, states are taking it upon themselves to try to get ahead of, or at least keep up with, its development and use. New York is among the forerunners, with legislation already adopted for state agencies and more being explored in relation to labor laws, penal law, the regulation of specific industries, and more.

Overall, legislation seems to be trying to balance unlocking AI potential for the public good while protecting the public from its downsides. Municipalities and their employees should stay abreast of what’s here and what’s coming to ensure compliance and make informed decisions about local AI applications and use.

AI Policy for NYS Agencies

In January, New York State’s Information Technology AI Policy took effect. While encouraging state agencies to adopt AI tools, it also sets guidance for doing so responsibly. While the policy does not cover authorities, boards, and other NYS Government organizations (i.e., the MTA and NYSERDA), these groups are encouraged to follow the policy or use it as guidance.

The policy is broad and should be reviewed in full to understand its full scope. In general, agencies are allowed to adopt their own policies if they are not less restrictive than the state’s policy. State agencies must appoint supervisors to oversee AI systems, which are not allowed to make decisions impacting the public without final approval by a human. State agencies should also have policies for processing personally identifiable, confidential, or sensitive information. They are also advised to consult counsel to ensure intellectual property protections aren’t undermined when inputting data.

The policy also includes best practices for addressing unacceptable uses of generative tools to deceive people, creating content without confirming data, and using AI chatbots without identifying them as such.

Proposed Updates to NY Penal Code

On the criminal law front, Governor Hochul proposed legislation in February as part of the FY 2025 budget to set “important guardrails” to protect against untrustworthy and fraudulent uses of AI. This would classify using AI for the unauthorized use of a person’s voice as a misdemeanor; allow for private action to combat digitally manipulated, false images; disclosure on digitized political communications published within 60 days of an election; and clarify current law regarding unlawful distribution of intimate or sexually explicit images.

Proposed NY Labor Law

NY Bill S07623 was proposed on February 28. If enacted, it would be unlawful to use an automated employment decision tool (AEDT) to screen applicants for jobs in NY, unless the AEDT underwent a disparate impact analysis in the past year, and the employer published a summary of the analysis on its website and provided the NY DOL with an annual summary. If enacted, it will take effect immediately. (This aligns with NYC’s Local Law 144 which took effect last July, setting rules for employer use of AEDTs for screening, hiring, and assessing employees for advancement.)

Private Sector Impacts

As for legislation covering the private sector, while a proposed state task force focusing on this was vetoed in 2023, proposed legislation and guidelines for different industries have been issued and/or are in the pipeline.

For example, the NYS Department of Financial Services issued a proposed circular letter on January 17 regarding the use of external consumer data and information sources(ECDIS), as well as AI systems (AIS), for insurance underwriting and pricing. It includes rules and principles to address “risks of inaccurate, arbitrary, capricious, or unfairly discriminatory outcomes that may disproportionately affect vulnerable communities and individuals or otherwise undermine the insurance marketplace in New York.” Comments on the letter were accepted until mid-March, so there may be more to come.

The insurance industry isn’t alone. For example, bills SB 7922 and AB 8098 target book publishers, requiring disclosure when books are produced with AI. When it comes to newspapers, magazines, and other publications printed or electronically published, SB 7847 would require the identification of any parts made with AI.

For all businesses, there’s AB 8179, which would impose a “Robot Tax” on businesses that displace workers with AI. There’s also the Advanced Artificial Intelligence Licensing Act which would require the registration and licensing of advanced AI systems considered high-risk

No doubt, more is coming – a lot more. As you work with counsel to understand the impact of new laws and those in the pipeline, while making sure your employees are also up-to-speed, if your organization needs any accounting, audit, tax, or advisory services, you can continue to count on RBT CPAs to do the job professionally, ethically, on-time and within budget. Give us a call to learn more.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Please note: RBT CPAs is not a law firm and the information herein should not be construed as legal advice. As always, to ensure your policies comply with global, national, state, and local laws, it is in your best interest to seek legal counsel.

How to Protect Your Assets from Future Long-term Care Needs

In truth, none of us know what type of medical care we’re going to need in the future. Some may need none and some may need care for years. We just don’t know. What we do know is that future healthcare costs can wipe out lifetime savings, assets, and financial legacies, unless you plan in advance.

According to the NYS Partnership for Long-Term Care, the average cost of a nursing home in the Northern Metropolitan area (covering Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties) is $466 daily, $14,165 monthly, or $169,980 annually! People with significant assets (over $6 million) may be in a position to cover those costs, even for a long period of time. People with low to no assets will likely be eligible for Medicaid. What about those in between?

For those 65 and up, Medicare does not cover long-term care (LTC); it does cover short-term nursing home expenses for rehab for eligible individuals. Medicaid does cover LTC, if you’re eligible. Eligibility is based on income and total assets, with limits varying by state. For example, in New York, for Medicaid LTC coverage to kick in, the following limits apply:

Single: a maximum of $1,732/monthly income and $31,175/total assets.
Married with both spouses requiring LTC: a maximum of $2,351/monthly income and $42,312/total assets.

(The American Council on Aging provides a free test to determine Medicaid eligibility for the elderly. To learn more, click here.)

There is a way to protect your assets and still benefit from Medicaid – a Medicaid Asset Protect Trust or MAPT. A MAPT is an irrevocable trust. You’ll basically shift assets to a trustee. This allows you to protect a portion of your assets for loved ones while still allowing you to qualify for Medicaid. There are a couple of caveats that are important to know.

First, states have a lookback period for Medicaid eligibility. In most states, including New York, the current lookback period is 5 years If money or assets are transferred to a trust inside of the lookback period or simply given away, gifted, or sold for below market value, it will delay Medicaid benefits. The delay or penalty period equals the value of the funds transferred/gifted/given away/sold by Medicaid’s regional rate for nursing home care. (The regional rate varies by county and is updated annually. Click here to see the 2024 New York regional rates.)

In basic terms, if you transfer $100,000 to an irrevocable trust two years before needing a nursing home and assume the regional rate is $10,000/month (just for simplicity’s sake), you would not be eligible for Medicaid assistance for 10 months ($100,000/$10,000) and you’d end up spending the full $100,000 you put in the trust.

On the other hand, if you establish the trust early enough and the lookback period has passed by the time you need LTC, the assets in your MAPT will not count toward your Medicaid eligibility. So, you can get LTC and protect your assets.

Second, there is a trade-off. When you establish an irrevocable trust, you designate someone else as trustee, giving them full control of your assets. You cannot change or cancel the trust in any manner. While the trustee can distribute income to you if authorized by the trust agreement, he/she will not distribute principal to you. That means you are putting 100% trust in that person.

Those are the biggest considerations. There are others. For example, when you die, Medicaid can recover funds paid on your behalf by going after assets like a house. On the other hand, assets placed in an irrevocable trust will not be included in your estate for the calculation of estate taxes or probate.

Interested in learning more about how to protect your assets and ensure you can get the medical care you may need in the future? RBT CPAs professionals in our Estate, Trust, and Gift Practice can help.

While RBT is not a law firm, RBT CPA professionals in our Estate, Trust and Gift Practice can help you plan for future healthcare needs as part of an overall estate plan. We can help you understand your options and define a course of action; refer you to an attorney who can create related legal documents (or work with your attorney if you already have one); review legal documents to ensure they accurately reflect your wishes; and review and update your plan annually so they continue to reflect your wishes and are adapted due to any tax law changes.

Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Why Succession Planning in the Construction Industry Is Imperative

Succession planning is a critical strategic process that ensures business continuity in the event of a leadership change. It is a proactive approach that involves identifying and developing potential leaders who can replace key roles when they become vacant. This process is crucial in every industry, but it holds particular significance in construction due to its unique challenges and skills and knowledge requirements.

Succession planning in construction is important because it enables a smooth transition should someone in a key role leave or become unable to work. Construction projects often involve complex operations and long timelines. Having a well-prepared successor can ensure that projects stay on track during a leadership change. In addition, succession planning fosters a culture that shows staff development matters. By identifying potential leaders and providing them with training and mentorship, companies can enhance employee engagement and retention. Finally, succession planning reduces the risk of business disruption. In the construction industry, where contracts are time-bound and penalties for delays can be substantial, business continuity is critical.

Succession planning in the construction industry entails a systematic process beginning with identifying key roles that are critical for business operations. These roles often include the company owner, project manager, site supervisor, and other positions that are instrumental in decision-making and project execution.

Once these roles have been identified, potential successors are selected based on their skills, experience, and leadership potential. These individuals are then provided with targeted development opportunities, such as training programs, mentoring, job rotation, and exposure to strategic decision-making. This process helps them acquire the necessary skills and knowledge to succeed in their potential future roles.

The impacts of not having a succession plan in the construction industry can be severe. Without a plan, the transition of leadership roles can be chaotic and stressful, leading to disruptions in project execution. This can result in delays, cost overruns, and potential damage to the company’s reputation.

Furthermore, the lack of a succession plan can lead to a talent drain. If employees do not see opportunities for advancement within the company, they may choose to leave, taking their skills and knowledge with them. This can further exacerbate the leadership vacuum and affect the company’s long-term sustainability.

What’s more, in the absence of a succession plan, companies may resort to a hurried recruitment process, which can lead to the selection of leaders who are ill-prepared for their roles. This can impact the quality of decision-making and potentially put the entire business at risk.

Don’t leave the future of your business to chance. Invest time and resources in developing a robust succession plan that prepares the company for future leadership transitions and promotes long-term success.

Insights on ERP Implementations from People Who Have Been There

If you’re considering adopting an Enterprise Resource Planning (ERP) system, it likely means your business is doing well and has reached a point where getting to the next level requires systems that will promote efficiency and effectiveness, or you’re getting systems in place to support big growth over a long period of time. Congratulations either way!

My goal in writing this is to provide insights to maximize what an ERP can offer, and pitfalls to avoid, by sharing my own experiences and two case studies from local manufacturing businesses.

To start, what is an ERP? It’s a business software solution designed to manage data, resources, and operations. In lieu of separate systems for different functions, an ERP integrates and automates a variety of processes in one system, providing one source of “truth”; the ability to use data in ways that separate systems unable to communicate with each other can’t; and eliminating one-offs, workarounds, and fixes that cost time, money, and business.

With an ERP, you can have one system for accounting, customer relationship management, e-commerce, finance, human resources, inventory management, manufacturing, marketing, procurement, productivity, sales, supply chain, time systems, scheduling, and more, depending on the modules you choose. An ERP is scalable, so you can add new capabilities as your business grows or needs change.

In the past, ERPs were used primarily by very large, complex organizations. The cloud has made it more accessible, prompting businesses of all sizes to consider one as part of their digital strategy.

So, what can an ERP do? Depending on the system and modules you purchase, as well as the work your team puts into it, an ERP can boost competitiveness by helping your business operate more efficiently and effectively.

You can use data to schedule projects and production more effectively; make more informed decisions in real-time; more accurately estimate and track costs; automate tasks so staff can focus on value-added activities; improve customer service; reduce lead times; maximize production and profitability; and use data for predictive modeling.

ERPs can also help improve internal controls for accounting, financial reporting, and compliance; set the stage for growth, a new line of business, or a new business model; and support remote and distributed workers.

If you are losing time tracking down data…if your systems don’t “talk” to each other, limiting what you can do…if you’ve lost business, profits, or productivity due to data issues…if regulatory compliance keeps you up at night…or if you’re ready to move to the next level, it may be time for an ERP.

Beware! An ERP is not a silver bullet. You get out of it what you put into it. Moving to an ERP is a major undertaking requiring collaboration, teamwork, time, and commitment. Interested in learning more? Two leaders of local manufacturing companies generously agreed to share their ERP experiences.

Case Study: PTI

PTI manufactures equipment for leak detection in high-risk industries. Today, it has 65 employees working in New York and Switzerland. The company was having challenges managing forecasting and inventories. More people were required to help manage back-office work and data entry, increasing costs due to the need for manual processes, interventions required, and time spent trying to catch problems and fix them before they escalated.

CEO Oliver Stauffer explains, “Because of the unique nature of our business, we needed more than what basic systems could provide. We saw the potential for gains in linking material and financial information effectively, and we knew we needed something that would cover the full enterprise to get the most long-term value in terms of cost savings.

About a year ago, we decided to explore an ERP. One of the best decisions we made was to hire a firm to help us select the right ERP for our business. We had a team of about 10 people representing key parts of the business provide input. The search firm evaluated more than 50 different systems based on our requirements and identified three that could work. We conducted a rigorous selection process and chose the vendor and system we wanted to move ahead with in September. Implementation started at year-end.

Originally, implementation was going to take three months. We didn’t want to rush and were more concerned about getting it right, so we extended the implementation period. We found a system that does most of what we wanted, with some customization and upstream infrastructure required.

I think choosing the right ERP is the most critical part of the process. Hiring a firm to help you understand which system will best serve your needs is so important, as is gaining input and buy-in from all departments.

Be prepared to address what happens when the system may not be exactly what every department wants. Not everyone may end up happy, so you must find a way to navigate to a place that everyone can live with. In PTI’s case, that meant agreeing to additional sales infrastructure. Finally, you need a champion – someone who is going to oversee the entire process and maintain momentum and buy-in from start to finish.”

Case Study: MPI, Inc.

MPI is the world leader in wax-room and ceramic core injection, assembly, and automation equipment, with operations in Poughkeepsie, NY, and sales worldwide. MPI previously had an ERP, but the company that created it stopped providing maintenance and was sold. With each piece of MPI equipment having about 2,000 part numbers adding up to over 65,000 parts across the product line, MPI leadership knew it was time to change.

A large internal team was involved with the planning. They hired a company to help value stream processes and select the final ERP solution. They also chose an implementation company with a solid background in project management.

According to MPI President Aaron Phipps, “The client manager at the implementation company knew what he was doing and everything was going fine, but he decided to leave his firm. We ended up moving to another implementation company, but we found they lacked project management skills and most of the responsibility shifted to us. Two weeks before go-live we were told the project was on time and within budget. By go live, we found we were two months behind and $100,000 over budget. We didn’t stay with them.

When it comes to choosing software, you have to be careful. Some vendors are so focused on the sale that they make promises that they can’t keep. We chose an ERP that’s well-known in the industry and has been around for a while. Still, if I knew then what I know now, I would have gone a different route. We gave up a lot. Our business doesn’t fit with the system’s out-of-the-box solution.

That said, we are using the system and getting some benefits from it. We have better data and can make better decisions. My Engineering Department would say there are benefits from consistency throughout the entire company. The software helped unify and align operations across the company.”

What advice does Aaron give based on his experiences?

“Be aware that certain things can exist outside the system and be more accurate and less expensive.
With the new ERP, it is more expensive to run our business and certain tasks involve more work. You have to be prepared to dedicate staff to maximize what it can do.
Up front, define what the completed project includes and do not allow additional charges until completion is reached. For example, up front we confirmed how one link should work, but it didn’t. After a lot of effort, they agreed we were right and said they would update it during the next upgrade six months later, or we could pay to expedite it. We just threw it out. Having a definition of project completion would have helped address issues like that.
When evaluating a system, look at procedures everyone does like clocking in and out, and count the number of clicks it takes to complete a task. You may find an ERP adds work.
Everyone in the company needs to understand how their actions affect others. For some people, the new system is better but for others, it’s harder.
An ERP implementation is harder and more expensive than you think. We went with a number of modules and then decided to pull back and drop a few. The cost is far more expensive when you take into account the software, implementation, and service fees.
Vet all of the subcontractors as best you can and be prepared with contingencies.”

Make no mistake about it, this is a huge time, cost, and personnel commitment. As the case studies show, you can do everything right and still face significant challenges that you need to muscle through. Still, it is a game-changer for many and can set the stage for operational efficiencies, cost-effectiveness, and more.

If you’re considering an ERP system, start by doing some research. Talk to colleagues about their experiences. Do a cost-benefit analysis to ensure it’s the right time to move ahead. Be prepared for what it will take – your staff will be shouldering extra responsibilities for several months and possibly even years – as you make the transition. Training and upskilling will be required. You may need full-time resources to maximize ROI once a system is in place. Ultimately, you’ll get out of it what you put into it.

Federal and State Tax Incentives: What’s Available to Help Small Businesses in 2024?

Recognizing small businesses are the backbone of the U.S. economy, the Federal and NY State governments offer many tax incentives to support growth, development, and sustainability. The first step to maximizing tax deductions (which reduce the amount of business income subject to taxes), credits (which reduce the amount of taxes you owe dollar for dollar), and other incentives is knowing which ones exist and may apply to your business.

Business Incentives

At the federal level, the Qualified Business Income (QBI) Deduction remains a significant benefit for small businesses. The QBI (also referred to as Section 199A) deduction allows eligible small business owners and self-employed individuals to deduct up to 20% of their QBI.

Then there’s Internal Revenue Code (IRC) Section 179. If you buy or lease (with qualified financing) appreciable business equipment, deduct the full purchase price (or lease amount) from your gross income. Eligible equipment can include computers, furniture, machinery, vehicles, and more. Plus, for 2024, there’s a 60% bonus depreciation to reduce your tax liability further.

You can also reduce your income tax liability with Section 174 tax credits for research and development. The tax credit is available to businesses of all sizes for qualifying research activities like software development, architectural design, product enhancements, and more.

As for New York, the Investment Tax Credit rewards businesses that invest in production property and equipment, providing a credit of 5% to 10% on their investments. Furthermore, the START-UP NY program creates tax-free zones for new and expanding businesses, offering a ten-year tax holiday on various state taxes to qualified businesses that relocate to these zones.

Hiring and Retention Incentives

The Federal Work Opportunity Tax Credit (WOTC) is available to businesses that hire individuals from certain groups facing barriers to employment like veterans, individuals on public assistance, ex-felons, qualified summer youth, and more. The WOTC credit equals 40% of the first $6,000 in qualified first-year wages. The maximum credit is $2,400.

New York State also offers a number of different tax credits for hiring employees from targeted groups. What’s more, the Excelsior Jobs Program provides refundable tax credits for businesses in certain industries that commit to invest in, hire, and retain employees in NY. Also, the Empowerment Zone Tax Credit provides an employer in a designated empowerment zone up to a 20% credit of the first $15,000 in annual wages paid to residents of the zone for services within the zone. Click here to learn more.

There are also incentives to help you retain employees. For example, under SECURE 2.0, you may be eligible to claim a tax credit of up to $5,000 for each of three years for the costs to start, administer, and educate employees about a SEP, Simple IRA, or other qualified plan. Under the Employer-Provided Childcare Credit, you may be eligible to receive a tax credit of up to $150,000/year for a qualified childcare facility, resources, and referrals.

Workforce Development Incentives

When you invest in developing your employees’ skills, you may be eligible for New York tax incentives. For example, the Employee Training Incentive Program provides a refundable tax credit of up to 50% of eligible training costs, as well as a tax credit of 50% of any stipend paid to an intern. The Empire State apprenticeship tax credit provides a credit of $2,000 to $6000 per apprentice per year (up to five years), with a higher credit available when the apprentice is a disadvantaged youth.

Energy Incentives

The Inflation Reduction Act (IRA), combined with New York State incentives, can help your small business adopt clean energy technologies and equipment and save on energy costs. For example:

Energy Efficient Commercial Buildings. Receive a Federal tax credit of up to $5 per square foot for new construction or a retrofit involving lighting, heating, cooling, ventilation, hot water systems, and building envelop improvements. In addition, in New York, you may be eligible for a variety of equipment rebates for heat pumps, boilers, water control systems, HVAC systems, lighting, weatherization, and more, depending on your energy provider.
New Electric Vehicles. Receive a Federal tax credit of up to $7,500 for vehicles under 14,000 pounds and up to $40,000 for larger vehicles. In addition, the Charge NY initiative offers up to $2,000 in rebates for new EV car purchases or leases.
Vehicle Charging & Fueling Stations. Receive a Federal tax credit of up to 30% ($100,000 maximum) for installing a vehicle charging station. In addition, NYS offers up to a $2,000 rebate per port at workplaces plus an additional $500 per port if located in a disadvantaged community.
Receive a Federal tax credit of up to 30%, plus another 40% in bonus credits if certain materials are mined, produced, or manufactured in the U.S.; if the business is in a low-income or energy community; and if labor requirements are met. Also, accelerate depreciation on installation costs. Combine that with potential NYS tax credits, financing, and incentives.

Click here to learn more. To find additional information on tax incentives click here and here.

This article highlights a sampling of the tax incentives available to support small businesses in New York. It’s important to recognize each incentive has its own eligibility requirements, guidelines, and rules. Still, with the new year barely under way, it’s a good time to consider how tax incentives may play into your financial strategy and support growth in 2024.

As always, it’s in your best interest to speak with a tax professional when it comes to any tax matters. RBT CPAs has been providing accounting, tax, audit, and business advisory services to businesses throughout the Hudson Valley for over 50 years. If you want to learn more about tax incentives and the implications of any move you make, please don’t hesitate to give us a call at 845-567-9000. We can be Remarkably Better Together.

Revolutionizing Construction: Using Drones for Site Surveys, Inspections, and 3D Modeling

Among the many technologies driving advancements in our world, drones are highly transformative, especially when it comes to the construction industry and their ability to increase accuracy, promote safety, and improve efficiency. Drones or Unmanned Aerial Vehicles (UAVs) are remote-controlled, high-tech devices that have become invaluable when it comes to site surveys and mapping, inspections, 3D modeling, and more. Adding drone capabilities to your business offerings is easier than ever thanks to an ever-growing list of options and resources.

What drones can do for your business

Drones complete critical tasks in less time and at a fraction of the cost of traditional methods. This includes but isn’t limited to, site surveying and mapping, inspections, and 3D modeling.

Site surveys and mapping are time-consuming, labor-intensive activities that pose safety risks. Drones significantly mitigate these challenges. They provide a bird’s eye view of a construction site, capturing high-resolution images and videos. This aerial perspective enables companies to identify potential issues, measure distances, and assess the landscape while reducing the need for manual labor.

When it comes to inspections, a drone’s ability to reach inaccessible or dangerous areas is proving invaluable. Previously, inspectors had to physically climb structures, risking their safety to check the integrity of buildings. Now, drones equipped with advanced cameras, sensors, and GPS technology can inspect structures with improved accuracy and detail.

As for 3D modeling, by capturing multiple aerial images from different angles, drones allow businesses to create highly accurate models and maps and enable construction teams to assess terrain, plan layouts, and identify obstacles. As a result, issues are addressed, plans are adjusted, and resources are optimized before construction begins.

In addition, 3D models can be used for progress monitoring. By comparing a project’s current state with a model, construction companies can track progress, maintain schedules, and manage resources more effectively.

Undoubtedly, the use of drones in construction will continue to grow thanks to enhanced capabilities from integration with the Internet of Things (IoT) and Artificial Intelligence (AI). AI-powered drones can already perform tasks autonomously, analyze data, and predict potential issues. Meanwhile, the IoT enables real-time data sharing and analysis, facilitating better decision-making and project management.

Construction companies using drones attest to the fact that they save time and money while promoting safety. The majority of large construction companies already use them. While uptake among smaller construction businesses has been slower, it is growing and presents an opportunity to be more profitable and distinguish your business from its competitors.

Getting drone capabilities off the ground

How do you get a drone program off the ground? Start by learning more. There’s an abundance of information online. Plus, drone manufacturers post valuable information on their websites, discussing everything from drone features and capabilities to use cases and important considerations.

Going a step further, you may want to explore online classes or certificate programs available at a growing number of community colleges to help you (or someone on your team) prepare to earn certification to operate a drone (as required by the Federal Aviation Administration).

Consider defining how you would use drones in your business. Create a budget and prioritize the drone capabilities you want, as both will prove useful when you research which drone hardware and software will best meet your needs.

You may have a few options for operating a drone. Depending on what’s available in your area, you can have someone on staff get certified to operate the drone; subcontract a licensed drone operator; or contract with a business specializing in offering drone services for construction.

Make sure whoever you use is familiar with federal, state, and local laws governing the commercial use of drones. Some municipalities don’t allow them to be used at all (largely due to privacy concerns). Others have restrictions, such as how close they can be flown to land. Requiring ongoing training is one way to stay up to speed on changing drone regulations, technology, and capabilities.

Finally, as your drone program and capabilities take off, develop a standard operating procedure covering aspects like mission planning, flight operations, data management, maintenance, and emergency procedures to ensure operations run smoothly and safely.

Investing time to launch drone capabilities as part of your construction business can have big payoffs now and in the future. Now is as good a time as any to get started.

New Generation of Workers Require New Approaches to Union Recruitment

With more Americans than ever supporting unions and more employees expressing interest in joining one, it’s a prime time to explore the best ways to attract the next generation of workers to grow union membership. After all, increasing membership leads to stronger unions, stable finances, and greater collective bargaining power.

According to the AFL-CIO, “71% of Americans support unions. The highest level in nearly 60 years. And our future is bright: 88% of people younger than 30 support unions, too.” These same statistics are being repeated by numerous sources, but there is a disconnect. Union membership growth is stagnant. A contributing factor may be how the recruitment of younger workers is approached.

In general, newer generations of workers:

Have different priorities and values. New generations of workers place a priority on work-life balance, respect, having a voice, valuing diversity, taking care of the planet, and making a difference. They also place a lot of value on benefits that can help them today – like higher pay, student loan reimbursements, time off, and childcare.
Learn differently and move fast. They never knew a world without the Internet or hand-held devices. Because they grew up as digital natives, they are quick to learn, adapt, and act.
Communicate and network differently. Their online identities and networks started in grammar and middle school. They meet, socialize, learn, date, work, find friends and roommates, play, and connect online.

All of this came into play during the grassroots unionization efforts at Starbucks, which apparently started with conversations among local employees who reached out to the local branch of a union to learn more. When their efforts became public, employees at other locations reached out for information. Through social media and digital meeting platforms, experiences were readily shared. While the story continues to unfold, it holds some valuable insights into how to engage the newest generation of workers and grow union memberships.

First, make sure newer generations know what a union is, why it exists and what it can do for them. Explore building membership pipelines by presenting at a high school or tech school’s career day or having a table at a local college’s career fair. Host a multi-generational event to build on the goodwill toward unions that exists today while having an opportunity to explain the role and value of a union. You never know when having that knowledge can inspire a young worker to act.

Second, have an online presence where people can easily find your organization, learn what it stands for, who it represents, and more information. Even better, use an online form to collect contact information from interested parties so a current union member can reach out to them directly. If you don’t have a local website presence, use social media channels to post about meetings, celebrations, recognition, accomplishments, and events to provide insights that prompt potential members to take the next step.

And third, be prepared to help them get started – fast. Some unions have online training sessions that educate about the unionization process. Others have direct links to information on what unionizing entails.

Along the way, be sure to highlight the many benefits of unions, including the ability to deduct dues from New York state taxes on itemized returns; higher wages; better benefits; scheduling flexibility; paid time off; safer workplaces, and more.

As you focus on building your union’s membership, you can count on RBT CPAs to handle your accounting, tax, audit, and advisory needs. We have been serving organizations and individuals in the Hudson Valley for more than 55 years and show time after time how RBT CPAs and our clients can be Remarkably Better Together. For more information, give us a call.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.