RBT CPA’s Ross Trapani, CPA, has been awarded the Tax Credit Specialist certification by NCHM

Ross Trapani, CPA
FOR IMMEDIATE RELEASE

Ross Trapani, CPARBT CPAs, LLP is proud to announce that Client Advisory Partner Ross Trapani, CPA has been awarded the Tax Credit Specialist certification by the National Center for Housing Management.

The Tax Credit Specialist (TCS) certification demonstrates expertise for professionals servicing the IRS Section 42 Low-Income Housing Tax Credit pertinent to the affordable housing sector. Ross earned his TCS certification through the National Center for Housing Management (NCHM), participating in a week-long live course followed by a five-hour examination. The NCHM is a non-profit organization that offers training, certification, and other services in the affordable housing industry as well as the conventional apartment market. About the certification process, Ross says, “The NCHM is an industry leader in providing high-quality specialized certifications to professionals serving the housing industry, and their instructors and course materials are top-notch.”

The Low-Income Housing Tax Credit (LIHTC) program is used to create affordable housing for low-income families via single or multifamily rental real estate development. The LIHTC can be used for new construction, rehabilitation, or acquisition of rental properties. The program benefits families seeking quality affordable housing while also creating opportunities for developers and investors to achieve a profit. The program is very complex, presenting many administrative hurdles and compliance requirements. As such, it is imperative to have a CPA versed in all stages of a LIHTC project to avoid recapture of any tax credits received.

Ross says, “I look forward to utilizing this certification to provide tremendous value to our numerous clients operating in the affordable housing space.” RBT Managing Partner Mike Turturro adds, “We’re very excited for this opportunity to enhance our offerings to our real estate clients.”

RBT CPAs congratulates Ross on his accomplishment, and we look forward to the amazing work he will do in the affordable housing space.

To learn more about the diverse offerings and award-winning service you can expect from RBT, please visit the RBT website. To learn more about the Tax Credit Specialist certification, please visit the NCHM website.

Managing Financial Reporting Issues When Shifting to Cloud-based PIMS Software

Managing Financial Reporting Issues When Shifting to Cloud-based PIMS Software

In recent years, many veterinary practices have shifted to using cloud-based Practice Information Management System (PIMS) programs. The overall response by veterinary staff to the new software has been positive. Staff members appear to be adjusting to programs quickly once trained—and noticing improved operations within the practice. That said, some challenges have emerged with the financial reporting generated by these new systems. It’s important to be aware of the benefits of cloud-based PIMS programs, the impact of new systems on financial reporting, and the actions you can take to combat financial reporting issues.

Benefits of Cloud-based PIMS Software

Cloud-based veterinary PIMS software offers several benefits including:

  • Improved accessibility and staff collaboration on both the hospital and administrative side
  • Staff training and support
  • Streamlined workflow
  • Cost-savings, as less hardware is required
  • Automatic updates
  • Integration capabilities with other software and programs
  • Improved overall efficiency & patient care

Financial Reporting Issues

While cloud-based PIMS systems seem to be a success from the operational standpoint, a number of practices in recent years have struggled with the financial reporting generated from the new systems. Cloud-based systems enable staff to change invoices and data in real-time, which can affect previously reported numbers. This can leave bookkeepers, office managers, practice managers, and accountants constantly chasing ever-changing numbers. Many of the new cloud-based PIMS lack proper cutoffs when it comes to financial reporting.

Running different reports for the same figure (i.e. gross sales) for the same exact time period may generate completely different numbers on one report vs. another (i.e. gross sales on a summary report do not match gross sales on an invoice by revenue type report)—so which one is right?

It is important to understand what is being included and/or excluded from each report:

  • Is one report net of discounts and the other not?
  • Does one report include sales tax and the other not?
  • Is one report based upon “closed” invoices only and the other based on both “open” and “closed”?
  • Is one report set to show cash basis numbers and another accrual basis?
  • Were the reports run at different times? Numbers can subsequently change in the new cloud-based PIMS systems and not correlate to other reports if not run at the exact same time.

How To Combat Financial Reporting Issues

There are several ways to manage and prevent these kinds of discrepancies in your financial reporting:

  • Schedule a meeting with your veterinary PIMS software representative
    • Ask questions about discrepancies: you’ll want to understand exactly what specifications the reports are based upon and why the numbers on reports are different. Accurate reports will provide you with a true picture of your practice’s performance.
  • SCHEDULE YOUR REPORTS
    • Many systems allow you to schedule reports to run at a specific time, date, day, month-end, etc.
    • Scheduling all necessary reports for the same time will help you avoid the issue of numbers subsequently changing—and the need to chase numbers when trying to do your financial reporting.
  • Make sure you use reports run on the same parameters, i.e. accrual basis, closed invoices only, gross or net of discounts, etc.
  • Train your staff
    • Ensuring that your invoices are closed and included in the financial reporting of the month earned will help you analyze and manage your practice’s performance.
    • Make sure your staff closes any open invoices by month-end to avoid timing differences from month to month.

Gone seem to be the days when veterinary PIMS systems cut off at the proper times and reports would never change. Now, it is important to figure out ways to extract the data you need before it’s too late to get it. For additional guidance on your practice’s financial reporting—and for all of your other accounting, tax, audit, and advisory needs—please don’t hesitate to reach out to our experts at RBT CPAs. Give us a call and find out how we can be Remarkably Better Together.

Governor Hochul’s 2025 Education and Child Initiatives

Governor Hochul’s 2025 Education and Child Initiatives

On January 14, Governor Kathy Hochul delivered her annual State of the State Address in Albany. The governor’s plan for 2025 includes several initiatives focused on supporting children and education in New York State. Among the proposed initiatives are an expansion of the child tax credit and a free universal school meal program.

In her address to the State last month, Governor Kathy Hochul emphasized the need to support New York’s children and their families. Hochul laid out her plan to increase the child tax credit in New York, raising the maximum credit for children under age four to 1000 dollars. The plan also calls for an increase in the credit for children over age four to 500 dollars in 2026. These proposed increases represent a significant jump from the current maximum credit of 330 dollars per child. The expanded child tax credit would help to support more than 2.75 million children across New York State, extending to previously ineligible middle-class families. Hochul cites this initiative as a critical step in reducing child poverty in New York State.

Hochul also announced her plans for a universal school meal program, which will provide free breakfast and lunch to all students in New York State public schools regardless of income. The governor remarked: “The research is abundantly clear. Children who grow up hungry score lower on tests and underperform…In the wealthiest country in the world this can no longer be tolerated. Not in America and definitely not in the great state of New York.” The program is aimed at reducing hunger and food insecurity among school-age children, thus improving mental well-being, physical health, and academic performance. The program will also provide financial relief for families with school-age children, saving families an estimated $165 per child each month in grocery bills.

The governor discussed several further initiatives concentrated on children and education. Among these are new standards for distraction-free learning, the College-in-High School Opportunity Fund, and the launch of “Get Offline, Get Outside 2.0.”

  • Distraction-Free Learning: sets out to restrict smartphone usage in K-12 schools as a way of improving student safety, mental health, and academic success.
  • College-in-High School Opportunity Fund: expands access to college courses for high school students, reducing time and money spent on college education.
  • “Get Offline, Get Outside 2.0”: increases the State’s support for youth programming including sports, drama and music programs, volunteer opportunities, and more.

For a complete list of initiatives included in the 2025 State of the State, along with their descriptions, refer to the 2025 State of the State Book.

2025 is set to bring with it some significant changes in the education space. While you prepare your school district to adopt the latest state-wide policies, you can rely on RBT CPAs to take care of all of your accounting, tax, audit, and advisory needs. Give us a call today to speak with one of our accounting professionals and find out how your school district can benefit from our expert services.

Mitigating Fraud Risk in Public Housing Authorities

Mitigating Fraud Risk in Public Housing Authorities

Public Housing Authorities (PHAs) can become vulnerable to fraud and corruption—by both external and internal parties— if proper precautions are not taken to safeguard these agencies against such risks. This article will discuss the measures Public Housing Authorities can take to prevent and detect potential fraud risks.

Types of Fraud

The Office of the Inspector General lists several of the most common fraud schemes that occur in Public Housing Authorities and other organizations that receive Housing and Urban Development funds. Some examples of common schemes are:

  • Embezzlement and theft
  • Contracting and procurement fraud
  • Bribery and kickbacks
  • Conflicts of interest
  • Identity theft
  • Disaster recovery grant fraud
  • False billing
  • Tenant/applicant fraud

Establishing a Formal Fraud Policy

The most important means of fraud prevention is a formal fraud policy. A formal fraud policy should be comprehensive, outlining the procedures for preventing and responding to fraud. The policy should be accessible and easily understood by tenants and employees. According to the Office of the Inspector General, a formal fraud policy should accomplish the following: declare the organization’s commitment to preventing fraud, lay out the activities that constitute fraud, ensure confidentiality in reporting, identify officials with authority to investigate suspected fraud, state the consequences and penalties for fraud, assure due process, and provide instructions for reporting suspected fraud. PHAs should consult with legal counsel to review their fraud policies and ensure compliance with tenant-landlord laws, as well as alignment with HUD policies.

Educating Relevant Parties

Awareness of a PHA’s fraud policy and procedures is key in fraud prevention. PHAs should make their fraud policies accessible to management, tenants, employees, contractors, and other relevant parties by distributing printed copies, hanging posters in common areas, and/or making the policy available online. Employees and stakeholders should be trained to recognize and report suspicious activity. Awareness of a strong anti-fraud policy can also help to deter potential fraudsters.

Maintaining Strong Preventative Procedures and Internal Controls

To safeguard against fraud, PHAs must have board-approved operational and financial procedures in place. These procedures should include systems for verifying tenant eligibility, policies for vetting vendors and third-party service providers, and regular risk assessments to determine the likelihood of various fraud scenarios. PHAs should conduct regular reviews and audits of processes and controls to ensure compliance and effectiveness. In addition to periodic audits, PHA staff should monitor data and transactions on a daily basis. Data analytics and AI technology can be utilized to improve the accuracy and efficiency of monitoring processes.

Establishing a Whistleblower System

PHAs must ensure that the systems in place for reporting fraudulent activity are clear, accessible, and confidential for those reporting. Whistleblowers who report suspected fraud, waste, or abuse are protected by the law from retaliation.

How Can an Accounting Firm Help Mitigate Fraud Risk?

It is critical that the proper policies and procedures are in place to prevent and detect fraud threats—from both inside and outside of the organization. A reliable accounting firm can help carry out these crucial procedures.

RBT CPAs provides a variety of services that help prevent fraud within Public Housing Authorities and other organizations. These include:

  1. Internal control assessments: review controls to ensure proper checks and balances are in place to prevent fraud (segregation of duties, approval processes, etc.).
  2. Fraud risk assessments: identify areas within the Authority’s operations with greater potential for fraud.
  3. Agreed-Upon Procedures: perform specific tasks requested by an Authority, such as reviewing selected financial information.
  4. Annual financial and compliance audits: conduct independent audits to ensure accuracy and compliance with accounting standards and regulatory requirements.
  5. Consulting/Advisory services: provide insight and advice on various topics, such as strategies to mitigate financial, operational, and compliance risks; assist with the development of policies and procedures.
  6. Bookkeeping/Fee Accounting services: maintain accurate financial records and assist the Authority in maintaining compliance.
  7. Forensic audits: examine the Authority’s financial records for evidence of suspected fraud.

 

Protecting Public Housing Authorities from fraudulent activity is crucial for maintaining the operational integrity and reputation of these agencies. RBT CPAs’ accounting, tax, audit, and advisory experts are here to help safeguard your organization from fraud. Call us today and find out how we can be Remarkably Better Together.

The Taxability of the NYS Alcohol Production Tax Credit

The Taxability of the NYS Alcohol Production Tax Credit

Are you a brewery or distillery claiming the NYS Alcoholic Beverage Production Credit?

If so, you should be aware of the general rules regarding the credit, as well as taxability of the credit when it is received for both New York State and federal purposes.

You may be eligible for this credit if your business:

  • Is a registered distributor under Article 18 (Taxes on Alcoholic Beverages); and
  • Produced in NY during the tax year a maximum of:
    • 60 million gallons of beer or cider,
    • 20 million gallons of wine, or
    • 800,000 gallons of liquor.

The Instructions for Form CT-636 state the following:

If you produce more than one type of alcoholic beverage in NYS within the tax year, you qualify for the credit for each alcoholic beverage produced within the production limits stated above. If you exceed the production limit for an alcoholic beverage, you cannot claim a credit for that beverage.

Example: If you produce 50 million gallons of cider and 100 million gallons of beer in NYS in the same tax year, you qualify to claim the credit for the cider production. However, you would not qualify to claim a credit for the beer production since you produced more than 60 million gallons of beer in NYS in the tax year.

How much is the credit?

The amount of credit per tax year for the first 500,000 gallons produced in NYS is:

  • 14 cents per gallon of beer or cider;
  • 30 cents per gallon of wine;
  • $2.54 per gallon of liquor with more than 2%, but not more than 24%, alcohol by volume (ABV); and
  • $6.44 per gallon of liquor with more than 24% ABV.

If you produced more than 500,000 gallons, the credit is 4.5 cents per gallon up to:

  • 15 million additional gallons for beer, cider, or wine; and
  • 300,000 additional gallons for liquor.

How can you claim this credit?

Your business can claim this credit if you meet the criteria described above. Corporations need to file Form CT-636; all others need to file Form IT-636.

Additional instructions for claiming the Alcohol Beverage Production Credit can be found in the Instructions for Form CT-636 and Instructions for Form IT-636 on New York State’s Department of Taxation and Finance website.

Is the credit taxable?

Yes. New York State credits are generally taxable for federal purposes as a recovery if a taxpayer benefited from a federal deduction related to such credit.

A recovery is a return of an amount a taxpayer deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates (IRS Publication 525, page 24).

Each year, New York State alcohol manufacturers pay an excise tax to the State for the production of alcohol, which is a deduction on the federal and state returns. Since the business received the benefit of the deduction for excise taxes paid in the previous year, the credit must be included in the taxpayer’s gross income the next year.

Still have questions?

If you have additional questions about the taxability of the NYS Alcoholic Beverage Production Credit, our accounting and tax experts at RBT CPAs are happy to answer them. RBT CPAs has been proudly serving businesses in the Hudson Valley and beyond for over 50 years. Visit our website or call us at 845-567-9000 to speak with one of our professionals today.

New Legislation in Effect: New York State Department of Labor Contractor Registry

New Legislation in Effect: New York State Department of Labor Contractor Registry

The new year brings with it new legal requirements for contractors and subcontractors in New York State. On December 30, 2024, Section 220-I of the New York Labor Law went into effect. This new law requires registration with the Department of Labor for all contractors and subcontractors working on public projects as well as private projects covered under Article 8 of the Labor Law.

The legislation has been enacted in an effort to increase compliance with New York’s prevailing wage laws and other laws protecting workers.

As of December 30, contractors must register before submitting any new bids or starting work on covered projects. Any contractor or subcontractor planning to bid on a covered project who has not yet done so should register immediately.

Review and processing time for applications is estimated to take three to four weeks. As such, the New York State Department of Labor (NYSDOL) encourages all contractors and subcontractors to register as soon as possible to avoid impacting project schedules or bidding periods. Please note that registration is not valid until an application has been reviewed and a certificate has been issued.

The NYSDOL lays out the steps for registering on their website. As part of the application process, contractors and subcontractors will need to provide details regarding their business and its officials, workers compensation and unemployment insurance, any previous labor law or employment tax law violations, previous violations of workplace safety laws or standards, and apprenticeship programs if applicable. Also, contractors who are in arrears on NYS State Unemployment Tax (NYS-45 SUTA) may be denied a certificate by the DOL until addressing past due amounts. For a full list of required information and documents, see the NYSDOL website’s page titled “What You Need to Register for the Contractor and Subcontractor Registry.”

A $200 fee is due upon registration, reduced to $100 for New York State certified Minority or Woman-owned Business Enterprises (MWBEs).

Once registration is approved, a registration certificate will be available for download in the Contractor Registry Portal. The certificate is valid for two calendar years from the date of issuance. It is important to note that registration must be renewed at least ninety days before the current registration expires. Contractors and subcontractors can check the status of their registration at any time through the Contractor Registry Portal.

Contractors who do not register with the DOL run the risk of not being awarded public works jobs. Additionally, failing to comply with registration requirements may result in a penalty of up to $1000 and the issuance of a stop work order. Register now to avoid these risks.

Lastly, the burden of proof of registration for all subcontractors will fall on the prime contractor.  Prime contractors can initially review the NYS DOL website registry to see if a sub has applied and been approved. However, they should set a new standard of collecting a copy of the subcontractor’s registration certificate as part of a bid package or prequalification. Please note that registration under this new law does not replace or change other legal requirements for contractors and subcontractors but stand in addition to previously existing requirements.

The Frequently Asked Questions page on NYSDOL’s website provides helpful information for registrants. The Bureau of Public Work and Prevailing Wage can also be contacted for additional information or assistance regarding the registration process at 518-457-5589.

While you focus on keeping up with the latest legal requirements for New York State, please know that RBT CPAs is here to support your accounting, tax, audit, and advisory needs. Give us a call today to learn more.

What Do New Tariffs Mean for Manufacturers in the U.S?

What Do New Tariffs Mean for Manufacturers in the U.S?

The United States economic landscape has seen a great deal of change since the arrival of the new administration in January. One of the most widely discussed and debated topics of the past year has been the possibility of increased tariffs on goods imported to the U.S. in 2025. That possibility became a reality early this month.

What tariffs have been announced?

On February 1, the White House announced a 25% additional tariff on imports from Canada and Mexico, a lower 10% tariff on energy resources from Canada, and a 10% additional tariff on imports from China.

The tariffs on Canada and Mexico have been temporarily paused after negotiations between the U.S. government and the Canadian and Mexican governments regarding increased border patrol. The tariffs for these countries are now delayed until March 4, when the status of borders will be reassessed.

However, the 10% additional tariff on imports from China went into effect on February 4. China has responded with retaliatory tariffs on certain U.S. products.

President Trump has also reinstated the 25% tariff on steel imports and increased the tariffs on aluminum imports to 25%, eliminating exemptions previously granted for certain countries. These tariffs are slated to take effect in March.

Reciprocal tariffs on additional countries are expected to be announced in the near future.

How will the tariffs impact U.S. businesses?

The increased tariffs have the potential to impact U.S. manufacturing businesses both positively and negatively. One of the stated goals of the tariffs is to encourage American domestic production by raising prices of imported goods and reducing the country’s dependence on foreign imports. The increased tariffs may result in growth for certain U.S. manufacturing businesses, as well as the creation of new jobs, as has happened in the past.

However, there are also challenges and complications that come with such broad-sweeping tariffs. Some industries may suffer more than others due to retaliatory tariffs placed by other countries. Due to higher production costs, businesses that rely on foreign imports will either have to raise prices for consumers or take a hit to their profits. If product prices go up, consumers may reduce spending. The tariffs may result in the loss of jobs across the country if businesses resort to lay-offs to make up for financial losses.  Additionally, manufacturers might encounter significant supply chain disruptions or delays as a result of the new policies.

How can manufacturers prepare?

The current uncertainty surrounding the tariffs and potential retaliatory measures makes it hard to predict the full effect of these policy changes. However, there are ways you can prepare your business for the impact of tariffs.

In preparation for potential tariffs, businesses can take the following measures:

  • Identify which imports may be affected and estimate cost increases
  • Identify potential supply chain vulnerabilities
  • Consider the benefits of pricing increases versus the potential impact on demand
  • Explore alternative sourcing options—either domestic or in regions less affected by tariffs
  • Improve supply chain resilience by diversifying suppliers
  • Invest in technology to improve efficiency, reduce production costs, and strengthen supply chain management

It is critical that business leaders stay abreast of the latest tariff developments as the situation is changing rapidly. Planning ahead—and adjusting your business strategies accordingly—will help to mitigate the impact of tariffs when they take effect.

Our experts at RBT CPAs can assist with cash flow projections and help to determine reasonable sales price increases if needed. While you work on strategies to adapt to the new tariffs, please know that RBT CPAs is here to support your business’s accounting, tax, audit, and advisory needs. Visit our website or give us a call to learn more about what we do.

Are You Required to Take an RMD Before April?

Are You Required to Take an RMD Before April?

If you turned 73 in 2024 and are the owner of a retirement account, you will likely need to make a minimum withdrawal by April 1 to avoid penalties.

What is an RMD?

A required minimum distribution (RMD) is the minimum amount that must be withdrawn annually from certain retirement plans beginning when the account holder turns 73.

Retirement plans to which RMD rules apply:

  • All employer-sponsored retirement plans including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans
  • IRA-based plans such as traditional IRAs, Simplified Employee Pension (SEP) IRAs, and SIMPLE IRAs
  • Inherited Roth IRAs and Designated Roth accounts after the death of the account holder

When are you required to start taking RMDs?

Owners of IRA-based plans must begin taking RMDs for the year they turn 73, even if they are not yet retired.

Account holders who turned 73 during the year 2024 must take their first RMD by April 1, 2025, and the second RMD by December 31, 2025.

RMDs can be delayed until retirement for holders of workplace retirement plans, unless the account holder is a 5% owner of the business sponsoring the plan.

What happens if required individuals fail to take an RMD?

If a person required to take an RMD fails to withdraw the full amount within the designated time period, that person may be subject to a 25% excise tax on the amount of the RMD. If corrective actions are taken within two years, that amount may be reduced to 10%. The penalty may be waived if the individual can prove the failure to take an RMD was due to “reasonable error” and that the proper corrective steps are being taken.

How are RMDs calculated?

The amount of the RMD is calculated using the balance of the retirement account on December 31 of the previous year divided by a life expectancy factor. The IRS tables listing life expectancy factors for different ages can be found on the IRS website. Most individuals will use the “Uniform Lifetime Table” to calculate their RMD.

Example: A 73-year-old individual has 100,000 in their retirement account (as of December 31, 2023, the previous year). Based on the Uniform Lifetime Table, the life expectancy factor for an individual who is 73 years old is 26.5. To calculate the RMD, you must divide 100,000 by 26.5. The RMD for this person would be $3,773.58.

Can you withdraw more than the RMD amount annually?

Yes, you can withdraw more than the minimum distribution amount.

Are RMDs taxable?

Yes, RMDs are subject to income taxes when they are withdrawn since contributions to the retirement accounts are made with pre-tax dollars. However, in New York State, the first $20,000 of retirement income for those 59.5 or older is tax-exempt. Spouses are eligible for this exclusion as well.

Need more information?

More answers to common RMD-related questions can be found on the IRS’s Retirement Plan and IRA Required Minimum Distributions FAQ page.

To avoid potential penalties, it is advisable to work with an accountant knowledgeable about RMD requirements, deadlines, and calculations. RBT CPAs’ accounting experts are here to guide you through the process of taking the required minimum distributions when the time comes. Give us a call today to find out how RBT CPAs can be of service to you.

2025 Updates: Minimum Wage for Tipped Employees and NYS Tip Credit

2025 Updates: Minimum Wage for Tipped Employees and NYS Tip Credit

Despite some controversy, the minimum wage for tipped employees in New York State remains in place as of early 2025, with wage rates increasing from last year.

Beginning January 1, 2025, the minimum wage rate for tipped food-service workers increased from $10.65 to $11.00 per hour in New York City, Westchester, and Long Island, and from $10.00 to $10.35 per hour in the rest of the state. The new wage rates will apply through December 31, 2025.

The State continues to see push-back from lawmakers and restaurant workers advocating for an end to the tiered wage system for tipped workers in New York. Last month, a group of restaurant workers gathered at the State Capitol in Albany to campaign for “One Fair Wage” legislation, a bill that would require employers to pay tipped workers the full minimum wage. Proponents of the bill have expressed concern about workers’ reliance on unpredictable tips to support themselves and their families. Under the proposed legislation, any tips earned by employees would be earned in addition to full minimum wage.

Seven U.S. states currently require that tipped employees be paid full minimum wage before tips, while the others—including New York—maintain a tiered wage system.

Hospitality employers in New York State are able to pay less than the full state minimum wage because of tip credits. Employers can satisfy minimum wage requirements through a combination of employer-paid wages and a tip allowance, or tip credit.

For example, the current minimum wage for food service workers in New York State is $15.50 per hour. Employers can satisfy the minimum wage by combining a cash wage of at least $10.35 with a tip allowance of no more than $5.15 per hour.

Below is some important information about tips and tip credits in New York:

What is a tip?

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

What is a tip credit?

A tip credit 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?

The Fair Labor Standards Act (FLSA) defines a tipped employee as “an employee engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips.”

Are there tip recordkeeping and reporting requirements?

Yes, reporting requirements help ensure compliance with state and federal wage and hour laws and provide proof that employers are upholding minimum wage requirements. Under New York Labor Law Section 196-d, employers are required to maintain daily records of the tips received by employees, records which are subject to DOL inspections. Employee wage statements must also clearly show how much of an individual’s pay is comprised of tips and how much is comprised of employer-paid wages. In addition, written notice must be provided to new employees informing them of wage rates and tip credits. Accurate recordkeeping and reporting are crucial, as employers not complying with New York tip laws can face serious penalties.

Have questions?

As mentioned at the start of the article, the future of tip credits in New York is unknown—but as of right now they still exist, and accurate recordkeeping is imperative. More information can be found in the Department of Labor’s Tips and Gratuities Frequently Asked Questions. If you have any further questions about the laws governing tips in NYS, we encourage you to seek legal counsel.

And remember, for all of your accounting, tax, audit, and advisory needs, RBT CPAs is here to help. Give us a call today and find out how we can be Remarkably Better Together.

How and Why to Create a Union Budget

How and Why to Create a Union Budget

Why Should You Prepare a Budget?

Budgeting is a critical component of any organization. The American Federation of Government Employees discusses several reasons why preparing a detailed budget for your union is important:

  1. A well-formed budget helps to ensure the financial health and security of your organization.
  2. A budget acts as a guide for leadership when making financial decisions.
  3. Union members want to know where their membership dues are going. Making the flow of money visible to members indicates transparency and encourages trust in union leadership.
  4. Analyzing the union’s financial activity allows the organization to adjust or reallocate money if necessary.

How to Prepare a Budget

The task of creating a budget can seem overwhelming if you don’t know where to start. However, the process can be broken down into a few essential steps.

  1. Determine Your Goals and Ask Key Questions

Before preparing a budget for the coming year, it’s important to consider your organization’s goals. Do you want to improve communication with union members? Provide more professional development opportunities? Increase community engagement?

According to the Union Operating Procedures Manual for Communications Workers of America, you should also take a look at your current finances and ask yourself some key questions:

  • What percentage of funds is utilized for each area or purpose?
  • Are we spending too much in any one area?
  • Are we allocating funds to areas that help build and strengthen the union?

Once you have determined the answers to these questions about your organization’s goals and current fund allocation, you’ll be better able to make decisions about the upcoming year’s budget.

Now it’s time to prepare your budget. At its most basic, preparing a budget requires you to estimate two things: future income and future expenses.

  1. Predict Income

To predict income for your organization, you’ll need to identify all reliable sources of revenue for the coming year. For unions, membership dues make up the majority of income. To predict revenue from membership dues, you’ll need to first predict membership numbers. The CWA Union Manual suggests you may want to assume the “worst case scenario” for membership estimates, predicting the lowest possible membership numbers and thus erring on the side of caution.

After estimating income from membership dues, you’ll want to identify all other sources of income such as investment earnings, interest on savings, fundraising activities, newsletter advertising, and government grants. You should not include in your estimates any income that is unreliable or unpredictable.

  1. Estimate Future Expenses

To estimate your future expenditures, you should first look at your fixed expenses for the year. Fixed expenses include set predictable costs such as officer salaries, payroll taxes, property taxes, rent, phone and internet services, insurance, affiliation fees, etc. You’ll also want to consider variable expenses that change from month to month, including utilities, accounting services, and legal services, among others. You will then need to decide what activities and programs you want to provide for your members in the coming year and determine the cost of each of these. You may want to establish an “additional projects” category to cover any unforeseen programs or projects that might come up throughout the year (CWA).

  1. Compare Income to Expenses

Once you have predicted your income and expenses as accurately as possible, it’s time to compare the two numbers to determine whether there is a budget surplus or deficit. If there is a deficit, you will need to cut back on some programs or services. If there is a surplus, you can set the money aside for future use or use the surplus to expand your program and service offerings.

Union Budgeting Tips

  • Utilize a pre-made budget template to streamline the budget-making process (a sample union budget template can be found here).
  • Take advantage of budgeting software to improve accuracy and efficiency. Many options for budgeting software are available, including QuickBooks’ budgeting function.
  • Make sure all expenses are properly documented via bills and receipts.
  • Regularly review expenses, comparing them with receipts and bills to ensure they match up.
  • Be cautious of the risks of union credit cards. Limit the number of people authorized to use credit cards. It is usually safer to reimburse officers for expenses after the fact than to provide officers with union-owned credit cards (CWA).

Setting a budget is an important aspect of operating a union. For help creating a budget—and for all of your other accounting needs—contact our professionals at RBT CPAs. We’d be happy to work with you to achieve your budget and financial goals.