EMPLOYEE ACHIEVEMENT AWARDS

Dear Larry,

I am a spa owner with 15 employees. We are planning a large company family picnic in July and I would like to give an achievement award to my top massage therapist. She has been with me for four years and really deserves it. I would like to know if it is better to give her cash, or an actual gift. If possible, I don't want her to have to pay taxes on it. I would appreciate any information you can give me.

Thanks,
Whitney

Whitney, the best information I can give you on this subject is on our website. Click on Achievement Awards to learn about giving and receiving employee awards.

It is a pleasure serving you!

Larry Kopsa CPA

HOW LONG SHOULD I KEEP MY RECORDS?

Larry, I've been cleaning house and was wondering how long I need to keep all of my old tax papers.

Barbara

Barbara, here's a link to our Record Retention Guide on our website. It shows you how long to keep your records for tax purposes. I hope this helps.

Larry Kopsa CPA

'WHAT BUSINESSES CAN DO ABOUT SWINE FLU'

(MSN.com) -- In an article appearing on MSN's "Business on Main," author Joanna L. Krotz writes that there are several steps businesses can take in response to the H1N1 — or swine flu — strain, which could re-emerge as a serious health threat later this year. Krotz writes that there are steps your business or organization can take "to help immunize your business, allay customer fears and safeguard staff from the threat of a health scare." Some of the steps include: creating a few backup plans to safeguard business operations; keeping the workplace clean; and letting customers and employees know you’re ahead of the curve. See the complete list at <http://businessonmain.msn.com/knowledgeexchange/articles/managingpeople.aspx?cp-documentid=19854470&source=msnmoney>

BOY SCOUT CAMP

Expect to see fewer postings on our blog next week. Starting this Sunday, I'll be sleeping outside with the bears and my 12 year-old son at Boy Scout Camp.

I'm looking forward to spending some quality time with Ryan, with the exception of the mosquitos and the Polar Bear Swim.

If you have any questions while I'm out enjoying nature, please email me at lkopsa@kopsaotte.com, or call 800.975.4829.

Larry Kopsa CPA

1099 QUESTION

Hi Larry, I read your blog (regarding the 1099-MISC) and have a related question I hope you can help me with.

I received a 1099-MISC for about $5000 in "self-employment" compensation last year. Only about half of this amount is actually my income, the rest I paid out to 6 subcontractors. However, only one of them received greater than $600 from me so, strictly speaking, I am only required to send THIS person his own 1099-MISC.

I am considering sending the others--who earned less than $600--each a 1099-MISC anyway. Since I want to share my tax burden with my sub-contractors, would it behoove me to send out 1099s to each of them anyway (even though I'm not required to)--just so it's documented as non-employee compensation? Or is this just a waste of time & money? I appreciate any advice you have.

David

David, regarding your situation, having good records should help you to avoid any problems. As far as a 1099 is concerned, you really only need to give a 1099 to the individual you paid over $600. The other people you pay less than $600 to do not need a 1099. Just by sending them a 1099 does not document they are a non-employee.

If you need to obtain a Form 1099, you can download a copy from the IRS at http://www.irs.gov/, in the upper right hand corner there is a search tab.

I do need to mention that 1099s should have been issued to the individual by the end of January and a 1099 with a copy of the 1098 going to the IRS prior to the end of February. If you do get a notice from the IRS that your 1099s are late, I would argue with them that there should be no penalty for late filing. You won’t know about that problem for another six to nine months, but let me know if you do have a problem and I can walk you through it.

I did mention a 1098. A 1098 is really a cover form showing you only had one 1099. The 1098 can also be downloaded from the IRS website. Check out the forms, they are not as confusing as it sounds.

It is a pleasure serving you.

Larry Kopsa

DEALING WITH STAFF ABSENCES

The May 2009 issue of Nails Magazine published an article called, Here Today, Gone Tomorrow. The article describes how not to get caught off guard by a planned or sudden staff absence.

Along with this article, Nails Magazine published my Coping Strategies, which offer up some winning strategies I have seen used to avert disaster in salons.

The following is an overview:

Prepare in Advance:

• Encourage staff members to have contact with all clients to create familiarity.


• When staff members are on vacation, urge clients to have service provided by another technician. This allows them to gain client trust.


• Introduce new staff members to clients to establish a comfortable rapport.


• Ensure clients know that the entire team is well-trained.


• Put systems into place to inform the replacement of the nuances of the client. Salon software can accommodate this. Just got married; just went through a divorce; enjoys running; etc., can be noted to give the replacement some insight into making the client feel more comfortable.

When Disaster Strikes:

• Involve the absent technician, if possible, when communicating with clients. This can help comfort the client that all is well and communicate that the replacement is capable of helping.


• Talk openly with the staff to reduce the chance of surprises.


• Let the staff members know the steps being taken and how it will impact them personally.


• Protect the absent technician's privacy by not disseminating personal details.

WHAT DOES ONE TRILLION DOLLARS LOOK LIKE?

All this talk about "stimulus packages" and "bailouts"...A billion dollars...A hundred billion dollars...Eight hundred billion dollars...One TRILLION dollars...What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I'd take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for a week or two of shamefully decadent fun.

Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

And $1 BILLION dollars... now we're really getting somewhere...

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing about so much. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

You ready for this?

It's pretty surprising.

... I give you $1 trillion dollars...

(And notice those pallets are double stacked.)So the next time you hear someone toss around the phrase "trillion dollars"... that's what they're talking about.