Archives for February 2016

Let’s Negotiate

You have just been given a job offer. This is fantastic. You skills are validated, and someone see value in what you can offer. Now come the negotiation. This is that part that many people fail at because they fear rejections and feel they have little to negotiate with, but in reality, it never hurts to have a few can negotiate for more than just salary and benefits. There are a variety of items to negotiate including flex time, signing bonus, day care options, health care, a guaranteed severance package, employer-provided cellphone plans, laptops, gym memberships, continuing education, and vacation time. Some of these may be non-negotiable for the company so do your research through the employee package before beginning negotiations.

Here are some ideas to make the negotiations process more successful:

  • Don’t negotiate until you have been given an offer. You may be an eager beaver, but do not ask about negotiating during the interview process. Chances are you will never even get the opportunity.
  • Don’t accept the job on the spot. Take 24 to 48 hours to think over and understand the offer being presented. Don’t except out of excitement, but instead look over the proposal and come to the table with benefits you would like to negotiate.
  • Do your homework. Visit the employer’s website. Contact people we were former employees or who have similar job titles to find out what the standards for the job are for your experience level. You cannot ask for the moon and expect it handed to you on a silver platter. Some things you will just have to work for.
  • Realize there are differences in employers. Smaller business may not have as much negotiating room as larger businesses, but smaller businesses may be able to make up for in other way, such as a more flexible schedule.
  • Determine what the employer defines success. The more information you have the more leverage you will have. Find out the key performance indicators are and other components to the job. You may find you way to the key that unlock the negotiating door.
  • Avoid single negation items. Come to the table with your top five. Prioritize the five and give solid reasons why these are important. Figure out what the bundle is worth and identify your deal breakers. Be prepared to walk away if you don’t get what you want.
  • Be straightforward, honest, and reasonable. Nothing is off limits, but make sure your requests are within reason for the job position. You cannot go in asking for a private yacht if your job is a junior associate. There are somethings you will be required to earn.
  • Anticipate pushbacks. The company will not leave the table without countering. Be prepared with your bottom line and be prepared to hear the word no. But remember, no is the beginning of a negotiation. Ask them why it is being rejected. Is it policy, preference or opinion.
  • Don’t accept the offer and then try to negotiate. Once you accept the job, you have lost your chance to negotiate. Take your time. Understand the offer, and settle everything before accepting.
  • Know what you are worth. Don’t accept anything that degrades your worth to you or the company.

Business Tax Changes for 2016

Over this year, there are some important tax changes for businesses taking effect. Many of the changes are in response to new acts, such as The Protecting Americans from Tax Hikes (PATH) Act of 2015, the Bipartisan Budget Act of 2015, and the Trade Preference Extension Act of 2015. The following are some of the changes that will effect businesses this year:

  • Enhancements for Sec. 179 expensing: This provision changes the investment ceiling and the maximum expensing limit. In 2014, the dollar limitation on expensing deductions was $500,000 and the investment-based reduction dollar limitation only effected property placed in service in the tax year that exceeded $2 million, which was the investment ceiling. Starting in the tax year beginning after Dec. 31, 2014 the maximum expensing limit was to have dropped to $25,00 and the investment ceiling should have dropped to $200,000. Under the PATH Act, the $500, 000 limitation and the $2 million investment ceiling amounts were retroactively extended and made permanent.
  • De minimis expensing safe harbor for taxpayers with no AFS (applicable financial statement) was raised: Under Sec. 162, the final tangible property regulations that permits small businesses to expense their outlays for “de minimis” business expenses. If they were eligible for the de minimis safe harbor, and choose it, the amount paid to acquire or produce any eligible unit of property (or eligible material or supply) is deducted in the year it incurred. This included building improvements that also received a bonus depreciation. Under the prior law, leasehold improvement property qualified for the bonus depreciation, but under the PATH Act, qualified leasehold improvements property is no longer eligible for bonus depreciation. Instead, any property placed in service after December 31, 2015, qualified improvement property is eligible for bonus depreciation. The PATH Act makes this easier by allowing any building improvement to be eligible for depreciation even if the improvements are not property; the improvement no longer needs to be placed in service more than three years after the date the building was first in service; and structural components that benefit a common area are no longer excluded from the qualifying improvements.
  • Research credit for qualifying small business may offset payroll tax: For years beginning after Dec. 31, 2015, qualified small businesses may claim a credit for a portion of their research credit as a payroll credit against their FICA tax liability. This would offset their tax liability.
  • More eligible for differential wage payment credit: Eligible small business employers that pay differential wages can claim the credit. To be eligible for the credit the business must: (1) making payments to employees for periods that they are called to active duty with the US uniformed forces (for more than 30 days) that represent all or part of the wages the employee would have otherwise received from the employer and (2) the employee must be employee for 91 days preceding the period of differential pay. The differential wage payment credit is equal to 20% of up to $20,000 of differential pay made during the tax year.

Considering Pension Payout Options

Retirement is looming in the near future. Your company that you have been loyal to for the last 15 years has given you an option. Either you can take a one-time lump sum payout of your pension, or it have it distributed to you in monthly installments over your lifetime. This can be a decision that will affect you and your family. It should be an informed decision, and you should discuss with a financial advisor.

According to the poll in 2013 by the Employee Benefit Research Institute, more than a third of retirees covered by a pension plan took a lump sum payment when they left or retired from their job. Many of them were uninformed about what the lump sum would do for them or how it is calculated. These employees potentially faced a reduction in their retirement by accepting the lump-sum offer from their employers.

Just like most things, the government has an office that reviews and regulates such matters. The Government Accountability Office (GAO) reviewed information from about 248,000 pension plans in 2012. They found that the packets were unclear and lacked critical information about the lump-sum payment. The packets lacked not only information about how the pension was calculated, but about protections that would be lost if the lump sum is taken, such as federal pension insurance that protects part of their benefits if the employer files for bankruptcy.

The Consumer Financial Protection Bureau recently published a guide to help consumers weigh the risks to taking a lump sum over the monthly payouts. The report determined if you are in good health and your family members tend to live long lives, the monthly payouts would be a better option because it reduces the risk of running out of money later in life. This option helps retirees manage money throughout their retirement years.

They recommend that the ultimately the depending factor is the individual, age, health, family history, and money-management skills. Not every person can fit into the same scenario, so they also give a time when the lump sum would be appropriate. They suggest taking the lump sum if you are in poor health, or have an illness that is expected to shorten your life span. Also if you have a substantial nest egg or other income source.

The biggest part of making your decision is to educate yourself. Do your research and ask questions.


Are You Prepared?

It has been a long cold winter, and one day you come home and it is freezing in the house. Once the repairman is called you are informed the you need a new heater. The estimated cost $5000. This is something homeowners insurance does not cover. It is up to you to come up with the money. Do you have an extra $5000 laying around? I know I don’t, and neither do nearly half of American households. Even households with an annual income of $250,000 or more, about 16% of them do not have the money for significant home repairs. So, how do we prepare for something we cannot predict?

The Gallup poll asked households the same question in 2011 with similar results, but this time they took the questions a step farther. Gallup asked if the households had enough money “to make ends meet on a daily basis.” The results were shocking, but nothing new. According to Gallup, 7 out of 10 households struggle to buy the things they need on a daily basis. The results raise more questions, such as “How much money should I have?” and “How do I work within my means?” Many Americans struggle with, and there is no right answer for everybody.

The first step in insuring that you have enough money for day-to-day life and emergencies is to determine how much money you need to cover expenses on a monthly basis. Track your bills and other spending. You need to know how much money is coming in and how much is going out. This is you cash flow. You should never spend more than you take in. If you are, then you need to examine your other spending to determine what to cut or reduced to make ends meet.

Once you have established you cash flow it is time to make some financial goals. This could be anything from paying off a credit card to setting aside money each month in savings. The goal needs to be realistic to your circumstances. Do not go outside you means to make the goals, but make sure they are something you can accomplish over time.

To be prepared for anything, it is important to set aside money each month. Make sure it is something that can be set aside regardless of circumstances that arise. The best way to do this is to pay yourself first. Many companies have electronic deposits. You can set up a certain amount to go to savings each month, and you will never see it. Keep some for emergencies and make sure to set some aside for retirement.

The key is to set a balance. Make sure you cover your needs, including savings and retirement, and then if there is extra you can pay for the extra. It requires a change in attitude for many to look at money in a different way. It will take time and patience.