Recently, our marketing department received an email notifying us that we were chosen to receive a “2013 Worthington Award” from the Worthington Award Program.  It was very exciting news.  It even came with a press release, so that we could share this accomplishment with the world.   But in the background of that excitement, something didn’t seem quite right.  How did we get nominated? Why haven’t we heard of this award before? And who is the “Worthington Award Program” anyway?

The website for the award program is very vague.  You can visit it here, or do a search for “award program” and the name of almost any city, and you will find an identical website. There is no address available, no contact person, and no real information about this prestigious award that we have just won.  Upon entering the award code from the email, we are taken to an order page, where we have the honor of purchasing our award.  The prices range from $80 to $200 dollars.

After doing a bit of research, it is apparent that this is a very common scam which has been targeting small businesses for years.  The point of the scam is to get businesses to buy an award, which is ultimately worthless. The original culprit was a business calling itself the US Commerce Association, which became well known for its efforts to snare businesses into purchasing their “awards.”

It seems highly likely that the people behind the US Commerce Association are the same as the ones behind the (Your City Name) Awards Program.  The content of the websites, emails, the press release, and the awards are virtually identical.  The only difference is that they are no longer associated with the infamous US Commerce Association.

Here are a few valuable tips from the BBB so that you don’t fall victim to one of these schemes:

• Learn everything you can about who is giving the award. If it is coming from a mystery company, chances are it simply wants your money.
• If you didn’t apply for an award, or the group cannot tell you how you were nominated, chances are the award is not legitimate.
• Most legitimate awards do not come with costs for the recipient. If there is a cost, scrutinize even more closely.
• Ask specific questions about how your company or organization was chosen for an award, and find out how many similar awards are given each year.
• Check BBB reliability reports at www.bbb.org or by calling your local BBB office.

S corporation owners often take modest salaries as a tax-saving strategy. By distributing most of the corporation’s profits in the form of dividends rather than wages, the company and its owners can avoid payroll taxes on these amounts. The tax savings may be even greater now that the additional 0.9% Medicare tax on wages in excess of $200,000 ($250,000 for joint filers and $125,000 for married filing separately) has gone into effect. (S corporation dividends paid to shareholder-employees generally won’t be subject to the new 3.8% Medicare tax on net investment income.)

Although S corporations may be tempted to pay little or no salary to their shareholder-employees, this is a dangerous tactic. The IRS has targeted S corporations, assessing unpaid payroll taxes, penalties and interest against companies whose owners’ salaries are unreasonably low.

To avoid an unexpected tax bill, S corporations should conduct an analysis — using compensation surveys, company financial data and other evidence — to establish and document reasonable salaries for each position. Please contact us if you have questions about the right mix of salary vs. distributions for your S corporation’s shareholder-employees.

If you rent out your vacation home for 15 days or more, you must report the income. But exactly what expenses you can deduct depends on whether the home is classified as a rental property for tax purposes, based on the amount of personal vs. rental use. Adjusting your personal use — or the number of days you rent it out — might allow the home to be classified in a more beneficial way.

With a rental property, you can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.

With a non-rental property, you can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property taxes.

We can help you determine how your vacation home rental will affect your tax bill — and whether there are steps you can take to reduce the impact.

Image courtesy of www.freedigitalphotos.net.

If you allow employees to telecommute, be sure to consider the potential tax implications. Hiring someone in another state, for example, might create sufficient nexus to expose your company to that state’s income, sales and use, franchise, withholding, or unemployment taxes. And the employee might be subject to double taxation if both states attempt to tax his or her income.

The rules vary by state and also by type of tax — and become even more complicated for international telecommuters. So it’s a good idea to review the rules before you approve a cross-border telecommuting arrangement.

In partnership with Ohiomeansjobs.com, the Ohio Development Services Agency is once again offering funding for the Ohio Incumbent Workforce Training Program. This program provides funds to reimburse eligible employers for certain training costs for their employees.  The funds are available on a first come, first served basis according to when the online application is received. Each employer is eligible for up to $500,000 in assistance per fiscal year. Only one application per employer will be accepted per program year.

Please note: this is NOT a tax credit! The employer must first pay for the training and then request a reimbursement. There are also timelines regarding when the training needs to be performed. Plus, the training must relate to the employee’s current position or for future advancement within the company.

For the fiscal year 7/1/2013 – 6/30/2014 the date to apply has not yet been announced. But please be aware that you must take action NOW to be prepared for this program on the date it begins. The last time (fiscal year 7/1/2012 – 6/30/2013) the state ran this program all the funds were accounted for on the first day!  We will be monitoring the website daily to determine the exact date of the program.

For additional information on the Ohio Incumbent Workforce Training Voucher Program and the Online Application from last year go to: http://development.ohio.gov/bs/bs_wtvp.htm

Please contact your Whalen business advisor if you have any questions or you would like our assistance.