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MARCH 2021 E-NEWSLETTER

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SIMPLE IRA vs. SEP IRA

Most people have heard of Roth and Traditional IRAs. But two other types of IRAs are less commonly known: the SIMPLE IRA and the SEP-IRA, which are available to small business owners.

They have similarities, but also some key differences.

BUSINESS START UP

Starting a business involves research, planning and making critical financial and legal decisions.

Once you’ve landed on your product or service offering, consider these steps when launching your new business.

TRIPLE TAX ADVANTAGES OF HSA

If you have a high-deductible health insurance plan, you’re likely eligible to open a health savings account (HSA).

Similar to flexible spending accounts, these tax-advantaged savings accounts allow you to contribute money to cover your medical expenses. But HSAs have three distinct tax advantages.

WORKERS COMPENSATION INSURANCE

Workers' compensation insurance provides benefits to employees who become ill or injured on the job and offers employers some protection from injured employees' lawsuits. The premiums are paid by the employer.

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FLEXIBLE WORK ARRANGEMENTS

Offering the right benefits to your employees keeps them engaged and motivated. Besides monetary benefits like a competitive salary or health insurance, consider non-financial perks like flexible work arrangements.

MARCH 2021

CLIENT PROFILE

Beth is self-employed and preparing to file her taxes, but hasn’t received some of her 1099s. She doesn’t want to file for an extension. What should she do?

March 2021 Q & A

Q: I will claim an automobile deduction on my tax return and have used the standard mileage rate in previous years. However, in 2020 I incurred significant car expenses that will outweigh the standard mileage deduction. Can I switch to deducting actual costs for 2020?

A: Yes, you’ll be able to switch to the actual expenses method if you own your car and you used the standard mileage rate in the first year that you used your vehicle for business. The rules are different though if you lease your car. If you’re leasing your car, you’ll need to take the standard rate for the entire lease term.

Q: I’ve heard that I should have errors and omissions insurance, but I’m not sure what it is and why would my business need it?

A: Generally, errors and omissions (E&O) insurance protects against litigation claiming you made a mistake while providing a professional service. Some of the common types of claims that E&O insurance covers include: negligence, errors, omissions, misrepresentation, and inaccurate advice. This type of insurance usually covers court costs and settlement amounts, which can quickly add up. If your business is vulnerable to such lawsuits, then you should consider carrying E&O insurance.

SHORT BITS

FAST STIMULUS PAYMENTS

The IRS successfully delivered millions of stimulus payments during the COVID-19 pandemic last year. Within two weeks of the passage of the CARES Act, the IRS distributed $147 billion to more than 81 million people. By comparison, in 2008, the last time stimulus payments were issued by the IRS, it took 75 days to get the first payments out. With the launch of the Get My Payment tool, an additional 16.6 million requests for payment were received. By the end of October 2020, the IRS had delivered approximately $270 billion in stimulus relief to taxpayers.

SOCIAL SECURITY INCREASES

Approximately 70 million Americans are seeing a 1.3% increase in their Social Security benefit payments in 2021. Federal benefit rates increase when the cost-of-living rises, as measured by the Department of Labor’s Consumer Price Index. These cost of living adjustments were first enacted in 1972 and automatic annual adjustments began in 1975. The year that saw the highest adjustment was 1980 with a 14.3% increase, while there have been several years with no adjustment, most recently 2016.

WOMEN'S HISTORY

National Women’s History Month goes back to 1857 but wasn’t officially recognized by Congress until 1981. According to the U.S. Census Bureau, women age 85 and older outnumber men in the same age bracket two to one. And overall, there are slightly more females than males in the U.S. In 2018, there were 166 million women compared with only 161 million males and earnings difference still exist. While 58% of women, age 16 and older, participate in the workforce they only earn 82% of what males earn for similar work.