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Monthly Archives: January 2021

Why Your Business Should Have an Active Social Media Presence

Free Vector | Illustration of social media marketing app

Did you know that the ad spend on Facebook grew by almost 30% in 2020? According to the same report, the trend indicated that business budgets were tightened. However, more budget was allocated to digital channels and social media. This is also the expected trend for 2021. If you’re still not investing in social media marketing, it’s time to get on board with the trends. Here are benefits you can get from it:

Boost Brand Awareness

One of the biggest advantages of having an active social media is the increase in brand awareness. Social media allows businesses a platform to reach out to users who may not have heard of them before. Social media also allows you to enable sending targeting ads. When you send relevant ads based on a user’s preferences, they are more likely to be interested in your content. This feature also allows you to target ads based on different criteria which may include location, gender, age, etc.

Increase Website Traffic and Leads

As more people see what you have to offer, you are likely to see an increase in website traffic. Since you are reaching out to targeted audience, you are also likely to see more traffic coming from qualified leads. This may lead to a boost in lead generation efforts. Not only that, you’re also likely to see a boost in average time spent on a website.

Pro Tip: To keep track of your leads coming from different platforms, use an advanced program specially designed for lead generation.

Improve your Brand Recall

A memorable social media marketing campaign can go a long way in creating a lasting impression in front of your target audience. It’s okay if users don’t purchase your product right away. If users can remember your brand easily, you can move them down the sales funnel with a few more touchpoints. Social media helps you boost your visibility and improve your ad recall. If you run a social media campaign for a long time, you can make sure that you are reaching out to more people and improving their ability to recognize your brand.

Get More Brand Credibility

Social media allows you to work with influencers to promote your products on different channels. Not only can you boost your reach and get more engagement, but you can also boost your brand credibility. Social media influencers work hard to build relationships with their followers.  Because of their expertise, they hold credibility in their field and therefore, their followers wait for their recommendations and advice. In addition, other sponsored content can also help you establish your brand as a thought leader in the industry.

Get more Engagement

When you upload content on social media that resonates with your audience, they are likely to respond to it. You’ll get more likes, shares, and comments if the content strikes a chord with them. This can result in a boost in engagement. You can also do things like host contests, create polls, and publish live videos to keep your audience entertained. These things matter because  in order to turn a prospect into a customer, you need to keep them engaged. It’s a stepping stone in the right direction.

Get Detailed Customer Insights

One of the biggest advantages of advertising through social media is that you can get access to customer insight. All social media platforms collect user data. From user insights to demographics, these platforms record all kinds of behavioral data. When you run an ad campaign, you can also see how people are engaging with your content. This data can help you figure out which content your audience resonates with the most. Based on that, you can create a more robust content and marketing strategy.

This data can help you learn how to get the most out of your ad spend. In the long run, it can help your business save money and get the most out of your budget through campaign optimization. Once you have data on what works, you can leverage retargeting to follow up multiple times with users who may be interested in your brand. This, in turn, can help you boost your conversion rate.

Conclusion

Regardless of your industry or business size, social media can be a powerful tool to grow your business. It can help you get more visibility, reach out to a broader audience, and generate more qualified leads. Not only can it help you increase your sales and revenue, it can also help you create more cost-effective campaigns. You can leverage social media to gain more credibility and improve your brand recall value. By tracking your campaign results, you can optimize future social media campaigns for better results. Don’t miss out on the multiple benefits social media can offer.

IRS Expected to Audit More Small Businesses in 2021

After years of low examination rates, the IRS announced it will increase audits of small businesses by 50 %. This news comes during a time when complex tax law changes and economic stimulus programs, in response to COVID-19, have made businesses’ books even more complicated than usual.

Tax Audit Vector Images (over 3,100)

The Illinois CPA Society cautions this could lead to audits and enforcement actions against many different businesses. These businesses range from long-held family-owned operations to the many online businesses launched as the pandemic drags on.

With the IRS planning to hire more specialized auditors to begin strengthening its enforcement efforts, ICPAS offers the following tips to safeguard your business interests and help avoid an audit:

Keep Clear Records

Accurately and honestly reporting all income, deductions, credits, expenses, and other figures can help keep an audit at bay. Make sure you have adequate documentation to support the figures reported on your business’ information return. This will make your individual tax return less likely to be have errors or be audited.

Mind your deductions

Unusual itemized deductions raise red flags for auditors, especially now that most taxpayers only claim the standard deduction. If your small business is driving you to seek unique deductions or report business losses, enlist the help of a CPA to guide you. Reporting losses for three years or more could increase your risk of an examination into whether you’re actually in business.

Make your estimated tax payments

If you anticipate owing more than $500 in taxes for your business entity throughout the year, you should be making quarterly estimated tax payments. Failing to make these payments raises your risk of an audit and/or penalties.

Go Digital

Today’s bookkeeping software utilizes tools to keep your records accurate and secure. This helps your CPA electronically prepare and file your tax returns—the best method for preventing the filing of erroneous returns that might trigger an audit.

Read up on the rules

Since many small businesses are formed as partnerships, it’s important to determine if yours is subject to the Centralized Partnership Audit Regime, which dramatically changed IRS partnership audit procedures.

CAA 2021 Extension and Expansion on Employee Retention Credit

Scope

This  is to alert Vertical Advisors’ clients about Expansion and extension of Employee Retention Credit (ERC) provided by the Consolidated Appropriations Act, 2021 (CAA, 2021) which was signed on December 27, 2020. This credit is also available for the period March 12, 2020 to January 1, 2021 based on the prior bill called Families First Coronavirus Response Act. However, if a business received a PPP related to the prior period, generally the credit will not apply.

Under the CARES Act, the Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before Jan. 1, 2021. The CAA includes the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTR), which extends and expands upon the ERC provided by the CARES Act until June 30, 2021 (Sec. 207).

This credit will generally benefit businesses that have employees that did not receive PPP money. However, if a business has received PPP money, the ERC could still be applied related to wages not included in the PPP covered period.

Highlights

ERC Calculation:

As noted above, the credit applies to wages paid in both 2020 and 2021.

For wages paid prior to 12/31/2020, the credit amount is 50% of qualified wages, up to $10,000 in total per employee. Thus, the maximum Retention Credit in total amount is $5,000 per employee. The Retention Credit applies to:

  • The employer’s share of Social Security tax under IRC Section 3111(a) (6.2% of wages)
  • The portion of the employer’s and employee representative’s share of RRTA tax under IRC Sections 3211(a) and 3221(a) that corresponds to the 6.2% Social Security tax rate due.

If the Retention Credit exceeds the employer’s Social Security or RRTA tax liability for the quarter, the excess may be refunded to the employer. The credit will need to be claimed on IRS Form 941 (Quarterly Payroll form).  Please see Item D of this section for details on how to claim and report the credit.

For wages paid after 12/31/2020, the credit amount is 70% of qualified wages, up to $10,000 per quarter (up from $10,000 total) of qualified wages paid to an employee. Thus, the maximum ERC amount available for 2021 is $14,000 per employee ($7,000 per quarter).  This would apply to Q1 and Q2, 2020 payroll form 941.  If you have already filed the forms, it can be amended.

CAA also allows businesses with 500 or fewer employees to advance the credit at any point during the quarter based on wages paid in the same quarter in a previous year (Sec. 207(e)(1)).

Qualified Wages:

CARES Act section 2301 created the ERC for wages paid from March 13, 2020 to December 31, 2020, by employers that are subject to closure or significant economic downturn due to COVID-19. The CAA extends the ERC to include wages paid before July 1, 2021 (from January 1, 2021). Qualifying wages are based on the average number of a business’s employees.

Prior to 12/31/2020, for employers of 100 or fewer employees, qualified wages are wages paid to any employee during a COVID-19 shutdown or during a calendar quarter with a significant decline in gross receipts, without regard to whether the employee is providing services; For employers of more than 100 employees, qualified wages remain wages (as defined under the Federal Insurance Contributions Act) paid for services an employee is not providing due to a COVID-19 shutdown or a significant decline in gross receipts.

CAA increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees (Sec. 207(e)(1) for period beginning after 1/1/2021.

The CARES Act previously contained a limitation that qualified wages paid or incurred by large employers could not exceed what the employee would have been paid for an equivalent amount of work in the 30 days immediately preceding the period for which the employer claimed the credit. The expanded ERC eliminates this limitation.

Eligible Employer:

All employers are eligible for the employee retention credit, including tax-exempt organizations. There is no size limitation or threshold.

Prior to 12/31/2020, to be eligible for the Retention Credit for the period, an employer must carry on a trade or business in 2020 that experiences one of the two following COVID-19-related occurrences:

(1) COVID-19 Shutdown: operations were fully or partially suspended on orders from a governmental authority due to COVID-19, or

(2) Gross Receipts Decline: the business experienced a 50% reduction in gross receipts for a calendar quarter as compared to the same calendar quarter in the prior year.

  • For 1/1/2021-6/30/2021, CAA Expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50% to 20% and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility (Sec. 207(d)(2)(B))

 

Employers who received forgiven PPP loans can still qualify for ERC: As originally enacted, employers who received PPP loans were not eligible to claim the ERC. Retroactive CAA, 2021 provisions retroactively clarifying the limitation such that employers who receive PPP loans may elect to treat payroll costs paid during the loan-covered period as qualified wages to the extent the wages are not paid for with forgiven PPP loan proceeds (Sec. 206(c)). As a result, for that portion of wages the employer may claim the ERC.

How to Claim ERC:

Form 941, Employer’s Quarterly Federal Tax Return, will be used to report total qualified wages and claim ERC for each calendar quarter. The nonrefundable portion of the ERC will be reported on line 11c and the refundable portion, if applicable, which is the amount that exceeds the employer’s social security or RRTA tax liability for the quarter will be reported on line 13d.

Wages paid by forgiven PPP loans are excluded from qualified wages. Therefore, if you have applied for PPP loan and did not pay it back, the portion of the loan used to pay wages will be subtracted from total qualified wages.

Please ensure the quarterly qualified wages and ERC are properly reported and claimed on Form 941. 2020 Q4 Form 941 is due by 1/31/2021.

Tax deduction offset: Please also note that ERC reduces the expenses that could otherwise deducted because CARES Act Sec. 2301(e) provides that rules similar to Code Sec. 280C(a) apply for purposes of applying the employee retention credit. Code Sec. 280C(a) generally disallows a deduction for the portion of wages paid equal to the sum of certain credits determined for the tax year. As such that an employer’s aggregate deductions would be reduced by the amount of the ERC.

Next Steps:

If you are interested in VA running some numbers for your business related to the ERC, we will need the following items?

  1. Did you receive a PPP? If so, we will need the amount of the PPP, your covered period, and information about the loan forgiveness.
  2. We will need payroll reports for the ERC covered period.
  • Please provide the quarterly wages report for Q2, Q3 and Q4.
  • For Q1, please provide payroll report covering 3/13/2020-3/31/2020.
  • Alternatively, you can share your payroll access with us.
    1. Please let us know if you need our assistance in the filing to claim the ERC.

If you have filed Form 941 without claiming the ERC for 2020 Q2-Q4, you can still claim the credit for by filing Form 941-X for each corresponding quarter. Generally, you may correct overreported taxes on a previously filed Form 941 if you file Form 941-X within 3 years of the date Form 941 was filed or 2 years from the date you paid the tax reported on Form 941, whichever is later.

Form 941-X cannot be electronically filed. If you did not claim ERC for Q2 and Q3 but have not file the 4th quarter Form 941, we recommend claim the credit on the original Q4 Form 941 as the claim is generally processed quicker on original returns. Then consider filing Form 941-X for Q2 and Q3 to claim remaining eligible credit.

Where Did Americans Move in 2020?

Which States Did America Flock to in 2020?

States compete with each other in a variety of ways, including attracting (and retaining) residents. Sustained periods of inbound migration lead to (and reflect) greater economic output and growth. Prolonged periods of net outbound migration, however, can strain state coffers. This can contribute to revenue declines as economic activity and tax revenue follow individuals out of state.

United Van Lines, the largest moving company in the United States, keeps track of its clients’ migration among the 48 contiguous states. It publishes that data each January, comparing the number of inbound moves to outbound moves for each state. Because those who use United Van Lines are individuals and companies, this data is only a subset of all moves. However, the National Movers Study still provides a targeted look at the types of interstate migration patterns we can expect to see in government-issued data once it becomes available.

Where did Americans move in 2020? 2020 state migration data, 2020 moving study, state-by-state migration trends, state migration trends, state migration data

The 2020 National Movers Study shows Idaho, South Carolina, Oregon, South Dakota, and Arizona as the states with the highest proportion of inbound moves. New Jersey, New York, Illinois, Connecticut, and California saw the highest proportion of outbound migration. Inbound and outbound moves were nearly balanced in Colorado, Wisconsin, and Michigan. (Vermont also saw a high percentage of inbound moves but it was excluded from the survey’s rankings because the sample size was too small.)

Reasons for the Moves

In this study, United Van Lines tracks a few of the most common reasons that people pack up and move to a new state. While “state tax climate” is not a listed reason in this study, we can see glimpses of how taxes can affect decision-making.

Taxes may have limited influence on whether someone takes a job, but they can influence where jobs are available. They can also influence where a person taking a position might locate. The latter is perhaps most visible in smaller states and states with metropolitan centers located near state borders. For example, tens of thousands of individuals work in greater Chicago but live in Indiana. Many interstate commutes are attributable to stark differences in tax landscapes, particularly property taxes. While it is difficult to measure the extent to which tax considerations factor into individuals’ moving decisions, there is no doubt that taxes are important in many individuals’ personal financial deliberations. With the rise of remote work, individuals are likely to be more mobile than ever. They are able to make decisions about where to live that are independent of where their employer is located.

Another reason people moved was retirement.

Top 10 States for Retirement-Motivated Moves, 2020
State Rank
Delaware 1
Florida 2
South Carolina 3
Arizona 4
Wyoming 5
Idaho 6
New Mexico 7
Nevada 8
Maine 9
North Carolina 10
Note: Source: United Van Lines, 2020 National Movers Study

It’s unsurprising that retirees gravitated toward states with good climates, but many of these top states also have tax climates that would be attractive to retirees. Nine out of these 10 states either exempt a large portion of Social Security from income taxes, exempt Social Security completely, or have no income tax at all. Retirees, moreover, are freer to consider factors like taxation than those who are tied to a job.

States and Tax Rates

Our State Business Tax Climate Index uses over 100 variables to evaluate states on the competitiveness of their tax rates and structures. Four of the 10 worst-performing states on this year’s Index are also among the 10 states with the most outbound migration in this year’s National Movers Study (New Jersey, New York, Connecticut, and California). Seven of the top 10 ranked inbound migration states also rank in the top half of states on the Index, which measures tax structure. And the three which do not (Alabama, Arkansas, and South Carolina), while having significant room for improvement in the structure of their tax codes, generally feature low tax burdens. Conversely, all but one of the top outbound states rank in the bottom third of the Index, the only exception being North Dakota (17th), where outbound migration has been driven by a decline in energy markets.

While certain factors are outside a state’s control (sunny Florida may always have a certain competitive advantage in attracting retirees, for example), every state can foster an attractive economic landscape through wise tax policy decisions.

2021 State Business Tax Climate Index, 2021 State tax rankings Tax Foundation

4 Ways to Improve Your Company’s Sales

Most salespeople would tell you that there are few better feelings in life than closing a deal. This is because guiding a customer through the sales process and coming out the other side with dollars committed isn’t a matter of blind luck. It’s a craft — based on equal parts data mining, psychology, intuition and other skills. Many sales staffs were under unprecedented pressure last year. The COVID-19 pandemic triggered changes to the economy that made many buyers cut back on spending. Now that the economy is slowly recovering, sales opportunities may be improving.Growth clipart sale growth, Picture #2783288 growth clipart sale growth

Here are four steps your salespeople can follow to improve the odds that those chances will come to fruition: 
1. Qualify prospects. Time is an asset. Successful salespeople focus most or all their time on prospects who are most likely to buy. Viable prospects typically have certain things in common:
  • A clear need for the products or services in question
  • Sufficient knowledge of the products or services
  • An identifiable decision-maker who can approve the sale
  • Adequate financial standing
  • A need to buy right away or soon.
If any of these factors is missing, and certainly if several are, the salesperson will likely end up wasting his or her time trying to make a sale.
2. Ask the right questions. A salesperson must deeply understand a prospect’s motivation for needing your company’s products or services. To do so, inquiries are key. Salespeople who make great presentations but don’t ask effective questions tend to come up short. An old rule of thumb says: The most effective salespeople spend 80% of their time listening and 20% talking. Actual percentages may vary, but the point is that a substantial portion of a salesperson’s “talk time” should be spent asking intelligent, insightful questions that arise from pre-call research and specific points mentioned by the buyer.
3. Identify and overcome objections. A nightmare scenario for any salesperson is spending a huge amount of time on an opportunity, only to have an unknown issue come out of left field at closing and kill the entire deal. To guard against this, successful salespeople identify and address objections during their calls with prospects, thereby minimizing or eliminating unpleasant surprises at closing. They view objections as requests for information that, if handled correctly, will educate the prospect and strengthen the relationship.
4. Present a solution. The most eloquent sales presentation may be entertaining, but it will probably be unsuccessful if it doesn’t satisfy a buyer’s needs. Your product or service must fix a problem or help accomplish a goal. Without that, what motivation does a prospect have to spend money? Your salespeople must be not only careful researchers and charming conversationalists, but also problem-solvers. When you alleviate customers’ concerns and allow them to meet strategic objectives, you’ll increase the likelihood of making today’s sales and setting yourself up for tomorrow’s.