Monthly Archives

September 2021

Tax News for Nonprofits

By | Accounting, Nonprofit, Tax | No Comments

Tax law changes all the time and, with the pandemic, it’s shifting more frequently than ever. Minor changes can add up to big savings (or big mistakes if you’re unaware of them). Here’s a roundup of the latest tax news that nonprofit accounting and finance professionals need to know. Our previous tax tips update may also be helpful.

Paycheck Protection Program Loan Forgiveness Is Deductible

Originally, the IRS ruled in Notice 2020-32 and Rev. Rul. 2020-27 that Paycheck Protection Program loan recipients could not deduct expenses that are normally deductible under the extent the payment of those expenses resulted in PPP loan forgiveness. However, that ruling became obsolete with Rev. Rul. 2021-2.

Congress clarified in the Consolidated Appropriations Act, 2021 (CAA), P.L. 116-260 that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven. The tax basis and other attributes of the borrower’s assets are not reduced as a result of the loan. This was clarified in December 2020. There is now a safe harbor provision for those who filed a tax year 2020 return on or before Dec. 27, 2020, to deduct those expenses on their 2021 tax return rather than file amended returns or administrative adjustment requests if they are a “covered taxpayer” (as defined in the revenue procedure) and they satisfy all of the requirements for the time and manner of making the election to apply the safe harbor.

Food and Beverage Deductions

50% or 100%? That’s what everyone wants to know.

Typically, food and beverage deductions are 50%. A restaurant meal for business purposes, for example, counts as a 50% deduction.

However, the IRS temporarily increased it to 100%. Under Sec. 274(n)(1), a deduction for any expense for food or beverages is generally limited to 50% of the amount that would otherwise be deductible. The Consolidated Appropriations Act, 2021, P.L. 116-260 removed that limitation for amounts paid or incurred after Dec. 31, 2020, and before Jan. 1, 2023, for food or beverages provided by a restaurant (Sec. 274(n)(2)(D)).

Now, of course, we need to define “restaurant.” According to the definition that applies here, it is any establishment that prepares and sells food or beverages for immediate consumption on or off-premises. A coffee shop that sells breakfast sandwiches and coffee drinks for consumption on-premises or take away would count for 100% deduction but a kiosk or vending machine selling the same products does not.

So, schedule those breakfast, lunch, and dinner meetings as long as it’s safe to do so in your area. Now is the time to patronize local establishments for business meetings (and save your receipts for your accountant).

American Rescue Plan Adds to Wages Qualifying for Sections 3131 and 3132 Credits

The American Rescue Plan is another economic relief package for American families adversely affected by the continuing health crisis. The IRS sent a reminder that under this plan, employers with 500 or fewer workers can take a credit equal to the wages paid to employees for a paid day off to be vaccinated.

IRS Extends E-Signature

The IRS has extended its provision to accept e-signatures on many forms until December 31, 2021. The ongoing pandemic has necessitated that not only will they extend the deadline, but they are also adding more forms. Many of these forms can now be signed remotely, then printed or scanned and sent to the IRS, making it easier to complete required paperwork during the pandemic.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

7 Tips for Conducting Effective Virtual Interviews

By | HR | No Comments

It’s a job-seeker’s market right now, with more jobs open than people applying for them. In June 2021, for example, job openings in the United States rose to slightly over 10 million, an unprecedented surge.

Accounting and finance are already highly competitive job markets, with companies and nonprofits vying for the most talented professionals. In this atmosphere, employers must understand the differences between interviewing job candidates in person and through teleconferencing. More and more, companies are using technology to screen applicants, first by screening resumes and then throughout the interview process. By understanding and using the virtual interview process effectively, you can shorten the time it takes to find and hire great candidates.

7 Tips to Host Effective Virtual Interviews

  1. Invest in the right software.
  2. Send instructions to the candidate.
  3. Leave 5 minutes for a test run of the software.
  4. Prepare for the interview.
  5. Ensure adequate light.
  6. Check the sound quality.
  7. Minimize distractions.
  1. Invest in the right software.

You don’t need an expensive platform, but you do need a platform that allows for adequate time for the interview. Zoom, GoToMeeting, JoinMe, and other virtual meeting software often limits the amount of time or the number of people on a free virtual call. Investing in a simple hosted plan can help you ensure you have adequate time for the interview. If you do opt for a free package, be sure to have a backup plan ready if you decide to go over the time limit. There’s nothing worse than getting cut off in the middle of a conversation!

  1. Send instructions to the candidate.

Don’t assume that the candidate has the software downloaded or even knows how to use it. Send them simple instructions and a link to where they can download the software free of charge. Make sure to send such instructions at least twice, once when you schedule the interview and the day of the interview itself.

  1. Leave 5 minutes to test the software.

Leave at least 5 minutes between interview appointments so that you can test the software and your connection with the candidate. You may need to spend a few minutes at the start of the call getting the candidate familiar with the software, for example, if they want to do a screen share to show you samples of their work.

  1. Prepare for the interview.

Just because the interview is virtual does not make it any less important than an in-person interview. Hiring managers should prep for the interview the same as they would an in-person interview. Have the job description and the candidate’s resume in front of you, either on a second screen or printed out. Be sure to introduce yourself and explain how your position interacts with the position the candidate is interviewing for and add any information that will help the candidate understand the role, the company, or the interview process. Develop your questions beforehand and keep them handy, jotting down notes or asking permission to record the interview for reference later.

  1. Ensure adequate light.

It’s off-putting for both candidates and interviewers to speak with someone who looks like they’re working in a cave. Make sure you have a good light source illuminating your face from in front or the side. If you do not have access to natural light, invest in a ring light, a simple gadget that provides better lighting for virtual calls. These can be found in many online stores for a nominal fee and attach directly to the computer monitor to provide good lighting. Candidates need to see your facial expressions and you need to see theirs to help you both feel at ease.

  1. Check the sound quality.

Computer microphones vary in sound quality. Put on your headset, if you have one, if the candidate cannot hear you easily. Make sure you both know where the “mute” button is on the screen as well in the (likely) event of background noises: pets and children both seem to sense an important call and crash it accordingly!

  1. Minimize distractions.

Check your software to see if it has a “blur” feature for the background. If you are interviewing the candidate from home and wish to maintain more privacy, blurring the background can remove any identifying pictures of family or children or simply blur out a distraction, like interviewing from the kitchen and showing your sink full of breakfast dishes in the background. Minimize distractions by closing your office door, moving your computer to a quieter location in your home, and asking a spouse to watch young children while you’re on your call. And of course, turn your cellphone to mute, and turn off instant messaging to avoid being interrupted.

With the right software and preparation, you’re well on your way to hosting successful video interviews and finding great accounting and finance professionals.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

How the Pandemic Affects Compensated Absences: Something to Consider

By | Accounting, Nonprofit | No Comments

The global pandemic’s effects are still being felt in many areas. One such area is in the realm of accounting; specifically, the area of compensated absence.

What is compensated absence? It’s vacation and sick time. Many employees deferred vacation time during the pandemic since travel was so restricted. The result is a higher than usual amount of accrued compensated time off, which must be accounted for logically and systematically.

There are no FASB standards for the rate at which such time is accrued. Instead, organizations are urged to look at their record of accounting for such time off. Accountants may choose from the current rate or the likely compensation rate when employees are expected to redeem their vacation days.

The latter is easier said than done. Even though better awareness, knowledge, and testing for COVID-19 have kept much of the nation open, some employees may still be reluctant to take their vacation time. Nonprofits must develop a plan of action to handle the accrual of compensated time off.

Develop Your Plan for Compensated Time Off

To develop a plan for compensated time off, first, review your current definition of such time.

  • How does your organization define compensated time off? Many define it as vacation time, sick days, or personal days. Review your organization’s current definition and method of acquiring time off. For example, is vacation time off based on the number of days worked, or do all employees receive the same amount of time at the start of the calendar or fiscal year?
  • Does your policy allow employees to roll over such time and, if so, how long can they accrue it?
  • If they cannot roll over the time but must “use it or lose it,” are they compensated for it instead?
  • Have you made any emergency declarations, i.e., special arrangements, for employees during the pandemic?
  • Have you reviewed both accrued and vested rights? Are these in line with state and local laws and requirements?

Once you have the facts about your current policies and understand fully all of the considerations for paid time off, think about the following as you create your plan to account for compensated time off.

Accrual for Compensated Time Off

Take into account the substance and spirit of your organization’s vacation and sick leave policies, rather than the actual form. Does your organization provide a generous policy that goes above and beyond the legal rights of employees as governed by state and federal law? If so, then the liability for compensated time off should include all reasonable compensation likely to be paid.

Accountants should use historical data pertaining to compensating employee absences to make projections about the potential of unused accrued time off. This information can be used to estimate the value of lapsed compensated absences.

A spreadsheet can be helpful to estimate the possible adjusted journal entries. Having a computerized accounting system will also make the estimation process easier. Historic reports will show the average balance for accrued vacation and unpaid sick leave, which can be used as a basis to adjust for any anticipated increase due to the unusual years, thanks to COVID-19.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.