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Business Planning

03/28/2015

Tax Tips on Tips

Consumers debate about how much they should tip a server at a restaurant with the general understanding that an average 10% to 15% tip indicates the service was good and up to a 20% tip
indicates it was exemplary.  As the food and service bill total is tallied, they usually don’t consider that the employee will be paying taxes on the tips.

Waiter with tip jarIRS rules require restaurant employees to report their tips daily from both cash and credit or debit card payments. Restaurant employees and employers must both pay social security and Medicare taxes on the tips, and the employee must pay income taxes on them just like other wages.

Employers are required to ensure that the total tip income reported by employees is at least equal to 8% of total receipts collected during each pay period.  The rules generally apply to food or beverage establishments with 10 or more employees. So, when a restaurant customer leaves no tip for a server, it can cost that employee and the entire wait team more than embarrassment.

02/27/2015

Have a Complicated Tax Return? Here's What to Do

Is preparing your own income tax return becoming more complicated every year? How do you know when it's time to hire a professional?

Taxpayer with stack of papersConsider these questions as you determine whether you should turn to an accountant to help you file your tax return:  

Are you confident you know enough about new laws that apply to your income tax filing?  

Have you had a major life event that will affect how you file your return such as; the change or loss of a job, buying or selling a home, addition or loss of a dependent, education expenses, borrowing money from an IRA, buying or selling a business, experiencing a major illness, or going through a divorce?

Are you certain you know what forms to use? Are you confident you are calculating deductions and credits properly?  Are you stressing out over what you're finding out about your income and what you don't know about your income taxes?  Have you received a letter from the IRS about an income tax issue?

If any of the above questions apply to you, it's time to talk to an accountant who is experienced and qualified to handle even the most complicated tax return.

What to Do About Complicated Income Taxes

When you realize that you can no longer prepare your income taxes on your own, don't panic. Instead, do your best to get organized to present your income tax "story" to a professional.  This means get your documents in order.  Collect any documents that report income you have earned in the past year as well as any proof of any federal, state and local taxes you may have already paid.

Gather up receipts and statements that will document your expenses that may qualify as tax deductions or result in a tax credit.  Categorize the documents by subject and date to help the tax professional you select better understand your financial picture and how it applies to your tax obligation.

Find copies of your tax returns from the past two years to show your chosen tax professional so that a thorough review of your tax filing history can be made.  There may be something that was missed that could save you tax dollars or cost you in the long-run.  The sooner the issues are identifed, the better.

Note: Complicated tax issues and questions do not go away if you simply ignore them.  Bring any tax-related question or issue you have with you to your appointment with a tax preparation expert. They will help you understand the significance and meaning of IRS letters or other documents. Sometimes taxpayers ignore important notices because they are hard to understand or feel that the information is wrong or doesn't apply to them, but that can be a costly mistake. 

Graphic with ad infoWith tax laws and regulations changing on a regular basis, it is essential that you use a tax professional who fully understands these changes and how to apply them to your unique situation.

Without expert tax preparation assistance, many taxpayers who fill out their own returns make unnecessary errors either through miscalculation of numbers or through not knowing the proper forms to file.  All of this can cost plenty in fees, penalties and interest payments.  So, the cost of making mistakes and omissions should be carefully considered against the cost of bringing a professional on board to help you with tax preparation.

When you decide that it's time you find a tax expert, we hope you'll choose McRuer CPAs.  No matter the tax problem, we can help you make the best choices efficiently and effectively while helping you put together a long-term plan to make certain you pay no more than the taxes you owe. That will give you peace of mind.

Contact us online by clicking here or all us at 816.741.7882.

02/21/2015

How to Know When You Need a CPA

The DIY (Do It Yourself) industry is flourishing these days.  This trend also extends to accounting and income tax services.  The availability of affordable computing power, improved entry-level accounting and income tax software, and cloud-based applications and storage options are attractive because they may help you save money by doing it yourself.  Added to that is some very effective advertising claiming that at the push of a button your business accounting and income tax filings will be worry free.  However, be warned; our clients often turn to us when their experience with DIY solutions show the ease and efficiency of using these products has been oversold.

In today’s highly regulated environment, innocent omissions and mistakes from simply not knowing An-accountant-helping-clientshow transactions should be recorded, or how to properly comply with new federal, state or local tax
law, can be costly, and sometimes devastating.  Instead of spending time increasing sales, improving processes and growing their businesses, some business owners say they grow frustrated and waste time trying to learn to use and update the latest software as well as keep up with filing deadlines and regulations by themselves.  That’s when they call us.

Let’s consider how engaging professional help with your business accounting and finances can pay big benefits that will help your bottom line both short-term and long-term. 

For those business owners who have a solid accounting or bookkeeping background and a good understanding of business finances, with McRuer CPAs’ MyMcRuer/BackOffice service offering you may benefit by a combination of some DIY and some professional on-demand services.

MyMcRuer/BackOffice helps business owners control costs by personally managing their business’s books.  In addition, when a difficult issue or a question arises, they have access to a local experienced accounting professional who will view the issue real time to identify the problem and quickly provide a solution.  Then as the business grows and its operations need more of an owner's or manager’s time, a smooth transition can be made to full-time professional accountants and bookkeepers who already know the business.

If you intend to grow your business, the benefits of professional accounting services cannot be overestimated.  Is it time that you utilized a professional for your combined personal and business tax preparation?  When is it cost effective to hire an accounting firm’s experts to help with your business accounting and bookkeeping needs?

Consider the following as a mental checklist to help you find an answer to the question: 

How Do I Know When I Need a Professional Accountant or CPA?

You know you need a professional accountant or CPA when…

(circle the sentence numbers that apply to you and when finished add up the total number of sentences that describe your financial situation)

  1. You are considering investing significant time, money and passion into a business idea. Before you “take the leap” you want input about your business plan from an independent professional who will review the numbers and help you analyze your idea’s future growth potential.
  2. You are starting a new business and want to select the best business structure that fits the marketplace, your proficiency and your goals.  You have been told there are different types of business entities that may limit your personal liability for your business activities, but you don’t understand the tax consequences of this decision.
  3. Your income and deductions have changed and you no longer file a simple tax return, or you suspect you must make quarterly estimated tax payments.
  4. You need new or additional business financing, and your lender or insuror is requesting financial information that must be provided by a third party.
  5. You want to better understand your business’s financial information, and use it to improve profitability, inventory management, and cash flow.
  6. You need more information in order to prepare to sell your business.
  7. You are shutting down your business.
  8. You hire other people to help you, and you need information about employees versus independent contractors.
  9. You have become responsible for another person’s affairs, either during their life or after their passing.
  10. The IRS or another regulatory agency has contacted you about an upcoming audit or other collection actions.
  11. You wish to develop and act on a plan to provide for your financial future, including saving for retirement, your childrens’ education, and/or other obligations.
  12. You want to ensure you have the best estate plan in place by understanding the tax, financial and time-based consequences of that plan.
  13. You want to create a succession plan for passing your business on to the next person when you’re ready to retire or sell.
  14. You want to take responsibility for your business and personal financial affairs, and want a trusted advisor to help you succeed.
  15. You must prepare and file Forms W2 and 1099 annually.
  16. You need to understand your best choices on property purchase versus equipment leasing.

How many of the above statements apply to you?

These are just a few of the practical reasons that you need a professional accountant on your business’ financial team.  If you circled 3 to 5 of the above business and personal accounting points, it’s probably time you considered using an upgraded business accounting tool that provides a live accountant when you need one.  If you circled more than 5, it’s time you connect with a professional accountant long-term with comprehensive services and experience to ensure business success.

Accountant over shoulderConsider using a CPA (Certified Professional Accountant) that is experienced and trained specifically to be your business and personal financial planner, management consultant, management information specialist, business consultant and more. 

Yet, don’t forget to consider whether the professional you bring on board is someone you get along with personally.  Financial decisions are a reflection of the production and goals of real people like you who are working to make profits in order to enjoy the life you love.  It’s important to find an accountant who will work well with your business team and shares your concerns about accuracy, reliability, efficiency, and long-term effectiveness.

When you know you need an accountant, we’re here.

At McRuer CPAs, we know business “numbers” are personal and we make the extra effort to match the personalities of our professional accountants with you and your business team.  You may discover the latest online tools with the on-demand help of a CPA are the best choice for you and your business.  Maybe it's time to have a full-time accounting professional join your team?  How do you what to do?

Let’s find out what will work best for you.  Contact us for a strategic planning session by calling 816.741.7882 or contact us through our confidential online resource.  We’ll review your goals and help you make the best choice.

02/10/2015

What is Minimum Essential Coverage Under the Affordable Care Act?

The IRS has issued new information on how to interpret "Minimum Essential Coverage" under the Affordable Care Act.

Many individuals and businesses have been concerned about having the right kind of "qualifying" health care coverage for themselves and their employees.  Here is the latest notice about Minimum Essential Coverage from the IRS that may be helpful as 2014 federal income tax returns are being prepared and tax plans are being implemented for the 2015 tax year.  If it sounds complicated, it can be. If you have any questions or need to design a tax plan to cover this and many more important issues as you prepare your tax return, contact us and we'll help you with a confidential consultation to review all your options.  You may also consider using the services of a professional team like ours for your tax preparation needs.

 

Accountants workingIRS Release:

Individual Shared Responsibility Provision - Minimum Essential Coverage

The individual shared responsibility provision requires you and each member of your family to have qualifying health care coverage (known as minimum essential coverage), qualify for an exemption from the responsibility to have minimum essential coverage, or make an individual shared responsibility payment when you file your federal income tax return. If you are not required to file a tax return and don’t want to file a return, you do not need to file a return solely to report your coverage.

The chart shows some types of coverage that qualify as minimum essential coverage and some that do not.

Coverage TypeQualifies As Minimum Essential CoverageDoesn't Qualify As Minimum Essential Coverage

Employer-sponsored coverage:

  • Group health insurance coverage for employees under –
  • A governmental plan, such as the Federal Employees Health Benefit program
  • A plan or coverage offered in the small or large group market within a state
  • A grandfathered health plan offered in a group market
  • A self-insured group health plan for employees
  • COBRA coverage
  • Retiree coverage

 

Yes
 

Individual health coverage:

  • Health insurance you purchase directly from an insurance company
  • Health insurance you purchase through the Health Insurance Marketplace
  • Health insurance provided through a student health plan
  • Health coverage provided through a student health plan that is self-funded by a university (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)
  • Catastrophic plans
Yes  

Coverage under government-sponsored programs:

  • Medicare Part A coverage
  • Medicare Advantage plans
  • Most Medicaid coverage
  • Children’s Health Insurance Program (CHIP)
  • Most types of TRICARE coverage
  • Comprehensive health care programs offered by the Department of Veterans Affairs
  • State high-risk health insurance pools (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)
  • Health coverage provided to Peace Corps volunteers
  • Department of Defense Nonappropriated Fund Health Benefits Program
  • Refugee Medical Assistance
Yes  

Other coverage:

  • Certain foreign coverage
  • Certain coverage for business owners
Yes  

Certain coverage that may provide limited benefits:

  • Coverage consisting solely of excepted benefits, such as:
    • Stand-alone dental and vision insurance
    • Accident or disability income insurance
    • Workers' compensation insurance
  • Medicaid providing only family planning services*
  • Medicaid providing only tuberculosis-related services*
  • Medicaid providing only coverage limited to treatment of emergency medical conditions*
  • Pregnancy-related Medicaid coverage*
  • Medicaid coverage for the medically needy*
  • Section 1115 Medicaid demonstration projects*
  • Space available TRICARE coverage provided under chapter 55 of title 10 of the United States Code for individuals who are not eligible for TRICARE coverage for health services from private sector providers*
  • Line of duty TRICARE coverage provided under chapter 55 of title 10 of the United States Code*
  • AmeriCorps coverage for those serving in programs receiving AmeriCorps State and National grants
  • AfterCorps coverage purchased by returning members of the PeaceCorps

*In Notice 2014-10, the IRS announced relief from the individual shared responsibility payment for months in 2014 in which individuals are covered under one of these programs. See the instructions for Form 8965, Health Coverage Exemptions, for information on how to claim an exemption for one of these programs on your income tax return.

 

 

Yes

 

 

11/24/2014

McRuer CPAs Year-End Tax Planning Guide

Income tax and flag imageIt's time to review year-end tax strategies that may help reduce your tax bill or prevent you from paying more than you owe.  

The 2014 tax year has been marked by more questions and unresolved tax issues than in years past.  The current uncertainty especially about expiring "temporary" tax provisions, income tax deductions and IRA conversions leads us to send a precautionary "yellow" signal as we stay alert to react to any last minute updates.

Click here to download the McRuer CPAs 2014 Year-End Tax Planning Guide with tips and information that may help you.

Your window of opportunity to take action regarding your 2014 tax obligation is rapidly closing, but remember, this is also a very good time to consider choices about your individual and/or business tax strategies for the 2015 tax year.

If you haven't already scheduled your year-end tax planning strategy session, please contact us right away.  Call us for an appointment with one of our tax strategy experts who will explain details to help you choose the best plan for you: 816.741.7882.

 

10/22/2014

2015 Tax Brackets Now Available

Federal tax return with penEstimated taxable income brackets and rates are now available for the 2015 tax year.  Each year, the IRS adjusts more than 40 tax provisions for inflation to prevent “bracket creep”.  Bracket creep is what happens when inflation causes taxpayers to be pushed into a higher income tax bracket or have a reduced value from credits or deductions even though they may have had no actual real income increase.

The IRS adjusts income thresholds, deduction amounts and credit values using the Consumer Price Index (CPI) to calculate the past year’s inflation. Yet, in a bit more complicated approach, each tax provision is also adjusted from a specified base year.

In 2015, the standard deduction will increase by $100 to $6,300 for single taxpayers and $200 to $12,600 for married couples filing jointly. The personal exemption for 2015 will be $4,000.

Also in 2015, the highest marginal income tax rate of 39.6% will be levied on single taxpayers whose adjusted gross income is $413,000 and higher and $464,850 and higher for married taxpayers.  The remaining federal income tax rates are:

  • $0-$9,225 single/$0-$18,450 married – 10%
  • $9,225-$37,450 single/$18,450-$74,900 married- 15%
  • $37,450-$90,750 single/$74,900-$151,200 married- 25%
  • $90,750-$189,300 single/$151,200-$230,450 married- 28%
  • $189,300-$411,500 single/$230,450 to $411,500 married- 33%
  • $411,500-$413,200 single/$411,500-$464,850 married- 35%

For more information on 2015 federal income tax rates, click here to see the Tax Policy Center’s Tax Facts chart.

Individual state and local income taxes are also complex and vary from state to state.  Their 2015 rates are harder to find and calculate.  To read more about 2014 state income tax rates, click here to see the latest review by a professional tax information organization.

09/16/2014

Being Deskilled by Technology: Losing Jobs to Computers

Computerized automation and software upgrades continue to push workers out of their jobs.  This phenomenon is now being called “deskilled”; i.e. If your job has been "deskilled", it means you’ve been replaced by technology. 

Computer man versus human worker imageA new report by one of the largest online placement agencies, CareerBuilder, says 25% of companies have replaced workers with technology in the last 18 months. Organizations with more than 500 employees report a higher deskill rate of 30%.

Researchers say while the technology is replacing many occupations, the replacement technology itself must have people to customize, maintain, and operate it; so, while companies are deskilling one position, they may be creating another position requiring new technology-related skills.  Yet, numbers show the correlation of jobs lost to jobs created is far below one-to-one.

In fact, the research shows overall one third of American occupations are experiencing a deceleration on the path to being replaced by other more rapidly growing technology-related occupations like web and software developers, market research analysts/specialists and management analysts.

Among those who have lost their jobs, 4 in 10 of these jobless are now classified as long-term unemployed because they have been actively looking for work for more than 27 weeks. The percent of long-term unemployed who are aged 50 and older is now at more than 30% of all unemployed who want to work.  Most of them report what they are experienced at doing is disappearing in the job market.

In an interesting twist, the report reveals that 35% of the firms who deskilled workers had to either hire them back or replace them because the technology did not work as promised, or the cost savings backfired when customers complained.

Jobs that are most in danger of being deskilled:

  • Customer Service  35%
  • Information Technology  33%
  • Accounting and Finance   32%
  • Assembly and Production   30%
  • Shipping and Distribution   25%
  • Sales   17%

Overall, the researchers say a marked transition is occurring that shows today’s workforce requirements will continue to be more deeply connected to technology, engineering, science, and math.  The question is, what kind of training and how long will it take to help deskilled workers re-enter the job market and at what economic cost?

09/09/2014

Tax Cuts and Credit Woes: A Review of Kansas and Missouri Tax Bills

Tax Cuts GraphicKansas’ second credit rating downgrade by a bond rating agency has rekindled debate on how tax cuts affect budget bottom lines, taxpayer pocketbooks, and quality of life.  In August, Standard and Poor’s reduced the state’s credit rating from AA+ to AA. This follows last April’s credit and bond downgrade announced by Moody’s Investors Services citing a concern over revenue declines and a lack of budget cuts to make up the difference.

The 2012 Kansas tax cuts reduced the personal income tax bracket from 6.45% to 4.9%, and more importantly for some, eliminated the income tax on small business income.

Three months ago, the 2014 Missouri legislature overrode the Governor’s veto to enact more modest tax cuts of its own.  The Missouri tax cuts have a more gradual implementation format that will begin in 2017.  The Missouri tax changes include a reduction in individual income tax rates eventually bringing the top tax bracket down to 5.5%.  It also phases in a new 25% deduction for business income reported on personal income tax statements which is designed to provide tax relief to sole proprietors and owners of “pass-through” entities such as partnerships, S corporations and most limited liability corporations.

Ohio, Oregon and South Carolina have also passed laws to provide similar tax relief to some small business owners and individual taxpayers.

Though the Kansas tax cuts were initially promoted as a “shot of adrenaline” to the state’s economy, the rapid drop in revenues affecting the state’s credit and heavy media exposure is now affecting voter confidence as Governor Sam Brownback seeks re-election. Economists say it could be ten years before the actual benefits of the tax cuts will be revealed as it takes time for businesses to grow and new businesses to start.

Kansas Secretary of State Kris Kobach issued a statement that business formation has hit an all time high two years in a row.  Kobach said, “This is not a one-year outlier; it is a meaningful trend. Kansas is clearly becoming a great place to start a business.” But the release also said the increase is due to the fact that filing to become a business has been made easier and has little to do with the state’s tax laws.

Some small business associations say business owners see their number one problem is not income tax, but rather the lack of access to capital and the high cost of credit.

In Missouri, experts predict the new tax cuts say won’t be fully realized until 2022.  The Missouri tax cuts also can only be implemented if annual revenue thresholds are not achieved which could delay results even longer.

While taxpayers may wait a few years to realize the affects of tax cuts on their tax bill, state revenue collections have already dropped significantly in Kansas and it appears the power of politics and media influence is moving faster than legislative budget solutions. If the upcoming elections result in new leadership with different tax philosophies, Kansas’s income tax climate could again change.

Nationally, eyes are on states who are working to pass some kind of tax reform even as federal individual income and self-employment taxes are on the rise and businesses face looming expense hikes due to health care reform mandates.  How things settle for Kansas and Missouri, especially through the 2014 and 2015 tax seasons, could determine how other states develop their own solutions for tax and revenue troubles.

Regardless of the tax environment, here at McRuer CPAs we constantly monitor these developments and advise our clients about the best strategies and actions to meet their individual and business tax planning goals.  Feel free to contact us for more information or set up an appointment to review how state and federal tax changes may affect your bottom line.

03/31/2014

Actual Taxes for Virtual Money

Virtual currency is the latest product of the global internet-connected marketplace we live and work in today.  The most popular form of virtual currency is called Bitcoin. Now the IRS has issued new guidance ensuring the same old tax rules apply to this new kind of money.

Bitcoins are under scrutiny for a variety of reasons.  First, let’s look at what virtual money is and how it works.  Bitcoin is a payment network where a user can anonymously use their country’s currency to quickly purchase any amount of bitcoins on an exchange.  The digital bitcoins may then be used to buy any kind of product or service that accepts virtual money payments.

Bitcoin_bigToday, everything from webhosting services, to pizza and even manicures can be purchased with bitcoins. Bitcoins make international payments easy and cheap because this kind of currency has not yet been subject to any country’s regulations nor is it controlled by a Central Bank.

Think about how you and your family may attend a local fair.  In order to ‘purchase’ a seat on the latest spinning carnival ride, you must use your cash to purchase a ticket at a booth.  Then you give the ticket to the ride’s operator in order to take your seat.  Some rides cost more tickets than others and price adjustments can be made seamlessly and quickly.  Virtual money operates in the same way. 

When you exchange your currency for bitcoin, you have proof of the bitcoin value in what is called a “digital wallet” which you can choose to set up on your own computer, mobile device or in the cloud. You may now use the virtual account to send or accept bitcoins for selling or buying products and services.  The wallet ID is all a buyer or seller sees, so the purchase is virtually anonymous.

More merchants nationwide are beginning to accept these kinds of virtual currency payments, because they avoid paying the 2% to 3% credit card transaction fees or other transaction costs charged by their ‘middle man’ bank.  The bitcoins received can be exchanged right away for deposit as the business’ currency of choice.  This kind of payment is rapidly growing in popularity for companies who provide technical and online services to a worldwide client base.

Bitcoins are becoming so popular that even money market investors are buying and selling the bitcoins as a commodity.  In fact, speculators are now fueling price volatility because they are buying and selling bitcoins at a far greater rate than the rate of general commercial use.

That leads us to the downside.  Because of the anonymous nature of purchases, bitcoins have become the currency of choice for the online purchase of illegal drugs, illicit activities and paying for legitimate services with the provider expecting to be able to avoid taxes.  There is also a warning about investing in currencies like this that have no Central Bank authority to guarantee or insure values.  

Now, as bitcoins are making a noticable impact in the marketplace, the IRS is issuing new warnings to end any questions about the taxability of bitcoins and virtual money payments.  In a new IRS guidance, the agency makes it clear that, for U.S. federal tax purposes that the same general tax principles that apply to property transactions also apply to transactions using virtual currency.

The Journal of Accountancy explains that “in computing gross income, a taxpayer who receives virtual currency as payment for goods or services must include the fair market value (FMV) of the virtual currency (measured in U.S. dollars) as of the date the virtual currency was received.”

There are also several tax rules affecting virtual currency transactions and income.  For example, some people participate in what’s called “mining” to earn bitcoins.  It is a type of reward system for solving complex math problems.  This kind of bitcoin income is reportable.

Some global service providers and contractors are accepting bitcoins for payments to employees or themselves.  Wages paid to employees are taxable to the employee and independent contractors also face the same self-employment tax rules with payers required to issue Form 1099.

Experts say some form of virtual money is here to stay as our internet-connected world provides global accessibility 24 hours a day.  Your decision about how and when you choose to use virtual money should be carefully considered, especially if you are considering whether to accept bitcoins as payment for goods or services.  For more information on how this issue may affect you or your business, please contact us at McRuer CPAs for a review of your goals and the possible tax consequences.

03/25/2014

Overtime Rules Set for a Change

If overtime rules apply to more workers, will that put jobs in jeopardy or create new jobs?  Will it cause an increase or decrease in wages?  These questions are at the heart of debate over last week’s executive order from President Obama directing the Labor Department to revise federal overtime pay rules.

Current federal regulations allow salaried workers who are categorized as “professional, administrative, executive or outside sales” to be denied overtime under what’s commonly referred to as the “white-collar exemption”.   Also, employers are only officially required to pay time-and-a-half overtime pay to workers who make less than $455 per week. Overtime with windup clock

The President says his order is a response to a “crisis of economic inequality” evidenced in recent years by soaring corporate profits, but worker wage decline to all-time lows.  The President’s order seeks a raise in the minimum weekly exemption salary level to $1,000 per week and a revision of the description of the kind of work that allows an employer to exempt workers from overtime pay.

For example, a report from the Economic Policy Institute explains under current rules an employer may declare a worker’s responsibility is ‘executive’ in nature because that worker supervisors other employees.  Even if a worker spends a majority of time performing tasks, if that worker manages even one other employee or vendor, that worker could be exempted from receiving overtime pay.

Reports predict changing the overtime exemption rules could affect five million workers.  Employees have been putting in longer workweeks in recent years and it’s now estimated it adds up to an average of 30 overtime hours a month or 360 extra hours per year.  That can be a major source of extra income if the worker is not exempted from overtime pay.

The rules changes also address workers with supervisory ‘management’ jobs, such as fast-food managers, who work long hours doing tasks and also manage a team of workers, but receive a salary.

Small business associations have already been lobbying hard against a push to increase the minimum wage.  Now the overtime order is causing additional concern.  They fear overtime changes would mostly harm small businesses by increasing the cost of doing business, while having little effect on major corporations and their highly paid executives, boards and shareholders which are supposed to be the target of political pressure.

They also point out that the Bureau of Labor Statistics shows that only 4.7% of hourly workers receive minimum wage and more than 20% of that number were 16 to 19 years of age.  They say that shows that the issue that affects generally the least experienced part-time worker has been blown out of proportion.

Opponents claim overtime changes would result in fewer jobs, because small businesses would no longer achieve profitable production levels and would be forced to close their doors.  They also fear businesses would simply cut back worker hours, causing an overall decrease in income.  

Proponents say qualifying more workers for overtime would lead businesses to hire more workers to cover daily production to escape overtime costs.  They also claim businesses would hire more workers at higher wages to avoid the higher overtime hourly pay threshold.

In Missouri, the minimum wage is $7.50 per hour and overtime is mandated at a minimum 1.5 times that rate to $11.25 per hour.  In Kansas, the minimum wage is $7.25 per hour and overtime is set at $10.88 an hour.  Neither Missouri nor Kansas has a daily overtime limit.

Already, the President has issued an executive order requiring an increase in the minimum wage paid to federal workers be raised to $10.10 and requesting companies that do business with the federal government raise their minimum wage.

The Labor Department must go through a public comments process on the new overtime regulations.  Typically, that process takes at least six months to complete depending upon how controversial the requested change may be.

For more information on how the regulation changes may affect you or your business, contact us a McRuer CPAs.

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