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Making Employee Financial Wellness a Priority Can Pay Off for Your Business

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After a 42-month hiatus, federal student loan payments resumed in October 2023. Impacted employees are now dealing with a new bill factored into their monthly budgets, leaving many stressed and worried.

As employers strive to support their workforce, offering benefits that help employees manage their student loan debt has become increasingly important.

More than just a paycheck

Whether you’re running an organization or working for one, most people would agree that employee financial wellness is a hot topic. A comprehensive benefits package — one that focuses on financial wellness — can help cultivate a happier, more focused and more engaged workforce that’s better prepared for retirement.

The pause on payments afforded borrowers over $260 billion in waived costs. However, the resurgence has added stress to employees’ financial situations, affecting their job performance, overall well-being and ability to make major life decisions. Younger workers, in particular, find themselves torn between repaying student loans and saving for retirement.

According to a recent study by the ADP Research Institute, about half of workers are in the process of leaving their workplace. Among workers with student loan debt, that number increases to nearly 60%.Turnover is costly, and offering the right benefits can encourage workers to stay.

Benefits for employees — and employers

By offering a retirement plan with a student loan matching program, employers can demonstrate their commitment to supporting employees in making sound financial decisions, ultimately enhancing employee retention and satisfaction.

Under the SECURE 2.0 Act, employers are enabled to match student loan payments as contributions to retirement plans, so employees can tackle debt while saving for the future. For every qualified student loan payment made by an employee, the employer may make a matching contribution to their 401(k) plan based on the amount of the loan payment.

The results?

  • Reduced student loan debt
  • A retirement savings increase (even if they’re not making contributions)
  • Compound interest as 401(k) account grows

Plus, employers get a tax benefit for their matching contributions. If certain requirements are met, employers can deduct contributions made to a qualified retirement plan on behalf of its employees. The deduction reduces an employer’s taxable income — while helping more people achieve a secure financial future.

If you have a question about retirement benefits or their tax implications, reach out to the tax experts at Magone & Company.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your unique circumstances.

CPA vs. Tax Preparer: What’s the Difference?

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Once the calendar flips to a new year (and you’ve barely had a chance to recover from the busy holiday season), Uncle Sam will come knocking at your door to get his share of your taxable income.

Tax season will be here before you know it. But unless you’re a mathematical savant who revels in the joy of crunching numbers and interpreting tax laws, chances are you lean on the sturdy shoulders of a tax professional.

While both Certified Public Accountants (CPAs) and tax preparers are professionals authorized to prepare and file tax returns, their training, certifications, expertise and scope of services vary greatly. So who’s the right candidate?

Here’s a quick rundown to help you hire the ideal tax professional:

Tax preparer

Tax preparers have no college degree requirement, and many lack tax-specific training. In fact, the only pre-requisite for obtaining the required (PTIN) to file taxes on your behalf is the completion of a simple form — one that takes about 15 minutes to fill out.

Why choose a tax preparer? If you or your small business only need assistance filing simple tax returns, they’ll typically apply the most common deductions and tax credits to your return — things like deductions for educational expenses and health care costs, as well as earned income or retirement tax credits. But what they may not do is research more unusual tax credits and deductions.

You can count on them to:

  • Collect relevant financial records and input applicable tax data
  • Determine basic deductions, refunds and payments using federal state and local tax laws
  • File documents with the IRS
  • Offer best steps to take to reduce your tax liability for the coming year

CPA

CPAs, on the other hand, must undergo extensive education and ongoing training to obtain their certification and ensure they’re responsible fiduciaries:

  • Completion of bachelor’s degree program, including 150 credit hours with a concentration on accounting, business and general ed
  • Passing of the AICPA (American Institution of Certified Public Accountants) exam, covering business concepts; accounting and reporting; auditing and attestation and regulations, within 18 months of completing their undergrad degree
  • Licensure by their individual state(s)
  • Annual completion of 40 hours of continued education

Because they have advanced training, CPAs are authorized to represent their clients before the IRS. They also tend to have greater insight into complex tax positions and are well-equipped to assist clients well beyond the tax return, with investments, audits and financial planning.

In addition, CPAs can provide the following services:

For individuals:

  • Estate planning expertise
  • Wealth preservation
  • Budget management and analyses
  • Investment strategy and asset allocation
  • Charitable giving strategies

For businesses:

  • Bookkeeping duties
  • Forensic accounting
  • Cost segregation analyses
  • Financial reporting
  • Audit and assurance services

The choice between a CPA and a tax preparer depends on your unique financial circumstances. Whether you’re a self-employed individual seeking comprehensive financial guidance, a growing business that could benefit from tax planning, or a salaried executive with stock options, there is a professional who can meet your needs.

If you’re looking for a trusted CPA, the professionals at Magone & Company will consider every deduction, break and incentive in preparing your return. Call us today at (973) 301-2300 to schedule a confidential consultation.

Magone Managing Partner Named Man of the Year

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On March 18, 2023, Magone & Company Managing Partner Nick Magone will be honored as Man of the Year by the Milan Soccer Club of New Jersey. 

This nonprofit organization provides youth soccer development programs that foster teamwork, social development and respect. As a first-generation American, Nick is proud to be recognized for his contributions to the Italian-American community. 

Funds raised during the March event will support the club’s youth development efforts. Please consider supporting this worthy goal by attending the March 18 dinner or becoming a sponsor.

Gold Level: $500 

  • 4 email blasts to 6,000+ Milan Club subscribers with a link to your website
  • Company name/logo displayed on the Milan Club home page for 12 months with a link to your website

Silver Level: $300 

  • 2 email blasts to 6,000+ Milan Club subscribers with a link to your website
  • Company name/logo displayed on the Milan Club sponsors page for 12 months with a link to your website

More details can be found here. Thank you for your consideration.

Operating Challenges: Clogged Supply Chains and Higher Costs of Doing Business

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Most business leaders expect revenues to rise throughout 2022, despite serious challenges.

The COVID-19 pandemic is winding down, but still interrupting supply chains. Energy prices are increasing, partially because of the Russian-Ukrainian War. Inflation is rising, and taming it may involve some economic pain for everyone.

Yet despite all this, there is good news.

Growth is expected to continue. In fact, 95% of business leaders expect their revenues to increase or hold steady, while 88% expect profits to grow or hold steady, according to JP Morgan Chase & Co. economists. The best bet for small and midsize business owners is to focus on the following:

  • Take a look at a new talent strategy. Many small and midsize companies are struggling to find and retain people. You may need a combination of outsourcing some business processes, engaging 1099 contractors or upgrading a benefits and salary strategy to attract high-quality talent.
  • Stay optimistic. Economists expect the U.S. economy to grow 2.4% through the third and fourth quarters of 2022 — and they expect growth to continue (albeit slower) throughout 2023, around 1-4%. They key thing to remember is you’ll be operating in a growing economy.
  • Supply chain problems continue to be rough, so you’ll need a risk mitigation strategy. The silver lining is this is an opportunity to see where you are vulnerable and where you need to source additional suppliers. (And on the business-growth side, where you can provide added value to your customers.)
  • Monitor costs closely, especially the impact of inflation. Energy costs are skyrocketing, affecting the entire supply chain. The federal government is looking to raise interest rates to tame inflation, and they expect it will cause economic pain. Devise a plan to protect your margins.

The good news: Despite a lot of vivid rhetoric in the headlines (i.e., “shattered” supply chains), supply chains are operating and the economy is expected to continue growing. And rest assured, there are plenty of options in talent, cost control, supply chains and growth.

Enlist the experts at Magone & Co

With our forward-looking Business Advisory services, we can help you identify the levers that will most impact your growth and success. Contact us for a free consultation.

 

The Right Time to Build a Banking Relationship? Right Now

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If you think about it, running a business is largely about building relationships. And establishing a solid banking relationship is one of the most critical moves you can make as a business owner.

When is the appropriate time to begin forming this relationship? According to CPA Nick Magone, Managing Partner of Magone & Company, “Immediately — before you need the money.”

Get the ball rolling on the relationship

Banks typically offer three levels of financing:

  • Branch level – up to $250K
  • Small business lending – $1-5 million
  • Middle marketing lending – Over $5 million

To get started, reach out to your branch manager, and they’ll introduce you to the correct contact for your future lending needs.

Become the ideal borrowing candidate

What are banks looking for? First and foremost, if your business isn’t profitable, or isn’t able to show a track record of profitability, the bank will not loan you money. Remember, the bank is not your business partner.

Banks also need to have a clearcut understanding of your business and what it brings to the table for them. For example, how many of their services will you use? Will you need their treasury or cash management services in the future? In other words, they are looking for a profitable relationship. Bankers are more than accommodating to get to know you, especially if there is business to be had.

The first meeting

While in-person meetings are preferable, a video meeting can be just as effective for introducing yourself and your business. A typical presentation may include:

  • An overview of your business and management team, including who you are and the number of years in business overall.
  • The market your business serves, including the top 10 suppliers and customers.
  • Your high-level budget for the year, e.g. cost of goods sold, wages, administrative costs, etc.
  • The performance of the budget, as well as the trend for expected revenue and profitability throughout the year.
  • Future plans for growth, acquisition or inventory that may require financing.

The takeaways

Says Magone, “The three main points to keep in mind: Get to know your banker before you need the money; invite your banker to a meeting before you need the money; and, profitability and performance are key to having your loan approved.”

30 years of experience and expertise

In celebration of our 30th year in business, we’re rolling out a series of educational videos to help busy executives, families and business owners meet their accounting and tax needs and achieve their financial goals. Check out the latest on our YouTube channel.

Return to the Office: Managing Employee Pushback on In-person Work

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The pandemic fueled a massive work-from-home trend that many non-essential businesses have maintained for the past 18 months or more. But despite the current surge in COVID-19 cases, more and more employers are asking employees to return — causing a fair share of anxiety and fear, especially among the unvaccinated. As employers receive pushback from their teams, what can be done to ease employee comfort and peace of mind around colleagues, customers and clients after an extended hiatus?

A heavy-handed request?

With the FDA fully approving the vaccine beyond emergency use, employers may increasingly be making vaccination a requirement for returning to the office.

As an employer, you have options up to and including termination (in some circumstances) if employees refuse to return to the office or get vaccinated. But will on-site work directly impact or negate your success?

Here are some potential reasons to reconsider a blanket return-or-quit policy.

  • Employees may be genuinely reluctant for legitimate health reasons.
  • It may cause more stress for employees whose lives have already been turned upside down by COVID-19.
  • You risk damaging morale across the workforce.
  • You may have wrongly assessed the legal risks of doing so.
  • It might be harder than expected to recruit replacements for terminated employees.

The first step in formulating a return-to-work strategy is uncovering why your employees are reluctant to stop working from home. Consider conducting a survey, but avoid giving the impression that simply preferring to work at home is a compelling enough reason to allow it.

Coaxing tips

Reassuring employees of your commitment to maintaining a safe environment may help alleviate concerns. Here are some tips to help them get on board:

  • Give a generous heads up. Set the onsite work deadline a month or two into the future to give employees time to adjust and plan head.
  • Have a conversation. If feasible, have one-on-one conversations with employees who express worry about returning to work. They’re more likely to come around if they know you respect their concerns and want to understand them. A reasonable compromise might emerge.
  • Educate, educate, educate. Inform employees about the Centers for Disease Control and Prevention (CDC) workplace safety standards and the scientific basis for those practices, as well as your compliance practices.
  • Enact a policy phase-in period. Instead of setting an all-or-nothing date of return, allow employees to slowly acclimate. You may ask them to return for one or two days a week initially, adding more days over time.
  • Be flexible and fair. Cutting deals with individual employees may create resentment from others. While doing your best to accommodate individual needs, it’s important to ensure that your practices are reasonable for everyone.

Help from Uncle Sam

If you’re considering a mandatory vaccination policy to accompany your return-to-work policy, you may consider incentivizing hesitant employees to get their jab.

One possible solution is to offer paid time off for COVID-19 vaccine appointments. Some employers take this a step further, offering a financial bonus on top of regular pay.

A little compassion goes a long way

No matter how you approach the task at hand, be aware of the many health conditions that may make people more vulnerable to contracting or having an acute case of COVID-19. The CDC’s list includes cancer, chronic kidney disease, COPD, heart conditions, obesity, pregnancy, smoking and diabetes. And some employees with these conditions might worry about COVID-19-related health risks at the workplace, even if they’ve been vaccinated.

In all cases, be sure to review how federal, state and local statutes may impact the approaches you can take.