Category: business

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Report Right or It’ll Cost You (double)

Report Right or It’ll Cost You (double)

paper-stackReporting requirements for business just keep growing, and so do the penalties for doing it wrong.  New this year and just in time for the annual reporting season (makes it sound almost fun, huh?) are new forms to file and an increase in penalties for not making an effort to get the information correct and into the hands of the proper recipient. Failure to file by the due date can cost businesses $250 per item, up to $3,000,000 in penalties ($1,000,000 for small businesses).  Add to that the warning about intentionally not filing or having an “intentional disregard of the requirements to furnish a correct payee statement”, which carries a penalty of at least $500 per payee statement and has no maximum penalty. Clearly, the cost of making sure the information is correct and filed in a timely manner is far less than the cost of not getting it done – or done right.

Growing problems around wage and revenue reporting have caused the IRS to pursue a variety of measures over the years to try to improve information reporting.  The Affordable Care Act has also had quite an impact on wage and benefit reporting, increasing reporting requirements substantially.  From the introduction of health plan reporting on W2s to the new mandatory forms 1095-C and 1094-C (for applicable large employers), businesses of all sizes are feeling the pressure.

February 2016 marks the date when employers and healthcare providers are required to file those shiny new IRS information returns regarding employer-provided healthcare coverage, providing a copy of the return to each employee much like a W2. The information would then enable the IRS to enforce rules established under the Affordable Care Act by revealing whether an individual might be eligible for a premium tax credit, or if an employer may be subject to non-compliance penalties. Penalties for failing to comply essentially double in 2016.  And the IRS suggests that a “good faith effort” standard will be applied to information reporting, offering no relief for employers that fail to make the effort to file timely and correctly.

It wasn’t very long ago that 1099 filing requirements expanded substantially, forcing businesses to get far more detailed in their production of information to the IRS and to payment recipients.  While this filing requirement impacted businesses both large and small, most lived through it (with the help of their trusted accounting professional!) and were able to comply.  That effort informed the IRS on a wide variety of business payments and expenses not previously tracked, in particular payments made for services and non-employee compensation.

The increasing scrutiny of wage and earning information may also help in efforts to curtail tax refund fraud.  Identity thieves use stolen (or borrowed) social security numbers to file false tax returns early in the year. Unfortunately, with the IRS motto of “pay first, prove later” the cross checking won’t likely be done until after the refund check has been sent. Once the task is performed, however, the taxpayer could end up getting a letter from the IRS stating that more than one tax return was filed using the social security number, they owe for a tax year for which they did not file a return, or the IRS indicates that wages were reported from an employer the taxpayer doesn’t know.

The IRS expects tax refund fraud to top $21 billion by 2016, which is an increase of 223% from 2013 numbers. Tax refund fraud costs every taxpayer.  No wonder the IRS is getting tougher with the penalties for not filing information returns accurately or on time.

jmbunnyfeetMake Sense?

J

Following is the text from the IRS, which outlines the “Increase in Penalties for Failure to File Correct Information Returns and to Provide Correct Payee Statements — 31-JUL-2015

L. 114-27, section 806, increased penalties for failure to file correct information returns and provide correct payee statements for information returns required to be filed after December 31, 2015.

Penalties are discussed in Section O in the General Instructions for Certain Information Returns. The penalties in the bulleted list under “Failure To File Correct Information Returns by the Due Date (Section 6721)” are revised as follows.

  • $50 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $500,000 per year ($175,000 for small businesses).
  • $100 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $1,500,000 per year ($500,000 for small businesses).
  • $250 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,000,000 per year ($1,000,000 for small businesses).
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Franchise FUD: Browning-Ferris Industries, the NLRB, and Joint-Employer Status

Franchise FUD: Browning-Ferris Industries, the NLRB, and Joint-Employer Status

iconicAn August decision by the NLRB is likely to have a broad impact in the coming years, forcing a great deal of change in how many businesses do business.  While the issue may be under the radar for some business owners, those in the franchise industry are paying very close attention – which makes sense because the ruling could easily be construed as the beginning of the end for the franchise business model.  At stake are the definition of “employer” and the determination of who is really responsible for the workers.

The issue stems from a 3-2 decision by the NLRB on a case involving Browning-Ferris Industries of California.  Browning-Ferris Industries is a waste management company that contracted with another company – Leadpoint – to supply employees to perform a variety of work functions.  Under the NLRB ruling, it was determined that Browning-Ferris was a joint employer with Leadpoint.  What is interesting in this case (and where the FUD – fear, uncertainty and doubt – come in) is that “indirect control” of the employees became the primary factor determining whether a joint employer relationship existed under the National Labor Relations Act. Going against years of precedent, the board ruled that Browning-Ferris and Leadpoint were jointly employing the workers.

In the decision, the Board applies long-established principles to find that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.

https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-browning-ferris-industries

There are many who believe Browning-Ferris is a precursor to the pending proceeding against McDonald’s Corp. in which the NLRB general counsel charges McDonald’s Corp as a joint employer of its franchisees’ employees.  Possibly in response to outcries of wage inequality and fast-food worker strikes to force an increase in the minimum wage, the NLRB seems to be adjusting its definitions in favor of the movement and may inadvertently destroy the foundations of the franchise business model according to some.

Clearly the franchise business model is in the crosshairs.  In an article published on Law360 by David J. Kaufmann, Breton H. Permesly and Dale A. Cohen, the authors cite from the June amicus brief on the Browning-Ferris proceeding, in which NLRB General Counsel Richard F. Griffin Jr “directly addressed and attacked franchising, claiming that it was merely an “outsourcing arrangement” and insisting that franchisors are the joint employers of their franchisees’ employees because franchisors can exert significant control over the day-to-day operations of their franchisees”. No ambiguity there.

There have always been questions when workers are classified as contractors, forcing regulatory agencies to delve into the details of the relationship to determine whether or not independence actually exists.  But this decision changes things in a big way.  From Unions gaining more strength in forcing contracting organizations to participate in bargaining processes, to franchise businesses electing to run only company-owned locations to minimize exposure and risk, there is likely to be some troubling times for businesses large and small in the coming months and years as the new definitions take hold.

jmbunnyfeetMake Sense?

J

here’s a shortlink to this article http://wp.me/p2hGOJ-Om

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Payment Card Roll Call: “Not Present” fraud likely to increase as EMV takes hold

Payment Card Roll Call: “Not Present” fraud likely to increase as EMV takes hold

rollingballNo retailer wants to become the next Target (pun intended).  Payment card fraud costs businesses and consumers billions of dollars every year.  What’s even more frightening, many of the breaches in the news are the result of innocent participants inadvertently granting access to the bad guys.  The Target breach in 2013 exposed the data of 110 million payment cards.  Hackers got into the network using perfectly good credentials of the HVAC company.  Sometimes password security just isn’t enough, which might bring in to question the security of all those SaaS subscriptions and online shopping sites folks use these days.

EMV chip technology, the standard around the world which has just recently become a standard in the United States, has done a lot to stem the tide of credit card fraud in other countries.  As it was implemented in various countries, guess where it pushed the fraudsters?  Where the anti-fraud technology wasn’t, of course! The United States was among the laggards in requiring EMV chip technology for payment cards, opening the door for bad guys and turning the US into a veritable haven for credit card fraud, “accounting for nearly 50% of global fraud losses, according to the Nilson Report[1]”.

EMV chip (or chip and pin) technology will go a long way to prevent credit card fraud for businesses accepting payment cards… in-person and counterfeit card fraud, anyway. Online retail, on the other hand, not so much.  A chip on the card doesn’t really help when the transaction is completed with the card not present (CNP).  Some industry analysts suggest that CNP fraud losses will exceed $6 billion within the next few years, making e-commerce and online payment security a high stakes game for even the smallest of retailers.  As it gets more difficult to hack the payment system when the card is presented, bad guys will fall back in even greater numbers to the card-not-present model to find their victims.

Online retailers and service providers must take additional steps to secure their systems and protect customers and business partners, and face the challenge with the understanding that effort must be ongoing as new threats emerge. Tokenization is a prime method of layering the system with security, making the merchant system somewhat less of a worthy target by not storing the card data in the system.  Even if the system becomes compromised, the bad guys wouldn’t find customer payment card information.  There are numerous other steps a business can take to secure the CNP sales, including applying behavioral analytics which might identify rogue activities, or using 3D Secure to authenticate a cardholder’s identity at the time of purchase.   The point is that CNP fraud is likely to spike as EMV technology takes a firm hold in the US.

Card fraud is already escalating rapidly for ecommerce retailers and other card not present channels – it didn’t take EMV to start on that roll but it will surely give it a push.  Paperless payment systems, SaaS subscription services and online application service usage are increasing dramatically and there’s no chip to get in the way of these transactions.  Sellers of any and every service utilizing online payments need to now pay particular attention to system and information security.  The risk has always been there, and EMV chips and other shifts in pay card technology simply give it a push.

jmbunnyfeetMake Sense?

J

 

[1] Chipping away at Credit Card Fraud with EMV; Information Week Tech Digest powered by Dark Reading, Nov 2015; NilsonReport http://www.nilsonreport.com/publication_newsletter_archive_issue.php?issue=1071

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Mobile Device Security is a Moving Target

Mobile Device Security is a Moving Target

mobile-devicesAs businesses mobilize their workforces and processes the volume and variety of sensitive data passing through and sitting on mobile devices increases dramatically.  Even though the business owner or IT manager may recognize the importance of mobile data and device security, doing something useful about it is altogether another issue.  New considerations enter into the picture frequently, turning mobile security into a moving target. Protecting the business – the organization, its employees and its customers – requires adopting mobile security strategies that cover a broad range of issues.

First of all, is there any means of monitoring the activities of the connected or mobile devices?  Knowing which devices are interacting with your information would seem to be an essential part of business information security, yet smartphones and tablet devices often fall under the proverbial radar of IT or business management.  Actually, business management is likely among the base of users with the very mobile devices in question.

Are there ways to limit what information is accessible via these mobile devices, and is that data encrypted?  Consider also that data is sometimes at rest (like when it is just sitting on a hard drive) and sometimes in transit (like being uploaded/downloaded/transmitted over the wire).  In either state, the data should be encrypted in order to be more secure.

Is there a standard set of apps or services that users can enable, or is it pretty much personal choice?  Too often a user will innocently install a malicious app on their device, exposing the business to a variety of potential threats.  Creating strict policies around app selection and use is a really good idea, and finding a way to actually enforce them is even better.

The big issue is separation of work and personal apps and content.  Especially in small businesses where personal devices are the norm (well, not just in small business… Hey Hillary!) it is quite a challenge to create any useful separation between personal and business use.  The mobile device is often adopted as a personal choice of the user – who elects to invest their personal mobile device in their work – so exacting any real level of control in how the device is used is tough.  The security of the information is only as good as the security of the device, meaning that it is usually up to the device owner to decide if a password or pin is required.  Unfortunately and for the sake of convenience, there is often little or no real security on the device meaning there is no real security around the information on the device in the event that it becomes lost, stolen or compromised.

There are a lot of things that the business can do in order to improve the security of their business data in a mobile device environment.  Here are a few of the basics:

  1. Have defined procedures for what happens when a device is lost or stolen; make sure they’re followed
  2. Have a way to do a remote wipe of the device
  3. Make sure all devices lock after a period of inactivity, and that they have password or pin protection
  4. Have a mobile device use policy, and make sure all employees understand why it matters and agree to it.

jmbunnyfeetMake Sense?

J

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Why Offering Anytime, Anywhere Work Works

Why Offering Anytime, Anywhere Work Works

An Anytime, Anywhere Work Survey was completed by ConvergenceCoaching, LLC this spring, and they’ve published the results.  In the survey, they asked firms to provide feedback on the results of flexible work programs, asking for both the good and the bad aspects of having an anytime/anywhere working model.  It isn’t much of a surprise that the positive outweighed the negative, given the popularity of cloud computing and mobile working models.

anywhere-anydeviceThe benefits of providing flexibility where and when people work is something that many businesses are just realizing.  It took a while for the idea to catch on (and for the technology to catch up) but enterprise and small business alike are now taking advantage of flexible work programs to improve employee morale and the business bottom line. Keeping employees happy and engaged is critical to running and growing a successful business, and providing a level of flexibility in work programs can deliver a big boost to worker satisfaction.

Supporting a flexible work environment and mobile employees takes some additional attention to detail, especially when it comes to communication. If workers aren’t certain of their responsibilities and boundaries, then expectations may not be fully met.  Training and communication become key elements in the business, making sure that employees understand what to do and how to get it done before they are allowed to operate remotely and with less on-site support.

There may also be some workers who feel that disconnecting is not an option when they are allowed some flexibility in hours and place of work.  Often electing to error on the side of caution, these users may put in more hours than usual simply to make sure that their work and contribution is recognized.  It is the “out of sight, out of mind” scenario they play over and over again, fearing that they will be forgotten or their usefulness minimized simply because they are not present in the office.  On the other hand, many workers describe being more effective in their jobs because they’re able to focus better and find themselves to be more creative or efficient when working away from the office. The company must provide clear lines of communication and work validation which support offsite employees and allows workers to embrace the freedom an anytime/anywhere approach offers if they want positive and productive results.

The survey demonstrated that businesses offering flexibility in work programs saw improvement of employee work/life balance and better overall morale than those offering no such flexibility.  Building and improving trust among teams was another cited benefit, as was the positive impact to the job of finding and retaining staff.  I think the best attribute of the Anytime/Anywhere working model listed from the survey was “It is worth it!”. Maybe it’s just because I agree.

jmbunnyfeetMake Sense?

J

Source: Why Offer Anytime, Anywhere Work? | ConvergenceCoaching, LLC

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Analysis, forecasts and modeling: What’s the point?

Analysis, forecasts and modeling: What’s the point?

financeIn today’s business world, risk, uncertainty and volatility are just par for the course – everyday realities of simply being in business.  Nothing is certain, they say, except death and taxes.  Yet there is a fine art to driving profitable growth in a business, and adapting to existing and emerging risk takes a great deal of experience, information and agility.  While planning and process development may occur at many levels within the organization, it is the FP&A (financial planning and analysis) capability which helps top performing businesses be top performers.

Financial planning and analysis are activities central to enterprise performance management (EPM) and must necessarily extend beyond finance.  Integrating various functional domains in the business (financial, operational and strategic), FP&A should bring data together from the various facets of the business and use the information to help structure and guide the organization toward meeting short-term and long-term goals.  Among the most critical of the duties of FP&A is calculating the financial impact, the monetary effects, of potential business decisions.  Everything in business means money, so there is always an impact to a decision.  With the right information supporting the decision, it is far more likely to have a positive impact and a level of sustainability.

While many CFOs may recognize the importance of performance measurement, planning and forecasting, a great many also believe the process isn’t very effective. The cause is frequently the divide between the various domains in the business and the information systems supporting them.  Operational data are distilled into summary financial information and fed to finance systems, losing much of the underlying intelligence that might be gained from analysis of the details.  Strategic development and planning may overlook certain volatile elements in the market, or may base successful outcomes on an expectation that conditions within the business will not change.  Finding ways to integrate the data from the respective domains into a comprehensive model is essential to developing a better and more robust forecasting and scenario-playing capability.  With the right information, analytics may be applied to all facets of management decision-making, anticipating and shaping business outcomes far more effectively than could be done without the insight.

Small business owners may believe that things like “predictive modeling” and “enterprise performance management” aren’t things they need to worry about, but the small business could use this information just as beneficially as a larger enterprise – perhaps even more as the insight could be the key to small business survival and growth.

Using analytics, the owner is able to adjust and re-align strategy in real-time to keep on the right path and goals clearly in sight.  Analytics can also help a business better understand what really drives revenue, working capital and profits.  Analytics can even help managers align compensation and strategy with business objectives, preventing compensation issues from outpacing business benefit.

There is a cost to growing a business, and some strategies might be more sustainable than others.  Time will tell, but it is great if the business owner has some business intelligence that might indicate what’s going to happen before it actually does.

Make Sense?

J