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Volume 4, Issue 7, July 2006

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Business Owners - Classify Workers Carefully

In businesses like construction and other building trades – or anywhere the use of contractors is common – it is important for business owners to make a distinction between independent contractors and common-law employees, as the tax treatment for these two types of workers differs.

In order to determine which category a worker falls into, consider the level of control you have over that particular worker – the more control you have, the more likely it is that the worker is a common-law employee. All facets of the relationship between employer and worker must be considered when determining how to classify the worker. You can use IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding if you would like the IRS to make the determination for you.

You must withhold income taxes and Social Security and Medicare taxes from your employees’ wages, and you must pay your share of the Social Security and Medicare taxes, as well as unemployment taxes. Generally speaking, you do not have to withhold or pay any federal taxes on payments to contractors, although they are responsible for self-employment tax.

If you incorrectly classify a worker, you may be penalized, but it is also possible to correct the mistake. Click here to view tips from the IRS on correcting worker classification errors.

Additional information about worker classification is available in Publication 1779 and Publication 1976. If you have any questions, the certified public accountants and consultants at  Kemper CPA Group LLP can help. Contact us today!

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Flexible Work Schedules - Benefits for All
Involved

If you are a business owner, consider offering a flexible schedule to your employees whose jobs you’ve identified as a good fit for such an arrangement. Even if you are a smaller business, sometimes such working arrangements can result in greater job satisfaction, higher retention rates, and increased productivity for your employees.

A flexible work schedule should be one that benefits both the employer and employee; a clear understanding of the hours/days to be worked, responsibilities, and goals for the employee should be arrived at in advance of implementing any change to work schedules. You can offer a plan that is very flexible and involves a great deal of employee input, or you could be more restrictive in the choices made available to your employees.

Examples of flexible work schedule offerings include:

Allowing employees to work from home (telecommute) on a full- or part-time basis

Reducing the number of days (but not hours) worked each week, by allowing employees to work more hours in fewer days

Offering staggered shifts and work schedules

Some states even offer programs aimed at helping employers set up flexible work programs for their employees. This is becoming more prevalent, as states look for ways to help reduce pollution, maintenance costs, and congestion on roads and highways during rush hours. To determine if your state offers such a program, contact your secretary of state or state department of labor for assistance.

Offering flexible work arrangements can help smaller businesses compete with larger companies for talented employees. With careful planning, clear communication, and well-defined goals, both businesses and employees can benefit from flexible work schedules.

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Rules for Reporting Gambling Earnings

If you hit it big at your favorite casino this summer, remember that earnings from gambling, prizes, and awards are subject to income tax and must be reported on Form 1040, Line 21. Gambling income can come from a variety of sources, including winnings from lotteries, raffles, horse races, and casinos, among others. Tangible prizes are also subject to tax on the fair market value of the item.

Keep in mind the following facts about reporting gambling earnings:

All gambling income must be reported, regardless of whether it is subject to withholding.

You may be required to pay estimated taxes on your winnings.

Winnings of more than $5,000 from any sweepstakes, wagering pool, lottery, or any wager where the proceeds are no less than 300 times the amount of the bet are subject to income tax withholding.

You should receive a Form W-2G from a payer if he withholds income tax on your winnings; you will need to give the payer your name, address, and Social Security Number and tell him whether you made identical wagers or if anyone else is entitled to any of the winnings.

Certain gambling earnings, like winnings from bingo and slot machines are not generally subject to income tax withholding, but the payer may withhold a flat rate tax if you do not provide your Social Security Number.

Additional information about withholding on gambling earnings is available in IRS Publication 505, Tax Withholding and Estimated Tax.

If you itemize deductions, you may deduct gambling losses as a miscellaneous deduction on Form 1040, Schedule A, but the amount you deduct for losses cannot exceed the amount of winnings you have claimed. You should maintain detailed records of both your winnings and losses, and retaining receipts is a must. IRS Publication 529 contains more information about miscellaneous deductions.

If you have any tax-related questions about your gambling earnings or losses, the certified public accountants and consultants at Kemper CPA Group LLP can help you answer them. Contact us today for all of your accounting needs.

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Loose Change

The July/August 2006 issue of the “Loose Change” Newsletter includes the following articles:

Contact Kemper Capital Management LLC for all of your investing needs.

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities officered through Securities America, Inc., a registered broker/dealer. Member NASD/SIPC. Thomas A. Moore, John D. Porter, Polly Reynolds, Shawna D. Horne, Jeffery C. Holt, CA insurance Lic. #0E38034, Jessica Daugherty, Sheila R. Lautenbacher, Joseph M. Mendes, CA Insurance Lic. #0C62535, Regina S. Hughes, Gregory Meador, Marcia Elder, Registered Representatives. Insurance services offered through KCPAG Insurance Services LLC. Kemper Capital Management LLC and its subsidiaries are not affiliated with Securities America.

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Kemper Technology Consulting Helps Midwest
Boat Distributor Realize A Substantial Increase in Productivity, Efficiency, and Inventory Trackability

The Challenge

How do you effectively steer through the waters of growth and competition with an outdated, DOS-based, point-of-sale system? In the case of a Midwest boat distributor, the answer was simple…they couldn’t.

Our boat distributor, a long-time Kemper Technology Consulting client, realized it’s hard to row with only half a boat when they upgraded their accounting package to Sage Accpac ERP.

After realizing the speed and benefits of a Windows-based accounting system (Sage Accpac ERP), our boat distributor wanted an enhanced point-of-sale system with similar features. Managing inventory, service and repair, and showroom operations was next to impossible. As a result, integration between front- and back-end procedures had become ineffective and cumbersome. Daily sales totals were tallied from three different reports, by hand. Information could only be obtained through a series of complicated steps that required “pushing” customer information and inventory data to the register and then retrieving transactions from the register. The boat distributor turned to Kemper Technology Consulting, long considered a partner dedicated to the client’s success, for an ideal solution.

The Solution

After thorough research and analysis, Kemper Technology Consulting provided the perfect fit – Sage Accpac ePOS. With the tight integration between Sage Accpac ERP and Sage Accpac ePOS, the boat distributor now has the perfect tools at hand to handle all front- and back-end operations easily. Sage Accpac ERP and ePOS benefits include:

Back-end office time has been drastically reduced.

Order entry and point-of-sale procedures are simplified and more easily managed.

A user-friendly interface provides a comprehensive sales report for both order entry and over-the-counter operations.

With its simplistic and intuitive design, training staff is virtually effortless.

The customers’ shopping experiences are quicker, more efficient, and overall more professionally handled.

Up-to-the-minute inventory, pricing and customer details are available at the point-of-sale.

With its Internet-based design, single server installation made initial deployment and on-going maintenance fast and cost effective. In addition, our boat distributor gets uninterrupted use of POS terminals, even if the network connection is lost.

The Result

Our boat distributor has multiple components to its business – an expansive showroom containing expensive, physical inventory including pontoon, deck, aluminum fishing, jon, runabout, bass, and fiberglass boats. In addition they handle the primary accessories, motors, trailers, canvas covers, and service and repair. Now all facets of their business are collectively trackable through a single, tightly-integrated ERP and ePOS system.

As is typical within the boating industry, business is seasonal – Memorial Day to Labor Day – approximately 100 days – not surprising. Our boat distributor, with more than 1,000 different SKUs, processes 85% of their accessory and showroom sales during this time frame. With the implementation of Sage Accpac ERP and ePOS, our boat distributor has eliminated a minimum of 1.5 hours per day on back-end operations. Reallocating that same 1.5 hours to the sales process, multiplied by 100 days, our distributor has now increased their selling cycle by almost three weeks!

Kemper Technology Consulting’s extensive experience and innate understanding of their business model and goals allowed the boat distributor to realize a substantial increase in productivity and efficiency – both of which will positively affect their bottom line as well as position them for future growth.

For more information about what Kemper Technology Consulting and Sage Accpac ePOS can do for your business, contact us today, or visit our website at http://www.kempertc.com/epos/.

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com
Evansville, IN  •  Indianapolis, IN  •  Paducah, KY  •  Effingham, IL

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Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.

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