Category Archives: Education

Education, Illinois, Tips

What Illinois Secure Choice Retirement Means for Your Small Business or Non-Profit

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Click the image to watch an excellent 20-minute overview video of the IL Secure Choice Program.

There have been rumblings in the news for quite some time now about small businesses being required to provide retirement plans for their employees — but most owners seem to be turning a deaf ear, presuming that their small size exempts them from the requirement.

Not so! There is a phased-in approach to the State of Illinois’ new plan, and this November (2023) is going to catch a bunch of folks unprepared, as the requirements will extend to any business with five or more employees.

That probably means you — and if this sends you into a panic, no fear… we’re going to outline what the requirements are and will offer a couple of suggestions for getting into compliance.

What Is Illinois Secure Choice?

It’s a combination of legislation that requires most employers to offer a retirement plan to their employees — and a system that fills the gap for employers who do not currently offer retirement savings via payroll deductions.

In the words of the Illinois Department of Revenue, “Secure Choice is a program administered by the Illinois Secure Choice Savings Board for the purpose of providing a retirement savings option to private-sector employees in Illinois who lack access to an employer-sponsored plan.” Check out this excellent 20-minute video for an overview.

Enacted in 2015, the Illinois Secure Choice Savings Program Act has been phased in over many years, starting with companies with many employees, and working its way to those with very few staff by comparison.

Wave One began in 2018, and included employers with 500 or more employees. Wave Two, in 2019, included employers with 100‑499 employees, and another wave later that same year included employers with 25-99 employees. The deadline for wave Four — employers with 16 or more employees — was Nov. 1, 2022. The deadline for wave Five, employers with five or more employees, is Nov. 1, 2023.

Why Is Illinois Making Small Business Owners Do This?

Research has shown that Americans are 15 times more likely to save for retirement when it’s done through a payroll deduction at work. With more than 50% of us unprepared to retire when the time comes — even taking Social Security into account — the state decided that one way to address this problem would be to offer a program that helped the 40% of employers who do not offer a retirement plan a way to auto-enroll its team members into making payroll deductions into a Roth IRA.

Since it is estimated that most of us, when we retire, will need around 70-80% of pre-retirement income, the need to save is essential. The stress that it places on the social safety net when folks do not have sufficient funds to care for themselves after they stop working is enormous, so it’s not surprising that the state decided to facilitate individual savings through their workplaces.

It’s worth mentioning that the gap in retirement savings disproportionately affects workers at small businesses, lower-wage workers, people of color, and women. According to AARP, among businesses with 10-24 employees, nearly 59% of workers are not covered by a workplace retirement plan, and for businesses with fewer than 10 employees, that figure is nearly 73%.

Are Employees Being Forced To Save For Retirement?

No. Although the program starts with auto-enrollment, employees may opt-out (or back in) at any time, just like the majority of 401k plans out there. And as a reminder, the employer is able to offer their own 401k plan instead of IL Secure Choice; there is no obligation to participate in this particular program, as long as another qualified plan exists.

The default option for program participants is to enroll in a target-date Roth IRA with a 5 percent contribution rate. Participants can choose to change their contribution level or fund option at any time. Accounts are owned by individual participants and are portable from job-to-job.

Is The State of Illinois Going To Manage My Retirement Plan?

No. Investments are held in a separate trust outside the Illinois Treasury and are managed by private-sector investment managers. Acensus, a private-sector financial services firm, administers the program, which is overseen by a public board chaired by the Illinois State Treasurer. Each employee gets their own IRA account, which like any other IRA, belongs to them and is not associated with which employer or job they have.

As of January of this year, the program has hit the $100 Million mark in savings.

Does My Small Business Have to Participate?

If your company (or non-profit) has been in business for two or more years, has five or more employees, and does not already offer a qualified retirement plan, then you have two choices:

  • start offering a qualified retirement plan (more on that later); or,
  • participate in the Illinois Secure Choice program.

Supposedly, Illinois Secure Choice was not intended to replace or compete with traditional employer-sponsored qualified retirement plans, like 401(k), 403(b), SEP and SIMPLE programs. So if you’ve been thinking about starting one of those for your company — especially if you are interested in being able to sock away more retirement money for yourself than an IRA allows — this is the time to adopt a plan for your business, rather than signing up for IL Secure Choice.

That said, the fees and employer contributions involved in these types of plans can be prohibitive to many small businesses, which is one of the reasons the IL Secure Choice program was developed. The three “hurdles” that employers deal with that prevent them from having a retirement plan are 1) the administrative burden, 2) fees, and 3) fiduciary liability. The program was designed to reduce and, as much as possible, eliminate these concerns.

What Do Employers Need To Do To Comply?

Employers need to do the following:

  1. Choose whether to establish a qualified retirement plan or facilitate IL Secure Choice.
  2. Register your organization at employer.ilsecurechoice.com by the state-required deadline (or note that you are exempt because you already have a qualifying plan). All employers should receive a “welcome notification” email or letter with an Access Code; use this to register or inform them of your exemption.
  3. If facilitating IL Secure Choice:
    • set up account portal
    • submit and maintain employee roster
    • submit employee contributions every pay period
    • keep employee lists up-to-date
    • reconcile the employee contributions liability account each month and annually (to make sure the correct amounts have been both withheld and submitted)

Why Would We Choose To Sponsor A Qualified Retirement Plan (401k/403b) Instead of Illinois Secure Choice?

Our company, like many others, has chosen to offer a 401(k) plan instead of IL Secure Choice. Why?

  1. We are fans of increasing our own retirement contribution limits well beyond what can be saved with an IRA-based plan like IL Secure Choice (generally $6,500);
  2. The competitive advantage of offering a plan that includes employer contributions (not allowed with IL Secure Choice) is significant in our field of work;
  3. Guideline’s use of Vanguard “Admiral Shares” means we get the lowest expense ratio in the industry;
  4. The SECURE 2.0 Act offers tax credits of up to $15,000 over three years, to offset costs of setting up and contributing to the plan (!!!); and,
  5. We love the ease of not having to maintain employee lists or submit contributions (more on this below).

With Gusto, our preferred payroll provider (my referral link gets you $100 or more when you run your first payroll), and Guideline, our preferred retirement plan, the two systems sync with each other, so there’s no need to maintain employee lists or submit contributions — it all happens automatically. This is a huge administrative burden lifted for us. (Plus, our clients receive the first five months of Guideline fees free of charge, so that’s an added bonus.) This alone certainly isn’t worth it for your company when deciding which path to choose, but if you’re also eager to increase your own retirement contributions as a business owner, and to distinguish yourselves as a desirable employer in a competitive labor market, then in my opinion, it’s a no-brainer.

https://storage.googleapis.com/www.guideline.com/public-assets/outreach/State%20Mandate%20-%20IL%20-%202023.pdf

What Happens If I Missed The Deadline?

This came up in the Q&A in my state rep’s presentation (see the bottom of this post for the link), and the response was that although by statute, penalties can certainly be assessed, the goal is not to punish employers who are trying to do the right thing. Right now they are focused on outreach, education, and trying to ensure they are reaching employers who are required to comply. As long as you register as soon as you discover that you missed the deadline, you should be fine. Otherwise, employers that do not comply could face penalties of $250 per employee for the first year and $500 per employee for each subsequent year.

What Options Do My Employees Have For Investing?

Lots. And they’re good — the board who developed this program really was thoughtful in their design. To learn more, please watch the video I referenced at the beginning of the post, as this is meant to be a guide for employers who are trying to suss out their requirements. If you’ve already decided to go for it and facilitate the IL Secure Choice Plan, then you should definitely watch the video to learn more. It’s only 20 minutes long, you can do it!

How Do I Onboard And Submit Contributions?

Again, this blog post is meant to help employers sort out their requirements and get their bearings. To learn how it all works, please watch the 20-minute video referenced at the beginning of the post. (Honestly, if you can’t even watch a short video, then you’re really not going to like the administrative overhead of facilitating the program, and might want to consider going with the Gusto/Guideline combo I mentioned earlier.)

Where Can I Learn More?

The FAQ on the Illinois Secure Choice website is astounding in its comprehensiveness. Check it out. If you have a question, someone has likely already answered it there.

Additionally, there are these handy downloadable Program Resources:
– Employer Overview
– Eligibility and Rollout
– Communication To Your Employees

As well as an excellent DIY Step-By-Step Guide for Employers.

They also offer these resources:

And if that all wasn’t enough for you, check out the most excellent version of this same presentation that was offered by my state rep’s office in December of 2022. It’s the same presenters of the slideshow portion as above, but there are also other participants that offer more context, and a very long and informative Q&A. They’ve granted me permission to share it here, and you can use passcode Vd*Uqgn2 to view or download the zoom recording.

Click the image above to access a zoom recording of the IL Secure Choice webinar — Passcode: Vd*Uqgn2

They truly did a great job with both the presentation and the Q&A and I encourage you to watch the whole thing while you’re reviewing the program details on the IL Secure Choice website.

Good luck navigating the system (if you are one of our clients — please reach out and we’ll help you), and congratulations on helping your employees save for retirement!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Cooperatives, Education, Site News, Tips

Nancy McClelland Featured on Accounting Insiders Podcast

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Check out the podcast on Insightful Accountant’s YouTube channel.

I met the charming and intelligent Christine Gervais earlier this year, having shared an article of hers from Tax Practice News to my LinkedIn feed with my own perspectives. We immediately connected and met via zoom to get to know each other better, compare notes on our practices, and discuss ways in which we might collaborate. (Side note: TPN picked up an important article of mine shortly afterwards due to Christine’s recommendation.)

What an honor that some months later, I was named one of Insightful Accountant’s Top 100 ProAdvisors of the Year and accepted the award at the annual Scaling New Heights conference. I had recommended the jam-packed educational event to Christine, and to my delight, she attended and we met in-person. What neither of us expected was that she ended up being the interviewer in my Top 100 spot with Insightful Accountant, as Tax Practice News is a sister publication.

The question posed was, “if you could start your own practice over again, what would you do differently?” As anyone who has been in the industry — or run their own business — for a while knows, we are constantly making mistakes and learning from them. The goal is not to make the same one twice. So it’s natural to have regrets. But sharing those stories can be immensely helpful to others in the space — whether it’s younger entrepreneurs wondering which next steps to take, or colleagues who feel isolated because they think they’re the only ones who don’t have it all figured out yet.

We had a lovely chat — she’s very easygoing and conversational — and covered the following topics, among others:

  • Hiring your first employee
  • Traits in an ideal team member – intelligence, written skills, ability to learn, detail-oriented, team-player, caring attitude, enthusiasm
  • Interviewing with an eye toward building team culture
  • How teams can collaborate
  • Networking with colleagues
  • Trusting your team and clients to support each other
  • Importance of joining a professional organization and attending conferences
  • Standardizing systems and establishing workflows
  • Teaching accountants and bookkeepers what they need to know to specialize and establish a niche
  • How to find your professional community
  • Identifying and improving processes

I also give a shout-out to a few favorite resources, such as Keeper, AICPA Town Hall series, NATP’s tax education, NSAC and Co-op Professionals Guild, and of course, Bookkeeping Buds.

So check it out! And as always, please give us a like and a comment if you enjoyed it — really does mean so much to us and is very helpful in continuing to reach our audience.

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Education

Conference Alert: The Unique CPA “Bridging The Gap”, Aug 29-30, 2023

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I’ve been a fan of Randy Crabtree’s Unique CPA podcast for a while, and though we’ve run across each other at accounting technology conferences here and there, I had no idea that he was so committed to our industry as to hold an entire in-person event for us! The upcoming “Bridging The Gap” conference will be held right near Chicago’s O’Hare International Airport, and promises two full days of education and networking (plus an optional pre-conference).

Especially exciting is the lineup of sessions by some of my favorite speakers, including Dawn Brolin, Nayo Carter-Gray, David Leary, Kellie Parks, Blake Oliver, John Garrett, Paul Hamann, and Gaynor Hardy-Meilke. (I’m sure the other presenters are delightful as well, but this tried-and-true list is GOLD, in my opinion.) Check out the agenda here.

Randy’s conference has been virtual the past two years, and this is the first time it’s being held in-person. The focus is on bringing a fresh focus to work-life balance and how it relates to making us better professionals and people. The emphasis on physical and mental health truly makes this a unique conference in the accounting world. I think this was the claim that got me to click the sign-up button:

And even better… you can use code BTG23RTDISC for $150 off the In-Person Conference ticket!

Just to be clear — I’m not being paid to promote this conference… any of our regular readers already knows that I’m passionate about education and community. Realizing that there’s yet one more opportunity to find both at this under-promoted conference motivated me to share — to make sure that my colleagues know not to miss it. Register here and join me August 29-30. Leave a note in the comments if you’ll be there and we’ll try to connect!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Education, Illinois

Chicago Minimum Wage Increase Takes Effect July 1, 2023

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Chicago Office Of Labor Standards Minimum Wage Chart

The City of Chicago and Cook County both saw increases to their minimum wage requirements as of July 1, 2023 (they have fiscal years that end June 30, which is why we see their updates at this time each year, rather than January 1, which is when the State of Illinois changes usually go into effect). Since reaching $15 per hour in 2021, the minimum wage for Chicago increases annually per ordinance according to the Consumer Price Index, or 2.5%, whichever is lower.

In Chicago, minimum wage will increase to $15.80/hr for “large” employers (21 or more employees) and domestic workers. The minimum will be $15/hr for “small” employers (4-20 employees). For tipped workers, who tend to earn a large portion of their pay from gratuities, the minimum wage is going up to $9.48/hr for large employers, and $9/hr for small. (Efforts to eliminate this practice are yet again gaining momentum under the new mayor.) As has always been the case, if tips do not bring the worker up to the non-tipped employee minimums, the employer must make up the difference. Most payroll software (including Gusto) will address this discrepancy automatically, but it’s worth checking your system to make sure.

The overtime minimum wage for non-tipped employees is calculated at 1.5 times the minimum wage. The overtime wage for tipped Employees is calculated at 1.5 times the tipped minimum wage, minus no more than the current maximum tip allowance. The maximum tip allowance is calculated by subtracting the tipped minimum wage from the regular minimum wage. Therefore, in Chicago, overtime minimum wages will increase to $23.70 and $22.50, respectively.

Rates for “youth” workers in Chicago — those under age 18, in a subsidized temporary youth employment program, or transitional employment program — are now $13.50/hr for regular pay, $20.25 for overtime, and $8.10 for tipped workers.

In addition, the minimum wage to be paid under City of Chicago contracts or concessionaire agreements is increasing from $16.00 to $16.80 per hour for non-tipped employees and from $8.20 to $8.80 per hour for tipped employees.

Chicago’s Minimum Wage and Paid Sick Leave Ordinance guarantees a minimum wage for employees working more than 2 hours in any 2-week period in Chicago for an employer with four or more workers. Domestic workers are guaranteed Chicago’s “large” employer minimum wage irrespective of the number of workers.

Employers must provide the Minimum Wage and Paid Sick Leave notice to all covered employees with their first paycheck, as well as in communal areas at a workplace. Notices must be provided in English and any language spoken by employees that do not speak English proficiently, if a notice in that language has been provided by the Department of Business Affairs and Consumer Protection on the Office of Labor Standards website. Notices can be provided electronically.

The Chicago Department of Business Affairs and Consumer Protection offers a free webinar with Q&A on the topic of the recent changes on its YouTube channel. They also have a great PDF download of their FAQ. For more information on Chicago Labor laws to pay attention to this year, see our recent summary of reminders for local business owners.

Parts of Cook County that are not in Chicago, and for which the municipality did not “opt out”, allow lower rates than Chicago ($13.70/hr regular pay and $8/hr for tipped workers), but require higher hourly pay than the State of Illinois ($13/hr regular pay and $7.80 tipped workers).

The federal minimum wage, which was last raised in 2009, stands at $7.25 an hour, which when adjusted for inflation is the lowest in 66 years.

Reactions to increased minimum wages by small business owners are understandably mixed. On the one hand, higher wages often help the local economy and boost consumer spending power. On the other, many small businesses owners operate on slim margins and make far less per hour than their employees. An increase in the minimum wage often means that some staff hours are reduced or eliminated in order to stay in the black.

Note when speaking with your employees that phrases like “poverty wage,” “minimum wage,” and “living wage,” while all related, are not the same thing. That said, Chicago consistently ranks as one of the most affordable places to live, when evaluating the relatively low cost of living compared to other big cities, and the relatively high minimum wage.

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Cooperatives, Education

Fundamentals of Co-op Taxation — A “Must Watch” NSAC Webinar, 4/19/23

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Everyone who reads my blog or works with me knows I’m a vocal proponent of the cooperative structure as a sustainable and enriching alternative to classic shareholder business models. Co-ops allow companies to distribute wealth among those that do business with it, rather than to investors just trying to make a buck. They exist to fulfill member needs, rather than to generate profit — though they can be lucrative to those involved. They also often have “collateral goals” that are in concert with the main mission, which often are focused on community engagement, social equity, and environmental issues.

However, there simply aren’t enough accountants out there who know about this model, or how to navigate some of the special treatment under Internal Revenue Code. That’s why the work that the National Society of Accountants for Cooperatives is essential. They provide the education and outreach to help accountants excel in this often-misunderstood realm of society.

To that end, I want to encourage folks who might be interested in breaking into this area to attend the upcoming “Fundamentals of Cooperative Taxation” webinar coming up next Wednesday, April 19th. What better way to relax after Tax Day than by watching a webinar on an unfamiliar area of taxation, right?

I happen to know one of the presenters, Teree Castanias, personally, and let me say, she is a powerhouse of knowledge! You don’t want to miss this class. As a bonus, the webinar is FREE to NSAC members (and only $59 for non-members). Use this as an opportunity to join today and get an amazing slate of webinars delivered to the comfort of your home every month.

And while you’re in there, consider watching a recording of my recent NSAC presentation on grocery, housing, and worker co-ops, entitled “Hippie Co-ops? Expanding Your Co-op Expertise to Other Cooperative Niches“. It was a hit, if I do say so myself!

Fundamentals of Cooperative Taxation

Date: Wednesday, April 19, 2023
Time: 01:00 PM ET / 12:00 PM CT / 11:00 AM MT / 10:00 AM PT
Presenters: Teree Castanias, CPA, Principal, Teresa Castanias, CPA, Brett Huston, CPA, Tax Managing Director, Associate National Director of Cooperative Tax Services, KPMG – retired
Moderator: Wayne Sine, CPA, MBA, Director of Education, National Society of Accountants for Cooperatives
Objective: 
1. To operate on a cooperative basis for tax purposes, a company must meet specific tax rules in Subchapter T of the Internal Revenue Code. Attendees will understand the basic rules that must be met under Subchapter T.
2. Attendees will learn the definition of a patronage dividend and how it can be computed and distributed to members/patrons.
3. Attendees will also learn about the taxation of the member/patron, and the Form 1120-C that is used by Subchapter T cooperatives for filing its tax return.
Field of Study: Taxes
Program Level: Basic
CPE Credit: 1.5 Credit Hours
Delivery Method: Group Internet-based
Prerequisite(s): No advanced preparation or prerequisites are required for this course.

Course Description

Teree Castanias and Brett Huston, both CPAs, will present the basic rules of Subchapter T of the Internal Revenue Code and describe how those rules affect a cooperative’s tax return, Form 1120-C.

This session will be helpful for anyone who wants to know what tax rules are required for a cooperative.

Presenter and Moderator Bios

Presenter: Teree Castanias, CPA, Principal, Teresa Castanias, CPA

Teree is a CPA and has been working with cooperatives for over 40 years.  She retired from KPMG in September 2009 after 32 years where she was a Tax Partner and the firm’s National Director for Cooperatives.  She has worked with many types of cooperatives over the years, including large and small agricultural marketing and supply cooperatives, wholesale grocery, specialty supply, rural electric, Farm Credit agricultural lending, consumer grocery, and worker cooperatives of various types.  She has assisted cooperatives from inception throughout their corporate life.  Teree has been active in legislative issues affecting cooperatives, including Section 199 in 2005 and its predecessor provision, Section 199A, in 2017.  Teree is active in several cooperative organizations – National Council of Farmer Cooperatives, National Society of Accountants for Cooperatives, and recently Cooperative Professional Guild.  She has been in leadership positions in NCFC and NSAC and is a frequent speaker at webinars and conferences of all of these organizations.

Teree continues to provide cooperative consulting and litigation support services to all types of cooperatives in her own firm from October 2009 to present.

Teree recently retired from the Farm Credit West board of directors upon its merger with Northwest Farm Credit Services which became AgWest Farm Credit.  She also served on the board of directors of California Center for Cooperative Development in Davis, California for over 15 years.  Currently she is serving as a board advisor to Wine Service Cooperative in Napa, California, and as a Finance Committee member for Davis Food Cooperative in Davis, California.

Presenter: Brett Huston, CPA, Tax Managing Director, Associate National Director of Cooperative Tax Services, KPMG – retired

Brett is a CPA located in Auburn California. He has been working with cooperatives for over 32 years. He will be retired from KPMG in February 2023 and will continue to work with cooperatives in retirement. Brett was a Tax Managing Director with KPMG and the Associate National Director of cooperative tax services for KPMG working out of the Sacramento office. He has worked with agriculture marketing, supply, rural electric, consumer and Farm credit cooperatives. He has experience in providing tax compliance and consulting services to cooperatives including consultation regarding Section 199A, patronage and nonpatronage allocations, cooperative bylaw review, and state and local cooperative issues. He is currently a tax member of the National Council of Farmer Cooperatives and the National Society of Accountants for Cooperatives.

Moderator: Wayne Sine, CPA, MBA, Director of Education, National Society of Accountants for Cooperatives

Wayne Sine is an experienced and highly knowledgeable professional in the field of Tax. Wayne recently retired as Tax Director from his company, Southern States Cooperative. He has extensive experience working with agricultural cooperatives and has been a long-time member of the NSAC. He is extremely active in the NSAC, serving as both past Chapter President of the Atlantic Chapter, and past Chair of the Tax Committee, and is currently serving as the NSAC Director of Education. Wayne’s career is marked by several accomplishments, and he has always been involved in many organizations, spreading his knowledge. Wayne is a member of the Legal, Tax, and Accounting (LTA) Committee for the National Council of Farmer Cooperatives. He is also Past Chair of both the Tax Committee of the Virginia Chamber of Commerce and the Virginia Manufacturers Association. Wayne also served on the Tax Policy Committee at the Virginia Society of CPAs and served as past Region Vice President for the Tax Executives Institute.

Cost
Free for NSAC Members / $56.00 for Non-Members

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Education, Tips

Final Restaurant Revitalization Fund (RRF) SBA Report Due April 30, 2023 — Here’s How to File

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In this YouTube video, I demonstrate how to use the AICPA RRF tracker tool for SBA reporting.

Only 60% of restaurants that applied actually received funding for the popular Restaurant Revitalization Fund program (RRF), due to a failure of Congress to replenish the kitty with leftover PPP money, as was envisioned. (A substitute Restaurant Revitalization Tax Credit bill is currently languishing.) After the SBA disbursed the last of the funds in November of 2022, you might think that all was said and done on the topic; but in fact, recipients of those funds still need to report to the SBA that the money was indeed used according to the program’s rules.

There were three SBA reporting dates: December 31, 2021; December 31, 2022; and a final report date of April 30, 2023 — which is fast approaching. The RRF eligible expense period, however, allows costs from the very beginning of the pandemic, February 15, 2020, clear through to March 11, 2023. The two year-end reporting dates were intended as just a progress report of what the recipients had spent so far in eligible costs.

The great news for most businesses was that if all the RRF funds were allocated to eligible costs before the first reporting date, no additional reporting was required. If not, then the business needed to come back the following year and report a second time. At this point, most restaurants have (hopefully) already submitted their final report.

However, for those who missed the first two reporting dates; or somehow didn’t expend all the funds before the end of 2022; or simply did not understand how to report properly; or didn’t realize what a wide date range of eligible expenses they could use… there is one shot left at a final report to the SBA, or they risk having to pay back the funds.

This blog post (with a 20-min video walking you through the process) is our suggestion of how to translate the info you already have in your bookkeeping software into a format that will easily conform to the Restaurant Revitalization Award Portal requirements.

Sample email from SBA regarding the initial RRF year-end reporting

Spoiler alert: the process takes more than 5 minutes. It can easily take an hour or more. The actual entering of data into the SBA RRF portal is the part that only takes 5 or so minutes.

Our recommendation is to download the free Restaurant Revitalization Fund Tracker from the American Institute of CPAs (AICPA) website (as with their PPP Forgiveness Calculator, you do have to register for an account, but there’s no charge). However, instead of entering each individual transaction on the form (as it’s designed for you to do), our suggested shortcut is to take the information you already have in your bookkeeping file and enter each category as one line — then subtract all the non-RRF grants and assistance received, so that you’re not double-dipping.

As mentioned earlier, the RRF period runs from February 15, 2020 — the very beginning of the pandemic — to March 11, 2023. So we suggest you run a Profit & Loss for your company for the period of February 15, 2020 all the way through March 11, 2023 (or February 28, 2023 if you’re doing this before March 2023 is reconciled), and use those numbers to report what has been spent so far. Then enter the non-RRF grant funds as negative numbers on the same Expense Tracker tab, so that they net against each other. The result will be the data you submit to the SBA at restaurants.sba.gov once you log in to your portal.

I recorded a video illustrating the whole process back in December 2021 — the one big difference is simply the ending date of the report you’ll run.

Here are the steps:

Step 1 – download the AICPA RRF Tracking Tool
Step 2 – enter the name of your company in the Summary tab, cell A9
Step 3 – enter the RRF amount in the Expense Tracker tab, cell C6
Step 4 – run your Profit & Loss from 2/15/2020-2/28/2023 (or 3/11/23 if you’re doing this in April 2023)
Step 5 – export to Excel and save to your RRF file folder
Step 6 – on the Expense Tracker tab, enter summary amounts from the Profit & Loss for Payroll, Rent, Utilities, Food & Beverage, Maintenance, Supplies, Covered Supplier Costs, and Business Operations Expenses

Tip: skip Mortgage Payments, Debt Service, Outdoor Seating Construction, and Depreciation, or ask your accountant for help with these, as they are usually on the Balance Sheet or in the Non-Operating Expense section of the Profit & Loss, and are therefore harder to DIY.

Tip: Business Operations Expenses are all operating expenses that are not already accounted for in one of the other categories.

Step 7 – IMPORTANT: enter all the non-RRF grants and financial assistance as negative amounts on the Expense Tracker tab — this is to prevent any double-dipping
Step 8 – go to restaurants.sba.gov and log in
Step 9 – enter your name, address, EIN, phone, and email (if this information is not already there)
Step 10 – enter the amounts from the Summary tab — Note: you cannot enter more than the total RRF grant, so you may need to reduce one or more of the categories so that you don’t exceed the total.
Step 11 – if you have allocated all the RRF funds, certify as such — you will not be required to repeat this progress report next year; if you have not allocated all the RRF funds, you will be able to “Save” but not “Submit”.

You have until March 11, 2023 to allocate all the funds (aka spend them on eligible expenses), and until April 30, 2023 for final reporting. If it turns out you didn’t have enough eligible expenses from 2/15/20-3/11/23 using Profit & Loss Operating Expenses, then take some time to work with your accountant to determine if you have debt service, mortgage payments, capital expenses for outdoor seating, or depreciation that counts toward allowable costs.

In all cases: make sure to subtract all other grant income from expenses so you are not double-dipping!

23-minute video walking you through the whole process in Dec 2021

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Cooperatives, Education, Site News

The Dancing Accountant Offers Webinar On Accounting For Cooperatives

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I’m very proud to again be partnering with the National Society of Accountants for Cooperatives (NSAC) to offer an entertaining and educational upcoming webinar, “Hippie Co-ops? Expanding Your Co-op Expertise to Other Cooperative Niches“, on Tuesday, February 21, 2023, at 2 PM ET/1 PM CT/ 12 PM MT/ 11 AM PT.

The focus of this webinar is to teach existing accountants who are already familiar with co-op accounting about the similarities and differences between the types of clients they already work with, and contrast them against a few other co-op types that are becoming more popular.

Consumer, Housing, and Worker Co-ops have been around for a long time and are experiencing a surge in popularity, but many experienced cooperative accountants know little about them. By introducing NSAC members and other accountants to unfamiliar cooperative structures, they can leverage their existing expertise in areas common to all co-ops, and build on that knowledge. We will explore these three co-op types and learn to recognize what they have in common with other co-ops, as well as explain the differences. Our goal is to help identify and create additional business opportunities for cooperative accountants to expand their scope and offerings.

The learning objectives will be:
1) Identify distinguishing characteristics of consumer, housing and worker co-ops.
2) Recognize the unique benefits and challenges of each type, as well as common industries.
3) Explore additional resources and next steps to expand scope and offerings to potential clients.

Normally the cost is $56 for the one-hour session for non-NSAC members, but they have been generous enough to allow me to offer a code to blog readers to attend at no charge. Simply visit:
https://nsacoop.memberclicks.net/022123
and enter the code $DAVIP2023$ to attend at no cost.

Hope to see you there!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Education, IRS, Tips

FREE CPE/CE Webinar: §199A and Reasonable Compensation – Jan 12 & Feb 2, 2023

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Presented by Thomas Gorczynski
Partner/CEO/President
Gorczynski & Associates, LLC

One of my favorite presenters — Tom Gorczynski — is giving a free webinar in conjunction with RCReports (one of my favorite apps), and CPA Academy (one of my favorite education platforms) this Thursday, January 12 (to repeat on Thursday, February 2), on Section 199A and how it interacts with Reasonable Compensation requirements.

The course description from CPA Academy: 

§199A is a key tax deduction available to pass-through entities through tax year 2025. Reasonable compensation determinations have a substantial impact on a taxpayer’s potential §199A deduction and are an important part of tax planning. This course will describe how reasonable compensation intersects with §199A and tax planning with examples.

Learning Objectives

  • Name factors impacting S corporation’s reasonable compensation determinations
  • Describe the effects on §199A of paying less than the reasonable compensation amount
  • Identify the effects on §199A of paying more than the reasonable compensation amount

FREE – 1.0 hour CPE / 1 CE
Field of Study: Taxes

About The Speaker

Thomas A. Gorczynski, EA, USTCP is a nationally recognized speaker and educator on federal tax law matters. He is editor-in-chief of EA Journal, author of the Tom Talks Taxes newsletter, co-author of the PassKey Learning Systems EA Review Series, and co-owner of Compass Tax Educators.

It’s an extremely important topic, and one of the best presenters out there — and it’s free! (No, I’m not being paid to promote this; I simply want to make sure my readers don’t miss out on a golden opportunity.) If you struggle with entity choice calculations due to Section 199A, or if you are unsure how to calculate Reasonable Compensation, you should take this opportunity to learn more.

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Education, Illinois, IRS, Tips

Year-End Reminders For Chicago Small Business Owners

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Chicago businesses should take a moment to review upcoming changes before year-end.

The Chicago Department of Business Affairs & Consumer Protection (BACP) was designed to “license businesses and public vehicles, provide business education and access to resources, enforce the Municipal Code, and protect consumers from fraud,” which means that sometimes they have to create and enforce ordinances and regulations that are a bit arduous or challenging for small businesses. But in the public interest, we need to take a moment to review the annual changes and requirements to make sure we have everything in order. (Besides, the penalties for willful ignorance are no fun.)

With that in mind, here are some things you’ll need to make sure to take care of before ringing in the new year.

  1. Illinois Department of Human Rights Sexual Harassment Training
    For the record, this one is state-mandated, not just city-wide. The Illinois Workplace Transparency Act requires all employers to comply with the sexual harassment prevention training by December 31, 2020, and thereafter must provide annual training to all employees.
    As of July 1, 2020, the Illinois Human Rights Act defines “employers” as those having one or more employees (replacing the prior threshold of 15 or more employees in Illinois for most types of discrimination). This means that every employer in Illinois must comply with this sexual harassment training requirement, for all employees working in Illinois, regardless of their status as part-time, intern, or temporary. There is no requirement to train independent contractors, though it is recommended.

    The Illinois Department of Human Rights provides the training for free (registration ends 24-hours before each class), or there are numerous commercial training options (as low as $25). They have an FAQ here, as well as details on minimum training for all employers, versus more comprehensive training for bars and restaurants.
  2. Chicago Minimum Wage
    Back in 2014, the city implemented a gradual increase of the minimum wage. It applies to any employee who works at least two hours in any two-week period. As of July 1, 2022 the minimum wage in Chicago is $14.50 per hour for employers with 4 to 20 workers, and $15.40 per hour for employers with 21 or more workers. Tipped workers have a minimum wage of $8.70 for employers with 4 to 20 workers, and $9.24 for employers with 21 or more workers. If a tipped worker’s wages plus tips do not equal at least the full minimum wage, the employer must make up the difference. BACP offers a one-hour-long free webinar on the ordinance.
  3. Chicago Paid Sick Leave
    This ordinance went into effect on July 1, 2017, and was so poorly-written that folks are still confused. It applies to any business or individual that employs at least one “employee” and has a facility within Chicago’s city limits (though Cook County followed suit a few months later and has a similar requirement). The term “employee” covers anyone who works at least 80 hours within a 120-day period (20 hours a month).
    – For hourly employees, paid sick leave accrues at one-hour for every 40 hours worked. Salaried-exempt employees are presumed to have worked 40 hours/week.
    – Employees are capped at accruing a total of 40 hours of sick leave each year, unless the employer opts to set a higher limit.
    – Employers must permit employees to carry over half of their accrued leave, to a maximum of 20 hours of unused sick leave each year (40 for employers with 50 or more employees).
    – Employers are not required to pay out any accrued but unused sick leave upon employment termination.

    What we’ve generally seen — given the stringent requirements and the way hours accrue — is that many employers with existing PTO policies have to get substantive revisions, as they often do not follow the same rules (even though they are often more generous). Failure to comply is costly, so we recommend having an HR professional experienced with the Chicago rules review your policy.

    BACP offers a one-hour-long free webinar on the ordinance.
  4. Illinois Secure Choice Retirement Savings Plan
    State law now requires every Illinois employer with 16 or more employees to either offer their own retirement program, or to sign up to help staff contribute to personal IRAs via Secure Choice. As of November 1, 2023, this obligation will extend to employers with 5 or more employees.

    Aside from the administrative burden, there are no costs to small businesses owners. The program facilitates saving for retirement — but is still limited to the IRS’s annual $6000 cap ($1k higher for those 50 and up), increasing to $6,500 in 2023. (For those interested in a higher limit, I strongly recommend Guideline 401k plans for small businesses, which use low-cost Vanguard Admiral Shares — my own clients have the first five months of plan fees waived.)

    Our State Representative, Will Guzzardi, co-presented an excellent informational session recently, and his team graciously invited us to share the link and passcode with anyone interested in learning more:
    https://us02web.zoom.us/rec/share/GbU0vqXStnOYNsgxPg-1sUWGWWhWy_G_Wo6dbjjDOUhCdaK8FyNfyv7ySjH3Ggb7.L9WjeYo8OmJ6cQIg
    Passcode: Vd*Uqgn2
    The session is about 40 minutes long — feel free to skip the 5-min introduction if you’re pressed for time.

    (I’ll be providing a breakdown and analysis of the plan and the info-session in an upcoming blog post. Spoiler alert: I’m mostly pretty happy with this legislation! –This doesn’t happen often.– However, most sole proprietors will want to make sure to implement their own savings plan simultaneously, since they won’t be eligible to participate; and many others will prefer the 401k approach due to higher limits.)
  5. State Unemployment Insurance Contribution Determination Rate
    If you have employees, you should normally have received a letter from IDES with your 2023 unemployment rate determination by now, but they are running behind and the letters won’t be posted on mytax.illinois.gov until January 5th, 2023. As soon as they do, you will need to update your payroll company’s records with the new unemployment tax rate, or it can cause expensive problems with reporting and reconciliations in the future. I wrote a blog on how to do this if you’re using Gusto for payroll.


    HAPPY NEW YEAR, CHICAGO SMALL BUSINESSES:
    WE WOULDN’T BE A WORLD-CLASS CITY WITHOUT YOU!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.