It’s been almost a year since our shindig with the Logan Square Chamber of Commerce, clients, and friends — celebrating 21 years of working with small businesses in our community. Today we celebrate our 22nd trip around the sun in this amazing neighborhood, and it’s high time we share all those great memories of the blow-out party that was.
Gratitude also goes out to cherished long-time client Vinejoy for the prosecco, Revolution Brewing for the beer, SipJeng for the CBD mocktails, Dill Pickle Food Co-op for the soft drinks, and the amazing Nick Connell for the balloon twisting and general merriment. We couldn’t have done any of this without the dedicated help of Sage Ferguson and her family, as well as the enthusiastic Candy Minx.
Most importantly, we have to thank our entertainers for the event: the best honky-tonk band in Chicago, if not the world — Wild Earp & The Free-For-Alls, with special guest Michelle Billingsley. We are indebted to them for their spirit, talent, charm, camaraderie, generosity — and patience, as the Chamber dealt with power and light challenges at the newly-activated Solidarity Triangle.
Speaking of the Logan Square Chamber of Commerce — this whole crazy event was dreamed up by their energetic Executive Director, who also invited our wonderful drink and food pop-ups, and we were touched that the two previous directors of the Chamber also attended (wish I’d thought to get a photo of all three of them together)! What an honor. Our neighborhood owes so much to LSCC, as well as their incredible Farmers Market.
I could go on and on about what an incredible celebration it was — pretty sure I floated on Cloud Nine for weeks afterwards. Suffice it to say that having hundreds of clients, community members, friends and neighbors come together to commemorate the difference we’ve made together… feels really great. Thank you for letting us be a part of your neighborhood.
Nancy modeling at the Beehive In Bloom Fashion Show | photo by Zak Jacobson
It’s not often I am described as either brilliant or insightful — so it’s a banner day when referred to as both.
And what better day than today, the 22nd anniversary of starting my own accounting firm?
To celebrate, I am delighted to share a recent interview with CanvasRebel, an online magazine and podcast that highlights voices of small business owners — in their words, “stories about our business or career that we might share at dinner or over coffee, but that wouldn’t necessarily make it into our memoir at the end of our lives; stories that illustrate the nitty-gritty details of what it takes to be successful day to day, how to build and grow a client base, recruit, train and manage a team or generate a living.”
I agree wholeheartedly with the folks who interviewed me. “There is so much we can learn from each other, and we hope these stories inspire you to pursue your passion and support those who are doing so themselves.”
Their questions were thought-provoking and caused me to truly reflect and think about some of the universal truths that I’ve learned in working with small business owners as their CPA. Questions such as:
What’s the best advice you’ve ever given to a client?
How did you get to where you are today?
What do you think helped you build your reputation within your market?
Do you have any insights you can share related to maintaining high team morale?
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.
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.
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.
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.
As you might imagine, we get quite a few inquiries for tax preparation services, but a) we only do taxes for our small business accounting & bookkeeping clients, and b) we only work with clients in Illinois, Indiana and Wisconsin. I’m currently in the process of interviewing qualified CPAs and bookkeepers to develop a vetted list of firms to whom I can refer potential clients, but in the meantime, I do have a solution for finding a good local tax preparer — the National Association of Tax Professionals’ Find a Tax Preparer (natptax.com) searchable directory.
NATP is one of my favorite professional organizations, and their “Find A Tax Pro” tool works great! When you use the link above, it will automatically filter for folks who are NATP members — which means these people are voluntarily taking the extra step to obtain excellent education in the field on a monthly basis (via e-newsletters, webinars, conferences, their research service, quizzes, and the regular TaxPro magazine), as tax guidance changes so frequently.
(No, I don’t earn commissions for this — I just have great respect for them, have been a member most of my career, have taken countless courses with their instructors, and have been generally impressed with their research service. I also really appreciate what a solid ratio they have of female officers, managers and instructors, which is not always the case in my field. They still need to work on DEI, but let’s be real: so does everyone in accounting and tax, to be honest. It’s an arena rife with underrepresentation issues.)
My suggestion is to use the search box on the right (after you click the button on the bottom of the landing page) and enter the following:
1) What do you need? Tax Preparer
2) Specializing in? All
3) Located in? Type in your city and see if it comes up — if not, pick a slightly larger city nearby, or even your entire state if you prefer.
The thing is, taxes don’t have to be done by a local preparer (so many of us are remote at this point) — however, you do want to work with someone who understands the specific requirements of your geographic area.
So even though it might be a remote relationship, it’s still best to go with someone from your area if you can. They might know something about your industry’s requirements in that area that a non-local would not.
Then lastly, scan or do an on-screen search of whatever list comes up based on your filters, and look for people who have the letters “CPA” or “EA” after their names. These are practitioners who went the extra mile (or twenty) to get a professional designation — it doesn’t mean they know everything, but they’re clearly committed to learning everything they can about tax law, so you want one of them!
And if you find a fabulous CPA in the Chicago area who is still taking on new clients, please let me know in the comments! (Bonus points for women-owned firms; extra bonus points for CPAs that offer tax, accounting, bookkeeping and advisory services.)
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.
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.
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.
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.
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.
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.)
(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.)
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.
As anyone who’s worked with me — clients, team members, colleagues, vendors — knows, I adore Gusto Payroll. They truly changed my life for the better (not to mention the lives of thousands of small business owners) when they decided to create a tech-forward payroll company that seamlessly syncs with QuickBooks Online.
(Note: our affiliate link will earn you a $100 gift card after you run your first payroll — or up to $500 if you are an accountant or bookkeeper who signs up your own clients. We may earn a commission as well — win-win! For our own clients, we offer a 15% discount in lieu of referral fees.)
With so many of our own clients using Gusto, I wanted to share how to properly report S-Corp medical insurance premiums, and decided to make the information available to the public as well.
Much of the following information was collected from the Gusto Help section — which is freely available to the public — but as their dynamic support site changes structure and organization frequently, it seemed like collecting the various instructions into one area would be helpful.
Setting up benefits for S-Corp 2% shareholder-employees
For S-Corps, the IRS requires that health insurance premiums paid by the company to employees with a 2% or greater ownership be reported as wages (not pre-tax benefits), and included on their W-2s in Box 1, but not Boxes 3 or 5.
(This means that the total will be taxable for income taxes but not payroll taxes, and once the self-employed health insurance deduction is taken on the personal return, the wages and deduction net to zero — so in effect the corporation will have taken the deduction for the health insurance. More in this blog post and from the IRS here.)
Note: If your company’s benefits are provided through Gusto, they will manage this reporting for S-Corp owners automatically, as long as they are marked as a 2% shareholder in Gusto (under “Employment Details” in the shareholder-employee’s info in the “People” section).
However, if you offer benefits outside of Gusto (and use Gusto for payroll), then follow these steps to set up benefits for 2% shareholder employees:
Sign in to your Gusto admin account.
Go to the People section and select Team members.
Click on the employee’s name.
Under Employment Details, make sure the employee is designated as a 2% Shareholder.
Under Benefits, click Add Benefit.
Next to Select a Benefit, select “Create New Benefit” from the drop down menu.
Enter a Benefit Name.
Next to Benefit Type, select Medical, Dental, or Vision.
You will have the option to enter a Company Contribution Per Pay Period or Employee Deduction Per Pay Period. (For S-Corp shareholder-employees, this will usually be a company contribution, but check how your plan is set up.)
Company contributions: Taxable at the employee level only, for both federal and state income tax.
Employee deductions: Fully taxable as wages at both the employee and employer level.
Click Save.
As long as the entity is set up in Gusto as an S-Corp and the shareholder-employees that own 2% or more of the company are marked as such under Employee Details, the health insurance premium benefit should be added to Box 1, but not Boxes 3 or 5. You should review your draft W-2 at or shortly after year-end to make sure it is accurate, and contact Gusto immediately if there are issues so they can correct them before the final W-2 is issued and filed with the IRS and SSA.
FAQs about 2% shareholders:
Q: Which benefits must be taxed as wages for 2%+ shareholders?
A: Medical, Dental, Vision, HSAs, and more must be taxed as wages. Refer to Publication 15-B to view all a full list of benefits that are treated as wages.
Q: What if a 2%+ shareholder status changes part way through the year?
A: Change the 2%+ shareholder status in the employee’s account. Employees who are 2%+ shareholders at any point during the year must be taxed as such for the entire year.
Q: What happens if you need to update an employee’s 2%+ shareholder status mid-or-end year, and they have already received pre-tax benefit deductions this calendar year?
A: If your company withheld health insurance premiums rather than having them processed as 2%+ shareholder — contact Gusto Support, as their team will need to assist within adjusting the benefits, since there are tax implications.
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.
My colleagues at the National Society of Accountants for Cooperatives are offering a 75-minute webinar on Tuesday, August 23 to discuss the requirements and pitfalls in claiming Employee Retention Credits (ERC). The cost is free to members and $56 to non-members.
The ERC has been in the news quite a bit lately due to aggressive tactics by non-CPA firms claiming to be able to apply for these credits on behalf of business owners. (We’ll have an upcoming blog covering that topic.) However, the rules regarding whether or not a business qualifies are complex, and best performed by a knowledgeable professional.
During this webinar, the panelists will provide an overview of the Employee Retention Credit (ERC) and how to qualify for ERC including:
• Partial and full shutdowns as they apply to the ERC • What constitutes “gross receipts” • Safe Harbors • Rules for Large Employers • Unsettled matters and how the IRS is examining ERC claims
Participants are encouraged to submit questions in advance at info@nsacoop.org and during the session.
If you are an accountant or bookkeeper calculating these credits for your clients, or a business owner considering a DIY approach, please make sure you are thorough about obtaining education and resources before submitting anything to the IRS. You can expect their enforcement division to ramp up audits in the next few years.
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.
This webinar should be of special interest to our readers, as it’s an interview with two small business owners who will walk through the experience that they had working with SCORE to access capital through different methods of financing, in different rounds throughout the stages of their business growth. For me, hearing “how we did it” from other small business owners is not only educational, but inspiring, and I hope this upcoming webinar will offer you both angles.
Wednesday, 8/10 Webinar at 3:00 PM How We Did It: Raising Capital for Your Business Presented by Score Chicago (Part of a Score Chicago Funding Webinar Series)
In this webinar, you will learn how two Chicago entrepreneurs, former SCORE Chicago clients, and founders of Tiesta Tea Dan Klein and Patrick Tannous raised 4 rounds of financing totaling over $8 million. Tiesta Tea has also used many different methods of funding including friends/family, factoring, purchase order (PO) financing, SBA loans, Angel Investors, and VC funding. Dan and Patrick will share their experiences raising capital during the different growth stages of their business.
Tiesta Tea is a company that used SCORE Chicago to get started in 2010. Dan and Patrick know first-hand how important mentorship is for aspiring entrepreneurs and established businesses seeking mentoring from SCORE to accelerate the growth and success of their businesses. The founders, Dan Klein and Patrick Tannous, started with nothing but an idea to sell tea, and fast-forward 10 years, they have sold over $54MM of their product. They sell their teas in thousands of retail stores, including Walmart, Jewel, Mariano’s, Amazon, Costco and many more.
The Chicago Department of Business Affairs & Consumer Protection (BACP) Entrepreneur Certificate Program is a free and optional program available to attendees of the free BACP business education workshop and webinar series.
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.
On June 27th I woke to find dozens of notifications from MyTax Illinois in my email inbox — one for each and every client of ours who files sales taxes.
Just in case you got one or more of these yourself and haven’t logged in to check it out yet, here’s what it looks like —
It doesn’t give you much to go on — just a sort of “hey we saw you’re registered to file sales taxes, so you should read these four bulletins which may or may not apply and you’re unlikely to understand anyway” note.
But, if you dig through the bulletins you’ll find two in particular that could be important to a small business owner. One of them I covered in a recent blog post — Illinois Grocery Sales Tax Reduced by 1% For The Next 12 Months — it’s only likely to apply if you sell groceries that qualify for the low-tax food rate.
If you want to skip my rant and go to the section on what a small business owner should do next, scroll down to the next line in bold.
While I’m super-supportive about giving working families a break on prices — this is a terrible way to do it! It costs small businesses more in accounting and bookkeeping work than it could possibly save anyone.
It requires a small business owner — already overworked and without sufficient staff, and having in most cases barely survived the pandemic and still scraping to get by — to paw through every item in their Point of Sale system and change sales tax on an item-by-item basis. It’s hard enough to change sales tax amounts on a department-by-department basis… but item-by-item? Honestly, it will cost them so much more to figure this out than anyone will ever save on this “holiday”. And worse are the folks who don’t keep inventory in an automated system. They are stabbing in the dark and have no way to implement it at all. I just have to hope they don’t get audited by IDOR.
To make matters worse, the guidance says that the retail selling price per clothing item must be less than $125, and that supplies must be used by students in the course of study, in order to qualify. It’s simply impossible to program any Point of Sale system to create a sales tax discount on certain dollar-amounts of products and not others, or to change the sales tax rate on an individual item for some sales but not others (i.e., only after finding out that it will be used in the course of study at school). If small business owners are going to be able to comply with any of these rules, it will have to apply to all sales of a certain product — not just some sales.
This type of well-intentioned law — like the bag tax, carbonated beverage tax, and ill-fated sweetened beverage tax — has my full support from a social perspective. But they are so poorly-worded, difficult-to-enact, and misguided, that no small business could ever properly implement any of them cost-effectively.
This is just like that. Well-intentioned but completely out of touch and indicative that our representatives don’t have a clue what’s going on “on the ground”.
I received a hilarious text from a client when she read the IDOR notice:
Texts from a client when she read the IDOR notice.
As an aside, I wrote my state rep and begged him not to support this kind of thing in the future, and to work with other elected officials to find more reasonable, sustainable ways to provide relief to hard-working families, without crushing small business owners along the way. His response was truly wonderful, and he apologized profusely for not involving stakeholders in the last-minute rush to get it passed.
“Looks like we really did a terrible job here. You’re absolutely right that this was an example of government decision making at its worst. I think in the abstract these are largely good ideas, but looking at that guidance, it’s clear that implementation is going to be a nightmare. You have my word that I’ll try to do a better job of asking questions like “yes but is this feasible?” or “how much of an administrative burden is it placing on our small business owners?” when we’re contemplating things like this in the future.”
What does this mean for you, the small business owner? What are your next steps?
Follow these steps, in order, to determine what actions to take:
Step 1 – Check this list to see if you sell any products on it:
The great news is, that if you don’t sell any of these products, then you do not need to make any changes or do any extra work. However, I’d recommend rehearsing the phrase, “the sales tax holiday is only for back-to-school clothing and supplies, and as we don’t sell any items that would qualify, we aren’t able to offer you the 5% sales tax discount.” Because for sure there are going to be people who think that anything they buy during the 10-day period will be at a lower sales tax rate.
If you do sell products on the list above, then move on to the next step.
Step 2 – Identify all the products you sell that are on the list above. If any of the clothing items are priced at $125 or more, cross them off. Then make sure none of the remaining products you just identified are on this list of non-qualifying items:
Step 3 – Look at the items that made it onto your “qualified” list, and ask yourself who your clients generally are that buy these items — are they likely to be used for school? If the answer is definitely no, then again — no worries. You do not need to make any changes or do any additional work. (Except rehearsing that phrase from above and teaching it to your staff.)
However, if the answer is maybe or likely, then we’ve got some work to do.
Step 4 – If the answer is maybe, then you have to decide whether it’s worth your effort to go through your Point of Sale system and change the tax rate on each product that qualifies (and then change it back 10 days later) — or if you don’t have a POS system, if it’s worth it to figure out how to manually change the tax rate on each sale of one of these items, and to track how many were sold during the period of Aug 5-14. Because an alternative might be to just leave everything at the higher sales tax rate unless a customer specifically states that they are buying it for school use (you could even ask each customer who buys one of these items during that period if it’s for school use or not) — and then just give them a discount and write down the sale somewhere so that later on when you file your ST-1, you know how much to enter onto the Schedule GT so you get your money credited back to you — yes, I know that this means your cash drawer and your Sales Tax Payable accounts will be off. You can just have your accountant book an adjustment after the correct amount of tax is paid to the state. Or, in all honesty, you could even give them the discount out of the business’ own pocket and it would still be cheaper than reassigning tax rates in your POS system.
Step 5 – On the other hand, if the answer is likely, then you need to:
Create a new tax rate in your POS system called “holiday rate” that is 5 points lower than the current sales tax rate (in Chicago, 10.25% — so the new rate will be 5.25%). Hopefully your system allows enough rate slots to accommodate this. If not, maybe consider the approach outlined in Step 4.
After close of business on August 4th, assign that new rate to all the items that qualify.
Make a note to reassign the old rate to all those items after the close of business on August 14th.
Be sure you can run a report of all the items that sold at this rate, since you’ll need to declare that total on a separate tax form (Schedule GT) when you prepare your monthly sales tax return (ST-1).
If you do not have inventory or non-inventory sales-taxable items stored in your POS system — or if you have a cash register instead of a POS — then you’ll need to look at how you charge sales taxes to each item and come up with a plan that mimics the approach I just outlined. For example, if your system allows you to manually edit the sales tax rate on a sale-by-sale basis, you could keep a list of all the qualifying items by the register, and simply adjust for each qualifying sale. The problem is that only some of the items get the discounted rate, so if this is how your system works, you’d have to run a separate sale for all the qualifying items and then one for the non-qualifying items. You also will need to keep a list of all the sales made at the lower rate, since as mentioned above, you’ll have to note those on a separate schedule when you prepare your sales tax return. And if your system doesn’t allow you to manually edit the sales tax rate, you’ll have to take the approach I mentioned earlier, whereby you just give the customer a discount and adjust the inaccurate books later, hoping it all comes out in the wash.
Step 6 – Once the time comes to file your monthly (or quarterly) ST-1 sales tax return, you’ll notice there is an additional form– Schedule GT, Sales and Use Tax Holiday and Grocery Tax Suspension Schedule. This was created for retailers to report sales of qualifying items sold during the sales tax holiday. Per IDOR:
Form ST-1 has not changed. Retailers should continue to report their normal taxable sales, including sales of qualifying items, on Lines 4a and 4b, Lines 6a and 6b, or Lines 12a and 12b, of Form ST-1 and will then use Lines 2a and 2b, Lines 3a and 3b, or Lines 4a and 4b on Schedule GT to calculate a credit against the tax reported on those lines for the tax they are not collecting during the state sales tax holiday.
So you’ll report the sales of these items, on which you charged the lower tax amount, on Schedule GT and it will flow onto your ST-1 as a credit so that you’re not remitting more to the IDOR than you collected.
Whichever approach you take, make sure to rehearse the phrase, “the sales tax holiday is only for back-to-school clothing and supplies, and as we don’t sell any items that would qualify, we aren’t able to offer you the 5% sales tax discount.” Lots of folks read the headlines, but not the small print.
Hopefully this was all clearer to read than it felt to write it! And please make sure your state representative knows how you feel about having had to think about it in the first place. Small businesses have enough to deal with these days!
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.
The annual scheduled increase in Chicago’s minimum wage goes into effect on Friday, July 1, 2022. The Chicago minimum wage is tiered for large businesses with 21 or more employees, and small businesses with 4-20 employees. Since reaching $15 per hour in 2021, the minimum wage for larger employees increases annually according to the Consumer Price Index or 2.5%, whichever is lower. The minimum wage for small businesses continues to increase towards $15 per hour by 2023.
As of July 1, 2022, the Chicago minimum wage will be:
$15.40 for employers with 21 or more employees (including all domestic workers, regardless of the number employed)
$14.50 for employers with 4-20 employees
The minimum wage for tipped employees will be $9.24 for employers with 21 or more employees, and $8.70 for employers with 4-20 employees (employers must make up the difference between any tips received and the applicable minimum wage for non-tipped workers.)
Anyone age 24 or younger employed by, or engaged in employment coordinated by, a nonprofit organization or government agency will see a minimum wage increase to $12.00.
Employers that maintain a business facility within the City of Chicago or are required to obtain a business license to operate in the City are required to pay their employees at least the Chicago minimum wage. Additionally, any employee that works two hours or more in the City within a two-week period must also receive at least the Chicago minimum wage.
Chicago BACP recently presented a free hour-long webinar called “Employer Responsibilities Under Chicago’s Minimum Wage Ordinance”, available here.
Employers in “covered industries ” (see below) to post work schedules with at least 14 days’ notice, an increase from the previous 10 days’ notice.
Employees will need to earn less than $29.35 per hour or $56,381.85 per year to gain protection under the Fair Workweek Ordinance.
Covered industries include building services, healthcare, hotel, manufacturing, restaurant, retail, or warehouse services.
Chicago businesses are required to post the Minimum Wage Notice and Fair Workweek Notice at their business. The notices will be available to workers and business owners in English, Spanish, Polish, Simplified Chinese, Tagalog, and Korean by July 1, 2022. Employers that violate the minimum wage ordinance can be fined $500 to $1,000 per day for each offense.
Chicago BACP recently presented a free hour-long webinar called “Employer Responsibilities Under Chicago’s Fair Workweek Ordinance”, available here.
Sexual Harassment Law Updates
As of July 1, 2022, all employers in the city of Chicago must have a written policy on sexual harassment. Additionally, employers are required to display a public notice advising of the prohibition on sexual harassment where employees can see it, and there are increased training requirements. A model policy, written notice, and training templates are available by visiting Chicago.gov/SexualHarassment.
Recent updates to the law include:
Adding sexual misconduct to the definition. Sexual misconduct is defined as any behavior of a sexual nature which also involves coercion, abuse of authority, or misuse of an individual’s employment position.
Requiring all employers to have a written policy on sexual harassment. The written policy must be available in the employee’s primary language within the first calendar week of starting employment.
Increasing the statute of limitations from 300 to 365 days.
Create flexibility to notify a respondent up to 30 days from the time of complaint (compared to 10 days currently), to mitigate any retaliation such as denial of a reasonable accommodation request.
Requiring additional annual training for all employees including the one hour of prevention training aligned with State requirements and one hour of bystander intervention. Supervisors and managers are required to have an additional one hour of training.
Increasing the penalty for individuals or businesses that participate in discriminatory practices in the workplace including sexual harassment. The penalty is increasing from $500 – $1,000 per violation to $5,000 – $10,000.
It seems not all small business owners are aware of the responsibility to provide Chicago workers paid sick leave. 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 now 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.
Even the least expensive version of Gusto Payroll allows for a sick pay plan, and it’s not hard to set up and track (see instructions here).
Reminder that if you sign up and run Gusto using my link, you’ll get a free trial period… and after running your first payroll you’ll receive a $100 Visa gift card! My clients instead will receive a 15% discount for the life of the plan.
And a final point: all Chicago worker protections are enforced by the BACP Office of Labor Standards (OLS). The OLS is dedicated to promoting and enforcing Chicago’s labor laws, including Minimum Wage, Paid Sick Leave, Fair Workweek, and Wage Theft Ordinance. The BACP OLS webpage offers informational materials on Chicago’s Labor Standards Laws.
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