Paris Accounting Corp

Practice limited to business consulting and tax resolution

Phone: 718-281-0200
Email: [email protected]
PO Box 604993, Bayside, NY 11360
Profitability Consultant and CPA

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New York State Department of Labor is assessing penalties to employers of ‘undocumented employees.’

I must write this to help protect all NYS/NYC employers:

The New York State Department of Labor is assessing penalties to employers of ‘undocumented employees’.

Please repeat the above sentence to yourself and substitute ‘illegal aliens’ for the last two words.

know the employment rules in NYC
Employers must know the employment rules in New York State (NYS)

We have more than one case already where a temporary worker, who never came forward with proper paperwork, and her illegal friend are suing a past employer.

Their claim, working 80.5 hours per week with no overtime rate, at a concierge station in a hotel lobby.

Further, the complaint was made against the client’s bussing company and not the concierge business at all.

This is not the only hospitality industry case.  There are many others. How about a diner where the employer paid the employee properly. So instead the lawyer for the employee has started a class action lawsuit. Employees from 5 & 6 years ago suddenly remember being underpaid? There is no doubt in my mind that many in the hospitality industry have trouble with undocumented workers.

New York State requires ALL employees to work under the same code, regardless of legitimacy of paperwork of an undocumented worker.

This means the practice of employees signing their time cards, paying payroll rates properly and the reviewing personnel files become the focal point of your defense against an investigation.

  • Everyone should have a time clock or a time register.
  • The employee should initial or sign each time they are paid that the hours are correct.
  • Rates should be updated on a systematic basis and reviewed for accuracy.

The bills that go with these cases become, pay the lawyer or pay the state or pay both. And typically I hate to report, it is pay both.

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When do you pay your accountant?

It was suggested that I write a little bit about when to pay for accounting services.

In our office there are generally two types of clients:  Monthly business clients and year-end clients.  Most of our active clients run businesses and pay us monthly for work based on the work we complete for them regularly.  Some of our larger clients are on monthly retainers.  Some businesses are so small that they really only send us information once a year around tax season.

An example of small client would be an individual who owns a 2 family rental property.  This type of client can send us 12 bank statements in January because each monthly statement for the prior year may reflect only a few deposits and a few disbursements.

So when are fees due?

When to pay your accountant

Accounting fees for taxes are due upon receipt in our office.  Which means we expect our 1040 clients and once a year business clients to pay when tax return services are rendered.

There are some clients whose tax work even though once a year, exceeds $2,000.  For new clients we usually ask for a deposit in advance.  This is because we need collateral from experiencing some clients withdrawing work after we accomplish some, most or all of it.

When our firm first started in November of 1989 we pretty much took any client that came our way.  Starting a new business does not mean you have to take EVERY potential client.  And this is an important lesson that most people don’t learn until years into a business.  These days, we are fairly picky about new clients and certainly need to get to know the new client a bit before formally accepting them.  You can’t please everyone; you need to know that in business.  You want to steer clear of known problem clients or potential clients that seem to exhibit indicators that they aren’t easy to work with.

In never ceases to amaze me the number of new clients that expect or request free services or discounted services based on their future growth and sales.  Our answer is NO.

  • Your accountant is your personal and business advisor.  We are trained in budgets, financial statements, taxes and general business knowledge.
  • Accountants are not financial institutions and certainly should not lend money to their clients.  Lending money to clients impedes the rational thinking as an independent third party.  Which is why accountants are not allowed to do a succeeding audits for a business who hasn’t paid the prior year audit fee.

I’m in business 25+ years.  At this point I have lost enough fees for allowing longer payment periods and have been disappointed by clients who promise to pay and then go out of business.  At this point in time, I can tell a good business model from a losing business model and protect my firm from customers who think one day the losing model will produce results.

Your accountant is perhaps the best guide to protecting your assets, growing your business and acting as a springboard for questions and decisions you need to make.  You want your accountant to be eager to take your calls, answer your questions and dispense winning advice.  Treat your accountant with dignity and respect, including timely payments, and you will have a trusted advisor for life.

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NYC ever changing employer/employee rules and regulations.

Today’s blog on employer/employee rules in NYC comes after spending 6 business days at CPA seminars updating tax changes and learning recent events that affect my clients.

NYC has been making more employer/employee rules and regulations.

know the rules in NYC

Not only should EVERY employer have a time clock, the new employer/employee rules make it a crime for an employer to not have a time clock because it is a general disregard for the requirement to keep employee records.  In one case, a restaurant was indeed considered criminal for no time cards.

More importantly, the NYS Dept. of Labor, an agency for a long time considering all employers guilty and all employees innocent turn against any employer with inadequate records.

An employee fired for just reasons, for example stealing, can still sue a prior employer for not paying over time, or not paying all wages as required, and without time cards, the employer will lose the suit.  Regardless of the any outcome, the burden of proof from employee claims always falls on the employer.  Beware.

As a clarification, any employee who works 10 hours in any 1 day is to be paid for 11 hours.  [yes this is a real rule]

However, the additional hour of pay is not required to be at the employee pay rate, it is required at minimum wage only.  So a $17/hour employee working 10 hours need only be paid $9 per hour for the non-worked 11th hour.  This is contrary to what many employers believed, that the extra hour was at the employee’s rate of pay.

NYC-Wage-Rates

NYC wages for restaurant waiters and busboys [tipped employees] is increasing from $5 per hour to $7.50 per hour.  I can’t remember the last time anyone got a 50% increase in wages.  And, most importantly, the restaurant wage increase takes place 12/31 to include new year’s eve in the new rates.

Lastly, NYC requires 5 days personal/sick/vacation time to all employees.  The regulations made this effective April 2014.  Any employee who works 80 hours in a year starts to accrue time off.  1 hour for every 30 hours worked.

Harlan Kahn CPA

 

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New Laws for NYC Businesses with 20+ FT Employees

Once again there are new laws effective January 1, 2016 for all business with 20 or more employees located inside NYC.

Twenty (20) employees includes full time employees only. For this NYC commuter benefits law, a full time employee is defined as working 30 hours per week.

New Laws for NYC Businesses with 20+ FT Employees

The new law allows employers to pay employees for regular commuting [subway, trains, busses, water taxi, van pools and access-a-ride] as a pre-tax deduction.

What’s more, the employers HAVE to offer it. And the employers have to retain proof for 2 years that the offer was made, should the employee decline.

The maximum an employer can pay pre-tax for an employee’s commute is $130.

If one thought NYC is aware that large amounts of workers commute from Long Island, Westchester, Connecticut and New Jersey, one would find this law doesn’t really accommodate them for their commute. [The law falls short of a LIRR commuter pass $338; Amtrak and others]

This is another burden put on nyc employers. The law itself can help those New Yorkers with inexpensive commutes and also reduces taxes to employers in most cases. The problem is the law includes burdensome record keeping for no reason. Also the law could have been written to extend to all employees and their commuting. Clearly the legislature didn’t want to help everyone.

This law mirrors the IRS new law of $130 for commuting pre-tax reimbursements. Only the IRS law also allows up to $250 for parking. NYC does not allow parking as a pre-tax deduction; so employers offering that to employees now have a NYC add back to their business returns.

Harlan S. Kahn CPA
www.parisac.com

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Obamacare Update

This week I just want to touch on one of the complexities of the Obamacare health insurance

(aka, Patient Protection and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or colloquially #Obamacare).

Everyone employed needs to have health insurance.  The penalty for not having health insurance during 2015 is 1% additional income tax.

obamacareWhat I found interesting is that you can’t just get health insurance any more.  Most people, individuals and the self employed business of 1, must apply during the enrollment period.  The enrollment period opens November 15, 2015 for the year 2016.  So, if you don’t have health insurance at this point, chances are you can’t get it until next year. 

The only exception to not being able to get insurance is if you are a new business applying.  Businesses need to have more than just an owner or husband and wife, they need to have two individuals or families on the policy to start during 2015.

This provision is to stop the false use of health insurance of only applying when you have a known malady and then removing yourself from insurance after treatment; then going on again when a new malady irrupts down the road.

I was able to ask an expert,

Which is better, a small business of single people, or each finding insurance on the web in NYS?

Although I expected the group to have greater benefits, the expert said there may be little difference at this point in time.  Individual health insurance may be have the same benefits or better than a group.   That’s new to this industry, until now, groups always were better off.

Harlan S. Kahn CPA
Paris Accounting Corp
www.parisac.com

 

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