Posts

Tax Codes

changes in tax codes – what you need to know

Tax changes are coming. 

Have you prepared for the changes that may begin at the end of the year? If you haven’t started thinking about it already, it’s about that time.

Here are a few of the proposed changes that are looking to go into effect starting next year. 

Income Tax Changes

 

Your tax liability might be at risk to change, although it all depends on your current financial situation. Some of the main changes will affect your bottom line. For example, if your income exceeds $400,000, then you are likely to be impacted.

Along with higher tax rates, itemized deductions will also be prevalent in tax code changes. The proposed changes include a $10,000 limit on local and state taxes. 

Carried Interest Tax Changes

The last time carried interest tax changes were drastically changed was in 2017. It looks like there will be more change coming. Some lawmakers introduced the “Carried Interest Fairness Act of 2021” which if passed, would “tax carried interest at ordinary income tax rates and treat it as wages subject to employment taxes.” 

Capital Gains Tax Changes

The proposed changes would increase the applicable tax to a higher marginal income rate. This would conclude with the total being 43.4% on long-term capital gains. 

Estate & Gift Tax Changes

President Biden has proposed that the current Estate & Tax Changes that are meant to extend until 2026 be looked at closely. 

How to know if these tax changes will affect you?

If you are a business owner or individual whose income is above $400,000 then odds are you will be affected by these tax changes. 

Increased tax rates will mean it’s hard to know how much you’re paying to insure your business. Learn what the general costs are for your business.  READ ON… 

Surface Water and Property Insurance

surface water & property insurance

It’s that time of year again where the rain starts to fall, and flooding and other rain-related issues arise that businesses typically don’t have to deal with during the rest of the sunshine-filled year— at least in California.

As a business owner, it’s important to understand how your coverage will protect you during various seasons of your business. First and foremost, did you know that Property Insurance has a surface water exclusion? What does this mean for your business?

What is Surface Water? 

Surface water is also known as flooding but doesn’t always mean a full-blown flood. In this case, surface water is defined as spring thaw, flash floods, excessive rain, storm drain overflow.

Additionally, surface water is any water that runs through or travels over land where it’s not supposed to be located. It’s typically determined as any damage that has occurred by water that filtered through man-made objects, instead of from the ground

Why is there an Exclusion?

Investopedia outlines some of the main reasons behind the exclusion, “The reasoning is that only specific areas are prone to water-related natural disaster events, such as floods, tidal waves, or tsunamis.” The insurance industry wants to make sure policyholders with these specific water-related exposures purchase specific Flood policies that can address these loss conditions.

Surface Water Insurance

The Standard Flood Insurance Policy (SFIP) Forms contain complete definitions of the coverage they provide. Direct physical losses caused by “floods” are covered. Also covered are losses resulting from flood-related erosion caused by waves or currents of water activity exceeding anticipated cyclical levels, or caused by a severe storm, flash flood, abnormal tidal surge, which result in flooding, as defined. However, damage caused by mudslides as specifically defined in the policy forms is covered under “Catastrophe Coverage.”  

An Example

In 2012 there was a court case titled, “Union Street Furniture v. Peerless Indemnity Insurance Company,” where the definition of surface water cost Union Street Furniture and Carpet lost substantial amounts of money. 

In this case, there was a large storm that funneled rainwater from the parking lot into their commercial building causing water damage. The case claimed that the water damage was not covered by their insurance policy because the water was deemed to be caused by surface water or flooding. 

Do you need it? 

Take the above example as a learning opportunity. Reach out to your insurance broker to see if it may be a good idea to start investing in a Surface Water Insurance policy. Let your broker know if the topography of your location(s) lend themselves to water damage that fits the definition of “Surface Water”.

Of course, it depends on your specific business situation. If you’re concerned about flood damage specifically, then buying separate flood coverage might be necessary. Flood insurance coverage is available for both commercial and residential properties. With the rainy season approaching in Southern California, there are unpredictable factors that may not be included in your General Liability coverage. 

As a business owner, you have or will need to file some kind of insurance claim. Understanding what that means is essential to your success. Read more about commercial insurance claims, and what you need to know here

Do You Need an Employee Manual Review? (Yes!)

do you need an employee manual review? (yes!)

What Is an Employee Manual Review?

An employee manual is not only a resource for employees but also for an employer as well. An employee manual is a book or online PDF containing employees’ and employers’ guidelines to reference for all job-related information.

Although an employee handbook is given and reviewed once a new hire is onboarded, the document should be reviewed at least annually. 

This is generally a large document, as it will cover topics including: 

  • Equal Opportunity Guidelines
  • Company Culture
  • Paid Time Off (PTO) and Holiday Time
  • Job Expectations
  • A Company Mission Statement
  • Company Policies
  • Work Performance Expectations
  • Who to Contact if an Issue Arises

Surprisingly, employee handbooks are not required by law. They are, however, very helpful and highly recommended.

Most HR representatives consider the employer’s handbook as an active document. This means that throughout the year when policies and employment laws change, notes can be added and reviewed.

It is important to note that creating and maintaining employee manuals within California is much more difficult than in other states as policies and guidelines are constantly being adjusted. It’s almost impossible to keep up, which is why adding notes and using the employee handbook as an active document is a helpful practice to follow.

Why Review?

Most HR representatives consider the employer’s handbook as an active document. This means that throughout the year when policies and general guidelines change, notes can be added and reviewed. Again, an employee handbook is most helpful when acting as an active document because the handbook will stay perfectly to date without annual revisions. 

As an employer, it can be helpful to see the employee handbook as a resource, not just another box to check off the list. It can be a helpful tool because there is a high level of information to keep track of. If an employee gets called to jury duty, for example, do they receive paid time off? Check the employee handbook.

What to Avoid

If you have an employee handbook from a past business, don’t copy and paste this document for another business. This doesn’t work for many reasons. Each company has a unique set of guidelines that apply to its employee handbook.

Ideally, an employee handbook should be written by an HR consultant or professional, or an employment attorney. Although there are tools that can help employers build a handbook, it’s more consistent to collaborate with a professional. 

As a new hire is onboarded, there are many documents that can get lost in emails. One suggestion as an employer is to review the handbook in-person—open it and highlight some of the main topics. Consider creating an infographic with the top 10 ideas and questions that employees might have as a reference.

Do you have questions about our program development and options available? Our team is ready to answer your questions and provide you with information about insurance and building a beneficial partnership with us. Call Benchmark today at 800-283-0622 or send us a message.

Thursday August 19 2021