Happy November! I hope you are doing well as we move past Veteran’s Day and closer to the end of this crazy 2020 year.

Today’s newsletter highlights year-end spending tips and a recap of some of the ballot initiatives recently passed in Colorado.

Spending tips for year-end

Staff/employee benefit:

An option to spend excess business monies at year-end is to spend on your employees. You may choose to add talent or to bonus existing talent. Whatever your choice, we encourage you to build a plan and stick to it. This plan should include formulas, calculations, and a budget. We want to avoid the scenario where you feel like you are having a good year but later discover that the numbers tell a different story. Using a formula every year allows for a consistent approach to your bonus decisions. If your choice is to add talent and/or consider a “plus 1” hire, the timing is good. Often you can find great talent at the end of the year and this year is no exception. Reach out to Dave Reed, Crystal Brady or Kim Hitchcock if you need any assistance building your formula or if you want to discuss this in greater detail. Appointment can be scheduled using the MHA Schedule tool or by emailing us directly.

Virtual office improvements:

Another plan is to review your company policies and procedures over the past few months to evaluate changes that you think will become permanent. This year it is especially important to include your virtual systems in this analysis. Consider apps, technology, artificial intelligence options and online storage. Think of this as an opportunity to do an interior design project for your “virtual” space.

Reimbursement plan:

To tie the two ideas together, another option to take some of the bonus calculation and convert it to a stipend for a reimbursement for your employees to upgrade their home office space. This is a great opportunity to encourage your remote team to improve their posture with a new chair or desk, improve work product with a new monitor, and improve communication with a new camera.

Invest in equipment:

Equipment purchases should also be evaluated before the year ends, and this year in particular, really needs a good plan. Are you looking at making a change in your client base or considering incorporating new virtual processes? If yes, this is a great time to revisit purchasing decisions for the next 12 months.

Support the community:

Charitable contributions have new rules for 2020 which should be evaluated to see if you can incorporate them into your year-end spending plan as well. Check out our most recent blog to read more about changes to donation deductions for this year: MHA Blog – Charitable Contributions

Outcomes of key issues in Colorado: Recently, Coloradan’s went to the polls and passed some key amendments that will kick in relatively quickly. Briefly, these include:

  • Amendment B: Repeal the Gallagher Amendment. According to the Denver Chamber, this Amendment should stabilize property tax rates and peg them where they are today.
  • Proposition EE: Increase Taxes on Nicotine Products. If you are in an industry that sells nicotine products then it is critical that your sales tax rates are updated timely to address this new tax which increases the sales tax on applicable products over the next 7 years starting in 2021. This tax applies to vaping products as well which is a change from prior taxes.
  • Proposition 116: State Income Tax Rate Reduction. This proposition reduces the state income tax rates from 4.63% down to 4.55% retroactively back to the beginning of 2020.
  • Proposition 118: Paid Family and Medical Leave Insurance Program. The details of this will be unfolding over the next few months but this is generally a paid family and medical leave insurance program funded by employers and employers starting in 2023. This is not the same program that has been discussed recently for COVID-19 sick pay or the new Colorado paid sick leave program starting in 2021 or 2022. Click here to read more about those prior provisions: MHA Blog and follow this link to read a great article by my cohort, Michelle Ferguson: “Paid Family & Medical Leave Insurance Program,”
  • The Denver Metro Chamber has compiled a summary of the new ballot issues which can be found here: Denver Chamber Summary of Key Colorado Provisions

Individual Tax Planning:

The 2020 tax year is coming to a close and it has some key tax situations that could drive up your individual taxes this year. PPP Loan forgiveness will have a tax impact, as well as unemployment proceeds. Property sales have been big this year as well. Be sure to reach out if any of these apply to your tax situation. Some tax planning will be difficult this uncertain year, however, we have some tools to make it work. Click here to schedule a virtual appointment so we can meet and show you any pertinent information to help build a plan for year-end: MHA Schedule

Accounting Year-End:

And, on the topic of year-end, this is a great time to remind all business owners of the importance of having your documents in order. Please review your files and request documents from all contractors to include form W9 and proof of insurance. These are necessary for proper filing of annual form 1099s and addressing annual workers comp audit document requests. If you need any assistance with your business reporting please don’t hesitate to reach out to Crystal Brady, our accounting manager. She can be reached at cbrady@mcnurlincpa.com.

MHA Blogs:

This month we have added two new blogs to the website. The first is part of our tax planning series with a focus on Charitable contributions found here:
MHA Blog: Charitable Contributions and the second provides a more in-depth explanation of Homeowners Associations (HOAs) and taxes which can be found here: MHA Blog: Homeowners Associations and Taxes.

PPP Loan Forgiveness: We have seen PPP Forgiveness applications starting to roll out to loan recipients. Be sure you consider your timing for your application to meet requirements for your staffing and spending. If you have questions or would like assistance compiling documents then please schedule a call or meeting with me or Crystal using our online scheduling tool MHA Schedule or by calling the front office at 303-988-5648.

Thank you for reading to the end! Our new “norm” is keeping us on our toes and we truly appreciate your patience and understanding as we work to circulate good information.Thank you,

Kim Hitchcock

The owner of McNurlin, Hitchcock & Associates, PC a certified public accounting firm located in Lakewood, Colorado. Kim specializes in all areas of accounting, tax strategy planning, business management, and financial statement reporting.  Kim can be reached directly at kim@mcnurlincpa.com.