Overtime Rules

In California, the general overtime provisions are that a nonexempt employee 18 years of age or older, or any minor employee 16 or 17 years of age who is not required by law to attend school and is not otherwise prohibited by law from engaging in the subject work, shall not be employed more than eight hours in any workday or more than 40 hours in any workweek unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday and over 40 hours in the workweek. Eight hours of labor constitutes a day's work, and employment beyond eight hours in any workday or more than six days in any workweek is permissible provided the employee is compensated for the overtime at not less than: 1. One and one-half times the employee's regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek; and 2. Double the employee's regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek. There are, however, a number of exemptions from the overtime law. An "exemption" means that the overtime law does not apply to a particular classification of employees. There are also a number of exceptions to the general overtime law stated above. An "exception" means that overtime is paid to a certain classification of employees on a basis that differs from that stated above. Please refer to the State of California website at www.dir.ca.gov/dlse/faq_overtime.htm.

A question that comes up from time to time - Does the sentence above including the following language " she receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday and over 40 hours in the workweek" require the employer to pay for time and one-half for hours over the 40 in a week and 8 in a day? The answer is No. The overtime hours to be paid over the 8 hours are excluded from the total hours for the over 40 hours in the workweek.

For example, assume the employees works three 9 hours days, one 8 hour day and one 7 hour day for a total of 42 hours. Since the 9 hour days contain 3 overtime hours, subtract these 3 hours from the 42 to compute the overtime to be paid. In this case 39 hours are left, thus no hours over 40 are required to be paid.

dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

Minimize Business Taxes Before Year End

Minimize Taxes before year end If you find that your Company has been profitable during the year and it is looking at a hefty tax bill after the year end, there are a few things you can do to minimize your businesses taxes.  Note however, that you should consult your CPA to determine if these action items are right for you.

1. Make payments - Pay all your payables and payroll before year end.  Remember, cash expenditures during the year qualify for deduction.  If you normally would run payroll on January 2, consider running that payroll on December 31 instead.
2. Prepay - Prepay certain expenses normally due on the first of each month.  Traditionally, recurring bills such as rent and insurance are due on the first of the month for the following month.  Take advantage of prepaying these items to push the deduction to the current year rather than the next year.
3. Buy equipment – Certain types of businesses can accelerate depreciation for tax purposes during the year of purchase.  For instance, if you have a construction related business and buy a qualifying truck, you can accelerate the depreciation on that truck and take the total value as a deduction to businesses income.

Remember that your businesses may have NOL (Net Operating Loss) carry-forwards and getting extra deductions in a given year may not be needed.  In addition, law changes can effect when and how you should spend money.  Contact your CPA to determine what is best for your company.

dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

IRS Makes Offer in Compromise Rules More Flexible

The Internal Revenue Service ("IRS") recently announced, under release IR-2012-53, that they were making the terms to accept offers in compromise more flexible under the expansion of their "Fresh Start" program. An offer in compromise is an agreement between the IRS and the taxpayer in which settles the taypayer's liabilities owed. The IRS makes the determination as to what the taxpayer is capable of paying through review of the taxpayer's current income and assets. Under the expanded program, the IRS in calculating the taxpayer's collection potential, will now look at only one year of future income for offers with obligations paid in less than five months, down from four years. For offers for repayment in six to 24 months, two years of future income will be reviewed, down from five under the previous program. All accepted offers of compromise must be paid within 24 months.

Other changes announced were: allowing taxpayers to repay student loans, pay stated and local delinquent taxes and expanding the Allowable Living Expense allowance category and amount. These amounts are used in calculating the taxpayers future income. See the release above for specific information.

The modification to the offer in compromise program will allow taxpayers in which are having a difficult time meeting their financial obligations to obtain some relief from the IRS. It is always best practice to contact an attorney or CPA prior to negotiating with the IRS. Please contact dbbmckennon for a free consultation regarding your options and look here for information if you are contacted by the IRS or any other government agency.

dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality professional services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.