Business Update – January 12 2022
With the more contagious Omicron variant rapidly becoming the dominant strain, many experts are recommending upgrading from cloth to N95 masks. This article in Popular Science explains what to look for in a mask, how long they can be worn, how to safely reuse them, and when they should be discarded. Masks designated as KF94, N95, or in the FPP family are all subject to strict government oversight and quality control. However, KN95 masks – a Chinese protocol – may be counterfeit and may not meet minimum US standards.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
Getting your taxes done this year will be a bit different from previous years. Through the end of January, recipients of the advance child tax credit payments will be receiving Letter 6419 from the IRS, which will be needed to reconcile the amount received with the amount a family is eligible for. Refunds will not be paid out until the IRS receives the reconciliation. For more information on the expanded child tax credits see the IRS FAQs.
Victims of the recent wildfires in Boulder County, Colorado have until May 16, 2022 to file various individual and business tax returns, according to IR-2022-01, released on January 3. Tax payments and tax filings that would normally be due between December 30, 2021, and April 18, 2022, will be due on May 16, 2022. This includes individual tax returns, estimated tax payments, payroll tax returns, and excise tax returns.
Tax refunds may be smaller this year than in previous years due to a combination of factors. Recipients of advance child tax credit payments may have already received half of the total they are eligible for. The pause in student loan payments may mean a loss of the usual tax deduction for interest. Some mutual funds have made large year-end payments of capital gains distributions to investors, which may result in a higher tax bill.
January is the month when most people review their investment portfolios to update their financial goals for the year. When updating your investment plan for the year, Kiplinger has several questions and recommendations to consider. Is your portfolio still invested correctly? You may need to rebalance your investments to match your retirement horizon. Have any of your plans changed? Do you need to consider the financial needs of other family members who may need your support in the future? What are your projected expenses after retirement?
The “Great Resignation” is providing employees an opportunity to improve their work and financial situations, but what happens when you’re the boss and all your employees decide to leave? Before making decisions that you may regret down the road, take some time to consider these four questions. What do you want your company to look like? Remote work is here to stay, so this could be the time to shift to an all-remote workforce. How can you create a personalized strategy for retaining your most valuable employees? Identify your most valuable employees and work with them to find ways to keep them happy. Are their concerns valid? If a large chunk of your team is leaving, that could be a sign that employee engagement is lacking, or that compensation isn’t competitive. Should you leave, too? If your company isn’t treating team members well, and there’s no desire among senior leaders to change, this may be a sign that you should leave as well.
Sometimes the solution to burnout and exhaustion is taking a sabbatical. Extended leaves aren’t common in the US, but employers are turning to them as a means to reenergize people and allow them to fully disconnect from their jobs. Offering sabbaticals can help attract and retain top talent. Tech companies such as Asana and Adobe have been offering sabbaticals for years or even decades. Distributing work across other team members can help ensure that sabbaticals are not overly burdensome and can help spread skills and knowledge across a company.
REMOTE AND HYBRID WORK OPTIONS
Some business experts believe that remote work is doing a disservice to younger employees by depriving them of experiences that are easiest in an office environment. Forming relationships and learning from observing the interactions of others is much harder in a remote environment, which may deprive younger employees of valuable career-building skills. According to a recent poll of college students and recent graduates, 40% prefer working in-person, and 70% miss having an office community. If remote work is unavoidable, young employees should actively seek out and create networking and learning opportunities. Asking supervisors for feedback via email or a quick phone call can help establish vital relationships, as does participating in virtual happy hours.
Before the pandemic, companies organized off-site retreats to energize team members, develop strategy, and to form strong interpersonal bonds. In the remote and hybrid work world, on-site retreats may become the new off-sites. Creating a successful on-site event requires attention to three elements. Events should be centered around the organization’s values by developing content that reflects those values. Including professional development with lunch-and-learns, book clubs, or outside speakers can help to retain employees. Including or creating shared rituals such as an ice-breaker question or lunch as a group help bring team members together.
Many employees are finding that they prefer full-time remote work to working in the office. But as some companies begin returning to the office, asking your boss for permission to work remotely full-time can be difficult. Developing a proposal that explains how remote work will benefit your boss, team, and company is critical. Include evidence that demonstrates your value to the company as well as statistics on remote work productivity plus case studies on successful remote work. Address how you will remain connected to your team and be available for collaboration when needed.
The highly contagious Omicron variant is forcing many companies to temporarily shut down or reduce services as employees are out sick or are forced to juggle child care as schools and day care facilities shut down. Shutting down for days or curtailing hours results in a financial hit. Companies that are already short-staffed due to the tight talent are facing additional challenges. Nearly half (48%) of small business owners report they had job openings in November that they could not fill. Other businesses manage to keep open by shifting healthy employees to different roles.
While nonfarm payrolls grew by only 199,000 in December, according to the Bureau of Labor Statistics, unemployment fell to 3.9%, a pandemic era low, and near the 50-year pre-pandemic low of 3.5% in February 2020. However, total employment for December was still 2.9 million short of February 2020 levels. These numbers were recorded before the Omicron variant began to spread widely, so the impact of a more contagious strain is unknown. Labor shortages are improving, but as of November, there were still 4 million more job openings than unemployed workers. The BLS data conflicts with a report from payroll processing firm ADP, which said that 807,000 new jobs were added to private payrolls.
A silver lining to the pandemic is the impact of trillions of dollars of government stimulus spending which has improved the finances of many Americans. Stimulus payments lifted 11.7 million people out of poverty and helped Americans accumulate $2.7 million in extra savings. Increasing wages on top of the additional savings may provide new-found financial stability for many. However, improvements in financial well-being are not evenly distributed. White-collar workers who were able to work from home did better than those who lost their jobs. While people across all income levels were able to put more cash away in savings, that additional savings is still meager for those at the bottom, who may have less than $1,000 in their bank accounts.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on the advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!