Business owners have access to volumes of data to help them make the best decisions. To ensure your business is running at peak performance, it is a must to measure and monitor key performance indicators (KPIs).
goal – to save you time and money.
Step 1: Decide what KPIs are most critical for your business.
recommend each department of your business brainstorm what measurements are
important to them and how best to monitor them.
Step 2: Determine metric(s) to measure the information.
Base metrics may
revolve around quality, cost, delivery, safety, morale or other items.
Quality Based Metrics:
of first run acceptance
of units returned to units shipped
cost of quality
of suggestions per year per employee
of implementation of suggestions
spent on improvement
of services reperformed
items specific to your industry
Cost Based Metrics:
reduction in pieces or dollars
hours incurred to standard hours/budgeted hours
overtime hours to allowed overtime
per unit manufactured
of suppliers with price breaks
cost of expediting
items specific to your industry
of setup time to run time
visits to operations
completed on schedule
in process reduction
of work orders per direct employee
of skills (worker flexibility)
of schedules changed
dues not on last week’s report,
week’s new expedites
of last week’s expedites
items specific to your industry
time injury (OSHA)
without a lost time injury
without a lost time injury
of safety/ergonomic improvements
The list of possible metrics is endless. What elements make a good metric?
Understood by all
Based on business objectives
Easy to measure
Step 3: Identify appropriate benchmarks for KPIs.
include industry information, budgets, strategic plans, etc.
Step 4: Set performance goals.
of the metric goals is important. Since the overall goal is to improve
performance, save time and money, it is important to align individual
performance with chosen KPIs. We recommend setting “stretch goals” in order to
Step 5: Review.
KPI should be regularly reviewed to ensure it is providing valuable information
and driving the desired behavior.
What are the key components of a KPI plan?
Develop a KPI title and a brief
Determine goals and objectives the
metric is linked to.
Document an understanding of what
decisions may be made based on the analysis of the metric.
Assign who will make those decisions.
Allocate who will collect the data.
Determine how the data will be collected
and how often.
Assign who reports the data and how it
Determine who analyzes the data and how it
should be analyzed.
Document lowest and highest acceptable
numerical values, target goal(s).
KPI plans are
meant to change behavior. It’s important those involved understand the needs
and benefits of change. Metrics alone do not change behavior, management MUST
analyze, monitor and communicate results to drive improvement.
Need help getting started?
Pick a few KPIs
and execute them well before adding additional. If a metric is not working, modify
or try a different measure. Smith Schafer is an ongoing source to help you grow
your business with strategies to help you increase profits, identify opportunities
and much more!
The Tax Cuts and Jobs Act of 2017 resulted in many changes for taxpayers. One of which is the elimination of personal and dependency exemptions. The Internal Revenue Service (IRS) redesigned the W-4 form and no longer uses the concept of withholding allowances. The changes are expected to increase transparency, simplicity and accuracy of the withholding system. Read on for additional information regarding these changes, as well as links to forms and frequently asked questions.
The new form was effective January 1, 2020. Current employees are not required to complete a new W-4 form. The employee’s current form on file will be used to calculate withholding. Employees hired January 1, 2020 or later must use the new W-4 form. Employees claiming to be exempt from withholding will be required to complete the new form.
The form is divided into five steps. The only two steps required for all employees are step one and step five.
Step 1 – Requires employee personal information (i.e. name, address, social security number, filing status).
Step 5 – Requires employee signature and date.
The employee can complete steps 2 – 4 if applicable.
Completing steps 2 – 4 – results in withholding more accurately matched to tax liability. If the employee chooses not to complete steps 2 – 4, the withholding will be computed based on the filing status’s standard deduction ($24,800 for married filing jointly, $12,400 for single, and $18,650 for head of household) and tax rates, with no other adjustments.
Employees are encouraged to review current withholding selections throughout the year. The IRS provides a tax withholding estimator to assist in calculating estimated withholding as well as provide suggestions for completing a new W-4.
Each payroll software provider has addressed the changes in a different manner. Most are allowing employers to toggle between the 2019 withholding method and the 2020 withholding method on an employee by employee basis.
In 2020, employees who complete a federal Form W-4 must also complete a Form W-4MN, Minnesota Employee Withholding Allowance/Exemption Certificate, in order to determine their Minnesota income tax withholding. If the employee does not complete the Form W-4MN, employers withhold Minnesota income tax as though the employee claimed single filing status with zero allowances.
Employers can still use the allowances claimed on the employee’s federal Form W-4 if the employee used a 2019 or earlier version for Form W-4 and does not want to change their withholding for 2020.
If an employee completes a 2020 Form W-4, they must also complete a Form W-4MN to determine their Minnesota withholding allowances.
Employees must also complete the new Form W-4MN if they:
Claim fewer Minnesota withholding allowances than federal allowances on a 2019 or prior-year Form W-4.
Claim more than 10 Minnesota withholding allowances.
Request the deduction of additional Minnesota withholding each pay period.
Claim to be exempt from Minnesota income tax withholding. Your employees must meet one of the requirements listed in section 2 of Form W-4MN.
Many states have their own version of the W-4 form. Here are links to W-4 forms for Minnesota’s neighboring states:
Wisconsin: Click for form Iowa: Click for form North Dakota: North Dakota does not have a form comparable to the Federal Form W-4. The information on the W-4 is also used for North Dakota income tax withholding purposes.
December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act
(TCJA), also known as tax reform. The $1.5 trillion tax legislation is the
biggest change to the tax code since 1986. The implications for school bus
companies are complex so we have summarized the most commonly asked questions
related to the tax reform:
Q: How does the corporate
tax rate reduction impact school bus companies?
A: The corporate tax rate reduction from a
top marginal rate of 35% to a flat rate of 21% provides significant tax savings
for school bus companies. The reduction in individual tax rates, along with the
addition of the 199A deduction, creates tax savings for bus companies operating
as entities other than C-Corporations. The additional savings provides
opportunities for school bus companies to retool their fleets by purchasing new
buses, making repairs to the existing fleet and hiring additional drivers.
Q: How does Bonus Depreciation
and Section 179 provide opportunities for school bus companies to reduce
taxable income by purchasing new busses?
A: The TCJA updated its provisions for
bonus depreciation so major asset purchases, with useful lives of 20 years or
less, may be fully deducted in the year of purchase. This allows school bus
companies to deduct 100% of the purchase price of school their buses. This
applies to the purchase of either new or used school buses. There is also no
limitation on the amount of bonus depreciation companies may take on buses
purchased during the tax year.
179 expensing is another option for fully expensing school bus purchases.
Section 179 expensing is limited to a company’s taxable income, so it would
apply if your bus company has made a lot of money or if the amount of bonus
depreciation available to be used from asset purchases would significantly
overrun income. In 2019, companies may expense up to $1,020,000 in new asset
purchases under Section 179. The limit does not begin to phase out until
greater than $2,550,000 of total assets are placed in service.
Q: How does tax reform
impact deduction of interest expense?
A: Tax reform puts limitations in place
for the net amount of business interest expense that can be deducted in a tax
year. The limitation does not apply to school bus companies with average annual
revenues of less than $25M for the past three tax years. For school bus
companies with average annual revenues greater than $25M, business interest is
limited to the sum of 30% of their adjusted taxable income, plus business
interest income plus any floor plan financing interest. Any disallowed interest expense would carry over
to the next tax year. It would then be treated as business interest paid or
accrued in that year subject to the same limitations.
Q: Are there changes to
the deductibility rules for meal and entertainment expenses?
A: There were revisions to the rules
pertaining to the deductibility of meals and entertainment with tax reform.
Prior to the passage of the TCJA, 50% of the cost of meals and entertainment
were generally deductible for tax purposes with a few notable exceptions. Tax
reform generally disallows tax deductions for costs associated with
entertainment related to existing business contacts or prospective clients. The
costs of meals themselves provided for business clients continue to be 50%
deductible for tax purposes. This means it is important to document and
segregate the costs of meals from the costs of entertainment. The provisions
for meals that were 100% deductible prior to tax reform remain unchanged. This
includes snacks provided for employees on the business premises, meals furnished
for employee events (i.e. annual Christmas Parties) and meals furnished for the
convenience of employers.
Q: What aspects of tax
reform should school bus companies keep in mind when doing long-term tax planning?
A: The same tax savings opportunities from tax reform
available in 2019 will likely remain in place for the next few years. Barring
any changes by Congress to the existing law, the rules for 100% bonus
depreciation do not begin to phase out until 2023. School bus companies still
have a few years to fully deduct their bus purchases. Bonus depreciation is
then slated to phase out by 20% each year until it completely phases out in
NOTE – MINNESOTA TAX LAW CONFORMITY
Minnesota Legislature recently passed a tax bill conforming or partially
conforming several Minnesota tax laws to changes made under prior Federal tax
bills. However, complexities remain around Minnesota’s treatment of the tax
It is important to work with a qualified advisor to help you leverage these opportunities. If you have questions about the changes or need assistance with a tax, accounting or audit issue, Smith Schafer & Associates can help. Our Transportation Group, comprised of numerous professionals, is committed to serving over 110 Minnesota transportation entities. Smith Schafer has the experience and understanding of the transportation industry to make a lasting positive difference in your future success.
you confident you are doing everything to minimize taxes for your business? One
of the best ways to reduce tax liability is to ensure you are claiming all tax
Tax Deduction: An expense subtracted from your taxable
income to reduce the amount subject to tax.
The expense must fit the IRS criteria of a tax deduction.
A deduction should not be confused with a tax credit.
A tax deduction reduces taxable income.
A tax credit reduces the amount of taxes owed.
Here is a List of 8 Small Business Tax Deductions:
1. Qualified Business Income Tax Deduction
Tax Reform created a new deduction for
pass-through business owners. It is called the Qualified Business Income
Deduction, also called a Section 199A deduction or QBI deduction. According to
the IRS, “QBI is the net amount of qualified items of income, gain, deduction
and loss from any qualified trade or business. Only items included in taxable
income are counted.”
This deduction, in certain situations,
may provide up to 20% tax deduction on qualified business income for eligible
partnerships, S corporations and sole proprietorships. For taxpayers with
taxable income exceeding $321,400 for a married couple filing a joint return,
or $160,700 for all other taxpayers, the deduction is subject to limitations.
These limitations include:
the business is classified as a service trade or business
amount of W-2 Wages of the business
basis immediately after acquisition (UBIA) of qualified property held by the
trade or business
2. Section 179 Depreciation Deduction
In 2019, businesses may deduct up to
$1.02 million of cost of qualifying property placed in service during the given
tax year. In addition, as a business owner, you may purchase up to $2.55
million in business property qualifying for the Section 179 deduction each year
before the benefit is phased out.
Example: ABC Corp. spends $400,000 on equipment and off-the-shelf computer software equipment in 2019. The business can deduct $400,000 this year on those purchases. To qualify for this Section 179 tax treatment in 2019, the equipment or software must be purchased and placed into service by December 31.
3. Bonus Depreciation Tax Deduction
Tax Reform allows businesses to fully
expense certain capital expenditures instead of depreciating them over several
Examples of eligible expenses are:
• Office furniture
These expenditures may be fully expensed
starting with business assets placed in service after September 27, 2017. Bonus
depreciation will begin phasing out for assets placed into service after
December 31, 2022.
4. Meals & Entertainment Deduction
Business owners may deduct 50% of food
and beverage related to operating a trade or business, with a couple
expense is not lavish or extravagant under the circumstances.
taxpayer is present when the food or beverages are furnished.
Note: Expenses related to entertainment,
amusement or recreation no longer fall under the 50% deduction. The Internal
Revenue Service (IRS) will not allow the entertainment disallowance rule to be
circumvented through inflation of food and beverage costs.
to the Rule: Expenses
related to business meetings for employees, stockholders, agents or directors
are fully deductible. Therefore, entertainment expenses related to meetings,
activities, or events for the benefit of employees are fully deductible. This
may include events such as shareholder meetings, holiday parties, and summer
outings. If these events remain as COMPANY ONLY functions, these rules should
5. Health Insurance Expenses
For S-Corporations, owner-employee
taxpayers, who own more than 2% of the S-Corporation stock, may deduct 100% of
the amount paid for medical insurance for himself or herself, a spouse and
dependents under the health plan established by the S-Corporation.
A more than 2% shareholder’s wages from
an S-Corporation are treated as the shareholder’s earned income. A deduction
for health insurance premiums may not exceed an individual’s earned income from
the trade or business. Certain exceptions apply to group health plans.
6. Vehicle & Travel Tax Deductions
Automobile usage tax deductions are some
of the most scrutinized deductions on business filings, but it may be worth it
if you travel frequently for work. There are two ways to claim this deduction:
Standard Mileage Rate. Total all the miles driven for your
business and multiply by the IRS’s standard deduction rate to figure out your
deduction. As of 2019, the standard mileage rate is 58 cents per mile.
Actual Car-related Expenses. This option may entail a little more
work. If you keep very detailed records throughout the year, you can add up how
much your car depreciated and what you spent on gas, repairs, tires, tune-ups,
car insurance and registration fees. That will be your deduction, instead of
The option you choose depends on how
economical your car is, how much it cost you to drive it throughout the year
and how well you documented your car-related expenses.
For a travel trip to qualify for a
travel deduction, it must meet the following criteria:
responsibilities during the trip must keep you away from your regular place of
business for substantially longer than a regular day’s work.
need sleep or rest to meet the demands of your work while away.
As with all these deductions, it is important
to keep receipts and records of all business travel expenses you plan to deduct
in case of an audit.
7. Home Office Tax Deduction
You may deduct expenses for the business
use of your home, which includes utilities, mortgage interest, insurance,
repairs and depreciation.
Note: This deduction allows business owners
to deduct $5 for every square foot of your home office, up to a maximum of 300
Office supplies is also deductible such
as printer ink, pens, software, a new laptop and much more.
8. Charitable Deductions
Your business may donate to charity and take a deduction for it. In general, contribution to charitable organization may be deducted up to 60% of adjusted gross income, however, there are limitations. If you donate property, you may deduct the fair market value of the it.
Note: Some of the tax deductions in this
list may not be available to your business so consult with your CPA before
claiming a deduction on your tax return.
What is a standard
deduction? The standard
deduction is a deduction of a fixed dollar amount, adjusted each year for
inflation, reducing a taxpayer’s taxable income.
Married Filing Joint or Surviving Spouse – $24,400
Head of Household – $18,350
Married Filing Separately or Single – $12,200
Age – If you are age 65 or older, you may increase your standard deduction by $1,600 if you file Single or Head of Household. If you are Married Filing Jointly and you OR your spouse is 65 or older, you may increase your standard deduction by $1,300. If BOTH you and your spouse are 65 or older, you may increase your standard deduction by $2,600.
Blindness – If you are legally blind, you may increase your standard deduction by $1,650 if filing Single or Head-of-Household. If you are Married Filing Jointly and you OR your spouse is blind, you may increase your standard deduction by $1,300. You may increase your standard deduction by $2,600 if BOTH you and your spouse are blind.
Proactive Tax Strategies
Partner with an experienced team of CPAs to help you create saving opportunities both now and in the future. We will work closely with you to evaluate your situation and recommend the best approach to lower the current year’s tax liability and maximize savings from allowable deductions, so you can focus on growing your business.
Our tax professional in the industry, Kim Mahanna discusses the main items affecting the transportation industry in the new year. Click below to watch the short video.
Whether it’s negotiating fuel surcharges or dealing with leasing sales tax and fleet maintenance, Smith Schafer has the experience and understanding of the transportation industry to make a lasting positive difference in your future success. Our Transportation Group, comprised of numerous professionals, is committed to serving over 110 Minnesota transportation entities.