Holiday Season Reminders

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Gifts to employees

Bonuses are entirely voluntary, but if you choose to give them to your employees, here are some guidelines. 

Non-cash gifts:

Food items fall under special, and very favorable, rules. They are not counted as income to the employee, but the cost is deductible to your business.

Non-cash, non-food gifts to employees with a value of more than $25.00 are considered income to the employee and will have to go on his or her Form W-2 at the end of the year. While they are still deductible for the business, they will require withholding for the employee, and you will have to pay the employer match.

Cash gifts:

Any gift in cash, by check, or any cash equivalent has to go through your payroll system. There are no exceptions. 

If you’d like to give an employee a check for an even dollar amount, call your payroll service and ask them to do a “net check.” Their software will figure out the payroll taxes and give you a paycheck where the final amount is the even number you specify.

Fixed assets and depreciation schedules

A useful life of more than a year is the test for whether an asset should be put on your balance sheet and depreciated, rather than being deducted as a regular expense in the current year. Simple office equipment like tape dispensers and staplers have a useful life of many years. Since it would be silly to depreciate office supplies, most businesses use a standard cost level (the most common is $500, though there are new rules that allow up to $2,500) to decide what to depreciate versus what to count as an expense.