Category: Blog

How to Host Awesome Holiday Office Parties

4 min read

How to Host Awesome Holiday Office PartiesFall is here and so are many of the holidays we love. Whether it’s Halloween, Thanksgiving or December holidays, here are some fail-safe things you can do to make sure everyone shows up and has a good time.

Throw a Potluck

One of the easiest ways to lure people away from their desks is – you guessed it – food. Create a sign-up sheet with different categories to make sure you have enough savory and sweet dishes, and provide options for those with dietary restrictions. If you’re the organizer, you might supply the drinks and utensils, maybe even some appetizers or snacks. Depending on the holiday, you might also suggest a theme. If it’s Halloween, you could ask folks to bring their spookiest fare.

Have a Raffle

This is yet another way to get people out of their offices. Everyone who shows up gets a ticket and on the back they’ll sign their name. At different times during the party, have a drawing. Maybe leave the big prize to the end. You could even stipulate that people must be present to win. Some of the prizes you could offer are: gift cards, smart watches, paid time off (PTO) or tickets to an event (a sporting event, a concert, etc.). A weekend at a local hotel (think staycation) or airline tickets are also attractive options. If resources allow, the sky’s the limit.

Designate Secret Santas

During December, this is always a big hit. Employees draw random names and get paired up with someone. The Secret Santa is given a wish list to choose from to give to their giftee. A smart idea is to set a monetary limit, such as gifts for under $25. After opening the present, the giftee has to guess who gave them the gift.

Set Up Games

Think giant Jenga. Pin the carrot nose on the snowman. Cornhole. These can be scheduled or ongoing. And best of all, it’s easy and uncomplicated. Employees can come and go as they wish. A little competition while everyone is noshing is a surefire way to foster employee bonding.

Host a White Elephant Gift Exchange

This is another classic. Everyone brings a wrapped gift and then you draw numbers. People sit in a circle with the presents in the middle, select their gifts in numerical order and unwrap them for all to see. But here’s the fun part: You can steal a gift that someone before you has unwrapped, which causes that person to either select a gift from the pile or steal from someone else. After three steals, the gift is frozen with whoever has it.

Volunteer Together

Working side by side with your colleagues for a purpose greater than yourself always cultivates a sense of community. For example, you could print off blank cards with your company logo on them, then ask employees to send a note of thanks to deployed military members. Another thing you could do with the cards is send a word of encouragement to those who live at places like The Salvation Army. The holidays can bring up lots of emotions, and sending positive messages to others is always a reward in and of itself. After all, when you give, you receive.

If you try one or all of these ideas, taking a break from the grind and enjoying a little non-work fun is not just necessary, it’s critical. When employees can cut loose, as well as feel appreciated and cared for, it’s highly likely you’ll have a happier, healthier workplace.

Sources

https://www.indeed.com/career-advice/career-development/office-holiday-party

How to Increase After-Tax Returns on Investments

4 min read

How to Increase After-Tax Returns on InvestmentsIt is all about how much you keep after taxes – not what you earn from your job, a business, or investments. While it is always great to see fabulous investment gains, the only financial metric that really matters is what is in your bank account at the end of the day. One of the ways you can influence this is by minimizing the taxes you pay on your investments.

Unfortunately, many people do not think about how taxes impact their investment returns until near the end of the year; however, you should act all year round. Taking part in investment tax planning throughout the year will give you opportunities to keep more of what you earn. Here are some rules and strategies to keep in mind.

Know When to Take Your Losses

Psychologically, many investors are averse to taking losses, holding out to “make their money back.” Instead of emotion, logic and investment acumen needs to be applied here. If an investment does not have a fundamental reason to turn around, then you are better off selling it and taking a tax loss.

Losses reduce taxes on either your capital gains for the year or, when losses exceed gains, up to $3,000 on other income. Excess losses can be carried forward to future years. Plus, you will have the proceeds to reinvest in something more likely to produce a return.

Let Winners Run

Unlike long-term capital gains, short-term capital gains are taxed as ordinary income. This means your marginal income tax rate (the highest rate applied to you) can impact your investment gains.

While you should not let the tax tail wag the investment dog, ideally you want to hold a winning investment for at least a year and a day to benefit from long-term capital gains tax treatment. This means you will pay only a 20 percent maximum tax versus whatever your marginal rate is.

As with losses, the fundamentals of the investment are key. Therefore you should not sell a holding if you think the gains are at risk just to save on taxes. If you believe in the investment for the long term, then holding out for preferred capital gains treatment can be a clever idea.

Give the Gift of Appreciation

Making charitable donations you would not otherwise give is generally not a viable tax strategy. However, if you are already charitably inclined then consider donating stock or mutual funds instead of cash.

When you donate property such as stocks, your charitable deduction is based on the fair market value of the asset on the date of the gift. It is much better to do this than donate cash.

For example, if you have a stock you purchased for $35 and it is now worth $135, when you donate it you will receive a charitable deduction of $135. If you were to sell the stock first, you would have to pay tax on the $100 gains and then have only $103 to donate in cash – assuming you are in the 32 percent tax bracket. The only winner in this situation is the IRS; both you and the charity lose. This is because the charity is excluded from paying capital gains taxes on the appreciation that occurred while you owned the asset.

Hold Until You Die

This strategy does not benefit you directly, but rather your heirs. When someone inherits an asset such as real estate, stocks, bonds, mutual funds, etc., the cost basis of the asset is reset to the fair market value at the date of death.

This means that if you have stock in company XYZ that you bought for $50 and now it is worth $500, you would pay tax on the gain of $450 per share. However, your heir would pay $0 if he sold it on the day you died. If your heir continues to hold the stock, the benefit still applies as his cost basis in the stock of XYZ would reset to $500, so he will pay taxes only on gains over that amount.

Conclusion

While you should never cheat on your taxes or do anything unethical, it is foolish to pay any more than legally necessary to the IRS. Engage in investment tax planning year-round and you may see better after-tax returns and more money in your bank account.

Increase In Deepfake Attacks and How Enterprises Can Prepare

4 min read

Deepfake AttacksDeepfake technology utilizes machine learning and artificial intelligence (AI) to manipulate or create synthetic audio, video and images that appear authentic. Deepfakes are commonly featured in entertainment and politics to spread false information and propaganda. For instance, deepfake has been used to show a celebrity or leader saying something that they didn’t, and this creates fake news.

Unfortunately, in deepfakes, cybercriminals have found a new tool for cyberattacks. Cybercriminals are now using deepfakes to pose a variety of enterprise risks.

How Cybercriminals Are Using Deepfakes

Deepfake technology is now used to create scams, hoaxes and false claims that undermine and destabilize organizations. For instance, a manipulated video might show a senior executive associated with fake news, such as admitting to a financial crime or spreading misinformation about a company’s products. Such corporate sabotage costs a lot of time and money to disprove and can impact a business’s reputation.

Another way businesses can be negatively impacted is through social engineering attacks such as phishing, which relies on impersonation to compromise an email. Similarly, social engineering using deepfakes can feature voice or video impersonations. A good example of such an impersonation was reported in The Wall Street Journal, in which fraudsters used AI to mimic a CEO’s voice. This incident happened in March 2019, when criminals impersonated a chief executive’s voice to direct a payment of $243,000.

Cybercriminals are able to execute social engineering attacks by accessing readily available information online. They can research a business, employees and executives. The criminal will even use an actual event picked from social media – for instance, a financial director who is just returned to work from a holiday – to sound more legitimate.

This emerging security threat is also made possible by the development of video editing software that can swap faces and alter facial expressions. Such developments have enabled deepfakes to fool biometric checks (like facial recognition) to verify user identities.

The deepfake cybersecurity threat has become such a concern that the Federal Bureau of Investigation (FBI) has issued a Private Industry Notification (PIN) cautioning companies of the possible use of fake content in a newly defined cyberattack vector referred to as Business Identity Compromise (BIC).

How to be Prepared and Protect Against Deepfakes

Deepfake videos and images can be recognized by checking for unnatural body shape, lack of blinking in videos, unnatural facial expressions, abnormal skin color, bad lip-syncing, odd lighting, awkward head and body positioning, etc. However, cybercriminals keep evolving and creating more convincing deepfakes.

Other measures introduced to combat deepfakes include creating solutions that detect deepfakes. There also was an introduction of deepfake legislation in the National Defense Authorization Act (NDAA) in December 2019.

Unfortunately, this has not been enough, and enterprises have the task of helping reduce the impact of these attacks. The following measures can help:

  1. Use anti-fake technologies
    Businesses should explore automated technologies that help identify deepfake attacks. They should also consider watermarking images and videos.
  2. Enforce robust security protocols
    Implement security protocols to help avoid deepfakes, such as automatic checks for any procedure involving payments. For instance, putting systems that allow verification through other mediums.
  3. Develop new security standards
    As security threats keep evolving, so should security standards within a company. For instance, introduce new security standards involving phone and video calls.
  4. Training and awareness
    Enterprises should enforce regular training and raise awareness among employees, management, and shareholders on the dangers of deepfakes to businesses. When all involved parties are trained to identify deepfake social engineering efforts, this will help reduce the chances of falling victim.
  5. Keep user data private
    Deepfake attackers use the information found in public domains such as social media. Although not a failsafe procedure, company profiles can be made private. Users also should avoid adding or connecting with strangers they don’t know and posting too much personal information online.
  6. Disinformation response policy
    Some deepfake incidents are out of control for an enterprise, such as fake videos purporting to be from top management. However, establishing a disinformation response plan will help in cases of a reputation crisis. This should include monitoring and curating all multimedia output – which will help present original content to the public as authentic content.

Conclusion

Deepfake is an emerging cybersecurity concern that requires enterprises to be aware of its potential threats and stay prepared. Although it might be possible to identify a poorly generated deepfake with the naked eye, the technology continues to advance. In response, countermeasures must keep pace.

How to Determine Partnership Basis, Inside and Out

3 min read

How to Determine Partnership Basis, Inside and OutAccording to the Internal Revenue Service, the 2019 tax year saw more than 25 million partners comprising nearly four million tax returns filed by partnerships in 2019. With many concerns necessary for navigating the U.S. tax code, including filing annual returns, one important consideration for partnerships and their partners is how to calculate a tax liability. In order to determine how much they profit or lose on their investment, there must be an accurate calculation of adjusted cost basis via outside cost and inside cost basis.

According to the Internal Revenue Code (IRC), one aspect of Section 754 details how the tax basis of partnership assets are handled. When partnerships change or when there are changes in partnership interest, it helps to rebalance the basis of the business entity’s property. This entails defining and calculating both outside cost basis and inside cost basis.  

Understanding Outside Cost Basis

Outside cost basis refers to what percentage of interest each partner owns in a partnership. For example, if three partners own a partnership and each partner contributes $200,000, this establishes their outside cost basis. Recording what each initial partner contributes to the partnership is essential to determine their tax basis, including whether they’ve established a loss or gain and therefore their tax obligations.

Understanding Inside Cost Basis

As the Internal Revenue explains it, “Inside basis refers to a partnership’s basis in its assets.” One way to look at it is if three partners bought an asset for $600,000, each contributing $200,000 (symbolizing their inside cost basis), their respective inside basis in that particular asset would be $200,000.

When to Consider a Section 754 Election

It’s important to distinguish that partnerships adding or selling partnership interests must consider how such changes impact owners’ tax basis. By making a Section 754 election, partnerships can adjust the cost basis for new partners to provide an accurate accounting of profits (or losses). Assume five partners contributed $200,000 to a partnership and bought an asset for $1 million. A year later, the asset appreciated to $1.3 million. The outside basis is $200,000 (per partner) and the inside basis is $1 million.

Assume the asset appreciates to $1.3 million and one of the original five partners wants to cash out and sell it to a new, independent partner for $260,000. The original partner must pay taxes on the appreciation of $60,000 when exiting the partnership. Assume three months later, the asset is sold at the same price of $1.3 million with no Section 754 election. The four original partners are faced with a taxable gain of $60,000 ($1.3 million selling price – $1 million inside basis) / 5 partners = $300,000 profit / 5 partners). However, despite the new partner’s outside basis of $260,000, they would face the same $60,000 tax liability.

However, if a partnership chose to elect their partnership to Section 754, the new partner’s tax basis is “stepped up” to $260,000 instead of the original partner’s basis of $200,000. The new partner’s inside cost basis will remain at $200,000, requiring no adjustment. However, the new partner now has an outside basis of $260,000 – the amount the partnership interest was sold for from the original partner to the new partner.

While each business arrangement is unique, for partnerships that see their assets regularly increase in value and experience frequent changes in partners, it could make sense to go with a Section 754 election.

Financial Accounting Overview

5 min read

What are financial statementsFinancial accounting is how accounting professionals document, compile and outline how a business performs financially over a discrete period of time. Unlike cost accounting, which is used primarily for internal short and long-term strategic planning, financial accounting focuses primarily on producing relevant documentation for outside parties interested in short- and long-term financial performance.

Small businesses, large corporations and nonprofits use the following financial statements produced for relevant parties: the Balance Sheet, the Cash Flow Statement and the Income Statement. When it comes to publicly traded companies, their financial accounting standards are overseen by generally accepted accounting principles (GAAP). It’s one way to provide a standardized means to communicate the business’s monetary details to potential and current shareholders, lenders, government oversight and tax enforcement agencies.

Balance Sheet

As the U.S. Securities and Exchange Commission (SEC) explains, the balance sheet is a financial statement that informs readers about a business’s assets, financial obligations and shareholders’ equity. It’s how a business documents its asset valuation, its financial obligations and cash holdings. It provides owners, lending institutions and investors a way to analyze a business. The current ratio shows the ratio of current assets to current liabilities. This is a way to evaluate a business’ ability to manage financial obligations over the next year. Shareholders’ equity represents how much cash would remain if the business satisfied all creditors and all assets were liquidated; whatever remains would be the property of the shareholders.

Income Statement

Released once a month, every quarter or once per year, an income statement reports revenue, expenses, and net earnings or losses of a company for a given period. A company’s net revenue is calculated by subtracting allowances for uncollectable accounts, discounts, etc. from a business’s gross sales or revenues. From there, subtract the cost of sales, or how much the lot of products or services cost to make for the accounting period, from the net revenues figure. This results in gross profit or gross margin. Depreciation, along with amortization, or the cost of machinery and equipment losing life over time, is subtracted from the gross profit figure.

From there, operating expenses, which aren’t directly attributable to product or service production but are running day-to-day operations, are deducted from the resulting gross profit figure. This number is now called income from operations or operating profit before interest and income expense. Depending on the number, the interest income or interest expense is either added or subtracted from operating profits to arrive at the operating profit before income tax. Finally, income tax is deducted, resulting in net profit (net income or net earnings) or net losses. For publicly traded companies, it gives investors insight as to how much the company is making per share, so-called “earnings per share” (EPS).

Statement of Cash Flow

Per the SEC, a statement of cash flow features three sections that detail sources and utilization of the business’ operating, financing and investing cash flows. It paints a picture of inflows and outflows of the business’s cash levels. At the end of the day, it helps anyone interested in the company’s financials, especially potential and current investors, see the latest status and trends of cash flow.

One way to calculate cash flow, according to the SEC, is to look at a company’s free cash flow (FCF). This is calculated as follows:

Free Cash Flow = Operating Cash Flow – Capital Expenditures

Free Cash Flow = $50 million – $20 million = $30 million

This information is helpful because free cash flow can help determine a company’s financial health, how well (or not) the business model is performing, and its overall likelihood of success moving forward. Additionally, understanding the difference in accounting methods is another helpful piece of financial accounting analysis.

Accrual Method vs. Cash Method

Accrual Method

When it comes to the accrual method, according to the Congressional Research Service, when a business is paid for services or products to be rendered in the future, the payment is permitted to be recognized as revenue only when the product or service has been rendered. When it comes to accounting for expenses that are presumably deductible, under the accrual method, the expense can be recorded when it’s experienced by the business, not when payment has been made to the utility, raw material supplier, etc.

Cash Method

If a consultant gets payment immediately but isn’t expected to do said job until the following month, this approach requires revenue to be recognized when the cash has been received. Similarly, when expenses are paid is when expenses are recorded.

Considerations

For any business that handles inventory or sells to customers on credit, accrual accounting is required by the Internal Revenue Service. Similarly, for companies with average gross receipts of revenues greater than $25 million for the past 36 months, the IRS mandates accrual accounting. For companies with average gross receipt of revenues of less than $25 million, depending on the exact circumstances of the company’s business nature, cash or accrual may be used.

Financial accounting provides investors, business owners, and those providing businesses with legal and accountability a way to monitor performance and compliance.

Sources

IRS, IRS, IRS, FAS, SEC, SEC

Should You Upgrade Your Homeowners Insurance?

5 min read

Should I Upgrade Your Homeowners Insurance?During the first year of the pandemic, many homeowners spent their down time upgrading their homes. The year 2020 alone experienced at 3 percent uptick in spending on home improvements – to the tune of nearly $420 billion nationwide. This included modifications for remote work, online schooling and leisure activities at home.

Between remodeling, high inflation and today’s elevated real estate prices, it’s important to review your homeowner’s insurance policy to ensure it’s up-to-date. Does it include enough coverage for recent upgrades to your home? Does it carry an inflation factor to ensure coverage is on par with more expensive building material costs and labor increases? Do you have coverage for ancillary factors, such as the cost of meeting local building ordinances, or flood insurance for today’s extreme weather events?

Replacement vs. Actual Value

One term to check on your policy’s declaration page is whether your coverage is determined by replacement cost or actual cash value. Replacement cost will pay for repairs to your home or replace your personal property (e.g., laptop, television) up to coverage limits, regardless of its current value. In other words, the policy will pay for a new computer even if your old one was 3 years old.

Actual cash value refers to a cash payout equal to the current value of your property. In other words, if your computer was 3 years old, you will receive the cash value of a 3-year-old computer – which will not likely cover the cost of a new replacement.

Guaranteed Replacement

In lieu of upgrading your home’s cost coverage each year, you might have the option to pay for guaranteed replacement, which is an extra fee that ensures the policy will cover the entire cost to rebuild your home. Extended replacement cost coverage pays out a certain percentage above your policy’s stated dwelling coverage limit if the cost to rebuild is higher than the face amount. For example, a policy with $200,000 coverage and 25 percent extended replacement coverage will pay up to $250,000 to rebuild your home.

Ordinance Coverage

Homeowners who live in older homes should consider adding ordinance coverage if it is not standard under your policy. Ordinance coverage pays for the cost to meet current building codes should you need to rebuild. These fees can be substantial and would have to be paid out-of-pocket if you don’t have this form of coverage. Note, too, that although guaranteed replacement cost coverage might offer a higher payout, that is only for the material and labor costs to rebuild – not local ordinance fees, licenses or inspections.

Inflation Impact

As you review your current policy, note that the section labeled Coverage A represents the amount available to rebuild your home. It generally rises by 2 percent to 3 percent each year for basic cost-of-living increases. However, it is worth noting that building materials, such as lumber and steel, increased by 19 percent in 2021, and in June the general inflation rate increased to 9.1 percent, its highest level in more than 40 years.

Because home building costs, the inflation rate and the increasing number of weather events have plagued the home insurance industry, policy premiums are starting to increase at a higher rate each year than in the past. In additional to higher costs due to supply chain disruptions and inflation, the home building industry is hampered by a lack of qualified workers – and experienced workers are demanding higher pay. This is yet another component that is factored into calculating insurance premiums. Basically, anything that would lead to a higher cost to repair your home will result in higher rates.

Insurance companies calculate your policy premiums by multiplying your home’s replacement rate with your home’s current value. Therefore, a combination of higher building costs and higher real estate values have contributed to higher insurance premiums. Some states have set an annual percentage cap on how much insurance companies can raise homeowner rates each year. However, given the increasing number of extreme weather events (e.g., storm surge, wildfires) in recent years, state legislators also have increased those rate caps so that insurers have the latitude to cover excess payouts. Note that rate increases vary by geographical area, based on local weather activity, labor costs and building supplies.

Some insurance policies offer an inflation guard, which automatically increases coverage limits to match inflation rates when the policy is renewed.

Flood Damage

Be aware that homeowners insurance does not cover flood damage. Mortgage lenders require homes located in government-designated Special Flood Hazard Areas (SFHA) to purchase a separate flood insurance policy. However, we have seen inland and even metropolitan areas that are not located in flood zones be devastated by the effects of storm surge following a hurricane. Homeowners who live in these higher-risk areas should consider purchasing a separate flood insurance policy as well. 

Top Side Hustles

4 min read

Top Side HustlesIn our current economy, or anytime actually, it can’t hurt to have a side hustle to bring in extra cash. Some of these options can be quite lucrative, but like everything, it takes a little work to create a steady income stream. However, with a little pre-planning, you can do it. Let’s take a look.

Become a Tutor

Are you a math whiz? A wordsmith? History nut? Whatever your specialty, you can earn between $10 and $75 an hour. You might vary your price based on whether you’re tutoring high school, college or adult education classes. You can conduct your sessions online or in-person –totally up to you and your comfort level. All you have to do is create a lesson plan, then spread the word on social media, contact your local high schools and universities, or tack a notice near a central location such as a local coffee shop. When you’re sharing your knowledge and helping others, it might not feel like work at all.

Deliver Groceries with Instacart

If you haven’t heard of this, you might have seen people in grocery stores with their carts stuffed with brown paper bags full of items, list in hand – these are most likely Instacart workers. In sum, this gig is a same-day grocery delivery app. You shop for other folks; you don’t have to pay out-of-pocket when you’re at the store; and you can start earning money the very first week. Oh, and you get tips. According to ridester.com, you can make anywhere from $200 to $1,000 a week. Pretty easy and cool, right?

Rent an Extra Room Through Airbnb

While this might require some prep like buying extra towels and toiletries, as well as communicating with customers, you can make a lot in the long run. It might take a couple of months to get up and running, but you can bring in around 7 percent to 12 percent of your property value per year.

Help with Finances

If you have a background in accounting or finances, you might start up a business doing someone’s books, taxes or other services that have to do with money and/or budgeting. You can make from $20 to $100 an hour. Be sure to check with your city and state to find out what licenses and certifications you need.

Walk Dogs

Yes, dog walking can bring in more than you think. And you’ve probably seen these hearty souls on the sidewalks, sometimes with more than one furry friend in tow. If you live in a big city, there’s ample opportunity to make this work: you can make between $10 and $100 per day. And this is just a ballpark estimate. Plus, you’ll get your steps in. It’s healthy both fiscally and physically.

Write Resumes and Cover Letters

With all the job seekers out there, you could make a good chunk of change doing this. And you don’t necessarily need to be a writer. If you have a background in HR, recruitment or you’ve worked as a hiring manager, you’ll be ready to go. Hesitant about all that punctuation? One word: grammarly.com. This app will help you navigate all those writing questions you might have that inevitably come up when you’re composing. The average you might earn is somewhere in the neighborhood of $500 or more.

One Thing to Note

If you make more than $600, you must report it to the IRS. If you see that your side hustle is booming, if you start making thousands or tens of thousands of dollars a year, you might want to start a business. You could enjoy additional tax write-off opportunities so you can keep more of what you earn.

So start exploring, hang those shingles and watch the extra dough come rolling in.

Sources

https://careersidekick.com/side-hustle-ideas/

https://time.com/nextadvisor/financial-independence/best-side-hustles/

https://www.ridester.com/how-much-can-you-make-a-week-with-instacart/#:~:text=As%20an%20Instacart%20shopper%2C%20you,orders%20will%20earn%20more%20money.

Electric Vehicle Tax Credits and the Future of the Automotive Industry

3 min read

Electric Vehicle Tax CreditsOne highlight of the recently passed Inflation Reduction Act of 2022 (IRA; HR 5376) includes modifications to what is more commonly referred to as EV credits. Specifically, Section 30D of the Act is where the most important modifications are, and where the present tax credit for electric vehicles is spelled out in the U.S. Code. There is also new stimulus for previously owned electric vehicles, industrial vehicles and “alternative fuel refueling property.”

According to the Joint Committee on Taxation’s estimates, in lieu of what was previously known as the credit for plug-in electric vehicles, there is now a new clean vehicle credit. It is expected to be worth $7.5 billion over the next decade. Other noteworthy tax credits include $1.7 billion for “alternative fuel refueling property,” $1.3 billion available for buying a previously owned qualified plug-in EV, and $3.6 billion in tax credits for qualified commercial clean vehicles.

How the IRA Changes Section 30D and EV Tax Credits

For eligible, new clean vehicles, purchasers may receive $7,500 in federal tax credits and $4,000 for similarly used vehicles. It is important to note that taxpayers who purchase such vehicles are eligible for this tax credit if their modified adjusted gross income (MAGI) during the current or preceding tax year is no greater than $300,000 for joint filers; $225,000 for heads of household; and $150,000 for single filers. It is also limited to pickup trucks, vans, and sport utility vehicles up to a MSRP of $80,000. All other vehicles costing up to $55,000 are similarly eligible.

Critical Mineral Standards

Another important qualification for this tax credit is if the vehicle’s battery has a minimum threshold of critical minerals and if it has been processed in the required geographies. Section 30D(e) requires progressively increasing percentages of critical minerals either processed or extracted in the United States or another country the U.S. has an existing free-trade agreement with. If the stated percentages are recycled in North America, a vehicle’s battery components may also qualify for the tax credit.

Once guidance is issued by the U.S. Treasury and before the start of 2024, there must be at least 40 percent of eligible critical minerals to qualify. Vehicles placed in service in 2024 must have at least 50 percent critical minerals in their batteries. Critical minerals must be 60 percent, 70 percent and 80 percent of a battery’s components in 2025, 2026 and after Dec. 31, 2026, respectively. Dependent on future guidelines developed by the Internal Revenue Service, manufacturers will have to sign off on battery component makeup.

Requirements for Battery Manufacturing/Assembly Requirements

According to Section 30D(e)(2), prior to Jan. 1, 2024, at least half of the components of an EV battery must be assembled or manufactured in North America. Starting in 2024 and through 2025, 60 percent of a battery must meet such requirements. Beginning in 2026 through 2028, this requirement will increase by 10 percent annually, eventually requiring 100 percent of a battery’s construction to meet these standards beyond Dec. 31, 2028.

Other Considerations for Tax Credit Eligibility

If any critical minerals were extracted, handled or recycled by a “foreign entity of concern,” it is prohibited by the IRA for tax credit eligibility. Similarly, final assembly also must take place within North America to retain eligibility for the tax credit. Being considered a “qualified manufacturer” is another requirement that is necessary to maintain tax credit eligibility. This is any manufacturer that adheres to the EPA’s Title II Clean Air Act rules.

With the push for cleaner and greener energy evolving, this is one of many tax credits for consumers and businesses alike to reduce emissions and navigate the U.S. Tax Code.

Risk of Browser Extensions and How to Stay Safe

4 min read

Risk of Browser ExtensionsWeb browsers such as Google Chrome, Firefox, Safari and Edge, among others, play an essential role in enabling access to websites on the internet. Most browsers allow users to install extensions, also referred to as add-ons or plug-ins. These extensions are applications or small software modules that add functionality and other useful features to a browser.

By means of the extensions, users can carry out various tasks such as password management, cookie management, ad blocking, interface modification, productivity tracking, grammar and spell-checking, etc.

However, although the extensions offer different useful functionalities, cybercriminals have taken advantage of them, creating a security risk to users and their data.

The Need to Beware of Browser Extensions

Browsers enable websites to collect information such as viewing history, adding cookies, etc. Also, when installing the extensions, some require to be allowed various permissions, like the ability to read or change data. For instance, according to a recent study by Talon, a digital security company, most Chrome Web Store extensions (62.43 percent of extensions) require dangerous permissions, including permission to read or change user data and activity. This means that an extension can see the sites visited, keystrokes, login credentials and private data, such as payment card details.

Since this information is readily available on a user’s web browser, cybercriminals can use a malicious extension to collect the data for their gain. At the same time, the data collected is sold without user consent or knowledge and used by third-party data brokers to send users tailor-made ads.

Although not all browser extensions are a security risk, some might be built to impersonate legitimate extensions, especially those from third-party resources. In other cases, legitimate extensions have been compromised or bought by a developer who uses them for malicious purposes.

Some browser add-ons are built to download malware onto your device, redirect search traffic to malicious websites or download ad ware and Trojan horse viruses.

The extensions can automatically update without requiring any action from a user. This means that if a legitimate extension is compromised, it can be used to install malware without user knowledge. Even secure extensions are prone to attacks or can be compromised, enabling attackers to gain access to data stored by browsers.

Additionally, malicious extensions can be built to bypass fraud detection by official Web stores. For instance, in 2020, Google removed over 500 extensions from its web store that violated policies, with some already having infected users and stolen their data. This followed the discovery of some malicious extensions that users had already downloaded.

A recent report released by Kaspersky, a cybersecurity firm, shows just how dangerous malicious add-ons are. After the firm analyzed data from January 2020 to June 2022, it discovered that over this time frame, 4.3 million users were attacked by adware hiding in browser extensions. This put adware as the highest representative of browser extension risks, with malware coming second. The report also indicates that Kaspersky products prevented more than 6 million users from downloading adware, malware or riskware disguised as browser extensions.

Such figures from just one cybersecurity firm are worrying, considering the study focused only on users that use their security solutions. This creates a need for users to be more vigilant when using browser extensions.

How to Make Sure Browser Extensions Are Safe

There are various ways to help reduce the risks posed by browser extensions:

  1. Ensure the extension is from an official web store. Since these extensions can also be compromised, it is best to find out more information about the developer.
  2. Check reviews as they help to know what other users think of the extension and if there have been any complaints. However, users should be cautious of identical comments or too many 5-star reviews, as these could be fake.
  3. Check whether the extension is updated regularly. An extension last updated many years ago might not be reliable.
  4. Review extension permissions for each extension.
  5. Check that you are not installing clones of the original extension. For instance, if you search for an extension, you can find other similar ones that look legit.
  6. Uninstall browser extensions that you don’t recognize or those you no longer need.
  7. Use browsers that have the features you want.
  8. Install reliable antivirus software that will help spot malicious activities or applications.

Conclusion

Browser extensions play an important role in the user browsing experience. Although not all extensions are dangerous, users must conduct due diligence to ensure they install legitimate extensions.

How Cost Accounting Helps Businesses Measure Performance

4 min read

Cost AccountingCost accounting is a type of accounting that analyzes a business’ complete production costs by looking at both variable and fixed costs. This includes the concepts of marginal costing, lean accounting, standard costing and activity-based costing. It’s used by a business’ management to evaluate fixed and variable costs involved in the manufacturing operations.

The initial step is to assess and document such costs one-by-one. Once production is finished, it will contrast projected costs to what actual costs ended up being and see how processes can be improved. Management gleans information on how funds are used, revenue is earned, and where funds might be misdirected. It can help businesses create greater productivity and financial efficiencies after analyzing such information.

Looking at it more in-depth, there are different types of costs analyzed. The first is fixed costs, such as a monthly mortgage or lease payment, or those that are static regardless of the production level. The next is a variable cost that correlates directly with the production level. Operating costs can be either fixed or variable, depending on each business’ type of operation. Other types of costs include direct or directly connected; and indirect costs, which are costs such as administrative expenses that are less directly associated with production.  

Variable Cost Ratio

Variable Cost Ratio (VCR) looks at what percentage a business’ variable production costs is of its net sales. Businesses can calculate the VCR by:

VCR = Variable Costs / Net Sales. Net sales is a business’ gross sales after subtracting any discounting, customer returns and allowances.

It can also be calculated this way: VCR = 1 – Contribution Margin

If each widget’s variable unit cost is $40 and it sells for $200 individually, the VCR equals 0.2 or 20 percent. It’s also possible to be completed within a certain time frame. For example, if a single month’s total variable production costs are $6,000, and the business has revenues of $30,000 within that same month, the variable cost ratio is 0.2 or 20 percent.

The VCR shows if a company is able to earn a higher rate of revenues and a slower growth in input costs. It can help businesses determine when it hits an equilibrium between a loss and profit. It’s also important to note that fixed costs are excluded.

Marginal Costing

Marginal costing, or cost-volume-profit analysis, is a way to determine how much more it would cost a company to increase its manufacturing by one more widget.

It helps analyze the impact of varying levels of costs and volume on operating profit. This calculation looks at potentially profitable new products, sales prices to establish for existing products, and the impact of marketing campaigns. It assumes that the retail price and the variable and fixed costs per unit don’t change. It’s a way for businesses to calculate when they’ve developed a price point to cover all expenses. It also can indicate when the business can obtain profits at a particular price point and mix of manufacturing output. It’s a way for businesses to determine which levels are unprofitable, break-even and make a profit.

When it comes to determining how much sales volume a business needs to break even, the formula is as follows:

Sales Volume = Fixed Costs / Contribution Margin (Contribution Margin = Sales – Variable Costs)

If a business is looking to determine its break-even sales revenue figure, it must determine what its fixed costs are and its contribution margin. This calculation would be as follows:

$210,000 in fixed costs and a contribution margin of 30 percent = 210,000 / 0.30 = $700,000

However, it’s important to note that there’s no profit with the first calculation. If the business wanted to make $100,000 in profit, it would add that to the $210,000 in fixed costs. This would be calculated as follows: $310,000 / 0.30 = $1,033,333.33

Considerations of Marginal Costing/Cost-Volume-Profit Analysis

This formula tells a company if a widget is profitable. The contribution margin is what’s left over after each item or a lot of items is sold after deducting the variable costs for the respective number of units sold. When the contribution margin exceeds the fixed cost for the item or respective number of units sold, this signifies a profit. 

Companies that have the time and resources to analyze their performance beyond the traditional financial statements can see what’s right with their processes; but can more importantly, they can find out what’s wrong and how to fix it going forward.