employer - Linkenheimer LLP CPAs & Advisors

Critical Challenges Facing Today’s Business Owners

Running a business in California brings many opportunities, but also a unique set of challenges for employers. Employers today must navigate legal compliance, talent management, remote work issues, and rising costs, all while trying to run a successful business. As your trusted advisors, we want to highlight some of the most pressing issues California employers face today and how they can affect your bottom line.

Complex Employment Laws and Legal Risks

California is known for having some of the strictest labor laws in the country. The state imposes various requirements related to wages, overtime, breaks, sick leave, and discrimination protections. Failure to comply can expose a business to significant costs including penalties, lawsuits, and audits.

For example, misclassifying workers as independent contractors rather than employees can trigger serious consequences under Assembly Bill 5 (AB 5). Likewise, not adhering to meal and rest break laws or failing to maintain proper payroll records can lead to costly wage claims.

Employers must stay compliant and be up to date on current laws and court rulings. A simple oversight can create a major financial and legal liability.

Attracting and Retaining Talent

The labor market in California remains competitive. Attracting and keeping qualified […]

By Linkenheimer LLP|2025-04-22T20:14:16+00:00April 22nd, 2025|Advisor, business, employer|0 Comments

Employers: In 2025, the Social Security Wage Base is Going Up

As we approach 2025, changes are coming to the Social Security wage base. The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $176,100 for 2025 (up from $168,600 for 2024). Wages and self-employment income above this amount aren’t subject to Social Security tax.

If your business has employees, you may need to budget for additional payroll costs, especially if you have many high earners.

Social Security basics

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees and self-employed workers. One is for Old Age, Survivors and Disability Insurance, which is commonly known as the Social Security tax, and the other is for Hospital Insurance, which is commonly known as the Medicare tax.

A maximum amount of compensation is subject to the Social Security tax, but there’s no maximum for Medicare tax. For 2025, the FICA tax rate for employers will be 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2024).

Updates for 2025

For 2025, an employee will pay:

6.2% Social Security tax on the first $176,100 of wages (6.2% × $176,100 makes the maximum tax $10,918.20), plus
1.45% Medicare […]

By Linkenheimer LLP|2024-10-28T14:25:33+00:00October 28th, 2024|business, employer, social security|0 Comments

ACA Penalties Will Rise in 2024

Recently, the IRS announced 2024 indexing adjustments to the applicable dollar amount used to calculate employer shared responsibility penalties under the Affordable Care Act (ACA).

Although next year might seem a long way off, it’s best to get an early start on determining whether your business is an applicable large employer (ALE) under the ACA. If so, you should also check to see whether the health care coverage you intend to offer next year will meet the criteria that will exempt you from a penalty.

The magic number

For ACA purposes, an employer’s size is determined in any given year by its number of employees in the previous year. Generally, if your company has 50 or more full-time employees or full-time equivalents on average during the previous year, you’ll be considered an ALE for the current calendar year. A full-time employee is someone who provides, on average, at least 30 hours of service per week.

Under the ACA, an ALE may incur a penalty if it doesn’t offer minimum essential coverage that’s affordable and/or fails to provide minimum value to its full-time employees and their dependents. The penalty in question is typically triggered when at least one full-time employee receives […]

By Linkenheimer LLP|2023-03-22T19:14:18+00:00March 22nd, 2023|affordable care act, employer|0 Comments

Have Employees Who Receive Tips? Here Are The Tax Implications

Many businesses in certain industries employ individuals who receive tips as part of their compensation. These businesses include restaurants, hotels and salons.

Tip definition

Tips are optional payments that customers make to employees who perform services. They can be cash or noncash. Cash tips include those received directly from customers, electronically paid tips distributed to employees by employers and tips received from other employees under tip-sharing arrangements. Generally, workers must report cash tips to their employers. Noncash tips are items of value other than cash. They may include tickets, passes or other items that customers give employees. Workers don’t have to report noncash tips to employers.

For tax purposes, four factors determine whether a payment qualifies as a tip:

The customer voluntarily makes the payment,
The customer has the unrestricted right to determine the amount,
The payment isn’t negotiated with, or dictated by, employer policy, and
The customer generally has the right to determine who receives the payment.

Tips can also be direct or indirect. A direct tip occurs when an employee receives it directly from a customer, even as part of a tip pool. Directly tipped employees include wait staff, bartenders and hairstylists. An indirect […]

By Linkenheimer LLP|2023-02-14T16:32:51+00:00February 14th, 2023|employer, w2|0 Comments

Work Opportunity Tax Credit Provides Help To Employers

In today’s tough job market and economy, the Work Opportunity Tax Credit (WOTC) may help employers. Many business owners are hiring and should be aware that the WOTC is available to employers that hire workers from targeted groups who face significant barriers to employment. The credit is worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). It’s generally limited to eligible employees who begin work for the employer before January 1, 2026.

The IRS recently issued some updated information on the pre-screening and certification processes. To satisfy a requirement to pre-screen a job applicant, a pre-screening notice must be completed by the job applicant and the employer on or before the day a job offer is made. This is done by filing Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit.

Which new hires qualify?

An employer is eligible for the credit only for qualified wages paid to members of a targeted group. These groups are:

Qualified members of families receiving assistance under the Temporary Assistance for Needy Families (TANF) program,
Qualified veterans,
Qualified ex-felons,
Designated community residents,

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By Linkenheimer LLP|2022-09-27T17:18:01+00:00September 27th, 2022|business, employer, tax credit|0 Comments