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The June 15th deadline for return estimated payments for PA-40 and PA-41 is quickly approaching. The RBF tax team wanted to be sure you are aware that estimated payments of $15,000 plus must be paid electronically via myPATH online portal or PA will assess up to a $500 penalty. myPATH stands for “my Pennsylvania Tax Hub,” and replaces many of the Department of Revenue’s online services.  Pennsylvania is encouraging all individuals to make payments via myPATH for any amount due.

To make a payment:

• Visit the myPATH page and scroll down to click on “Make a Payment.”
• You will be directed to a page of options. You will again select “Make a Payment.”
• On the next page, you will be asked “How would you like to apply your payment?” You can use the drop-down menus under “Account Type,” “Payment Type,” and “Tax Year” to make your selections.
  • You will also need to provide your social security number or individual tax payer ID, as well as your name and contact information on this page.
• The next page will prompt you to provide a payment method. You can make a payment for ACH transfer using your checking or savings account number. You can also use a credit card to make a payment, though there is 2.49% transaction fee for this option.

Currently, myPATH is only available for personal tax self-service. Business taxes, including employer withholding tax, sales tax, and corporation taxes, will transition from E-TIDES to myPATH in November 2022.

For more information regarding myPATH for individual and business filers, click here.

Please reach out to your RBF tax professional for assistance making your myPATH payment or with any questions regarding these changes. We are always happy to help!

Cash flow awareness is vital in the day-to-day activities of a business. Keeping track of the inflows and outflows helps a company make better plans and decisions, such as choosing the right time to expand. Cash flow knowledge reveals where a business is spending money and can protect business relations, among other benefits. However, tracking cash flow is a challenge for many businesses.

To avoid business failure due to poor cash flow management, business owners are investing in software applications to help manage cash flow challenges. Modern technology enables access to these applications over the cloud, allowing small- and medium-sized businesses to benefit from them. These cash flow management tools help companies improve cash flow in various ways.

Remove Manual Paper Systems that Cost Time and Money

Using a cash flow automated system, it’s possible to create and send invoices directly to clients through email. This saves on time that would otherwise be used for printing invoices, mailing them, making bank trips, and going through paperwork comparing details. It is also possible to automate recurring invoices, saving the time used to create and send invoices.

Makes it Easy for Clients to Pay

Paying invoices takes time if a client has to keep confirming the payment details. However, an automated invoice can contain a pay now link, which facilitates quick payments for applications that include access to online payment options.

Helps Avoid Data Entry Errors and Reduces Risks

There is no need to move from one platform to another to check details, manually enter details, verify figures, etc. This ensures fewer errors, such as those generated when copying details like bank information to a check or paying the wrong amount. Sorting out these errors takes time, hence delaying payments.

Cash Flow Forecast

The applications offer access to account insights in real-time using cloud-based software and mobile apps, making it possible to forecast when clients are likely to pay and when bills are due. Access to live data also means there is no more dealing with complicated spreadsheets and paper ledgers. This way, a business can plan its actions to ensure positive cash flow. For instance, a business can delay paying vendors and plan when best to pay bills without running out of standby cash.

Avoid Late Payments

Late payments can result in fines that will cost the business unnecessary losses. However, with software that automatically sends invoice reminders, it is possible to make timely payments.

Centralized Cash Flow System

All activities involving cash transactions are located in one system, offering the ability to see cash inflows and outflows at a glance. As a result, a business can streamline its accounts and monitor cash flow. Plus, since it includes real-time reporting, it’s easy to spot any red flags and solve problems that could adversely affect a business.

Leverage on Data Analytics

A centralized system collects data and stores it in one place. By deploying artificial intelligence technology that performs data analysis, a business can better forecast its cash flow. This also provides insight into how changes such as new products or price adjustments affect cash flow.

Choosing a Cash Flow Tool

Cash flow automation enables a business to maintain a positive cash flow and have cash in its reserves to afford reinvesting in its operations, settling debts, and handling other operating costs. However, before investing in an automation tool, it’s recommended to analyze different tools to find the best fit for your business. Each tool is different and built to address various business problems.

Some features to look out for include integration with the existing accounting system, payments and invoicing, accepting a variety of payment methods, and security.

Besides getting the most suitable application, there are other considerations to establishing a healthy cash flow. Technology has its benefits, but it does not act as a cure for a poorly implemented system. For instance, if employees don’t know how to use new technology, its impact will be limited. Therefore, a business should establish a workflow process before implementing any new technology.

When was the last time you or your attorney reviewed or updated your will or trust? If it was some time ago before the passage of substantial tax law changes over the past few years, your documents may be out of date. Among the many changes was a substantial revision to the estate tax exclusion.

No doubt your will or trust was prepared with not just estate taxes in mind but so that your assets will be distributed after your death according to your wishes. However, certain events besides the tax laws being revised can cause these documents to become outdated.

Life’s ever-changing circumstances make estate planning an ongoing process. If you don’t keep your will or trust up to date, your money and assets could end up in the wrong hands. That’s why a periodic review of your will or trust is an essential part of estate planning. Here is a partial list of occurrences that could cause your will or trust to be outdated:

• Your marital status has changed.
• Your heirs’ marital status has changed.
• You have relocated to another state.
• You’ve had or adopted children.
• Your children are no longer minors.
• Your children are now mature enough to handle their own financial matters.
• Your assets have significantly changed in value.
• You have sold or acquired a major asset or assets.
• Your personal representative (executor, trustee) has changed.
• You wish to delete or add heirs.
• Your health status has changed.
• Estate laws have changed.

Are your named beneficiaries up to date on your life insurance policies, IRA accounts, and pension plans? For example, did you forget to remove your ex-spouse or a deceased relative as your beneficiary?

You should never overlook or put off these issues because once you pass on, it will be too late to make changes.

If you have questions about how your changed circumstances may impact your estate taxes, please give our office a call.

There are plenty of advantages to being your own boss, but that doesn’t mean that every decision is easy or straightforward. One of the first things you’ll have to decide is the type of business structure that is best for your situation. While selecting “sole proprietor” may seem like the path of least resistance, if you have personal assets at risk for your business’ debts and liabilities, it may make more sense to go with the more complicated route of electing to form as a C- or S-corporation, or even as a limited liability corporation (LLC).

What is the difference between each?

In a nutshell, if you set up as a C corporation – the preference of venture capital investors – you’ll have to pay taxes as both an individual and as a corporation. By contrast, both S corporations and LLCs have the advantage of a favorable pass-through tax treatment while still providing your personal assets with significant protection.

No matter which entity you choose, you won’t find the process costly or complicated, and if you decide to switch at a later date you can do so easily. Still, it’s important to understand that filing a Certificate of Incorporation does not entirely protect you from personal liability. In order to provide yourself and your shareholders with the highest level of personal protection make sure that you do the following:

• Never use your personal name or the name of a shareholder on any official documents. Whether invoices, correspondence, or contracts, the official corporate name is the only appellation that should be used, and the word “inc.” or “corp.” should be included where corporate. This is the best way to ensure separate entity recognition. The same is true whenever signing on the company’s behalf. Only use the corporate name and include your title, as shown below:

  CORPORATION NAME By: ___________________________________
  Name and official title of the authorized signer

• Maintain entirely separate bank accounts for your personal funds and your corporate funds, as well as separate taxes. Corporate tax liabilities should be paid from corporate accounts and personal taxes from personal accounts; the same is true for shareholders.
• Assuming that you have corporate bylaws and other formalities, make sure that you follow all of them to a tee. This may include ensuring that meeting minutes are recorded, that the Board of Directors holds regular meetings, and that stock is issued.

The clearer and cleaner the line between the organization and the individual, the higher the level of personal protection, so make sure that there is a separation between corporate and individual transactions.

If you have questions about what type of entity is right for you we can help. Contact us today for more information.

Taxpayers often question how long records must be kept and the amount of time IRS has to audit a return after it is filed.

It all depends on the circumstances! In many cases, the federal statute of limitations can be used to help you determine how long to keep records. With certain exceptions, the statute for assessing additional tax is 3 years from the return due date or the date the return was filed, whichever is later. However, the statute of limitations for many states is one year longer than the federal limitation. The reason for this is that the IRS provides state taxing authorities with federal audit results. The extra time on the state statute gives states adequate time to assess tax based on any federal tax adjustments that also apply to the state return.

In addition to lengthened state statutes clouding the recordkeeping issue, the federal 3-year rule has several exceptions:

• The assessment period is extended to 6 years instead of 3 years if a taxpayer omits from gross income an amount that is more than 25 percent of the income reported on a tax return.
• The IRS can assess additional tax with no time limit if a taxpayer: (a) doesn’t file a return; (b) files a false or fraudulent return to evade tax; or (c) deliberately tries to evade tax in any other manner.
• The IRS gets an unlimited time to assess additional tax when a taxpayer files an unsigned return.

If no exception applies to you, for federal purposes, you can probably discard most of your tax records that are more than 3 years old; add a year or so to that if you live in a state with a longer statute.

Examples: Susan filed her 2020 tax return before the due date of April 15, 2021. She will be able to safely dispose of most of her records after April 15, 2024. On the other hand, Don filed his 2020 return on June 1, 2020. He needs to keep his records at least until June 1, 2024. In both cases, the taxpayers may opt to keep their records a year or two longer if their states have a statute of limitations longer than 3 years.

Important note: Even if you discard backup records, never throw away your file copy of any tax return (including W-2s). Often the return itself provides data that can be used in future tax return calculations or to prove amounts related to property. You should keep certain records for longer than 3 years. These records include:

• Stock acquisition data. If you own stock in a corporation, keep the purchase records for at least 4 years after the year you sell the stock. This data will be needed to prove the amount of profit (or loss) you had on the sale. Although brokers are now required in most cases to keep purchase records and report the information to the IRS when the stock is sold, it is still a good idea for you to maintain your own records, as you the taxpayer are ultimately responsible for proving the cost to the IRS if your return is audited.
• Stock and mutual fund statements where you reinvest dividends. Many taxpayers use the dividends they receive from a stock or mutual fund to buy more shares of the same stock or fund. The reinvested amounts add to basis in the property and reduce gain when it is finally sold. Keep statements at least 4 years after the final sale.
• Tangible property purchase and improvement records. Keep records of home, investment, rental property, or business property acquisitions AND related capital improvements for at least 4 years after the underlying property is sold.

As we become more and more a paperless society, you may wonder if you must keep the paper version of the records mentioned in this article. No, you don’t – the paper documents can be scanned and maintained on your computer or in the cloud. But if you do convert the records to electronic files, be sure to maintain a back-up that can be retrieved if you have a computer crash or cyber attack that takes over your computer.

If you have questions about what records to retain and what you can dispose of now, please give our office a call.

Are you familiar with 401(k) retirement funds?

More and more employers are offering 401(k) plans as an employee benefit, and if you have the option and are not currently taking advantage of it, it may be time to rethink your savings strategy. Not only do these popular plans offer the advantage of using pre-tax dollars (and thus lowering your taxable income each year), but they are also a simple way to ensure that you’re putting away money regularly, without having to give it a thought once you’ve set up the plan.

Employers can sign you up automatically in the 401(k) plan that they offer, but even if you have to opt into a plan, once you’ve done so the amount that you’ve elected will automatically be deducted from your paycheck and deposited into your retirement savings account. All you have to do is decide how much you want to set aside each week. The answer to that question is entirely up to you and should be based on what your goals are, as well as variables like your living expenses and your age.

The closer you are to retirement age, the less time you have to save so you may want to bump up the amount that you deposit. Because the money that you invest will compound, the sooner you start investing the better. To give you an idea of how money can grow, consider the difference between investing $3,000 a year at an 8% annual return for 30 years – which would add up to $340,856 – versus only saving for 20 years, which would leave you with just $137,752. You also need to keep in mind that there is an annual maximum amount that you are permitted to contribute. Fortunately, that number increases each year. For 2022, the limit is $20,500.

You’ll also want to consider whether your employer offers a match, and if so how much that match is. One of the advantages of the 401(k) type of account is that employers can match all or a portion of your contribution, but you need to make sure that you understand exactly how your individual program works. Some employers will only offer a match up to a certain point, and others will only match if you opt for a minimum percentage of your income. Most experts encourage employees to make sure that they are fully taking advantage of whatever match their employer is willing to contribute.

To give you a sense of how much the average American has in their 401(k) account, consider the results of a recent survey conducted by Vanguard. It showed that those between the ages of 45 and 54 have an average 401(k) balance of $161,079 (median $56,722), while those who are between the ages of 55 and 64 have saved an average of $232,379 (median $84,714). The group that is closest to retirement – those who are 65 and older – do not have that much more than the group closest to them in age: they have an average 401(k) balance of $255,151 with a median of $82,297.

When thinking about your retirement and how you’ll fund your lifestyle, one of the most important questions you need to answer is exactly how you’re hoping to spend your golden years. If you plan to spend your time at home with family, you will need less than someone who plans world travel.

If you don’t have access to a 401(k) account, a Roth IRA is another good option. Though the contributions that you make come from after-tax dollars, you are able to withdraw them and their earnings tax-free at any point after you turn 59 ½. The annual limit that you can contribute to a Roth IRA is currently only $6,000, which is much lower than the $20,500 allowed each year for the 401(k) accounts.

It’s never too early to start saving for retirement, and there are plenty of good options available. If you need guidance on how best to save, contact us today to set up a time to discuss your situation.

If you have a second home in a resort area, or if you have been considering acquiring a second home or vacation home, and with summer just around the corner, you may have questions about how rental income is taxed for a part-time vacation-home rental. The applicable rental rules include some interesting twists that you should know about before you begin renting. Although some individuals prefer to never rent out their homes, others find such rentals to be a helpful way of covering the cost of the home. For a home that is rented out part time, one of three rules must be considered, based on the length of the rental:

1. Home Rented for Fewer Than 15 Days – If a property is rented out for fewer than 15 days in a year, the property is treated as if it were not rented out at all. The rental income is tax-free, and the interest and taxes paid on the home are still deductible as part of itemized deductions and within the usual limitations. In this situation, however, any directly related rental expenses (such as agent fees, utilities, and cleaning charges) are not deductible. This rule can allow for significant tax-free income, particularly when a home is rented as a filming location or during a major sports event such as the Super Bowl.
2. Home Rented For At Least 15 Days with Minor Personal Use – In this scenario, the home is rented for at least 15 days, and the owners’ personal use of the home does not exceed the greater of 15 days or 10% of the rental time. The home’s use is then allocated as both a rental home and a second home. For example, if a home is used 5% of the time for personal use, then 5% of the interest and taxes on that home are treated as home interest and taxes; these costs may be deductible as itemized deductions. The other 95% of the interest and taxes, as well as 95% of the insurance, utilities, and allowable depreciation, count as rental expenses (in addition to 100% of the direct rental expenses). If the rental income less the expenses result in a loss, the loss is limited to $25,000 per year for a taxpayer with adjusted gross income (AGI) of $100,000 or less and is ratably phased out when AGI is between $100,000 and $150,000. Thus, if a taxpayer’s income exceeds $150,000, the rental loss cannot be deducted; it is carried forward until the home is sold or until there is rental profit in a future year or the taxpayer has gains from other passive activities that can be used to offset the loss.
3. Home Rented For At Least 15 Days with Major Personal Use – In this scenario, a home is rented for at least 15 days, but the owner’s personal use exceeds the greater of 14 days or 10% of the rental time. With such major personal use, no rental-related tax loss is allowed. For example, consider a home that has personal use 20% of the time and is a rental for the remaining 80%. The rental income is first reduced by 80% of the combined taxes and interest. If the owner still makes a profit after deducting the interest and taxes, then direct rental expenses and certain other expenses (such as the rental-prorated portion of the utilities, insurance, and repairs) are deducted, up to the amount of the remaining income. If there is still a profit, the owner can take a deduction for depreciation, but this is also limited to the remaining profit. As a result, no loss is allowed, and any remaining profit is taxable. The interest and taxes from the personal use (20% in this example) are deducted as itemized deductions, which are subject to the normal interest and tax limitations.

Vacation Home Sales – A vacation-home rental is considered a personal-use property. Gains from the sales of such properties are taxable, and losses are generally not deductible.

Unlike primary homes, second homes do not qualify for the home-gain exclusion. Any gain from a second home is taxable unless it served as the taxpayer’s primary residence for two of the five years immediately preceding the sale and was not rented during that two-year period. In the latter scenario, the taxpayer does qualify for the home-gain exclusion, if he or she has not used that exclusion for another property in the prior two years. As a result, the home-gain exclusion can offset an amount of gain that exceeds the depreciation previously claimed on the home; this amount is limited to $250,000 for an individual or $500,000 for a married couple filing jointly (if the spouse also qualifies).

There are complicated tax rules related to the home-gain exclusion for homes that are acquired in a tax-deferred exchange or converted from rentals to primary residences. Homeowners may require careful planning to utilize the home-gain exclusion in such cases.

As an additional note, when a property is rented for short-term stays or when significant personal services (such as maid services) are provided to guests, the taxpayer likely will be considered a business operator rather than just an individual who is renting a home. If so, the reporting requirements will differ from those outlined above.

As with all tax rules, there are certain exceptions to be aware of. Please call our office to discuss your situation in detail.

Cybersecurity has become more important than ever, especially with the rise in cyberattacks. However, much focus is put on computers, laptops, servers, etc. Mobile phones and tablets seem to be overlooked when talking about cybersecurity.

Today, smartphones are integrated into the modern workforce as driven by work at home and remote working. To enhance mobility, these devices are installed with business mobile applications that enable access to company systems. They enable users to conduct different activities on the go such as banking, connecting to company networks, performing business transactions, and handling other social operations. However, this is raising concerns about the security of sensitive corporate data and other personal information stored on phones.

Despite these concerns, businesses continue to be lax on enforcing solid measures to protect company data and networks. Since phones have less protection than computers, they have become an easy target for cybercriminals who are using different methods to gain access to phones.

Security Threats to Mobile Devices

Phishing is one common attack vector that uses fake emails and text messages to trick users into clicking links that download malware onto a user’s smartphone. For instance, cybercriminals may use SMS to mimic legitimate companies and send messages that contain harmful links.

Recently, cybersecurity researchers cited a WhatsApp phishing campaign that attempts to lead WhatsApp users to install an information-stealing malware. The senders impersonate the WhatsApp notification service and send an email to a user claiming they have received a private voicemail. A user who is unaware of this ploy and clicks on the play button in the email will download malware onto their phone.

Attackers also take advantage of data leakage through malicious mobile apps. Users can get these apps by downloading fake versions of real apps, which are infected with malicious code that steals personal data stored on a phone.

Data can be stolen through legitimate solutions, as researchers found at the end of October 2021, when they discovered a banking trojan horse known as SharkBot in six phone apps. These apps were designed as legitimate antivirus solutions. The malware could bypass multifactor authentication to steal credentials and banking information, and even transfer money. Although the six dangerous apps have since been deleted from the Google Play store, this goes to show that hackers do not tire of looking for ways to infiltrate mobile devices.

Mobile phones also are affected by web-based mobile security threats when users access affected sites that download malicious content onto a device. Other security threats to phones include the use of unsecured public WiFi, lost or stolen mobile devices, mobile spyware, rooting malware, and jailbroken phones that become more prone to attacks.

How to Keep Safe

Since phones are now primarily being used as business tools, business owners need to rethink their mobile strategies for both employer-provided devices and bring your own device (BYOD).

Businesses that deploy mobile device management (MDM) tools will block potentially harmful apps, automatically update software, and remotely wipe off data on stolen or lost phones.

Users are the weakest link in security issues; hence, a need for regular security risk training on social engineering by learning how to differentiate suspicious emails and SMS messages. Users also need to learn to avoid downloading applications from third parties and other untrusted sources and use only authorized app stores. Furthermore, user training should include the dangers of public Wi-Fi, the importance of turning off a phone’s Wi-Fi when not using it, and the need to lock the device with a strong password or biometrics, such as fingerprint detection. Users also should avoid granting broad app permissions, especially for free apps that may be sending sensitive data to remote servers, where it can be used not only by advertisers but also by cybercriminals.

Keeping device operating systems and other software updated will reduce attack possibilities since cybercriminals use old bugs to hack devices. It is important to install anti-malware and anti-virus programs on mobile devices since they now face the same threats as computers and laptops.

Businesses can introduce a mobile device policy that employees sign before accessing company resources on their devices or when receiving employer-provided devices. Such a policy includes the dos and don’ts of using phones.

Regular security testing is crucial for enterprise applications as it helps expose vulnerabilities in apps and especially those developed by third-party agencies to ensure the security meets required compliance guidelines.

Conclusion

Mobile phones now have capabilities similar to computers and store a lot of personal and sensitive data. As more devices access business systems, it creates more endpoints that put the business at risk of a data breach. Therefore, businesses of all sizes should take mobile security seriously through strong defensive measures, which can be enhanced with enterprise mobile security solutions.

The Bureau of Labor Statistic’s Consumer Price Index rose by 8.5 percent year-over-year ending March 2022, leading most economists to agree that inflation is going to be with us for a while. With inflation seeming not to abate, at least in the near term, how will different types of investments react to inflation that is sustained and unknown when it will peak and begin to drop. Looking at a 2004 study from the Federal Reserve, an unexpected 25-basis point rate cut can be expected to see equities appreciate by one percent.

Defining Different Rates

The Federal Open Market Committee (FOMC) sets the federal funds rate – the overnight rate at which banks borrow from each other. This undoubtedly will impact the economy and the domestic and global stock markets. While it can take months, if not more than a year, for a change in interest rates to have a universal impact, the stock markets see the impact sooner. This is opposed to the discount rate, which is the interest rate banks are charged when loans come from regional Federal Reserve Banks – the so-called discount window.

One main reason the Fed adjusts the federal funds rate is to shape inflation. When the federal funds rate is raised, it is trying to reduce the money supply available for consumers and businesses. With less money available to circulate throughout the economy, it costs more to borrow money as interest rates rise.

Another important reason to keep an eye on the federal funds rate is the fact that the prime interest rate is based largely on the federal funds rate. Whether a mortgage, credit card, or other personal or commercial loans, the prime interest rate is an influential factor in these lending vehicles’ interest rates. As the Fed Board of Governors explains, the prime rate is how each bank determines its interest rates. Their unique prime rate is based on the target level of the federal funds rate, which is how much other banks charge them for short-term loans. Once the prime rate is established, it is used as a reference base rate for a multitude of lending products, including personal and commercial loans and credit card lines.

FOMC and Federal Funds Rate Adjustments

As the Federal Reserve increases its discount rate, short-term borrowing costs for financial institutions increase. Financial institutions in turn are pushed to increase borrowing costs for companies and consumers. Whether it is a credit card or a mortgage, rates increase. The higher the interest rate, the less spending ability the account holder has. The account holder also sees higher bills via the higher interest rates. The higher the bills, the less money they can spend elsewhere, often impacting the economy.

Rising Rates and the Markets

Publicly traded companies can suffer in different ways. A company may bring in less revenue or have higher borrowing costs, cutting into its growth forecast or reducing its profits. Companies also may see lower growth expectations and a decline in future cash flow projections. Assuming no other changes, the stock price will likely fall. Depending on how severe the increase in interest rates, can impact entire sectors – and depending on how much weight a particular company comprises within an index, an entire index.

Bond Market Dynamics and Interest Rate Fluctuations

Compared to corporate bonds, where bondholders are first in line to be paid if a company goes bankrupt, government securities, such as Treasury bills and bonds, are viewed as more likely to pay their investors back even in more challenging financial circumstances. This is because, according to the U.S. Securities and Exchange Commission, they are backed by the full faith and credit of the U.S. government.

Per an example from the Financial Industry Regulatory Authority (FINRA), interest rates have a noticeable impact on bonds. Say a bond is sold for X and matures in Y years down the road with a Z percent coupon at par value. Twelve months later, interest rates have risen and another of the same type and amount of bond is issued at the same par value but is issued with a one or two percent higher coupon rate. Based on these two different bonds’ characteristics, the original bond is less attractive on the open market. If the original bondholder wants to sell a bond issued a year ago, he will have to sell for less than face value due to the more attractive interest rate of the newly issued bond.

While there is much uncertainty in the financial markets, including the FOMC and the bond and equity markets, understanding how past market moves have occurred can offer guidance on how increasing interest rate environments may evolve in this rate-tightening environment.

According to the January 2022 Future Forum Pulse survey, there’s been a shift in what workers want post-pandemic. The report found that in Q4 of 2021, 78 percent of workers from six industrialized companies wanted location flexibility. The survey also found that 95 percent desired schedule flexibility. This is in light of the same survey finding that 72 percent of employees desire greater flexibility from their current places of employment. Those same workers reported that if they can’t find more flexible arrangements, they would seek out another employer that provides greater flexibility – compared to 57 percent expressing the same desire in Q3 of 2021.

According to a December 2017 Gallup report titled, “Thinking Flexibly About Flexible Work Arrangements,” along with helping develop and keep high-performing workers, creating and improving a flexible workplace intensifies the tie workers have to their employer.  It also reduces employer expenses. While lowering costs is always attractive, it’s important to understand that not every role or type of business will have the same implementation opportunities.

When businesses formulate their flexible working arrangement, employers and employees must be on the same page, have clear expectations, and have a way to measure that work is being completed in a manner similar to that in the office. One important consideration is ensuring that remote employees are treated with the same consideration for potential promotions, projects, etc. Do managers and senior executives maintain the same level of treatment of employees whether someone comes into the office or works remotely and at different hours?

As for jobs that cannot be performed remotely, flexibility may not be very realistic. However, businesses can offer employees compensatory approaches to flexibility. Examples include a relaxed dress code and the ability, within reason, to choose lunch and break times. Employers also may offer the option for both an open floor plan and traditional office space to provide variety, which can lead to creativity and innovation.

Additionally, employers can create digital spaces where in-person workers can communicate with co-workers to discuss covering and switching shifts in their work schedules, helping them better attend to their personal lives, and fostering camaraderie. Businesses also can gamify employees covering each other shifts; for example, by creating a system that rewards employees who take on extra shifts.

Permitting workers to select their preferred variety of tasks gives employees an awareness of freedom and can increase capabilities. By switching tasks within a pre-determined time frame or permitting employees to work at different offices or sites, employers can similarly provide a flexible working arrangement. This lets employees take on new responsibilities, use new workplace flows, and engage with different co-workers.

Variations on Flexible Working Arrangements

Another option is to work around employees’ circumstances. This could look like a school system holding classes every other month or implementing a mixed schedule. It could take the shape of a four-day workweek, whereby employees work 10 hours a day. This could similarly benefit families with children, parents, etc. that have medical or other special needs that can be addressed efficiently by a shorter but equally productive work week.

Splitting a Position

Having two (or more) employees perform the duties of one full-time worker is called job sharing. This happens via employees performing a part-time schedule, combining to create a single full-time position. This method allows employers to satisfy the role of a full-time job while meeting the needs of workers looking for part-time work.

Legal Considerations

One consideration for employers to maintain compliance with the Fair Labor Standards Act (FLSA) for non-exempt employees with flexible work arrangements is to strictly monitor hours worked. According to the FLSA, non-exempt employees must receive 1.5 times standard wages when they work beyond 40 hours within any continuous seven-day workweek. Ensuring that workplace guidelines are crafted and implemented equally, as well as documenting the implementation, is one way to reduce the risk of discrimination claims.

While providing flexible working arrangements is unique to every business, offering it can provide many benefits, especially the potential to attract and retain high-performing staff.

Sources

https://futureforum.com/pulse-survey/

https://www.gallup.com/workplace/236183/thinking-flexibly-flexible-work-arrangements.aspx

https://www.dol.gov/agencies/whd/flsa