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August Continues Lower

   
The third week of August continued to be stuck in negative territory for independent grocers, with same store sales reported to be down 0.92 percent compared to the same period in 2015. The fourth and final week of the month has a lot of ground to make up in order to keep sales on track with 2015’s.

Tomorrow the Bureau of Labor Statistics releases its August unemployment report. Initial estimates from other sources suggest that hiring in August was decent, but slower than in the previous two months.

Same Store Sales        
% Change from last year

Same Store Sales – Previous Months

2016 Independent Grocers Financial Survey Released

   
FMS and the National Grocers Association (NGA) have released the results of the 2016 Independent Grocers Financial Survey, covering fiscal year 2015. This joint study polled independent supermarket operators in 38 states and four Canadian provinces on their financial performance and business strategies, and provides an in-depth look at the economic, political, and competitive landscape in which these retailers operate. Fiscal year 2015 proved to be an improvement over 2014 with both sales and margins having increased despite a rise in expenses and stagnant food-at-home prices.

To learn more about the survey and how you can get a copy, click here.


BGBC Partners, LLP Tax Update: Gifts to Employees

As a store owner, do you ever wonder if those “benefits” you are handing out to show your appreciation to your employees have any tax implications to your business or to the employees themselves?  Maybe you are throwing around ideas for what to do around the holidays.  Yes, it is early, but we see Christmas specials in summer, so why not plan for taxes now too?  Whether the benefits resulted from some sort of achievement, recognition of a holiday, or just because you felt like it, certain IRS rules may apply.  That is the focus of this installment of our Tax Update.
 
The IRS has provided guidance on something called “De Minimis Fringe Benefits” that can assist you in evaluating the taxability of these items.  According to this guidance, if you can consider the value and frequency of the benefit as being so small it is unreasonable or impractical to account for, the benefit is generally non-taxable. The lists below give a general idea of items qualifying, or not, as de minimis.
 
Benefits that qualify as de minimis if occasional or infrequent:
·   Personal use of photocopier
·   Group meals, employee picnics
·   Movie or sporting event tickets
·   Occasional snacks, coffee, soft drinks
·   Holiday gifts
·   Employer-provided local transportation
·   Personal use of a cell phone provided by an employer primarily for business purposes
 
Benefits that do not qualify as de minimis:
·   Cash
·   Cash equivalents (gift certificates, etc.)
·   Certain transportation costs
·   Commuting us of employer’s vehicle more than once a month
·   Membership in a country club or athletic facility
 
Now, if the value and frequency exceed the designated de minimis amount, the total value of the benefit is taxable to the employee and should be included as taxable wages.  But the law does not specify a value threshold for qualifying an item as de minimis, so the determination rests on the facts and circumstances.  For example, let’s say you hold a company picnic once a year for all employees and their families.  Since this would be considered infrequent, the value of the picnic would not be considered taxable.  On the other hand, if you provide daily meals for employees, the meals are generally included in taxable compensation unless they are provided on the employer’s business premises and are for the convenience of the employer.
 
The above lists are general guidelines only. It is important to think about the overall value and frequency of the benefit.  Evaluate each benefit on an employee-by-employee basis and compare the items to all similar items.
 
Like many areas involved in running a business, planning your employee gifts is recommended.  The tax rules should be one important factor of many when determining the types of gift to give in a particular year.
 
Since this area of the tax law is filled with rules and regulations, you should consult your CPA to help you sort out the type, quantity and frequency of gifts.  The holiday season will be here sooner than you think so the earlier the better!
BGBC Partners, LLP is a full service certified public accounting and business consulting practice.  

For more information, contact
Brad Bell, CPA or Steve Reed, CPA/ABV/CFF at BGBC Partners, LLP (317-633-4700).
For More Information,
Contact Mark Ehleben
877-435-9400 x1402
marke@fmssolutions.com
8028 Ritchie Highway | Suite 212 | Pasadena, MD 21122


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