CPA Blog

How Series EE savings bonds are taxed

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Published: Monday, 23 November 2020 09:20

Written by Phillip Strickler, CPA.CITP

Many people have Series EE savings bonds that were purchased many years ago. Perhaps they were given to your children as gifts or maybe you bought them yourself and put them away in a file cabinet or safe deposit box. You may wonder: How is the interest you earn on EE bonds taxed? And if they reach final maturity, what action do you need to take to ensure there’s no loss of interest or unanticipated tax consequences?

Fixed or variable interest

Series EE Bonds dated May 2005, and after, earn a fixed rate of interest. Bonds purchased between May 1997 and April 30, 2005, earn a variable market-based rate of return.

Paper Series EE bonds were sold at half their face value. For example, if you own a $50 bond, you paid $25 for it. The bond isn’t worth its face value until it matures. (The U.S. Treasury Department no longer issues EE bonds in paper form.) Electronic Series EE Bonds are sold at face value and are worth their full value when available for redemption.

The minimum term of ownership is one year, but a penalty is imposed if the bond is redeemed in the first five years. The bonds earn interest for 30 years.

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Putting the finishing touches on next year’s budget

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Published: Monday, 23 November 2020 09:17

Written by Phillip Strickler, CPA.CITP

By now, some businesses have completed their 2021 budgets while others are still crunching numbers and scrutinizing line items. As you put the finishing touches on your company’s spending plan for next year, be sure to cover the finer points of the process.

This means not just creating a budget for the sake of doing so but ensuring that it’s a useful and well-understood plan for everyone.

Obtain buy-in

Management teams are often frustrated by the budgeting process. There are so many details and so much uncertainty. All too often, the stated objective is to create a budget with or without everyone’s buy-in for how to get there.

To put a budget in the best position for success, every member of the leadership team needs to agree on common forecasting goals. Ideally, before sitting down to review a budget in process, much less view a presentation on a completed budget, you and your managers should’ve established some basic ground rules and reasonable expectations.

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Laptop battery safety is no laughing matter

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Published: Monday, 16 November 2020 08:22

Written by Phillip Strickler, CPA.CITP

You’d be hard pressed to find a business today that doesn’t have laptop computers listed among its assets. Large companies have hundreds of them; midsize ones issue them to managers to facilitate mobility; and many small businesses rely on them as primary computing devices.

Now, in and of itself, a laptop may seem harmless. But they literally hold a clear and present danger to companies: their batteries. Poorly maintained or damaged batteries can catch fire — putting any people and property nearby in serious risk. Faulty batteries can also hamper the device’s functionality, shorten its lifespan and put critical data at risk, inhibiting employees’ productivity and lowering morale.

Best practices

To help guard against the possibility that one of your company’s laptops might incur battery-related damage, follow these best practices:

• Require the use of only compatible computer batteries or chargers.
• If you maintain an inventory of loose batteries, keep them away from metal objects, such as small tools, coins, keys or jewelry.
• Educate employees to, perhaps ironically, not use their computers on their laps or on any other soft surface (such as a bed or sofa) that could restrict airflow.
• Teach employees to never place any heavy objects on their laptops that could crush, puncture or place a high degree of pressure on the battery.
• Provide training on the proper transportation of laptops to prevent bumping the computers into objects or dropping them on hard surfaces.
• Instruct users to never put a laptop in an area that could get very hot, such as the hood or dashboard of a vehicle, or a desk in a warm room directly exposed to sunlight.
• Explain to employees how to safeguard their laptops from moisture and, if a computer does get wet, to bring it in for maintenance immediately because, even after drying, batteries or circuitry could slowly corrode and pose a safety hazard.

Ultimately, workers need to follow battery usage, storage and charging guidelines found in the user’s guide of their respective laptops.

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How to research a business customer’s creditworthiness

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Published: Monday, 16 November 2020 08:20

Written by Phillip Strickler, CPA.CITP

Extending credit to business customers can be an effective way to build goodwill and nurture long-term buyers. But if you extend customer credit, it also brings sizable financial risk to your business, as cash flow could grind to a halt if these customers don’t make their payments. Even worse, they could declare bankruptcy and bow out of their obligations entirely.

For this reason, it’s critical to thoroughly research a customer’s creditworthiness before you offer any arrangement. Here are some ways to do so:

Follow up on references. When dealing with vendors and other businesses, trade references are key. As you’re likely aware, these are sources that can describe past payment experiences between a business and a vendor (or other credit user).

Contact the potential customer’s trade references to check the length of time the parties have been working together, the approximate size of the potential customer’s account and its payment record. Of course, a history of late payments is a red flag.

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