This pandemic of this year has only accelerated a trend that has been slowly occurring for a number of years. In a matter of months, traditional offices were forced to shut down and move their operations to a remote setting. For both employers and employees, this chaos proved difficult enough at the moment.
As the dust has begun to settle, though, new questions are beginning to emerge. One of the bigger issues is in regard to tax policies. This pandemic has changed the entire accounting structure organizations became accustomed to, and adapting to these changes will certainly require starting with resolving the largest issues.
Enhance workforce education
One problem to be concerned about amidst remote work is duplicate taxes. This budding issue affects your employees more than your organization, but it’s best to familiarize yourself with the problem and how to overcome it for the sake of educating your employees.
Forget about the pandemic for a minute. The workforce is currently composed of a number of different generations who aspire for different things in life. Members of Gen Z do not want the same things as Millennials, and Millenials don’t want the same thing as Baby Boomers. A gradual shift away from in-person work has coincided with the beginning of Gen Z’s entering the workforce.
For various reasons, some younger members of the workforce never wanted to work in a corporate office in the first place. Couple this with the Covid-19 pandemic and the fact that you have members of Gen Z who have actually never worked a day in the corporate office in their life. Unfortunately, there is reason to believe this has led to less financial literacy overall, as less than a fifth of millennials demonstrate financial literacy. This number may be even lower for Generation Z.
Yet, certain provisions such as reciprocal personal income tax agreements exist that can protect these young workers from duplicate taxes. This is why it’s important to keep your employees aware of such provisions that may benefit them, regardless of where they are in the world.
Many business accounting services will even handle your payroll taxes for you and update any changes made to the tax code for your employees to see. Ultimately, one of the best ways to avoid tax issues within your business is to simply keep your workforce educated about tax changes and any options they have available to them.
Changes to the tax nexus
As the future comes faster, how organizations are taxed is going to change. For those unfamiliar, a tax nexus is a combination of factors that determine how states tax companies and their employees. The average company has three primary factors that go into this nexus: payroll, property, and sales. Focus on identifying all of the factors in your organization’s tax nexus and try to anticipate how they are going to change in the next few months.
As you can imagine, Covid-19 has disrupted more than one factor within this nexus. Identifying how this is being altered can help any accounting division overcome existing tax policy issues. For perspective, telecommuting employees who are in another state could subject that company to state payroll registration and income taxes.
Assuming they are still working for your organization at the time of this move, you may be facing a number of unforeseen tax issues. There has been speculation that remote work may continue to become far more common even after the pandemic is completely over. That means that this sporadic tax element may become a common one.
Overcoming this is all about proper organization and ensuring security. When all your employees are in one place, accounting can be slightly easier. However, with employees scattered across state lines, balancing your books can be a little more difficult. Relying on comprehensive online tax software can help make the bookkeeping process go smoother.
Just make sure that all financial data used for your accounting or tax purposes are kept encrypted. Utilizing PCI compliant hosting for your business website and accounting software is one such strategy to ensure this. PCI-DSS compliance means that all financial data will be kept encrypted when transmitted across open networks, a configured firewall will block unauthorized access to your data, and security processes will be regularly tested and updated as appropriate.
Tax policy changes are unpredictable and any accounting division is rolled in with the punches. That said, buffing up your general organization structure with the use of user-friendly tax services can help you tackle this disruption when it arises.
Many startup businesses with limited budgets in particular will avoid the use of business tax software in order to help save money, but this can actually prove to be a costly mistake.
According to Toronto-based software developer Gary Stevens of Hosting Canada in his analysis of the most common business tax services, “Despite the fact that you often have to pay for tax return software, the cost of hiring a professional is often significantly higher.”
Concise and managed organizational structure
Overall, these are disruptive times we are living in. The workforce, as well as the world, has been in a state of disarray like never before.
With that in mind, there’s never been a more important time for concise and impactful organization. Tax policies may change or they may stay the same, but the best way to overcome tax policy issues should they arise is to simply be ready to adapt.
One of the most important aspects of enhancing organizational structure is building trust and improving the chain of command. Your organization and employees may be scrambling amidst the chaos, but being a stable force in a changing world can be powerful. If you have employees all over the world in particular, the best way to improve your organizational structure is to embrace the online format of the workforce.
It’s worth noting that organizations that make the effort to seek out untapped talent from the remote workforce have proven to be more profitable. For example, one study measured the performance of businesses that had more inclusive policies compared to those with less inclusive policies. They found that the companies that were less inclusive were outperformed by 36%.
Focus on fostering inclusivity among your remote workers
Marginalized and underrepresented individuals have been left behind due to systemic barriers and preconceptions on whether or not they have the ability to be valuable in the workplace. The pandemic has put into perspective the importance of diversity in maintaining stability and success and how these talented individuals have been left to the wayside. With 26% of employees more likely to leave a company due to disrespect in the workplace in 2021, there is a significant amount of talent that is being ignored and wasted.
A significant wealth gap has been steadily growing due to a lack of opportunities for marginalized workers, and this gap has a damaging effect on the economy of the entire country. With 65% of residents falling below the national average in economic opportunity, under-hired groups also experience lack of access to capital due to their financial status.
The effects of untapped talent is not just about community goodwill, it also has a negative effect on business productivity and overall success. The latent talent that goes unrecognized due to inability to afford education and other systemic factors can often bring creative solutions and increased revenues for businesses. Experience and company loyalty are critical to long term success, however people who are suppressed by stereotypes are often left out of the hiring and promoting process altogether.
In addition to tax breaks, higher DEI (diversity, equity, and inclusion) scores, and the ability to relate to other markets by being more mindfully inclusive of hiring diverse individuals, the social effects have a huge impact on our society.
- When companies support their employee’s success, workers are more likely to stay at a company and continue to improve their skills. With the rise of freelancing and other remote work opportunities, businesses stand to lose talent to higher paying gigs where their skills are seen and heard.
- Creating an inclusive environment fosters a culture of collaboration and mutual respect in the workplace.
- Building long-lasting relationships with a diverse range of businesses that can benefit multiple parties helps to sustain industry even during times of financial hardship.
- The communities that you serve will greatly benefit from DEI focused businesses and will remain loyal in a constantly changing business landscape.
- With a larger talent pool to choose from, companies can identify employees that have the potential to enhance the growth of the organization in ways that could not have been realized before.
DEI is critical to maintaining a successful workplace and allowing everyone the opportunity to thrive and succeed. People with different backgrounds and perspectives can positively influence the ways that products are produced, how a business functions, and refine daily processes. To gain these insights, everyone has to have the ability to contribute and be compensated fairly for the work that they put in.
As more companies are finding ways to be more inclusive of marginalized and untapped talent in their businesses there has been a significant shift. However, there is more work to be done to educate and inform employers why increasing DEI is of the utmost importance. It can seem like a daunting task to rework longstanding systems, but there are many organizations that have been created for the sole purpose of educating and supporting businesses that want to become more inclusive and aware of untapped talent.
For example, Bank on 100 Million is an organization that works to address the wealth income gap, racial injustice, prioritize human rights, and create equitable access to opportunities for people who have been incarcerated. They work with organizations like companies, philanthropies, venture capitalists and others to rebuild the American economy in a way that works for all of everyone by addressing some of our long ignored social problems.
Covid-19 has caused many unforeseen disruptions around the world, but it’s the lesser-known disruptions that may cause issues within your organization. Prepare your business by identifying your tax nexus, educating your workforce on any changes and the various options they have, as well as enhancing your overall organizational structure.
Make a point to stay in the know on tax changes during this pandemic. There are a number of standard tax policies that could be impacted in the coming months if they haven’t been already. Educate your employees on any changes that may have occurred due to the remote style of the workplace, especially considering that this may be the future of work for some time. Keep your organization in the know and stay up-to-date on all tax policies amidst the chaos.
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