As you might imagine, we get quite a few inquiries for tax preparation services, but a) we only do taxes for our small business accounting & bookkeeping clients, and b) we only work with clients in Illinois, Indiana and Wisconsin. I’m currently in the process of interviewing qualified CPAs and bookkeepers to develop a vetted list of firms to whom I can refer potential clients, but in the meantime, I do have a solution for finding a good local tax preparer — the National Association of Tax Professionals’ Find a Tax Preparer (natptax.com) searchable directory.
NATP is one of my favorite professional organizations, and their “Find A Tax Pro” tool works great! When you use the link above, it will automatically filter for folks who are NATP members — which means these people are voluntarily taking the extra step to obtain excellent education in the field on a monthly basis (via e-newsletters, webinars, conferences, their research service, quizzes, and the regular TaxPro magazine), as tax guidance changes so frequently.
(No, I don’t earn commissions for this — I just have great respect for them, have been a member most of my career, have taken countless courses with their instructors, and have been generally impressed with their research service. I also really appreciate what a solid ratio they have of female officers, managers and instructors, which is not always the case in my field. They still need to work on DEI, but let’s be real: so does everyone in accounting and tax, to be honest. It’s an arena rife with underrepresentation issues.)
My suggestion is to use the search box on the right (after you click the button on the bottom of the landing page) and enter the following:
1) What do you need? Tax Preparer
2) Specializing in? All
3) Located in? Type in your city and see if it comes up — if not, pick a slightly larger city nearby, or even your entire state if you prefer.
The thing is, taxes don’t have to be done by a local preparer (so many of us are remote at this point) — however, you do want to work with someone who understands the specific requirements of your geographic area.
So even though it might be a remote relationship, it’s still best to go with someone from your area if you can. They might know something about your industry’s requirements in that area that a non-local would not.
Then lastly, scan or do an on-screen search of whatever list comes up based on your filters, and look for people who have the letters “CPA” or “EA” after their names. These are practitioners who went the extra mile (or twenty) to get a professional designation — it doesn’t mean they know everything, but they’re clearly committed to learning everything they can about tax law, so you want one of them!
And if you find a fabulous CPA in the Chicago area who is still taking on new clients, please let me know in the comments! (Bonus points for women-owned firms; extra bonus points for CPAs that offer tax, accounting, bookkeeping and advisory services.)
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Chicago businesses should take a moment to review upcoming changes before year-end.
The Chicago Department of Business Affairs & Consumer Protection (BACP) was designed to “license businesses and public vehicles, provide business education and access to resources, enforce the Municipal Code, and protect consumers from fraud,” which means that sometimes they have to create and enforce ordinances and regulations that are a bit arduous or challenging for small businesses. But in the public interest, we need to take a moment to review the annual changes and requirements to make sure we have everything in order. (Besides, the penalties for willful ignorance are no fun.)
With that in mind, here are some things you’ll need to make sure to take care of before ringing in the new year.
Illinois Department of Human Rights Sexual Harassment Training For the record, this one is state-mandated, not just city-wide. The Illinois Workplace Transparency Act requires all employers to comply with the sexual harassment prevention training by December 31, 2020, and thereafter must provide annual training to all employees. As of July 1, 2020, the Illinois Human Rights Act defines “employers” as those having one or more employees (replacing the prior threshold of 15 or more employees in Illinois for most types of discrimination). This means that every employer in Illinois must comply with this sexual harassment training requirement, for all employees working in Illinois, regardless of their status as part-time, intern, or temporary. There is no requirement to train independent contractors, though it is recommended.
Chicago Minimum Wage Back in 2014, the city implemented a gradual increase of the minimum wage. It applies to any employee who works at least two hours in any two-week period. As of July 1, 2022 the minimum wage in Chicago is $14.50 per hour for employers with 4 to 20 workers, and $15.40 per hour for employers with 21 or more workers. Tipped workers have a minimum wage of $8.70 for employers with 4 to 20 workers, and $9.24 for employers with 21 or more workers. If a tipped worker’s wages plus tips do not equal at least the full minimum wage, the employer must make up the difference. BACP offers a one-hour-long free webinar on the ordinance.
Chicago Paid Sick Leave This ordinance went into effect on July 1, 2017, and was so poorly-written that folks are still confused. It applies to any business or individual that employs at least one “employee” and has a facility within Chicago’s city limits (though Cook County followed suit a few months later and has a similar requirement). The term “employee” covers anyone who works at least 80 hours within a 120-day period (20 hours a month). – For hourly employees, paid sick leave accrues at one-hour for every 40 hours worked. Salaried-exempt employees are presumed to have worked 40 hours/week. – Employees are capped at accruing a total of 40 hours of sick leave each year, unless the employer opts to set a higher limit. – Employers must permit employees to carry over half of their accrued leave, to a maximum of 20 hours of unused sick leave each year (40 for employers with 50 or more employees). – Employers are not required to pay out any accrued but unused sick leave upon employment termination.
Illinois Secure Choice Retirement Savings Plan State law now requires every Illinois employer with 16 or more employees to either offer their own retirement program, or to sign up to help staff contribute to personal IRAs via Secure Choice. As of November 1, 2023, this obligation will extend to employers with 5 or more employees.
Aside from the administrative burden, there are no costs to small businesses owners. The program facilitates saving for retirement — but is still limited to the IRS’s annual $6000 cap ($1k higher for those 50 and up), increasing to $6,500 in 2023. (For those interested in a higher limit, I strongly recommend Guideline 401k plans for small businesses, which use low-cost Vanguard Admiral Shares — my own clients have the first five months of plan fees waived.)
(I’ll be providing a breakdown and analysis of the plan and the info-session in an upcoming blog post. Spoiler alert: I’m mostly pretty happy with this legislation! –This doesn’t happen often.– However, most sole proprietors will want to make sure to implement their own savings plan simultaneously, since they won’t be eligible to participate; and many others will prefer the 401k approach due to higher limits.)
State Unemployment Insurance Contribution Determination Rate If you have employees, you should normally have received a letter from IDES with your 2023 unemployment rate determination by now, but they are running behind and the letters won’t be posted on mytax.illinois.gov until January 5th, 2023. As soon as they do, you will need to update your payroll company’s records with the new unemployment tax rate, or it can cause expensive problems with reporting and reconciliations in the future. I wrote a blog on how to do this if you’re using Gusto for payroll.
HAPPY NEW YEAR, CHICAGO SMALL BUSINESSES: WE WOULDN’T BE A WORLD-CLASS CITY WITHOUT YOU!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Note: much of the information below was pulled from the old Polito Eppich website — however, they have since merged with another firm to become Magnus Blue, and as such have removed their former blog content. My 2018 blog post linking to their article on how to properly account for partnership and S-Corp health insurance to avoid double-dipping now points to a web archive of the original site — but since that’s hard to find, I’m borrowing some of their material and sharing it here as well. To-date it’s the most well-illustrated and to-the-point summary I’ve seen on the topic.
The IRS rules for reporting health insurance premiums for partnership and S-Corp owners are complex, and as a result, easy to accidentally bungle. Sometimes an entity will incorrectly deduct the premium, and so will the owner — on their personal return — leading to what is known as “double-dipping”. This usually happens when the person preparing the personal return did not also prepare the business entity return.
TL;DR? The most important take-aways are: 1) you can’t double-dip; and, 2) though the particular hoops that have to be jumped through are a) different for partnerships than for S-Corps, and b) a PITA for both, they are in fact the law and must be followed.
The key here is that when the entity pays for health insurance for owners, it is deducted as payments for services to the partners or S-Corp shareholders — who are then entitled to take the self-employed medical insurance deduction — which means it will net to zero deduction on the personal return. If you’re not careful, then the deduction is mistakenly taken on both the entity-level and personal returns. In their original article, Polito Eppich illustrated the accidental double-dipping (all charts are copyright of Polito Eppich).
We will use an example of a $10,000 medical insurance premium to illustrate this issue. Here’s what was happening (incorrect approach):
Income (Expense)
Passthrough Business Entity
Owner’s K-1
Owner’s Personal Return
Net Taxable Income
Medical premiums paid
$(10,000)
Ordinary income reduced
$(10,000)
$(10,000)
Self-employed medical insurance deducted
$(10,000)
(10,00)
Total effective deduction on owner’s return
$(20,000)
Accidental double-dipping — the $10k premium becomes $20k.
Here is how it should be handled:
PARTNERSHIPS
The actual deduction occurs at the partnership level and is passed to the partner — via lower income on the K-1.
If the partnership pays for the health insurance premiums for its partners, it deducts the expense as guaranteed payments and reports the amount to each partner on their respective K-1s as guaranteed payments.
The partner then picks up the guaranteed payment as income and reports “self-employed health insurance” deduction. The guaranteed payment offsets the self employed health insurance deduction for a net zero effect on taxable income, thus the single deduction described above on the K-1.
(When a partner pays his (her) own medical insurance premiums, the self-employed medical insurance deduction is allowed if there is self-employment income.)
Correct reporting for partnership:
Income (Expense)
Partnership
Owner’s K-1
Owner’s Personal Return
Net Taxable Income
Medical insurance premiums paid and deducted
$(10,000)
$(10,000)
$(10,000)
$(10,000)
Guaranteed payment to partner
10,000
10,000
10,000
Self-employed medical insurance deduction
(10,000)
(10,000)
(10,000)
Total effective deduction on owner’s return
$(10,000)
Partnership: by following the IRS rules, the $10k premium remains a $10k net deduction.
S-CORPORATIONS
S-Corps are a bit more complex because owners who work for the company are paid payroll via W-2 (rather than guaranteed payments to partners). Keep in mind that these rules only apply to shareholders who own more than 2% of the company. Owners below 2% are not eligible for the self-employed medical insurance deduction.
The S-corporation deducts the expense as compensation and includes the amount on the shareholder’s W-2 — in Box 1, but not in Boxes 3 or 5, which means they are not subject to Social Security or Medicare taxes (commonly known as “payroll taxes” or “employment taxes”). The amount should also be reported in box 14 of the W-2 — this is only for informational purposes, so that the personal tax preparer knows to take the deduction. Some payroll companies will track this reporting properly throughout the year, but others require a call at year-end to make sure this amount shows up properly in Box 1 and 14. (See my blog post on how to handle this for Gusto Payroll.)
The shareholder reports the compensation from their W-2, then deducts the health insurance amount noted in Box 14 on the W-2 as a “self-employed health insurance” deduction on the personal 1040. Because the amount is subject to income taxes, but not employment taxes, taking the self-employed health insurance deduction leads to a net-zero impact to taxable income. The actual deduction is achieved at the corporation level and passed to the shareholder in the form of lower income reported on the K-1.
Correct reporting by S Corporation for 2% or greater shareholders:
Income (Expense)
S-Corp
Shareholders’s K-1
Owner’s Personal Return
Net Taxable Income
Medical insurance premiums paid and deducted as owner wages lower ordinary income
$(10,000)
$(10,000)
$(10,000)
$(10,000)
Owner’s W-2
10,000
10,000
Greater than 2% shareholder medical insurance premium (Noted in Box 14 of W-2)
(10,000)
(10,000)
(10,000)
Net taxable income reported by shareholder
$(10,000)
S-Corp: by following the IRS rules, the $10k premium remains a $10k net deduction.
Either way — partnership or S-Corp, the net result is that the amount paid by the company for health insurance on behalf of owners should only be deducted once, on the entity return, and as payments for services. On the personal return these payments will net to zero after the deduction for self-employed health insurance is taken.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
My colleagues at the National Society of Accountants for Cooperatives are offering a 75-minute webinar on Tuesday, August 23 to discuss the requirements and pitfalls in claiming Employee Retention Credits (ERC). The cost is free to members and $56 to non-members.
The ERC has been in the news quite a bit lately due to aggressive tactics by non-CPA firms claiming to be able to apply for these credits on behalf of business owners. (We’ll have an upcoming blog covering that topic.) However, the rules regarding whether or not a business qualifies are complex, and best performed by a knowledgeable professional.
During this webinar, the panelists will provide an overview of the Employee Retention Credit (ERC) and how to qualify for ERC including:
• Partial and full shutdowns as they apply to the ERC • What constitutes “gross receipts” • Safe Harbors • Rules for Large Employers • Unsettled matters and how the IRS is examining ERC claims
Participants are encouraged to submit questions in advance at info@nsacoop.org and during the session.
If you are an accountant or bookkeeper calculating these credits for your clients, or a business owner considering a DIY approach, please make sure you are thorough about obtaining education and resources before submitting anything to the IRS. You can expect their enforcement division to ramp up audits in the next few years.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
This webinar should be of special interest to our readers, as it’s an interview with two small business owners who will walk through the experience that they had working with SCORE to access capital through different methods of financing, in different rounds throughout the stages of their business growth. For me, hearing “how we did it” from other small business owners is not only educational, but inspiring, and I hope this upcoming webinar will offer you both angles.
Wednesday, 8/10 Webinar at 3:00 PM How We Did It: Raising Capital for Your Business Presented by Score Chicago (Part of a Score Chicago Funding Webinar Series)
In this webinar, you will learn how two Chicago entrepreneurs, former SCORE Chicago clients, and founders of Tiesta Tea Dan Klein and Patrick Tannous raised 4 rounds of financing totaling over $8 million. Tiesta Tea has also used many different methods of funding including friends/family, factoring, purchase order (PO) financing, SBA loans, Angel Investors, and VC funding. Dan and Patrick will share their experiences raising capital during the different growth stages of their business.
Tiesta Tea is a company that used SCORE Chicago to get started in 2010. Dan and Patrick know first-hand how important mentorship is for aspiring entrepreneurs and established businesses seeking mentoring from SCORE to accelerate the growth and success of their businesses. The founders, Dan Klein and Patrick Tannous, started with nothing but an idea to sell tea, and fast-forward 10 years, they have sold over $54MM of their product. They sell their teas in thousands of retail stores, including Walmart, Jewel, Mariano’s, Amazon, Costco and many more.
The Chicago Department of Business Affairs & Consumer Protection (BACP) Entrepreneur Certificate Program is a free and optional program available to attendees of the free BACP business education workshop and webinar series.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
On June 27th I woke to find dozens of notifications from MyTax Illinois in my email inbox — one for each and every client of ours who files sales taxes.
Just in case you got one or more of these yourself and haven’t logged in to check it out yet, here’s what it looks like —
It doesn’t give you much to go on — just a sort of “hey we saw you’re registered to file sales taxes, so you should read these four bulletins which may or may not apply and you’re unlikely to understand anyway” note.
But, if you dig through the bulletins you’ll find two in particular that could be important to a small business owner. One of them I covered in a recent blog post — Illinois Grocery Sales Tax Reduced by 1% For The Next 12 Months — it’s only likely to apply if you sell groceries that qualify for the low-tax food rate.
If you want to skip my rant and go to the section on what a small business owner should do next, scroll down to the next line in bold.
While I’m super-supportive about giving working families a break on prices — this is a terrible way to do it! It costs small businesses more in accounting and bookkeeping work than it could possibly save anyone.
It requires a small business owner — already overworked and without sufficient staff, and having in most cases barely survived the pandemic and still scraping to get by — to paw through every item in their Point of Sale system and change sales tax on an item-by-item basis. It’s hard enough to change sales tax amounts on a department-by-department basis… but item-by-item? Honestly, it will cost them so much more to figure this out than anyone will ever save on this “holiday”. And worse are the folks who don’t keep inventory in an automated system. They are stabbing in the dark and have no way to implement it at all. I just have to hope they don’t get audited by IDOR.
To make matters worse, the guidance says that the retail selling price per clothing item must be less than $125, and that supplies must be used by students in the course of study, in order to qualify. It’s simply impossible to program any Point of Sale system to create a sales tax discount on certain dollar-amounts of products and not others, or to change the sales tax rate on an individual item for some sales but not others (i.e., only after finding out that it will be used in the course of study at school). If small business owners are going to be able to comply with any of these rules, it will have to apply to all sales of a certain product — not just some sales.
This type of well-intentioned law — like the bag tax, carbonated beverage tax, and ill-fated sweetened beverage tax — has my full support from a social perspective. But they are so poorly-worded, difficult-to-enact, and misguided, that no small business could ever properly implement any of them cost-effectively.
This is just like that. Well-intentioned but completely out of touch and indicative that our representatives don’t have a clue what’s going on “on the ground”.
I received a hilarious text from a client when she read the IDOR notice:
Texts from a client when she read the IDOR notice.
As an aside, I wrote my state rep and begged him not to support this kind of thing in the future, and to work with other elected officials to find more reasonable, sustainable ways to provide relief to hard-working families, without crushing small business owners along the way. His response was truly wonderful, and he apologized profusely for not involving stakeholders in the last-minute rush to get it passed.
“Looks like we really did a terrible job here. You’re absolutely right that this was an example of government decision making at its worst. I think in the abstract these are largely good ideas, but looking at that guidance, it’s clear that implementation is going to be a nightmare. You have my word that I’ll try to do a better job of asking questions like “yes but is this feasible?” or “how much of an administrative burden is it placing on our small business owners?” when we’re contemplating things like this in the future.”
What does this mean for you, the small business owner? What are your next steps?
Follow these steps, in order, to determine what actions to take:
Step 1 – Check this list to see if you sell any products on it:
The great news is, that if you don’t sell any of these products, then you do not need to make any changes or do any extra work. However, I’d recommend rehearsing the phrase, “the sales tax holiday is only for back-to-school clothing and supplies, and as we don’t sell any items that would qualify, we aren’t able to offer you the 5% sales tax discount.” Because for sure there are going to be people who think that anything they buy during the 10-day period will be at a lower sales tax rate.
If you do sell products on the list above, then move on to the next step.
Step 2 – Identify all the products you sell that are on the list above. If any of the clothing items are priced at $125 or more, cross them off. Then make sure none of the remaining products you just identified are on this list of non-qualifying items:
Step 3 – Look at the items that made it onto your “qualified” list, and ask yourself who your clients generally are that buy these items — are they likely to be used for school? If the answer is definitely no, then again — no worries. You do not need to make any changes or do any additional work. (Except rehearsing that phrase from above and teaching it to your staff.)
However, if the answer is maybe or likely, then we’ve got some work to do.
Step 4 – If the answer is maybe, then you have to decide whether it’s worth your effort to go through your Point of Sale system and change the tax rate on each product that qualifies (and then change it back 10 days later) — or if you don’t have a POS system, if it’s worth it to figure out how to manually change the tax rate on each sale of one of these items, and to track how many were sold during the period of Aug 5-14. Because an alternative might be to just leave everything at the higher sales tax rate unless a customer specifically states that they are buying it for school use (you could even ask each customer who buys one of these items during that period if it’s for school use or not) — and then just give them a discount and write down the sale somewhere so that later on when you file your ST-1, you know how much to enter onto the Schedule GT so you get your money credited back to you — yes, I know that this means your cash drawer and your Sales Tax Payable accounts will be off. You can just have your accountant book an adjustment after the correct amount of tax is paid to the state. Or, in all honesty, you could even give them the discount out of the business’ own pocket and it would still be cheaper than reassigning tax rates in your POS system.
Step 5 – On the other hand, if the answer is likely, then you need to:
Create a new tax rate in your POS system called “holiday rate” that is 5 points lower than the current sales tax rate (in Chicago, 10.25% — so the new rate will be 5.25%). Hopefully your system allows enough rate slots to accommodate this. If not, maybe consider the approach outlined in Step 4.
After close of business on August 4th, assign that new rate to all the items that qualify.
Make a note to reassign the old rate to all those items after the close of business on August 14th.
Be sure you can run a report of all the items that sold at this rate, since you’ll need to declare that total on a separate tax form (Schedule GT) when you prepare your monthly sales tax return (ST-1).
If you do not have inventory or non-inventory sales-taxable items stored in your POS system — or if you have a cash register instead of a POS — then you’ll need to look at how you charge sales taxes to each item and come up with a plan that mimics the approach I just outlined. For example, if your system allows you to manually edit the sales tax rate on a sale-by-sale basis, you could keep a list of all the qualifying items by the register, and simply adjust for each qualifying sale. The problem is that only some of the items get the discounted rate, so if this is how your system works, you’d have to run a separate sale for all the qualifying items and then one for the non-qualifying items. You also will need to keep a list of all the sales made at the lower rate, since as mentioned above, you’ll have to note those on a separate schedule when you prepare your sales tax return. And if your system doesn’t allow you to manually edit the sales tax rate, you’ll have to take the approach I mentioned earlier, whereby you just give the customer a discount and adjust the inaccurate books later, hoping it all comes out in the wash.
Step 6 – Once the time comes to file your monthly (or quarterly) ST-1 sales tax return, you’ll notice there is an additional form– Schedule GT, Sales and Use Tax Holiday and Grocery Tax Suspension Schedule. This was created for retailers to report sales of qualifying items sold during the sales tax holiday. Per IDOR:
Form ST-1 has not changed. Retailers should continue to report their normal taxable sales, including sales of qualifying items, on Lines 4a and 4b, Lines 6a and 6b, or Lines 12a and 12b, of Form ST-1 and will then use Lines 2a and 2b, Lines 3a and 3b, or Lines 4a and 4b on Schedule GT to calculate a credit against the tax reported on those lines for the tax they are not collecting during the state sales tax holiday.
So you’ll report the sales of these items, on which you charged the lower tax amount, on Schedule GT and it will flow onto your ST-1 as a credit so that you’re not remitting more to the IDOR than you collected.
Whichever approach you take, make sure to rehearse the phrase, “the sales tax holiday is only for back-to-school clothing and supplies, and as we don’t sell any items that would qualify, we aren’t able to offer you the 5% sales tax discount.” Lots of folks read the headlines, but not the small print.
Hopefully this was all clearer to read than it felt to write it! And please make sure your state representative knows how you feel about having had to think about it in the first place. Small businesses have enough to deal with these days!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Speaking with Mark was a truly gratifying experience — he was kind, organized, interested, and sincere, and asked great questions. As a sneak preview of a few good ones:
How did you end up being interested in Music from an education standpoint, and how did you end up moving towards accounting?
At what point did you decide to further your education with the Masters in Financial Analysis and why that particular major? Was it difficult to return to school?
How has your practice evolved over the years? I see you use the DBA The Dancing Accountant. Was that always the case, or did that come later? Is it related to a niche, or more about branding?
You’ve been listed on the 50 Top Women in Accounting list. Congratulations! How does that make you feel? Is it acknowledgement of hard work, even more responsibility, honor…?
What does the future look like for you if it goes exactly how you would like it to go? When you look back on your career & life, what will you want to be able to say you accomplished?
If you could go back in time and give your younger self just one piece of critical advice, what would that be?
We spoke for over half-an-hour and I felt like we could have gone on for days… his conversational style was comfortable and disarming. I enjoyed sharing personal stories, talking about the great folks I’ve studied and worked with, about how hard it was to go back to school while working, how much I love helping small businesses in my neighborhood, how much I hate saying “no”, how a client came up with my business name… and so on. Give it a listen — and raise a glass to our amazing team while you’re at it!
I would love to be remembered as someone who helped keep our communities vibrant by helping small businesses succeed. That’s the whole point of any of this, and my staff is a group of women who feel the same way. Our work really has meaning. ~Nancy McClelland, CPA
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
The annual scheduled increase in Chicago’s minimum wage goes into effect on Friday, July 1, 2022. The Chicago minimum wage is tiered for large businesses with 21 or more employees, and small businesses with 4-20 employees. Since reaching $15 per hour in 2021, the minimum wage for larger employees increases annually according to the Consumer Price Index or 2.5%, whichever is lower. The minimum wage for small businesses continues to increase towards $15 per hour by 2023.
As of July 1, 2022, the Chicago minimum wage will be:
$15.40 for employers with 21 or more employees (including all domestic workers, regardless of the number employed)
$14.50 for employers with 4-20 employees
The minimum wage for tipped employees will be $9.24 for employers with 21 or more employees, and $8.70 for employers with 4-20 employees (employers must make up the difference between any tips received and the applicable minimum wage for non-tipped workers.)
Anyone age 24 or younger employed by, or engaged in employment coordinated by, a nonprofit organization or government agency will see a minimum wage increase to $12.00.
Employers that maintain a business facility within the City of Chicago or are required to obtain a business license to operate in the City are required to pay their employees at least the Chicago minimum wage. Additionally, any employee that works two hours or more in the City within a two-week period must also receive at least the Chicago minimum wage.
Chicago BACP recently presented a free hour-long webinar called “Employer Responsibilities Under Chicago’s Minimum Wage Ordinance”, available here.
Employers in “covered industries ” (see below) to post work schedules with at least 14 days’ notice, an increase from the previous 10 days’ notice.
Employees will need to earn less than $29.35 per hour or $56,381.85 per year to gain protection under the Fair Workweek Ordinance.
Covered industries include building services, healthcare, hotel, manufacturing, restaurant, retail, or warehouse services.
Chicago businesses are required to post the Minimum Wage Notice and Fair Workweek Notice at their business. The notices will be available to workers and business owners in English, Spanish, Polish, Simplified Chinese, Tagalog, and Korean by July 1, 2022. Employers that violate the minimum wage ordinance can be fined $500 to $1,000 per day for each offense.
Chicago BACP recently presented a free hour-long webinar called “Employer Responsibilities Under Chicago’s Fair Workweek Ordinance”, available here.
Sexual Harassment Law Updates
As of July 1, 2022, all employers in the city of Chicago must have a written policy on sexual harassment. Additionally, employers are required to display a public notice advising of the prohibition on sexual harassment where employees can see it, and there are increased training requirements. A model policy, written notice, and training templates are available by visiting Chicago.gov/SexualHarassment.
Recent updates to the law include:
Adding sexual misconduct to the definition. Sexual misconduct is defined as any behavior of a sexual nature which also involves coercion, abuse of authority, or misuse of an individual’s employment position.
Requiring all employers to have a written policy on sexual harassment. The written policy must be available in the employee’s primary language within the first calendar week of starting employment.
Increasing the statute of limitations from 300 to 365 days.
Create flexibility to notify a respondent up to 30 days from the time of complaint (compared to 10 days currently), to mitigate any retaliation such as denial of a reasonable accommodation request.
Requiring additional annual training for all employees including the one hour of prevention training aligned with State requirements and one hour of bystander intervention. Supervisors and managers are required to have an additional one hour of training.
Increasing the penalty for individuals or businesses that participate in discriminatory practices in the workplace including sexual harassment. The penalty is increasing from $500 – $1,000 per violation to $5,000 – $10,000.
It seems not all small business owners are aware of the responsibility to provide Chicago workers paid sick leave. It applies to any business or individual that employs at least one “employee” and has a facility within Chicago’s city limits (though Cook County now has a similar requirement). The term “employee” covers anyone who works at least 80 hours within a 120-day period (20 hours a month). – For hourly employees, paid sick leave accrues at one-hour for every 40 hours worked. Salaried-exempt employees are presumed to have worked 40 hours/week. – Employees are capped at accruing a total of 40 hours of sick leave each year, unless the employer opts to set a higher limit. – Employers must permit employees to carry over half of their accrued leave, to a maximum of 20 hours of unused sick leave each year (40 for employers with 50 or more employees). – Employers are not required to pay out any accrued but unused sick leave upon employment termination.
Even the least expensive version of Gusto Payroll allows for a sick pay plan, and it’s not hard to set up and track (see instructions here).
Reminder that if you sign up and run Gusto using my link, you’ll get a free trial period… and after running your first payroll you’ll receive a $100 Visa gift card! My clients instead will receive a 15% discount for the life of the plan.
And a final point: all Chicago worker protections are enforced by the BACP Office of Labor Standards (OLS). The OLS is dedicated to promoting and enforcing Chicago’s labor laws, including Minimum Wage, Paid Sick Leave, Fair Workweek, and Wage Theft Ordinance. The BACP OLS webpage offers informational materials on Chicago’s Labor Standards Laws.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
“Really great interview. I appreciated how the highlights were amplified. Nancy is smart and real. Blake does a great job allowing the interviewee talk and share her knowledge. Well done!” -YouTube viewer comment
I was honored to be interviewed recently by the one-and-only Blake Oliver for Relay‘s “Gearing Up” series, where every two weeks, he talks to a real accountant or bookkeeper about ONE challenge in their firm — and how to solve it.
In this episode, we discuss how to build a team with whom you love to work (kudos to Bookkeeping Buds for helping me make that happen).
As our firm grew, I realized that building The Dancing Accountant in a traditional way was re-creating working conditions that our team and I didn’t love — it was immensely important to me that above all, we enjoy working with each other.
But first I had to convince myself I had something to offer — and decided to focus on what I knew employees wanted: meaningful work.
In the latest episode of Gearing Up with our host Blake Oliver, I open up about the a-ha moment that led to our building an entirely different kind of remote firm. In the episode, you’ll learn: Why Nancy is known as The Dancing Accountant Nancy’s favorite tool in her tech stack Three things employees want from work The non-traditional structure of Nancy’s team
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
We learned this week that the EIDL is permanently closing their Rapid Portal on May 16th. What does this mean for you?
If you haven’t already, download a copy of your EIDL loan agreement documents, and snap a screenshot of your loan number and save it to PDF for easy reference.
Your bookkeeper and accountant will thank you for this — and you’ll thank them for insisting you do it!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Why Nancy is known as The Dancing Accountant 
Nancy’s favorite tool in her tech stack 
Three things employees want from work 
The non-traditional structure of Nancy’s team