Appearances Matter

Many organizations rely on outside vendors for their technical or professional services, materials, or other special needs. Those needs could be specialty skills, bulky or fragile materials, and other needs that are not practical to provide in-house. Clients and customers might never know that vendors are involved because they appear to be part of the organization.

 

Appearances can be deceiving but they really matter. Vendors intended to help organizations with expertise or capacity can end up hurting instead, if they don’t perform as promised. And if they appear to be part of the organization, guess who ends up getting hurt and looking bad? You guessed it – the organization!

 

Three simple steps help organizations avoid vendors who appear to be helpful, but end up hurting productivity, profit and reputation:

 

  1. Do Your Homework

There are a lot of choices out there, not all of them good. Weeding out the dreck and identifying vendors that meet the organization’s standards takes time and effort, but it really pays off in results. Start by defining your standards for quality, timing, and other specifications necessary for the vendor to meet the organization’s productivity and reputational needs. Involve your network and professional associations to get referrals that appear to meet the standards that you defined.

 

  1. Get Proof

Sure, trusting your instincts is part of selecting from the referrals you get. But relying solely on a prospective vendor’s word about her or his track record is an invitation for issues — expensive issues. Ask prospective vendors to provide proof of her or his performance. References provide insight, too, but other organizations don’t share your objectives, requirements and standards. It’s not a one-size-fits-all world, so make sure you get proof that you can trust the vendor to deliver.

 

  1. Monitor and Inquire

Once the vendor choice is made, it’s important to have confidence going forward that the choice was a good one. That takes regular monitoring and periodic inquiries to let you know that the vendor is helping, not hurting. Figuring out what to monitor and how takes time and effort, just like Doing Your Homework. Monitoring not only provides the organization with peace of mind, it lets the vendor know you’re watching and you care about performance.

 

Relying on vendors can be great, but it comes with risks. Protect your organization’s reputation and bottom line by managing vendor risk using the three simple steps above. Sure, it takes time and effort, but it’s well worth protecting your organization from being hurt by a vendor who appears to be helpful, but is hurting your organization instead.

Need 2018 Estimated Tax Payments?

Phew! Tax season 2018 is over! So how did it turn out? Did you have to pay when you filed your 2017 returns? Do you know if you are withholding or paying enough for 2018?

 

April is a good time to check on what you are projected to owe for your 2018 taxes and see if it’s enough, or too much. That’s especially true this year because of the new tax law and changes to employer withholding tables. Word on the street is that the IRS was really aggressive in decreasing employer withholdings in order to increase paychecks. That can make employees feel rich now, but it could bite them hard when their 2018 tax returns are due.

 

If all your income comes from wages, chances are that your tax withholdings will cover your income tax liability. But if you are self-employed or receive other income, such as interest, dividends, capital gains, or rent, you might need to make estimated income tax payments. On top of that, if you don’t pay enough of your taxes on time, you could get hit with interest and penalties.

 

What the Required Payments?

If you owed additional tax for 2017, you may have to pay estimated tax for 2018. Estimated payments should be made if:

 

  • You expect to owe at least $1,000 in tax for 2018, after subtracting your withholding and refundable credits.

AND

 

  • You expect your total withholding and refundable credits to be less than the smaller of 90% of your 2018 tax liability or 100% of your 2017 tax liability.

 

What Are the Penalties?

Penalties are assessed if the required payments described above aren’t made as income is received, at least quarterly. Interest penalties are assessed on the underpaid amount, accrued daily from the date it was due and until it is paid. Interest rates are adjusted periodically and daily accruals really add up.

 

What Should You Do?

Clearly, the IRS and other taxing agencies are serious about wanting their money on time. You can figure out your 2018 federal income tax bill by using the IRS Withholding Calculator, updated for the new tax law – . People who are self-employed or have investment income should check out the IRS web page about tax estimates.

 

When in doubt, or if you are not comfortable with DIY tax estimates, be sure to consult with a qualified tax professional. She or he will help you identify all the information needed to project your 2018 tax liabilities, pay enough taxes on time, and avoid interest penalties.

Getting a Tax Filing Extension

Your life is busy and deadlines can be hard to meet. April 15th is on a Sunday this year and Monday is a holiday, so the tax deadline is pushed back to April 17th. Whether you just can’t get organized or all your tax information hasn’t come in, you might just need more time to get those tax returns filed by the deadline, even with those extra two days.

 

Not ready? Not a problem! You can get an automatic six-month extension to file your taxes.

 

Two things to know if you’re not ready to file your taxes by April 17th:

 

  1. Requesting an Extension

 

Individual taxpayers use IRS Form 4868 to request an automatic extension to file their federal income tax return. An extension can be filed on the IRS website, e-filed using approved tax software, or in paper form. Paper forms must be postmarked or date-stamped before midnight of the due date.

 

Requesting an extension to file your state taxes varies based on where you live. Check your state’s tax website for instructions and details.

 

  1. What to Do if You Owe

 

You have to estimate your tax liability and figure out your tax withheld and/or paid quarterly to prepare your extension request. If you will owe more tax than you’ve already paid in, the balance due must be paid with your extension request. Failure to pay will result in an underpayment penalty and interest on the unpaid amount, accrued daily until it’s paid. That really adds up.

 

If you are getting a refund, your extension is automatically approved. But you still have to wait until your return is filed to get your tax refund.

 

Need more details about estimating your 2017 tax liability and getting a tax filing extension? Go to the IRS website and your state tax website. Need more guidance? Consult a qualified tax professional.

Vendor Risk and Your Reputation

Recent news about Facebook and user data highlights the need to understand how your organization’s confidential data is protected. As if we needed another reminder! Sure, it’s a big, extreme and public example most of us cannot relate to. Splashy news stories are an opportunity for you to think about your own organization’s risk exposure related to data protection, without the splashy headlines.

 

These days, many businesses outsource services to third party vendors. Those vendors could have access to or be responsible for your organization’s confidential data. How can you make sure that those vendors are protecting your data as well as, if not better, than you would? How do you prevent your organization from being the victim of a data breach and avoid the negative on your reputation and operations?

 

Organizations should, at minimum, take three simple steps to protect their data and reputation from vendor risk:

 

  1. Written Agreement

Data protection responsibilities and expectations must be clearly delineated in a written agreement signed by both parties. Sufficient details should be included to clearly describe what controls and precautions are in place, who is responsible, how controls and precautions are validated, and when validations are performed. The agreement should also address the assumptions and performance expectations for your operations and controls.

 

  1. Vendor Monitoring

Use the data protection responsibilities and expectations in the written agreement to determine the vendor activities for you to monitor. Monitoring can take many forms, such as system or management reports and performance test results. Don’t hesitate to ask the vendor for documented evidence. Taking the vendor’s word without proof can backfire later.

 

  1. Hold Up your End

Vendors with access to or responsibility for your confidential data are depending on your organization and your workers to fulfill certain responsibilities. If a data breach or other performance issue occurs and you have not held up your end, the vendor could escape taking the appropriate responsibility – or liability. Remember, outsourcing doesn’t mean a total hand-off.

 

Data breaches, splashy headline or not, can be expensive and damaging to your organization. A vendor you depended on could be the cause. Outsourcing can be great but it comes with risks. Protect your organization’s reputation by managing vendor risk using the three simple steps above.