August 2019

Common Questions about Kids and Taxes

Posted on August 13, 2019July 22, 2024 by Debra Barcuch

Does your son or daughter work during the summer or school year? A part-time job can be a great way for your child to learn about financial responsibility. It can also teach a valuable lesson about owing taxes. In addition to explaining why the government takes money from kids’ paychecks, parents may need to help their children file their taxes by April 15.

Here are answers to common questions about the tax rules that may apply to kids.

Does My Child Need to File a Tax Return?

For 2019, your dependent child must file a federal income tax return in the following situations:

The child has unearned income of more than $1,100. If your child has more than $2,200 of unearned income, he or she may be subject to the so-called “kiddie tax.”
The child’s gross income exceeds the greater of 1) $1,100, or 2) earned income up to $11,850 plus $350.
The child’s earned income exceeds $12,200.
The child owes other taxes, such as the self-employment tax or the alternative minimum tax (AMT).

Even if your child isn’t required to file a tax return, one should be filed if federal income tax was withheld for any reason and would be refunded if a return is filed. It’s also necessary to take advantage of certain beneficial tax elections, such as the election to currently report accrued U.S. Savings Bond income that would be sheltered by your child’s standard deduction.

Who’s Responsible for Filing My Child’s Return?

A child is generally responsible for filing his or her own tax return and for paying any tax, penalties and interest. If a child can’t file his or her own return for any reason, the child’s parent, guardian or other legally responsible person must file it on the child’s behalf.

If the child can’t sign the return, a parent or guardian must sign the child’s name followed by the words “By (signature), parent or guardian for minor child.” If you sign a child’s tax return, you can deal with the IRS on all matters related to the return.

In general, a parent or guardian who doesn’t sign can only provide information concerning the return and pay the child’s tax bill. The parent or guardian isn’t entitled to receive information from the IRS and can’t legally bind the child to a tax liability arising from the return.

Can I Report My Child’s Income on My Tax Return?

For a given tax year, parents can choose to report their children’s income on their tax return if:

The child will be under age 19 (or under age 24 if a full-time student) as of December 31, and
All of the child’s income is from interest and dividends, including mutual fund capital gains distributions and Alaska Permanent Fund dividends.

So, kids with income from working part-time jobs don’t qualify. Your tax professional can tell you if this option is allowable and advisable in your specific family situation.

What’s the Kiddie Tax?

For 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) revamped the kiddie tax rules. Under the TCJA, a portion of the kid’s (or young adult’s) unearned income is taxed at the higher rates paid by trusts and estates. Those rates can be as high as 37% and as high as 20% for long-term capital gains and dividends.

Under prior law, the kiddie tax rate equaled the parent’s marginal rate. For 2017, a parent’s marginal rate could have been as high as 39.6% or 20% for long-term capital gains and dividends.

Follow these steps to calculate your child’s taxable income:

Add the child’s net earned income and net unearned income.
Subtract the child’s standard deduction.

The portion of taxable income that consists of net earned income is taxed at the regular rates for a single taxpayer. The portion of taxable income that consists of net unearned income and that exceeds the unearned income threshold ($2,200 for 2019) is subject to the kiddie tax. This amount is taxed at the higher rates that apply to trusts and estates.

Unearned income for purposes of the kiddie tax means income other than wages, salaries, professional fees, and other amounts received as compensation for personal services. Some examples of unearned income are capital gains, dividends and interest. Earned income from a job or self-employment is never subject to the kiddie tax.

Important: For a given tax year, any child (or young adult) who meets the following conditions must file Form 8615, “Tax for Certain Children Who Have Unearned Income”:

The child has more than $2,200 of unearned income (for 2019). He or she is required to file Form 1040. He or she is 1) under age 18 as of December 31, 2) age 18 as of December 31 and didn’t have earned income in excess of half of his or her support, or 3) between ages 19 and 23 as of December 31 and a full-time student and didn’t have earned income in excess of half of his or her support. He or she has at least one living parent as of December 31. He or she doesn’t file a joint return for the year.

Child-Related Tax Breaks

It can be expensive to raise a child. Fortunately, parents may be eligible for several child-related federal income tax breaks, including:

Child credit. For 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) increases the maximum child credit from $1,000 to $2,000 per qualifying child. The hitch? Only kids under age 17 qualify.

Up to $1,400 of this credit can be refundable, meaning you can collect it even if you don’t owe any federal income tax. Under the TCJA, the income levels at which the child credit is phased out have significantly increased, so many more families now qualify for it.

Tax credit for over-age-16 dependents. For 2018 through 2025, the TCJA establishes a new $500 tax credit that can be claimed for a dependent child who isn’t under age 17.

The term “dependent” means you pay over half the child’s support. However, a child in this category also must pass an income test to be classified as your dependent for purposes of the $500 credit. For 2019, your over-age-16 dependent child passes the income test if his or her gross income doesn’t exceed $4,200.

Higher education tax credits. Paying college costs could qualify parents for one of two federal tax credits. First, the American Opportunity credit can be worth up to $2,500 during the first four years of a child’s college education. Second, the Lifetime Learning credit can be worth up to $2,000 annually, and it can cover just about any higher education tuition costs.

Both higher education credits are phased out at higher income levels. But the Lifetime Learning credit is phased out at much lower income levels than the American Opportunity credit. Also, you can’t claim both credits for the same student in the same year.

Deduction for student loan interest. This deduction can be up to $2,500 for qualified student loan interest expense paid by a parent. However, for 2019, the deduction begins to phase out when modified adjusted gross income is above $70,000 for single taxpayers and $140,000 for married couples filing jointly.

In addition to these tax breaks, single parents may be able to file their taxes using head of household (HOH) filing status. This is preferable to single filing status, because the tax brackets are wider and the standard exemption is bigger (if you don’t itemize deductions). HOH status is available if:

Your home was for more than half the year the principal home of a qualifying child for whom a personal exemption deduction would be allowed under prior law, and You paid more than half the cost of maintaining the home.

Where Can I Find More Information?

The rules for kids can be complicated in certain situations, especially when the kiddie tax comes into play. Contact your tax advisor if you have additional questions about the tax consequences of working a part-time job or reporting unearned income from investments, as well as potential tax-saving opportunities that come with parenthood.

Changing Jobs? What Will Become of Your 401(k) Balance?

Posted on August 9, 2019July 22, 2024 by Debra Barcuch

Most private sector employers, for better or worse, put you in the driver’s seat when it comes to saving for retirement. If you’re a genuinely savvy and diligent investor, you might prefer the flexibility of rolling over your accumulated retirement savings into an IRA. This choice assumes, however, that your next employer’s 401(k) plan allows you to move money into it from another 401(k) plan. Most, but not all, do.

Keep in mind, there are some important distinctions between IRAs and 401(k)s that matter to retirement investing sophisticates and novices alike:

One bit of flexibility 401(k) plans typically offer is that you can borrow against your plan account balance penalty-free. (You’ll need to pay your account interest on the loan.) Loans aren’t possible with an IRA. And it might take you a while to accumulate enough money in a new 401(k) that you’re starting without a rollover to make a loan worthwhile.

Another plus for rolling over to your new employer’s 401(k) is that assets held in qualified retirement plans — which don’t include IRAs — are generally off-limits from debt collectors. There are exceptions, such as qualified domestic relations orders, money you owe the IRS and federal criminal cases. IRA assets can enjoy some protection from creditors, but the extent varies according to state law.

“Rule of 55”

Also, under some circumstances, you can take funds out of a 401(k) plan earlier than you can from an IRA without paying the 10% early withdrawal penalty that usually applies to withdrawals prior to age 59 1/2. The “rule of 55,” as it’s known, lets you start taking money out of your current 401(k) plan the year you turn 55 if you leave that job (whether it was your decision or your employer’s). However, it only applies to dollars you put into the plan during your stint with your most recent employer. So, you wouldn’t be penalized for having rolled over 401(k) dollars from a prior employer to an IRA, but it’s still useful to know about.

If none of those considerations matters a great deal to you, you can move to the next level of comparisons — investment options and costs. Suppose you’re relatively close to retirement and want to be very conservative with your investments. “Stable value” funds are a popular option for conservative investors. These are essentially bond portfolios that provided a fixed return over a set period, backed by an insurance company guarantee. They’re available only in 401(k) plans, not IRAs.

In theory, though, you can get just about any other kind of investment in an IRA. However, your IRA investment options will vary based on the financial institution you choose as your custodian. Also, some financial services companies give you incentives to invest in their own financial products, and penalize you if you opt for outside funds. That’s fine if you’re content with the firm’s own investments, but no one wants to feel trapped.

Focus on Fees

A broader potential hazard associated with IRAs is being stuck with “retail” class shares of mutual funds. Such shares carry higher fees than “institutional” shares generally (but not always) available to 401(k) investors. But you also need to consider differences in total expenses charged against your retirement assets, including 401(k) plan administrative costs. Often smaller employers pay higher administrative fees than larger plans, and those fees are typically borne by employees.

Even relatively small differences in combined fees can have a big impact on your retirement savings accumulation over time. For example, paying a half a percent more in annual fees on $12,000 in annual retirement savings over a 25-year period would reduce those savings by $65,000.

The quality and independence of the investment advice you’d receive in either scenario could also be an important consideration for your rollover decision. Employers generally use 401(k) advisors who are held to a “fiduciary” standard of care. The person or people within a company in charge of a 401(k) plan are also considered fiduciaries. This means they’re legally bound to act in your best interest — and vulnerable to being sued if they don’t. If you work with a traditional broker with your IRA, he or she might not be held to such a high standard.

That distinction doesn’t guarantee that one advisor will be better than the other, but it’s an important factor to take into consideration. Also, a relatively new player on the investment management scene — the “robo-advisor” — is an investment platform for IRA (and other) investors that can guide your choices with computer-generated recommendations.

Given the high stakes, don’t rush your decision on what to do with your 401(k) funds from a former employer. Chances are that your employer won’t try to force you to move your funds out of their plan — especially if you have at least $5,000 in your account. If that’s the case, you can take as long as you want to decide — including the choice of leaving the money right where it is.

Update on the New Business Interest Expense Limitation

Posted on August 5, 2019July 22, 2024 by Debra Barcuch

The Tax Cuts and Jobs Act (TCJA) imposes a new limitation on deductions for business interest expense. The IRS recently issued guidance in the form of proposed regulations. The business interest expense limitation is a permanent change for tax years that began in 2018. Thankfully, many businesses are unaffected. Here’s what you need to know.

Prior Law

Before the TCJA, some corporations were subject to the so-called “earnings stripping” rules. Those rules attempted to limit deductions by U.S. corporations for interest paid to related foreign entities that weren’t subject to U.S. income tax. Other taxpayers could generally fully deduct business interest expense (subject to restrictions, such as the passive loss rules and the at-risk rules).

TCJA Change

The TCJA shifts the business interest deduction playing field. For tax years beginning in 2018, a taxpayer’s deduction for business interest expense for the year is limited to the sum of: 1) business interest income, plus 2) 30% of adjusted taxable income (as defined later), plus 3) floor plan financing interest paid by certain vehicle dealers. This new interest expense deduction limitation can potentially affect all types of businesses — corporate and noncorporate.

Business interest expense is defined as interest on debt that’s properly allocable to a trade or business. However, the term trade or business doesn’t include the following excepted activities:

Performing services as an employee,
Electing real property businesses,
Electing farming businesses, and
Businesses that sell electrical energy, water, sewage disposal services, gas or steam through a local distribution system, or transportation of gas or steam by pipeline, if the rates are established by a specified governing body.

Interest expense that’s disallowed under the limitation rules is carried forward to future tax years indefinitely and treated as business interest expense incurred in the carry-forward year.

Proposed Regulations

The IRS has issued proposed regulations on how to apply the business interest expense limitation. The proposed regulations are organized into these sections:

1. Definitions used throughout the proposed regulations.

2. General rules on how to calculate the business interest expense limitation.

3. Ordering rules and rules coordinating the limitation with other tax code provisions, such as the passive activity loss rules.

4. Rules for C corporations and tax-exempt corporations.

5. Rules on the treatment of C corporation disallowed business interest expense carry-forwards.

6. Special rules for applying the limitation to partnerships and S corporations and their owners.

7. Rules for foreign corporations and their shareholders.

8. Rules for foreign persons with effectively connected income.

9. Rules for elections by eligible real property businesses and farming businesses to be exempted from the business interest expense limitation.

10. Rules for allocating income and expenses between nonexcepted and excepted trades and businesses. Excepted trades and businesses are electing real property businesses, electing farming businesses and regulated utilities.

11. Transition rules for the limitation.

Unless otherwise stated, the proposed regs would be effective for tax years ending after the date they’re published in the form of final regulations. However, taxpayers can choose to follow the proposed rules for tax years beginning in 2018 — if they apply the proposed rules consistently.

Small Business Exception

The good news is that many businesses are exempt from the interest expense limitation rules under what we’ll call the small business exception. With this exception, a taxpayer (other than a tax shelter) is exempt from the limitation if the taxpayer’s average annual gross receipts are $25 million or less for the three-tax-year period ending with the preceding tax year.

Businesses that have fluctuating annual gross receipts may qualify for the small business exception for some years but not for others — depending on the average annual receipts amount for the preceding three-tax-year period. For example, if your business has three good years, it may be subject to the interest expense limitation rules for the following year. But if it’s been a bad year, it may qualify for the small business exception for the following year. If average annual receipts are typically over the $25 million threshold, but not by much, judicious planning may allow you to qualify for the small business exception for at least some years. Your tax advisor can help with that.

Interaction with Other Limitations

The rules in the proposed regs generally apply only to interest expense that could otherwise be deducted without regard to the business interest expense limitation. So interest expense that has been disallowed, deferred or capitalized in the current tax year, or that hasn’t been accrued yet, shouldn’t be taken into account when considering the limitation. However, the limitation should be applied before applying the passive activity loss rules, the at-risk rules and the new excess business loss disallowance rule.

Calculating the Deduction Limitation

Assuming your business doesn’t qualify for an exception, the business interest expense deduction for the tax year can’t exceed the sum of: 1) business interest income, plus 2) 30% of adjusted taxable income, plus 3) any floor plan financing interest expense.

Adjusted taxable income means taxable income calculated by making adjustments to factor out the following:

1. Items of income, gain, deduction or loss that aren’t allocable to a business,

2. Any business interest income or business interest expense,

3. Any net operating loss deduction,

4. The deduction for up to 20% of qualified business income from a pass-through business entity,

5. Any allowable depreciation, amortization or depletion deductions for tax years beginning before 2022, and

6. Other adjustments listed in the proposed regulations.

Deductions for depreciation, amortization, and depletion are added back when calculating adjusted taxable income for tax years beginning before 2022. For tax years beginning in 2022 and beyond, these deductions won’t be added back, which may greatly increase the taxpayer’s adjusted taxable income amount and result in a lower interest expense limitation amount.

Example

For 2019, BB Co. has $20,000 of business interest income, $250,000 of business interest expense and $1 million of adjusted taxable income. Assume the small business exception doesn’t apply. The company can deduct all $250,000 of its business interest expense because that amount is less than the deductible limit of $320,000 [$20,000 of business interest income + $300,000 (30% of the $1 million of adjusted taxable income)].

For 2020, BB Co. has $20,000 of business interest income, $120,000 of business interest expense and only $100,000 of adjusted taxable income. The company can only deduct $50,000 of its business interest expense in 2020 [$20,000 of business interest income + $30,000 (30% of the $100,000 of adjusted taxable income)]. The $70,000 of disallowed interest expense ($120,000 – $50,000) is carried forward to future years.

This example illustrates that the business interest expense limitation is more likely to affect a business when it’s having a subpar year. The only good news is that the disallowed interest is carried forward to future years, so it can potentially be deducted when things get better.

Important: For tax years beginning before 2022, taking advantage of generous depreciation tax breaks (such as 100% first-year bonus depreciation and Section 179 deductions) will not reduce adjusted taxable income. For later years, taking advantage of such breaks will reduce adjusted taxable income, which will make the interest expense limitation more likely to come into play.

The interest expense deduction limitation rules get more complicated for businesses operating as partnerships, limited liability companies (LLCs) treated as partnerships for tax purposes and S corporations.

Electing Out of the Limitation

Eligible real property and farming businesses can elect out of the new business interest expense limitation. However, electing to be exempt has a tax cost.

Real Property Businesses

Real property businesses can elect out of the rules if they use the Alternative Depreciation System (ADS) to depreciate their nonresidential real property, residential rental property and qualified improvement property. Using the ADS results in lower annual depreciation deductions because its depreciation periods are longer than the depreciation periods under the regular MACRS (Modified Accelerated Cost Recovery System) rules that usually apply. Real property businesses include developing, redeveloping, constructing, reconstructing, acquiring, converting, renting, operating, managing, leasing and brokering real property.

Affected real estate businesses should evaluate the tax benefit of gaining bigger interest expense deductions by electing out of the interest expense limitation rules vs. the tax detriment of lower depreciation deductions under the ADS. If the election out is made, first-year bonus depreciation that would otherwise be allowed for real property assets won’t be allowed under the ADS.

Farming Businesses

Eligible farming businesses can also elect out of the interest expense limitation rules. Farming businesses include nurseries; sod farms; raising or harvesting of tree crops, other crops, or ornamental trees; and certain agricultural and horticultural cooperatives. These businesses can elect out of the rules if they use the ADS to depreciate assets used in the farming business that have MACRS depreciation periods of 10 years or more.

Special Partnership and S Corporation Rules

Basically, the limitation is calculated at both the entity level and at the owner level. Special rules prevent double counting of income when calculating an owner’s adjusted taxable income for purposes of applying the limitation at the owner level.

The proposed regs set forth the special rules for applying the business interest expense limitation to partnerships and S corporations and their owners. The provisions are complex and present significant compliance challenges for affected taxpayers.

Minimize the Effects

As you can see, the business interest expense limitation rules are complicated. Fortunately, many businesses are exempt from the limitation. According to one estimate, about 98% of U.S. businesses are covered by the small business exception.

If your business is among the 98%, it’s important to properly document that fact in case the IRS comes calling. Your tax advisor can help.

On the other hand, if your business is affected by the limitation, your tax advisor may be able to suggest planning moves to minimize the ill effects.

Construction Company Owners: Watch Out for the TFRP

Posted on August 4, 2019 by Debra Barcuch

The Trust Fund Recovery Penalty (TFRP) is one of the harshest tax provisions on the books. Under the TFRP, a company owner, officer or other employee may be held liable for 100% of the company’s unpaid payroll taxes — which is why the assessment is sometimes called the “100% penalty.” Contractors beware: The TFRP can severely damage, if not destroy, your construction business and threaten your personal financial security.

Broad Interpretations

The TFRP may be applied to any person who’s: 1) responsible for collecting or paying withheld income and employment taxes or for paying collected excise taxes, and 2) willfully fails to collect or pay those taxes. Be aware that the IRS has broad interpretations of these two requirements.

For example, a “responsible person” is any person — or group of people — who has the duty to perform and the power to direct the collection, accounting and paying of trust fund taxes. This person might be:

An officer or employee of a corporation,
A member or employee of a partnership,
A corporate director or shareholder,
A member of a board of trustees of a not-for-profit organization,
Another person with authority and control over funds to direct their disbursement, or
Another corporation or third-party payer.

Similarly, the IRS broadly interprets the requirements for a “willful failure.” The failure doesn’t have to be intentional. For instance, the TFRP may be applied in situations where the responsible person knew, or should have known, about the taxes that should have been paid but, in fact, weren’t.

If the IRS determines that you’re a responsible person, it will mail you a letter stating that it plans to assess the TFRP against you. You have 60 days (75 days if this letter is addressed outside the United States) from the date of the letter to appeal. The letter will explain your appeal rights. If you don’t respond to this communication, the IRS will assess the penalty against you and send a Notice and Demand for Payment.

Once the TFRP is assessed, the IRS can take collection actions against your personal assets. It may, for example, file a federal tax lien or take levy or seizure action.

U.S. v. Samango

A recent Pennsylvania court case illustrates how easily a construction company owner can be found negligent. The defendant in U.S. v. Samango was the sole shareholder and president of a concrete construction company. As president, he supervised all aspects of the business, including reviewing and signing all federal and state tax returns. In addition, he was a minority shareholder and president of a framing company. In this capacity, he approved, signed and submitted various tax forms and documents to federal and state tax authorities.

Both companies had the same business address and phone number. They also shared top-level management and employees. In 2008, the concrete business subcontracted with the framing company to help on a construction project.

While the owner was president of both businesses, he signed checks from the concrete construction company’s account to pay the framing company’s liability for state unemployment compensation insurance. He also approved, signed and submitted to the IRS the Federal Unemployment Tax Act (FUTA) form for the framing company.

Subsequently, the IRS assessed the TFRP against the owner, claiming he was a responsible person who failed to pay trust fund taxes for the four quarters during which the framing company worked with the concrete construction company as a subcontractor. But the owner objected. He argued that he was only a minority shareholder; had no knowledge of the company’s finances, operations or general decision-making; and held no power or authority to pay its taxes.

Court’s Ruling

However, when the case came before a Pennsylvania district court, it found that the owner was a responsible person who willfully failed to pay taxes. The court rejected the owner’s claim that he wasn’t responsible because he had no oversight or control of the framing company’s finances. After all, the court reasoned, he signed and certified government forms on the company’s behalf. He also paid taxes owed by the framing company with funds from the concrete company’s account for which he had signatory authority.

The owner admitted at trial that he didn’t take any steps to ensure that the framing company’s taxes were being paid. This hurt his case. As president, he should have known that there was a grave risk that the taxes weren’t being paid. And he could have easily found out whether they were being paid. In the end, the owner was ordered by the court to pay $900,000 in unpaid employment tax.

High Stakes

With the TFRP, the stakes for tax compliance are high. To protect your construction business and personal assets, ensure that payroll tax deposits are made to Uncle Sam in a timely manner.

Your HR Department Should Be as Well-Oiled as Your Machinery

Posted on August 1, 2019 by Debra Barcuch

Manufacturing company owners and managers generally focus their attention on what’s happening — or isn’t happening — on the plant floor. Activities in overhead departments, such as human resources (HR), can become a secondary consideration. If this sounds like your company, consider this: Manufacturing is a labor-intensive industry, and you can’t afford to ignore HR.

A well-oiled HR department enables your business to run on all cylinders and overcome many challenges. Conversely, HR problems can slow down your company’s growth. If, for example, HR doesn’t proactively search for new machine operators, you may not be able to fill a big order that comes in unexpectedly.

7 Critical Functions

Here are seven ways HR departments can support a manufacturing company’s operational and performance objectives:

1. Recruitment.

This may be HR’s most important function. Finding the best talent to keep the plant humming without breaking the bank is always an issue, but it’s even more so in the current tight labor market. Today’s unemployment rate has reached record lows in some markets, and many applicants lack the skills and training to operate complex machines and computers that are used by advanced manufacturers.

One challenges for HR is that Millennials have shown less interest in manufacturing than previous generations. This may be due to a widely held misconception that manufacturing isn’t “cutting-edge.” Some younger workers may also believe that manufacturing jobs aren’t secure due to a reliance on temps to handle seasonal or periodic work.

The numbers bear this out. According the National Association of Manufacturers (NAM), in the first quarter of 2019 more than 25% of manufacturers had to turn down new business opportunities for lack of skilled employees. By 2025, millions of manufacturing jobs are expected to go unfilled. Your HR department must constantly strategize and think creatively to ensure that this doesn’t happen to your company.

2. Compensation.

For many manufacturers, compensation is the second largest business expense next to raw materials. Of course, wages alone aren’t enough to attract the top talent. Today, jobseekers look for a complete package that includes a good salary, benefits and perks, such as bonuses, paid time off and retirement plans.

Your HR team needs to know enough about the labor market to offer the best combination of these elements. At the same time, HR must align salary and incentive programs with your company’s performance markers — all while working within a tight budget. It’s a tough balancing act.

3. Health care benefits.

No question, the biggest-ticket under the benefits umbrella is health insurance. As health care costs rise, premiums will also continue to soar.

HR managers must balance the needs of employees against the cost to your company. Increasingly, this means asking workers to pay a larger percentage of premiums and accept high deductibles. But your company can’t put too much of the burden on employees or it risks losing them. HR must understand the health insurance marketplace and know how to find the best “deals” without sacrificing quality or violating laws governing employer-sponsored health insurance. This may require them to outsource some work to benefits experts.

4. Training.

Manufacturers hoping to rely on “interchangeable” workers probably won’t last long in the global marketplace. You need workers with specialized skills — and that means devoting resources to training.

Extra training isn’t only about the right hands operating critical machines. When workers are well-trained, they tend to care more about the quality of work, leading to higher productivity. Accordingly, HR should use every tool at its disposal, including mentoring, coaching, internships, career development plans, tuition reimbursements and motivational speakers.

5. Performance management.

Skilled performance management promotes employee success and, if HR is successful, results in better financial performance. Many HR managers design and implement internal employee appraisal programs. But input from performance management consultants can be valuable as new “best practices” emerge.

6. Labor relations.

In most U.S. states, manufacturers can’t ignore unions. Managing union relations may fall to your HR department. It’s important that this team maintains a positive and productive relationship with unions and union members. Of course, if conflict arises, upper management must step in.

7. Compliance.

Whether they want to be or not, HR managers must be labor law experts. Your HR manager may be responsible for drawing up policies that protect workers and keeping corporate officers abreast of changing regulations. There’s little room for error because failure to comply with labor laws can lead to litigation and financial penalties.

Protect Your Assets

Your company’s HR department to integral to its success. Make sure that this team receives the budgetary and other support it needs to excel at recruiting, training, reviewing, compensating and protecting your most valuable asset — your workforce.

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