The IRS Knows About Your Venmo
Be forewarned: All payments exceeding $600 will be reported in a 1099-K.
Here are today’s highlights:
Stagflation has already arrived in the U.K.
So far at least, in the battle over hybrid offices, employees have the leverage.
And by the way, the four-day workweek may not be the solution.
Meanwhile, the latest global shortage? Sriracha.
Women are driving the surge in new businesses—but not because they want to: “In February 2021, Jamie LaDuca returned from maternity leave to learn she'd be furloughed for a second time. ‘I had been working so, so hard,’ she said. But it seemed like her hard work wasn't enough. Every weekday, LaDuca went from one Zoom meeting to another, picked up her 6-month-old daughter and 3-year-old son from day care, got dinner on the table, put the kids to bed, and then logged back online to finish work. She felt like a hamster on a never-ending wheel. ‘I deserve better than this,’ she told herself. That was the moment she decided it was time for a change.”
“Determined to take control of her career, LaDuca, 37, used the monthlong furlough to formulate a business with her friend and register for an LLC. In June 2021, she quit her job, and they launched a public-relations agency, 143 Communications.”
“LaDuca represents one of the 1.4 million mothers who lost their jobs or dropped out of the workforce last year. In fact, women lost twice as many jobs as men during the pandemic and recouped only half.”
“Burned out from juggling the pressures of family, finances, and career, many did something they never imagined they'd do: become their own bosses.”
“Women made up 49 percent of new business owners in 2020 and 2021, compared with 27 percent in 2019.” READ MORE
The IRS is going to know about your digital payments: “Small-business owners, prepare yourselves for the era of the 1099-K. That’s the tax form for disclosing transactions with services such as PayPal, Venmo, and Airbnb. Until this year, anyone with less than $20,000 in total payments typically didn’t get a 1099-K—and thus, in theory, could avoid paying taxes on money earned on such platforms. But since Jan. 1 those companies have been required to report gross payments of more than $600 directly to the Internal Revenue Service. That means small-business owners—as well as people who periodically empty their closets on EBay—will receive a 1099-K from any service provider where their income exceeds that amount.”
“Because many users don’t separate personal transactions from business revenue on Venmo and other platforms—and the services don’t always make it easy—entrepreneurs say the rule change will create an administrative headache.”
“EBay, Etsy, and five other players have created what they call the Coalition for 1099-K Fairness to combat the new rules, saying they want to protect ‘casual online sellers and microbusinesses from unfair tax and privacy burdens.’”
“William DeJesus, co-founder of accounting firm TaxTerminal.com, says one benefit of the shift is that it will allow small companies to offload responsibility for issuing 1099s to the payment platforms.” READ MORE
In the U.K., businesses are already confronting stagflation: “A Conservative lawmaker first used the word in Parliament in 1965, and it was a chilling warning of what was to come over the next two decades: Unemployment rose and inflation climbed into double digits amid workers’ strikes and political instability. Ever since, the grim economy of the 1970s and the prospects of stagflation’s returning have haunted Britain’s political leaders.”
“In the struggle against soaring prices, Sean Hughes has been willing to try anything to keep costs down at his gastropub, Dylans at The Kings Arms. That includes adding some less traditional fare among favorites like prime rib and Scotch eggs. The latest: confit beef tongue.”
“His diners, in St. Albans, a relatively wealthy commuter city north of London, got over their initial hesitancy, he insists, and the tongue, a less expensive cut of beef, became a popular choice. But this is how his menus are determined now — by cost.”
“‘It’s a very, very, very delicate balancing act at the moment,’ Mr. Hughes said. ‘It’s definitely not some kind of boom recovery that we were all hoping for.’” READ MORE
Housing prices are still rising, and people are getting shut out of the market: “The housing market may be slowing down, but that doesn't mean buying a home has become any more affordable. Across the country, hopeful buyers are eagerly waiting for home prices to fall — especially as buyer competition continues to fizzle out. However, despite waning demand, prices are still rising and that could mean prospective buyers are betting on a pipe dream. According to Corelogic, home prices hit a new all-time high in April. During the month, they grew by 20.9 percent from 2021 – marking the 123rd consecutive month of price gains. The increase is attributed to mortgage rate hikes, which researchers say drove buyer urgency.”
“According to Freddie Mac, the average U.S. fixed rate for a 30-year mortgage came in at 5.09 percent this week, declining from a pandemic high of 5.30 percent but still a tremendous increase from a pandemic low of 2.68 percent in December 2020.”
“According to Fannie's Home Purchase Sentiment Index, the percentage of survey respondents who say it is a good time to buy decreased from 19 percent to 17 percent in May, while the percentage of those who say it is a bad time to buy increased from 76 percent to 79 percent.” READ MORE
To ease inflation, the U.S. is considering reducing tariffs on China: “Treasury Secretary Janet Yellen said the Biden administration is considering ways to reconfigure tariffs on imports from China as a means of helping to ease decades-high inflation. Ms. Yellen, speaking at a House Ways and Means Committee hearing on Wednesday, said she expected the administration to have additional information on its plans in the coming weeks, although there is no firm timeline. ‘I think some reductions may be warranted,’ Ms. Yellen said of the tariffs, adding it could help to bring down prices. Tariffs were imposed on certain Chinese imports during the Trump administration.” READ MORE
China’s exports rebounded in May: “Chinese exports to the rest of the world surged in May as Covid-19 restrictions eased, adding to signs of recovery in the world’s second-largest economy after months of punishing pandemic lockdowns. The year-over-year rebound in exports, which was much bigger than economists were expecting, suggests overseas orders for Chinese goods had piled up during previous months when factories were idle and port traffic collapsed amid stringent Covid containment measures in major cities, most notably Shanghai.” READ MORE
Concerns about hybrid work are not going away: “It’s a dream for many workers, but it could be pure fantasy unless companies are vigilant, according to career coaches and researchers who say people in the office are more likely to get noticed and rewarded. A 2020 study of more than 400 tech workers by researchers at Rensselaer Polytechnic Institute and Northeastern University found that while remote and non-remote workers won roughly the same number of promotions, the salaries of remote workers grew more slowly. At companies where remote work was less common, telecommuters won fewer promotions.”
“Sure, you can hit your performance targets from the kitchen table and wear out the ‘raise hand’ button on Zoom. But a colleague who chats up the boss when the meeting is over and goes for a drink after hours may get ahead.”
“There’s a term for this: “Proximity bias (präk-ˈsi-mə-tē bī-əs) | noun. 1. A tendency to favor people in close proximity to you.2. Human nature and the way things have worked in business since forever.”
“‘If you want to be a managing partner, you’re probably not going to do that working one day a week in the office, and I think people get that.’” READ MORE
And yet, so far at least, the leverage continues to lie with employees: “Optimism about return-to-office plans, across industries and cities, is slowly abating. When asked in early 2021 about the share of their workers who would be back in the office five days a week in the future, executives said 50 percent; now that percentage is down to 20, according to a recent survey from the consulting firm Gartner. Office occupancy across the country plateaued last month at around 43 percent as Covid cases spiked again, according to data from Kastle, a security firm. The vast majority of Americans, particularly those in the service sector and low-wage jobs, have been working in person throughout the pandemic. But those who were able to work remotely got attached to the flexibility.”
“‘It’s kind of a Wizard of Oz thing,’ Mr. Kime said. In other words, his team realized that there was no all-powerful being forcing their attendance; there was only a man behind a curtain (or Zoom screen).”
“‘As much as we grumbled about going back to work, we all understood that it was going to happen. But the second we started going, we realized how silly it was.’”
“‘What is abundantly clear is that there are fewer and fewer companies expecting their employees to be in the office five days a week,’ said Brian Kropp, vice president in Gartner’s human resources practice.” READ MORE
Here’s the thing about a four-day workweek: Longer hours are the problem, not the solution: “Since our brains are not wired for long bouts of focus, it's largely unrealistic that everyone will be able to get all of their work done in less time. Those who can't manage will simply end up working longer days. Not surprisingly, research shows that long hours backfire for people and companies. The solution then is not to have fewer, but longer days. But to have fewer hours per day, and perhaps more days. As terrible as that might initially sound, the reality is that it can be strangely ideal. For the record, I say that as someone who has done this in the past, sometimes working seven days a week, happily on my own accord.”
“Being an early riser I would often work a weekend morning or two when most of the world was still asleep. It was a time when nothing else was going on and the peace of the quiet morning meant I could work without distractions, and get a lot done.”
“By working a few hours over the weekend, I could then leave work mid-afternoon guilt-free to take advantage of a beautiful day, when there was something else going on, or when I simply didn't feel like working.” READ MORE
And now there’s a shortage of Sriracha: “The maker of one of the U.S.’s most beloved condiments — Huy Fong Foods — has been forced to suspend production of its iconic spicy sauces due to a shortage of chili peppers. The company confirmed Wednesday that a shortage of peppers in its inventory had affected production of Sriracha Hot Chili Sauce, Chili Garlic and Sambal Oelek. What appears to be an April letter from the company to buyers of the products, dated April this year, recently came to light online.”
“‘Currently, due to weather conditions affecting the quality of chili peppers, we now face a more severe shortage of chili,’ the letter reads. ‘Unfortunately, this is out of our control and without this essential ingredient we are unable to produce any of our products.’” READ MORE
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