Should You Go Back to the Office?

A taste of remote work has left some workers hesitant to head back to the office.

PHOTO: GETTY IMAGES
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After months of experimenting with remote work, your company is calling you back to the office.

Should you go?

“It’s been weighing on me,” Christina Marcellino, a 34-year-old business development manager for a law firm, says of the back-to-work question. It’s all her working-mom friends in Charlotte, N.C., can talk about. “What is it going to look like? What are we going to do?”

The calculus is complicated, even if you’re comfortable with your employer’s plans for Covid safety. Some companies will, at least ostensibly, give workers a choice; others will ratchet up the pressure or dole out ultimatums. How much do you push back? How do you decode corporate statements to tell you what you really want to know: Will it kill my career if I stay home?

The other variables to analyze feel infinite, the stuff of life: that workout you can now sneak in each morning, the leisurely walk to the bus stop with your kid, the exodus of $15 sad desk salads from your lunch routine. But also, wasn’t the chatter and camaraderie at the office the thing that made work feel…almost fun? Who can even remember at this point?

 

The good news—and the bad news, for the indecisive among us—is that we’re in a unique moment.

“There’s never going to be a better time to make the pitch to your company,” says Ed Voelsing, founder of the Rivet Group, an executive recruiting and talent-consulting firm in the Charlotte area. “ ‘Allow me to work remotely.’ ”

Workers, dreading back-to-office orders, have approached Mr. Voelsing in search of permanent telecommuting jobs. One client moved to Ohio during the pandemic and doesn’t want to give up his new life: cheaper, closer to family.

Mr. Voelsing recommends that employees tread lightly if they’re early in their careers. The office is where you learn by osmosis, tout your work and occasionally get pulled into a random meeting with higher-ups.

“You get to state your opinion in front of a whole bunch of executives who now know who you are,” he says.

Consider how much leverage you have: How rare and revenue-generating is your skill set, and how hard would it be to replace you right now? Are you open to taking a pay cut if it means you can stay remote? How would you feel if your career stagnated a bit down the line because you couldn’t ascend away from headquarters?

Some 43% of 1,046 remote workers surveyed by insurer Prudential in March said they’d be nervous about their job security if they stayed home while others returned to in-person. Yet the data indicates many of us really don’t want to go back, at least not every day. Nearly nine out of 10 workers in the same survey said they want to work from home at least once a week after the pandemic subsides; one in three said they wouldn’t work for a company that forced them to be on-site full-time.

Bethany Goldszer quit her previous job, with a nonprofit in Queens, N.Y., after leaders called everyone back to work last June. Now conversations are bubbling up at her new employer, a charter school where she’s been working remotely, about returning to five days in-person come fall. Ms. Goldszer made a pro and con list about what staying home would mean: no frantic mornings trying to find parking on city streets, no daily tolls—but also the possibility of “people even forgetting that I exist.”

The sticking point was the prospect of having to make her commute a high priority as she begins house-hunting on Long Island.

“I’m tired of making decisions like that,” she says. “I don’t want where I work to factor in.” She floated her remote-work pitch by a board member, who she hopes can advocate for her when it’s time to make a formal request.

Then again, is having no commute the answer? Harvard Business School professor Ashley Whillans says preserving some sort of physical transition between work and home helps us set boundaries. During the pandemic, many filled the time gained from killing their commutes with more work.

“People feel like they have to be chained to their desks all the time,” Dr. Whillans says. Evaluate your remote work experience: Are you capable of maintaining separation and avoiding burnout? Or have you spent the past year logged on at all hours, stressed and miserable?

Gaetan DeSimone, a graphic designer and animator in Easton, Conn., kept a journal chronicling how he was adjusting to remote work and using his extra time. There was the bonus hour with his toddler daughter in the mornings, the ability to pop out to his new garage studio when inspiration struck at 2 a.m., and then head out for a bike ride the next day when he couldn’t focus. His company left it up to him to decide whether to start coming into the Manhattan office. Still, “there’s that looming concern of, what if one day they change their tune?” he says.

 

Gaetan DeSimone has been working from his garage studio during the pandemic.

PHOTO: GAETAN DESIMONE

 

He asked his manager if staying remote would affect his future opportunities. When he said no, Mr. DeSimone’s decision was made.

How you’ve adjusted to remote work is only one piece of the puzzle. How did the people around you do with remote work?

“Was your boss extra hypervigilant, calling you every five seconds?” asks Joyel Crawford, a Philadelphia-area executive coach. Maybe showing up at the office will boost trust and actually buy you some more autonomy.

Ethan Tyler, pictured with his daughter, Rebecca, and wife, Margaret Tyler, is looking forward to returning to his office in Anchorage, Alaska.

PHOTO: ETHAN TYLER

 

If you’re the manager, consider whether it’s easier for you to lead meetings and rally the troops over Zoom, or in a conference room. Over the past month, Ethan Tyler, a corporate affairs director in Girdwood, Alaska, started to notice that some tasks were falling through the cracks on his remote team.

“I’ve just felt this kind of a disconnect,” he says.

When the group met up at a local restaurant recently, they were able to swiftly outline projects and divvy up work. Conversation felt less awkward.

Mr. Tyler was excited to hear his company was bringing everyone back at least three days a week starting in June. He can’t wait to get in his car and make the hourlong trip to his Anchorage office.

Will staying home hurt your chances for promotion? Will leaders reverse course in a year, ordering you back? Tips on reading the risk, from professor Ashley Whillans:
 

Office downsizing: If your company is shedding real estate, that could be a sign that it’s committed to a flexible model of working.

Hiring from afar: Are new employees from around the country onboarding into fully remote roles? Or has the company been focusing on recruiting local talent in the past several months? If it’s the latter, executives might be switching gears.

Signals from the boss: Pay attention to what leaders are doing, not saying. “Do you see your bosses Zooming in from their offices?” Dr. Whillans asks.

Subtle perks: Is your company offering things like free lunch to those who come back? That’s a sign they want you there.

How Midsize Companies Can Maximize Growth and Efficiency

How Midsize Companies Can Maximize Growth and Efficiency


by 


A few months into 2021, middle-market companies are eager for growth and sense unique opportunities, including the chance to profit from pent-up demand and the momentum of a rebounding economy — and, for some, to take share from or acquire a weakened rival. The International Monetary Fund is forecasting U.S. economic growth at 6.4% this year; companies would be foolish not to position themselves to catch that kind of tailwind.


But how can they fund the growth they seek? Even in normal times, middle-market companies are reluctant to dilute equity and anxious about getting out over their skis by taking on debt. Today, almost half of middle-market executives say that coping with Covid-19 has made them more risk averse than before. Many drew on lines of credit last year or got federal Payroll Protection Plan support; they would prefer not to call on their banks again. But without capital, they risk missing out on a historic growth opportunity.


Many of these companies have the solution at hand but don’t know it. Data and research from the thousands of members of AchieveNEXT’s CFO Alliance show that middle-market companies can fund much of their growth through efficiency. Indeed, increasing productivity and efficiency, our 2021 Sentiment Study shows, is the number-two strategic priority for middle-market CFOs, just after growth. The trick is to make them work together, rather than have the pursuit of one handicap the other. Ours and members’ experience shows that growth and efficiency can be allies, not antagonists. Properly managed, the push for efficiency can free up capital and direct it to where it will create revenue, generate strategic growth options, and increase enterprise value.


One of our CFO Alliance members faced that challenge from their position overseeing finance for a midsize trucking company with a fleet of more than 500 tractors and upwards of 1,500 trailers. As an essential business with broad diversification of customers across industries, it grew moderately in 2020 and entered 2021 with ambitious plans, supported by strong demand. The company had enough capital, but not enough human capital thanks to a shortage of drivers — a problem which affects the whole industry and has been intensified by increased regulation and the introduction of the Drug and Alcohol Clearinghouse. But the impact and imperative are the same: The company cannot reach its growth goals without big gains in productivity and efficiency. Every dollar lost to inefficiency is a dollar that could be used for growth.


Often, however, companies look for efficiency by cutting costs in ways that actually defund growth and leave an enterprise anemic and stressed. This member’s experience has revealed three approaches that feed efficiency and growth at the same time.


Attack all the variables in the productivity equation.


In many companies, the search for productivity growth becomes a cost-cutting exercise. But productivity is simply outputs divided by inputs. And inputs aren’t just labor inputs, but also capital equipment, inventory, technology investments, materials, and more. Looking at the complete productivity equation encourages leaders to discover opportunities to maximize outputs, as well as reduce inputs, and to get more from all their assets, not just the workforce.


One way the trucking company gets more from less is to focus on profitable customers. Marginal customers syphon off a surprisingly large amount of time, energy, and assets and deliver less to the top line. The company now separates customers into “strategic” and “transactional” groups and makes sure the former gets first call on its resources. By linking sophisticated load-planning software with its ledger of customer commitments, the company is able to ensure that customer service teams don’t inadvertently tie up capacity that could create more value if it were used for a different opportunity.


Raise your working capital game.


The cheapest capital you can get is money that’s tied up in bills you pay too soon, receivables you collect too slowly, and inventory you don’t need. Middle-market companies underestimate how much working capital they use. Data for publicly held middle-market companies reveals a four-times performance difference between the 25th and 75th percentiles in payables, receivables, and inventories. For example, a $100-million-in-revenue materials company that moves from the median to the 75th percentile would free up more than $17 million in capital every year — interest-free money to use for expansion or any other purpose.


Mismanaged working capital can starve a company. We know one company that decided to pay its bills in 25 days instead of its usual 40 as a favor to pandemic-stressed suppliers. They soon discovered that they were running out of cash. Middle-market executives often fear that they’re at the mercy of trading partners — forced to accept discounts in return for timely payment from big-company customers, for example. In fact, middle market companies have more leverage than they think, especially if they’re providing critical components or raw materials.


Understanding how these levers work may stretch the skills and knowledge of CFOs and their teams. It’s no wonder CFOs in the AchieveNEXT 2021 Sentiment Study told us that financial planning and analysis is their number-two skills gap in their departments, just after critical thinking. Global enterprises often have teams of hundreds doing this kind of analysis; in the middle market, the job might fall to the CFO and an overtaxed analyst or two. In addition, if the finance team lacks the right capabilities and tools, it can spend a significant amount of time on fixing data issues, creating reports, undertaking strategic planning, and explaining variances after the fact instead of driving real-time analytics for stronger insights and more informed business decisions.


Seize the moment to get creative about costs.


This year offers three unique cost-management opportunities. First, take a look at all the improvisation and adaptation the pandemic provoked (“pivoting,” in the jargon du jour) to see what to keep, what to toss, and what to clean up. (Does anybody know how many Zoom accounts your company has?) Sales teams chafed at pandemic travel restrictions, but many have adapted brilliantly to virtual selling and new modes of lead generation, realizing both sales gains and reduced customer acquisition costs. Among clients of Delancey Street Partners, an investment bank focused on the middle market, many CFOs are having serious discussions with sales and marketing departments to determine if these new practices can be retained or expanded in an attempt to capture a meaningful portion of these savings permanently.


Second, rethink real estate needs and act fast on what you learn. According to the McKinsey Global Institute, in the third quarter of 2020, office vacancy rates in New York were 32% higher than they had been a year before; they were 23% higher in Chicago and 12% higher in Los Angeles. Now is the time to negotiate lower rents, but, more important, it’s a chance to examine long-term real estate needs — before the market rebounds in landlords’ favor and your employees settle into a less-than-productive “old normal.”


Third, get more strategic about digitalization. Many middle-market companies are stuck in what we call “first-generation digitalization,” such as automating routine work. But there are at least two other stages. One is digital integration across functions, allowing companies to optimize operations, HR, logistics, marketing, and other systems as a whole. For example, by tying together IT stacks that once were separate, the trucking company is now able to coordinate customer commitments, load planning, and route optimization — and even buy commodity hedges on fuel costs. Optimizing the whole system generates productivity gains far above what can be attained by improving each element alone. Not long ago, tools like these were out of reach for middle-market companies; today, one out of seven middle-market CFOs see cross-functional IT integration as the biggest challenge and opportunity they face.

Even bigger productivity gains can be found by imagining how digitalization can transform your business model and balance sheet as well as your income statement — for example, by offloading assets like warehouses and fleets, IT servers, and swing production capacity.


Each of these approaches to productivity improvement can feed and fund growth more easily than mere cost cutting. They have an additional advantage: They significantly enhance enterprise value, which will put your company in a better position if you choose to fund expansion with outside capital, or if you choose to enter the M&A market as a buyer or seller. Capturing productivity gains, working capital management efficiencies, and other operational improvements are best done well in advance of approaching the capital markets. In Delancey Street Partners’ experience, clients that are able to show several quarters of enhanced profitability due to material changes in productivity, working capital efficiencies, etc., are more likely to get credit for these improvements during a sales process or capital raise. The ability to evidence two to three quarters of improvement gives potential investors and buyers confidence that these efficiencies are sustainable and not short-term practices put in place as transaction-related window dressing.


None of these things can be done in a vacuum or by functional leaders acting by themselves. Whether managing working capital, reshaping cost structures, or driving digitalization, CEOs and CFOs from middle-market enterprises must overcome misalignment among leadership, build buy-in across their organizations, and organize this effort for growth by focusing on change management. Achieving buy-in is not a one-time exercise for them, either. They must communicate to all stakeholders the growth strategy, the value drivers of change, the phases of the digital journey, and the expected outcomes. They must clearly demonstrate and communicate success through validation points along this productivity journey. The long-term and ongoing culture change activities and interventions that will come will help shape a culture that celebrates cost management and growth simultaneously.

4 Payroll Mistakes That Could Get Your Business into Trouble

 

If you run a small business and have employees, you know the importance of payroll. You may also know how much time and effort it takes to get things right. Instead of focusing all of your energy on payroll, however, what if you used services and resources from trusted professionals like Daves Bookkeeping & Tax Services to eliminate the stress and guesswork? 

 

Interested in learning more? Then you can start with these tips for avoiding payroll mistakes. 

 

Using a Personal Bank Account 

 

For those who are just getting started in business, it may seem convenient to pay employees out of a traditional bank account. This could be a huge mistake with major consequences for your business, however, if you decide to use your personal account rather than a business bank account. Here are some reasons why: 

 

        Without a business account, you’ll need to track expenses on your own. 

        You open your personal finances up to liability in the case of mishaps. 
  •         You’ll miss out on essential business bank account features you need like payroll integration, cash flow projections, instant deposits and high-yield interest rates. 
  •  

Failing to Protect Payroll Systems 

 

Right now, there are criminals lurking online looking to hack into your payroll. According to the FBI, attacks on payroll resulted in losses of “$8.3 million dollars” from 2018-2019 alone. Otherwise known as payroll diversion schemes, these attacks target your employees and employee email systems to gain access to sensitive information and steal from your accounts. 

 

So what can you do to protect your payroll systems? You can start by conducting routine security audits and securing your company’s email. Properly educating employees can also help, but payroll services can take the risk out of processing your payroll to begin with. 

 

Forgetting to Take Out Taxes 

 

Another frequent payroll slip up for small businesses is withholding too little or too much from employees’ paychecks on a regular basis. Failing to do so could land your business with penalties and fines, while making tax preparation a nightmare for your staff members. 

 

It’s also critical to choose the right classification for everyone who works for your small business. This may sound pretty straightforward, but the IRS rules for contract vs. regular employees are pretty complex. You don’t want to get it wrong. 

 

Failing to Pay Employees Overtime

 

Do you know whether your state requires businesses to pay overtime to employees? Most states legally mandate that overtime be paid when a regular employee works over 40 hours in a single week, although some states have no requirements. Unpaid overtime in these states could result in severe penalties for your small business.

 

Even if your state doesn’t require it, paying overtime and adhering to other payroll principles is important for protecting your reputation as a business owner. The last thing you want is for your business to become known for unfair wages and labor practices. So if you’re not aware of current labor and payroll guidance in your state, educate yourself or look into payroll services. 

 

Your employees count on you to get payroll right. They rely on their paychecks to cover rent, bills and other living expenses. The long-term success and stability of your small business can also be impacted by whether you put the time and effort into avoiding some of the most common payroll issues and mistakes. 

 

Instead of leaving your payroll up to chance, save yourself time, worry and stress by working with Dave’s Bookkeeping & Tax Services to handle your payroll, accounting, expense tracking and other routine accounting operations. 

 

Photo Credit: Rawpixel

 

Thanks in advance for considering!
Lisa
lisa_walker@jobdreamteam.com 

 

Improve Your Law Office Productivity With QuickBooks

When it comes to accounting, QuickBooks is recognized as the number one business financial software out there today. That’s why so many law firms use QuickBooks for Law Firms. It takes the complexity out of your financial accounting process and makes life easier for you, your clients, and your vendors.

 

The program was designed specifically with the needs of legal practices in mind so it can handle all the financial management needs of your firm. And, when you combine Quickbooks with your case management technology, your firm can have a powerful, all-in-one law firm solution.

 

Here are some of the ways QuickBooks for Law Firms can make your law office more productive and efficient.

 

 

    Tracks, records, and invoices for legal services rendered, which are often based on varying hourly rates. Records hours worked and then passes the time through to client invoice.
  • Provides one-way synch of accounting data into QuickBooks that eliminates manual data entry, uploads and downloads.
  • Eliminates opportunity for errors and ensures consistency throughout your financials.
  • Automatically generates invoices, sends them directly to your clients, and makes the corresponding entries in the general ledger.
  • Enables customization of existing invoice templates so that your invoices better represent your law firm.
  • Simplifies the complicated record keeping involved with handling of client monies held in trust. If you use an IOLTA (Interest on Lawyer’s Trust Accounts) you can set up a few QuickBooks accounts to track the transactions.
  • Handles client trust activity and the firm’s accounting in one central location.
  • Documents payments to third parties, reimbursing the law firm on behalf of the client.
  • Provides new customer data synch that eases new customer setup.
  • Supports both cash and accrual accounting
  • Allows access to financials anytime from anywhere.

With all these benefits, more law firms every day are beginning to realize the benefits that QuickBooks for Law Firms offers. Even more beneficial is the option of integrating QuickBooks for Law Firms directly into your law practice management software, as MyCase does–offering the convenience of an automated, financial software package – including training and support. Learn more about the integration here.

 

So why not get started today? Improve your productivity and simplify your financial management process with Quickbooks. Practice more and manage less.

Should Your Business Be an LLC or an S Corp?

Here’s how to decide whether to incorporate your business as a limited liability corporation or an S corporation.

You’ve finally decided to start a business of your own. Or maybe you have been running one as a sole proprietor, even moonlighting on the side, and have decided you need to protect your personal assets from those involved with your growing business. You might even decide that there could be a tax break in it for you. Whatever your reasoning, you’re likely contemplating a choice that many entrepreneurs face: Should your enterprise be structured as a limited liability corporation (LLC) or an S corporation (S corp), which is named after subsection S of Chapter 1 of the Internal Revenue Code?

These two organizational forms have similarities and differences–which can make choosing between them and others, like a C corporation (which includes publicly-held companies), confusing at best. Each state might also have different rules that come into play. That’s why you’ll want to get some input from a respected accountant and/or attorney to help you decide what might be the best fit for your business.

Defining the Benefits

A major advantage of organizing your business as an LLC or an S corp is that you can protect your personal assets from the creditors of your business. “Limited liability means you can’t be financially responsible for more than your investment in the company,” writes Greg McFarlane in his book, Control Your Cash: Making Money Make Sense. “If you put in $10,000, and incur $11,000 in debt, you’re only potentially liable for $10,000. Your creditors (check that, your LLC’s creditors) can’t ‘pierce the corporate veil,’ as the phrase goes.”

Another common aspect of LLCs and S corps is that they help you avoid paying both personal and corporate taxes. The difference is that in an S corp, owners pay themselves salaries plus receive dividends from any additional profits the corporation may earn, while an LLC is a “pass-through entity,” which means that all the income and expenses from the business get reported on the LLC operator’s personal income tax return, says Ebong Eka, a CPA who also pens his own blog about the world of entrepreneurship at MoneyMentoringMinutes.com.

Both LLCs and S corps can also deduct pre-tax expenses, such as travel, uniforms, computers, phone bills, advertising, promotion, gifts, car expenses, and health care premiums, McFarlane writes.

Note the Differences
 
Once you understand the benefits that come from LLCs and S corps, it’s time to explore some of the pros and cons of each approach. Here are some of the key differences, according to Eka:

LLC Pros:

The owner of a single member LLC doesn’t have to file a tax return for the LLC, as they only report the activity on their personal tax return.

Ease of setup: Most LLC forms are only a single page for single member LLCs.

Inexpensive to start: The cost of setting up an LLC is also inexpensive, usually just a couple hundred dollars.

Guidelines: The red tape involved in forming an LLC isn’t as stringent as that involved with S corps, which also leads to savings on accountant and attorney fees, among others.

LLC Cons:

  1. Self-employment tax: Single member LLC owners are required to pay self-employment tax on income generated in the LLC, which means making quarterly estimated payments to the IRS.
  2. Owners of LLCs must make sure they don’t pierce the “corporate veil,” meaning they have to operate the LLC separately from their personal affairs. “The LLC must not be a shell but an operating entity,” says Eka. “There have been cases where a business owner lost their protection because there was no distinct difference between the LLC and its owner.”

Dig DeeperWhat Is an LLC?

S Corp Pros:

  1. The key advantage of an S corp is that it offers tax benefits when it comes to excess profits, known as distributions. The S corp pays its employees a “reasonable” salary, which means it should be tied to industry norms, while also deducting payroll expenses like federal taxes and FICA. Then, any remaining profits from the company can be distributed to the owners as dividends, which are taxed at a lower rate than income.

S Corp Cons:

  1. S corps have more strict guidelines than LLCs. Per the tax code, Eka says, you must meet the following standards to create an S corp:
    • Must be a U.S. citizen or resident.
    • Cannot have more than 100 shareholders (a spouse is considered a separate shareholder for the purpose of this rule).
    • Corporation can only have one class of stock.
    • Profits and losses must be distributed to the shareholders in proportion to the shareholder’s interest. For example, you can’t have disproportionate distributions of dividends or losses. If a shareholder owns 10 percent of the S corp, he or she must receive 10 percent of the profits or losses.
  2. It costs more to form an S corp.
  3. Shareholders must adhere to the requirements at all times. If they don’t, they risk disallowing the S corp election, and the corporation would be treated as a C corp with its corresponding restrictions.
  4. Passive income limitation: You can’t have more than 25 percent of gross receipts from passive activities, such as real estate investment.
  5. There can be additional state taxes for S corps.
  6. Shareholders should pay attention to paying themselves a “reasonable” salary for the work they perform for the S corp, since the IRS is increasingly scrutinizing S corps for this.

Case Study: Why an LLC Might Be Best for Your Business

Given that it takes far less red tape to organize and is generally cheaper to administer, the LLC might be your best choice if you’re a new business owner or operate an internet business, says Eka.

There is also another key benefit of LLCs: You can elect to be taxed as an S corp while retaining the structure of an LLC. Consider the case of Mike Turner, founder of Front Street Brokers, a real estate agency in Boise, Idaho. When he started his business, which sells high-end homes and properties, he was advised to form it as an LLC, which he did. However, a couple years later, as the business began to earn more revenue, Turner was shocked by the amount of taxes he was paying the IRS.

It was then that his accountant told him how he could elect to be taxed like an S corp while keeping his LLC intact. Turner decided to make the switch. He began paying himself and his wife a modest salary, which he also pays fees on (such as FICA and unemployment insurance), and then paying himself a monthly dividend from the extra profits his company was earning.

“The rules are I must pay myself a realistic salary,” says Turner. “I can’t pay myself minimum wage, and do the rest in dividends. But in my industry, the average salary is not that high, so I can still take a hefty amount via the dividends.” The difference has been a savings of between $6,000 and $8,000 a year in federal taxes. “I feel I get the best of both worlds,” he says. “For my small business, I get all the legal benefits of running my small business through an LLC, but I can be taxed as an S corp, which saves me money at tax time.”

Case Study: Why an S Corp Might Be the Better Choice

While Turner’s story is a compelling one for a smaller, lifestyle business, the truth is that fast-growing businesses that plan to bring on investors or share the ownership of the company with employees may need to consider making the switch to an S corp sooner rather than later.

Consider the case of Vicky Phillips, the founder of GetEducated.com, which provides guides and ratings for college courses and programs offered online. Phillips originally started her business, which is based in Burlington, Vermont, as an LLC and has kept it that way for 10 years. But now that her business is established–it now earns $1 million in annual revenue–she’s ready to bring on investors to expand even faster.

In talking to her advisers, she came to realize that it was in her best interest to convert her company into an S corp, despite some of the disadvantages of doing so. “There’s much more paperwork required to substantiate everything,” she says, since running an S corp requires you to hold meetings, keep minutes, make resolutions, elect officers, and produce formal financial statements. “But the S corp structure creates more separation between me and the company, which is something that investors and bankers are more comfortable with.”

Phillips says that she spent about $6,000 on attorney and accountant fees making the switch over from an LLC, the assets of which were essentially bought by the new S corp, though she admits she could have spent less if she had been willing to do more of the paperwork herself. “I’m not a huge fan of more paperwork, which is one of the key reasons we held off on making the switch for as long as we did,” she says. 

Will Movie Theaters Survive When Audiences Can Stream New Releases?

Last month Warner Brothers announced that all of the movies it will release in 2021 will be available on Warner’s HBO Max subscription streaming service — on the same day they premiere in U.S. theaters. That includes such expected hits as Matrix 4DuneGodzilla vs. Kong, and The Suicide Squad.

This announcement has had a seismic impact on the movie industry, for several reasons.

First, prior to this announcement almost all major Hollywood movies were given a three-month exclusive theatrical release before they were available on in-home channels. Indeed, theater owners had threatened to boycott any studio that violated the exclusive theatrical release window — a threat that AMC Theaters acted on in April of 2020, when, to punish NBCUniversal for releasing Trolls World Tour simultaneously in theaters and on digital channels, it announced a boycott of all of the studio’s movies.

Second, while several studios had released movies on digital channels while theaters were closed during COVID-19, Warner’s announcement covered its entire 2021 slate, including movies slated for release late in 2021 when most industry observers believe theaters will no longer be subject to COVID-19 restrictions. This made it appear to some that Warner wanted to make these temporary COVID accommodations permanent.

Theaters owners and other industry observers were quick to criticize Warner’s move. Chris Johnson, the CEO of Classic Cinemas, called Warner’s decision “ridiculous and short-sighted,” and Adam Aron, the CEO of AMC Theaters, argued that Warner would “sacrifice a considerable portion of the profitability” of movies that bypassed the traditional theatrical release. David Sims piled on in The Atlantic, saying of Warner’s decision, “Audiences will have little incentive to pay more to see these films in theaters.” His conclusion? “Theater chains are right to fear for their survival.”

These concerns reflect the conventional wisdom in the industry: that given the choice, many consumers will avoid the “big screen” theatrical experience in favor of the convenience of watching the same movie at home. If that’s true, it would obviously be ruinous for theaters.

But is it true? Will early digital releases significantly harm theatrical revenue? We analyzed that question in a recent research study, and what we found might surprise those who are concerned about digital platforms encroaching on the theater business.

In the study, we analyzed what happened to theatrical revenue in Korea from 2015 through 2018 — a period during which Hollywood studios significantly shortened the exclusive theatrical windows for their releases, from three months to only one month. We found that, after controlling for differences between movies with early digital releases versus traditional release windows, early releases had a statistically and economically insignificant impact on theater sales, equivalent to around a 0.8% drop in total theatrical revenue during the first eight weeks of the movie’s theatrical run in Korea. Most theatergoers, it turned out, remained loyal to the theatrical experience even when they had the option of watching the movie at home while the movie was still showing in theaters.

We should interpret this result with some caution, of course. U.S. consumers may behave differently than Korean consumers when it comes to early digital releases, and our study results only apply to movies that received an exclusive theatrical release for at least four weekends — a release window more similar to the 17-day exclusive theatrical window that AMC and NBCUniversal ultimately negotiated than to the “day-and-date” HBO Max availability proposed by Warner.

Nonetheless, our broad finding is consistent with what we’ve seen in other settings where many feared that new digital products would cannibalize existing markets. For example, our past research found that making books available on Amazon’s Kindle platform didn’t significantly cannibalize hardcover sales, unbundling digital singles from albums didn’t damage overall music revenue, and releasing movies on iTunes didn’t harm those movie’s DVD sales. In each case, the data showed that opening new digital channels wasn’t a zero-sum game. Rather, the new digital products appealed to new and previously untapped customers, and making them available to the market ultimately benefitted both consumers and sellers.

What we learned in our Korean study suggests that a similar effect may exist for movies, which in turn suggests that John Fithian, the president of the National Association of Theater Owners, was right when he argued that “theaters provide a beloved immersive, shared experience that cannot be replicated” — but that Jason Kilar, the CEO of WarnerMedia, was also right when said that early digital releases provided an opportunity to give customers a choice “whether that choice is to enjoy a great new movie out at the cinema, to open up HBO Max, or to do both.”

That’s an encouraging sign. Maybe, when it comes to how movies get released, studio executives and theater owners have more to agree on than they realize.

Pajamas Are the New Sweatpants—How to Wear Them Everywhere

Men and women are trading their sad WFH uniforms for snazzy sleepwear, spending every waking hour in snugly bliss. These expert tips will help you style PJs for almost any socially distant activity.

PAJAMAS ARE at least partially responsible for keeping Vincent “the Chin” Gigante out of jail for decades. Starting in the 1960s, the late Mr. Gigante, a notorious New York mob boss, feigned mental illness in a surprisingly successful scheme to convince authorities that he couldn’t possibly be the head of the Genovese crime family. To keep up appearances, he’d meander through his Greenwich Village neighborhood mumbling to himself while wearing slippers, sleepwear and a bathrobe. His pajama game helped him elude arrest until the 1990s, at which point he was locked up for racketeering and conspiring to murder his Mafioso rivals.

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Today, the Chin’s ploy wouldn’t fool anyone. As the pandemic persists, pajamas have come to seem entirely sensible as all-day wear for social-distancing women and men. Whether you’re Zooming with the boss, running to the store or hosting your pod for cocktails and charades, sporting pajamas from morning ’til the next morning—a style strategy once reserved for degenerates and hung-over college students—no longer provokes censure. Today, in fact, if a man wanted to convince the world he was certifiable, he might have better luck striding down 6th Avenue in a pinstripe suit and a hat.

COZY NIGHT OUT Filmmaker Sofia Coppola wearing a silky sleepwear set on the 2013 Met Gala red carpet with designer Marc Jacobs.PHOTO: GETTY IMAGES

“People are looking for a different way to find comfort and fashion together,” said Roopal Patel, the fashion director of Saks Fifth Avenue. She noticed an uptick in the store’s sleepwear sales after the world hit pause last March. Ms. Patel observed that people are procuring extensive pajama wardrobes and assigning different styles to different isolation activities. “Everyone is experimenting with how to wear these pieces with their everyday looks, which they may not have done a year ago.” Indeed, if you pick the right pair, pajama dressing resolves the WFH-era dilemma of how to remain stylish at home. Emulate Sofia Coppola’s marvelous 2013 Met Gala look: metallic Marc Jacobs PJs, subtle sparkly jewelry and a mid-heel sandal. Do not mimic the Dude’s disheveled SoCal-stoner style in the supermarket scene of 1998’s “The Big Lebowski.” Tired, tattered bathrobes should be left in the closet, or the trash.

It might seem counterintuitive, but a sharp pair of PJs can look more put-together than the sad WFH uniform to which so many have succumbed: sweatpants, T-shirt and hoodie. The former is “crisp and happy,” said George Cortina; the latter, “sloppy and slovenly.” Mr. Cortina, 55, is a New York fashion editor (who contributes to WSJ.) and pajama evangelist who’s worn custom cotton pairs everywhere from tony Paris eateries to scene-y Los Angeles hangouts. “If you have a fresh set of pajamas,” he said, “there’s something beautiful in the choice you’ve made. If you’re wearing sweats, it’s gray and dreadful.” Mr. Cortina so strongly believes that PJs are the ultimate all-occasion ensemble that, this March, he’s launching a line of unisex poplin pairs with Savile Row tailor Anderson & Sheppard. They’ll come in un-dreadful “1960s Italian Riviera” hues like hot pink and lavender.

According to market research firm the NPD Group, as of November 2020, year-to-date pajama sales were up 5% nationwide—a margin expected to increase once holiday sales are factored in. Specialty sleepwear brands have enjoyed an even greater surge: The Great, a Los Angeles casual wear label, and 24-year-old Miami brand Eberjey both report that they saw pajama sales double last year and, after less than a year in business, Los Angeles loungewear upstart Leset sold out of almost every item on its website last spring.

Sleepwear as a comfy-on-the-job alternative to tired WFH sweatpants and sets playfully frolicking through the urban wilds.ILLUSTRATION: JACK RICHARDSON

It’s no surprise, then, that other brands are pivoting to snooze style. The new appetite for PJs led New York label Adam Selman Sport, known for flamboyant workout wear, to bump up the launch of its sleepwear line a full year, said its namesake designer. San Francisco lifestyle brand Athleta debuted its sleep range this month and Parisian fashion house Christian Dior just released its “Chez Moi” capsule, which includes such swank, snugly wares as toile-print pajamas with black piping.

“Our perception of these garments has shifted,” said Lorna Hall, the director of fashion intelligence at London trend forecasting firm WGSN. “We value them more now and many of us are prepared to spend more on them because we’re spending so much time in them.” With nowhere to go but the couch, many see standard apparel purchases as “a waste of money,” said Ms. Hall. Pajamas, on the other hand, seem a justifiable indulgence.

SLEEP-CHIC A guest pairs Valentino pajamas with a pair of pointy pumps outside the brand’s Paris fashion show in September 2019.PHOTO: GETTY IMAGES

Some have indulged more than others. Vanessa Chamberlin, 51, a Las Vegas author who was feeling glum after weeks of sheltering in place, giddily relayed that she’s bought 21 pairs of PJs. “I put on my pretty clothes a few times and walked around the house, but it didn’t make sense,” she recalled. “I thought, ‘How do I get my fashion back? How do I get my sense of feeling good, but also what’s going to be a useful thing to wear?’ And it was pajamas.” She mostly wears traditional, button-front separates, reserving four floral pairs exclusively for gardening.

Dianna Cohen, the New York founder of haircare brand Crown Affair, has procured three pairs of formal silk pajamas to wear on Zoom calls. In the before times, Ms. Cohen, 29, enjoyed teaming playful PJ tops with jeans for dinners out. Now, she sports full sets to the grocery store. “The combo of an oversize coat, a pajama and a clog is kind of the look these days,” she laughed. “I definitely wasn’t wearing that before the pandemic.”

Snooze-wear’s unparalleled ease makes it perfect for long days of sightseeing—provided you style it properly.PHOTO: JACK RICHARDSON

Steve Schwartzman, a 57-year-old Seattle attorney, has adopted a similar errand style—pajama bottoms by Burberry, Ralph Lauren or L.L.Bean mixed with T-shirts, Gucci loafers and a long coat for his morning coffee runs. “No one cares anymore,” he reasoned. “It’s just about being comfortable and getting through things.”

Pajamas’ newfound popularity comes as many re-examine their priorities and focus their lives around family, home and simply feeling good. Once the world reopens, designers, retailers and consumers agree that we’ll be unwilling to relinquish jammies’ cozy reassurance. Mr. Cortina contends that we won’t have to. “If [your pajamas] are great-looking, you can wear them anywhere,” he said. Perhaps, but only with proper styling.

Women should start at the bottom of their look with a kitten heel, like Prada’s pastel spring styles, or a favorite leather loafer. Saks’s Ms. Patel suggests mixing PJs with other closet staples, like a cashmere sweater for videoconferences or a tailored blazer for dinner at home. Mariela Rovito, the co-founder of Eberjey, advises women to accessorize with “a little bit of jewelry and a soft lip.” And Adam Selman, the New York designer, says to embellish with attitude. “If you pull it off with confidence, you can get away with murder.”

WAKING DREAMS Sublime men’s and women’s sleep sets for working, resting and entertaining. From left: For Fetching a Morning Latte, Men’s Pajama Set, $198, sleepyjones.com; For a Monday Zoom Meeting, Women’s Sleep Shirt, $275, intothebedroom.com; For Lounging Luxuriously, Women’s Skin Top, $68, Bottoms, $135, Cardigan, $250, goop.com.PHOTO: F. MARTIN RAMIN/THE WALL STREET JOURNAL (SLEEP SHIRT)

Other fans have reservations. “Don’t go into a boardroom with pajamas, but you can totally go to brunch,” said Ms. Cohen, who would also wear them to gallery openings and internal meetings. While Mr. Schwartzman will remain devoted to his pajamas on weekends, he thinks PJs in the workplace is a step too far. “I’ve got some fancy pajamas,” he said, noting he spent New Year’s Eve in a Sleepy Jones style, “but I don’t think I could carry that off in the office—it would be a little too much.” Or, more accurately, not enough.

Wherever you choose to venture in your PJs, Ms. Rovito offers this advice: Ensure you’re well groomed. “You can’t have pajamas and bedhead,” she scoffed. “That’s not a good combination.” Some might even say it’s criminal.

From left: For Sprinting to the Store, Men’s Top, $49, Bottoms, $49, Robe, $85, thewhitecompany.com; For the Laziest Days, Women’s Pajama Set, $84, lakepajamas.com; For Date Night In, Women’s Top, $1,850, Bottoms, $1,650, Dior Soho Pop-Up, 646-694-9701.
THE BIG-SCREEN SLEEP

Somehow, there’s still no Oscar for cinema’s most memorable pajamas, so we’ve taken it upon ourselves to dole out the honors. Here, 5 notable moments from movie history.

PHOTO: EVERETT COLLECTION
Least Cringe-y Twinning

Irene Dunne and Cary Grant, ‘Penny Serenade’ (1941)

Skip cheesy matching PJs and instead opt for subtly complementary sets, like those of this celluloid couple.

PHOTO: EVERETT COLLECTION
Best Oversize Fit

Claudette Colbert, ‘The Palm Beach Story’ (1942)

Whether fleeing your marriage via train (a la Ms. Colbert’s character) or lazing on a Sunday, you can’t go wrong with a few sizes up.

PHOTO: EVERETT COLLECTION
Best Monochrome Moment

Whoopi Goldberg, ‘Jumpin’ Jack Flash’ (1986)

As Terry Doolittle, Ms. Goldberg offers a lesson in layering with matching red pajamas, scarf and gloves—penguin slippers optional.

PHOTO: EVERETT COLLECTION
Most Likely To Repel a Date

Tom Hanks, ‘Big’ (1988)

Comic-book-themed flannel sets should only be worn for Pajama Day at your elementary school or on the most desperate of laundry days.

PHOTO: EVERETT COLLECTION
Coziest Cameo

Meg Ryan, ‘Sleepless in Seattle’ (1993)

What Ms. Ryan’s Annie Reed wears is everything loungewear should be: soft, gray, chic. Thick, ribbed socks are the cherry on top.—Sara Bosworth

CFOs Face Challenges Forecasting Capital Spending Plans for 2021

Finance chiefs must decide whether to make long-term investments based on changes in demand during the pandemic

Finance chiefs across industries are facing a common challenge: Predicting whether pandemic-driven shifts in customer demand and consumer behavior are here to stay.

The task, which is part of the budgeting process for 2021, in many cases means placing a bet on what they expect the future will look like—and what they think their companies should spend on plants and other big-ticket items.

Capital expenditures are investments in assets such as land, buildings and technology that companies use to generate growth. Executives often make these longer-term spending plans covering multiple years.

The pandemic has made the call much harder. “They look at their projects, they look at their capex, and they don’t know where things are going to be in the future,” said Mark Gottfredson, a partner at advisory firm Bain & Co.

Finance chiefs are responding by closely monitoring changes in consumer buying patterns and running more scenarios than they have in the past to model future demand, executives said. Some are looking at previous forecasts for 2021 and beyond to see if they can accelerate or bolster existing spending plans, especially in industries that have fared well during the pandemic. Executives in sectors that are suffering, for example hospitality or travel, are doing the opposite: Slashing their companies’ capex budgets to preserve cash and postponing investments until later.

Clorox Co. , which has seen especially high demand for its disinfecting wipes in recent months, is adding lines at plants in Georgia and Maryland to produce more wipes and solutions for electrostatic machines that clean surfaces, for example in schools or hospitals.

The Oakland, Calif., company is increasing its spending target for capex in fiscal 2021 to between 4% and 4.5% of sales revenue, up from its 3% to 3.5% range in previous years. That is to meet what Clorox’s management believes will be higher demand going forward, Chief Financial Officer Kevin Jacobsen said.

Companies are also increasing investments in regional distribution centers, as retailers look to reduce the distance traveled by trucks to deliver their goods, said Josh Nelson, an associate principal at consulting firm Hackett Group Inc.

E-commerce giant Amazon.com Inc. has been among the most aggressive investors in logistics and distribution globally. The company, whose sales have soared in recent months, spent $25.3 billion on capex during the first nine months of 2020, or about 50% more than during all of 2019.

The Seattle-based online retailer moved up investments that were initially scheduled for 2021 to meet demand and reduce shipping delays, CFO Brian Olsavsky said on a recent earnings call. Amazon earlier this year said it planned to spend more on capex in 2020 than in 2019, when it invested $16.9 billion, but didn’t disclose a target for 2020. Amazon declined to comment on its capex budget for the year ahead.

“We’ve got to play the hand that we’re dealt,” Mr. Olsavsky said on the earnings call. The company’s spending on transportation could remain elevated for years to come, he said.

Crocs CFO Anne Mehlman said the shoe company is building out its distribution centers in Ohio and the Netherlands because of an increase in online sales.

PHOTO: CROCS

Other companies are investing in their supply chains. Crocs Inc., known for its plastic clogs, is building out its distribution centers in Ohio and the Netherlands because of an increase in online sales, said Anne Mehlman, the company’s CFO. Crocs plans to spend about $50 million on capex this year, roughly on par with 2019, Ms. Mehlman said. She declined to comment on the budget for 2021.

At the same time, CFOs on the other end of the economic spectrum, in industries such as energy, hotels and airlines, are being forced to revamp their capex budgets. They have to weigh the need to conserve cash without choking off growth. “It’s a fine balance,” said Hackett’s Mr. Nelson, adding that companies face the risk of potentially missing the target on the right level of investment, which could harm their business.

Industrial firms, such as manufacturers and auto makers, are forecast to slash capital spending by between 20% and 30% in 2020, according to a recent report from Bain, which analyzed 935 companies. By comparison, industrials slashed their capex budgets by an average of 34% between 2008 and 2010, Bain said.

Oil giant Chevron Corp. cut its 2020 budget by around 20% amid a drastic fall in oil prices and plans to reduce its spending plans by 26% next year and through the middle of the decade.The San Ramon, Calif., company said this month it would spend $14 billion next year and no more than $16 billion a year through 2025. It previously had said it would allocate $19 billion to $22 billion a year through 2024.

“Our capital program reflects that we are planning for lower prices over those five years, that’s because air travel is not going to come back tomorrow, and the economy is going to come back but there is going to be lag,” CFO Pierre Breber said.

Finance leaders at hospitality companies also are facing tough choices. Wynn Resorts Ltd. this year had planned to remodel the rooms at its namesake Las Vegas resort and casino, but put those plans on hold in the spring in an effort to shore up cash. The company in November reported a $1.8 billion loss for the first nine months of the year, compared with a $195.9 million profit for the same period in 2019.

Most of Wynn Resorts’ capex plans remain on hold, finance chief Craig Billings, said last month on an earnings call. “We are only proceeding with the highest priority projects,” Mr. Billings said.

Wynn Resorts declined to comment further.

—Christopher M. Matthews contributed to this article.

Write to Kristin Broughton at Kristin.Broughton@wsj.com

How Managers Can Support Remote Employees

In the global transition from corporate hallways to home offices, we’ve left something behind: meaningful access to managers. Gone are the instant answers to unblock progress, information streams that managers are privy to before the rest of the organization, informal feedback and coaching while walking together after a meeting, and predictable process and structures for communicating about work and ensuring mutual accountability.

Last week, during a coaching call, a senior director lamented, “I’m stalled because I don’t know how to connect with my manager on the less formal stuff — the way I used to.” He’s not alone. Manager distancing is frustrating employees and stalling work.

But managers are finding themselves struggling, too. For every employee who is trying to reach their manager, a manager is attempting to connect with half a dozen or more direct reports, plus trying to get direction from their own boss. In a poll of my coaching clients last week about their biggest challenges, their key themes were about how to stay connected with each team member, help manage their own and others’ stress, maintain team morale and motivation, run engaged meetings, track and communicate progress, and help their team shed nonessential work.

My coaching clients — managers in a variety of organizations — and I have worked through several scenarios and arrived at these six strategies to augment availability to employees when working remotely. We’re seeing early indications that implementing these strategies can reduce manager and employee stress, address concerns about employee work progress, increase productivity for them and their teams, and restore and maintain healthy communication channels.

Bridge distance through frequent connections.

Yuval*, CEO of a 1,000-person high-tech company, messages or calls his direct reports at least once a day, usually without a specific agenda. He says things like, “Checking to see if you need anything from me,” “What questions do you have for me today?” “Just learned about X and want you to be the first to know,” and “Thinking of you; reminded of our winter team outing and your killer s’mores as I look at the picture on my home office wall.” Instead of simply asking his direct reports to get in touch with him as needed, Yuval proactively manages the frequency of connection. This way, he always has a finger on the pulse of his team, especially those directs hesitant to reach out and add more to their boss’s plate during a crisis.

Blast through questions with office hours.

Managers make dozens of decisions daily and provide their people with scores of data points via informal conversations. These interactions don’t merit full meetings, but when they’re ignored, little things can languish and become looming problems. Marissa, executive director of a non-profit, has started holding office hours: an hour a day in which she invites her directs to join her on a video conferencing app if they have concerns that can be addressed in 10 minutes or less. When one person joins, she locks the meeting — the online version of shutting the office door. Everyone understands they should try back in about 10 minutes if a lock is in place. For more complex issues, Marissa asks her directs to schedule a dedicated meeting. Allocating time to deal with the flurry of daily issues maintains work fluidity and prevents small sore spots from festering into large pain points.

Provide stability through consistent rituals.

In lives riddled with unpredictability and constant change, rituals provide predictability and structure. While we don’t know what challenges we’ll face tomorrow, we do know there will be some. We can better manage the unpredictable by containing it within structured rituals whenever feasible. Here are some examples of how managers have ritualized their availability: 15-minute morning check-ins to regroup on overnight developments and establish a course for the day; opening a meeting by having everyone share one word to describe their current state of mind followed by an elaborative sentence (or saying “pass”); or a theme for each week’s meeting, such as everyone wears a hat. By creating a predictable ritual and leading by example, managers can foster a sense of connection, safety, and fun, even while their teams are buffeted by the forces of change.

Enhance safety through clear boundaries.

Expanding your availability as a manager can also have downsides. Some team members might not desire frequent connection as they continue to adjust to the new normal and wrestle with complex emotions. Others might want more time from you than your capacity allows. Be transparent about your availability plan, then set boundaries and invite others to do the same. You can say, for example, “I’m prioritizing my time with you. I’ll reach out in a variety of ways, from checking in with you daily to having office hours. Let me know if you need some space and don’t want to connect quite so frequently. I’ll also do my best to respond to your messages the same day. However, I’m taking advantage of this unique opportunity to reserve 30 minutes each day at noon to have lunch with my family.” By setting expectations and giving others space, we meet people where they are and give them permission to set their own boundaries.

Stay ahead of the game by inviting problems, not just solutions.

Our previous rules of engagement have gone by the wayside, so no one has definitive solutions. Invite your team to come to you with problems, even if they don’t yet have solutions. Consider saying, “In our current world, we all have questions, few people have answers. If you see signs of trouble, issues that aren’t visible to me, don’t wait to come to me until you have an accompanying solution. Bring me your early indicators and together we’ll devise experiments to tackle the challenge.” Explicitly signaling you want to know about budding problems will enable greater periscopic vision and access to broader sets of solutions.

Enable capacity through feedback.

The subtleties of nonverbal communication are lost in remote work, even with the video turned on. People’s need for recognition and good news is exacerbated in trying times. Reserve time at the end of each day to provide specific, positive feedback for good work (not just great work). Appreciation expressed can help smooth a lot of disruptive discomforts. Also provide timely corrective feedback before shortfalls aggravate your pile of problems. Small and frequent performance guidance circumvents major corrections down the road and allows everyone to stay in sync despite distance and daily change.

Researchers Teresa Amabile and Steven Kramer have extensively studied employee motivation and found that making progress in meaningful work is the key to keep employees engaged. While the swift shift to remote work can cause stress and many complications to daily activities, your job as a manager is to remove as many barriers to forward momentum as possible. By communicating a clear availability plan, you can help your team members feel better connected to you and address any concerns or questions as they arise.

*All names and identifying information have been changed.

These Tiny Last-Minute Tax Changes Could Be a Big Deal in 2021

From stimulus checks to early retirement-plan withdrawals, here are some late-breaking items that could alter either your 2020 return or how you approach your taxes in the year to come

With taxes, small changes often add up to big differences—and major confusion.

Last year Congress passed two important bills in response to Covid-19 that contain a slew of tax changes, with the most recent one signed by President Trump on Dec. 27. Some of the changes apply only to 2020, while others affect more than one year or take effect beginning in 2021. The new year also brings automatic inflation adjustments that slightly shift tax brackets and some other thresholds.

That’s a lot to keep straight, so here’s a rundown of the most recent tax changes and when they apply, according to the Senate Finance Committee, plus an overview of this year’s key tax numbers. Happier New Year in 2021!

• Stimulus payments. The year-end relief and spending package just signed into law includes a second round of stimulus checks. This payment is up to $600 per taxpayer ($1,200 for married joint filers) plus $600 per qualifying child under age 17. It begins to phase out at $75,000 of adjusted gross income for most single filers and $150,000 of AGI for most married joint filers. For individuals without children, the payments go to zero when income reaches $87,000, or $174,000 for couples filing jointly. The second round of stimulus payments, like the first, isn’t taxable.

Payments are already going out, and most are based on taxpayers’ income as listed on their 2019 tax returns. If the recipients’ 2020 income turns out to be much higher, they won’t need to give the payments back. Taxpayers who earned too much in 2019 to receive checks but whose income dropped enough to qualify for the stimulus can claim payments through their 2020 tax returns.

• Unemployment pay. Among other changes in this area, the new law extends unemployment pay of $300 a week for many people from Dec. 26, 2020 to March 14, 2021, and sometimes longer. It increases the maximum number of weeks of benefits to 50 from 39 in many cases, and it allows states to forgive overpayments of benefits when repayment would “violate equity and good conscience.”

Unemployment compensation is taxable, although tax rates drop as income does. Recipients should expect to receive a Form 1099-G for 2020 payments that will be reported to the IRS.

• Charitable deductions. In its December bill, Congress extended and expanded charitable write-offs for taxpayers who take the standard deduction instead of itemizing them on Schedule A.

But the expansion applies to donations made in 2021. It allows single taxpayers to deduct up to $300 in eligible donations and married joint filers to deduct up to $600. For 2020, the limit remains $300 for both single and joint filers.

Also for 2021, this deduction reduces taxable income but not adjusted gross income. AGI is a key threshold for other tax provisions, such as Roth IRA contributions, the 3.8% surtax on investment income, and income-based Medicare premiums.

In addition, the new law extends the ability of individuals who itemize deductions on Schedule A to deduct donations up to 100% of adjusted gross income through 2021.

• Flexible spending accounts. Many workers with FSAs that allow them to use pretax dollars to pay for unreimbursed health expenses (like glasses) or dependent-care expenses (like summer camp) didn’t use all the money in their 2020 accounts because of the pandemic. The IRS had limited ability to ease FSA rules, but Congress has now done so.

Participants in such plans can carry over unused funds from 2020 to 2021 and 2021 to 2022, or for up to 12 months for companies with fiscal years. For dependent-care accounts, the law extends the age limit from 12 to 13 for some carried-over funds. For workers to take advantage of these changes, company plans must often opt into the new rules.

• Medical-expense deductions. The December law enacted a permanent threshold of 7.5% of adjusted gross income for deducting medical expenses. Without the change, the AGI threshold would have risen to 10%.

Relatively few taxpayers take this write-off because their expenses don’t exceed the threshold. But the deduction covers a wide range of unreimbursed costs when it does apply, and it’s valuable to people who have very large medical expenses, such as from nursing-home care. For a list of allowed expenses, see IRS Publication 502.

• Business-meal deductions. Acting on a request from President Trump, Congress has enacted a 100% deduction for business-meal and beverage expenses in 2021 and 2022, up from 50% in 2020. It applies to delivery and carryout meals as well as those in restaurants.

• Retirement-plan withdrawals. The new law has a permanent provision allowing victims of officially declared disasters such as hurricanes and fires to make withdrawals up to $100,000 of IRA and 401(k) assets. These withdrawals can then be included in taxable income or restored to the account over as long as three years. For people younger than 59 1/2 who take such payouts, the 10% penalty on early withdrawals doesn’t apply.

This relief is similar to what Congress allowed for people affected by Covid-19 in 2020. So far, however, lawmakers haven’t extended this relief for Covid victims into 2021.

Tiny Money Changes

Tired of 2020? Here are the small financial tasks, habits, and tips to help you achieve your 2021 goals.

Tiny Changes Can Help You Achieve Savings Goals for Retirement

Your 2021 Budget: Plan Ahead, but Not Too Far Ahead

How to Better Keep Track of Small Expenses and Fees in New Year

Write to Laura Saunders at laura.saunders@wsj.com