We will explore how corporations are providing allowances and reimbursements for employees who travel and use their personal vehicle for company business. We will evaluate the costs and benefits on a high level to understand what potentially could be the best fit for your organization.

We will share information that you can’t get anywhere else on how the IRS calculates its Standard Mileage Rate. We will discuss the shortcomings of the rate, how this tax tool became the traditional reimbursement standard, and how organizations all over the country are losing money and blowing budgets.

We will focus on the taxable auto allowance and variations of the auto allowance, including how the impact of fuel prices, costs variations, and territory size might affect productivity. You will leave with a firm understanding of who this is good for.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through December 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

For more information, see the IRS Announcement 2011-40.

The general American public already has less discretionary income to travel and purchase retail goods due to a slow economy. Companies are still uncertain about the business environment going forward and are not engaging in investing activities or hiring at a rate to stem the unemployment rate. Unfortunately, motorists are not going to get a break anytime. In December, Former  Shell Oil Co. President John Hoffmeister predicted that Americans would be paying $5 a gallon by 2012. With the current uncertainty in the Middle East, that prediction may have been optimistic.

The picture is even worse for companies that provide their employees vehicle and fuel reimbursements. Employees with a set fuel allowance are not going to go into their own pockets to cover their current territory or expand their territory to solicit new customers. This directly impacts a company’s operations, productivity, and new business. In many businesses it’s difficult to replace the human interaction inherent to the sales process. Thus, the business ultimately suffers.

However companies have recourse that the average consumer cannot take advantage of. Companies don’t have control over fuel prices, but they do have control over whether or not their car allowances are taxed and what to do with the employee tax waste. There could be savings and benefits that average 12% increase in employee net auto allowance and 20% net cost savings. Companies are going to have to work smarter to curb the potential loss in productivity due to rising fuel prices, as well as give employees incentive to continue to seek opportunities that promote and expand the enterprise.

Starting in 2014, businesses with more than 50 employees will be required to either offer healthcare coverage or pay a penalty of $750 a year per full-time worker. The coverage offered will also have to meet minimum benefits — covering both a specific set of services and 60% of employee health costs overall — or else employers will face additional penalties.

By 2014, states are required to create small business Health Options Programs, or SHOP Exchanges, which will enable small business owners to pool together to reduce insurance costs. These exchanges should help reduce premium costs for business owners: by bringing more insurable individuals into a pool, insurance ultimately declines in cost because the risks of outliers are reduced by more people being insured. This pooling option will be open to businesses with 100 employees or fewer.

His major points are:

1. Never fly without earning miles.
2. Only belong to one program per major alliance. This way you can consolidate miles on any carrier with an alliance.
3. Pick a “dominant” program to focus on.
4. Always go for Elite status which is the goal of airline loyalty. Typically baseline Elite status is 25k miles flown in one calendar year.

In order to choose the best loyalty rewards program the criteria Mr. Konwiser uses includes:

1. Points v. Miles: He says miles are usually more valuable because you can exact more value when you fly long segments.
2. National network: Choose the airline that flies to your city most and has easy connections.
3. Alliance: Find the best group of airlines for your international travel based on alliances.
4. Airline specific perks: Be on the lookout for perks that particularly appeal to you on a personal level.

Also with these programs be sure to read the fine print and make sure that a program accommodates your particular travel needs. If you’re in an alliance program make sure that miles for all the participating carries are indeed being credited. Be vigilant and happy travels.

The original article can be found at:

http://blog.flightcaster.com/part-2-the-art-of-mastering-airline-loyalty-p

A lot of organizations are looking for services that will do one (or all) of the following: save the company money, increase productivity, pay for themselves, top-line growth, bottom-line reduction, control spending. Fortunately, there are still some hidden gems and ways to cut costs when it comes to innovative budget ideas.

We offer a handful of services that will enable your organization to turn waste into savings. Based on your objectives, you can decide what you want to do with those extra funds, as you boost your business and employee morale.

When it comes to company cars, there are a variety of moving parts, the two biggest being liability and fuel.  If your company cars are stuck in an outdated policy or your business is struggling with budget, fuel, or usage issues, EMC can help you craft an up-to-date auto allowance plan that puts everyone comfortable in the driver’s seat.