Five practical steps in setting up a Tax Free Small Business Section 139 Qualified Disaster Relief Payment Program

A Small Business Section 139 Qualified Disaster Relief Payment Program can be used to get tax free payments to employees without the burden of income taxes, social security and wage taxes, and other expenses. This post entirely skips the explanation, legal background and strategy and jumps right into the practical steps in setting up a tax free benefit plan plan within a small business employer.

1) Use a written plan document. This is not a legal requirement but just a good business practice.

2) Use a third party administrator. It’s creepy and inappropriate for the employer to ask about employee personal expenses. Yet the IRS wants appropriate verification. An outside benefits administrator is best.

3) Piggyback off the payroll system. Even though this is not taxed as payroll, we can use the same financial infrastructure to make the payments and keep records.

4) Communication is key. Since employees are not at work, email and text message announcements are the key, combined with live real time support professional to answer employee questions.

5) K.I.S.S. – Act sooner rather than later. Employees and firm owners face growing stress daily. An independent small business benefits firm like Freedom Benefits can launch this plan in just a day. Keeping a simple approach will also keep administrative costs to a minimum. When designed as proposed and combined with the payroll service, this plan should only cost a few dollars per employee per month.

If you have questions, please reach out to @tonynovak, by phone (856) 265-0306, or email tnovak@freedombenefits.org for a free no-obligation discussion of this plan for your business.

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