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Make 2016 Your Best Year Ever!

12/30/2015

 
If you want 2016 to be better than 2015, you have to do something differently.  This is a simple but profound realization.  Change brings the opportunity to make things better; however, it can be scary yet exciting at the same time.  
 
Ask yourself: “What will I do differently to make 2016 my best year ever?” 
 
Here are some questions and exercises to consider:

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Clarify Your Vision
 
A vision statement for a company helps to keep everyone on track and seeing the bigger picture of what they are accomplishing day after day. 
 
What does the world look like after it has consumed your product or service? 
 
How is the world smarter, more beautiful, happier, healthier, or wealthier after they have left your business? 
 
If you haven’t written your business vision and mission statement, consider completing this exercise for 2016. 

Create New Habits
 
What habits are holding you back?  Which ones are propelling you forward?  Choose one habit that is costing you the most and make a commitment to drop it from your 2016 repertoire. 
 
Conversely, identify the habit that is brining you happiness and wealth and multiply it. 
 
Let Go
 
Sometimes we need to let go before we can move forward.  What do you need to let go of?  Are there customers or employees in your life that sap your energy or your bank account? 
 
Build Your Support Structure
 
Are you short-staffed?  The way you manage your time has everything to do with your success or the lack of it. 
 
If low- or no-revenue producing tasks are taking up your time, it is going to be hard to boost your income and get ahead.  Surround yourself with support to do everything that can be delegated, such as filing, bookkeeping, appointment scheduling, and routine customer service.
 
If possible, outsource personal tasks such as grocery shopping, housekeeping, cooking, and lawn maintenance as well.
 
Make a list of areas where you could use support, and fill these gaps.  In today’s world, you do not need to hire full time people to fill these slots. You can simply hire responsible contractors, other small businesses, and virtual assistants to build your support team. 
 
Focus
 
What project or task would make a huge difference in 2016 if you could pull it off? 
 
Focus on the high payback projects and commit to one, even though it might be out of your comfort zone. Imagine the difference in your business once it is completed, and get inspired to get started. 
 
Choose just one of these areas to start your 2016 out with hope, intention, and excitement.  


Consider the Value of Time in Business Decisions

12/22/2015

 
​The time value of money is a critical concept in handling personal finances. The same basic premise can be applied in making decisions for your business.

Here is how it works: 

Typically, the money you currently have in your hands is worth more than it would be years from now. That
 is because you are able to spend or invest the funds now instead of waiting to receive them. In other words, there is an “opportunity cost” attached to any delay.
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Image courtesy of Sira Anamwong at FreeDigitalPhotos.net
For example, let us say you are entitled to a $100 payment. If you receive the $100 now and you are able to invest it at a 5% annual interest rate, you will have $105 after one year. Assuming you do not need the money for expenses, it will be worth $110.25 after two years, and so on. This amount is known as the “future value” of the money.

Similarly, you can compute the “present value” of money. Suppose you won’t receive the $100 payment until one year from now. The value of the money must be discounted due to the opportunity cost. Using the same 5% interest rate, the present value of the $100 you will receive a year from now is $95.24 ($100 value divided by 1.05).

It is easy to see how this concept can affect your business. Accelerating payments from customers will enable you to better meet your current obligations and provide reserves for investment.

On the other hand, delays hamper cash flow and reduce the opportunity for investment. Computing the time value of money may also encourage you to lease, rather than buy, assets.


To benefit the most, make time to review your business situation to see where you can increase the time value of your money.

Make Time for Last-Minute Tax Savers

12/16/2015

 
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Image courtesy of cooldesign at FreeDigitalPhotos.net
That ticking you hear is the tax clock winding down – quickly. There is only a very short time left to cut your taxes for 2015.

Here are moves you can still make before year-end:
  • If you believe you will owe state or local taxes, consider prepaying them before the end of the year in order to claim the deduction in 2015. (Be aware of alternative minimum tax consequences.)
​
  • Use your credit card to purchase (and deduct) items in 2015. Using a credit card lets you take a deduction when the purchase is made, not when the card balance is paid. You can use the credit card rule for both business and personal transactions.
  • If you’re a business owner and need additional furniture, fixtures, equipment, and computers to operate your business, consider making the purchases before the end of the year in order to qualify for the Section 179 expensing deduction.

  • Don’t ignore stock losses, since they can be used to offset stock gains. If you have unrealized losses for 2015, consider selling those positions to offset any gain transactions you might have made. You can also deduct up to $3,000 in net capital losses against other income. Net losses greater than $3,000 can be carried forward and used on your 2016 tax return.

  • Consider making a deductible traditional IRA contribution. If you qualify, you can contribute up to $5,500 for 2015, plus an additional $1,000 “catch up” contribution if you are age 50 or older. You have until mid-April 2016 to make your contribution and still take a deduction for 2015.

  • Maximize your employer tax-deferred retirement accounts, such as 401(k), 403(b), or 457 plans.

  • Donate appreciated stock or mutual funds to charity. You receive a deduction for the appreciated value, but you don’t have to report or pay taxes on any of the appreciation.

If you have questions on what tax-savers you might utilize for your business, please contact your CPA or tax preparer to discuss your personal situation.

Get Finance-Savvy with 10 Accounting Terms

12/9/2015

 
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It’s good to know some basic accounting terms, and here are ten terms with friendly definitions for your review. 
 
Asset:  Essentially, assets are what you own.   These include your bank accounts, business equipment, and even the amounts that customers owe you. 
 
Revenue:  Revenue is what you make.  Another word for it is Sales.  You generate revenue in your business when you make a sale to a customer.  The amount of the sale is included in revenue.  

​Expense:  An expense is what you spend in your business on items that are not expected to benefit you in the long term.  Expenses include credit card fees, office supplies, insurance, rent, payroll expense, and similar items that you need to incur to keep your business running.  
COGS:  COGS stands for Cost of Goods Sold.  It’s a form of expense that directly relates to the product or service being sold.  For example, if shoes are being sold, the cost of purchasing those shoes are consider COGS, while something like rent or insurance is simply an expense.  COGS is more important in manufacturing, retail, and distribution companies. 
 
Net Income:  Another word for net income is profit.  It’s calculated by subtracting expenses from revenue.  If what’s left over is a positive number, it’s net income and if it’s negative, it’s a net loss.  Besides your salary, it’s the amount of money you can either keep or re-invest into your business. 
 
Debit:  A debit is a term that tells you whether money is being increased or decreased.  The hard part is that it’s opposite depending on the account and the company.  Here are some examples: 
  • A debit to cash increases it, so that’s good.
  • A debit to a loan you owe decreases it, so that’s good too because you are paying it off.
  • When you talk to a bank teller and they want to debit your account, it means they are taking money away, because your account is a liability to them.  So it’s opposite. 
 
Credit:  A credit is a term that tells you whether money is being increased or decreased.  The hard part is that it’s opposite depending on the account and the company.  Here are some examples:
  • A credit to cash decreases it, as in writing a check to someone.
  • A credit to a loan you owe increases it, so you owe more money.
  • When you talk to a bank teller and they want to credit your account, it means they are putting money in, because your account is a liability to them.  So it’s opposite. 
 
GAAP: GAAP stands for Generally Accepted Accounting Principles.  It refers to the set of standards that must be followed by accountants when creating accounting reports for people like bankers and investors who rely on them. 
 
Liabilities:  Liabilities are what you owe.  If you have loans taken out for your business or owe vendors money for invoices of purchases they sent you, those are liabilities.  Common liabilities include sales tax that you’ve collected but not paid, unpaid vendors’ invoices, credit cards that are not paid off each month, mortgages on buildings, and any bank loans you’ve taken out.  
 
Equity:  In mathematical terms, equity is the net of your assets less your liabilities.  In more philosophical terms, it’s the net amount you and your fellow business owners have invested in your business adjusted by the years of net income you’ve made less what you’ve taken out of the business. 
 
How many terms did you already know?  Knowing accounting terms will help you understand this aspect of your business a bit better.  

Three Costly Accounting Mistakes to Avoid

12/2/2015

 
​Small business owners have a lot on their plates, and time simply does not allow you to become an expert in all the areas required for running a business.  Here are a couple of common mistakes that we see all the time.  Correcting them will help you be more productive and profitable in your business. 
Mismanaging receipts 

Maintaining receipts are challenging for everyone, but the IRS requires that you have proof of business expenditures.  Periodically, we come across people who feel that keeping the credit card statements are enough; unfortunately, they’re not.  You will want to create a process to keep your receipts all in one place so they don’t get lost. 
 
Receipts printed on thermal paper (think gas station receipts and many more) will fade within a year or two, and the bad news is the IRS could audit several years back if they come calling.  Correct this by scanning them in or taking a clear picture of them using your smartphone.
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Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net
Some accounting systems and/or document management applications allow you to upload the receipt and attach it to the transaction in your accounting system.  This is a great solution, and if you’re interested in this, please ask us about it. ​
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Image courtesy of imagerymajestic at FreeDigitalPhotos.net

​​​Ignoring the accounting reports
 
There are gold nuggets in your accounting reports, but some business owners don’t take the time to review them or are uncertain about how to interpret them.  Your accountant can help you understand the reports and find the gold nuggets that can help you take action toward profitability. 
 
Some of the things you can do with your reports include:
  • Identifying your highest selling services or products
  • Projecting cash flow so you’re not caught short at payroll time
  • Getting clear on your top customers or your demographic of top customers
  • Evaluating your marketing or business development spend
  • Pointing out trends compared to prior years, budget, or seasonality effects
  • Checking up on profit margins per product or service to make sure you are priced correctly
  • Managing aging receivables or speeding up collections
  • Measuring employee profitability, if relevant
  • And so much more
Being proactive with your accounting will help you spot opportunities in your business that you can act on, as well as spot and correct problems long before they manifest into trouble. 
​


Mixing business and pleasure
 
In your bank accounts and on your credit cards, mixing business and pleasure is to be avoided when possible.  All businesses should have a separate bank account, and all business transactions should go through there.  It takes an accountant much longer to correctly book a business deposit that was deposited into a personal account. 
 
Taking out a separate credit card and putting all your business transactions on it will save your bookkeeper a ton of time.  The credit card doesn’t even have to be a business credit card.  It can just be a personal credit card that’s solely used for business.  If you have employees making credit card charges, sometimes a separate card for them helps you control fraud. 
 
The hardest area in which to separate business from pleasure is cash transactions.  Be sure your accountant knows about these.  The accountant can either set up a petty cash account or a reimbursement process so that you can get credit for cash expenditures that are for the business. 
 
How did you rate on these three mistakes?  Avoid these three and your accounting department as well as your business will run a lot smoother.  ​

    Author

    Successfully meeting the challenges inherent to new and smaller businesses provides me with a special type of satisfaction. 

    Supporting businesses that have the potential to become amazing – from both the perspective of owners and team members as well as their clients – is what I enjoy. 

    I hope to use this blog to provide information specific to businesses that are growing from small beginnings into exceptional companies.

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  • Home
  • Why Us?
    • Reviews
    • Open Positions
  • Client Services
  • Resources
    • Save on QBO Subscriptions!
    • Tax Refund Status
    • Gusto Year End Checklist
    • Videos >
      • Business Taxes >
        • 2019 Business Tax Highlights
        • 7 Ways Small Business Can Save On Tax
        • Taxes for S-Corp Owners
        • The IRS Loves Businesses
      • Personal Taxes >
        • 2019 Tax Highlights
        • Five Yearly Tax Essentials
        • 4 Common Tax Surprises
        • Retirement Can Be Taxing
        • Advance Child Tax Credit Reconciliation - 2022
        • Make the Most of Your Donations
        • Five Great Tax Secrets
        • Renting Your Property Tax Free
        • Ideas to Audit-Proof Your Tax Return
      • The Tax Cuts & Jobs Act >
        • The Tax Cuts & Jobs Act: What You Need to Do Now
        • The Tax Cuts & Jobs Act: Are Itemized Deductions A Thing of the Past?
        • The Tax Cuts & Jobs Act: The New Child Care Tax Credit
      • Tax Topics >
        • Tax Season is Coming!
        • The New World of Deductions: What Everyone Needs to Know
        • Proving Your Deductions
        • How to Fix a Mistake on Your Tax Return
        • How Long Should I Save It?
        • Tax Credit vs Tax Deduction
        • Understanding Effective Tax Rate
        • Understanding Marginal Tax Rate
      • Life Events >
        • Life Events: A New Birth
        • Life Events: Marriage
        • Life Events: Divorce
    • Articles >
      • Accounting & Bookkeeping >
        • How to Get the Most Out of Your Accounting Fees
        • The 10 Biggest Money Leaks in Your Accounting System
      • Business Factors >
        • IRS Rules for Classifying Workers
        • Checklist for a Healthy Cash Flow
        • 12 Ways to Improve Your Business Profits
        • 10 Step Annual Business Check-Up
      • Tax Topics >
        • Tax Guide for Self-Employeds
        • 15 Things Every Tax Payer Should Know
        • Disaster Casualty Losses
        • Travel & Entertainment Deductions
        • Tax Guide - A Deduction Checklist
        • What You Should Know About Tax Audits
    • Newsletters >
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        • Newsletter - Monthly Edition
      • Newsletters - Quarterly Editions >
        • Newsletter - 2019 Fall/Winter
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      • How To - BILL
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