Archive for the 'Finance - Accounting - Taxes' Category

SBA Poll: What does your economy look like?

Published
by
Jim Blasingame
on May 17, 2013
in Business planning and Finance - Accounting - Taxes
. 0 Comments

The Question:
In preparing for business over the summer, what does your economy look like?

38% - We’re seeing an improving economy for the next few months.

50% - We expecting our economy to maintain the current level this summer.

3% - We’re forecasting a sales decline from recent business conditions.

9% - Our business has been down and we don’t see improvement soon.

My Comments:
As you can see, less than four of ten of the respondents to our poll last week are expecting the economy to pick up over the summer. The rest, 62%, think business through the summer will be no better or worse than the recent past.

It’s almost four years since the technical end of the Great Recession and the U.S. Main Street economy is still limping along. When considering the awesome entrepreneurial energy that is pent up in America today, one has to wonder what could cause this. In an upcoming Feature Article I’ll answer this question and challenge those who can solve the problem. Stay tuned.

Check out more of Jim’s great content HERE!

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The truth about small business retirement plans

Published
by
Jim Blasingame
on April 29, 2013
in Finance - Accounting - Taxes
. 0 Comments

One of the most intuitive ways to think about the experience of small business owners as they start, run and grow their businesses is to compare it to raising a teenager.

A small business is like a teenager in two ways: 1) You always love it, but you don’t always like it;and 2) it always has its hand out for more money. And never is the second example truer than when you should be funding a retirement plan separate from future expectations from company assets.

As in the past, we recently polled small business owners again about retirement planning with this question: “Will you contribute to a qualified retirement plan this year?” We learned that 42% of our respondents are funding a plan, but the other 58% either aren’t able to fund their plan or don’t have one. By the way, these percentages have not improved since the last survey.

There are three reasons why small business owners don’t fund a retirement plan:

  1. The business never achieves the financial critical mass necessary for the owner to carve out the income to fund a plan. This is true for too many small businesses.
  2. They convince themselves that the business will provide for them in retirement, which is handy when you’re trying to justify paying the business first. Sometimes this works out, but sadly, most of the time it doesn’t.
  3. They never get started budgeting for a retirement contribution.

There are many ways the federal government hinders small businesses, but providing pre-tax retirement programs is not one of them. Indeed, there are several qualified plans that allow a small business owner to provide for their own retirement with tax-deferred contributions. Plus several include setting employees up on the same plan for their benefit while helping you attract better employees and keep them.

Here’s a partial list of prominent plans that cover most small businesses: The traditional Individual Retirement Account (IRA) is about to turn 40. The Simplified Employee Pension (SEP) and the Savings Incentive Match Plan for Employees (SIMPLE) both include employee participation, as does the traditional 401k.

Be sure to check with a qualified retirement advisor to see which one is best for you. Also, IRS.gov has extensive resources that will educate you.

You might sell your business for a lot of money one day, but just in case, take advantage of one of the tax-deferred retirement plans.

Make the commitment; budget for and start funding a retirement plan this year.

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This week on The Small Business Advocate Show® I reveal even more challenges that small business owners face when planning for retirement. Click the link below to listen to the segment.


Three reasons small business owners don’t plan for retirement

Check out more of Jim’s great content HERE!

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SBA Poll: To Fund or Not to Fund

Published
by
Jim Blasingame
on April 22, 2013
in Business planning and Finance - Accounting - Taxes
. 0 Comments

The Question:
Will you fund a contribution to a qualified retirement plan that’s deductible on you 2012 tax return?

24% - I have funded an IRA for the 2012 tax year

18% - I have, or will contribute to, a 401K, Simple Plan, SEP, etc.

15% - I have established a plan, but can’t fund it for the 2012 tax year

42% - I don’t have a qualified plan, nor can I fund one right now

My Comments:
In past years we’ve polled small business owners about their retirement funding ability, as we did again last week with this question: “Will you fund a contribution to a qualified retirement plan that’s deductible on your 2012 tax return?” As you can see, unfortunately more than half of small business owners are not able to fund a retirement plan outside of the business.

In next week’s Feature Article, I’m going to have more to say about this and reveal some of the ways the government encourages and actually contributes to retirement planning. Stay tuned.

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Check out my recent interviews on The Small Business Advocate® Show with John Graves about small business retirement tools and the Baby Boomer generation?

What are the best small business retirement tools?

Are Baby Boomers really good savers?

Check out more of Jim’s great content HERE!

Take this week’s poll HERE!

Watch Jim’s videos HERE!

SBA Poll: The taxman cometh

Published
by
Jim Blasingame
on April 16, 2013
in Finance - Accounting - Taxes
. 0 Comments

The Question:
This is tax filing week. Will you file on or before April 15, or file an extension?

30% - Already filed our 2012 return

31% - Will file by the April 15 deadline

39% - Will file an extension

My Comments:
When you’re an employee filing an individual tax return, most people get theirs done within a few days of receiving their W-2, 1099s and possibly K-1s.

When you become a business owner - especially as your business becomes larger - the tax preparation and filing process becomes more complicated, and therefore takes longer. Consequently, the ability to file an extension to push your personal tax filing date to October 15 can come in handy.

We wanted to know how small business owners are handling the April 15 tax-filing deadline. (Actually, it should be called a softline, since you can get automatic permission to extend for six months.) As you can see from the poll results below, a little more than 60% have met, or plan to meet, the Ides of April filing date, with the rest filing an extension.

Frankly, I’m surprised the extension filers were not more. I can’t remember when I didn’t file an extension. Unlike in the old days, when you had to write in and ask for permission, today you just go to IRS.gov, fill out form 4868 online, hit enter and ba-da-bing ba-da-bam, the new tax filing date for your personal income tax return is October 15.

But remember, this extension is only for filing, not for paying taxes. If you owe taxes for last year - even if you don’t know how much - you have to make a good-faith estimate and send it in by April 15.

Finally, I recommend you do what I do: Talk to a tax professional and let them advise you on any filing and tax paying.

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Listen to my latest interviews with Peter Sepp on The Small Business Advocate Show. Peter is the Vice President for Communications of the National Taxpayers Union.

The tax code is requiring more time from small businesses with Peter Sepp

U.S. income tax compliance costs businesses 6.7 billion hours with Peter Sepp

Looking forward to Tax Freedom Day with Peter Sepp

Check out more of Jim’s great content HERE!

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Managing the three clocks of small business

Published
by
Jim Blasingame
on April 15, 2013
in Cashflow - Credit - Collections and Finance - Accounting - Taxes
. 0 Comments

“Time Is On My Side,” is the title of one of the classic rock ’n’ roll songs performed by Mick Jaggerand the legendary English band, The Rolling Stones.

This bold statement works in a song, but for small businesses … not so much. The reason is because of the complicated dynamic between time and our most precious asset, cash.

In the marketplace, there are actually three different clocks at work that every business uses: one for operating expenses, one for sales and one for cash. Let’s take a look at how these three clocks impact your small business.

Operating Expense Clock
Every month like clockwork, regardless of sales volume, cash collections or profitability, payroll must be met, rent must be paid, taxes must be remitted, plus phone, utilities, insurance bills, etc., must also be paid. The Operating Expense Clock is hardwired to Greenwich, England for accuracy within a nanosecond per millennium, and nothing stops it short of a global, thermonuclear holocaust coinciding with a direct hit from Haley’s comet.

The only way to influence this clock is through operating efficiencies – you won’t be billed for what you don’t buy.

Sales Clock
This clock is powered by the customer relationships you’ve created so sales result each month. You project when each sale will occur by qualifying prospects and attributing a clock to each potential transaction so that you can budget future sales volume and meet your cash requirements.

How the Sales Clock operates is completely logical and intuitive, but it only works in your favor when the purchase requirements of customers have been met.

Cash Clock
What is not logical or intuitive is the Cash Clock and its relationship with the other two. Think of it like this: Cash is to sales as snow is to cold: You can have cold without snow, but you can’t have snow without cold. You can have sales without cash receipts, but you can’t have cash receipts without sales. And expenses are like weather – you get some every day.

But what hits small business owners hard is that for every glitch in the mainspring of the Sales Clock, there are 1,000 potential sprocket failures that slow or stop the Cash Clock. Consequently, the Cash Clock requires constant maintenance.

Murphy’s Law lives inside the Cash and Sales Clocks, but the Operating Expense Clock is immune to this insidious law and rocks on just like The Rolling Stones.

Small business success requires understanding the three clocks of the marketplace.

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Check out my latest segment from The Small Business Advocate Show below. I go into more detail about managing the clocks in your small business

Managing the three clocks of small business

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The Facebook lesson about the value of users

Published
by
Jim Blasingame
on June 5, 2012
in Finance - Accounting - Taxes and Social Media
. 2 Comments

What would you say about a company that has 900 million people – one out of every 13 Earthlings – using its consumable product virtually every day? That’s an unbelievable marketing and product adoption success story, isn’t it?

As you probably have figured out, this company is Facebook, the world’s largest social media platform. And its consumable product is the time, attention and information these 900 million users give Facebook every time they log in.

The future of social media platforms, used to help us connect with and build communities among friends, family and customers, is no longer being debated. Social media may seem like a craze, but it’s not a fad and isn’t going away. But the future of social media platforms as publically traded companies is another matter, primarily because of their business model.

The business challenge for Facebook is that it doesn’t have 900 million customers, it has 900 million users. The distinction is that a user pays you a visit and a customer pays you money. Facebook is really good at getting users to engage and re-engage. But now that it’s a public company, there is new scrutiny from investors and fish-eyed analysts on how effective it will be long-term at getting advertising customers to pay for access to these users.

A few months ago, when Facebook first announced plans to go public, we asked our audience if they thought Facebook’s stock “… will prove to be a good investment?” Only nine percent said, “Yes,” with the rest not optimistic about the stock, especially for the long-term.

Recently, the weekend after Facebook’s initial public offering (IPO) launched – perhaps we should say, belly-flopped – amid more hype than we’ve seen since the “dot bomb” days of 1999, we wanted to see if our audience would “Like” the stock any better as a long-term investment, so we asked, “Do you want Facebook stock in your retirement portfolio?” Only 8% said yes.

It’s very encouraging how these two polls demonstrate that small business owners consistently understand the business model difference between the value of a user verses a customer. But the lesson isn’t that users are bad. Indeed, your small business’s digital users – who want to get to know you online before they buy – are the new breed of prospects: future customers who, unlike Facebook’s users, may one day pay you more than a visit.

Thank you, Facebook, for providing small businesses with a valuable lesson about users and customers.

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I talked more about the lessons small businesses can learn from Facebook on The Small Business Advocate Show. Click click on the links below to listen or download.

Lessons Facebook can teach small business about users

Why small business users are different from Facebook’s

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