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Fear of Success?

Thought I should share this quick story. I’ll write a longer post on this soon.

Met a man yesterday who had had some challenges but had begun to overcome them. He almost had everything in place to really become successful. I asked him what was holding him back. He said “fear of success” – really a fear of what other people would think if he were successful.

I told him that it sounds like he needs to change his definition of success and may change the people around him. Old saying – “How can soar like an eagle when I work with a bunch of turkeys?

Any relevant thoughts and comments are welcome.

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Give Yourself A Raise!

Try this exercise – multiply $15 x 5, then multiple that answer by 50.   Your total should be $3,750.00.

This is non-taxable money that can be put back into your family budget just by making a different decision.   How’d you like to have that much back in your budget?

George and Vanessa (not their real names) recently came to see me regarding their finances.  They were not happy.   It seems that in goiing over their finances, they should have more money saved  than they do.

In reviewing their budget, it seem that, yes, they should have more  money available to save.  So I decided to play “detective” and question them on their daily habits.  Guess what I found out!

George and Vanessa were spending money on groceries and then also buying breakfast and lunch while at work. On average they were each spending almost $15 day.  That’s $150 a week!  Even if they took a two week vacation, the additional spending would amount to $7,500.  That’s $7,500 that could be invested, be used to pay off or down debts, create a college fund, you name it!

As you can imagine, they were both shocked.  In fact they had thought it insignificant and had not even considered it as part of their budgeting.  They had a decision to make – stay the course or change their habits.

George and Vanessa decided to cut back extremely on their breakfast and lunch spending and begin to buy groceries that they could take for breakfast and lunch or took take “left-overs” from the previous night’s dinner.  This will probably save them $7,000 a year.  It’s like getting a raise without getting a raise.

(Of course, the food vendors will not be happy – you can’t please everybody.)

So take a look at your food and meals budgets and see if you can save, too.  Who would you rather have the money – your family or the food vendor?

To Your Financial Health,

If I can help you with your tax planning,  tax preparation, bookkeeping or marketing plans, give me a call.  I’d love to hear from you.

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Need New Business Equipment Now? Let the Tax Laws Help!

Dr. Watson watched another potential client walk out of his music studio door.  It wasn’t that Dr. Watson was a poor music engineer.  In fact, he is great at his craft.  His problem was that his equipment is outdated and slow.  Dr. Watson knew he needed to update his systems but he didn’t have the cash available.  He called me for ideas.

During our consulting session, we discovered that Dr. Watson could “kill 2 birds with 1 stone”.  He could get the equipment he needed now and reduce his taxes at the same time, but he had to act fast!

Recent changes in the IRS tax laws would allow Dr. Watson to completely write-off his new equipment (up to as much as $500,000) this tax year (2011) if he entered into a purchase agreement and began using the new equipment before December 31, 2011.  (Normally, he would have to “depreciate” the cost of the equipment over its useful life which could be anywhere from 3 to 40 years.)

Using a credit card for a small down payment and the vendor’s line of credit, Dr. Watson purchased $10,000 in new equipment for his music studio.

So, What does this do for Dr. Watson?

  • As a sole proprietor falling into about the 20% tax bracket, his purchase will save him $2,000 in taxes when he files his tax return,
  • He’s now able to attract new business and offer his previous and current clients faster service on cutting edge technology,
  • He preserves his cash now and won’t have to make a payment on his equipment for 30 to 45 days.  (Just enough time to bring in a couple of new paying, clients!)

The IRS tax laws used by Dr. Watson also apply to the business use of computers, software, vehicles, furniture and fixtures, etc.  but these laws may change after December 31, 2011.

As usual with the tax laws, your situation may be different.  In some cases, if your business is going to report a loss before these equipment deductions, you won’t be able to use the write-off this year.   The write-off will carry forward to the next year.  This is why you will need to review your particular situation with your tax accountant (or me).

Hopefully, you’ve found this helpful.  Feel free to comment.

If you’d like to contact me regarding this or other tax planning or business ideas, please give me a call at 240-356-5050.

To Your Financial Health!

 

 

 

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Funding Your Non-Profit

What is the major overriding issue facing all non-profits?  Fundraising!  How do you raise the needed funds to meet the stated objectives of your organization?

A few months ago, I attended an event sponsored by The Center for Non-Profit Advancement.

One of the several excellent presentations was “Diversifying Your Funding Sources”. The main argument was that non-profits depend upon only 1 or 2 sources for the majority of their income and that other sources should be identified or created.

Below is a list of potential sources that were discussed:

  • Individuals – Have you identified key individuals who can support the organization annually?
  • Local Businesses – What businesses benefit or could benefit from the services that your organization provides?
  • Government (Federal, State, County, City) – Have you built a relationship with key officials and let them know how you can help their constituents?
  • Foundation Support – Have you identified Foundations that provide grants to organizations like yours?
  • Memberships – Have you or can you offer a monthly or annual membership to create on-going revenue for your organization?
  • Products/Publishing – Can your organization create and offer books, tapes, CD’s, DVD’s, workshops or courses to raise funds?
  • Licensing Fees – Does your organization have or can it create a product or service that can be licensed to other organization in exchange for a recurring fee.
  • Fees for Service – Does your organization have or can it create a seminar or workshop that can be sold to other organizations?
  • Special Events – Does your organization have a Calendar of Special Events to invite the community to and to raise funds with?
  • Grant Writer Services – Do you have a access to a Grant Writer or a grant writer on staff who can research and write grant responses?
  • Partnerships – Are there partnerships that you can develop with other non-profits to respond to larger grants that may be available?

Hopefully this information helps you and your organization develop new funding sources.

If I can help you with any of these ideas, give me a call at 240-356-5050.  I’d love to talk with you.

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Get Debt Free!

$1 Trillion
Via: Credit Score

How’d you like to be debt free in 1/2 to 1/3 the time without spending any more money than you currently spend? Just complete the form below and you’ll receive an email with more information.

To Your Financial Health!


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Clergy Tax Facts – Housing Allowance

As a “qualified” minister, you are eligible to receive lodging from the church free of income tax liability. This is known as the Housing Allowance. A housing allowance may be provided for a minister living in employer-provided housing or in minister provided housing (owned or rented). This is a key component of your income tax preparation.

To be qualified and eligible, you must meet 5 IRS tests –

  • Be licensed, ordained or commissioned by the church,
  • Administer sacrements – serving communion, baptizing, dedicating infants, performing marriages and funeral services,
  • Conduct religious worship,
  • Be considered a religious leader by your church or parent denomination, and
  • Have management responsibility in the control, conduct or maintenance of your local church or parent denomination.

Every qualified minister should have a portion of salary designated as a housing allowance. This provides an opportunity to exclude dollars from gross income and save on your income taxes.

Typically, the Housing Allowance cannot exceed the fair rental value of the housing including furnishings plus utilities. Any allowance in excess of these guidelines is considered taxable income.

Allowable Housing expenses include:

utilities,
principal and interest payments,
down payment on house purchase,
real estate ommission,
real property taxes,
homeowner’s insurance,
structural maintenance and repairs,
landscaping, gardening, pest control, home association or condo fees,
furnishings, decoration and local telephone expense.

The qualifying minister should submit a housing related expense estimate to the church for the coming year and the church should adopt a written designation for the housing allowance and include the designation in the church minutes or resolutions.

This is just an overview of the issues regarding the Housing Allowance.

Please discuss this in more detail with your board or your church accountant or feel free to give me a call at 240-356-5050

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Cash Flow – How to Stop the Bleeding!

4 Areas and Questions to Improve

Cash Flow

Cash Flow is the life blood of any and every business.  Your business needs cash to stay alive, therefore, cash is king.  Below are 4 areas and questions to help you improve the cash flow of your business.

 Spending

  • Do you have a system that helps you identify what needs to be paid, how much and when?
  • How do you make purchase decisions – Need, Want or Return on Investment?
  • When did you last review your spending habits and determine if you could do better?
  • Have you price or value shopped the services or products you currently use – telephone, cable, auto, life, health and liability insurances, supplies, etc.
  • Are there products and services you can buy in bulk to reduce your costs?
  • How much does it cost you in fixed expenses to run your business each month?
  • Have you tried to negotiate new payment terms – Net 30, Net 60, 2%-10 Days, Pre-Payment discounts – in order to conserve cash?
  • Are there items where it would be better to own than to rent or rent than own – Car, trucks, furniture, buildings?
  • Can you use independent contractors – legally, rather than employees?

Collections

  • Do you bill clearly, accurately and on time?
  • Are you in regular contact with your clients and their payables department?
  • Do you have or can you enforce late payment fees?
  • Can you legally discontinue services for non-payment?
  • Do you or can you offer multiple payment methods?
  • If billing is based on hours or items quantity, can you move to a fixed fee model?
  • Can you bill prior to rendering service instead of after?
  • Are your billing and payment terms easily understood and agreed upon?
  •  Can you arrange to only accept only cash, credit card or debit card?

Profits

  • Do your sales prices cover all your business costs?
  • How can you raise the value of your products in order to raise your price?
  • Do you know what your costs are in order to properly set your sales prices?
  • How can you lower your costs to maintain your sales prices and still increase your profits?

 Sales

  • Do you have a qualified prospect?
  • Does the prospect have a real and verifiable need?
  • Has the prospect realized what the problem is costing them?
  • Why are  you focusing on this market?
  • Are you offering the right product?
  • Do you have a teachable and repeatable sales process?
  • Are your  sales people properly trained?
  • Does the prospect have the ultimate buying authority?
  • Have you educated your clients how to buy?

Finally, give consideration to these questions and apply them to help your business.  If it would help, give us a call us at 240-356-5050 for a cash flow planning session and bookkeeping and let’s stop the bleeding.

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Direct Sellers and MLM’s! – the IRS is looking for you!

In an ongoing effort to find unreported or underreported revenues, the IRS has now created a video for Direct Sellers and MLM’s.

This video is to “help” you properly record and report your income each year.  It also helps you determine if you really have a business or a hobby.  (The tax laws treat each differently).

The video Direct Sellers is about an hour long but very information and instructive.  It will help you understand the value of getting and keeping your bookkeeping in order and help you understand what the IRS will be looking for in case of an audit.

By the way, the IRS has created an ATG (audit technique guide) for its agents for the Retail Industry.    They include Direct Sellers in the Retail Industry.   This guide walks agents through the audit process for the Retail industry.  If interested, you can view the guide, again quite instructive.

As usual, if you have any questions, please feel free to reach me at 240-356-5050.   To Your Financial Health!

 

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Loan Modifications – Joy and Pain

Last year, Charles and Gloria were giddy with happiness.  Finally, after struggling for over a year with the loan modification process, they had been approved.

The modification would save them $700/month on their note, which equals $8,400/year.

Shortly thereafter, they received more good news!  Their property tax bill was being reduced $150/month or $1,800/year.  The county had re-assessed their home and the value of their home had dropped.

This was all good news… but a new problem was brewing.

Charles and Gloria now had an additional $850/month or $10,200 to work with.  What they didn’t have now was the tax write-off that went with the mortgage interest and the property taxes!

At our tax appointment, we discovered that they were in the 20% tax bracket.  As a result, their tax liability was $2,040 higher than usual because of the mortgage interest and property tax savings.   This was a major surprise to them.  They were still getting a refund but not as much as they had planned on.

Charles and Gloria were blessed that they did not end up owing taxes.  Many other families may not be so blessed.

So what should you do – Depending on your situation, here are 4 solutions

  1. Adjust your withholdings down to pay more taxes in during the year.
  2. Put more money into your 401k or 403b plan if you can
  3. Save 20%-25% of the new income to cover your taxes
  4. Some combination of all 3.

Hopefully you’ve found this helpful.

If you have any questions, please feel free to call me at 240-356-5050 or if you have any relevant comments on this blog, please feel to comment.

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IRS Announces Tax Filing Delays!

Out of a limb

The Christmas Gift of Extended Tax Benefits may turn out to be a New Year’s Headache for both Tax filers and Tax Preparers.

The IRS announced on Thursday, December 23, 2010 that their systems will need to be reprogrammed and they would not be ready to accept tax filings for certain forms until at least mid-February, 2011.

Those affected include:

• Taxpayers who claim itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses, state and local taxes.

• Taxpayers who claim a deduction for tuition and fees. This is a so-called “above-the-line” deduction, which means taxpayers don’t have to itemize to claim it.

Parents and students who claim other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit, will not have to wait to file, the IRS said, assuming they don’t itemize.

• Taxpayers who claim the educator expense deduction. This deduction, which is also an above-the-line deduction, allows teachers to deduct up to $250 in out-of-pocket costs for classroom materials.

“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” IRS Commissioner Doug Shulman said. “We will do everything we can to minimize the impact of recent tax law changes on other taxpayers. The IRS will work through the holidays and into the New Year to get our systems reprogrammed and ensure taxpayers have a smooth tax season.”

If you will have to itemize for 2010 or have tuitions and fees to be deducted, plan your finances now to anticipate the delay in possibly receiving a refund.

If you have any questions, please feel free to call me at 240-356-5050 or if you have any relevant comments on this blog, please feel to comment.

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