Maybe you can blame this on my mind being a little scattered now that tax season is over. I, however, will frame it as my mind is more open.
Either way, here is a little take on three news stories I saw earlier this week that I thought had lessons in them that were worth passing along.
First off, Pizza Hut’s original pan pizza is being remade. Whether or not there is then any value left then in the “original” moniker can be debated, but if the goal is to make a better product, that can’t be too bad, can it?
Beyond that, this CNN article was actually more interesting than I thought it would be, describing how Domino’s, Papa John’s, and Pizza Hut are in a tug-of-war competition to stay relevant, have new offerings, and embrace new technologies.
On the surface, it may seem like this is too much work for the companies. I mean those are three names that everyone knows, and everyone knows what they offer. It does, however, go to show that even when you reach a high level of success you cannot just rest on your laurels.
There is value in having a traditional offering. There can be greater value in realizing when your traditional offering needs to evolve if you want to continue holding your position (remember Kodak?). Be great at what you do - and we don’t have to get into a discussion here about what makes “great” pizza, these companies are still great at what they do - but also do not remain stuck in your ways. Only then can your famous name carry on.
Speaking of iconic names …
The brand and intellectual property of Sports Illustrated was sold recently for $110 million to Authentic Brands Group. That sentence has to be framed like that because Meredith Corporation, the former owner, will continue to publish the magazine and website under the Sports Illustrated name. What this means is that Sports Illustrated brand is worth more than the magazine that began the brand.
Names can stand for something beyond your current work, so be sure you’re standing for the
And speaking of standing for something …
MacKenzie Bezos joined the rank of the world’s wealthiest people following her divorce from Amazon founder Jeff Bezos. She recently committed to giving at least half of her estimated $36.6 billion worth to charity.
Do you read stories like that and think about how nice it would be to have that amount of money with which to do good? Then I urge you to still do what you can with what you have. When it comes to how you spend your money, there is value in the feeling you get from helping others that can outweigh the pleasure of purchasing goods.
With changes from the Tax Cuts and Jobs Act, making charitable donations became less of a tax issue for many, so I wanted to take the chance to close this week with that reminder that it’s still worth doing.
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There have been a lot of changes coming to QuickBooks Online recently. I know that this only affects a limited number of people directly, but some of the issues it raises reach further than QBO users. So I promise I won’t get too in-depth on just the QBO stuff in this space, for no one wants to read THAT much about bookkeeping software.
To give it some attention, though, QBO is based on a tier plan, essentially meaning you pay more the bigger your business is, which is pretty reasonable since you’ll be taking up more online space. The price has gone up, though, and you can also be forced into a higher advanced tier if your company uses more than 250 chart of accounts listings and/or 40 locations and classes.
250 listings on a chart of accounts could sound like a lot of things to track, but it is certainly not a ridiculous number, and some types of businesses don’t even have to get THAT large to get there. A lot of times, though, this is a place where we see businesses having some extra stuff that is just pushing that number up, cluttering up a profit and loss statement, and really serving little purpose.
Remember that one debit from three years ago that you weren’t sure how to classify and you started a new category for it? Of course not, but your chart of accounts does and that category thus still exists.
So if you are worried about the rising cost of a QuickBooks Online subscription and want a little personal guidance on how you fall within the programs rules, let us know and let’s set up an appointment.
This type of checkup, though, to see if your bookkeeping and reporting is really tracking and reporting what is most important to you can be a good idea no matter what platform you are using to track it. The issues that can keep you from working at an optimal level can be many:
- Did you have a professional set up our bookkeeping when your business started?
- Has your business grown since you started?
- Are you offering different products and services than when you started?
- Are you tracking similar expenses in separate accounts?
- Do you know what each line on your P&L means?
- Do you understand what transactions are going onto each of those lines?
Having good answers to these questions will let you know what level of a program like QuickBooks Online is necessary for your business. Having good answers to these questions will also help you understand how your business is working and help you make better decisions.
No matter what software you are using for bookkeeping (even if it’s an Excel spreadsheet or receipts in an envelope), having a hold on tracking it all correctly is necessary for optimal performance. And no matter how you are doing it, you may have questions on how to do it better. So you, too, let us know and let’s set up an appointment to discuss those things.
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In speaking with a colleague this week, I realized that I may have missed some pieces in my last blog aimed at people thinking about starting new businesses. It’s not that anything I said was wrong, but that there are some other points that business owners (and potential business owners) need to think about that deserved a little more spotlight. So here is my attempt to shine that light.
A slight word of caution first. None of these notes are intended to be, or should be taken as, advice for your particular situation. In fact, one of the biggest takeaways should be that every situation and every business is different. The key is that you want to address these things to make the decisions that are right for you and your business.
One of these decisions that have to be made is what type of business you are going to be from a legal perspective. I don’t want to use this space to go deep into LLCs, C Corps, S Corps, etc. - I mean, we’re still early here, you don’t want to go to sleep already. Suffice to say that there are differences and things such as whether you are going at this alone or have partners and how you will pay the taxes for the business (to be probably too simplistic, whether you account for it with a separate business return or on your personal return) all come up at this point.
Another key thing is going to be how you define success. If this is only something you ever envision to be a side gig, success could simply be not losing money. Then again, you may want that side gig to pay for a vacation for your family each year. And is that something that could be accomplished in the first year or will it take two or three to bring to fruition?
But then, what do you have to do to make that happen? Are you producing a product? If so, how many of that product will you need to produce (and sell) to get there? Are you providing a service? If so, how many clients will you need to serve to get there?
Then again, you may be looking to start a business that is immediately going to be what you do full-time. Defining success can be very different there. How many customers will you need to get enough money to get by? How many customers will you need to make enough money to get to a higher, thriving level? Will you be able to handle that time commitment? At what point will you be able to bring in new or more employee(s) and continue to grow?
Being a little bit deliberate in these areas will help you move you toward those success benchmarks. And you can’t be expected to have all these answers – or even know how to arrive at them - from the start. I could never claim that we will have all these answers for you. I am confident, though, that we can provide some of them and point you in the direction of where to find the ones we can’t.
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It’s National Small Business Week, which is something that causes two reactions around here. First, it is great to be a small business ourselves that is operating outside of a large corporate structure. Second, it is great to be able to help other small businesses succeed.
Last week, I wrote a good bit in this space to existing businesses about not allowing recordkeeping to lapse now that tax season is over. It is not always high on the list priorities for a small business owner, since their efforts are often better utilized in other aspects of the business. Since that time, the IRS has also chimed in with the kinds of records small businesses should keep. That’s a good place to start if you just want to know what you should be keeping and for how long. Just remember that being sure everything is recorded correctly is also key.
I want to steer away from existing businesses now, though, and use the spirit of the week to talk to those who want to start new businesses. This does not even have to be a huge thing, it can be a small side gig you do outside of your normal work hours. I would wager that most people give thought to some business idea along these lines at some point in their life.
The biggest roadblock to this can be time. If you already have a lot of commitments between work, family, hobbies, etc., it can be difficult to feel that you have the time necessary to make a new endeavor a success. I would remind you, though, that most of these ideas do not need to be huge (at least to start). Chances are you are having these thoughts because it’s something you WANT to do. It is possible that this could feel like another hobby – just one that can make you some money. So take stock of the things you do spend your time on. If you do have a schedule full of things you want to do more than pursue any business idea, great, you are living a fulfilling life. But if you do have a small amount of time and want to pursue it, that can be enough.
I say that can be enough because if you begin with the right mindset and planning your setup will free up some time. I think the right mindset is a combination of being prepared and not going at it alone. Preparation involves some simple questions (although the answers can be very difficult and call for deeper discussions than I can offer here) such as what service/good you are providing, who will want it, and how you are going to let them know you offer it. You must also be sure that the legal and financial pieces of it are set up correctly. It is much easier to do that at the start than to go back and try to clean up messes in the future.
Therein is where you should not start doing it alone. A little help with legally creating your entity comes with the comfort of knowing you did it right. A little help with best financial practices gives you a better chance to succeed and really know how things are going. If you’ve made it this far, hopefully you already feel that we will be on your side, so don’t hesitate to contact us if you want a little more guidance in getting off the ground.
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As promised last week, it is now time to take a look at what you can do personally (or in your personal business) now that tax season is over.
The biggest thing to look at is if you should change your withholding. In general, if you are satisfied with that you paid or received at the end of your recent tax filing process (and your situation isn’t changing this year), then you can leave things as is. If the numbers at the end of the return were not to your liking, though, this is an easy way to start taking care of that.
Many people fill out a W-4 form when they start a job, and then don’t give it another thought until they begin a new job. Many people also fill it out by just using the small worksheet provided with it. This is fine for a number of people, but it does not give your full financial picture and therefore is not a guarantee to withhold enough from your paycheck to cover your annual tax obligation. If that is the case, you can have more withheld than the IRS calculates based on your filing status and allowances. Sure, this means you will take home less in your paycheck every week, but you may prefer those small changes over one larger payment come next April. If it is only a small extra amount that you are withholding, it can be easier to budget that out of your spending than you believe. (How many times a month are you getting a coffee?, Are you watching every streaming service you pay for?, etc.)
Budgeting is something that I want to highlight not only for personal finances, but for a business, as well. It is difficult to know exactly how your business is doing, after all, if you do not have a good hold on your expenses. This is something that I see every tax season as some small business owners are doing a year of bookkeeping in one fell swoop since that task was not a priority during the year.
And hey, most of those businesses were still operating, so it’s not like one can’t survive in this manner, but I would say that one can’t thrive. If you’re paying bills based on if there is money in the bank, well, at least those checks are clearing, but you can’t make positive changes if you don’t have the information you need to do so.
Maybe you feel you don’t have the time to do it. Or maybe you feel you don’t have the money to have someone else do it. I would wager, though, that that increased attention and timeliness will come with enough benefit to pay for the cost.
In summary, both of these ideas are really calls for attention. We don’t always like to see the answers to our financial questions, because the answers aren’t always positive (ooh, math joke). Hiding from it, though, does not magically make the answer better. Added attention gives you the information, time, and power to make an impactful change. Consider this a call to not let these things lapse until tax season – again.
And if these are steps that you don’t feel confident taking yourself, you don’t only have to pay attention to us during tax season either.
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