We work with many small businesses and love when those relationships become long-lasting and span many years. Unfortunately, this is not always possible because running a successful business is difficult and there are many trials that can pop up and lead a business to failure. For example, this recent article from Accounting Web lists 19 potential problems. Even if that number of 19 represented all the possible issues, the business landscape would be tricky to navigate, but the fact is that the real amount of potential pitfalls is even larger.
I’m trying to be transparent here, for the article is aimed toward accountants and how they can help (and charge) clients to continue to succeed. And sure, we are looking for business, too, so that our enterprise can also continue to succeed. But we legitimately want to help our clients succeed for that will only be beneficial to everyone involved.
And hey, one of the entries on that list is paying for services that don’t produce results. So instead, we strive to be a service that produces results.
I think for many businesses, finding yourself battling a few of those 19 potential pitfalls is normal and inevitable. It is going to be a rare time when someone starts a perfect business at the perfect time that enters a perfect marketplace and becomes wildly profitable from the start. Worrying about those pitfalls, though, does not mean that you’re bound for failure. In fact, if you are battling them, then you stand a much greater chance of success. The businesses that fail are the ones that do not address their issues.
And as you grow, which battles you need to fight will change. For example, sometimes you offer an item or service that a customer utilizes then will not need to purchase again for a long period of time. In this situation, you may start strong, but will need to continue developing a customer base to maintain that success.
Or it could be that you need some guidance on where to put your efforts in the future for growth. Maybe you experienced success, paid down your debt, and now have funds to spend elsewhere, but don’t know where. Standing still would lead to stagnation, so advice and guidance is needed to move in the right direction.
Yes, there are a lot of places where problems could arise, they are not the same for everyone, and they will not be the same for the life of your business. No matter what, there are people who can help, want to help, and will continue to help as you travel your business’s path. So wherever you find yourself, we would love to help.
For even one of the reasons that the original articles says businesses fail is that they won’t spend money to grow. Expenses are only bad when they aren’t leading you anywhere. Expenses are a good investment when they are put some place dedicated to guiding you toward long-term success.
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Thinking about tax returns never stops, even as we go through the last quarter of the year when it seems like the topic should not be that timely. The IRS is always releasing something, though, and some numbers that have come out recently give a look at how the Tax Cuts and Jobs Act affected the landscape.
As we have seen earlier following the April deadline for returns, the changes were not that wild. Sure, we saw some people whose individual situations were drastically different, but when you spread it out over the millions of tax returns received by the IRS, the numbers largely evened out with previous years. (And if you personally saw a drastic change and have yet to do anything about changing it for next year, time is running short on being able to do that … see last week’s blog.)
And although things do tend to even out when we are talking about tens of millions of instances, the IRS recently released numbers that showed over 2.5 million less tax refunds were sent for the 2018 tax season over 2017. This sounds bad when you think of it from the mindset of “I’d like a tax return,” but that doesn’t necessarily mean it is. After all, a refund is really only giving you money back that you already paid to the government and it was later determined that your obligation was lower. Some changes in how you pay taxes or have them withheld from your paycheck can simply mean that you get that money in smaller chunks throughout the year, giving you quicker access to it.
Where this goes in the future is going to be a little difficult to determine. For one thing, more and more people are making money outside of their standard I-receive-a-paycheck-and-a-W2 job which is lowering the number and amount of refunds. Also, some who was surprised by their tax bill last year would have made changes to avoid that next time. In that situation you tend to just want the final number to come out to zero instead of making sure you get a refund back. Those who get a refund tend to just be happy with it and see it as an unexpected (or hoped for) surprise. Again, never minding the fact that better planning could get that money to you quicker.
The IRS unsurprisingly expects the number of returns it receives to keep growing, though, so who knows where the number of refunds will go. The bigger key is to be sure that you are taking care of your own personal situation and planning within the rules that now exist. This doesn’t mean that figuring out where you stand when it comes to taxes is ever easy or an exact science, but it does mean that you can obtain the power to set up things to work to your best advantage. So if you want to be ahead of things and not just follow national trends, give us a call.
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This week saw the tax extension deadline of October 15th pass. That means you only have six months left before it is time to file taxes again on the regular April date.
Now I know that most of you read that and think six months means there is plenty of time before you have to worry about your tax situation. I also know, though, that there are many who should read that and realize instead that there is not much time left to make moves that can affect your tax picture.
This is the time to think of a critical question. Do you know what your tax return is going to look like when April comes around? If your answer is yes and you are happy with how things look, good job, carry on as you were. If you do not know, though, (or don’t like how things looked last year) it is time to start looking into things and avoiding unpleasant surprises.
Now sure, if your life and employment situation has not changed, then what your tax return looked like for 2018 will be a good approximation of what it will look like for 2019. You can know this without a deep dive. Small changes can make for big surprises, though. So even if you just got a significant raise at work, it can be worth getting the peace of mind that your withholding changed enough with it. Then there are the life changes - did you have a child, did you get married? Is your child no longer a dependent, did you get divorced? All of these will change your return.
Especially if you have had any big changes, though, that deep dive should come now while there is still time to make moves to change it. Did you start a new small business? Or are you running a small business that is now generating more income than before?
And remember, small business doesn’t mean that you left your regular job and started going at it completely on your own. Even joining the gig economy with something like Uber is “running your own business” in some ways as far as taxes are concerned. The money you make there has to be put on top of any regular income you made when it comes tax time. And in most cases, that money has not already been taxed.
Even if you are making some of this extra money and have thought about what its tax implications are, did you remember to include your spouse’s income, as well? This is all going to be made into one pile when it comes time to file your taxes.
Every year, we see clients who receive unfortunate news of how much their tax bill is. More often than not this is due to some changes in their situation that seemed small at the time, but loomed larger when they went into tax calculations. It is not the people making huge amounts of money who are surprised, but the ones in the middle, making some modest gains, who just did not plan.
Planning can hold off the shock of this. It cannot remove the fact that you need to pay some amount in taxes, but we can most likely lessen it some, and then plan for what you will need to pay. So if you do not yet have a handle on things, please contact us to look at your situation while there is still time to make a difference.
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No matter where you stand politically, there is a feeling that we are living in interesting times. Where is the impeachment inquiry going? Are we on the way to recession? Is Joaquin Phoenix more creepy or genius? These are the questions that will define our age.
But they don’t have to define your business.
At least two of those questions could certainly have a big impact on the financial state of the nation. For business owners, it feels impossible to not prognosticate a bit, taking a guess at where things are going and imagining what that could mean for you down the line.
Granted, this is a fruitful endeavor for many businesses, but not all of them. I’m going to go with a general rule that if you are a big enough enterprise to have people who can afford to spend time on such issues, it is not a bad idea to have contingency plans in place for possible future events. If you are a smaller company where energies are best used elsewhere, though, keep them elsewhere. When you are in that situation, the best thing you can do is make sure your own house is in order.
When it comes to such future thinking we often get lost in ideas that don’t really have any data attached to them. We get a feeling of something that might happen, imagine it leading to a second incident, and keep spiraling until the first logical leap is lost in the miasma. The key here is that these flights of fancy don’t serve you at all if they aren’t backed up by something concrete.
So do you even have anything concrete to start from?
That is where the importance of having your house in order is highlighted. If you are keeping on top of your company’s financials, then you can actually tell when things change. If you do not have solid numbers from the beginning, then any decisions you make are being done on a whim and they will feel good if you like or want change or feel uneasy if you felt you just had to do something.
No matter what situation you are in, know that if you would like the comfort of knowledge in uncertain times we would love to help. If you do not have the foundation of good recordkeeping and reporting, we can get you started so you can start tracking where you are and figure out where you are going. If you already have a solid foundation, then we can help you analyze your numbers, track new ones, and keep you moving forward based on them.
Only with such diligence and planning can you be ready to react to outside forces if they do start to have an effect on your business. Beyond that, only with that diligence and planning can you know if those forces are having an effect on your business.
You hear lots of talk about how self-care is important and this is also true when it comes to business. Caring for yourself doesn’t only have to be done alone, though, so let us know if you need to get a better handle on things.
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Recently, USA Today ran an article about how many Americans are lagging in saving for retirement. Such bits of news never surprise me, for we all have times when we fall victim to thinking about the present at the expense of the future. What stood out to me was some of the things that are mentioned as ways to start saving more – all the way down to making coffee at home. Such a simple thing shows how easy it can be to spend less than you currently are.
For the most part, people’s income increases as they go through life. Even smaller, cost-of-living raises sends you through that dynamic. Often, though, that extra gets eaten up on the expense side of things. Those things can be very small, but it feels good to take those income advances and turn them into going out to eat more, a slightly bigger vacation, or such similar things. Once you get in that mindset, though, it can be difficult to halt and change to one that prioritizes saving.
Now of course, there are some people out there in unfortunate situations who literally barely make enough to get by. Most people, though, could benefit from an honest analysis of where their money goes and see where they could pull back and help secure their future. That is where some of those small moves mentioned in the article come in. That is great for almost everyone individually, but I also want to encourage business owners to take the same outlook.
Even very small business owners can quickly lose a handle on what their expenses look like. At the beginning, you may be very concerned about where money is going because there is not a lot of it. Once you hit a comfort zone, you start to put your efforts elsewhere and give less attention to every transaction going through the bank. Renewing some of that attention can help your bottom line continue to grow.
So the first step is just to make sure that you are keeping track of those financials and not winging it at the end of the year when it comes time to file taxes. It’s great if you have enough money coming in that you don’t have to worry about it and there is always enough to cover expenses, but that lax attitude definitely means you’re spending money that you don’t have to.
You may be surprised at software licenses you are still paying for and not using. You may find it shocking to actually see how much lunch costs when you calculate it on a monthly basis. And is it really possible to go through that much paper and that many pens?
Of course, it’s never going to be that no expenses are necessary. There are things you need to make your business work. You do not, though, need expenses that are only dragging your business down. The only way to ensure you are not paying for such things is to make sure you have updated books, giving you the ability to get the reporting you need to see such things. So if you need help with that, don’t hesitate to contact us. You could save more than it costs to do so.
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