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Tax Reform Changes - How will they affect you?

When you file your 2018 tax returns – about a year from now – your return will look very different.  Here are a few of the biggest changes that may affect you.

 

Individual Tax

• Individual tax rates will range from 10% to 37%.
• Standard deduction increases and personal and dependent exemptions eliminated
• The Child Tax Credit increased and a new Dependent Credit created.

Disappearing deductions: Beginning with the 2018 tax year, you will no longer be able to deduct:

• State income tax and property taxes above $10,000 per year in total;
• Moving expenses (with an exception for certain military);
• Employee business expenses such as mileage, travel, entertainment, home office expenses, union dues, tax preparation fees, and investment fees, among others;
• Mortgage interest beyond interest on $750,000 of acquisition debt (if you buy a new home); and
• Mortgage interest paid on equity debt (all homeowners).

Some new benefits for individuals include:

• Medical expense Adjusted Gross Income (AGI) threshold will temporarily drop to 7.5% of AGI for 2017 and 2018;
• Alternative Minimum Tax (AMT) threshold increased;
• A deduction for qualified business income for passthrough entity owners;
• Recharacterization to an IRA cannot be used to undo a Roth conversion;
• The estate tax exclusion has increased to $10 million (adjusted for inflation); and
• Annual gift tax exclusion remains the same ($14,000 for 2017 and $15,000 for 2018), but the maximum rate on gifts is 35%.

Small Business Tax

• Corporate tax rate will be a flat 21% for 2018
• Up to 20% deduction from net business income for a sole proprietorship, LLC (excluding those taxed as a C corporation), partnership, S corporation, and rental activity. The rules are complex but there is a lot of planning that we can do to maximize this deduction for you.
• Corporate Alternative Minimum Tax (AMT) repealed;
  
• IRC §179 expensing and bonus depreciation increased;
• Deductible business interest reduced;
• The net operating loss (NOL) carryback repealed, NOL deduction amount limited;
• The domestic production activities deduction is repealed;
• IRC §1031 treatment is limited to certain real property; and
• Entertainment expenses are disallowed.

We are here if you would like to discuss how the changes apply to your unique situation >> Contact Us

The post Tax Reform Changes appeared first on Checkbox Accounting.

This includes the pulse or heart rate, body temperature, respiration rate, and blood pressure. Taken together, these help indicate the state of the patient’s essential body functions.

If any – or all – offer some cause for concern, the doctor can start diagnosing the patient more thoroughly, before suggesting a course of action…

And now we’ve arrived at the part where you’re wondering why we’re discussing basic medical practice.

Well, this idea of ‘vital signs’ is something that can be comfortably extended to your business.

Your company’s financial health should be examined regularly to make sure there are no underlying maladies that will only grow worse if left untreated.

Knowing What to Look For

These financial ‘vital signs’ have many names, some of which may be familiar to you. They include: Key Performance Indicators (KPIs); business metrics; critical success factors; and moneymaking statistics.

No matter the label attached, they are all essentially the same thing: a means of tracking the performance and success of your business.

Just as a soaring temperature or irregular heartbeat will make a physician want to dig deeper in diagnosing their patient, there are a few things you should keep an eye out for when it comes to the health of your business.

For instance, revenue is a clear indicator as to the financial performance of your company. By monitoring your income in comparison to your expenses, you will have an understanding of how much you are making (or not, for that matter), and why.

And when it comes to revenue, consider the various streams. In particular, online sales are simple to measure by implementing sales software, allowing you to spot trends and take action before it’s too late.

Or perhaps you could track the referrals that bring you new business. This will help you determine whether or not your marketing endeavours have been worthwhile, and if your current clients are actively recommending you to their network.

Once you have those customers, think about retention. How many clients are returning to your business over time after first working together or selling them on a discount or offer? Are you maintaining a loyal customer-base, or are you struggling to retain them? The answer will give you an insight into your company’s customer service capabilities.

Take the Pulse of Your Business

These are just some of the Key Performance Indicators – or vital signs – that you ought to look out for as you measure the performance and success of your business.

Understanding how your business is doing at any given moment is crucial to helping you make informed and effective decisions as its leader.

Tracking financial and non-financial metrics can help keep your business healthy. And as with your body, spotting any worrying trends early will make it a great deal easier to remedy than if you leave them untreated.

And it can be tough when you dig deep and track these metrics, only to discover that your business is living on borrowed time. When that happens, you must be ready to evaluate the alternatives; and quite often those alternatives can mean making difficult decisions, such as letting people go, selling the business, or filing for bankruptcy.

Start Tracking Today

Putting a plan in place to track key business metrics is fundamental to the growth and success of your company.

By staying on top of your KPIs, you will be in a much better position as you work with an up-to-date and accurate budget. And by doing so, you will be able to grow and invest in new resources, personnel, or locations, without putting your business under financial strain.

If you’d like to discuss setting up a system to track your key business metrics, please contact us.

The post Is your business ill? appeared first on Checkbox Accounting.

Long days, longer nights, and no-one to talk to when the going gets tough – it can feel isolating and demoralizing.

But there is a solution: speak and share with other business owners.

Many small business owners actively fear working with other businesses, worried that they may take advantage of them rather than offering guidance and advice.

However, the rewards can be terrific. By tapping into your local network of fellow entrepreneurs, you have the opportunity to become more knowledgeable, understanding, and efficient.

Why Should I Reach Out?

There’s no two ways about it; being a small business owner is stressful.

All the responsibility, all the decisions, the planning, strategy, and execution; it all falls squarely at your feet. And it can be quite overwhelming.

That’s why having a mentor – or joining a local group of small business owners – can help alleviate some of that stress. They give you a sounding board with whom you can discuss your problems and share your successes.

And this isn’t a new concept by any stretch of the imagination.

Take a beat and think about the franchises you see just about every single day. Starbucks, Wendy’s, Dunkin’ Donuts; they all share financial data and marketing information with the other stores within their franchise in order to better understand the overall market.

Won’t This Threaten My Business?

You might look upon this arrangement as a threat to your business. Sharing confidential information with a perceived competitor will understandably make you uncomfortable, and it will impact your business.

But, if done right, that impact will be positive, not negative.

By working with your peers, you will improve your understanding of the local marketplace, boost your efficiency and delivery, and oversee a better standard of customer service. This will only serve to drive more business and increase profits.

Where to Start?

If you run an independent small business (i.e. not a franchise) then it can be tough to know where to start when reaching out to fellow entrepreneurs.

Becoming active on social media (Twitter and LinkedIn in particular) is certainly a good idea. This gives you access to a whole host of like-minded individuals, many of whom won’t be swimming in the same waters, and are therefore less likely to appear threatening to your business activities.

But the fact is, nothing beats face-to-face networking.

Search online for local organizations, groups of similar business owners, or an association to join in order to meet and develop valuable business relationships with your peers.

Here are a few in our neck of the woods worth checking out:

Roseville, CA

• Roseville Granite Bay Business Network
• Women In Networking (WIN) Roseville
• Miscellaneous Small Business Meetups – Roseville (Meetup.com)

Sacramento, CA

• Sacramento Business Social Network Group
• Sunrise Business Builders
• Sacramento Area Business Connection

U-Link Network also has a number of local groups meetings listed on their website.

If you can’t find one nearby or relevant to your industry, consider setting up your own. It can be as informal as meeting for a coffee every few months, but just as valuable as an established organization.

And be sure to complement these meetings by fostering professional relationships with business advisers and mentors.

Put Yourself Out There

As your business grows and develops, and you begin to better understand your own key financial data and moneymaking statistics, you will find that you actively want to compare yourself to your peers.

It’s only natural to seek to benchmark yourself against others. In fact, it can become a crucial part of the overall success of your business.

By simply being active in your local business community, you will open up the doors to new and prosperous relationships, promising leads, and a wealth of advice and experience.

And by improving your knowledge of the local market, it will push you to be a better business leader.

Put yourself out there and make it happen.

If you’d like a helping hand in getting started, contact us today to speak with one of our friendly advisers.

The post Don’t Be Afraid to Work Together appeared first on Checkbox Accounting.

No matter your reason for taking the leap as an entrepreneur, you will encounter a number of concerns as you progress. It’s important that you know how to recognize and handle these concerns so as to avoid derailing your business.

In dealing with many small and medium-sized businesses over the years, we have been able to distill some of these concerns down to four of the most common questions.

At some point in your business journey, you will find yourself asking a variation of the following:

1. How will I achieve what I want in my personal life?
2. How will my business help me achieve my goals?
3. Do I really have control over business performance and numbers?
4. How do I get more from my business?

In this post, we will help you navigate these concerns and emerge from the other side a better business owner.

How will I achieve what I want in my personal life?

Running your own business should be about achieving personal freedom.

Freedom to work on what you want, when you want. Finding joy in the day-to-day is the ultimate goal for many entrepreneurs.

So, to get to the heart of what you truly want out of your business – and how it impacts both your personal and professional life – ask yourself the following:

• Why did I start my business?
• How is my business organized?
• Do I feel I am on track with my goals?
• What keeps me up at night?
• What do I do in my spare time?

Once you have a handle on why you’re in business for yourself, and where your passions lie out with your business, you can start working on balancing the two. Otherwise, the business will consume you.

How will my business help me achieve my goals?

In order to achieve your personal and professional goals via your business, you must be the one in charge.

Now, this might seem a little strange given that you own your business; who else would be in charge?

But the truth is, your business can quickly take on a life of its own if you let it.

You must be the one in control, rather than taking a back seat and letting the business drive you. If you’re achieving success almost by accident, then you and your business are driving blind without a strategy or a roadmap.

Your goals will go unfulfilled if you don’t treat your business as more than just as means of making ends meet.

Do I really have control over business performance and numbers?

We know it can feel like you don’t; that your numbers can spiral out of control amidst the day-to-day of running your business.

But you can and you must take control of those numbers, and by extension, the performance of your business.

You should:

• Know exactly what your numbers are for the month
• Have complete clarity on which products or services are selling well (or not)
• Understand what’s in your financial statements, and what those numbers mean
• Know how much tax you’re going to pay, well ahead of the due date

When you do, you can actually look forward to meeting with your accountant!

How do I get more from my business?

When you have a handle on your goals, you’re building a business geared towards meeting those goals, and you’re accurately tracking your numbers at least monthly, you will get more from your business.

It’s really that simple!

You can then look forward to scaling your business, hiring employees (if you want), outsourcing work, spending time working on your business rather than in it, taking a day off now and again, and even taking a vacation.

Let’s Address Those Concerns

If any of those concerns are keeping you up at night, then here’s how we can help:

1. Personal Goal Setting

We can help you get to the very heart of the reason why you went into business in the first place. We will determine what your goals were, and how they have changed (if they have at all).

If your business has taken on a life of its own, we’ll find out why, and how far you are from achieving the goals you had when you started.

By taking you through a personal goal questionnaire and a one-on-one meeting with one of our advisers, we can develop a report that will show you what you want to achieve, what’s missing, and how you can go about accomplishing your goals.

We’ll then help you devise a specific plan of action – one with dates, milestones, and clear responsibilities.

2. Business Planning & Strategy

We want to help you take control of your business. No more autopilot, no more backseat driving.

Together we will develop a business plan and strategy that will have you questioning everything, and testing what you think you know.

We won’t focus solely on ‘best practices’; rather, we will help you find your industry’s ‘next practices’.

What’s more, we want to instil a belief in you, your team, and your mission that will see you carry out this plan to fruition.

3. Monitor KPIs

It’s no use merely glancing at your income statement in order to monitor your business. That’s a bit like watching a hockey game by only looking at the final scoreboard. To get the bigger picture, you must look at the activity within the game.

We will help you map and monitor your progress by focusing on a few Key Performance Indicators.

These will be tailored to your business, meaning no generic indicators or reports. Only valuable and actionable information.

4. Profitability & Cash Flow Improvement

Finally, we will help you get to grips with your profitability and cash flow by getting you up and running on cloud accounting software.

Everything will be real-time and instantly trackable by both you and us, meaning we can spot any potential cash flow issues, so that you can take action ahead of time.

How Can Checkbox Help You Become Great?

In his book, Good to Great, Jim Collins wrote:

“Greatness is not a function of circumstance. Greatness, as it turns out, is largely a matter of conscious choice and discipline.”

We can guide you to greatness. We only ask for your conscious choice to work together, and your discipline to meet, review, and check in.

You can grow a great business. Let us help. Contact us today to get started.

The post The Four Biggest Questions You’ll Ask Yourself as a Business Owner appeared first on Checkbox Accounting.

Choosing an advisor to help manage your money is one of the most important hiring decisions you’ll make. But even those who hire competent individuals for their businesses struggle when it comes to selecting and retaining the right financial advisors to grow and protect their wealth. Even the most discerning investors often don’t know which questions to ask or what the position actually entails.

These 10 questions should help you identify those advisors best suited to properly guide you on a successful financial journey.

1. What is your educational and professional background?

Look for a pattern of accomplishment and self improvement, and don’t assume that age translates to experience. Find out what licenses and registrations the advisor currently holds and for how long, what professional accreditations or certifications have been received. Most importantly, find out how they chose this career.

Some advisors will articulate an interest with economics and investment fundamentals. Others describe their interest with the impact of effective financial management on family relationships, attitudes, and personal fulfillment. You have to decide if you prefer to work with an advisor who is more interested in the markets, or more interested in helping you navigate toward your desired financial outcome.

2. What is the scope and extent of your professional services?

Find out what aspects of financial management are covered, and which are not. Make sure your advisor’s expertise and services match your needs. If you need additional services, ask the advisor to describe the collaborative process with other key tax, legal and financial professionals.

Beware a candidate who seizes an opportunity to disparage others in order to make themselves shine. Such behavior indicates that the advisor may place his needs above the ultimate need of helping you achieve your goals.

3. What is your regulatory and disciplinary record?

Don’t be afraid to ask this question and, if necessary, follow it up by contacting the regulatory authorities for additional information. Specifically, find out if the advisor has a disciplinary history, if open or current complaints exist, and if so, the nature of issues involved.

4. How are you compensated?

Many advisors hold multiple licenses and registrations. Get a clear understanding of whether you’ll pay fees, commissions, or both. Ask if the practitioner earns any compensation from third parties, also called “soft dollar” compensation. Some firms and investment product sponsors incentivize advisors for selling their products, which inherently creates a possible conflict of interest.

5. What fees and costs are not covered in your compensation?

There can be a surprising difference between what your advisor charges you and how much you actually pay. Familiarize yourself with any set-up, termination or transfer fees. Additionally, ask about annual maintenance fees or other charges that could impact your bottom line.

Check into record keeping and tax reporting services. You may incur additional expense If you are not provided with all the information you’ll need for tax preparation.

6. What is your strategic methodology and process?

Ask if the advisor has a written philosophy that guides the investment strategy. Many advisors don’t have a formal approach to investment management. If there is a formal approach in place, get a copy. Find out what it entails and how the advisor came to develop it. Ask how long the current approach has been in place and what specific ongoing processes guide your portfolio toward your stated objectives.

7. Are you a fiduciary?

Fiduciaries are held to a higher standard of care than other financial professionals and are accountable to place client’s interest above their own. If the advisor is affiliated with a Broker-Dealer, find out if his firm supports a uniform fiduciary standard of care.

Non-fiduciaries often act as a salesperson for either his firm or the product sponsors he represents, which presents an increased potential for conflicts of interest.

On a related topic, find out where and how the advisor will custody your financial assets and whether the advisor will take direct possession of clients funds. If so, the advisor must maintain a surety bond.

8. What if something happens to you?

Ask what procedures are in place should the advisor be out sick, on vacation or simply out of reach. Additionally, what happens to you and your portfolio if your advisor quits, retires, or dies?

Beyond asking the advisor how long he plans to continue in this field, get informed about and what will happen should your advisor be out of reach. And know your available resources and options in the event he sells, quits, retires or dies. Meet the staff and advisors who will be taking care of you and your portfolio should any such situation occur, and make sure you’re clear, and comfortable, with the continuity and succession plan.

9. What are advisor, staff and team member’s roles?

Find out if your advisor works collaboratively with the other advisors and staff in the firm to facilitate your professional relationship. Ask who is responsible for delivering performance reports, account statements, tax documents, scheduling review meetings, and providing timely communication with you. Find out who is responsible for conducting investment analysis, making recommendations, monitoring progress and executing your portfolio strategy.

10. Tell me about your ideal client

Although logical, it may be counterproductive to tell a prospective advisor about yourself right away. Instead, ask them to describe their typical clients. Find a financial advisor whose ideal client sounds very similar to your situation in terms of age, stage of life, and asset level. Ideally, you want an advisor who has extensive experience working with people just like you.

Facilitate a conversation based less on assets and more on the relationship dynamics. For instance, it may be helpful to ask: What’s a good client relationship look like to you? What’s most important to you and what do expect of me for a good business relationship?

When you’ve completed the interview, the final questions is yours: Do you feel compelled to move forward? Your reaction to this question should be a reflection of both the advisor’s skills and abilities, as well as their ability to connect with and advocate for you.

About the author:

Bradley Harsch is an Accredited Investment Fiduciary® specializing in strategic investment portfolio optimization. Brad lives in Sacramento, California with his wife Michelle and their five children. Brad can be reached at 916-849-5728 or bharsch@lighthouse-sa.com

 Bradley Harsch is a registered representative with, and securities are offered through, LPL Financial LLC, Member FINRA/SIPC.  Investment Advice offered through Strategic Wealth Advisors Group (SWAG), a SEC registered investment advisor and separate entity from LPL Financial LLC. Tracking #1-025295

The post 10 Questions appeared first on Checkbox Accounting.

We understand that there are frequently times when our clients rely on us to have answers and solutions.  They place their trust in our expertise and knowledge in helping them with their accounting, tax and financial statement issues.  In those situations, we are much more comfortable giving answers.

But for many of the issues we want to discuss here in the 3 Bottom Lines Blog, there will be no definitive answer, no one solution that fits all. We see our role here as being more the “inquirer” rather than the advocate. As Brian Stanfield in his excellent book The Focused Conversation writes –

The advocate is one who pleads, recommends, pushes a specific perspective, proposal or point of view or a particular product. The advocate is convinced that his position is right and seeks others who will support it. The inquirer, on the other hand, comes at a topic with an open mind looking for a creative or viable option or the facts of a particular matter. He is trying to open up new ground or get a new take on “established truth.”

A large part of the education and training we receive as children and young adults is aimed at making us good advocates and at teaching us an adversarial mode of conversation and dialogue through which one perspective, solution or answer emerges as the one true one and settles the question at hand once and for all. There is an appropriate time and place for this mode of discourse, but this blog is not the place. So…

We want to begin this blog with the assumption that there are no “absolute truths.”

This is not just a matter of the style and tone for us.  It really cuts to the heart of the subject we want to discuss which is how some businesses and nonprofit organizations are finding ways to operate more successfully and effectively.  There is a quiet revolution of sorts going on in the workplace where forward thinking managers and executives are finding that playing the “inquirer” and conducting open-minded conversations with employees, customers, vendors and suppliers yields enormous benefits. Quoting Stanfield again,

The key to learning is that individuals and small groups in the organization are constantly transforming raw experience into insight and a transformed personal style. Here, the focused conversation can enable groups to reflect what has been happening, what went well or poorly, and why it went thus. Such conversations can be life or death to the learning organization.

OK, enough about us.  Suffice to say that as we post we would really welcome your feedback…

Bill Simi

The post SETTING THE TONE – WE ARE NOT THE “DECIDER” BUT THE “INQUIRER” appeared first on Checkbox Accounting.

Just ask Jeff Seifried, small business coordinator for the City of Aurora, Colo., and Peter Tourtellot, chairman of the Turnaround Management Association.

They, along with other experts who prefer to keep their observations anonymous, have seen the best – and worst – of small-business operations.

Here are 10 examples of common, but potentially deadly, errors committed by otherwise brilliant small-business owners. Don’t make the same mistakes.

Underestimating the importance of cash flow management

Two woodworkers had a thriving business building interiors for retail stores. They did beautiful work and their customers were pleased, but it often took them 60 or even 90 days to pay the bill. Until the money rolled in, the partners couldn’t start on the next job because they couldn’t buy materials. They lost jobs because customers were in a hurry. You can be making plenty of money, but if cash isn’t arriving in time to meet payroll and buy inventory when it’s needed, you can be quickly out of business.

Getting sloppy with record keeping

The owner of a lawn service was haphazard about record keeping. If he had kept better track of lawns mowed, he would have known that his oldest mowers had so many miles on them, they were unlikely to last the season without an overhaul. Instead, it came as a very unpleasant surprise when three of them burned up in one week. Good records are a key decision-making tool. If you’re not keeping good track of your business, you are denying yourself the tools to make good business decisions.

Ignoring inventory

The owner of a business-supply store bought a flat of construction paper just before school started. Three years later, employees were still stepping around the boxes to get into the storage room. If you end up with stale inventory, discount it and get it out of there. Otherwise, you’re just tying up money and taking up storage space.

Neglecting collections

A dentist had dozens of outstanding bills for routine and special dental work approaching 180 days old because his assistant hated to make collection calls. Nobody likes to dun people, but unless you have a systematic collection plan and make sure it’s carried out, some people just won’t pay.

Disregarding employee concerns

The owner of a small jewelry manufacturing operation refused to pay overtime. He thought workers should be able to get the job done in the time allotted. Employees came and often left unhappy over what they saw as unfair treatment. Finally, one of them complained to the state division of wage and hour, which launched an ugly and (for the jeweler) expensive investigation. If you have a hard time hiring and retaining good employees, your business is doomed. And if you find yourself the target of an employment-related lawsuit, your expenses can be astronomical. Get expert advice on human-resource issues. While it may look expensive, it can save you a bundle in the end.

Failing to delegate

A baker thought she was the only one who could make the perfect cookie. Back trouble that put her in bed two weeks before Christmas nearly shut down the business. Recognize that you can’t do everything. Turn some of the job over to the best assistant you can hire and trust him to do the job, even if he makes a mistake now and then. If you insist on doing it all yourself, you can’t grow.

Offering something the customer doesn’t want

A water ice vendor spent all his time and money developing 100 delicious flavors. The trouble was nobody bought anything but cherry, lemon and vanilla. Ultimately, his inventory melted away and so did his profits. Market research is vital. Talk to potential customers, talk to current customers and respond to what they tell you.

Letting costs get out of control

The owner of an auto body shop was having such a great year, that he bought a lift that wasn’t in his budget. He also hired the son of an employee who needed a job, even though there wasn’t quite enough work to keep another person busy. In the final analysis, revenue went up significantly, but costs skyrocketed. If you’re not careful, you’ll spend up all the profits.

Spreading marketing dollars too thin

The owner of a Tex-Mex restaurant in a part of the country that’s not exactly a hotbed of enthusiasm for Southwestern cuisine had an obvious need to advertise. And she did. She bought one cable TV ad, one radio spot and a small coupon in the local weekly. Although she spent plenty – several thousand dollars altogether – her efforts didn’t add up to a marketing campaign. Failure to spend wisely on an integrated and continuing marketing plan is an expensive mistake. In this case, her location is now a pizza parlor.

Underfunding an emergency account

When unannounced road resurfacing closed a popular dress shop’s doors for a month, it put the owner out of business because she had no emergency money and she couldn’t go a whole month with virtually no sales. As every gambler knows, no matter how good a player you are, you’re occasionally going to be dealt a bad hand.

Likewise, every business needs a financial resource to turn to when disaster strikes. Bad things do happen frequently to good people and their businesses, so, like a good Boy Scout, you have to be prepared.

At CPA Corporation we can help business owners avoid these kinds of common business pitfalls, as well as, assist them in addressing other issues and concerns that may be keeping them awake at night.

Please call us for an appointment to sit down and talk with us about your business needs. There is no cost or obligation to you.

Or visit our website at and take advantage of our free online business diagnostic. It will take only a half hour of your time, but we are confident that it will be enormously valuable to you.  Again, there is no cost or obligation to you.

The post 10 mistakes that can cost you your business appeared first on Checkbox Accounting.