6 Benefits of a Mastermind Group

 

Benefits of Participating in a Mastermind Group         

  1. Be part of an exclusive community.  Participation in most Mastermind Groups are by invite or application only.   The other members need you just as much as you need them, so quality of experience and knowledge is crucial to all involved.
  2. Advisement and Accountability are top priorities of the group.  Being involved in a Mastermind group nixes that feeling of “being alone” in running your business. The other members of the group turn into your business advisory board and hold you accountable for your progress.
  3. Collaboration is king. Everyone has strengths and weaknesses.  Chances are that someone in your group will have certain strenghts that can help you balance out your weaknesses and vice versa. The group works together collaboratively, to achieve more together.
  4. You get to extend your network and make new connections on a deeper level. Joining a Mastermind can expand your network exponentially. As a professional, you know how important your network is. By joining a group of other professionals who are equally focused on success, you instantly add quality connections to your network.
  5. New learning opportunities are key to Mastermind participants. Everyone in the Mastermind is unique in skill, experience and connections. By interacting and sharing your challenges, it’s almost certain that someone in your mastermind will have a solution for you and you may also be able to offer a solution, connection or tactic to help another in the group.
  6.  Think bigger to grow faster. Being in a Mastermind eventually gives you a Master Mind! You can’t help but think bigger and stretch beyond your boundaries when surrounded by amazing professionals striving to accomplish their own amazing goals.

 About our Online Mastermind Groups

  • Your group meets exclusively online one day a week for 1 hour 30 minutes.  
  • Your initial committment is a once a week meeting for three months with the option to continue in six month increments.
  • You choose either an early morning, lunch time or evening group.
  • Your group members must apply by submitting the form below.
  • Your group members are required to sign a confidentiality agreement.
  • Your group members must commit to attending every meeting or risk being expelled from the group

  Masterminds are incredible and can do wonders for your business as well as for you, personally. Growing in a group is not only more effective, it’s quite a bit more fun!  Give it a try – what do you have to lose?

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5 Benefits of Outsourcing Your Accounting Function

Making the choice to turn over something as important as your accounting can be a tough decision.  We hope to explain some of the compelling reasons you might want to hire an outsourced accounting department.  These points can help you determine what’s best for you and your business.

  1. The most important benefit of having an outsourced accounting team has to do with cost savings.  Outsourcing your accounting department saves you the costs of a full-time employee’s salary, employee benefits, accounting software costs, upgrading computers, educating your in-house staff and more!  When you add it up all, you’ll quickly see that an outsourced accounting functon is a very affordable and convenient option.
  2. The second benefit of outsourcing your accounting is the elimination of the hassle of IT maintenance and upkeep.  If you have an internet connection and a fax machine or a scanner – that is all you need to submit your accounting work to us for processing.  You can forget about annual software updates, learning new technologies, and paying to train staff on your accounting system.
  3. A third benefit of an outsourced accounting department is NO sick days!  You eliminate all the hassles of having in-house accounting staff.  No employee benefits to worry about, no calling in sick, no need to worry about employees being inefficient or worse ineffective!
  4. Another benefit you might find surprising is increased security and safeguarding of your financial data.  The systems we use are built and maintained in the cloud and offer the most secure platform available.  Hosting your accounting in the cloud is actually a lot safer than housing it on an on-premise server.  A survey from the Ponemon Institute revealed that 55% of small business owners have experienced a breach of private data. While many small business owners are aware that data breaches hurt business, most don’t appear to be taking action.  You don’t need to worry about that because every software solution we employ uses state of the art security and privacy features that most private servers can’t even begin to match.
  5. A final benefit of using an outsourced accounting service provider is just having peace of mind about your financials.  When you use a team of experienced US based CPAs you are able to rest easy that your accounting is up to date and compliant with all of the latest standards in your industry.  Using an outsourced team of CPAs provides you with a much greater breadth and depth of knowledge at your disposal than if you were to spend the same or more on an uncredentialed in-house employee.

We hope you found this article to be useful in learning more about how outsourced accounting services can help free you up to do what you do best, and can give you peace of mind about your books.  You get to keep your eye on the big picture while highly trained and experienced professionals handle all the details.  If you’re interested in continuing the conversation with us and getting started on your custom action plan simply respond to this email or give us a call toll-free today at (757) 926-4109.

Congratulations to Jennifer Todd, now Certified in QuickBooks Online 2016

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Jennifer recently updated her Intuit QuickBooks certifications to include the latest version of Intuit’s Premier cloud-based accounting system QuickBooks Online!  Jennifer has been certified in QuickBooks desktop since version 99 and she also holds certifications in QuickBooks Point of Sale as well as Microsoft Office User Specialist in Excel and PowerPoint!  Contact Jennifer today to get a primer on QuickBooks and find out how the software can best be used to achieve your financial goals!  Interested in learning more about QuickBooks Online? Check out the free test drive here.  Learn more about QBO by visiting their website here! 

Best Practices to Lower Your Outsourced IT Risks

Mitigating the risks of IT outsourcing

Nowadays it is common for many businesses to outsource at least one or more of their IT functions.  The goal is usually to save money and work more efficiently and effectively.  Yet if you don’t mitigate the risks involved, you could end up both losing out financially and failing to get the most from the outsourcing arrangement.

Here we suggest a few best practices to consider when outsourcing your IT functions:

  1. Consult your internal users – Ask for candid feedback about whether your organization’s technology is meeting your employees’ needs. What help from an outside provider do they really need?
  2. Consult with other organizations – Contact other organizations that have outsourced their IT functions.  Much can be learned by talking with trusted colleagues about their outsourcing experience.  Ask them how outsourcing actually helped — or hurt — them.
  3. Weigh opportunities vs. risks – Identify opportunities beyond cost savings. For example, outsourcing non-core IT functions — such as management of HR systems and supply-chain technology — could free up internal resources for projects you’ve put on the back burner but that have strategic importance. Keep in mind though, outsourcing too many non-core processes, or doing so improperly, could leave you with too little control of these functions and expose you to inefficiency or compliance risks.
  4. Refine your relationship expertise – Many business owners believe that, once they sign the deal, the contract will take care of itself.  As a result, they don’t adequately manage the relationship and often find themselves in conflict with the vendor or stuck with unsatisfactory results.  Clarify your expectations at the onset of the relationship and revisit them often by keeping the lines of communication open between you and your outsourced provider.  You may need to develop new skills, processes and metrics to ensure the service provider deliver the results expected.

In today’s global economy, IT outsourcing has become — in many industries — a competitive necessity.  Whether your company is large or small, we can help you assess, negotiate and maximize the bottom-line benefits of an outsourcing arrangement. Give us a call to let us know what we can do for you.

© 2015

Customer Service Best Practices

In many industries, quality customer service has become a quaint, distant memory.  Customers are often reduced to selecting the provider that costs them the least. But the golden rule has not been repealed.  Pleasing customers can create a powerful competitive advantage – and a few simple changes may increase your bottom line.

To distinguish your organization from the rest, we recommend establishing the following best practices for your customer service policies and procedures:

  1. Communicate with your customers. Return calls, emails, and social media contacts promptly, send updates about matters in progress, and explain delays as soon as you can.
  2. Make life easy. Offer discounts at the point of sale rather than giving out coupons or making buyers apply for mail-in rebates. If you use an automated phone system, provide a simple method for reaching a live person.
  3. Apologize early and whenever necessary. If you’re even partly wrong, apologize and proceed to a resolution. Train your employees to do the same and reward them for positive outcomes.
  4. Put customers first. Let your customers know you’re there for them and that you regard them as more than “dollar signs.” Listen to their concerns and then do whatever you can to address them promptly. If a customer is unhappy with a purchase of your product or service, fix it, replace it, or refund the payment in full.  At worst, the loss won’t be compounded by damage to your reputation.  At best, the money will come back multiplied by repeat business and referrals.

Quality service is a powerful marketing tool that’s surprisingly easy to implement. Simply imagine how you would want to be treated and provide that treatment to your customers. As customer satisfaction increases, so too will your profitability.

The Tax Impact of Buying A Business

Don’t underestimate the tax impact of an acquisition

If your company wants to acquire another business, you’ll need to anticipate many challenges. To improve your odds of success, it’s important to devote resources to intensive tax planning before — and after — your deal closes.

During deal negotiations, you and the seller will likely discuss issues such as to what extent each party can deduct their transaction costs and how much in local, state and federal tax obligations the parties will owe upon signing the deal. Often, deal structures (such as asset sales) that typically benefit buyers have negative tax consequences for sellers and vice versa.

Tax management during integration is also important. It can help your company capture synergies more quickly and efficiently. You may, for example, have based your purchase price on the assumption that you’ll achieve a certain percentage of cost reductions via postmerger synergies. But if your tax projections are flawed or you fail to follow through on earlier tax assumptions, you may not realize such synergies.

Negative tax consequences of an acquisition can haunt a company for years. Let us help you avoid them and identify tax benefits that can improve the acquisition as a whole. Please contact us for more information.

4 Effective Cash Management Techniques

Prudent business owners take measures to smooth out cash fluctuations that are a normal part of the business cycle.  Follow these four practices to moderate the ebb and flow of your cash:

  1. Analyze cash every month: Analyzing cash doesn’t have to be complicated.  Start by writing down your cash balance at the beginning of the month, then add all the cash that came in during the month from all sources.  Finally subtract all of the outgoing cash and calculate the ending cash balance.   After a few months, review the ending cash balances of each month and compare them.  If your cash balance is decreasing month after month, then your business has a negative cash flow (not good).  If the ending balance is increasing, then your cash flow is positive (the goal).  You should keep record of the cash balances over the course of a and run a trend analysis to determine the causes ups and downs.   If you are funding your business with loans, be sure to leave this money out of the analysis so you can gauge the true cash flow from operations.
  2.  Monitor your customer balances:   It is easy to fall short in the management of your accounts receivable (money owed to you from customers).  Put in to place adequate pre-qualifying processes before extending credit to customers.  Always use a software system to track who owes you money so that you can follow up with customers and send invoices and statements.  A last resort would be to factor or sell your receivables to a factoring company to maintain a predictable cash flow.   Just keep in mind that factoring isn’t free!  There are several new companies out there that will fund your receivables for a fee – check out Fundbox amd Blue Vine.
  3. Slow down your cash disbursements:  Prudent cash flow management dictates that you retain cash as long as possible.  This doesn’t mean you become a deadbeat customer to your own vendors – you still have to pay on time, just not too early and not late.  If your vendor offers any sort of early payment discount like a 2% 10, net 30 you will always want to take advantage of the cost savings.  You can also try negotiating extended payment times with your vendors.   The longer the cash stays in your bank account, the better.  Try keeping the majority of your idle cash in an interest bearing account when possible as long as the monthly and transaction fees are not too steep or eating up any interest you might be earning.
  4. Time large expenses:  Get in to the habit of setting aside small amounts to fund large expected expenditures such as business license renewals and quarterly estimated tax payments.  You may also want to start an equipment fund, to save up for large capital assets that will eventually need to be replaced.  Being prepared for large purchases with a fully funded savings account will give you peace of mind all year long.  It is best to put the money in a separate account that you don’t have regular  or easy access to, that way you are not tempted to “raid’ it for splurge purchases.

Give these cash management techniques a try and give us some feedback on how you made out.  Do you have other ideas that work for you?  Share them in the comments below.

A Smart Start to Your Business

Considering establishing your own company?  Here are a few tips to help your new venture get off to a smart start.

  • Choose the right form for your business.
    • Sole proprietorship, partnership, corporation, or limited liability company: your decision will depend on questions such as how many owners the business will have, who will be in control of decision-making, and what liability issues exist.
  • Set up a good recordkeeping system.
    • A business launch means paperwork, including establishing a business bank account, filing for an employer identification number, acquiring a local occupational license, and maybe registering a fictitious name.
    • In addition to these permanent records, you’ll also need to track pre-launch costs and ongoing expenses for tax write-offs.
  • Understand tax reporting requirements.
    • Depending on how you structure your business, you may need to file a separate tax return each year.
    • You might also need to make quarterly estimated tax payments.
    • Other tax returns include federal and state forms for reporting sales and employment taxes.

Please call for advice before you open the doors of your new business. We’ll work with your legal, banking, and other advisors to help you establish a good foundation for future success.

Thinking of Crowdfunding? Talk to a Professional First.

Considering Crowdfunding as a Means for Raising Funds? 

Have you ever thought about raising funds for your small business using online crowdfunding tools?  Crowdfunding gives entrepreneurs the ability to raise funds by attracting relatively small amounts of money from large numbers of people.  Through a provision in the Jumpstart Our Business Startups Act (JOBS Act), crowdfunding creates a means for allowing startups and small businesses to raise capital through securities offerings using the internet.   The JOBS Act permits internet-based platforms, like kickstarter, rockethub and indiegogo, to facilitate the offer and sale of securities.  In coming up with the rules, the SEC attempted to create protections for investors while enabling businesses to use crowdfunding effectively.  Click on the following link to read the SEC press release and to get a rundown of the new JOBS Act rules pertaining to crowdfunding  SEC Press Release 2015-49 .

The CPAs at Todd & Co. CPA Group understand the tax implications of raising funds through crowdfunding.  We also understand the Securities and Exchange Commission’s rules, which help small businesses gain access to capital and take advantage of more investment choices.  We can help you understand this innovative means for raising capital.  Contact us at (757) 926-4109 to find out more.

Lending to Family Members

Ins and Outs of Family Hand-Outs

Ins and Outs of Family Hand-Outs

A Little Info on the Tax Issues Associated with Loans to and from Family Members –

Tax problems can arise when you first lend money to a family member or when you begin receiving payments or if you’re not repaid.  The tax issues usually involve three elements – imputed income on below-market rate loans, the imposition of gift tax on the giver, or the lack of a bad debt deduction in the case of default.

1) Imputed income is revenue presumed earned but neither recognized nor received by the alleged recipient. The IRS may impute interest on a loan at the “applicable federal rate” (AFR) when a lower rate (or no interest) is charged. The agency then assesses tax on the excess of the imputed interest over the amount required by the terms of the loan.  In recent years, the AFR has been fairly low, not even reaching 3% at the highest.  However, even though the AFR is still relatively low, lenders are required to charge at least the lowest rate as specified by the AFR.  Here is a link to the index for AFR rates.

* The Gift Tax issue arises when the IRS imputes phantom interest because it also creates phantom taxable gifts.  “Gifting” occurs because the imputed interest is treated as though the borrower actually paid the interest it to the lender and then the lender returned the same amount to the borrower as a gift.  Since the lender “constructively received” the additional interest, he or she owes income tax on it.  Since the lender then presumably gave the interest back to the borrower, he or she also owes gift tax on it, unless an exclusion or credit applies.  Gift tax only applies to annual gifts of $14,000 or more as of the time we posted this entry 6-5-15.

* There are limits on Bad Debt deductions for money lent to a related party.   Normally, a loan that goes bad is deductible, either against ordinary income (if made for a business purpose) or as a short-term capital loss. However, when the defaulting party is related, the IRS may demand clear and convincing evidence that the original loan was not actually a gift.  Once a loan is recharacterized as a gift, no bad debt deduction will be allowed if the loan isn’t repaid, and the lender also may owe gift tax on the principal unless an exclusion or credit applies.  Protect yourself by making sure all loans are structured as an arm’s length transaction and that all the terms are reasonable, and written, and signed by all parties.  Having the document notarized by an independent third party is also a good idea.

Interest need not be charged and will not be imputed on a family loan of $10,000 or less unless the loan directly relates to purchasing or carrying income-producing assets.  Without a written document imposing interest at the applicable federal rate (AFR) or higher, the loan probably will be considered a gift and thus will not be deductible if not repaid.

Interest will be imputed on a family loan over $10,000 if the stated rate is below the AFR. However, unless the principal exceeds $100,000, imputed interest will be limited to the borrower’s annual net investment income, and no interest will be imputed if that income is $1,000 or less.

Obviously, lending to relatives can create unintended tax consequences. You should always have a written loan agreement on family loans to document the transaction for the IRS. Please contact us for guidance before you make any family loans.

New 2014 Rules Affect Repairs, Maintenance & Supplies Expenses

The IRS issued “final” rules known as the “repair regulations” this year.  They will effect your 2014 tax return if you have any depreciable assets or if you regularly purchase materials & supplies in your line of business. The rules clarify which costs should be capitalized and which can be expensed when your business buys, makes, maintains, or improves certain fixed assets such as buildings, equipment, vehicles and machinery.

Here are three ways your business can be affected:

1. Accounting policies. You’ll need to update your accounting policies to reflect how you treat expenses for repairs, materials, and supplies, and the acquisition of assets. Having a written policy in place will help keep you in compliance with the rules.  Your accounting policy must be in effect as of January 1 of each year.  Contact us for a template to help you with tax compliant wording. 

2. Elections. The final regulations include six elections. You’ll want to review them to learn if they are beneficial to you. For example, by choosing the “de minimis safe harbor election,” you can opt to expense the cost of property below a specific dollar amount, typically $500 but your industry standard could dictate more.

3. Form 3115. You may want to file Form 3115, Application for Change in Accounting Method, with your 2014 federal income tax return to revise certain decisions you made regarding the treatment of tangible property in prior years. Alternatively, under simplified rules recently issued by the IRS, certain small businesses have the option of applying the repair regulations to 2014 and future years without filing Form 3115.

The final repair regulations will affect every business with fixed assets on the books as well as individuals with rental properties.   This law is very complex and requires a lot of paperwork to be in compliance.  Our tax preparers understand the ins and outs of the new repair regulations.  Please contact us to schedule an appointment so we can help you determine how to apply the rules.

QuickBooks Tutorial – Setting Up Inventory

If you are using QuickBooks Desktop software to invoice customers or track inventory, you must have a well thought out and properly set up Item List.  Accurate, thorough item records inform your customers and help you track inventory levels correctly.

Whether you’re selling services, one-of-a-kind items or stocking dozens of the same kinds of products, you need to create records for each. When it comes time to create invoices or sales receipts, your careful work defining each type of item will:

  • Ensure that your customers receive correct descriptions and pricing,
  • Provide the information you must know about your inventory levels, and,
  • Help you make smart decisions about reordering.

You’ll start the set-up process by first making sure that your QuickBooks file is set up to track inventory.

  • Open the Edit menu and select Preferences, then Items & Inventory.
  • Click the Company Preferences tab and click in the box in front of Inventory and purchase orders are activated if there isn’t a check in the box already. Here, too, you can ask that QuickBooks warn you when there isn’t enough inventory to sell.
  • Click OK when you’re finished.
How to set preferences

Figure 1: You need to be sure that QuickBooks knows you’ll be tracking inventory before you start making sales.

To create your first item:

  • Open the Lists menu and select Item List.
  • Click the down arrow next to Item in the lower left corner of the window that opens and select New.
  • The New Item window opens.

Warning: You must be very precise when you’re creating item records in order to avoid confusing your customers and creating problems with your accounting down the road. Please call us if you want us to walk you through the first few items.

QuickBooks should display the list of options below TYPE. Since you’re going to be tracking inventory that you buy and sell, select Inventory Part. Enter a name and/or item number in the next field. This is not the text that will appear on transactions; it’s simply for you to be able to recognize each item in your own bookkeeping.

How to create an item

Figure 2: Let us work with you if you have any doubts about the data that needs to be entered in the New Item window. It must be 100 percent accurate.

In the example above, the box next to Subitem of has a check mark in it because “Light Pine” is only one of the cabinet types you sell (you can check this box and select <Add New> if you want to create a new “parent” item on the fly).  Leave the next field blank if your item doesn’t have a Part Number, and disregard UNIT OF MEASURE unless you’re using QuickBooks Premier or above.

Fill in the PURCHASE INFORMATION and SALES INFORMATION fields (or select from the lists of options). Keep in mind that the descriptive text you enter here will appear on transaction forms, though customers will never see what you’ve actually paid for items, of course (your Cost, as opposed to the Sales Price).  Also, when using items on an invoice, you always have the option to change the description to exactly what you want your customers to see.

QuickBooks should have automatically selected the COGS Account (Cost of Goods Sold), but you’ll need to specify an Income Account. Please ask us if you’re not sure, as this is a critical designation. The Preferred Vendor and Tax Code fields will display lists if you’ve already set these up.

QuickBooks should have pre-selected your Asset Account which is the “Inventory” account set up to “hold” in stock items available for sale. If you want to be alerted when your inventory level for this item has fallen to a specific number (Min) so you can reorder up to the point you specify in the Max field, enter those numbers there (the Inventory to Reorder option must be turned on in Edit | Preferences | Reminders).

If you already have this item in stock, enter the number under On Hand. QuickBooks will automatically calculate Average Cost of inventory items when the items are used on vendor bills, purchase orders (P.O.s) and checks.  Your inventory items will not be correct if you do not consistently use your items when ordering inventory.  A common error we often see customers make is to post payments for inventory in QuickBooks by simply using the Cost of Goods Sold account or a “Purchases” expense account instead of using the “Items” tab on the bill, credit card charge or check.  When this happens, your quantities get depleted upon sale, but are never increased when purchased.  The moral here is ALWAYS use the items tab on an inventory purchase transaction.

Click OK when you’ve completed all of the fields. This item will now appear in your Item List, and will be available to use in transactions. When you want to create, edit, delete, etc. any of your items, simply open the same menu you opened in the first step here (Lists | Item List | Item).

The Item Menu

Figure 3: The Item menu, found in the lower left corner of the Item List.

Because Inventory Part records are so critical to accurate sales and purchase transactions you must use exceptional care in building them.  Give us a call for a two-hour in-person tutorial.  We can work remotely via teleconference and face-to-face for locals.

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