Wednesday, December 2, 2009

The IRS and the ARRA

Here's a link to the IRS publication explaining provisions of the American Recovery and Reinvestment Act which explains the act's importance to individuals and business taxpayers. I've copied the front page of the publication below for readers to review for items of possible interest. Expansion of Sec 179 allowance for the deduction of purchases of new and used equipment is one item worth reviewing. Extending the roll back period for losses is another. If you visit the linked site and click on captions of interest you may learn more. Feel free to give us a call for guidance in areas you think might apply to tour 2002 tax return.

The American Recovery and Reinvestment Act of 2009: Information Center

Updated Nov. 6, 2009: The newly-enacted Worker, Homeownership And Business Assistance Act Of 2009 extends and expands the first-time homebuyer credit.

InformaciĆ³n en EspaƱol

Information for Individuals
Some of the provisions of the law primarily affect individuals.

Making Work Pay Tax Credit. This tax credit means more take-home pay for many Americans. To make sure enough tax is withheld from their pay, taxpayers can use the IRS withholding calculator. See Making Work Pay for more.

First-Time Homebuyer Credit Expands. Homebuyers who purchase in 2009 can get a credit of up to $8,000 with no payback requirement. New legislation extends and expands this credit.

Money Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.

Education benefits. The new American opportunity credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.

Enhanced Credits for Tax Years 2009, 2010. Find details on the earned income tax credit and the additional child tax credit.

Increased Transportation Subsidy. Employer-provided benefits for transit and parking are up in 2009.

Up to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals should check their tax withholding.

$250 for Social Security Recipients, Veterans and Railroad Retirees. The Economic Recovery Payment will be paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board.

Energy Efficiency and Renewable Energy Incentives. See what individuals can do to reap tax rewards.

Health Coverage Tax Credit. The credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.
Information for Businesses
Some of the provisions of the law primarily affect businesses.

Making Work Pay Tax Credit. Businesses should use the new withholding rates for their employees. For pension plan administrators, new optional withholding procedures are available to supplement the February withholding tables.

Work Opportunity tax credit. This newly-expanded credit adds returning veterans and "disconnected youth" to the list of new hires covered by the credit that businesses may claim. Businesses have until Oct. 17 to request certification for the tax credit for some new hires.

COBRA: Health Insurance Continuation Subsidy. The IRS has extensive guidance for employers, including an updated Form 941, as well as information for qualifying individuals.

Energy Efficiency and Renewable Energy Incentives. See what businesses can do to reap tax rewards.

Net Operating Loss Carryback. Small businesses can offset losses by getting refunds on taxes paid up to five years ago. Information on the carryback, an expanded section 179 deduction and other business-related provisions, is now available.

Municipal Bond Programs. There are new ways to finance school construction, energy and other public projects.
2008 and 2009 Tax Returns
The law could affect some 2008 tax returns due in 2009. However, most of the changes in ARRA will affect 2009 individual tax returns filed next year and due April 15, 2010.

Friday, November 13, 2009

Way to go, Kids

Local Community College Beats Yale
Elgin Community College takes down Ivy League school in mock trial competition
Updated 7:08 PM CST, Tue, Nov 10, 2009

They might object to a David and Goliath comparison but, then again, as their twitter message said yesterday ...


Elgin Community College’s Mock Trial team didn’t win the Harvard Crimson Classic this year, but they did trounce a practiced Ivy League competitor -- no mean feat, considering Elgin completed its first full mock trial season just last year.

"What allowed the students to [beat Yale] was dedication," said coach Ron Kowalczyk. " That's the bottom line. Hard work."

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Sassy or Trashy: Miniskirts
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Illinois' Fugliest Political Web Sites
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Zoo Babies
ECC was one of 11 teams participating in the annual two-day event, which usually pits Ivy League types against each other in a faux courtroom setting.

The team from ECC wasn’t even allowed into the tourney until a regular team dropped out and they got a call to fill in.

So ECC made the best of it during their weekend run, beating Villanova in the first round, losing to Brown in the second round, beating Yale in the third round and losing to Princeton in the finals.

Brown, which barely beat ECC in the second round, went on to take the tournament.

For the coach who put together the Elgin team, the victory was a shocker.

"I would say we were stunned. You never know in the end how the judging is going to come down,” Kowalczyk said.

Kowalczyk has good reason to be amazed. Two years ago he didn’t even have a team – an interested student asked him to create one in 2007 – and he wasn’t even on Harvard’s radar.

But that didn’t stop him from writing letter upon letter until the stodgy university put his team on the waiting list.

And once that happened, Kowalczyk – and students Anastasia Toufexis, Jennifer Rieger, Rebecca Day, Jessica Bianchi, Elizabeth Martzel, Eleni Bala, Robert Dalin, Rita Russo and Mary Burke – shocked the upper crust with their come-from-nowhere performance.

"I was beaming thoughout this whole period and I still have not gotten my face back from the beam!" said Elgin president David Sam.

ECC's team celebrated with a nice dinner in Boston.

Overall, they had a better record than Boston College's "A" team, Wake Forest, Boston University, Dartmouth's "A" and "B" teams, and Wellesley's A&B teams. ECC also tied Penn State, the Herald notes.

The ECC squad has a few more tournaments before heading to the American Mock Trial Association regionals in February.

As for Yale, a spokesperson said ECC's victory was "impressive."

"I'm sure their reputation will precede them next time."

Friday, October 30, 2009


I'm passing along a recent email from the folks at SCORE. That organization provides great mentoring to entrepeneurs and a calendar of events and instruction you may wish to monitor. Here's a link:

Borrowing from Friends, Family Requires Wise Management

Friends and family are an invaluable source of support for the aspiring small business owner. And often, they're an invaluable source of financial assistance as well.

In fact, more small businesses rely on loans from friends and family than any other funding source. Familiarity with the person and his/her business goals, the investment opportunity, and the ability to monitor the venture's progress are among the major reasons why friends and family members willingly contribute to a start-up or expansion.

However, a ready source of cash is not without its potential pitfalls. Business loans from family and friends also can be a disaster if they are not done right. Unstructured or loosely structured financing and payback terms can haunt both sides later on. Research shows that 14 percent of business loans from family and friends go into default, compared to about one percent for bank loans.

To increase the odds of success, approach family and friends with a detailed loan proposal, including financials from your business, just as you would a bank or venture capitalist. Be frank about the risks. If things go badly, they could lose all or some of their money. Consider the consequences of a soured business deal to your relationships.

Pick a financing structure that works best for your business and make certain everyone understands it. Specifically, be clear on whether the deal involves an ownership stake in your business, or whether it is a simple debt you plan to repay. And be clear about repayment terms.

To legally seal the deal, use a document such as a "Promissory Note." Putting the terms of your borrowing agreement into proper legal form is crucial. You can find the downloadable legal documents you need, including many different Promissory Note variations, at Self-help legal publisher Nolo also offers loan forms and related information at

Another helpful resource is Virgin Money at, previously known as before it was acquired by well-known entrepreneur Richard Branson. Virgin Money helps small business owners avoid the problems that can arise with loans from friends and family by providing loan administration, recordkeeping, payment processing and structural support. The service emphasizes flexibility to meet the needs and concerns of both borrowers and lenders, from terms and interest rates to repayment strategies.

To learn more about financial issues facing your small business, contact SCORE "Counselors to America's Small Business."
The Fox Valley SCORE Chapter offers free, confidential counseling to small businesses, including start­ups. Affiliated with the U.S. Small Business Administration, SCORE has counselors available in nine locations in the counties and suburbs west of Chicago.

We look forward to helping you work out financing possibilities for your business.


The Counselors at SCORE

Friday, September 18, 2009

Frist-Time Homebuyer Credit

Ten Facts about the First-Time Homebuyer Credit

Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit.

Here are ten things the IRS wants you to know about the first-time homebuyer credit:

1. To be considered a first-time homebuyer, you and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
2. You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.
3. To qualify for the credit, the completed purchase must occur before December 1, 2009.
4. The home must be located in the United States.
5. The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
6. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.
7. The credit is fully refundable. A homebuyer with no taxable income, who qualifies for the credit, may file for the sole purpose of claiming the credit and receive a refund. The credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
8. The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.
9. Taxpayers can claim the credit for a qualified 2009 purchase on either their 2008 or 2009 tax return. For those who have filed a 2008 return, a Form 1040X, Amended U.S. Individual Income Tax Return can be filed in order to get a refund in 2009.
10. The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.

Qualified taxpayers who have been considering a main home purchase may find extra incentive from this tax credit to buy now so they can complete the purchase before the December 1 deadline.
Links: YouTube video: English-Spanish

Wednesday, August 26, 2009

How are you financing?

In addition to the article. I'm copying readers comments as well.

My experience is that small business creditors including vendors, credit card companies, and line of credit lenders, are all reducing availability, at a time when internal cash flow is deteriorating.

Commentor 2 refers to his "preselling" strategy, which is a good idea but may be an option limited to E Commerce. Most small business owners have probably already evaluated the possibility of internet sales, but now would be a good time to re-evaluate that model.

I work with sub-contractors who are already cash strapped, paying down vendor balances from 60 to 30 days, and meeting their payrolls. They also need to try to arrange prepayments, asking their best customers to pay in advance for material purchases on any job which will extend beyond their vendors terms.

Service providers have the advantage of not having to invest in materials or carry substantial receivables, but they will have to carefully review their expenses and redouble their sales efforts.

From the New York Times, Your the Boss Column

August 25, 2009, 9:00 am
Has the Recession Changed How Small Businesses Are Financed?
By Scott A. Shane
Recently, many people have been wondering if the poor economy has changed how small businesses are financed. Discover Card Financial Services has identified one interesting change.

The company looked at how small businesses were being financed before the recession and how they are being financed now. Ryan Scully, director of Discover’s business credit card, explained that the sources of financing for small businesses didn’t really change between June 2007 and June 2009. In both periods, Discover found, the same percentage of business owners used personal savings to finance their new businesses and similar percentages used credit cards and bank loans.

There was a change in whether or not founders of small businesses needed external financing to start their businesses. Mr. Scully explained that in June 2009 only a third of business owners needed to obtain financial capital to start their companies, substantially fewer than in June 2007.

While it’s possible that Discover’s findings show that entrepreneurs who needed financing couldn’t get started, the company’s analysis fits what many academics believe happens when credit gets tight — many owners change their business models so that they can rely less on external financing. This allows them to persist in their entrepreneurial efforts despite the tighter credit conditions.

I’m wondering if your experience jibes with this pattern, or if you’ve experienced something different. Since the recession began, have you changed the way you finance your new business? If so, what are you doing differently?

Scott A. Shane is a professor of entrepreneurial studies at Case Western.

Look, eveyone is paying later. Which mean I have to pay more for what I borrow because of the lag time. Also, I have to make this ups by receivble financing which means I make less profit and in turn have to either take my prices up to capture some of this lossor or eat it in hopes that my business won’t drop off more. My strategy is to tread water for now, hope I can capture some of my competitors business and take my price up as the competiton drops in about a year or two..

— Marty

2. August 25, 2009
11:47 am

When I started a similar business in 1992, I did it solely with credit cards and was rewarded with obscenely high credit limits. With this avenue closed this time around, I am pre-selling (allow 7 days for delivery). I deposit the clients funds, and with this capital I make my purchases.

Green Planet Meatz
Denville, NJ

— Greg Landry

3. August 25, 2009
12:11 pm

I started my business in 2006, and at the time, I had no need of external financing.

With the recession, my business is down and I chewed through my savings faster than I would have liked. Now that I could really use external financing, I find it’s harder to come by. Companies that were begging me to take out loans are now not interested.

Like most entrepreneurs, I’m trying to be creative to keep the business alive. My husband and I have seriously cut our living expenses and to get through, I’ve also been relying on personal credit as my rating has always been stellar.

But here’s the rub… With new credit laws in effect, I find that credit companies are still finding ways to make money. I enjoyed low apr’s and no additional fees because of my rating. To compensate, my credit cards are now requiring higher minimum payments at a time when I am trying to keep monthly expenses lean. Before, credit companies punished bad behavior, and rewarded good behavior. Now they’re looking to make up for losses from everyone.

The bottom line, I will do what I need to in order to weather the storm. But at a time when small businesses could use a little help to get through, there’s none out there.


— Maria

4. August 25, 2009
12:23 pm

I looked into a franchise and after serious thought, recognized it was a loser. The up front money, forty grand, would eventually be paid back, but I cannot tolerate debt.

I just read about a woman who lost her job and savings at Enron, but found a niche, and it only cost her a grand to start it up. She holds magnificent tea parties for little girls’ birthdays and all it took was some cute furniture she found at yard sales and lots of old linen. She managed to clear $25K after her third year.

How about some tea and sympathy? Tea Parties for Non-Tea Potty Little Black Bag Handlers who want to share stories of deprivation, not imagine them.

— Abby Tucson, AZ

5. August 25, 2009
5:48 pm

All business owners,and in particular those start up will generally have more difficulty because all though security requirents have increases, finacial institutions will ve looking repayment through proven profit generation. This is demonstrated through ome’s net worth statement or work experience. Look towards financial institutions looking past the working relationship for even loan renewals.

— Terry jackson

6. August 26, 2009
10:23 am

The tightening of credit will push would be entrepreneurs to more carfully study gaps in the market and real opportunities. When monehy was looser, one could have explored only ideas or developed a me-too business.

Hopefully the focus on better business models will create a new generation of stronger small businesses.

Domenick Celentano
Silberman College of Business
Fairleigh Dickinson University, Madison, NJ

— Domenick Celentano

Tuesday, July 21, 2009

The Business Plan

The website Articlebase provided this interesting guidance on preparing a business plan. While the writer refers to a bookkeeping business, her ideas are pretty much transferrable to other business models, and the simplicity of her approach will not intimidate the new business person.

Admittedly, a bookkeeping business does not usually have to present the plan to potential investors or lenders, and if your business involves manufacturing costs, or a distribution network, or the roll out of a new product, you will have to provide details for those aspects of the plan, and flesh out the plan with projections, analysis, and a roster of key persons. However, even for those requiring a more rigorously developed plan, I think the "one page" approach is a good place to start, and then to be developed.

Here's a link for advise on developing the kind of business plan you may eventually need to take to the bank or prospective investors, but please constuct a one page plan first. I especially like the authors advice regarding the "vision statement". At this point you should not be toning down your optimism for fear of skeptical reviewers.

PS One other thing. I like to recall the words of one self starter. I don't try to figure out what I can do, or what I like to do; I think of what I would pay someone to do.

The One-page Business Plan for Your Bookkeeping Service

Author: Linda Hunt

Sometimes the thought of sitting down to draft a business plan sends me running for the hills, even though I preach the importance of planning to all of my clients! Small business advice: Without planning, your bookkeeping business goes nowhere fast. When you fail to plan, you plan to fail

What I have come to learn as a business coach is that business plans don’t have to be long to be good. In fact, a single page can contain all the essential elements you need to show where you’re taking your bookkeeping business and how you’re going to get there. The most important reason to have a business plan is to clarify your thinking about where you are taking your business. When it’s in writing, others will know and understand your vision and your plan

Here are a few characteristics of an effective one-page business plan for your bookkeeping business.

• Simplicity. A one-page plan takes a complex subject and makes it simple

• Focus. It focuses on what’s important. There is no room for fluff or filler.

• Versatility. It is a communication tool for employees, prospective employees, partners, shareholders, investors and bankers.

• Consistency. It sends the same message to every person who receives it, unlike a verbal presentation, which may change every time you speak.

• Flexibility. It is easy to change and update.

The Five Elements of the One-Page Business Plan

1. The Vision Statement – What are you building
This is the place where you describe your vision —your way. Most business coaches will tell you that vision statements should be expansive and idealistic. They should stimulate thinking and communicate passion, while painting a detailed picture of the bookkeeping business you want. The key to capturing your vision is to refrain from restricting the flow of thoughts.

2. The Mission Statement – Why does this business exist
The mission statement describes the purpose for which your product, service or business exists. Great mission statements are short and memorable. They communicate in just a few words the company’s focus and what is being provided to customers. They answer the question, “Why will customers buy this product or service?” The mission statement should also reflect the owner’s passion and commitment. When the business satisfies an owner’s passion for creativity, independence or the need to serve, there is substance and staying power in the mission.

3. The Objectives – What results will you measure
Objectives clarify what you are trying to accomplish in specific, measurable goals. Some of the best small business advice that I can give you is this: for an objective to be effective, it needs to be a well-defined target with quantifiable, measurable elements. There are many types of objectives, and your plan should include a variety of them. For many businesses the two most important categories will be the financial and marketing objectives. It is important, however, to tailor your objectives to cover the full scope of your bookkeeping business, focusing on the goals that are most critical to your success

4. The Strategies – How will you grow your business
Strategies set the direction, philosophy, values, and methodology for building and managing your company. Strategies also establish guidelines for evaluating important business decisions. In most industries there are four to six core strategies that successful businesses follow. These core strategies are easy to understand, remain relatively constant over time, are used by market leaders and result in profitable growth. Here are two examples of a core strategy: “Price isn’t everything,” and “Attract the very best employees and give them a stake in the business.” What are your strategies

5. The Plans – What is the work to be donePlans are the specific actions the business must implement to achieve the objectives. Plan or action items should contribute to the growth of your bookkeeping business. Each plan or action item is, in effect, a project. Plans should be action-oriented, list specific tasks and have definitive deadlines or due dates

Once your plan is in writing, it is now time to put that same plan into action. Putting the plan into action is the most important step because the actions deliver the results you wanted when you started this process. For most entrepreneurs, this is easy — you are already action-oriented!

Here is some business advice, as well as a few suggestions, to help you put (and keep) your bookkeeping business plan in action
• Keep the plan with you.
• Use it as a decision-making tool.
• Update it with new thoughts.
• Share it with people you trust and whose opinions you value.
• Measure your progress at least quarterly.
• Prepare a budget to match the plan.

Thursday, July 2, 2009

LLCs and S Corps

Folks have been talking to us about LLC's (limited liability companies)as an alternative to the more familiar business organizations, such as partnerships and either S or C corporations. Since the state charges for registering an LLC are roughly double what they would be for the other forms of organization, I tend to question the perceived advantages to our clients. I'm attaching an article which provides a comparison of advantages of the business forms.

Most importantly, "members" (shareholders) of an LLC can be other LLC's, corporations, partnerships or individuals; the number of members is not limited by law, and alien non-residency status is not a bar to membership. To me it appears the best opportunity to benefit from the LLC business form is for rental real estate owners who can set up each property as a separate LLC, limiting liability arising from any one property to that property only. The state of Illinois allows registration of Series LLC's, whereby a parent LLC and several subsidiary LLC's (eg separate properties)can be set up with one registration.

Tax advantages are hard to identify, since the Internal Revenue Service has not treated LLC's as a distinct business form, and LLC's have the option of filing federal returns either as corporations or partnerships.

S Corp. Notes (abstracted from My Corporations Weblog site)

Let’s First Start off with Explaining What an S-Corporation is….An S-Corporation begins its existence as a general, for-profit corporation upon the filing of Articles of Incorporation at the appropriate state office. Once formed, a general for-profit corporation that has not requested “S-Corporation Status” with the IRS will be required to pay income tax on taxable income generated by the corporation. In addition, any dividends distributed to shareholders may be subject to taxation as dividend income to that shareholder as well (hence the problem of “double taxation” that can occur in a ‘Non-S-Corporation’). However, after the corporation has been formed, it may elect “S-Corporation Status” by timely submitting IRS form 2553 to the Internal Revenue Service. Certain states require that your corporation file state-specific forms to qualify for S-Corporation status in that state for state taxation purposes. In addition, S-Corporation status is not available for purposes of state tax liability in certain states. Please contact your state’s taxing authority for further information. Once this filing is complete, the S-Corporation is taxed in a manner similar to a sole proprietorship or partnership, rather than as a separate entity. Thus, the income is “passed-through” to the shareholders for purposes of computing tax liability. Therefore, each shareholder’s individual tax return will report the income or loss generated by the S Corp.

Who typically elects S-Corporation status? Most entrepreneurs prefer the S-Corporation structure for the following reasons: • The S-Corporation combines many of the advantages of the sole proprietorship, the partnership, the corporation, and the LLC into one entity. • Unlike sole proprietors and partners in a partnership, shareholders of an S-Corporation are afforded the same level of limited liability and personal asset protection as are the shareholders of a general, for-profit corporation. • In an S-Corporation, shareholders avoid the “double-taxation” common to shareholders of non-S-Corporations because all income or loss in an S-Corporation is reported only one time on the personal income tax returns of the S-Corporation’s shareholders. Where a corporation claims income from a passive investment (e.g. from real estate owned) for three consecutive years that exceeds 25% of the corporation’s gross receipts, S-Corporation status may be terminated by the IRS. Most real estate investors, for example, prefer placing real property in an LLC (Limited Liability Company) rather than an S-Corporation for this very reason.

Are There any Requirements to Qualify as an S-Corporation that I should know about? To qualify for S-Corporation status, the corporation must • Be filed as a U.S. corporation. • Maintain only one class of stock. • Maintain a maximum of 100 shareholders. • Be comprised SOLELY of shareholders who are individuals, estates or certain qualified trusts, who consent in writing to the S-Corporation election. • NOT have a shareholder who is a non-resident alien. Please note that failure to observe ANY of the above requirements could revoke S-Corporation status.

That Sounds Great but what are the differences between an S Corporation and an LLC? While on the surface the S-Corporation and the Limited Liability Company (”LLC”) may seem similar, but please note the following very significant distinctions. The following are some of the differences between the two types of corporate entities: • S-Corporations are limited to 100 shareholders, while LLCs have no limit to the number of members. • S-Corporation shareholders must ALL be individuals who are U.S. citizens or permanent resident aliens. LLC members (owners) may be individuals, corporations, partnerships, many trusts, and even non-reident aliens.

Are there any Tax Advantages to forming an S-Corporation? In an S-Corporation, only earnings actually paid out to an owner as compensation for services are subject to payroll taxes. Any money left in the business for reinvestment or distributed to the shareholder as a dividend is not subject to payroll taxes…and not subject to self-employment tax. Let’s review an example: “John” operates his business as an unincorporated, sole proprietorship. John has a net income (gross income less expenses) of $60,000 during the year. During the course of the year, John withdraws $40,000 as his personal salary leaving the remaining $20,000 in the business. If John operates as a sole proprietorship, he’ll owe self-employment tax on the full $60,000 (($60,000 x 15.3% = $9,180). However, if John forms a corporation, elects S-corporation status, and withdraws the same $40,000 as compensation for his services, he would only owe self-employment taxes on the $40,000 in salary ($40,000 x 15.3% = $6,120). Thus, forming an S-Corporation would save John $3,060 in payroll/self-employment taxes.

Sunday, June 21, 2009

Couldn't wait to share this one...

Happy Father's Day.

I found this article at a site called Open Forum. The site appears to be maintained by American Express, and they provide a lot of good material. I'll be going back there.

Your Staff is the Key to Referral Success

John Jantsch April 21st, 2009 - 07:36 PM

Here’s something your customers won’t ever tell you, but you better understand - Your employees are probably treating your customers about the same way you are treating your employees. Soak that in a minute and process the impact that might have on your organization’s ability to generate referrals.
Organizations that easily generate a high number of referrals hire for referral factors and treat their people as the prime target customer. It makes sense of course, happy employees are much more likely to represent the brand in a positive manner.
In all but the most technical positions, much of what employees do on a day to day basis can be taught. It’s much harder, however, to teach someone to be trustworthy, to give or to serve, yet, as stated above, these are key traits of organizations that generate referrals. A habit of referral for any organization that has more than two or three employees then is entrusted to the actions of the entire staff.
Mike McDerment, founder of FreshBooks, an online time tracking and invoicing service located in Toronto Canada shared these thoughts on how he addresses the customer, employee relationship, “First, we try to find people for fit, shared values and a passion for excellence. That doesn’t mean we have some preconceived idea of what they look like. It’s more that they match our brand in some way. We’re not in the billing business, we’re in the service business and we like to have fun. It really makes things easy if we surround our customers with employees that like to serve and like to have fun.”
The final element of the employee as customer habit lies in the word empowerment. While the word empowerment shows up in almost every book ever written about management, it’s a term that is easy to say but not so easy to put into action.
In the 1999 book, First, Break All The Rules: What The World’s Greatest Managers Do Differently, Marcus Buckingham and Curt Coffman published findings from research conducted by the Gallup Organization involving 80,000 managers across different industries.
The primary thesis of the work was that if a company could not satisfy an employee’s basic needs first, it could never expect the employee to give stellar performance.
The research found that a productive employee’s basic needs are: knowing what is expected at work, having the equipment and support to do the work right, and answering basic questions of self-worth and self-esteem by receiving praise for good work and development as a person.
Highly referred companies place so much focus on delighting customers that employees grow to understand that the primary thing that is expected, and even measured, is attaining referrals from every customer.
When this expectation is then reinforced with tools that allow the focus to be on the outcome as much as the process, they often learn to do whatever it takes to get a positive result.
This can be one of the hardest adjustments a small business owner can be forced to make as their business grows.
Larry Ryan founded Ryan Lawn and Tree in the Kansas City area over twenty years ago. He started out on the back seat of a tractor and steadily grew the business by taking care of his customers and employees.
Today, he is the CEO of one of the largest lawn services in the Midwest with over 150 employees and he still admits, “The hardest job I have is getting out of the way and letting my people do what they need to do.”
Although Ryan may claim that empowering employees is still hard for him he has always run his business with the philosophy that every customer will be thrilled and almost no matter how illogical the demand he would try to make it right in the eyes of the customer. He will tell you that this philosophy has caused him to scratch his head in disbelief at times, but he can also recount hundreds of instances when thrilled customers have voluntarily written him notes expressing how incredible it was that their turf manager came back on their own accord to redo a patch of grass that just didn’t work out right.
He hires for personal fit and talent, his employees are 100% certain what is expected of them, and given the tools, permission, and encouragement to take matters into their own hands to achieve the ultimate objective.
As a result his business, generated primarily through referral, has grown steadily year in and year out.

Friday, June 19, 2009

Another good article from AccountantsWorld

As you may know, the founder of our company, Jose Martinez is a native of Mexico, and our firm serves a substantial Hispanic clientelle. We feel Hispanic small businessmen have considerable growth opportunities as they serve consumer markets within and outside their own communities.

Thriving on Mexican-American Market

MEXICO'S economy has suffered a series of blows in recent months -- drug violence, swine flu and the worldwide economic downturn. Yet some companies on each side of the border with the United States are prospering because they serve the expanding Mexican-American market in the United States.
A new economy is emerging that builds on the economic relationship between the countries. Exports and imports between Mexico and the United States have grown rapidly in the last decade, to close to $400 billion annually. And now trade is taking on new complexity, with operations in Southern California sometimes serving as Mexico's link to the global economy.
Viz Cattle Corporation, for example, the American division of Mexico's SuKarne Global, handles exports of Mexican beef to Japan and South Korea, through contracts made in Compton, Calif. The beef originates in SuKarne's home base in Culiacan, Sinaloa, in northwest Mexico. ''Japanese and Korean executives buy here, and they go to inspect the ranches in Mexico, too,'' said Jesus Tarriba, manager of Viz Cattle's warehouse operation in Compton, in southeast Los Angeles County. ''Last year we sold $40 million of beef to Japan and Korea and $80 million here in the U.S.''
Viz Cattle has grown rapidly, from less than $10 million in revenue five years ago to $120 million in 2008. And it is doing well this year despite the downturn, Mr. Tarriba said. Its main business is importing beef from Mexico for American restaurants and retailers. ''We specialize in smaller cuts of rib-eye and strip steaks because Mexican ranches slaughter livestock at younger ages than American ranches,'' Mr. Tarriba said. ''Restaurants like those cuts.''
Viz Cattle and other food companies on the border have also capitalized on the expanding Latino population across the United States and the changing tastes of the public.
''Chipotle was unknown here five years ago,'' Marcelo Sada, president of Source Logistics Center Corporation, said of the smoked jalapeno pepper in many Mexican foods and sauces. Mr. Sada's company, based in Montebello, Calif., imports bakery and soft drink products from Mexico.
Martinez Brands/Tequila Holdings Inc., from Pasadena, Calif., has also been a beneficiary of the growing American taste for Mexican products. ''Tequila is the fastest growing liquor variety in the United States for the last seven years,'' said Javier Martinez, president of Martinez Brands. ''And why? Because young Americans vacation in Mexico and associate tequila with fun, freedom and friendship.''
Business is good as well, for Inter-Con Security Systems, a company also based in Pasadena, that protects State Department installations in the United States and abroad as well as private businesses, hospitals and sports arenas, said Carlo Gobelli, who leads Mexican operations. ''Security is in very great demand, to guard executives and company operations and also shipments of goods,'' Mr. Gobelli said..
Inter-Con employs 6,500 people in Mexico; the company has 30,000 employees over all. ''A new concern here,'' Mr. Gobelli said, ''is that we are getting demands to protect pharmaceutical laboratories against theft of key ingredients that drug gangs can use.''
Still, some companies are seeing a more mixed picture. ICS Group Inc. of Rolling Hills Estates, in southwest Los Angeles County, represents Carlisle Companies' roofing and building products in Mexico and Latin America, said, ''Right now, American companies are holding back from investing in Mexico and are not sending their personnel because of dangers from the drug wars,'' said Mark Aston, the president of ICS.
But he credited business in the Caribbean with helping the company's annual revenues grow to an estimated $15 million this year from $300,000 in 2004. ''Mexican business people and investors are confident that when this recession ends, Mexico will do well again,'' he said.
Mr. Gobelli and other Mexican executives generally agreed that the economy's overall outlook was positive. ''The businessmen say, 'This crisis did not start here in Mexico' as have so many crises in the past. It started in the U.S. and the world,'' Mr. Gobelli said. ''Therefore, they say, when the U.S. and the world recover, Mexico will too.''
Meanwhile, the slow American economy and moves to control illegal immigration with increased border patrols and raids on domestic job sites have reduced migration from Mexico. So remittances to families in Mexico from people working in the United States have declined sharply in the last year. But the Latino population in the United States has grown as a result of children born to immigrants in recent decades. That Latino population is 45 million, according to the Pew Hispanic Center.
This has led to more online commerce with Mexico and other shifts in the marketplace, said Hector Orci, co-founder of La Agencia de Orci, an advertising agency in Los Angeles. ''For example, Liverpool department stores in Mexico sell online to people here and the goods can be delivered to their mother living in Mexico,'' Mr. Orci said.
Spanish-language media is also shifting to more use of English language commercials and programs, he said. So Mr. Orci is building a new division of his agency, called One Plus Two, for the population that speaks English but enjoys Spanish language programming like telenovelas from Mexico.
''Online use is very high among Latinos, maybe 20 million people using broadband Internet,'' said Michele Ruiz, a former television anchorwoman who started the Saber Hacer (to know, to do) Web site in 2007. The site offers advice to Latinos on such subjects as parenting, personal finance, health and medicine and college preparation.
Ms. Ruiz said she had raised $700,000 to start the Web site and investors have now put in ''several million more.'' The site has close to 200,000 visitors, Ms. Ruiz said, and she is looking to private equity funds and other investors to raise an additional $5 million.
She wants to expand the Web site's reach and content, which includes presentations in English or Spanish on the importance of annual mammograms, on how to write resumes and apply for positions and how to talk to your doctor or your children about sex. ''We understand the culture and how people think,'' she said.

Monday, June 8, 2009

Tips and the IRS

Of particular interest may be the italicized section, the second half of the article below:

from Restaurant Report

Accountant's Corner

Take Advantage of Tip Credit
By Ronald L. Noll, MS, CPA

If you employ tipped employees, you are entitled to a credit against income taxes. The credit is figured using FICA taxes paid on reported tips and wages that exceed the minimum wage requirement. For example, if you pay your wait staff $2.13 per hour, figure an additional $2.12 per hour of tips to bring the wage up to the standard minimum wage ($4.25). All additional tips are then eligible for the tip credit of 7.65%.
Beware, however, that the tip credit amount is added to profits, thus increasing your income tax liability. Credit the IRS and Congress for this bad idea.
The IRS is still conducting lots of tip audits. Be sure to complete Form 8027 correctly (due Feb. 28th). The form is designed to determine the percentage of tips on credit card sales compared to the tips on other sales. You are expected to report cash tips within 2% of the charged tips. More audits are generated because of improperly completed forms than all other causes. It has been reported that up to 75% of the restaurants covered by tip reporting rules don't file their 8027 Report. Be one of those who report!
Not all restauranteurs are required to file the 8027 report. You are required to file the 8027 with the IRS if you serve food and beverages for on-premises consumption; if tipping is customary in your establishment and you employ 10 or more full-time employees on a typical business day. A separate 8027 must be filed for each food or beverage establishment that meets these criteria.
A business is required to keep employee tip information for 4 years after the due date of the company tax return. Tipped employees are required to keep daily records of tips received. These records must include names and addresses, company name, tips received, tips shared with others and names of those individuals.
The Philadelphia District IRS is participating in a national tip study agreement. This is a program designed to pressure restaurant owners and at least 75% of their tipped employees to sign an agreement requiring 100% tip reporting. The local and national restaurant associations are violently opposed to this program because it holds restaurant owners for their employees' honesty. The National Restaurant Association is working very hard to change this. If the IRS does audit and finds tips under reported, the owner is liable for matching FICA accumulated during the past three years.
IRS Targets Restaurants The IRS is targeting cash businesses for audits. Restaurants are on the hit list. When the IRS audits a restaurant, the owners seem to be the ones under scrutiny. I have seen more audits investigating owners' personal bank accounts than business accounts. You are expected to explain the source of every deposit to your personal bank account, even though it is a business audit. The IRS is particularly keen on investigating currency deposits into your personal account.
The IRS is very strict concerning skimming cash. For example, if you deduct a vacation as a business expense, the IRS will simply recalculate your taxes, add a penalty and interest and usually forget it. On the other hand if you under-report sales, the IRS will consider criminal charges. Furthermore, if you have under reported more than $10,000 in each of the last three years, the IRS will try to send you to jail.
I know of a restaurant owner charged criminally for skimming and spent $45,000 in legal fees - about double the taxes he saved, not to mention the three years of worry and stress he endured. Obviously, there are better ways of making money than cheating the IRS.
If you are audited, get professional help A competent accountant, CPA or enrolled agent will make your audit much easier. Hiring an attorney usually makes the auditor suspicious. The auditor usually wants a face-to-face meeting with the taxpayer. Your accountant should help you prepare for questions likely to be asked. Never volunteer information. Answer all questions directly, but as brief as possible.

Tuesday, June 2, 2009

An amusing analogy

Perceiving a lot of unresolved problems burdening our economy, I currently tend to take a negative view of most investment opportunities. While not dissuaded from my doubts, I found this article entertaining. Please don't take this post as a suggestion that you load up in the equity markets. Rather, please be reminded that maintaining sound perspective requires being open to hearing opinions contrary to your own.

When you think of it, stocks are a lot like tuna fish.

By: Frank Armstrong, CFP®, AIFA®

When you think of it, stocks are a lot like tuna fish. You buy them today to use sometime in the future. You don't expect to eat it in the store, or even when you get it home that day.

Let's pretend that you, your family, and your cat eat a fair amount of tuna fish. As you know, tuna fish comes in cans and has a long shelf life. We are used to buying it in large cans for $1.50. Now one day we go to the market and see that it is on sale for $1.00 a can.

What do we do?

Do we see ourselves as impoverished because we have some cans back home on the shelf?
Do we run home, grab all our unused tuna fish and then run back to the store to sell it back?
Do we feel bad because we have lost money on our cans at home?
Do we run home and throw them all out?
Do we vow never to buy tuna fish again?
Do we organize a protest march?
Do we start a campaign in the newspaper, on our Facebook page or on Twitter?
Of course not! We buy lots of tuna fish to take advantage of the low price. We know that we will need tuna fish for a long time and that the sale offers us a great opportunity to stock up for future needs. We have made the mental jump that LOW PRICE = GOOD.

Stocks have a long shelf life too and we buy them in order to use them a long time in the future. If you are a 401(k) participant, the stocks you buy now will be there when you need them in retirement. But the average investor seems to operate on the assumption that LOW PRICE = BAD! Rather than seeing temporary low price as an opportunity to buy something he will need in the future, he wants to dump what he has.

Especially if you have a few years to go before retirement, you should be dancing in the streets. This is your chance to scoop up bargains at very attractive prices. The world markets are on sale. Buy them while they're hot!

Note: I am indebted to Nick Murray, the Advisor's Advisor, a financial professional and nationally recognized public speaker for the inspiration for this piece which I have adopted from one of his articles published many years ago. Thanks Nick for your work throughout the years.

Frank Armstrong, CFP, is the founder and president of Investor Solutions, Inc., and the author of The Informed Investor (Amacom 2002). Contact him at

Investor Solutions, Inc. is a fee-only SEC Registered Investment Advisor based in Coconut Grove, FL with discretionary authority over assets in excess of $400 million. The firm provides investment management services for high net worth clients, pension plans, government agencies, trusts and foundations worldwide. Their web site is located at

Saturday, May 23, 2009

"Failing to plan is like planning to fail"

Our next monthly mailer will encourage the use of business plans and provide a few basic how to tips. Here's the first few paragraphs of an article from Entrepeneur Magazine and here's a link if you'd like to see more of the article.

9 Ways to Use Your Business Plan

It's not just for financing--your business plan can help you spot future success or failure, attract suppliers and employees, and more.

By David H. Bangs Jr. | September 27, 2005

Article Contents
9 Ways to Use Your Business Plan
Managing With Your Plan
Do the Numbers Add Up?
Plan for the Possibility of Failure

Editor's note: This article was excerpted fromBusiness Plans Made Easy, a guide to creating a high-impact business plan.

The process of writing a business plan helps you take a thorough, careful and comprehensive look at the most important facets of your business, including the contexts in which it operates. Just raising questions can sometimes lead to a solution, or at least ensure that if conditions change you won't be forced to make decisions hastily. The ongoing "what if this or that happens?" inherent in the planning process keeps you alert. In other words, the planning process itself makes you a far more capable manager than you would be without it. For many, this is a more valuable result than securing funding.

In many ways, writing a business plan is an end in itself. The process will teach you a lot about your business that you are unlikely to learn by any other process. You'll spot future trouble areas, identify opportunities, and help your organization run smoothly, simply through the act of writing a plan.

Thanks to our techy, Janett, for the blog site

which provides a user friendly site for us to post, and for readers to enter questions and remarks.