Accomplished Promotion

Someone once wrote: “Most small business owners would tattoo ‘idiot’ on their forehead before they would develop a business plan!” I tend to agree with that person, but I also want to change that perception. I think the primary reason most entrepreneurial Small Business Owners have such a poor regard for a business plan (BP) is that they automatically associate a BP with the painful experiences they imagine they will go through when they take it to their banker.

It doesn’t have to be that way! In fact, the best use of a BP is to keep it to yourself and use it to track your success in your business. How many entrepreneurs have started a business with boundless enthusiasm for what we were going to achieve? How many of us still have most of those ‘achievements’ buzzing around in our heads? If only we could find the time to take action on them. A BP will help us do that.

A BP is nothing more than putting down on paper, your business:

* Goal (Mission Statement)
* Objectives (How I’m going to achieve my goal)
* Products/Services (How I’m going to make money)
* Sales/Marketing Plan (How I’m going to convince people to buy my products/services)
* Operations Plan (How I’m going to spend money to make money)
* Management Plan (How I’m going to make sure all this happens)
* Finance Plan (How I’m going to keep track of it all)
* And most Importantly, Key Performance Indicators (what you’re going to measure over time to prove your success)

From a technology point of view, documenting your technology requirements in the BP ensures that you spend your technology dollars wisely. There should be a good fit between the technology and the Operations Plan, otherwise you may find yourself rebuilding the technology as your business grows or evolves. By planning ahead, you can ensure that the technology can and does grow with the business.

And now that you’ve got all of this out of your head and on paper where you can see it, you can review it regularly to measure your successes and correct anything that is hindering success. Then, when you are ready to expand your business, you will have a proven BP that you can take fearlessly to your banker and with confidence, show why lending to you is money well invested.

By: Boyd Carter

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Taxpayers who itemize deductions commonly utilize the services of tax professionals. Some individuals taking the standard deduction can benefit from considering itemizing. You can help them by utilizing your tax preparer certification to identify deductible items.

Taxpayer confusion about itemized deductions is common enough that many individuals simply skip the process. A Registered Tax Return Preparer knows to first gather the most common deductions. These include state taxes, local real estate taxes, mortgage interest on up to two residences, charitable contributions, and casualty losses.

When someone has sufficient deductions to itemize, tax preparer jobs involve inquiry about all extra possible deductions. For employees, job expenses that are not reimbursed command some attention.

There are many RTRP considerations for work-related expenses. Some of the common ones involve expenses incurred for business travel, business use of an automobile, and business meals. In many cases, employers have not reimbursed all these costs for employees.

When some business costs are reimbursed, you can show employees how to account for whether full reimbursement is received. This involves teaching taxpayers to keep track of all business expenses and reimbursement payments. All figures are then reported on a tax return to determine any unreimbursed amounts.

Employer reimbursements normally follow the rules of an accountable plan. There are specific procedures for such plans so that reimbursements are not reported with an employee’s gross wages. Reimbursements under non-accountable plans are added to an employee’s W-2. In these cases, an employee who can itemize will certainly want to deduct reimbursed amounts that are counted as income. But even employees with accountable plans can record tax deductions for unreimbursed amounts.

Your tax preparer training covers other types of deductible employee expenses. Among these are business supplies and tools as well as professional education. Even business use of a home is a potential tax deduction when you help taxpayers follow specific requirements.

The tax class that teaches you to become a tax preparer gives all the details about reporting deductible employee expenses. These are reported on IRS Form 2106. The amount from this form is then a miscellaneous itemized deduction on Schedule A. The actual tax-deductible amount for this category of deduction is limited to the excess of the total over two percent of a taxpayer’s adjusted gross income.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

By: Sawyer Adams

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A reverse mortgage is a loan that a lending institution issues to its long-term customers based on the equity in the customer’s home. The added feature is that during this term, the customer continues to retain ownership and occupation of the property. A reverse mortgage serves the dual purpose of keeping one’s home and receiving money from it simultaneously.

The loan need not be repaid during one’s lifetime if the person continues to live in that home and promptly pays the taxes and insurance. Companies that lend in the reverse mortgage market do not insist on any income or credit requirement on the part of the customer since the equity in the home serves as the security for the loan.

The reverse mortgage amount that the lender provides depends on the equity in the home, the age of the consumers, and the interest rate at the time of closing. The reverse mortgage needs to be repaid only when the consumer sells the home or permanently leaves the home. The heirs to the consumer have the choice to keep the house and pay back the loan from other assets in the event of the consumer’s death. The heirs also have the choice to sell the house and repay the loan using the proceeds from the sale. All reverse mortgage loans in Texas come under federal government programs.

Homeowners who are sixty-two or older can borrow against the equity in their homes under a reverse mortgage program. Generally, the income, health, or credit history is not a criterion for issue of a reverse mortgage. Also, there is no need for an underwriting or loan committee. Most reassuring for senior citizens is the fact that there are no monthly payments. Though interest rates on reverse mortgages are normally the highest in the market, they are also fairly easy to obtain.

By: Eric Morris

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Kansieo.com

For the sake of simplifying this article, strategy and planning will be used to mean the same thing. Budgets and objectives are related and so is the implementation of business strategy. The implementation of a business strategy is considered as the final stage in business strategy (before monitoring and control). It could be defined as the translation of strategy into organisational action through organisational structure and design, resources planning and the management of strategic change.” Analyzing the definition, it becomes obvious that strategy implementation of a business strategy would therefore, be how well the various components in carrying it out are successfully integrated.

The organisational structure and design aspect of the definition has to do with how the human resources in the organization are utilised, mobilised and organised to be encountered through the usage of the organisation; and design aspect is that most employers can leave the firm if they are not motivated or given the right position to operate in the organisation in other words underutilised.

The next aspect in the implementation of a business strategy – resources planning-sets out what resources need to be created and which disposed of. It deals with the identification of resources needed, how those resources will be deployed and controlled to create the competences needed to implement the strategies successfully. This resources configuration is dependent on protecting unique resources i.e. where a strategy depends on the uniqueness of a particular resources such as legal means, fitting resources together (i.e. mix resources to create competence) business process re-engineering (i.e. to create a dynamic improvement in performance) and exploiting experience by learning and improving continuously to improve competence. One of the many problems is the conflict arising amongst departments on the allocation of funds especially where money is involved in the implementation of the business strategy.

Management of strategic change is the next component in the implementation stage. This change involves incremental change that merely builds on skills, routines and beliefs of the organization so that change is efficient, and transformational change, which requires the organisation to change its paradigm over time.

In constructing a strategic management system, the budgeting process must be linked with the business strategy. In commencing the budgeting process therefore, budget targets and organizational goals are set up for the next budgeting period by the budget directors, whose main task is to produce a master budget that combines business units and functional period budgets. From period budgets, the budget director constructs the master budget. This is then adjusted to calculate the forecasted shareholder value, which in turn acts as a test on the corporate strategy. This is the point where strategic analysis can be verified. If the strategic blueprints do not create shareholder value, they are taken through strategy modification cycle. Once the master budget and therefore, the strategic blue prints are through, the budget is set to be used and strategy to be implemented.

Acquiring a sufficient budget is one of the main requirements for efficient business strategy implementation. The question is where does budget and business strategy implementation interact?

There is evidence of numerous spates of failures of business strategies implementations and plans in spite of reasonable analyses. Someone has said that good planning can greatly reduce the risks in business failure.

A plan is a projection of future activity. It is normally translated into budget if quantified. Thus, for a forthcoming time period in which the budget relates expressed in money terms. It is defined as a financial or quantitative statement, prepared prior to a specified accounting period, containing the plans and policies to be pursued during that period.

Generally, budgets are prepared procedurally and systematically usually followed by most organisations (although the procedures might differ depending on the size, type and leadership style of the organisations) are as follows:

Communication of details: Those responsible for preparing the budget must be made aware and kept informed of the company’s strategic plans (plans or objectives) so that the budget is tailored accordingly. This means that long-term plans of the organisation must be taken into account in drawing the budget.

Principal budget factor that limits an organisation’s performance. It is usually sales demand. If an organisation cannot make and sell, more of its products because consumers do not accept that price it restricts the company’s demand. Management may, not know the limiting factor, say, machine capacity, distribution and selling resources, until a budget, draft has been prepared. This is the starting point in budget preparation. Once this factor is determined, the rest of the budget is set to be drawn.

Sales budget preparation: Usually this is the base or primary budget prepared based on sales forecasts and from which most of the other budgets emanate because it has been established that the principal budget factor for most organisation.This leads to initial preparation of budgets for the following: finished good stock, production, resources for production, overhead cost, raw materials (stock), raw materials (purchase)

It is when all the budgets are in complete consonance and with one another that they are summarised into the master budget made up of budgeted profit and loss account, budgeted Balance sheet and cash budget.

Cash budget is one of the most important planning tools that any organisation can use. Its usefulness is felt when it shows that there are insufficient cash resource to finance planned operations. Cash budget can show four positions or scenarios giving management an indication of potential problems that might arise so that management can avoid such problems.

The implication of the position is one of the areas where the budget interacts with the implementation of the business strategy. For example when the cash budget shows a position of short-term surplus, management are prompted to either make short-term investments, pay creditors early to obtain discount or increase sales by increasing debtors and stocks, on short term deficit, the appropriate action to be taken by management include increase creditors, reduce debtors and arrange overdrafts to fund the deficit. The other cash position-long term surplus is tackled by making long-term investments, expand organically or by acquisitions or diversify among others; and long-term deficit could be handled by raising long-term finance or disinvestment opportunities.

Budgets and objectives (strategies) are clearly allocated to those areas and activities in the organization, which are seen as priorities. If important objects are to be achieved, and priority strategies implemented, resources must be provided.

However, research in inter-organisational settings identifies resource acquisition (i.e. budget), cooperative interaction acquisition and organisational power acquisition as the difficult part of implementation processes. Thus, inter-organisational fights for larger budgets also influence budget planning and affect strategy implementation. For example, where resources are limited and finite, strategic opportunities may be constrained. Since budget planning is usually annual, budgets are frequently bound to be different from the current situational needs, especially towards the latter part of the budget period. Because of this, flexed budgets are designed to allow for changes in the level of activity, which might result from adaptive changes in functional and competitive strategies.

It must also be noted here that while the role for today’s financial managers is quickly moving upstream in the strategic plane, the challenge becomes even grater in light of the accelerating pace of change. This reality is rendering obsolete the traditional approaches to corporate governance, such as 3-5 years static annual planning and static budgets. To provide useful financial insight, sooner rather than later managers need to think about business strategy as a process of continuous course correcting more like a series of real options than a single projected cash flow statement.

The implementation of a business strategy could be likened to a human body without a soul (budget). If there is no soul in a body, it is deemed dead; in the same vein budget is that soul (especially when implementing a new business strategy) for the implementation of a business strategy; thus, the two are linked and interdependent.

By: John Whonderr-Arthur, Ph.D. Esq

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There are some things that are just not deductible, and even though an entrepreneur or small business person may try to deduct these things, I think you’ll find that the IRS takes exceptions to the thought processing that goes into the manipulation of tax law for businesses in attempting to make rogue deductions.

Any good business accountant will tell you that there are certain things you just can’t deduct. And I know, because in the past I’ve tried, but the auditors of my company would merely place some of those deductions into my taxable personal income.

Now then, so you know what I’m talking about, let me give you an off-the-wall example of one such deduction that I did attempt to take previously. One, which my accountant told me was forbidden, and laughed at me that I would even try to attempt to argue with them that it was a business deduction.

You see, as an entrepreneur, I often was rushed and in a hurry, I didn’t have time to wait in line, often I’d pay people in line to trade places. Basically, here is $5, 10, 20 and “if you’ll go to the back of the line and start over and take may place, I’ll trade you and pay you cash, right here, right now?”

This in effect is a bribe, and yes it is a legal one, but it is clearly not deductible as per IRS rules. I believe it should be, because an entrepreneur only has a limited amount of time, and I can hire a personal assistant to go fetch me the coffee at line in Starbucks, but I cannot deduct the bribing of a nether person in line to trade places with me if I am in the back.

So let this be a note to you as an entrepreneur, and also to any business accounting professionals out there who come across to such ridiculous deduction attempts; you cannot deduct bribes, not even little legal ones. Indeed I hope you will please consider this.

By: Lance Winslow

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business accounting

Keeping the books for business is a challenging job. Oftentimes, you as the owner or operator postpone entering the days receipts till after closing. A lot of the time its not your, the owner/operators, best strength. I know for myself that doing the books and keeping things organized is right up there with going to the dentist for a root canal. Even if you have great software like QuickBooks or MYOB (Mind Your Own business), you still have to be organized and very careful about your expenses and record keeping. You might want to consider doing a couple of things. First, accounting software does require a little knowledge to operate it efficiently. The smart move might be to get some formal training in basic accounting so that you can do a great job. Trying to save some cash on your start up project can easily frustrate the budding entrepreneur. There are lots of online courses that can help you learn the accounting software and procedures to build good habit patterns.

Second, a smarter move may be to hire out the bookkeeping and you to continue running your business. By letting the headache fall upon someone who enjoys this type of work you will be free to manage and build your business. Even if you hire or outsource it out, you need to be familiar with the basics of how the accounting system works for your business. Analyzing your profit and loss statement can be very informative. There are a lot of online references and a bunch of books written on the subject. Take the time to get familiar with them and make them a normal part of your work week. You may want to get daily reports to determine your profit or loss daily. With luck you may have healthy profits and need the counsel of a good tax advisor.

By: Leslie West

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