Toss Out the To-Do List!

Author: Keith Huggett

When it comes to running a business, building as much efficiency as possible into your operations is the key to keeping things running smoothly and freeing up your own time to focus on the big picture. While employing the right team and the right technology are integral to boosting efficiency, so is having the right mindset when it comes to how you approach day-to-day tasks.

You may be surprised to learn that the traditional to-do list can actually hamper your ability to improve the efficiency of your business—and your own productivity. So what is the alternative for those of us who “Live by the list?” According to entrepreneurial efficiency and business experts, the key is to make sure that your to-do list is not just a vehicle for checking off mundane items, but instead that it remains a tool for helping you do the things that will have the greatest benefit to your business first.

Think in terms of priorities, not tasks.

Entrepreneur and author Mike Michalowicz writes, “The problem with a to-do list is that every entry has the same value.” Instead, he suggests business owners should use a priority list that has the following three symbols (you can substitute alternative symbols if you like), to help prioritize activities: The dollar sign ($), which is assigned to any task that generates revenue in the next 60 days; a smiley face, which is assigned to any task that pleases a current client; and a ∞ symbol for any task that creates a system—something that can run itself thereafter ∞.

The key to this type of priority list is that you can assign more than one value to each activity—or you can assign nothing to an activity, which means you may want to consider dropping it completely from your list. When you use your priority list the items with the most symbols should be addressed first. Those tasks without symbols are your lowest priority.

Another way to make a priority list is to divide your tasks into the following four categories based on Stephen Covey’s iconic Important/Urgent grid: Important and urgent, Not urgent but important, Not important but urgent, Not important or urgent. Using this convention, you would prioritize tasks falling in the “important and urgent” category first and perhaps reduce or eliminate tasks in the “Not important or urgent” category.

Use your list to organize action, not delay it

Many business owners do find that lists are an essential way to track the numerous things they need to accomplish on a daily basis. Whether you toss your traditional to-do list for one of the alternatives mentioned here, or keep it, be sure that the process you are using to create lists actually enhances your ability to take action efficiently—rather than being an end in and of itself.

Tax Day 2015 is Gone. Time to Ask These Three Questions.

Author: Keith Huggett

 Yes, Tax Day has come and gone for this year, but the memory of your tax return is likely still fresh. So before you move on, consider the following three questions that may point you toward areas you want to work on before next April 15 rolls around. 

 Do I need to start my tax filing earlier?

Ideally, you should engage in tax planning year-round. As your trusted advisors, we can help you identify tax savings strategies throughout the year, so set up an appointment to talk to us about how we can help you mitigate tax obligations and make sure that you are taking full advantage of the tax savings available to you.

 It’s also worth noting that the introduction of new tax reporting requirements related to the Affordable Care Act added considerable complexity to many individual returns this year. This, combined with delays in receiving tax documents from employers and other entities compressed the amount of time available to file returns. For the future, this means that the earlier you start getting your tax documents in order the more likely it is that your return can be filed promptly. The best strategy is to file (or better yet scan and electronically store) your receipts and any other documents you’ll need at tax time as they come in to avoid having to rush to meet tax deadlines.

 Does my tax withholding need an adjustment?

Once you are done filing your taxes, the answer to this question becomes quite obvious. If you found yourself in the position of writing a large, unanticipated check to the United States Treasury Department, you may wish to look at how much tax you are withholding through your employer. Or, if you are self-employed, you should consider increasing your estimated tax payments. On the other hand, if you are receiving a big tax refund, you may want to consider reducing your withholding or estimated tax payments to increase your take-home pay or to fund additional investments in eligible tax-sheltered retirement savings plans.

 Is my retirement strategy effective?

On the topic of retirement savings plans, your tax return clearly shows whether you made the maximum allowable contribution to tax-advantaged retirement savings accounts. If you didn’t in the 2014 tax year, you may want to consider increasing your contributions now so you can reduce your taxable income on next year’s return while also improving your financial future.

Better Budgeting Means Better Business

Before awarding credit, lenders demand detailed budgets, including cash flow forecasts. They want realistic projections, not unfounded profit and revenue estimates. Cash flow projections are an important element for lenders because they show how you plan to repay the money.

Even if your construction firm doesn't need credit, a well thought-out budget, including cash flow projections, is important for the ongoing operation of your business. For some construction projections, surety companies look closely at budgets before issuing the bond needed. Additionally, by preparing an effective annual budget and comparing it to your actual financial performance, you can find certain situations that need to be addressed. For example, a construction firm that expects $5 million in new projects in the first half of the year, but is awarded only half of that amount in contracts, need to review its bidding procedures. Perhaps the company needs to tighten up its bidding process, have someone review the work of the estimator before bids are submitted, and review other internal procedures to get more work. Upon review of the actual performance, you may find expenses that are out of line and you want to look at instituting controls, safeguards -- and perhaps even institute a bonus system for those responsible for controlling the job.

Be sure you understand the “timely mailed = timely filed” rule.

Author: Keith Huggett

The IRS considers a paper return that’s due April 15 to be timely filed if it’s postmarked by midnight on April 15. But dropping your return in a mailbox on the 15th may not be sufficient.

For example, let’s say you mail your return with a payment on April 15, but the envelope gets lost. You don’t figure this out until a couple of months later when you notice that the check still hasn’t cleared. You then refile and send a new check. Despite your efforts to timely file and pay, you’re hit with failure-to-file and failure-to-pay penalties totaling $1,500.

To avoid this risk, use certified or registered mail or one of the private delivery services designated by the IRS to comply with the timely filing rule, such as:

• FedEx Priority Overnight
• FedEx Standard Overnight
• FedEx 2Day
• UPS Next Day Air Saver
• UPS 2nd Day Air
• UPS 2nd Day Air A.M.

Beware: If you use an unauthorized delivery service, your return isn’t “filed” until the IRS receives it. For example, DHL is no longer an authorized delivery service.

If you’re concerned about meeting the April 15 deadline, another option is to file for an extension. We can help you determine if that makes sense for you. Time is running out, contact us today

Avoid These 4 Business Mistakes

Author: Keith Huggett

When you started your business you may have had concerns about staying flush with money.  As time progressed, your company funds have become sporadic and unreliable.  Some months you are performing great, others not so much.  You work hard, try and save every penny you can (and still run your business), but funds are getting tighter and tighter. Business owners often make mistakes with their funds, under the impression that "things will get better" or "we can pay it later." Here are four top mistakes that new business owners make with their funds:

Bookkeeping Problems - Let's face it. No one likes doing their bookkeeping. It brings the truth of your situation too close to home.  It's very time consuming. Sometimes it's really difficult to get a handle on the software.  Either way, bookkeeping is one of those tasks that business owners HATE. A lot of companies try and handle their bookkeeping in house to save money.  This is not the solution. Often you are hiring someone who isn't really qualified for they job or you are trying to do it all yourself.

Solution - Hire a professional to keep track of your books for you. Keep your accounts separate - no comingling of business and personal funds. Keep a strict account of your income and expenses.

Adequate Budgeting - Your business plan should have included a working business budget.  As is common with most businesses, that business plan has hidden itself away.  If you do not have an adequate budget, both monthly and yearly, you may find yourself dipping into other areas to provide funds for what your need.

Solution - Create a two-tiered budget, one as a guideline for the entire year and the other a monthly version of your annual budget that takes into account everyday business realities. List all of your anticipated expenses, such as materials, land and equipment, et cetera.  Stick to the budget!

Uncontrolled Spending - "Bright and Shiny Disease" can strike at any time.  Something is brand new on the market and you have to have it because it will make running your business easier.  What you need to consider is this: Is there anything wrong with what you are currently using? Does it do the job? If you do not have a strong need to purchase something new and unbudgeted for, consider waiting until a later date.

Solution - If an item is not strictly budgeted for don't make the purchase.  Stick to your budget and plan ahead for such purchases in your next year's budget.

Princing Strategies - Often times people focus on price.  Underbidding your service can cause you money problems later on. While you may have successfully gained a new client, that client isn't necessarily paying you what you are worth. 

Solution -  Weigh the costs of your service honestly. If your prices are too low, you may shoot yourself in the foot by creating doubt in the quality of your services.  If you aim too high, you may fall into a pit of "promising too much".  Having a smart price strategy in place is your goal.

If you would like to discuss any questions this article may bring up, The Tax Office, Inc. can provide you with the bookkeeping, budgeting, and business consulting answers you may need. Contact us today.

Ways to Save More Money

Author: Keith Huggett

I was thinking the other day about my son.  He's only two years away from starting his college education. WOW!  College expenses today are out of this world, I cringe at the thought of where they will be two years from now.  If you are a student, trying to scrape up enough money for tuition, books, and occassionally food, I have a few tips for you.

At tax time there are a few ways to save more money:

1. The American Opportunity Tax Credit or Lifetime Learning Credit may be available to you depending upon your income.  If you are one of those whose parents pay for your college education, your parents may be able to claim these credits if you are still their dependent. The IRS allows that if you are a qualified student, you can claim the maximum credit of $2500 for the first four years of your college education.  The Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students, up to $2000 per tax return.

2.Tuition and fees can also be deducted. You can can reduce the amount of your income subject to tax by up to $4,000. That equals out to maybe 1 semester's book cost.

3. Scholarships are another way to save money. If you receive a scholarship and are a qualified degree candidate, the money you receive is tax free.  However, it must be used for tuition, fees, books, supplies and equipment, otherwise anything else you use it for becomes taxable.

4. Student loans. Sounds scary right? Going into debt at the beginning of your life.  Up to $2500 of the interest you pay on student loans is tax deductible depending upon your income.

5. Work related education can save you some money also.  If you are back in school to learn something new related to your work, you may be able to deduct the amount spent on education expenses.

There are other ways available to you to keep more money in your wallet.  These usually fall under the topic of modifying your behavior.  Buy a coffee machine instead of hitting the local Starbucks.  Buy used books and electronics - they cost less than brand new versions and are often easily available. Plan your meals wisely, not everyone can afford to spend oodles on snacks at the snackbar.  Using common sense can keep more dollars in your pocket to be spent on other things of importance.

If you have any questions about education involved tax deductions, please contact us. The Tax Office, Inc. has many specialized tax professionals who can help you.

What to Know Before You Make the Switch

Author: Keith Huggett

Cloud computing is a major force in today's IT world for both big and small businesses. In fact, outsourcing software licensing, hardware purchasing, system administration and both data and physical security to a third party is particularly valuable for businesses that lack the scale to amortize all of these costs. Of course, small businesses without an IT staff may not have the support they need to strategically transition to the cloud. Luckily, it is not that complicated.

The first step is to figure out what you can move. Many business applications are available in a cloud computing setting -- ranging from mundane items like email and office suites to advanced tools such as customer relationship management software and accounting packages. Other cloud providers offer space and computing power to run your applications. You can also move much of your data storage to the cloud. This has the added benefit of making it easier for your teams to collaborate. On the other hand, highly sensitive and proprietary information should probably stay in your office, especially if you have the staff and infrastructure to keep it more secure

Once you have decided what to move, decide where to move it. You can move raw data to cloud services that include their own interfaces for you to access, like Google Mail, Dropbox or Salesforce.com. Alternately, you can move your applications to public cloud providers that give you a platform to run your own programs. Finally, you can set up a private cloud which has all of the benefits of public cloud computing but with an additional layer of security and privacy. 

Before flipping the switch to turn on your cloud computing setup, make sure that your company and your employees have the bandwidth they need to connect  to your applications. The cloud lets you do without a lot of things, but you do need  to have reliable Internet connections to get to your data.

If you need help understanding how to make cloud computing work for your business, contact The Tax Office Inc. Our experts can help you harness this exciting technology.

Cloud Technology Has Business Advantages

Author: Keith Huggett

Any change in business operations should come with a careful analysis of how it will affect the company, both financially and culturally. This is particularly true for crucial financial functions like bookkeeping and accounting, as changes in these systems can have a larger impact. Switching to a new system is always daunting, but the benefits are often well worth the effort.

Consider the ways that cloud-based accounting can improve your business:

• Lower costs: Cloud-based systems are generally less expensive than purchasing accounting software, especially when you factor in lower IT costs, software and license renewals and time saved.
• Improved security: If you have all of your financial data stored on one desktop or laptop computer, you could be in for a devastating surprise if it is lost, stolen or damaged. Even with regular backups, key financial information could be compromised. With cloud-based accounting, all of your data is stored on remote servers, so even if hardware is damaged, your financial information is always protected.
• Flexible access: Cloud-based accounting systems give you the ability to access your information from anywhere, including your mobile device. It is also easy to add multiple users with customized permissions so key personnel can readily access the reports they need, when they need them, without waiting for another person to do it.
• Better business processes: Financial data entered into a cloud-based accounting system is automatically updated so that every user has access to the same information in real-time. This means less travel for your CPA, more accurate reporting and the ability to make faster decisions.
• More time: Improvements in efficiency will allow you and your employees to focus on more strategic efforts, rather than the mundane details of bookkeeping. Your IT staff will also have more time to dedicate to larger organizational issues.

If you are ready to make the switch to cloud-based accounting, let The Tax Office Inc. guide you through the process. We'll help you select the right package and set up your back office support system so you can free up more time to manage your business, not your bookkeeping. Contact us here for any cloud-based accounting questions.

Choosing Which Is Right For You

Author: Keith Huggett

With dozens of tax preparation software choices available choosing the best one for you can be difficult. By not knowing which program to use mistakes are often made. Mistakes you inevitable have to pay for.  These mistakes can be easily avoided by hiring a qualified tax professional to prepare your taxes for you.

In comparison to the cost of using a qualified tax professional, the cost of using tax software may seem like a "no-brainer."  The initial cost of tax software ranges from $10 to $120 to websites offering free services.  In contrast, the initial cost of professional tax services may start at around $100 and go up from there.  The low cost is one of the most attractive benefits of using software to prepare your own taxes.

Accountants and tax preparers charge more for their services.  They have access to more sophisticated tax software that automates the data entry and organization required resulting in fewer mistakes made.  Consumer tax software cannot be compared to the software available to professionals.

It is impossible to form a relationship with your tax software, unless of course it frustrates you to no end.  This is not so with a professional tax preparer.  As your tax preparer works with you, he or she will become familiar with your personal situation, your family, and/or your business.  This provides them with the ability to make suggestions or ask questions that consumer tax software cannot predict.  You also have the ability to contact your tax preparer throughout the year to answer any questions that may arise.

As your tax situation becomes more complex, the amount of time spent to file your taxes increases dramatically.  Qualified tax preparers stay up to date on changes to the tax code, making it far easier for them to complete research tasks than the non-professional.  Isn't your time better spent on growing your business?  By paying an initial higher price for your tax preparation will save you time, stress, and money in the future.

So which solution is best for you? I can only answer that it depends upon your financial situation.  If your taxes are very straight forward, it may benefit you to use a commercial tax software.  As your taxes become complex, hiring a qualified tax professional may be in your best interest.  The more complex your situation the more you are going to need the assistance of a tax professional.  Your goal should always be focused on not paying more than you are required to.

If you would like to discuss your tax situation, please contact us either by phone at 916-773-7053916-773-7053 or online.  The professionals at The Tax Office, Inc. are here to help you grow your business and lower you tax liability.