Our mission for this blog is to provide information on taxation and other business related topics. Yes, we have strayed a time or two and railed about the dangers of the pending socialist medical program. There is only one way to pay for social program and that is by increased taxes. But I digress.
Today’s blog is on business development. I recently purchased a new car from one of the local “no-haggle” dealers. I thought I had made a good purchase. I later learned otherwise. The vehicle that I traded in was leased. For those that don’t know, the price of a leased vehicle is based, in part, on mileage. This is known as the contract mileage. If you go over the contract mileage amount, then you must pay a surcharge for any miles over and above the stated amount. For example, if your surcharge is $ .15 per mile and you go over the contract amount by 10,000 miles, then you owe $1,500 at trade in.
When I made my deal, I was to make the remaining unpaid lease payments on the old car and the dealer was to pay the mileage overage. Well, that didn’t happen. A month after signing the deal, I received a bill from the finance company saying that I owed for the mileage overage. Needless to say, I was surprised. I called the dealer to make sure that they paid the overage amount.
Guess what? I learned that “no haggle” also means “no recourse”. They said that the deal that I thought I made was too good to be true and I should have known better! In order to maintain my credit rating, I now have to pay the outstanding overage fees. Ouch!
As a result, I will never darken the door of that dealership or any of their other dealerships. They will not get $1 in service revenues from me. They will never sell me another vehicle at this dealership or any of their other dealerships. Further, any time someone wants to buy the same brand of auto, I will refer them to the Austin dealership where I did the exact same deal three years earlier without incident.
I understand their business development model, but I don’t agree with it. The experts tell us that business development takes two forms. First, there is new business. This is where you go out and get a customer that has no prior history with your company. Second, there is maintaining your current business.
In every business development seminar that I have attended, the experts consider maintaining your current business as the business number one development priority. These are the customers that come back time and again. They provide referrals. They are the base of your business. It is said that one unsatisfied customer can harm your business more than ten new customers would benefit it. I believe this statement to be true.
Car dealers and other high volume businesses believe that there are an unlimited number of customers. In a capitalist society this simply isn’t true. Consumers have a choice. They vote with their check book. If you don’t believe, ask Sears, Woolworths, General Motors, Chrysler Motors, and so on. There is a reason that HEB has run every grocery chain on the planet out of town…..and it isn’t just pricing.
When you put your annual business development plan together, don’t forget about your current client base. Don’t be like the “no haggle” guys. Be an HEB.
Monday, November 23, 2009
Friday, November 20, 2009
CPAs and TAX PLANNING - A PROACTIVE APPROACH
As a CPA in public practice, part of my job is to help clients with their taxes. While bookkeeping services and tax preparation services also offer this service, what sets the CPA apart is the ability to do tax planning with clients. What is 'tax planning'?
There are two goals in tax planning. The first goal is to minimize our client's annual tax liability. The second goal is to make sure that the client has paid in just enough tax to cover that liability.
The first goal is probably the more important - and complex - of the two. In order to help a client minimize their tax liability, we must have an accurate accounting of their income and expenses. Then we have to be able to project that over a full year and estimate their total income. Then the real work begins. The key to minimizing tax liability is in finding out what the client needs and deciding how to meet those needs in the most tax-friendly manner possible. There are several common ways I am able to help clients with their tax liability, including salary management, retirement planning, asset acquisitions, or debt structuring.
The second part of tax planning involves making sure clients have the right amount of taxes paid in. This is easy for employees, because they can manipulate their withholding simply by turning in a new W-4 to the payroll department at their job. However, for self employed individuals and people with large amounts of investment income it's a much more complicated process.
We often ask our clients "what is the perfect tax return?" Most people would say that it's the one that gives them the most money back. In my opinion, though, the perfect tax return is one where there is a small refund generated. Consider this logic: refunds are generated by overpaying taxes during the course of the year. If a return shows a large refund, it means the taxpayer essentially gave the government an interest-free loan for the course of the year. Wouldn't that money be better off staying in their pocket in the first place? We think so.
The common thread is that all of this planning has to be done proactively, not reactively. In other words, April 14, 2010 is too late to do tax planning for 2009. In fact, January 1, 2010 is too late to plan for 2009. Now is a perfect time to be doing tax planning for 2009. Enough of the year has passed that people have a good idea of where they stand, and there is still enough time left in the year to carry out any plans that are developed. Don't put it off!
For more information on options for tax planning for yourself or your business, contact our offices.
--Dan Musick is the Tax Services Partner with Cook & Associates, a full service accounting firm with offices in San Marcos and San Antonio, TX
There are two goals in tax planning. The first goal is to minimize our client's annual tax liability. The second goal is to make sure that the client has paid in just enough tax to cover that liability.
The first goal is probably the more important - and complex - of the two. In order to help a client minimize their tax liability, we must have an accurate accounting of their income and expenses. Then we have to be able to project that over a full year and estimate their total income. Then the real work begins. The key to minimizing tax liability is in finding out what the client needs and deciding how to meet those needs in the most tax-friendly manner possible. There are several common ways I am able to help clients with their tax liability, including salary management, retirement planning, asset acquisitions, or debt structuring.
The second part of tax planning involves making sure clients have the right amount of taxes paid in. This is easy for employees, because they can manipulate their withholding simply by turning in a new W-4 to the payroll department at their job. However, for self employed individuals and people with large amounts of investment income it's a much more complicated process.
We often ask our clients "what is the perfect tax return?" Most people would say that it's the one that gives them the most money back. In my opinion, though, the perfect tax return is one where there is a small refund generated. Consider this logic: refunds are generated by overpaying taxes during the course of the year. If a return shows a large refund, it means the taxpayer essentially gave the government an interest-free loan for the course of the year. Wouldn't that money be better off staying in their pocket in the first place? We think so.
The common thread is that all of this planning has to be done proactively, not reactively. In other words, April 14, 2010 is too late to do tax planning for 2009. In fact, January 1, 2010 is too late to plan for 2009. Now is a perfect time to be doing tax planning for 2009. Enough of the year has passed that people have a good idea of where they stand, and there is still enough time left in the year to carry out any plans that are developed. Don't put it off!
For more information on options for tax planning for yourself or your business, contact our offices.
--Dan Musick is the Tax Services Partner with Cook & Associates, a full service accounting firm with offices in San Marcos and San Antonio, TX
Wednesday, November 18, 2009
HOW TO BECOME A LEADER
I recently started reading a book called “The 21 Irrefutable Laws of Leadership” by John Maxwell. What a great book to pass on to your co-workers and employees! While not all of us are born leaders, Maxwell explains how each of us can become leaders, thereby increasing our effectiveness.
Leadership is important to the success of a business enterprise. It’s vital, in fact. Without leadership, organizations can make no progress. They are stuck at a complete standstill. Leaders are necessary to provide the vision, the influence, and the follow-through that is necessary to put a plan in motion.
Can you tell a good leader just by their appearance? Not likely. Many people have misconceptions about what makes a leader. Maxwell lists five, in particular:
Management Myth - People tend to think leading and managing are the same thing. Not so. Leadership is about influencing people while management is most often about maintaining systems and processes.
Entrepreneur Myth – Don’t assume that all entrepreneurs are leaders. Entrepreneurs are often good at seeing opportunities and going after them, but are not always good with people.
Knowledge Myth – High IQ and a good education do not always lead to good leadership. Consider a brilliant scientist who can come up with fascinating ideas but has no concept of leadership.
Pioneer Myth – Being the first to do something does not make you a leader. You need people intentionally following you and acting on your vision.
Position Myth – This is the most common myth. It’s not the position that makes the leader; it’s the leader that makes the position.
So how do we become a leader if it’s not innate? It’s simple. We become a student of leadership. There are several areas where we can improve ourselves, thus improving our leadership.
Character – Do you have depth of character?
Relationships – Who do you know and what kind of relationship have you established with them?
Knowledge – Have you done your homework? Do you have a grasp on the facts and a vision for the future?
Intuition – Can you make a decision based on what you feel?
Experience – Where have you been and what has it taught you?
Past Success – What have you done in the past that has had a positive impact?
Ability – What are you capable of? Can you lead a team/group/organization to victory?
Every organization needs leaders. To hone these skills and improve the overall function of your organization, become a student of leadership. It’s never too late to learn.
--LeAnn Carlson is the Audit Manager for Cook & Associates, CPAs, a full-service public accounting firm serving clients from offices in San Marcos and San Antonio, TX
Leadership is important to the success of a business enterprise. It’s vital, in fact. Without leadership, organizations can make no progress. They are stuck at a complete standstill. Leaders are necessary to provide the vision, the influence, and the follow-through that is necessary to put a plan in motion.
Can you tell a good leader just by their appearance? Not likely. Many people have misconceptions about what makes a leader. Maxwell lists five, in particular:
Management Myth - People tend to think leading and managing are the same thing. Not so. Leadership is about influencing people while management is most often about maintaining systems and processes.
Entrepreneur Myth – Don’t assume that all entrepreneurs are leaders. Entrepreneurs are often good at seeing opportunities and going after them, but are not always good with people.
Knowledge Myth – High IQ and a good education do not always lead to good leadership. Consider a brilliant scientist who can come up with fascinating ideas but has no concept of leadership.
Pioneer Myth – Being the first to do something does not make you a leader. You need people intentionally following you and acting on your vision.
Position Myth – This is the most common myth. It’s not the position that makes the leader; it’s the leader that makes the position.
So how do we become a leader if it’s not innate? It’s simple. We become a student of leadership. There are several areas where we can improve ourselves, thus improving our leadership.
Character – Do you have depth of character?
Relationships – Who do you know and what kind of relationship have you established with them?
Knowledge – Have you done your homework? Do you have a grasp on the facts and a vision for the future?
Intuition – Can you make a decision based on what you feel?
Experience – Where have you been and what has it taught you?
Past Success – What have you done in the past that has had a positive impact?
Ability – What are you capable of? Can you lead a team/group/organization to victory?
Every organization needs leaders. To hone these skills and improve the overall function of your organization, become a student of leadership. It’s never too late to learn.
--LeAnn Carlson is the Audit Manager for Cook & Associates, CPAs, a full-service public accounting firm serving clients from offices in San Marcos and San Antonio, TX
Monday, November 9, 2009
"Big Brother" Passes Health Care Bill
Fans of small government, I hope you're sitting down. Our House of Representatives passed a bill this weekend that would give our government a huge measure of control over our health care system. By taking the reins on health care, our government is proposing to take over an industry that currently makes up 1/6 of our Nation's total economy!!!
In the past year, we have seen our federal government expand its power exponentially. The government is now involved in our financial markets, our mortgage industry, the automobile industry, and now they're also planning on going in to the health care business. At this rate, it might not be long until the government runs everything for us.....all we will have to do is sit back and pay our 90% tax rates and they'll take care of the rest!
Yes, that's probably an exaggeration. But consider that the health care package has a projected price tag of $1.2 trillion, and the stimulus package passed earlier this year cost an estimated $3.27 trillion. That means that, should the health care bill get past the Senate, our esteemed lawmakers have spent an extra $4.5 trillion of our money in this year alone....and this is in addition to the already bloated federal budget.
Since we primarily deal with the aspects of these bills that relate to income taxes, here are some of the tax-related provisions of the bill passed by the House on Saturday night:
--This bill imposes taxes on individuals who do not obtain "acceptable" health insurance coverage, as well as increased employment taxes on employers who do not provide acceptable coverage, in addition to excise taxes on failures to meet certain health coverage requirements.
--The bill would impose a surcharge on taxpayers with adjusted gross income in excess of $1 million for a married couple filing a joint return and $500,000 for a single individual at a rate of 5.4 percent.
--The legislation eliminates nontaxable reimbursements of over-the-counter medications from health savings accounts, health reimbursement arrangements, and health flexible spending accounts, and limits contributions to health FSAs to $2,500. The bill also increases the penalty for non-health-related distributions from HSAs from 10 percent to 20 percent.
--The bill imposes an excise tax of 2.5 percent on medical devices used in the United States.
--Small business tax credits are available for businesses with 10 or fewer employees and $20,000 or less in average wages. The credits phase out if the employer has 25 or more employees, or if average wages are $40,000 or more. The credits are available on rolling basis for the first two years that an employer offers qualified coverage.
--Individuals are required to obtain health insurance coverage or pay a fee equal to the lower of 2.5 percent of their adjusted income above the filing threshold or the average premium on the health insurance exchange.
How else did you think the government was going to pay for this program, other than to tax its citizenry? In typical Washington fashion, their concept for improving our health care system wasn't to fix the problems with out of control provider costs and the need for tort reform. Nooooo....their solution was to require everyone to buy into the broken system - incredible!
Ladies and gentlemen.....our government at work!
--Dan Musick is the tax services partner for Cook & Associates, a full service public accounting firm with offices in San Marcos and San Antonio, TX
In the past year, we have seen our federal government expand its power exponentially. The government is now involved in our financial markets, our mortgage industry, the automobile industry, and now they're also planning on going in to the health care business. At this rate, it might not be long until the government runs everything for us.....all we will have to do is sit back and pay our 90% tax rates and they'll take care of the rest!
Yes, that's probably an exaggeration. But consider that the health care package has a projected price tag of $1.2 trillion, and the stimulus package passed earlier this year cost an estimated $3.27 trillion. That means that, should the health care bill get past the Senate, our esteemed lawmakers have spent an extra $4.5 trillion of our money in this year alone....and this is in addition to the already bloated federal budget.
Since we primarily deal with the aspects of these bills that relate to income taxes, here are some of the tax-related provisions of the bill passed by the House on Saturday night:
--This bill imposes taxes on individuals who do not obtain "acceptable" health insurance coverage, as well as increased employment taxes on employers who do not provide acceptable coverage, in addition to excise taxes on failures to meet certain health coverage requirements.
--The bill would impose a surcharge on taxpayers with adjusted gross income in excess of $1 million for a married couple filing a joint return and $500,000 for a single individual at a rate of 5.4 percent.
--The legislation eliminates nontaxable reimbursements of over-the-counter medications from health savings accounts, health reimbursement arrangements, and health flexible spending accounts, and limits contributions to health FSAs to $2,500. The bill also increases the penalty for non-health-related distributions from HSAs from 10 percent to 20 percent.
--The bill imposes an excise tax of 2.5 percent on medical devices used in the United States.
--Small business tax credits are available for businesses with 10 or fewer employees and $20,000 or less in average wages. The credits phase out if the employer has 25 or more employees, or if average wages are $40,000 or more. The credits are available on rolling basis for the first two years that an employer offers qualified coverage.
--Individuals are required to obtain health insurance coverage or pay a fee equal to the lower of 2.5 percent of their adjusted income above the filing threshold or the average premium on the health insurance exchange.
How else did you think the government was going to pay for this program, other than to tax its citizenry? In typical Washington fashion, their concept for improving our health care system wasn't to fix the problems with out of control provider costs and the need for tort reform. Nooooo....their solution was to require everyone to buy into the broken system - incredible!
Ladies and gentlemen.....our government at work!
--Dan Musick is the tax services partner for Cook & Associates, a full service public accounting firm with offices in San Marcos and San Antonio, TX
Friday, November 6, 2009
Homebuyer Credit Extended
Thinking of buying a new home? It’s still a good time. The Senate voted to extend the First-Time Homebuyer Tax Credit AND expand the credit to some existing homeowners.
The financial stimulus package passed in February provided for a credit for first time homebuyers that was set to expire December 1, 2009. New legislation has extended the existing $8,000 tax credit and expanded it to allow up to $6,500 in tax credits for existing homeowners who plan to purchase a new home. Both credits do not have to be repaid, and they are refundable - which means that a buyer would get the full amount even if the credit exceeds the amount they paid in.
Stipulations do exist, however. Existing homeowners must have lived in their current home for five consecutive years within the last eight years. Additionally, the credit is limited to the purchase of principal homes (no second homes or vacation homes) costing $800,000 or less. Finally, the credit is reduced for individuals with annual incomes over $125,000 and for joint filers with incomes above $225,000.
Purchase agreements must be signed by April 30, 2010 and closing must be completed by June 30, 2010 to qualify. The deadline is extended another year for members of the military who have served outside the U.S. for at least 90 days between January 1, 2009 and May 1, 2010.
For further questions on eligibility and how to claim the credit, contact our office.
--LeAnn Carlson is the Audit Manager for Cook & Associates, a firm offering a full range of accounting, tax, and auditing services from offices in San Marcos and San Antonio, TX
The financial stimulus package passed in February provided for a credit for first time homebuyers that was set to expire December 1, 2009. New legislation has extended the existing $8,000 tax credit and expanded it to allow up to $6,500 in tax credits for existing homeowners who plan to purchase a new home. Both credits do not have to be repaid, and they are refundable - which means that a buyer would get the full amount even if the credit exceeds the amount they paid in.
Stipulations do exist, however. Existing homeowners must have lived in their current home for five consecutive years within the last eight years. Additionally, the credit is limited to the purchase of principal homes (no second homes or vacation homes) costing $800,000 or less. Finally, the credit is reduced for individuals with annual incomes over $125,000 and for joint filers with incomes above $225,000.
Purchase agreements must be signed by April 30, 2010 and closing must be completed by June 30, 2010 to qualify. The deadline is extended another year for members of the military who have served outside the U.S. for at least 90 days between January 1, 2009 and May 1, 2010.
For further questions on eligibility and how to claim the credit, contact our office.
--LeAnn Carlson is the Audit Manager for Cook & Associates, a firm offering a full range of accounting, tax, and auditing services from offices in San Marcos and San Antonio, TX
Tuesday, November 3, 2009
What your business can learn from the Spurs
Last Wednesday night I had the good fortune to be invited to opening night by Stephen Geri of Diversified Employee Benefit Services. Generally, I am more of a football guy, but the opportunity to attend opening night was very enticing. The opportunity to sit on row 8 on opening night made it a no brainer.
I’ve been to Spurs games in the past, but have always sat far above the bat’s flight zone. The first thing you notice when you sit at floor level is the sheer size of the players. Those are some big guys. I’m glad I don’t have to feed them. The second thing you notice is the dance team. Gracious! Those are some ultra-attractive young ladies. Viva SA!
Once you waded through these obvious points, the thing that really caught my attention was the teamwork displayed by the home team.
I am constantly reminding and reinforcing the concept of teamwork with our staff. Today’s young professionals tend to be more about “me” than “us”. Whenever possible, I try to hire staff that participated in team athletics in high school. They understand “team”. Unfortunately, you can’t always find individuals with such a background. So, you have to teach them the concept of teamwork and the benefits thereof.
To this end, I have lectured. I have cajoled. I have instituted role playing. In short, I have tried everything within my power to emphasize the importance of “team”. Getting individuals that have never experienced the high of being on a team just don’t understand the incredible high that comes from team success and team recognition.
Businesses, no matter what their product line, have higher success rates when everyone is pulling in the same direction. Petty office politics and self promotion seldom lead to anything good. The more success that the organization enjoys, the more rewards there are for all the participants.
This brings me back to the Spurs. Wednesday night there was a complete singleness in purpose for the players. On the court, there were no raised voices. They played with a quiet determined presence of mind. The goal was to defeat the Hornets - which they accomplished. Good play was saluted and reinforced while bad play was ignored. Laziness was not tolerated. The goal was team success.
Maybe the solution to my problem is to simply push the pulpit aside and just take the staff to row 8 of a Spurs game. After all, seeing is believing.
--Steve Cook is the Managing Principal for Cook & Associates, a full-service accounting firm with offices in San Antonio and San Marcos, TX.
I’ve been to Spurs games in the past, but have always sat far above the bat’s flight zone. The first thing you notice when you sit at floor level is the sheer size of the players. Those are some big guys. I’m glad I don’t have to feed them. The second thing you notice is the dance team. Gracious! Those are some ultra-attractive young ladies. Viva SA!
Once you waded through these obvious points, the thing that really caught my attention was the teamwork displayed by the home team.
I am constantly reminding and reinforcing the concept of teamwork with our staff. Today’s young professionals tend to be more about “me” than “us”. Whenever possible, I try to hire staff that participated in team athletics in high school. They understand “team”. Unfortunately, you can’t always find individuals with such a background. So, you have to teach them the concept of teamwork and the benefits thereof.
To this end, I have lectured. I have cajoled. I have instituted role playing. In short, I have tried everything within my power to emphasize the importance of “team”. Getting individuals that have never experienced the high of being on a team just don’t understand the incredible high that comes from team success and team recognition.
Businesses, no matter what their product line, have higher success rates when everyone is pulling in the same direction. Petty office politics and self promotion seldom lead to anything good. The more success that the organization enjoys, the more rewards there are for all the participants.
This brings me back to the Spurs. Wednesday night there was a complete singleness in purpose for the players. On the court, there were no raised voices. They played with a quiet determined presence of mind. The goal was to defeat the Hornets - which they accomplished. Good play was saluted and reinforced while bad play was ignored. Laziness was not tolerated. The goal was team success.
Maybe the solution to my problem is to simply push the pulpit aside and just take the staff to row 8 of a Spurs game. After all, seeing is believing.
--Steve Cook is the Managing Principal for Cook & Associates, a full-service accounting firm with offices in San Antonio and San Marcos, TX.
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