At a time when the economy is slow and money is tight, what can firms do to reduce costs and increase their profit margin? The answer is in eliminating so-called fixed costs such as rent, electricity, and office space – otherwise referred to as Telecommuting.
More and more firms are catching on to the idea, allowing employees to work from home or another space of their choice. Austin-based firm Ariesnet Inc. has operated as a virtual office for six years now. While CEO Cruce Sanders was originally unsure how long the firm would be able to sustain a telecommuting workforce, he now has complete faith in the system.
Sanders said “We’ve learned we can be more productive, more profitable and more nimble. Our team members – programmers, project managers, consultants – get to live flexible lives while our clients experience high-quality, high-availability service. It’s better for all involved, including our families and the environment.”
According to a survey by the Austin Business Journal, half of the CEOs in the Entrepreneurs’ Organization allow telecommuting, while another 41 percent said it could be an option in the future. Only 9 percent said telecommuting was not an option.
If you are one of those companies considering telecommuting, here are 5 tips to help successfully manage your virtual office:
Set Expectations
Specify and document what is expected of telecommuters. Set up guidelines for how, when, where, and how well projects are to be completed.
Agree on a Schedule
Obviously telecommuting allows more flexibility than a typical 9-5 workday. However, a basic outline detailing days worked, hours worked, and breaks should be established.
Evaluate Performance
Focus on the results rather than the activities. Are your employees completing their projects in a timely manner? Is the work product of good quality? If so, you’ve probably found a good balance.
Maintain Communications
Just because you don’t communicate face-to-face anymore does not mean you should slack on overall communication. Keep an open line of communication about events, information, deadlines, and meetings.
Assess and Adjust as Necessary
Feedback is critical. Find out what the staff thinks is working and what needs improvement. Consider the responses and make appropriate adjustments.
Tuesday, June 29, 2010
Thursday, June 24, 2010
Tips For Small Business Regarding New Healthcare And Other Items Of Note
AND now other items of note:
The Treasury Inspector General for Tax Administration reported that approximately 1,300 prisoners filed for, and received, the First-Time Homebuyer Tax Credits. The total claims paid (yes paid) were valued at about $9.1 million.
Do you remember Reggie Bush and the Southern California Trojans from the 2005 national championship game? The NCAA slapped USC with the “near-death” penalty for improprieties regarding Mr. Bush and basketball player O.J. Mayo. The IRS and the State of California Franchise Tax Board are after them for unreported income. I suppose this will help cover the $9.1 million paid to the prisoners!
An Internal Revenue Service agent in Minnesota was indicted by the federal court for soliciting and accepting a $9,700 bribe from a Minnesota business in exchange for lowering the company’s tax liability. I’m not sure 9,700 bucks is worth ruining your life over.
Surprise, Surprise, Surprise……or healthcare reform
This is just in. The Congressional Budget Office released a study that found that the original projection that the new healthcare reform package would reduce the federal deficit was incorrect. It will increase the federal deficit.
If your business has ten or fewer full time employees and each employee’s annual wage is $25,000 or less, you will receive a tax credit equal to 35% of the paid health insurance premiums. Above ten employees, you will loose the credit. My question is how many full time employees make less than $25,000 annually?
On the other side, if you have fifty or more employees and do not offer coverage that the Congress deems adequate, you will be fined $2,000 for each employee beginning with the 31st employee. There is no minimum wage limit on this provision.
The Bright Side
Now that the President and his Posse have added a trillion dollars to the federal debt, driven up the cost of doing business in the U.S. which will force Walmart to buy even more products overseas, he will be less involved in domestic issues. That is a good thing.
After watching a few Victory at Sea and The War in Europe episodes on the History Channel, however, he has decided that his keen skills are best used as Commander and Chief…..holy wow!
I have yet to find anyone that admits voting for these guys.
The Treasury Inspector General for Tax Administration reported that approximately 1,300 prisoners filed for, and received, the First-Time Homebuyer Tax Credits. The total claims paid (yes paid) were valued at about $9.1 million.
Do you remember Reggie Bush and the Southern California Trojans from the 2005 national championship game? The NCAA slapped USC with the “near-death” penalty for improprieties regarding Mr. Bush and basketball player O.J. Mayo. The IRS and the State of California Franchise Tax Board are after them for unreported income. I suppose this will help cover the $9.1 million paid to the prisoners!
An Internal Revenue Service agent in Minnesota was indicted by the federal court for soliciting and accepting a $9,700 bribe from a Minnesota business in exchange for lowering the company’s tax liability. I’m not sure 9,700 bucks is worth ruining your life over.
Surprise, Surprise, Surprise……or healthcare reform
This is just in. The Congressional Budget Office released a study that found that the original projection that the new healthcare reform package would reduce the federal deficit was incorrect. It will increase the federal deficit.
If your business has ten or fewer full time employees and each employee’s annual wage is $25,000 or less, you will receive a tax credit equal to 35% of the paid health insurance premiums. Above ten employees, you will loose the credit. My question is how many full time employees make less than $25,000 annually?
On the other side, if you have fifty or more employees and do not offer coverage that the Congress deems adequate, you will be fined $2,000 for each employee beginning with the 31st employee. There is no minimum wage limit on this provision.
The Bright Side
Now that the President and his Posse have added a trillion dollars to the federal debt, driven up the cost of doing business in the U.S. which will force Walmart to buy even more products overseas, he will be less involved in domestic issues. That is a good thing.
After watching a few Victory at Sea and The War in Europe episodes on the History Channel, however, he has decided that his keen skills are best used as Commander and Chief…..holy wow!
I have yet to find anyone that admits voting for these guys.
Tuesday, June 15, 2010
EXTENDED EXTENSION OF THE HOMEBUYER CREDIT?
Yes folks, the First-Time Homebuyer Credit may be extended yet again. Senate Majority Leader Harry Reid has introduced an amendment to the American Jobs and Closing Tax Loopholes Act of 2010 that would extend the transaction closing date for the First-Time Homebuyer Credit from June 30 to September 30.
The action was taken due to growing concern that banks would be unable to process transactions such as short sales within the designated time frame. The September 30 deadline would allow for completion of the sales.
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyer’s worth up to $7,500. The American Recovery and Reinvestment Act of 2009 increased the credit amount to $8,000 for purchases made before December 1, 2009. The Worker, Homeownership and Business Assistance Act of 2009 extended the deadline to contract on a home to April 30, 2010, with a closing date prior to July 1, 2010.
The action was taken due to growing concern that banks would be unable to process transactions such as short sales within the designated time frame. The September 30 deadline would allow for completion of the sales.
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyer’s worth up to $7,500. The American Recovery and Reinvestment Act of 2009 increased the credit amount to $8,000 for purchases made before December 1, 2009. The Worker, Homeownership and Business Assistance Act of 2009 extended the deadline to contract on a home to April 30, 2010, with a closing date prior to July 1, 2010.
Wednesday, June 9, 2010
KUDOS TO ARIZONA
Wow there partner! Before you send the hit squad to my office, please be informed that I, in no way, support the latest Arizona immigration laws.
However, I do offer kudos to Arizona for bringing this prickly issue to the fore front. As citizens, we have looked the other way long enough. As a government, we have ignored our southern border long enough. Simply put, the federal government needs to establish a realistic, enforceable immigration policy specifically for the southern border.
Building fences does not work. The Berlin wall didn’t work nor did the Great Wall of China. Sorry W, that was not one of your more clairvoyant moments. A full scale military assault on the borders appears to be over kill.
To ascertain what level of security we need, we first need to decide whether we want these folks in the first place. In Monday’s WSJ, there is a picture of what appears to be two Hispanic men on their hands and knees crawling along an Alabama beach picking up oil globs. At my former in-laws farm in Washington state, they use Hispanic’ workers to pick their crops on their truck farm nine months per year. The last building that I reroofed used a 100% Hispanic crew to lay shingles in July in Houston, Texas. And my favorite Chinese restaurant in San Antonio has an all Hispanic kitchen staff.
It seems to me that there is a demand for these hardworking individuals. These are hot, dirty, nasty jobs. You don’t see many Gringos or Bros doing that work. I think it is reasonably safe to say that we need the Hispanic labor force. Since we (see above) won’t do that work, I fail to see how they (Hispanic immigrants) are “stealing” jobs.
We are a capitalist society (despite what the Obama’s say), so let’s capitalize on this productive import. Why not just give these people work permits and make them tax paying W-2 employees . Have them renew their permits every six years, just like we do with drivers licenses. Then we can concentrate our enforcement effort on those unscrupulous industries that hire workers but do not treat them as taxable employees.
However, I do offer kudos to Arizona for bringing this prickly issue to the fore front. As citizens, we have looked the other way long enough. As a government, we have ignored our southern border long enough. Simply put, the federal government needs to establish a realistic, enforceable immigration policy specifically for the southern border.
Building fences does not work. The Berlin wall didn’t work nor did the Great Wall of China. Sorry W, that was not one of your more clairvoyant moments. A full scale military assault on the borders appears to be over kill.
To ascertain what level of security we need, we first need to decide whether we want these folks in the first place. In Monday’s WSJ, there is a picture of what appears to be two Hispanic men on their hands and knees crawling along an Alabama beach picking up oil globs. At my former in-laws farm in Washington state, they use Hispanic’ workers to pick their crops on their truck farm nine months per year. The last building that I reroofed used a 100% Hispanic crew to lay shingles in July in Houston, Texas. And my favorite Chinese restaurant in San Antonio has an all Hispanic kitchen staff.
It seems to me that there is a demand for these hardworking individuals. These are hot, dirty, nasty jobs. You don’t see many Gringos or Bros doing that work. I think it is reasonably safe to say that we need the Hispanic labor force. Since we (see above) won’t do that work, I fail to see how they (Hispanic immigrants) are “stealing” jobs.
We are a capitalist society (despite what the Obama’s say), so let’s capitalize on this productive import. Why not just give these people work permits and make them tax paying W-2 employees . Have them renew their permits every six years, just like we do with drivers licenses. Then we can concentrate our enforcement effort on those unscrupulous industries that hire workers but do not treat them as taxable employees.
Monday, June 7, 2010
To Incorporate or Not to Incorporate?
In my practice, there is no question I get from small business owners more often than “Should I incorporate?” As with most business decisions, there are many factors that must be weighed when making the decision whether to incorporate a business. No amount of “rule of thumb” can replace evaluating each case on its own specific circumstances.
Here are some of the relevant factors to consider when deciding whether to incorporate:
1. What is the expected profitability of the business? For example, is the (realistic) expectation to make $20 thousand or $1 million per year? Corporations pay taxes on a different rate schedule than individuals, so planning for profitability and the taxes that come with it can be an important factor.
2. Will the business want or need to raise capital by taking on equity investors? The corporate structure makes it easier to take on investors – the business simply sells stock to them. If the only planned financing source is debt, then a corporation might not be as attractive to the owner.
3. What is the expected risk exposure of the business? Corporations provide an excellent way for shareholders to shield their personal assets from the activity of the business. If the business carries a high risk of liability, a corporation might be attractive to the owner. If the business is “safe”, the owner might be able to find all the coverage they need with liability insurance.
4. Does the owner need to be able to pay benefits to the employees (or themselves)? Corporations are generally regarded as the best form of doing business where employee benefits are concerned. From health insurance to defined benefit plans, corporations have the clear edge.
5. Does the owner expect the business to go on after they are gone? The corporate form of business can exist long after the founder has retired. Since it operates as a separate legal entity, the corporation does not “live or die” with its shareholders. It simply hires a new CEO and continues on.
6. How much paperwork can the owner tolerate? For all of its advantages, the corporation can provide a large paperwork requirement burden to the owners. The corporation must file a separate tax return, meet state requirements regarding shareholder meetings, keep minutes, track stock, have a separate bank account, and essentially be treated in all manners as separate from its owners. For the extremely small business, this can be a cumbersome burden.
Making the right decision on whether to incorporation can be critical to the success of the business. For more information on how to make the right decision, contact our business consultants for an evaluation of your business needs.
Here are some of the relevant factors to consider when deciding whether to incorporate:
1. What is the expected profitability of the business? For example, is the (realistic) expectation to make $20 thousand or $1 million per year? Corporations pay taxes on a different rate schedule than individuals, so planning for profitability and the taxes that come with it can be an important factor.
2. Will the business want or need to raise capital by taking on equity investors? The corporate structure makes it easier to take on investors – the business simply sells stock to them. If the only planned financing source is debt, then a corporation might not be as attractive to the owner.
3. What is the expected risk exposure of the business? Corporations provide an excellent way for shareholders to shield their personal assets from the activity of the business. If the business carries a high risk of liability, a corporation might be attractive to the owner. If the business is “safe”, the owner might be able to find all the coverage they need with liability insurance.
4. Does the owner need to be able to pay benefits to the employees (or themselves)? Corporations are generally regarded as the best form of doing business where employee benefits are concerned. From health insurance to defined benefit plans, corporations have the clear edge.
5. Does the owner expect the business to go on after they are gone? The corporate form of business can exist long after the founder has retired. Since it operates as a separate legal entity, the corporation does not “live or die” with its shareholders. It simply hires a new CEO and continues on.
6. How much paperwork can the owner tolerate? For all of its advantages, the corporation can provide a large paperwork requirement burden to the owners. The corporation must file a separate tax return, meet state requirements regarding shareholder meetings, keep minutes, track stock, have a separate bank account, and essentially be treated in all manners as separate from its owners. For the extremely small business, this can be a cumbersome burden.
Making the right decision on whether to incorporation can be critical to the success of the business. For more information on how to make the right decision, contact our business consultants for an evaluation of your business needs.
Tuesday, May 25, 2010
Senate Passes More Reform – This Time, It’s Financial Reform
In what has become a disturbing trend, the Senate once again rushed to a final vote on another massive reform package last week. This time, though, the Bill was not as well-publicized as the health care bill from this winter. This time, the financial industry was in the crosshairs of Obama’s “change” pledge.
The Restoring American Financial Stability Act of 2010 (the Act) was passed despite hundreds of amendments that were still pending. The Bill also passed despite the fact that many Senators had NOT EVEN READ IT. This sort of action should not surprise us, because this is exactly the same pattern that was used to pass health care reform earlier this year. Just another day in Washington.
So what does the Act do? The primary goal of the Act is to increase federal regulation of nonconventional investments. A simple way to describe nonconventional investment is to think of them as anything other than stocks, bonds, or money funds that are traded on the open market. Two major types of nonconventional investments are derivatives and hedge funds.
The government is proposing to step up regulation of these types of investments in hopes of avoiding another situation like we had last summer when banks failed and investment companies went bankrupt due partly to reliance on these nonconventional (and highly volatile) investments. These problems, along with the housing crisis, were at the heart of the economic troubles that the country is still feeling today.
President Obama has claimed that the Act will mean that “taxpayers will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts.”
But wait - wasn’t it Obama that gave all of those bailouts just last year?!?!?!? But I digress.
Perhaps the most significant provision of the Act provides a new way for failing banks to liquidate, similar to a bankruptcy process that a normal business would go through. The Act provides the SEC with the ability to regulate derivative markets. The Act also requires SEC registration of hedge funds. That’s a lot of regulation and government oversight, but no substantive changes to the system.
Other provisions of the Act continue this trend, creating new government agencies tasked with monitoring various sectors of the financial markets. The Act also streamlines the supervision of the banking industry, dividing oversight among agencies based on the size of the institution.
Critics argue that the Act is too strong on regulation and too weak on actual changes to the Wall Street systems that caused the problems in the first place. Rather than give banks a different process to go through when they fail, why not do something that would prevent them from failing in the first place?
Critics also argue that the Act does not prevent banks from combining their commercial banking and investment banking operations. This, they argue, continues to subject commercial deposits to investment risk and could leave banks with insufficient assets to cover their deposits.
In the end, only time will tell whether this Act is as good as its supporters think or a flawed as its detractors view it to be. It is also important to note that the Act, though passed by the Senate, may not be in its final form since it still has to be reconciled in Joint Committee with the House version.
As a CPA in tax practice, I can tell you one thing for sure: get ready – once again – to pay higher taxes to fund all of this new government that is being established.
The Restoring American Financial Stability Act of 2010 (the Act) was passed despite hundreds of amendments that were still pending. The Bill also passed despite the fact that many Senators had NOT EVEN READ IT. This sort of action should not surprise us, because this is exactly the same pattern that was used to pass health care reform earlier this year. Just another day in Washington.
So what does the Act do? The primary goal of the Act is to increase federal regulation of nonconventional investments. A simple way to describe nonconventional investment is to think of them as anything other than stocks, bonds, or money funds that are traded on the open market. Two major types of nonconventional investments are derivatives and hedge funds.
The government is proposing to step up regulation of these types of investments in hopes of avoiding another situation like we had last summer when banks failed and investment companies went bankrupt due partly to reliance on these nonconventional (and highly volatile) investments. These problems, along with the housing crisis, were at the heart of the economic troubles that the country is still feeling today.
President Obama has claimed that the Act will mean that “taxpayers will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more taxpayer-funded bailouts.”
But wait - wasn’t it Obama that gave all of those bailouts just last year?!?!?!? But I digress.
Perhaps the most significant provision of the Act provides a new way for failing banks to liquidate, similar to a bankruptcy process that a normal business would go through. The Act provides the SEC with the ability to regulate derivative markets. The Act also requires SEC registration of hedge funds. That’s a lot of regulation and government oversight, but no substantive changes to the system.
Other provisions of the Act continue this trend, creating new government agencies tasked with monitoring various sectors of the financial markets. The Act also streamlines the supervision of the banking industry, dividing oversight among agencies based on the size of the institution.
Critics argue that the Act is too strong on regulation and too weak on actual changes to the Wall Street systems that caused the problems in the first place. Rather than give banks a different process to go through when they fail, why not do something that would prevent them from failing in the first place?
Critics also argue that the Act does not prevent banks from combining their commercial banking and investment banking operations. This, they argue, continues to subject commercial deposits to investment risk and could leave banks with insufficient assets to cover their deposits.
In the end, only time will tell whether this Act is as good as its supporters think or a flawed as its detractors view it to be. It is also important to note that the Act, though passed by the Senate, may not be in its final form since it still has to be reconciled in Joint Committee with the House version.
As a CPA in tax practice, I can tell you one thing for sure: get ready – once again – to pay higher taxes to fund all of this new government that is being established.
Friday, May 21, 2010
The Good News And The Bad News……………………..
The good news for those of us with loans is that interest rates are at extremely low level. In today’s WSJ, New York prime is 3.25%, 30 year mortgages are 5.03%, and 48 month new car loans are at 5.14%. These are very good rates for those of us with debt. The lower rates either allow us to pay our loans off at a faster rate or qualify for larger amounts of debt.
The bad news, however, is that the exceptionally low interest rates coupled with inflationary rates under 1% indicate that the underlying economic structure is not improving. Historically, this country has used a combination of federal taxation and Federal Reserve controls to manage the economy. Stimulating the economy meant lowering federal taxes and reducing interest rates. When the economy over-heated, we did the reverse.
This worked well until the playing field changed. Today we live in a global economy. The things that are occurring in Europe with the Euro, do affect the average American. The same can be said of Asia. We are no longer economic isolationist.
The market has gone “ in the dumper” over the last few weeks because of the Euro crisis. The Euro crisis has been caused, according to the experts, because Greece, Italy and France decided to run their countries on credit. In effect, these countries have become governmental Enron’s and Worldcom’s. They are running on credit without any underlying assets to support the credit.
In response, the Greek government, under extreme pressure for the other European countries, looked to implement austerity programs. In other words, the Greek government proposed to stop living on credit, or at least reduce the degree of credit. In the perfect response from the “me- first” world, one of Greece’s larges unions, said hold on! The union said austerity is fine as long as it isn’t us.
I am hopeful but not optimistic that the U.S. Congress will learn the importance of fiscal responsibility from our European neighbor. I am equally hopeful that we, as Americans, will stand ready to make small sacrifices for the betterment of all should those sacrifices be needed.
So what does all of this mean? It means that not only do we need to take care of ourselves but we need to be intellectually invested in the fiscal interworkings of foreign governments. Our well being depends on other’s accountability.
The bad news, however, is that the exceptionally low interest rates coupled with inflationary rates under 1% indicate that the underlying economic structure is not improving. Historically, this country has used a combination of federal taxation and Federal Reserve controls to manage the economy. Stimulating the economy meant lowering federal taxes and reducing interest rates. When the economy over-heated, we did the reverse.
This worked well until the playing field changed. Today we live in a global economy. The things that are occurring in Europe with the Euro, do affect the average American. The same can be said of Asia. We are no longer economic isolationist.
The market has gone “ in the dumper” over the last few weeks because of the Euro crisis. The Euro crisis has been caused, according to the experts, because Greece, Italy and France decided to run their countries on credit. In effect, these countries have become governmental Enron’s and Worldcom’s. They are running on credit without any underlying assets to support the credit.
In response, the Greek government, under extreme pressure for the other European countries, looked to implement austerity programs. In other words, the Greek government proposed to stop living on credit, or at least reduce the degree of credit. In the perfect response from the “me- first” world, one of Greece’s larges unions, said hold on! The union said austerity is fine as long as it isn’t us.
I am hopeful but not optimistic that the U.S. Congress will learn the importance of fiscal responsibility from our European neighbor. I am equally hopeful that we, as Americans, will stand ready to make small sacrifices for the betterment of all should those sacrifices be needed.
So what does all of this mean? It means that not only do we need to take care of ourselves but we need to be intellectually invested in the fiscal interworkings of foreign governments. Our well being depends on other’s accountability.
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