As we face the new year, now is the time to sit down with your tax advisor to take a look at your potential bill for next April.  Bring your most recent pay stub (plus that of a spouse, if employed), information about any changes to your lifestyle (bought/sold a house, added/lost a dependent), and a copy of your prior year’s return if you are changing tax professionals.  All of these items will aid a tax preparer in estimating the amount of money you may owe the IRS.

After getting an estimate of your tax bill, go ahead NOW and adjust your withholdings, save, or execute tax reduction strategies.  Your employer can provide you with a new W-4 so that you can contribute additional amounts from your paycheck.  If you are a disciplined saver, setting up a CD or savings account specifically for your tax burden may be a better choice.  There is also time to open tax reduction vehicles, such as an IRA or college savings plan, many of which allow deductible contributions all the way to the April 15th deadline.  Your tax professional can help in these decisions and provide you with the pros and cons of each plus detailed information on how they operate and what your liabilities and benefits might be.

Q. So, Scott… you’re saying that even the smallest business can benefit from good accounting practices?

A. Yes! Many of our clients are small businesses, and we’ve found that sometimes these business owners don’t do things like prepare financials, or a profit and loss statement, because they either don’t know exactly what one is, what goes on it or why they might need one.

Q. Let’s talk about mom-preneurs… whether home-based or not. Do those businesses need this kind of business accounting, and why?

A. Definitely. Good accounting practices help even the smallest business know exactly where they stand, financially. Plus, it makes sure things like the right deductions for expenses, tax planning, payroll (even if you just pay yourself a little bit out of the profits!) are all done properly. It doesn’t have to be expensive or scary, either.

Q. Scary? Do you find that people are scared of  accounting?

A. I think they’re often scared of doing something wrong, or of spending money to know how much money they have. Small businesses and startups often think they can just look at their bank statement and know how much money they have. But really, in business, that’s just not the case. Business owners need to be looking at their statements, ledgers and other financial documents.

Q. When you’re working with a small business owner, what’s the most important thing you tell them?

A. To relax… we really are there to help, to make sure they understand everything and to help them keep their business moving forward in the right direction. We try to take the “fear factor” out of accounting.

Q. What about bigger or established businesses? Any words of advice for them?

A. Sure. If you haven’t updated or reviewed your business plan in a while… it’s time to sit down and take a good look at your goals, strategies and financials and make sure your plan is still working, or that you have one in the first place. The business environment has changed a lot in the past couple of years…. months even. We can help update your plan if you need it, and it’s just a good idea to annually review the plan. Does it fit? Is it viable? Do you need to adjust something?

In the case of startups, a few questions that need to be addressed to reach your potential clientele include:

• How does my company fit within the marketplace? Do I know (really) what that universe looks like?
• How can I differentiate myself from my competition so I can effectively target and grow my client base?
• What forms of marketing/advertising or public relations will most effectively motivate my potential target market?
• Is my (business) purpose clear to my potential clientele?
• Is my business ready? Do I have the ability to deliver on the promises my marketing will make?

In the case of seasoned companies, the following questions should be addressed:

• What’s the bottom line? What kind of ROI have we achieved over time with our marketing efforts? How do our results compare to others in our industry?
• What is my business reputation/perception in the public view and in my clientele’s view?
• Are we effectively using available technology and any current trends to maximize our marketing efforts?

Crafting a marketing plan – for a vast majority of companies – takes extensive amounts of time, money, and research to find the right mix between company/client. If you do not have a strong understanding of how your marketplace works and what methods of advertising work best, you’ll simply not be able to maximize your marketing dollars budgeted (or you’ll overspend or not budget enough… both costly mistakes that sink businesses). Too many companies fall into the trap of overextending on TV spots in bad times, running internet marketing campaigns which are not effective because, “they don’t cost very much,” or running radio/magazine ads which don’t reach their target market. All of these methods CAN be effective, when employed correctly and for the right business or scenario. They can all be dismally ineffective, and expensive, too.

If you need help maximizing your marketing dollars or help crafting an effective marketing plan, we can steer you in the right direction. While we are not marketing experts, we refer all of our clients to fantastic Tulsa-based integrated marketing and PR pro Mandy Vavrinak. She and her company, Crossroads Communications, will take your business to the next level. She works closely with Ryan and I, so the marketing plans and business plans developed through our joint efforts reflect real world business cases, ROI analysis and solid financial footing.

First and foremost, make sure that your vision statement does not just parrot your mission statement! Your vision statement should detail what the future of your company would look like if the mission is accomplished.  It’s a very common mistake to misstep and combine your vision and mission into one statement. Remember that the mission is about who you are (now), what you offer (now), how you offer it (now), and where you’d like to go. The vision statement, on the other hand, assumes you’ve gotten there. If you achieve the mission, who and what and where are you? That is a vision worth having, right?

We cannot stress enough how important it is to establish goals and objectives that you, your employees, and your clients clearly understand! Every goal and objective must show a specific result which can be easily tracked. An example would be increasing ROI (return on investment) by a stated percentage (let’s say 28%) over the course of a certain time frame (let’s say 3 years) determined by streamlining a particular process which will cut expenses by X percentage in that same 3 year time frame. That might look like this:

Goal: Increase our return on investment by 28% over the next three years through implementing more effective painting processes and technologies that will cut our labor cost by 40% over the same three years.

Your goals and objectives must be succinct!  Provide guidelines for items such as employee performance, customer and supplier satisfaction, and marketing your business with targeted measures and standards.

When tracking your goals and objectives, each one must have quantifiable measures with no ambiguity.  For example, to make the claim that your company is the “best” at a certain service, be sure to ask yourself: How can your potential clients measure how you are best at that particular service?  To further clarify, if you are a technology company, you may state that your company provides a 30 day money back guarantee, if not satisfied, along with unlimited support of a specific service over the next 45 day period.  To simply say you have the best customer service in the Tulsa is too ambiguous.

Knowing your goals and objectives and what your vision of the future looks like are necessary steps to designing a plan to get there. Now, we know our mission, our vision, our goals and objectives, and we’re ready to tackle the next steps in our plan. Stay tuned for part three!

Having trouble quantifying your goals and objectives….look no further, we can help!

An effective mission statement will often include your company’s functionalities, goals, markets and competitive advantages. Additionally, it should address your product offering, pricing position, quality, service, growth potential, and your relationships with your customers, employees, competitors and the community. No… you shouldn’t necessarily try to get all that into one sentence! However, you do want to keep it to three or fewer to avoid over-complicating things.

For those of you who have not written a mission statement, it’s important for you and your key management or employees to separately list all of the items that an effective mission statement discusses above. You do not want to fall into a groupthink setting where one owner, manager, or employee can dominate a mindset which sways others in describing and understanding your company. After you’ve tallied all of your information and discussed each measure in length, it’s time to begin writing your mission statement.

Primarily, mission statements should not be more than three sentences in length. Each sentence should be detailed but brief and to the point. Also, each sentence must adhere to the purpose of your business and philosophies surrounding your company. For those of you who already have a mission statement, it is absolutely key to monitor whether you mission statement is still fresh and relevant… do a check up about every six months to one year. Anytime you see changes in your market  – whether it is new competition entering the market, technology upgrades which enhance your product base, or potential of growth due to services added – you should consider modifications in your mission statement so you and your employees have a better understanding of the direction of your company.

Once you have a mission statement that accurately reflects who you are, what you offer, how you plan to do things and where you wish to go, it becomes a guiding point for your business plan. When the time comes in the writing process to make some hard decisions (and those times do come), you’ll have a “filter” to use to help make the right choices for your plan and your business.

It is extremely difficult to get from A to B in your company if you do not have the right business planning in place.  If you are intimidated by business planning or simply don’t have the time to accurately and effectively put together a strong business plan, give us a call and we can get started growing your business today!

See the next post: Vision, Goals, Objectives

• How To Create a Mission Statement Specific To My Needs
• How Do My Vision, Goals, and Objectives Stack Up?
• How Does A Detailed, Targeted Marketing Plan Make The Difference?
• What Are the Most Significant Items I Need To Know About My Competition?
• Let’s Talk Strategies
• Financials 101 for Business Plans

• In the case where you do not have a commercial vehicle for tax purposes (ie. Section 179 deduction or depreciable company asset), it is important to log the amount of mileage that you use for business purposes on a daily basis.

If you are someone who needs an organizer or mileage book to keep in your car to help you track monitor mileage on a timely basis, please do. However, if you are iPhone or iPad user, there are some great apps that you can download which are specific to helping you track business mileage as well.

• Qualify some of your purchased property in 2011 as Section 179 deductions instead of depreciating over longer periods of time. If you are not sure which of your purchases qualify, just ask us!

For example, the total depreciation deduction (including the section 179 expense deduction) you can take for a passenger   automobile (that is not a truck or a van) you use in your business and first placed in service in 2010 is $3,060. The maximum   deduction you can take for a truck or van you use in your business and first placed in service in 2010 is increased to $3,160.

Taxes and tax preparation can be painful… but like anything else in life, spending a little time preparing prior to the tax deadline helps immensely. Here are three ways to better prepare yourself in 2011:

First, organize any and all of your receipts over the current year in ONE SPECIFIC BINDER OR OTHER ORGANIZATION TOOL! Writing small details on lunch receipts with clients, including details in the memo field of a business checking transaction, or simply keeping a mileage book to keep track of mileage over the course of the year is a small investment of time each day. However, it saves you long hours at tax time remembering how some of your transactions need to be classified and making sure that expenses which may be deductible aren’t missed. Then, add any 1099 forms or W-2′s received in January of 2012 to your 2011 binder and you’re all set for tax prep. Whether you do your own taxes or pay to have someone do them for you, you’ll save time and be in a better position to take advantage of deductions offered when your business and personal information is in good order.

Next, if you itemize deductions, plan your level of cash/non-cash donations ahead of time to give yourself a tax advantage.  Donating to your favorite charity or church warms your heart; it also can help reduce the amount of taxation you have to pay in a given year. It’s best to speak with a tax planning specialist or financial consultant ahead of time if you plan to donate more than $5,000 in total to be sure you’re tracking appropriately to take advantage of any deductions. We can give you an idea of what organizations fit within the 50%, 30%, or 20% rules and how they apply to donations.

Finally, make yourself a line item in your budget that simply goes toward paying taxes. Whether you are filing for yourself or your business, budget an approximate amount that you will owe in taxes in 2011 going forward. For instance, if in the prior two years you owed $4,800 in taxes and you remain in the same approximate financial shape, better to budget $400/month in your safe spot (whether it is in marketable securities or in a simple savings account) than try to come up with the $4,800 in the middle of April 2012.

Remember, taxes and tax preparation are a part of life; fine tuning your organizational skills, timely planning, and budgeting are three factors that can help you and your small business, be better prepared in 2011. Contact us if you need help getting started. Need to figure out other ways to get your small business on the right financial track? We can help!

Golden, Sandy Beaches, anyone?

While many of us dream of sandy beaches, ski slopes, or second homes in the midst of our retirement, most of us have not adequately planned financially for our golden years.

Regardless of your financial position today, here are some things you need to keep in mind:

• Treat investing for your future, whether it is into an IRA, 401k, or a blend of stock/bond/mutual funds, etc., the same way you treat paying your everyday bills. It’s just as necessary.

Financial Food for thought: In order to keep the lights on in our home, we have to pay a monthly electric bill to our regional utility company; else the lights in our home will be shut off.  The same goes for preparing for our financial future….if you choose to eliminate or procrastinate saving/investing into your future, will you be able to pay that same light bill into your 70s, 80s, and beyond?

• Discipline, Discipline, Discipline – Did I Say Discipline?
  Monthly budgets for many of us are absolutely essential so that we’re able to pay our monthly bills, fulfill current needs, and provide for our future.

Financial Food for thought:  Staying disciplined and setting aside a certain amount each month or quarter for your future allows you to reach your financial goals and ensures you and your loved ones can live comfortably in later years.

Preparing for your financial future does not have to be difficult or intimidating; find sound advice from someone who can guide you in the right financial direction. Need advice today? Contact us and let’s get started.

photo credit: Dhammika Heenpella / Images of Sri Lanka

Call us or email us today to get your business on track for next year.