How to Use Your Business to Reduce Your Tax Pain

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Have you ever wondered what other creative business owners are doing differently to defer taxes and save for retirement? No, I’m not talking about a 401(k), SIMPLE IRA, or a SEP. I’m talking about a plan that affords you the opportunity to take advantage of large tax and retirement limits that aren’t typically available in traditional retirement plans.

If you haven’t heard already, you need to know about the cash balance plan, a defined benefit retirement plan designed for accelerated tax-deferred savings. For instance, in 2016, a 40-year-old employee could defer as much as $80,736 into a cash balance plan on top of their $18,000 deferral to a 401(k) plan. In essence, it allows this employee to pack away $98,736 in 2016 when a traditional defined contribution plan would have only allowed for a $53,000 contribution. The older the employee, the higher the maximum contribution. At age 50, an employee could contribute as much as $155,908 to a cash balance and 401(k) plan combined compared to the $59,000 traditional defined contribution limit. Wow!

So how do you know if it’s right for you and your company? Here are 4 basic things to consider:

  1. Your owners or key executives want to defer more than $53,000 a year into their retirement accounts,
  2. Your business has demonstrated steady profits,
  3. You are willing to contribute three to four percent to employees, and
  4. Your owners are age 40 or older.

There is also a solo cash balance version for small, closely-held businesses.

My name is Valerie Leonard and I’m your not-so-typical financial advisor who works with people just like you every day to help find creative business solutions that others often miss. If you want to learn more about whether the cash balance plan could help reduce your tax pain and save for retirement, let’s chat. You’ll want to know all the facts before going down this road, but I’d love to show you how powerful this strategy can be when designed and optimized correctly.

Four Ways to Get Ahead in the New Year

2017-goals-photoLet’s look at how you can get ahead in 2017 by focusing on short, bite-sized goals that are easy to meet. Here are four things you can knock out today to set yourself up for financial success this year:

  1. Sit down and add up all the expenses you expect to have in the next 30 days. Take into account any spending money you may need and try to limit your discretionary spending for the next 30 days. Cut back on anything that is not necessary for the next month.
  2. Make a list of all your debt balance, minimum monthly payment amounts, and interest rates.
  3. Compare the income you expect to receive over the next 30 days to your expenses. Determine whether you expect to have any money left over once all expenses are paid. If so, plan to use the extra money toward your debt, focusing on the account with the lowest balance first. If you don’t have any money left over, see whether you can raise some money by selling something you no longer need, doing an odd job for someone, or taking on a second temporary job.
  4. Mark your calendar for 30 days from today to repeat this exercise. In the meantime, only worry about what you can do to take control of your finances for this month. Don’t overwhelm yourself by trying to look too far into your future. Seize the day!

As always, I am happy to answer any questions you may have.

 

Hire Millennial Superstars – 10 Interview Questions

interview3When I work with business owners regardless of their industry, one of the issues that seems to cause deep frustration is hiring good employees. With the face of the workforce changing so drastically, hiring and retaining quality people is not simple.   You have to take into account the background of this newer generation and really explore what kind of person is sitting in front of you with their resume in-hand.   The average Millennial (person born between 1980 and 2001) does not stay at one job more than 23 months.   That rate of turnover is unproductive and costly to business owners.

interview1I have 10 interview questions that I suggest using when you are trying to recruit new employees. These questions should help you in identifying Millennial Superstars that will not only work hard for you but also stay around.

 1. If you were starting a company tomorrow, what would be its top three values?
Every good relationship starts with trust and aligned values. Insight into a person’s priorities — as well as honesty and integrity – usually emerge in the candidate’s answers.

2. Tell me about a time you were passed up for an award or promotion you felt you deserved.  Millennials can get frustrated if they don’t achieve quickly. Seeing how they respond to this question will give you an idea of their commitment and resiliency. Knowing up front that a person was shattered that he or she didn’t get a promotion in their first year of work at their last job gives you the opportunity to assess whether they will fit into your company’s culture.

3. Would you rather be an inventor or a leader?  There is no right or wrong answer to this question. It will simply help tell you where their passions lie and if they like to build things or build people. Depending on what the job is, you can determine the fit.

4. Who inspires you and why?  The job candidate’s answer often gives the interviewer a peek into who the interviewee models him or herself after. The response can also highlight the sorts of behavioral patterns the interviewee respects.  A response of Miley Cyrus compared to one of Princess Diana gives you a world of insight.

5. How do you like to receive feedback?  Millennials are a group that desires frequent positive feedback. Balancing this against your internal culture will be important. While baby boomers generally only desire a yearly performance review and Gen Xers like to hear feedback at least quarterly, the next generation needs much more constant and real-time praise and/or critique.

6.  Which book are you currently reading?  Passionate people tend to read books or listen to audio books to improve their skills. Whether the books are specific to a skill such as sales and marketing or they’re reading a book focused on self-development doesn’t matter, they are all good signs. If they’re reading a fiction book and haven’t read an educational book for a while, that’s may be a red flag. Superstars are always looking to better themselves, and the smartest people I know are always learning and absorbing new information.

interview27. Tell me about a time when things felt helpless but you knew you would pull through. Millennials are an optimistic group, and you want to be sure you are bringing that into your organization. Hire people with optimism and you will find they reach for big goals and try to change the future for the better. This question should be a deal breaker if they do not convey a positive attitude.

8. Give me an example of a situation when you worked in a diverse group with different opinions.  Millennials are the most inclusive generation, and it would be a flag if they did not have good examples of inclusive behavior and collaboration. I consider this to one of the best traits about our next generation. I am happy that my kids are growing up in such diversity.

9. Tell me about the volunteer or charity work you do.  The new generation is famously passionate about giving back, whether through missionary work, the Peace Corps, military service, or local charities. Giving and selflessness are hallmarks of great leaders. Having no answer here may indicate someone who is not very well-rounded.

10. “What do you think this job requires?”  While a Millennial may have a fantastic work ethic, and work harder than older employees, he doesn’t necessarily approach a job willing to do whatever it takes to get it done. The new age worker wants to know specifically what he is expected to do. He’ll also want to know when he can expect a promotion or a raise. The candidate’s idea of what it will take to do the job may be very different from what you know it requires. How many hours is the candidate prepared to work? Is he willing to take the time to learn new skills that the job will require? Be sure to give the candidate an idea of how long he would probably have to be at the job in order to get a promotion or a raise based on what it took the people who previously held the job to advance.

Sources:
http://www.inc.com/david-van-rooy/9-interview-questions-you-should-always-ask-millennials.html

https://www.entrepreneur.com/article/248524

https://www.mediabistro.com/recruit-hire/interview-candidates/4-questions-managers-must-ask-millennials-during-a-job-interview/

https://www.entrepreneur.com/article/241524

CPA Tidbits – “I’m more than a bean counter!”

beancounterSure, you have your trusty calculator by your side most all of the time, but this derogatory phrase – “bean counter” – doesn’t mean you slave over spreadsheets every waking second. You are much more than that – and your clients NEED to know that!

The strongest message you can give your clients is that you aren’t there to count beans, you’re there to GROW the beans! Many accountants would have a hard time grasping this concept but the ones positioned for growth will embrace it with arms wide open!

So how do you change your image from a bean counter to a successful bean cultivator?

  1. It all starts with trust – you need a solid reputation for providing top notch advice. We all know that behind every good business is a great accountant. Make sure your firm emotes that sentiment in every encounter with the public.
  2. Have a little fun – People, in general, appreciate laughter, humor, and honesty. Your reputation for being a capable professional can still thrive even if you stop being so serious. Your goal is to be approachable, relatable, and sympathetic to your client’s concerns. You may just reach a bigger audience by being yourself and reminding people that you are more like them than the IRS.
  3. Find people who can help you – You can’t do everything alone and you don’t have all the answers! So why not find employees who can offer specialized solutions for your top client issues and who aren’t burned out on crunching numbers and memorizing excel formulas? Learn to become a leader and excellent communicator to your employees – that will afford you more face-time with the clients and prospects who will help grow your business.

For more inspiration and ideas on how CPAs can live on the north side of average, let’s connect!

Women CPAs Work Their Assets Off

Let’s face it, accounting work is not for just everyone, especially when you’re balancing mom duties. Not only do you work impossible hours, travel like the globetrotters, bite your upper lip every time a box of receipts shows up on your desk, manage a mountain of e-mails daily, and listen to countless stories from your clients about that one TV or radio commercial that assured him his expense was deductible – you also are the CEO of your family! No wonder you feel like a legitimate superwoman!assetsoff.jpg

So what are other female accountants doing to balance their lives?

  1. Improve your habits, not your goals – You don’t need to set better goals because you already know who you want to be. Instead, you need to focus on the one or two things you can do that will make the biggest difference in your life.   What is that for you?? Maybe it’s changing a routine? Perhaps it’s narrowing your focus? What about having an accountability partner? Do you need more fun in your life? Could it be just simply taking action on what you already know you need to do? After all, imperfect action is better than no action. Take a look at the one simple thing that could modify your life and just focus on it for the next few months.
  2. Throw out the junk – You know you do things daily that aren’t on your life’s priority list. They don’t make one iota of difference in your life or in the lives of those around you. But you do them anyway. So why not picking one of those things and eliminating it altogether. It may just liberate you all the way to less stress.
  3. Just say “no”! – You can’t possibly be everything to everyone. For me, I recently learned to say no by saying “I’m sorry but I can’t commit to this right now but you can certainly count on my prayers.” And not only have I started saying it, I mean it! This gives me the confidence to gracefully focus on my priorities but also the feeling that I can make a difference by lifting up that person or their cause in prayer. After all, sometimes that’s the best way to make a difference!

For more tips on how you can live on the north side of average, subscribe or connect with me today!

 

“Yes, You Can Quit Your Job!”

“Yes, You Can Quit Your Job!”

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There is no greater feeling on this planet than to be able to have a conversation with one of my dear clients to reassure them that they’re in a position to chase their dreams.

The other day, a client called me and explained that she was frustrated with her job and felt like she was missing out on time with her young children. Not only that, but she also had a dream of pursuing a business and knew she’d be successful if she could only be free of the ties that bound her in her current job. I could sense the uncertainty over taking the leap of faith and she wanted to be sure she would not be jeopardizing the financial security of her family.

But here’s the thing…this lady was prepared to take the risk, she just didn’t know it. She had made sound financial decisions her entire life. She had saved enough cash to support her during the transition, she carried little debt and wasn’t a slave to crazy monthly payments, she had thought about the decision to quit her job from multiple angles and even had a fallback plan, and most importantly, she had faith that God would always take care of her.

I crunched some numbers and was able to tell her with reasonable confidence that she could make it work – and she will likely do just that!   You see, there’s a right way and a wrong way to start a new business and, thankfully, I’m excited to join her on the ride to pursuing her new endeavors.

If you need help chasing your dreams or starting a new business, let me know! I’d love to help. And thanks for sharing with anyone you know who may be on this path…

~Val

 

Actual results will vary. The above case does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted