Twas the night before Christmas
Twas the night before Christmas………………
While we shop through the mall
We rush and we hurry, having no fun at all
We’re feeling the pressure to buy one last gift
In hopes that our conscious will get quite a lift
As we open our wallets, and pull out a card
A struggle within us asks “Why is this hard?”
The pressure to buy, the pressure to spend
The struggle within us wants the misery to end
So we gently put the card back in its place
Feeling guilty, but trying our best to save face
So we think and we ponder about what really matters
As it comes to us clearly, amidst noise and the clatter
This season is not about money or things
This season is about the joy that one brings
The peace, the harmony, the happiness and love
Are all the things we should really think of
So let’s join our forces and pray with great might
That we realize there’s no need to struggle or fight
What we really should be thinking about instead
Is the human experience we share that’s widespread
So forget that last gift, and head home with great speed
Have the happiest, safest, holiday indeed.
Jacqueline E. Ford
Financial Poet
Year end Tax Tid Bits for your business
With the end of the year right around the corner, it’s time we start planning for the upcoming tax season. So the next few articles will contain some bits of useful information to help prepare you and your business for a successful filing. Although the tax code can be torturous to understand, I’ve pulled out some of the most common ideas that the average small business will come across.
1) Owner participation: It pays to participate in your business to the fullest extent possible in order to deduct all your losses under the passive loss limitation rule. This rule only pertains to those business owners who have ownership interest but do not work in the day-to-day operations or management. If you qualify for this rule, be sure to keep good records of how and when you participated in the business.
2) Review qualified plan selection: Review your plan (SEP, IRA, SIMPLE )to make sure it optimizes your benefits while keeping your costs down.
3) Reimbursement arrangements: When reimbursing for travel or entertainment, be sure that the arrangement is treated as an accountable plan. The company deducts the expense and no income is reported to the employee.
4) Classify workers correctly: Make sure you are classifying workers as employees instead of Independent contractors. If you misclassified, the IRS will charge back employment taxes with interest and penalties.
5) Accelerate expenses: Pay outstanding bills in advance. Make purchases for needed equipment and supplies. Be careful not to prepay expenses that relate to items extending beyond one year.
Jacqueline Ford
Financial Strategist
COMMON CENTS (SENSE)
Normally I’d write about business issues as it pertains to bookkeeping. However, I’ve decided to stir the pot so to speak. With all the news about the downturn in the economy, I though it best to focus on some serious soul searching elements of our behavior as consumers. Enjoy the article.
The more we work the more money we earn. The more money we earn, the more things we buy. Which came first, the chicken or the egg? The real question is which came first, the desire for consumption or higher earnings? This is a real paradox. There is an argument to support each as being first. But when you examine closely, does it really matter which came first. More importantly what are you going to do about the situation? What I’m really talking about here is getting honest about our financial lifestyles. Individually, consumers struggle in their own rights to stay ahead of potential financial disasters. With the economy in the condition it is today, many are taking special attention to national and global financial states. Is it because now we believe that the world feels our personal struggle? Or, are we now anxious that our perceived “cushion of comfort” has deflated?
Consumerism has reached new heights, as we find reasons to validate the choices we make. From a psychological viewpoint, one could say that our spending habits are directly related to our desires to achieve certain social status. We surround ourselves with successful people, hoping that in some way the success will “rub off” on us. In the meantime, we spend our time and energy trying to emulate what we think is success! In the short and long run, this leads to more consumption; more meals at restaurants, buying gifts, attending special functions to network, etc. Yes, I know, it takes money to make money, but at what point do we do some serious soul searching about whom we are and what our life’s purpose is? Does it really involve acquiring the best of the best through consumerism? How important is that Lexus, or the Fendi suit, or even the Dolce & Gabbana bag?
Keeping up with the Jones’ has turned the American dream into an American nightmare. Our spending habits have become our alter-egos. We have convinced ourselves that more is better. Look at how major companies have warehoused everything from purchasing cars, to grocery shopping, to outsourcing skilled labor from other countries. At some point the bubble will burst, just like the “dot com” bubble burst in the late 1990’s. Looking at our economy today, that bubble has burst again. Why is it that during times of prosperity we forget that what goes up eventually does not stay there? We ride the wave of artificial enthusiasm for as long as it will carry us. Not giving any forethought into being prepared for the cycles that the economy experiences and its impact on our lifestyle. We’re like kids in a candy store, eating all the candy we can right now, not thinking of the tooth ache that comes later.
Our perception of needs versus wants is much skewed. We are in complete denial about our spending habits and how they are directly related to the social statements we make. Even on a national scale, we can compare the spending habits of major corporations to our own households. For example, the mortgage crisis. Mortgage brokers were mesmerized by their own wheeling and dealing in unique products and the profits to be realized from selling them. In turn, the consumer, who purchased these mortgages, thought they could increase their social status by buying more house at cheaper interest rates. The end result, everyone is suffering. The mortgage industry has gone practically bankrupt as consumers are facing an all time high in foreclosures. Each side was looking only at the here and now, and forgot to prepare for the inevitable cycle.
What can we do to stop the madness?
1. Do some serious soul searching about your true purpose in life. Does it really include all the things that you’ve acquired?
2. Always have a plan, or need I say a cushion of your own. Pay yourself first.
3. Be in control of your spending habits instead of them controlling you. Impulse purchases are not an option, ever!
4. Always live below your means! Remember the Jones’ are an illusion
5. Find creative ways to save money that can include the family, such as starting your own garden, cooking more fresh meals at home together, or having game/movie night vs. going out.
6. Make sure your home, if you have one, is weather sealed to save energy.
7. Re-cycle. It’s a must for our environment. Our future generations need an earth that will continue to sustain them.
8. Join forces with an associate and barter your talents and services.
9. Stop riding on the emotional momentum of the media. It’s like having someone else living your life for you. Make sound financial decisions and stick with them no matter what is happening in the world.
10. Stay healthy mentally and physically. We perform best when our bodies and minds are in sync.
It’s all a case of mind over matter. Take control of your life and your finances. Stop playing the victim role every time an economic downturn happens. Stand strong because we all have “Common Cents”.
Jacqueline E. Ford
Financial Strategist
JE Financial Services
HEAD THE WARNING SIGNS OF A PERSONAL FINANCIAL CRISIS
Not too many people want to admit the hidden truth about their finances. To openly discuss this can be very painful for some. If we are to move forward and create a better financial image for ourselves and our families, we must be honest about the behavior patterns that have gotten us to where we are today. These sneaky sometimes often hidden agendas have only proven to be self serving. Remember, what’s done in the dark, does come to light at some point. Wouldn’t you rather it happen now than later? For those who do, we will marinate on the points below. For those that don’t, you will also marinate on the points made below.
WARNING 1: Having more than one credit card.
Credit should be used only for important unpredictable circumstances, like emergency plumbing. Unfortunately it’s used today as our own personal paycheck. Whenever the urge arises we charge it! Bad move on our parts. If you have more than 1 credit card, do yourself a favor and cut them up now. Out of sight, definitely out of mind.
WARNING 2: Hiding financial information
Do you feel the need to keep your purchases a secret from your partner? Do you buy major items on impulse? Do you make important financial decisions without consulting your partner? Have you ever “bet the farm” on some risky venture? Answering yes to any of these questions reveals that you are headed to some serious trouble. If you have to hide your information, you either have trust issues, which means you are with the wrong person, or you are ashamed of your behavior. Either way, get yourself some professional help!
WARNING 3: Denial
It’s not my fault! Stop playing the role of the victim. You got where you are by your own doing, not coincidence. No one held a gun to your head forcing you to make the decisions you made. Do a reality check on everything you’ve spent money on in the past month. Was it really necessary? Did it add to your physical, mental, or spiritual well being? If not, well, you know what to do with it.
TAKE THE STEPS TO CHANGING YOUR BEHAVIOR
Do more research when it comes to major purchases. Don’t only look at the price, also look at its functionality, the quality, and most importantly, will it add value to your existing condition.
Relationship issues can be your financial issues. If you are having marital problems or problems in your current relationship, often times this affects your spending habits. Research shows that impulse buying is directly related to lack of fulfillment or depression. Whether the relationship issues are with yourself or your significant other, either way, you must analyze the situation and prepare to take steps to reverse it.
Accelerate payments on your credit accounts. The experts tell you to make larger payments on higher interest loans. I say make larger payments on the loan that’s the longest. The longer a loan is outstanding, the larter the total interest will be over time. You can cut this in half by accelerating your payments .
Is bankruptcy really the solution? Only as a last resort. Don’t use bankruptcy as a bail out from your financial responsibilities. You created the problem; it’s your responsibility to erase it. It does take time. Remember you didn’t get into trouble over night.
Hard times call for harsh measures. We are in tough economic times, and it’s important that we all contribute by tightening the belts in our own financial households.
Jacqueline Ford
Financial Strategist
THE INS AND OUTS OF OUTSOURCING BOOKKEEPING
Outsourcing can be one of the most strategic management decisions that a small business could make. Daily struggles with trying to maintain operations can be overwhelming for most, and tragic for some. Trying to keep it all together will definitely take its toll on a small operation. A person can only handle but so much before reaching their breaking point. Besides, why would you want to put your business under such unnecessary stress, when you can outsource to alleviate the burdens of having to do it all?
In-House Bookkeeping
Although many small businesses believe it’s necessary to handle their own bookkeeping in order to cut cost, the downside is that managing your books in-house will minimize your ability to focus on the promotion and development of your business. Actually, in the long run, you will end up spending more. The time spent figuring out your debits and credits can be used more wisely and efficiently by allowing a skilled professional to handle the task. They are better equipped to work faster, which saves you money and time, and allows you to spend more time focusing on revenue building activity.
Out-of-House (Outsourcing) Bookkeeping
I can’t stress enough how cost effective this method is, but I will. Not only will you reduce operating costs such as payroll, employee benefits, and employment taxes, the cost savings can be shifted to areas that will promote business development, which in turn will increase revenues. Also, consider not having to spend time recruiting, training and maintaining staff. No more trouble with managing your staff’s behavior and personal issues. Besides, a professional working off site will be less subject to distractions from your office environment.
Outsourcing Abroad
With the rise in conducting business on a global scale, many companies are outsourcing internationally. Countries such as India, Canada, and Mexico, are becoming big contributors to the labor pools of American companies. As international governments relax their regulations and implement educational programs geared towards computer science and technology, the markets have become more competitive. Of course, the decision is very personal in nature and can be controversial. To remain loyal to your local economy versus profit by any means by outsourcing your labor pool to cheaper economies has been a heated debate for quite some time . If you decide to outsource to another country, keep in mind several factors which could affect your relationship, such as, language barriers, potential military conflicts, government regulations, time difference, and cultural differences.
Partnering for your success!
Jacqueline Ford
Financial Strategist