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Entries in Planning (80)


Is It Vital To Save For Your Future?

Here's another post from my awesome intern!! 

My name is Alicia Boyd and I am a full time student at Bay Path College and work part time. I have a passion for good businesses and excellent customer service. I hope to work some where within the insurance field some day because of its stability.

As I sit in my financial literacy class and listen to all the information regarding 401 K and IRA’s I start to get a little scared at the fact that I am going to be leaving school soon and will have to start planning for my retirement. Planning for retirement and or your future is an important and necessary aspect of every person’s life. The key is to find a company that  will offer a company match, which in essence means you put 4% into your 401k they will counter your offer by putting in 4% on their part.

In class, we learned that it is not a good idea to take out money from your 401k because fines will hit you and your money will then become money that is double taxed when you are ready and or capable of paying back the loan you took out of your company’s 401k. Therefore, when I read this article online about a bill trying to be passed in order to make it easier for people to pay back the loans that they had to withdraw I had mixed feelings.

After reading it I began to agree with this acts right to be established. This new act is entitled The Shrinking Emergency Account Losses Act, and will extend the grace period of 401k loans so that employees and or former employees can avoid penalties for repaying loans plan. Currently an employee has a minimum of 60 days to put the money they took out of their plan back into their account before they will receive a penalty (taxes and fees). This new act will stretch the time to pay to the next date that the worker files federal income taxes.

This will benefit people who decide to take out loans from their company’s savings plan because of an emergency or job loss and want to avoid fees when they decide to leave a job.  This will also make it easier for people to take out loans on their 40lk plans and or company savings plans so they can use the money if they are hit by a series of unfortunate events. According to this article people end up defaulting on these loans 70% of the time, because they had to leave their job and only 3% of active employs default. Which to me seems like it would be all right to give the people who lost their job due to our current state of the economy a better chance by offering them some extra time.

Also, as of right now if someone is to take out money from their 401k plan they are unable to put money back into that plan and receive the company match for 6 months. From my perspective if the person took our the emergency loan to cover a cost and has paid it back or is almost finished paying it back, they should be able to take part in the company match program as soon as possible. This way they can try and catch up with their savings since they had to withdrawal some and fall behind on their retirement savings in the first place.

Source: Senate bill aims to prevent 401(k) leakage By Kenneth Corbin March 25, 2013


3 Things Critical To Cash Flow 

Odds are you probably have seen a business plan at least once in your life. It could have been a well detailed spiral bound behemoth of a document or even scribblings on a napkin at the bar. The funny thing is about business ideas is that everyone has the capacity for great ones - I can think of at least three conversations in the last 24 hours that started, “You know what we should do next..”. The problem isn’t the visualization or the concept (OK maybe that’s the problems sometimes) it’s the detachment people have from the reality of the financials.

Relatively speaking, money is not hard to come by these days. Credit is easier to get and there are amazing resources like indiegogo and kickstarter to help get your project off the ground. The problem is that would be entrepreneurs don’t understand how cash flow works and that it can get kind of expensive to take that napkin from the bar to a full blown business. Granted I understand that with very little liquidity, some time, and some great use of web resources you can launch a venture with a small budget. But what next? How do you plan the to use the resources that are coming in the door to keep building your endeavor.

Here are a few tips to get you thinking about your cash flows even before you really have them.

1. Get real about your expenses. When you are small and your funds are commingled it’s easy to rationalize a monthly fee, some office supplies, a subscription, and maybe even rent in a co-working space without classifying them as proper business expenses. You are never too small to take your business idea seriously. Start tracking from the outset and you will be able to make more realistic assessments of the business and be able to allocate future resources that much better.

2. In the same vein as tracking your expenses you should be staying in line with GAAP - Generally Accepted Accounting Principals. You don’t have to be a CPA to crunch your own numbers but you should have an idea around how and where your figures are coming from. That makes your tax preparers job easier - especially if that’s you. It also makes it easier for you to compare what you are doing to your competitors. If you are just making up accounting metrics and accounting systems on the fly it will compromise the integrity of your financial information. Figure out how your industry tracks their numbers and try to emulate that. It might not always be a perfect fit but you’ll be able to tell how you are doing against your market.

3. Have a collections policy. Sending out an invoice is great. Getting paid 180 days later is not so great. An economist could argue that people are profit maximizing little automatons and I would say that works for businesses too. Not just in maximizing what we traditionally think as profit but also conditions, environments, and choices that make sticking around easier. What all that means is that you are going to hear excuses as to why people can’t or don’t pay. You may not be able to avoid the headaches that come with being paid on time but with a well thought out and incentivised invoicing strategy. Think “2% net 30” kind of stuff. This will help keep your cash flows relatively predictable so that you can plan around them, in good times and bad.

These three tips are not your conventional cash flow kind of tips. I know. But they are important factors to consider for your business. You can have all the spreadsheets and calculations you like but if it’s not quality information, if you aren’t collecting anything, and if you aren’t realistic about what’s going out the door then you won’t be in business long.

I would love to hear about any other cash flow mindsets or standards you use that go beyond the financial statement!


Inside the Entrepreneur's Brain

Have you ever had an idea for a business and when you told someone about it, they instantly tried to discredit it? That is one of my biggest pet peeves - having people shoot down ideas before they really give themselves the time to process it. I think part of cutting your teeth as an entrepreneur is learning to deal with the uncertainty and doubt that gets tossed our way. The other part of being an entrepreneur is probably learning to say no to people when that early discredited idea you had starts to catch some steam. The infographic I have for you today will help you figure out why we (entrepreneurs) think so differently than some people. 

I hope it will also help you keep your chin up when your first, second, third..and twentieth idea need to head back to the white board for a tweak. It doesn't mean stop, it just means rethink! 





Tax Time Woes And Tips For A Better Return

SUPER AWESOME UPDATE: I have been working really diligently to create a resource that small businesses and entrepreneurs can use to help them out of their Start-Up fatigue and slumps. It’s an e-book called “After the Honeymoon: Success After the Start-Up” and it should be live this week! It will be jam packed full of actionable information and resources you can download and adapt to make work for you. With the launch of the e-book comes a few changes to the site as well (getting rid of some extra fluff finally) so make sure you stay tuned :)

Are your tax refunds being delayed up to 6 weeks? Are you finding yourself at the raw end of an audit? Did you use a third party tax preparer? It’s been half-way through the week and I’ve already seen a handful of articles on CNN and similar sources reporting that places like H&R Block are allegedly butchering returns, triggering audits, and misfiling for consumers. That is all kinds of bad news bears for the consumers that are trusting these institutions to provide them the best possible service.

I know that not everyone has time to brush up on the Internal Revenue Code every year or even thoroughly understands how the tax return process works. That’s ok! There are lots of options out there to help get you filed appropriately. Everything from a CPA, if you can find one that’s not busy, IRS Certified Tax Preparers, and even software solutions like TurboTax. Quick note: I use and am a big fan of TurboTax. I use one of the biggest/most robust versions of it every year for myself and to even help people double check their own returns. I’ve seen a few news clips about problems in Minnesota but TurboTax worked hard to correct and stands by their integrity.

One of my biggest problems with the chain or franchise tax shops is that they focus more on the sales of their financial products than the filings and the people they serve. From talking with some previous managers of alleged chains they are incentivised to pump out returns as quickly as possible and to get straight to the sale of their extras. What?! I have recently worked with a new family that was subject to an audit because there were multiple errors on their return - filed by a chain. Before they came to me for help they said they went back to the chain to try to get some assistance but were told that the audit was not the responsibility of the business and they could be of no assistance. What?!

So here are a few tips to help you avoid a misfiling and to make it through this year’s tax time as unscathed as possible.

1. Be prepared. Get everything together before you sit down or approach a tax preparer. It’s more than just your W-2. You’ll want to think about all your major expense obligations, life changes (like buying a house), children, school bills, etc.

2. Double check the work! Before anything gets filed make sure that you double check the information. Make sure there are new mis-typed errors on your return. Names, addresses, filing status, Social Security Numbers, are all very easy to jumble up if your preparer is moving fast. It’s a simple mistake like this that triggered an audit the client of mine.

3. Don’t get oversold. Yes there is a cost to file and if someone is taking the responsibility to file for you, it’s expected that they will charge a fee. After that though it’s only a matter of time before your return comes in the mail or is direct deposited by the IRS. Don’t get sold on immediate returns or prepaid visa cards. Those immediate return type products can cost you up to 40% of what your total return would have been. 40%!!

4. Ask lots of questions so that you are asked lots of questions. Those preparers don’t know who you are or the depth of your financial situation. So do a little homework before you go in there and familiarize yourself with some common credits and deductions to ask about. Also make sure your preparer is being as thorough as possible through each of the various components of the return. DO NOT let them just breeze through it because they think they have an understanding of a typical family/person in your situation.

5. Try not to wait until the last minute. There is still lots of time. Try to get your return filed early because it will mean your refund (if you qualify for one) will come earlier. Before the last ditch deadline the IRS runs like a well oiled machine and stress levels are mitigated. Once the floodgates open it will not only take longer to get your return filed and a refund issued but the window for addressing issues that may arise gets a little tighter. More time is a good thing.

To check the status of your refund, use the "Where's My Refund" tool on the IRS website.

Good Luck filing your returns this year! If you are done and have refund in hand great job! I would love to hear about any challenges you may have come up against in using one of the tax preparing chains - feel free to leave your experiences in the comments below. 


Work Smarter Not Harder - Friday Edition

It’s Friday again! If you are in New England there’s a chance it means delays, some snow shoveling, and possibly even a telecommutee. For everyone it means the cap on another week. I usually like to use, at least a part of, Friday to reflect on the week and try to identify spots that I think could have used more attention. I even try to get my to-do list fired up so that Monday morning I set myself up to catch as much steam as possible. Pretty standard, right?!

Not as standard as you might think. I’ve been talking to a lot of small and medium size businesses lately that rush to get through Friday only to walk in on Monday scrambling to figure out where to start. That’s such a huge waste of time, energy and resources. It’s not just about planning on Friday it’s really a work mindset that I want to try to address with today’s post. I want to give you a few tips on how to work better so that even if you aren’t planning your Mondays on Friday you still won’t lose almost two weekdays worth of momentum. Especially for the solopreneur and small business - wasted time could mean wasted potential for revenue.

1. Stop rationalizing everything. Making excuses counts here too. We are all busy and just because you are trying to juggle 150 tasks all at once does not mean you have a free pass to deliver on none of them. Focus on trying to bring your core responsibilities down and stop trying to handle every little detail by yourself. It slows you down professionally, intellectually, and emotionally. Everyone is entitled to a few excuses every once and awhile but if you are never delivering on what you are promising or what is asked of you then you might not have a business to create long to-do lists for, for very long.

2. No one likes long drawn out meetings. Unfortunately I don’t think enough people have read ReWork. You can help battle this by being punctual or even early. The quicker you show up on time for meetings, work, appointments, and sales calls the better the potential outcome. It shows people that you are respectful of their time and creates a calmer environment to work from. Think about the quality of the last <insert work obligation> you had to deliver on with only 45 seconds to do it. Probably not your best work - yes even those of you that think you work better under pressure. The better you manage your time the less you have to juggle tasks and the better you can adapt to change on the fly. Mmmmmmmm....change.

3. Explain everything as if you were talking to a third grader. Yes, third grader. Not even going to make an “Are You Smarter Than A 5th Grader” joke because some of those kids are really smart. The idea here is that you want to make sure that your message or idea is conveyed in an as easy to understand way as possible. You are trying to take out all the room people can make for assumptions, confusion, or questions. Not only that but when you are working in a collaborative space you want to make sure that you aren’t leaving anyone out. When you boil down complex issues to really easy to understand language you can actually speed up the rate of communication. Even the potential to get faster email responses. It will also give you the opportunity to really get to the heart of any kind of problems as they arise and deal with them efficiently.

4. The last thing is keep an eye on your integrity. You started your endeavor because you believed that you could deliver something that was useful and unique. Make sure you are still delivering that! It’s important during the week you take a minute to really try to peel away the nonsense from the stuff that makes sense. Don’t get to-do list tunnel vision. Remember that everything you do during the day carries an opportunity cost.If you have promised to follow through with something not only make sure that you honor that obligation but that it also adds value to your business. Your businesses values and mission are important, third to that in my book would have to be your business’ integrity.

Don’t let the whirlwind of the week pull your business and your efforts off course. You need to make sure that every week you show up ready to catch some momentum. These are little mistakes and mindset flaws that tend to just pile up without you even knowing. Until you are running around and only put out last-minute-emergency-crucial-professional-value-added-fires. It’s important because come Friday when you are rushing to get out of the office you’ll want to make sure that the next Monday morning isn’t going to have to be a full day devoted to set-up and catch-up.