Business Resolutions for 2012 – January 2012

Important Deadlines

January 31, 2012

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New Year’s Resolutions – The Health of Your Business
Kevin Shaw, CPA, PFS, CEO

New Year’s Day. Is there any other day that evokes a desire for change, renewal and reassessment? It seems like resolutions abound for things like getting fit, losing weight, and minimizing bad habits. What I don’t hear as much about are resolutions to improve your business. Reevaluating your business finances can lead to significant improvement in many other areas of your life. Here are a few resolutions that I think that you should consider.

Keep track of tax deductions – We find that when clients try to assemble all of their tax deductions at the end of the year, they generally will miss things that could have been deductible. Many small business owners pay for items from personal accounts and forget to thoroughly review those accounts at the end of the year. Many personal deductions or credits such as charitable contributions, medical expenses and child care are paid in cash or not tracked properly. Using a 30% marginal tax bracket, each dollar of missed deductions will cost 30 cents in tax savings. For small business owners it could be even higher since their business income is also subject to self-employment taxes of 15.3%. $2,000 of missed deductions could cost you $600 to $900 in tax savings. Start now to develop a system for tracking these deductions and continue throughout the year.

Minimize expenditures – Whether in business or in your personal life, monitoring your cash flow can have a significant impact on your financial health. It is really incredible how much discretionary spending a business does without even knowing they are doing it. Credit and debit cards have created an atmosphere of not really knowing what we are spending. When we help business owners with budgeting, they are sometimes shocked at how much they spend on items that may not be important to the health of the business. Evaluate each expense to determine if it is truly necessary. Then create a budget and stick to it.

Create long-term goals – Long-term planning is very important in business. When you create a business, the very first thing you should be planning for is your exit strategy. In other words, what is the end game? Of course you got into business because you love what you do, but at the end of the day, most people start a business because they believe it is the best way for them to achieve financial independence. What does financial independence mean to you? Understanding this will go a long way to achieving your long-term goals.

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New Year’s Resolutions – Become Financially Fit in 2012
Dave Palm, Financial Advisor

As the New Year is upon us, so is the tradition of making a “New Year’s Resolution”. If your resolution for 2012 is to become financially fit, here are a few tips to help you along.

1. Track your spending. Most individuals when asked, say they have a budget and most people can very easily rattle off all of their major expenses. However, most do not keep track of the little things. Little expenses add up quickly and eat away at funds you would use for debt reduction or savings. Take the time to track all of your expenses so you can have the knowledge to make decisions regarding your finances going forward.

2. Increase your savings. Make it easy and automatic through a payroll deduction or a monthly withdrawal out of your checking account. Most of us spend the money if it is readily available to us. This way, you will not have to think about it or make the effort to put money in savings. You will be surprised at how quickly your savings will grow. Try bumping up your retirement contributions by 1-2% of your income. You will notice the “initial sting” to your checkbook, but you will be surprised at how quickly your budget will adapt to the new cash flow.

3. Review your service providers. Have you done a comparison of the providers of various services you receive recently? Take a look at your cell phone or cable bill. Are there better offers currently available? Have you reviewed your insurance needs and coverage? For instance, life insurance rates are currently at a 15 year low. Traditionally, life insurance rates increase with age, but depending on your situation, you might be able to find similar coverage. What about car insurance or home owner’s insurance?

4. Refinance your mortgage to a lower rate. If you are able to qualify for a mortgage refinance, now might be a good time to consider this option. Even if you just refinanced a year or so ago, it still might make sense. Rates are at historic lows with many 30 year mortgages below 4.0%. Obviously you will have to consider any additional closing costs, but depending on your savings, you can probably recover that quickly. Take the monthly savings and invest it or use it to pay down your mortgage to shorten the life of your loan.

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Shaw & Associates Green Tax Process

Is your New Year’s Resolution to reduce your environmental impact?  This tax season, take advantage of our Green Tax Process.  Shaw & Associates has created a step by step process to submit your tax information electronically.  Visit www.KevinShawCPA.com, click on Resources, click on Client Forms, click on Green Tax Process.
 

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