March 12, 2018 § Leave a comment
Take a moment, and think to yourself, who in your life is a great listener?
For some, this may be a hard question to answer. We live in a world where a vast quantity of conversations are two peers taking turns exchanging words with each other, and not actually comprehending what they are saying to one another. Frequently, while the other person is talking, we’re in our own heads crafting our next response. How could we possibly be fully engaged in what our peer is saying, if we’re thinking about what we’re going to say next?
Ultimately, our goal in conversations should be to listen to understand, rather than to listen to respond. I have been reading Rowena Crosbie and Deborah Rinner’s book “Your Invisible Toolbox,” and they discuss how the key to building strong relationships is listening effectively. When reading this, I thought to myself how accurate that point was from my past experiences. I’d like for you to think back to the person (or people) you thought of when you considered who in your life is a great listener – how do you feel about that person/people? I would venture to say that you likely are very fond of that person, and like being around them.
How can we become better listeners?
A good place to start would be to focus on understanding the speaker, before being understood. If the speaker feels understood, they will reciprocate the same courtesy to you when you’re speaking. While understanding the speaker, you will find yourself empathizing or seeing the speaker’s point of view. When this occurs, conversations are more productive, because both speakers feel heard and understood, rather than both speakers being talked at, and thus fostering better relationships. Everyone wins in this situation, then, right?
An additional way to be a good listener is to not interrupt. This one may seem obvious, but it happens a lot in day to day conversations without hesitation. Frequently, we interrupt someone because we’re excited about what they have to say, and want to contribute, or, we’re wanting to share our own experience. Regardless of the reason why, it’s disrespectful. Interrupting gives off the idea that your thoughts and ideas are more important than theirs.
Improving upon your listening skills can assist in your personal development skills as well. As Larry King has said before, “…nothing I say this day will teach me anything. So, if I’m going to learn, I must do it by listening.”
Working on improving your listening can impact many aspects of your life. Listening to your clients and understanding their needs, is vital in today’s competitive marketplace. Additionally, your spouse/partner could feel better after telling you about their day and you actively listening. I suppose there is indeed a reason we were given two ears and only one mouth…
March 2, 2018 § Leave a comment
After an unusually calm 2017, volatility has returned to the stock market and it’s expected to stay. If riding the roller coaster of the stock market makes you nauseous, here’s a couple things to keep in mind.
- Market volatility and market corrections are normal. The unprecedented stability & run we saw in the market from mid-November 2016 thru January 2018, while nice, was highly unusual. In fact, from 1980 – 2017, the average intra-year decline in the S&P 500 was 13%.1
When the market is volatile, it may be best to resist the urge to frequently check your portfolio’s performance. Seeing daily performance can lead to rash decisions, that could end up hurting your portfolio in the long run. Remember, performance should be measured over longer periods of time. You may, instead, want to focus on reviewing your investment objections, asset allocation (further described below), and your long-term goals.
- The media loves to sensationalize market corrections. Headlines screaming “Dow Plunges 1,175 Points” garner more attention than headlines announcing that “S&P Slides 4% During Normal and Overdue Correction.” It is important to look past the headlines and try to see what actual data is being reported.
If you have questions about the headlines and reports in the media, don’t hesitate to reach out to your financial advisor. They should be more than happy to help you understand the data behind the headlines, and more importantly, how your portfolio and financial plan, are or could be, affected.
It’s also important to note, that the same can be said when looking at your own portfolio. Focus on the percentages and benchmarks as opposed to the dollar figure. A $25,000 decrease may seem like a lot, but it would only be a 5% decrease on a $500,000 portfolio.
- There are several investing principals that, by their very nature, help take some of the edge off volatile markets. Whether you realize it or not, these investment principals are likely already in play in your portfolio. The trick is to make sure they’re at play at a level of risk that you’re comfortable with.
Diversification: The whole purpose of diversification is to help reduce risk and the majority of financial advisors preach its importance. Having a diversified portfolio among different companies and asset classes should help lessen your portfolio’s exposure to any one company or asset class and smooth out performance.
Asset Allocation: Allocating your investments between stocks and fixed income (bonds and cash) is a way to help balance risk. Most people aren’t invested in a 100% stock portfolio as they aren’t comfortable with that amount of risk. However, whatever your allocation is, it’s important that you are comfortable with the amount of risk your allocation correlates to. Since stock market drops of 10% are not an unusual occurrence, someone who has a portfolio allocation of 80% stocks and 20% fixed income, should be comfortable with and expect to experience drops of 8% (stock exposure of 80% times 10% market drop) in their portfolio. If you’re not comfortable with the level of risk your portfolio is taking, you may need to reevaluate your asset allocation.
Dollar Cost Averaging: If you are making regular, reoccurring contributions to your investment portfolio, you are dollar cost averaging. Dips in the market are great for people who dollar cost average as it allows your contributions to purchase more shares when the market/prices are lower.
While expecting volatility, seeing past the noise, and having an investment approach and plan that you’re comfortable with can’t prevent market volatility, it can help make the wild ride of the stock market easier to stomach.
As you can see, there are several reasons why it’s important to take a step back during market volatility and really evaluate the big picture before making changes to your long-term plans. If you’d like to discuss the recent return of volatility to the stock market or any other personal financial planning questions you have, please reach out. I’d be happy to meet with you.
This material has been prepared for informational and education purposes only, and is not intended to provide, and should not be relied on for, investment advice.
Advisory Services offered through Wealth Advisors of Iowa, LLC, a State of Iowa Registered Investment Advisor, and an affiliate of McGowen, Hurst, Clark & Smith, P.C. Certified Public Accountants and Business Advisors
February 21, 2018 § Leave a comment
We all know the words, reduce, reuse and recycle. We also know how important they are; reducing the amount of waste we create, reusing what we have, and recycling the correct materials every chance we get. All of this means keeping more things out of the trash and landfills and giving another life to something you already own. You may lead a lifestyle of reducing, reusing and recycling, but it never hurts to brush up on the guidelines and also learn a few new ideas.
- Shop for products that use less packaging. This will cut down on the materials used in the manufacturing process. For example, purchasing goods in bulk and using reusable produce bags instead of plastic produce bags.
- Buy reusable over disposable items. For example, try using metal silverware and ceramic coffee cups at work instead of plastic silverware and Styrofoam cups.
- Glass jars – These can be used for collecting leftover cooking grease or storing bulk items like granola, rice or nuts. They can also be useful when organizing office items or craft supplies.
- Grocery bags – Use reusable grocery bags when you are grocery shopping. Don’t forget, these can also be used when you are clothing shopping!
- Household item plastic containers. A couple ideas are:
- Laundry detergent – poke holes in the lid and use as a watering can!
- Creamer containers – remove plastic packaging and use for storing snacks like cereal or chopped veggies in the fridge!
It is important to understand what you can and can’t recycle! Please check your local guidelines and regulations because they could change based on the city and your location.
What CAN go into the Recycling Collection Can in Des Moines
- Newspapers (including glossy inserts)
- Mixed Paper (including junk mail, even envelopes with clear plastic inserts, phone books, and glossy magazines
- Shredded paper (must be enclosed in a paper sack or box. You can even use cereal or pop can box that is taped closed)
- Toilet paper and paper towel cardboard rolls
- Gift bags with handles cut off, paper gift wrap (Does NOT include metallic, foil, mylar or glittery gift wrap)
- Cardboard (broken down, flattened and cut to fit inside the cart)
- Plastic Containers (including bottles, yogurt or margarine tubs without lids)
- Glass Containers (all colors)
- Tin/Aluminum Cans (no need to remove labels
- Paper Food Cartons (milk, including soy, chocolate, and cream, juice boxes, protein drinks, wine, egg substitutes, soup and broth)
- Wire Clothes Hangers
- Empty Aerosol Cans
A full list of accepted items are located here:
What CANNOT go into the Recycling Collection Can in Des Moines
- Yard Waste
- Garden Waste
- Hazardous Waste
- Plastic Bags of any sort
- Plastics: hoses, pipes, wiring, furniture, polystyrene, food storage containers, sour cream, cottage cheese or cool whip containers
- The following papers: tissues, toilet paper, paper towels, photo paper, photos and carbon paper
- Aluminum Foil
- Metals: pots, pans or utensils
- Paper contaminated with food, coated paper coffee and fast food cups and pizza boxes-(cut off lid and recycle)
- Hard cover books
- Metallic, foil, mylar or glittery gift wrap
- Containers that once held motor oil or antifreeze
- Berry containers
- Convenience store cups
- Tupperware and food storage containers
- Clothes/Clothing any type
A full list of not accepted items are located here:
These can be big changes for some people, so try to gradually add them into your lifestyle. Together, we can work toward decreasing the amount of waste going into landfills and make our Earth a cleaner place. Plus, repurposing and reusing can be a great craft and bonding experience for you and your family.
February 16, 2018 § Leave a comment
Journalist, Tom Brokaw, describes the generation who grew up in the United States during the Great Depression and later fought in World War II as the, “Greatest Generation.” In his book, he pays tribute to their selfless efforts of fighting Hitler and other forms of tyranny so that their children could enjoy a better life. The values that this group possessed were personal responsibility, duty, honor, and faith. Brokaw credits this generation “with much of the freedom and affluence that Americans enjoy today. They have given the succeeding generations the opportunity to accumulate great economic wealth, political muscle, and the freedom from foreign oppression to make whatever choices they like. Despite these achievements, however, Brokaw believes that the Greatest Generation remains remarkably humble about what they’ve done. It is a generation that, by and large, made no demands of homage from those who followed and prospered economically, politically, and culturally because of its sacrifices.”
One of the definitions of sacrifice, by Merriam-Webster reads, “destruction or surrender of something for the sake of something else.” In the reference above, it was a surrender of great magnitude including a physical surrender of one’s actual life. “Greater love has no one than this: to lay down one’s life for one’s friends.” (John 15:13.) I don’t take the legacy of a sacrifice like that lightly.
While we may not be asked in our lifetime to make as big of a sacrifice, there are still things we can do on a daily basis that give strength to the power of sacrifice. Things that honor others above ourselves. Things such as:
Giving of time, energy and talents: what special skills and abilities do you have that you could use to bless others?
Being humble: what circumstances happen throughout your day where you could sacrifice your own pride for the good of someone else?
Having integrity: Are you doing what’s right even if it costs you something personally?
Listening more than speaking: Are you really listening and caring about what other people are sharing with you throughout the day?
Being generous: Are you willing to part with things you have in order to share them with someone else, if they need them?
These are small examples in light of what others have sacrificed for the sake of the common good but it at least gets you thinking of ideas where you could make small changes in your life that may have a big impact on someone else’s. I have had the privilege of having people in my everyday life (family, co-workers, neighbors) who have modeled living a sacrificial life very well. Some of the happiest people I know are also some of the most generous and selfless people.
Napoleon Hill said, “Great achievement is usually born of great sacrifice, and is never the result of selfishness.”
What can you and I give up today for the sake of blessing other people? It may be something big or it may be something small. Either way, the act of sacrifice has power that can be felt from generation to generation. We are a generation who has been given much therefore, we have much to give.
February 8, 2018 § Leave a comment
Can you believe it’s already 2018? Every year seems to go by more quickly than the last. Time is flying, technology is rapidly developing, and business trends are changing at unprecedented speeds. Small business owners have a lot on their plates: keeping their business secure, staying up to date with rules and regulations, knowing the latest industry software, understanding current HR trends, and – on top of all that – modernizing their marketing practices to keep up with the big guys.
Tackling just one of these areas seems overwhelming, let alone running an entire business, but there are a few marketing trends that small business owners can (and should try their hardest to) take advantage of. Current-day marketing trends really run the gamut from simple blogging to intricate email marketing campaigns to artificial intelligence. We’ll take a look at some that are more attainable for small business owners. If you already have these under control, you’re doing great!
Content marketing creates a strong base for all of your marketing efforts. But what is it? Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant and consistent content to attract and retain a clearly defined audience – and ultimately, to drive profitable customer action. Yikes, overwhelming! Let’s pick it apart.
Strategic marketing approach. All of your marketing approaches should be strategic. Think long term: how will my efforts fit together, who am I trying to reach, what else is my target audience interested in, where can I save some marketing dollars and where should I spend more? These questions and strategies vary for every company, so take some time to really think it through.
Creating and distributing valuable, relevant and consistent content. “Creating” is a big part here. While it can seem like a lot of work, it should also feel exciting! This is an opportunity to share your passion, expertise and personality with your audience. Distribution of content can take many forms. A very popular form is blogging. Again, go back to strategy here: Don’t just blog when you feel like it; create a plan and stick to it. For small business, a good target is one blog every one to two weeks. Other forms of distribution include your website content, social media content, newsletters and emails, downloadables and more. Finally, make sure your content is valuable, relevant and consistent. It should relate closely with what you do, provide some useful information to the reader and showcase your consistent brand and personality.
Attract and retain a clearly defined audience. Knowing your audience goes back to having a marketing strategy. If you sell landscaping services, your target audience might be homeowners (probably recent buyers) who are around the ages of 30-65 and make above median income. They enjoy attractive homes but aren’t complete DIY-ers. Know the ins and outs of these people and what their interests are. Create content that reaches this group of people, while being careful not to exclude your audience outliers.
Many small businesses are already on board with email marketing, but I would be remiss if I didn’t mention this useful tool here. Email is a great way to share your content with your customers and target audience; many businesses offer email marketing content in the form of newsletters. Newsletters have a few strong benefits: keeping your name in front of your audience, reminding them you have an expertise they may need, showcasing your company’s personality and much more.
There are other opportunities to use email marketing besides newsletters, though, depending on your business. Perhaps you have sales or coupons; sending an email to your customers is a good way to bring them in the door. If you’re in an industry with frequent news, changing regulations, etc., sending out emails specifically for these reasons is appropriate. If you host events, sending email invitations and registrations is useful both to your customers and to you! Look for email marketing opportunities that suit your specific business and needs.
Marketing automation isn’t a brand new tool, but in the small business world, it isn’t as well-known as things like newsletters and social media. Marketing automation refers to the software that exists with the goal of automating marketing actions. Many marketers use it to automate repetitive tasks such as emails, social media and other website actions. Automation uses data at a level that most small business owners simply don’t have the time to do; it can pick through your audience and determine who opens the most emails, who reads which articles, etc., and lets you know who your strongest prospective customers are. Now that’s useful information!
While not a new concept at all, social media is here to stay, and it continues to develop and change. The first rule of a successful social media presence for a small business is to know which platforms your audience uses. Once you determine the best platforms for your business, reach your audience in the way they want to be reached with the content they’ll like. This might be informational articles, photos of you and your team, photos of your product, live steam videos of a project, third-party articles, etc. Come up with a plan and a goal, and utilize social media tools and paid opportunities to reach the audience you need.
The above areas are almost completely digital marketing strategies, and in today’s world, this should come as no surprise. Online marketing is very beneficial; everything works together in your favor if you strategize and play your cards right. But is the world turning into robots? Of course not. Traditional face-to-face marketing, or relationship marketing, will always have its place in the world. Know your customers’ names, their family members and hobbies, what products or services they like most – let them know that you know and appreciate them. (Side note: there’s an online tool for this as well – CRM (client relationship management) systems.)
No matter the size of your company, the industry you’re in or the time and resources you have, know that you can market effectively. All it takes is a little strategizing and planning to get started in the right direction. Happy marketing!
January 31, 2018 § Leave a comment
There has been one common theme in almost every tax conversation I have had with friends and family over the last couple of months….. Bitcoin.
What is it? How is it valuable? Will I get rich investing in cryptocurrency?
“I don’t know” is a standard response to these questions from most CPAs these days. But as CPAs, we do need to be aware of the taxation issues involved when holding cryptocurrency for investment. We also need to understand the tax impact of business owners accepting virtual currency for payment of goods and services, as well as using virtual currency as payment for business expenditures.
Cryptocurrency, such as Bitcoin, is a type of ‘virtual currency’ based on cryptographic algorithms and block-chain technology. Bitcoins are digitally ‘mined’ by solving very complicated math problems, thereby verifying a public record of transactions for that Bitcoin.
According to IRS Notice 2014-21, “Bitcoin is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.” Virtual currencies, like Bitcoin, can be used like any other “normal” currency, or treated as an investment instrument, and these different uses can cause different taxable events.
A business owner may accept Bitcoin as payment for goods and services. The business would record ordinary income based on the fair market value (FMV) of the bitcoin at the time it was accepted. This FMV is then treated like any other income and is taxable. As Bitcoins are also treated as an investment instrument, basis and gain/loss impact must also be considered for every bitcoin transaction.
Let’s say the business owner takes the Bitcoin received for payment and uses that bitcoin to pay for business expenditures. The business would record a deductible business expense at the FMV of the Bitcoin, at the time of the transaction. The business would also record gain or loss based on the FMV at the time of the transaction and the basis in the Bitcoin used as payment for expense. Thus, in this scenario, the business owner would have two separate taxable events if they used Bitcoin to pay for business expenditures.
Bitcoin can also be held for investment use by an individual. In this case, the individual would have a taxable event every time they sold Bitcoin on an exchange, or used Bitcoin to pay for personal expenditures. The individual taxpayer would calculate a taxable gain/loss based on the FMV at the time of the transaction less their cost basis in that Bitcoin. (Note any virtual currency received by an individual as compensation for goods or services provided is treated as ordinary income.)
The main thing to remember with personal or business cryptocurrency transactions is that the currency must be “held for investment” to allow a deduction of any potential loss. The gain is always taxable!
(Please note – In the past, some taxpayers have attempted to apply like-kind exchange treatment to certain types of cryptocurrency transactions, in order to delay the recognition of taxable gain. The like-kind exchange provisions of the Internal Revenue Code have been adjusted by recent tax reform, and no longer allow any property, other than real estate property, to be eligible for like-kind exchange tax treatment.)
(Ref. Thomson Reuters Checkpoint Tax Action Memo-1854, 6/6/2017)
January 24, 2018 § Leave a comment
Change is in the air, at least when it comes to taxes. There is both good and bad within the new Tax Cuts and Jobs Act (TCJA) that was signed into law in late 2017; however, for most businesses a positive impact is expected. You have probably heard a lot about tax reform in the past month, but what are the things your business should know about right now to proactively plan for your 2018 tax return? Below are four items in the TCJA your business should be aware of and what you can do right now in preparation of the tax law change.
- If your business is an S-corporation, there may be tax savings in converting to a C-corporation. One of the biggest changes in the tax reform bill was that of the C-corporation tax rate dropping from 35% to 21%. S-corporations are still taxed at your individual tax rate; however, there is also a valuable 20% deduction available to provide some tax relief to business owners (sole proprietorships, partnerships, and S-corporations). Unfortunately, there is not a clear-cut answer on when an S-corporation should switch to a lower tax rate C-corporation. It may be worth your time to discuss your specific situation with our CPAs to determine if there are tax savings in converting from an S to a C-corporation.
- Deducting the cost of property and equipment in one year became easier under the TCJA. Section 179 limits have increased, and 100% bonus depreciation is now available. In 2017, Section 179 allowed for a $510,000 deduction with a phaseout beginning at $2 million of assets placed in service. Under the TCJA, Section 179 increased to $1 million with phaseout beginning at $2.5 million. In addition, the new law allows for 100% bonus depreciation for both new and used assets placed in service after September 27, 2017. This gives businesses the green light to invest in equipment and receive a full deduction in the same year. As a reminder, there are phaseouts to be aware of along with tax strategy for future years, so discuss with our CPAs prior to making any major purchases.
- One downside of the TCJA is that entertainment expenses are no longer deductible. Activities related to amusement and recreation for a client including dues to social, athletic, or sporting clubs are no longer deductible. Meals are still subject to the 50% deductibility rules. In addition, meals provided on the employer’s premises for convenience are also now subject to the 50% rule, whereas before, they were 100% deductible. Many business entities have historically grouped meals and entertainment into one account. With the difference in deductibility for meals and entertainment, it would be best to split these into two separate and distinct accounts. This will prevent you or your accountant from having to dig through this account next year to determine what is and is not deductible.
- Employee payroll withholding tables have been updated due to the change in the individual tax brackets in the TCJA. The IRS released the updated tables last week. Many accounting software programs, like Quickbooks, have updated their systems for the change. However, employees also need to be aware of this change so they can adjust their withholding appropriately for their 2018 income taxes. Expect your employees to want to change their withholding amounts by filling out new Form W-4s, especially when the IRS releases a calculator in mid-February to better help individuals determine their tax liabilities.
While there are many changes in the TCJA, the above is a good start in helping your business prepare for the new tax law. Let McGowen, Hurst, Clark, and Smith be your resource in navigating these changes and finding tax saving strategies for your business.