Financial matters can be a big cause of stress on a relationship. Often times, the discussion is avoided, or minimally addressed between partners. The great news is, that it does not have to be that way. There is a new trend that is changing the game for those in a relationship. A financial date night. These date nights are a pre-set, special time, to come together and get on the same page when it comes to money matters, and you can make it fun too!
The key to setting up a financial date night is that it is a planned out, scheduled time. By pre-scheduling your night, you will be more likely to stick to the topics at hand, and your time will be more productive. This is a good time to talk about your financial goals and how you plan to achieve them.
If you and your partner somewhat regularly talk money, you may want to go more in depth with your discussions. If you are a couple that tends to minimally address money matters, then you may want to start small. Decide what is most important to you, and you both bring those topics to the date.
Once you have set a date and added it to your calendar or planner, it’s time to make the financial date night fun and interesting. Plan out a fun meal or order your favorite take out or delivery to enjoy. Set up a fun space to go over your financial topics that is comfortable. Pour a favorite drink and have your agenda ready to go. With the promise of making it a fun evening, you will be more likely to stick to your plan.
Decide how often you want to hold your financial date nights in order to meet your financial goals. Depending on how intricate your personal circumstances are, you may want to start with more frequent money talks, and once you have a clear understanding of your direction, you can have them less frequently. Topics that you can cover include:
You can choose a specific topic for each date, or touch on all the subjects. Customize your date to be just right for you and your partner! Before you know it, you will have a new confidence about your financial situation, and have peace of mind that you are on the same page.
It’s understandable to want to focus a marketing campaign on the strengths and benefits of the products or services in question. However, something that’s easy to overlook is how your business and its offerings differ from the competition. Competitive intelligence is the process of legally and ethically gathering and analyzing information on your competitors.
Making this distinction isn’t as simple as, “We’re better because we say so.” When you can present prospective customers with accurate data and solid reasoning behind why your products or services will fulfill their needs better than other options, you’ll stand a much better chance of turning those marketing dollars into revenue. This is where competitive intelligence comes into play.
Competitive Intelligence can help you collect valuable data on their:
This information enables you to not only recognize your competitors’ strengths and weaknesses but also better identify and anticipate market trends. As a result, your marketing campaign should emphasize what customers need, how you can deliver it, and where the competition falls short.
Gleaning intelligence is relatively simple. At the most basic human level, chatting with customers and prospects, bank reps, financial services providers, and other business contacts can help keep you in the know about what’s going on in the marketplace. You might encounter these individuals in the regular course of business or seek them out at trade shows, conferences, and networking events.
Relying on fortuitous conversations alone won’t get the job done, however. You (or an employee) will need to gather information regularly. Scan major news providers — as well as relevant business publications — for updates on your competition or industry in general. Your competitors’ brochures, catalogs, press releases, annual reports, and other collateral also contain valuable information. And, of course, don’t forget to regularly visit their websites and blog and their public social media accounts.
In addition, there are a variety of powerful search engines and online resources that can boost competitive intelligence efforts — though some do charge for a subscription. For example, Dun & Bradstreet offers industry, market, and company-specific intelligence for both public and private businesses. The Securities and Exchange Commission (sec.gov) provides free financial reports on public companies.
Be sure to fact-check and verify any information you find. Inaccurate data can skew your observations, negatively affect your business decisions and hurt your reputation in the marketplace.
To succeed at marketing today, you need to make a strong case based on accurate and timely data relevant to your company’s purpose or industry. Competitive intelligence can help you find this information and integrate it into marketing campaigns. Contact our firm for help evaluating your marketing efforts from a return-on-investment perspective.
A marketing campaign should focus on the strengths and benefits of the products or services in question. But don’t overlook pointing out how your offerings are superior to those of competitors. That’s where competitive intelligence comes in. Competitive intelligence is the process of legally and ethically gathering and analyzing information about competitors. This includes their financial positions, business practices, and products and services. To gather such data, you can actively network, scan news sources, visit competitors’ websites and social media pages, and collect collateral such as sales brochures and annual reports. The end result: a more fine-tuned marketing message.
Business owners, you can sharpen your marketing efforts through the effective use of competitive intelligence. If you have any questions be sure to contact us!
When implementing a self-insured plan, stop-loss insurance is typically recommended. Although buying such a policy isn’t required, many small to midsize companies find it a beneficial risk-management tool. When choosing health care benefits, many businesses opt for a self-insured (self-funded) plan rather than a fully insured one. Why? For various reasons, self-insured plans tend to offer greater flexibility and potentially lower fixed costs.
Specifically, stop-loss insurance protects the business against the risk that healthcare plan claims greatly exceed the amount budgeted to cover costs. Plan administration costs generally are settled in advance. An actuary can estimate claims costs. This information allows a company to budget for the estimated overall plan cost. However, exceptionally large — that is, catastrophic — claims can bust the budget.
To be clear, stop-loss insurance doesn’t pay participants’ healthcare benefits. Rather, it reimburses the business for certain claims properly paid by the plan above a stated amount. A less common approach for single-employer plans is to buy a stop-loss policy as a plan asset, in which case the coverage reimburses the plan, rather than the employer.
The threshold for stop-loss insurance is referred to as the “stop-loss attachment point.” A policy may have a specific attachment point (which applies to claims for individual participants or beneficiaries), an aggregate attachment point (which applies to total covered claims for participants and beneficiaries), or both.
If you choose to buy stop-loss insurance, it’s critical to line up the terms of the coverage with the terms of your healthcare plan. Otherwise, some claims paid by the plan that you might expect to be reimbursed by the insurance might not be — and would instead remain your responsibility.
Properly lining up coverage terms isn’t always straightforward, so consider having legal counsel familiar with the terms of your healthcare plan review any proposed or existing stop-loss policy. In particular, watch out for discrepancies between the eligibility provisions, definitions, limits, and exclusions of your plan and those same elements of the stop-loss policy.
Because stop-loss insurance isn’t healthcare coverage, insurers may impose limits and exclusions that are impermissible for group health plans. For example, a policy can exclude coverage of specified individuals or services. Or it can impose an annual or lifetime dollar limit per individual.
You’ll also need to look carefully at the stop-loss policy’s coverage period. This is the period during which claims must be incurred by individuals or paid by the healthcare plan to be covered by the insurance. Specifically, determine whether it lines up with your plan year.
After buying stop-loss insurance, be extra sure to administer your health care plan in accordance with its written plan document. Any departures from the plan document could render the coverage inapplicable. We can help you determine whether stop-loss insurance is right for your business or whether your current coverage is cost-effective.
Many businesses opt for a self-insured (self-funded) healthcare plan rather than a fully insured one. Although stop-loss insurance isn’t required for self-insured plans, companies often find it beneficial. Why? It protects the business against catastrophic claims that greatly exceed the amount budgeted to cover costs. Stop-loss insurance doesn’t directly pay participants’ benefits; it reimburses the company for certain claims properly paid by the health care plan above a stated amount. Therefore, it’s critical to line up the coverage terms. We can help you determine whether stop-loss insurance is right for your business or whether your current policy is cost-effective. Contact us for more information! Also, check out our Facebook Page for updates!
In today’s data-driven world, business owners are constantly urged to track everything. And for good reason — having accurate, timely information displayed in an easy-to-understand format can allow you to spot trends, avoid risk and take advantage of opportunities. This includes your company’s website. Although social media drives so much of the conversation now when it comes to communicating with customers and prospects, many people still visit websites to gather knowledge, build trust, and place orders. So, how do you know whether your site is doing its job — that is, drawing visitors, holding their attention, and satisfying their curiosities and needs? A variety of metrics hold the answers. Here are a few of the most widely tracked:
This metric is a good place to start, partly because it’s among the oldest ways to track whether a website is widely viewed or largely ignored. A page view occurs when a visitor loads the HTML file that represents a given page on your website. You want to track:
You may have encountered this term before. It’s indeed an important one. The unique visitor metric identifies everyone who comes to your website, counting each visitor only once regardless of how many times someone visits.
Think of it like friendly neighbors stopping by your home. If Artie from next door stops by twice and Betty from down the street drops in three times, that’s two unique visitors and five total visits. Tracking your unique visitors over time is important because it lets you know whether your website’s viewing audience is growing, shrinking, or staying the same.
At one time or another, you may have heard someone say, “All right, I’m going to bounce.” It means the person is going to depart from their current surroundings and go elsewhere. When a visitor quickly decides to bounce from (that is, leave) your website, typically in a matter of seconds and without performing any meaningful action, your bounce rate rises.
This is not a good thing. A high bounce rate could mean your website is too similar in name or URL to another company or organization. Although this may drive up page views, it will more than likely aggravate the buying public and reflect poorly on your company. An elevated bounce rate could also mean your site’s design is confusing or aesthetically displeasing.
To quantify bounce rate, unique visitors, and page views — as well as many other useful metrics — look to your website’s analytics software. Your website provider should be able to help you set up a dashboard of which ones you want to track. Contact our firm for help using these metrics to determine whether your website is contributing to revenue gains and providing a reasonable return on investment.
Many people still visit websites to gather knowledge, build trust, and place orders. A variety of metrics can tell a business whether its website is attracting good attention and generating revenue. One is page views, which simply indicates that a visitor has loaded the HTML file that represents a given webpage. Another useful metric is unique visitors. It identifies everyone who comes to your website, counting each visitor only once regardless of how many times someone visits. Bounce rate is also critical. It indicates when a visitor quickly decides to leave your website without performing any meaningful action. Contact us for help managing your company’s technology costs.
Business owners are regularly urged to create and update their succession plans. And rightfully so — in the event of an ownership change, a solid succession plan can help prevent conflicts and preserve the legacy you’ve spent years or decades building.
If you want to take your succession plan to the next level, consider expanding its scope beyond ownership. Many companies have key employees, perhaps a CFO or an account executive, who play a critical role in the success of the business.
Your succession plan could include any employee who’s considered indispensable and difficult to replace because of experience, industry or technical knowledge, or other characteristics.
The first step is to identify those you consider essential employees. Whose departure would have the most significant consequence for your business and its strategic plan? Then, when you have a list of names, who might succeed them?
Pinpointing successors calls for more than simply reviewing or updating job descriptions. The right candidates must have the capability to carry out your company’s short- and long-term strategic plans and goals, which their job descriptions might not reflect.
Succession planning should take a forward-looking perspective. The current jobholder’s skills, experience, and qualifications are only a starting point. What worked for the last 10 or 20 years might not cut it for the next 10 or 20.
When the time comes, many businesses publicize open positions and invite external candidates to apply. However, it’s easier (and often advantageous) to groom internal candidates before the need arises. To do so, you’ll want to identify your “high potential” (HiPo) employees — those with the ambition, motivation, and ability to move up substantially in your organization.
Assess your staff using performance evaluations, discussions about career plans, and other tools to determine who can assume greater responsibility now, in a year, or in several years. And look beyond the executive or management level; you may discover HiPos in lower-ranking positions.
Once you’ve identified potential internal candidates, develop individual plans for each to follow. Consider your business’s needs, as well as each candidate’s personality and learning style.
An action plan should include multiple components. One example is job shadowing. It will give the candidate a good sense of what is involved in the position under consideration. Other components could include leadership roles on special projects, training, and mentoring and coaching.
Share your vision for the person’s future to ensure common goals. You can update action plans as your company’s and employees’ needs evolve.
Succession planning beyond ownership is more important than ever in a tight job market. Vacancies for key employees are often difficult to fill — especially for demanding, highly-skilled, and top-tier positions. We’d be happy to help you review your succession plan and identify which positions may have the greatest financial impact on the continued profitability of your business.
Business owners are regularly urged to create and update their succession plans. If you want to take yours to the next level, consider expanding its scope beyond ownership. Many companies have key employees whose departure would significantly and adversely affect the business. Create a list of names and identify who might succeed them. Look for your “high potential” (HiPo) employees. That is, those with the ambition, motivation, and ability to move up substantially in the organization. Once you’ve identified your HiPos, develop action plans for each. Consider your business’s needs as well as each candidate’s personality and learning style. Contact us for help.
Summer is here, but taxes never end. Here are a few recent tax questions for 2021 and updates we want you to be aware of:
If you are age 72 or older, you must take annual required minimum distributions (RMD) from traditional IRA’s and 401(K) plans. The 2020 exclusion to this rule does not apply to 2021 and going forward. Be sure to make these distributions this year.
If you are age 70 ½ or older you can transfer up to $100,000 yearly directly to qualified charitable organizations. This distribution counts towards your RMD, but they are not taxable and not included in your adjusted gross income. It’s much better to use this than to report as an itemized deduction on Schedule A of your tax return. Keep in mind the distribution must go directly to the charity. You cannot receive the distribution and then donate to charity for this to qualify. Transfers to donor-advised funds do not qualify for QCD treatment.
You’ve probably read about the possibility of increased capital gains rates. While this initially is targeted to taxpayers with incomes of $1M or more you may think this will never apply to you. But what if you are selling your company’s stock and retiring? Do you have stock options with sizable gains?
When you sell online such as PayPal or Amazon and receive $600 or more (starting in 2022) you will receive form 1099-K that reports the income to the IRS. There are slightly different rules for 2021. This income must be reported on your tax return. How does this affect you? Many people use these platforms as the new “garage sales”. An example might be if you tire of your exercise equipment and sell the equipment online. If you receive $600 or more, you will need to report the income and have tax due
This tax season we are seeing an increased number of delayed refunds, some up to several months. The IRS says they are checking amounts reported for stimulus payments and other verification measures. As preparers, we have no additional resource to check on the status of your refund other than using the IRS’s “Get your refund status” on their website. This adds even more questions to ask. We can verify the return has been electronically filed and accepted, but not as to the status of the refund.
At David Mills, CPA, LLC our experts can help answer your tax questions for 2021. Contact us online or call (309) 266-5700.
Most of us are taught from a young age never to assume anything. Why? Well, because when you assume, you make an … you probably know how the rest of the expression goes.
A dangerous assumption that many business owners make is that, if their companies are profitable, their cash flow must also be strong. But this isn’t always the case. Taking a closer look at the accounting involved can provide an explanation.
What are profits, really? In accounting terms, they’re closely related to taxable income. Reported at the bottom of your company’s income statement, profits are essentially the result of revenue less the cost of goods sold and other operating expenses incurred in the accounting period.
Generally Accepted Accounting Principles (GAAP) require companies to “match” costs and expenses to the period in which revenue is recognized. Under accrual-basis accounting, it doesn’t necessarily matter when you receive payments from customers or when you pay expenses.
For example, inventory sitting in a warehouse or retail store can’t be deducted — even though it may have been long paid for (or financed). The expense hits your income statement only when an item is sold or used. Your inventory account contains many cash outflows that are waiting to be expensed.
Other working capital accounts — such as accounts receivable, accrued expenses and trade payables — also represent a difference between the timing of cash flows. As your business grows and strives to increase future sales, you invest more in working capital, which temporarily depletes cash.
However, the reverse also may be true. That is, a mature business may be a “cash cow” that generates ample dollars, despite reporting lackluster profits.
The difference between profits and cash flow doesn’t begin and end with working capital. Your income statement also includes depreciation and amortization, which are non-cash expenses. And it excludes changes in fixed assets, bank financing, and owners’ capital accounts, which affect cash on hand.
Suppose your company uses tax depreciation schedules for book purposes. Let say, in 2020, you bought new equipment to take advantage of the expanded Section 179 and bonus depreciation allowances. Then you deducted the purchase price of these items from profits in 2020. However, because these purchases were financed with debt, the actual cash outflows from the investments in 2020 were minimal.
In 2021, your business will make loan payments that will reduce the amount of cash in your checking account. But your profits will be hit with only the interest expense (not the amount of principal that’s being repaid). Plus, there will be no “basis” left in the 2020 purchases to depreciate in 2021. These circumstances will artificially boost profits in 2021, without a proportionate increase in cash.
It’s dangerous to assume that, just because you’re turning a profit, your cash position is strong. Cash flow warrants careful monitoring. At David Mills CPA, LLC, our team can help you generate accurate financial statements and glean the most important insights from them. Contact us today or call (309) 266-5700.
For many business owners, putting together a succession plan may seem like an overwhelming task. It might even seem unnecessary for those who are relatively young and have no intention of giving up ownership anytime soon.
But if the past year or so have taught us anything, it’s that anything can happen. Owners who’ve built up considerable “sweat equity” in their companies shouldn’t risk liquidation or seeing the business end up in someone else’s hands only because there’s no succession plan in place.
To help you get your arms around the concept of succession planning, you can look at it from three different perspectives:
If you have many years to work with, use this gift of time to identify one or more talented individuals who share your values and have the aptitude to successfully run the company. This is especially important for keeping a family-owned business in the family.
As soon as you’ve identified a successor, and he or she is ready, you can begin mentoring the incoming leader to competently run the company and preserve your legacy. Meanwhile, you can carefully identify how to best fund your retirement and structure your estate plan.
Many business owners wake up one day and realize that they’re almost ready to retire, or move on to another professional endeavor, but they’ve spent little or no time putting together a succession plan. In such a case, you may still be able to choose and train a successor. However, you’ll likely also want to explore alternatives such as selling the company to a competitor or other buyer. Sometimes even liquidation is the optimal move financially.
In any case, the objective here is less about maintaining the strategic direction of the company and more about ensuring you receive an equitable payout for your ownership share. If you’re a co-owner, a buy-sell agreement is highly advisable. It’s also critical to set a firm departure date and work with a qualified team of advisors.
The COVID-19 pandemic has brought renewed attention to emergency succession planning. True to its name, this approach emphasizes enabling the business to maintain operations immediately after an unforeseen event causes the owner’s death or disability.
If your company doesn’t yet have an emergency succession plan, you should probably create one before you move on to a longer-term plan. Name someone who can take on a credible leadership role if you become seriously ill or injured. Formulate a plan for communicating and delegating duties during a crisis. Make sure everyone knows about the emergency succession plan and how it will affect day-to-day operations, if executed.
As with any important task, the more time you give yourself to create a succession plan, the fewer mistakes or oversights you’re likely to make. At David Mills, CPA, LLC, we can help you create or refine a plan that suits your financial needs, personal wishes, and vision for the future of your company.
The COVID-19 pandemic has affected various industries in very different ways. Widespread lockdowns and discouraged movement have led to increased profitability for some manufacturers and many big-box retailers. The restaurant industry, however, has had a much harder go of it — especially smaller, privately owned businesses in economically challenged areas.
In response, the Small Business Administration (SBA) has launched the Restaurant Revitalization Fund (RRF). It was established under the American Rescue Plan Act (ARPA) signed into law in March. The RRF went live for applications on May 3, and the SBA is strongly urging interested, eligible businesses to apply as soon as possible.
Funds are available for restaurants, of course, but also many other similar types of businesses. Food stands, trucks and carts can apply, as well as bars, saloons, lounges and taverns. Catering companies may also file a Restaurant Revitalization Fund application.
In addition, the program is available to snack and nonalcoholic beverage bars, as well as “licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products,” according to the SBA.
For some restaurant-like businesses, on-site sales to the public must comprise at least 33% of gross receipts. These include bakeries; inns; wineries and distilleries; breweries and/or microbreweries; and brewpubs, tasting rooms and taprooms.
Under the ARPA, the RRF received a total of $28.6 billion in direct relief funds for restaurants and other similar establishments that have suffered economic hardship and substantial operational losses because of the COVID-19 pandemic.
The dollar amount an eligible business can receive under the RRF will equal its decrease in gross revenues during 2020 compared to gross revenues in 2019 — less the amount of any Paycheck Protection Program (PPP) loans received. Other amounts must be excluded from 2020 gross receipts as well, including:
Overall, the RFF may provide a qualifying establishment with funding equal to its pandemic-related revenue loss up to $10 million per business and not more than $5 million per physical location. Recipients must use funds for allowable expenses by March 11, 2023.
A timely, properly completed application is critical to acquiring this funding. An applicant business must submit documentation of its 2020 and 2019 gross receipts, as well as at least one of the following:
Warning: Internally prepared financials could significantly delay SBA review of your application.
You’ll also need to disclose the amount of any PPP loans you’ve received. However, the SBA’s online application system should provide this information automatically.
To get started, register for an account at restaurants.sba.gov. The SBA advises applicants to first download a sample version of the application here. Our firm can help you identify necessary documentation and navigate the process.
For businesses, so much has changed over the past year or so. The COVID-19 pandemic hit suddenly and companies were forced to react quickly — sending many employees home to work remotely and making myriad other tweaks and revisions to their processes. Understandably, you may not have fully documented all the changes you’ve made. But you should; and among the ideal places to do so is in your employee handbook. Now that optimism is rising for a return to relative normalcy, why not look at your handbook with fresh eyes and ensure it accurately represents your company’s policies and procedures.
Among the primary reasons companies create employee handbooks is protection from legal challenges. Clearly written HR policies and procedures will strengthen your defense if an employee sues. Don’t wait to test this theory in court: Ask your attorney to review the legal soundness of your handbook and make all recommended changes.
Why is this so important? A supervisor without a legally sound and updated employee handbook is like a coach with an old rulebook. You can’t expect supervisors or team members to play by the rules if they don’t know whether and how those rules have changed.
Make sure employees sign a statement acknowledging that they’ve read and understood the latest version of your handbook. Obviously, this applies to new hires, but also ask current employees to sign a new statement when you make major revisions.
Employee handbooks can also communicate the total value of working for your company. Workers don’t always appreciate the benefits their employers provide. This is often because they, and maybe even some managers, aren’t fully aware of those offerings.
Your handbook should express that you care about employees’ welfare — a key point to reinforce given the events of the past year. It also should show precisely how you provide support.
To do so, identify and explain all employee benefits. Don’t stop with the obvious descriptions of health care and retirement plans. Describe your current paid sick time and paid leave policies, which have no doubt been transformed by federal COVID relief measures, as well as any work schedule flexibility and fringe benefits that you offer.
One word of caution: When updating their handbooks, some businesses acquire a “best in class” example from another employer and try to adopt it as their own. Doing so generally isn’t a good idea. That other handbook’s tone may be inappropriate or at least inconsistent with your industry or organizational culture.
Similarly, be careful about downloading handbook templates from the Internet. Chances are you’ll have no idea who wrote the original, let alone if it complies with current laws and regulations.
Your employee handbook should serve as a clearly written document for legal purposes and a helpful guide for your company’s workforce. At David Mills, CPA, LLC, we can help you track your employment costs and develop solutions to any challenges you face.