22 Jul / 2014
If you have been involved in the business world in the last 30 years, you have most likely had some experience with Microsoft Excel. Excel is the most common software program used for creating spreadsheets that businesses often use for tracking their financials. However, these same characteristics also make Excel a potential crutch for the entrepreneurially run business. In today’s fast-paced business world, business owners have become far too comfortable relying on Excel as an effective business solution.
So, how does this affect my business?
Excel leaves the creation of spreadsheets and the input of information in the hands of the individual tasked with maintaining key management metrics. Often, these spreadsheets are not reviewed for accuracy by someone else. Any auditor will tell you that this leaves the door open for serious errors in reporting, which can lead to costly fines or, in the worst case, the demise of your business. If this scenario applies to your company, stop and ask yourself two questions:
If the individual assigned the management of your business’ metrics had to leave work unexpectedly, how would that affect your reporting mechanisms?
What is the probability of error within your reporting due to manual input?
If your answers to either of these questions makes you nervous, rest assured there are automated reporting solutions available to give you back control of your key management metrics.
At the end of the day, who has control of your business’ metrics? What is it worth to you to have complete control of your financials and key performance indicators? Talley & Company and its affiliates have helped clients integrate their systems with automatic software solutions that help reduce the likelihood of reporting errors and provide reliable key performance indicators.
31 Mar / 2014
March 28, 2014
Earlier this week, the last contender for the $1 billion prize offered by Warren Buffet and Quicken Loans for the perfect March Madness bracket was eliminated. Considering the odds of winning per the contest’s own fine print were 1 in 9.2 quintillion (a trillion multiplied by a million) this comes as no shock to anyone.
But the battle wages on for millions of others who’ve placed friendly bets in pools that carry much better odds, though of course for much smaller amounts of money. Everyone from the overly-excited guy in the office next door to the President has been excitedly cheering for their teams. Yet we’re willing to wager that few (if any) of them have been thinking about how winning would impact their taxes. Of course, here at Talley and Company, you know we do just that. That’s because whether there’s $1 billion at stake or $100, March Madness bets are classified as gambling, and gambling is taxable.
Like with any day at the track, outing to a casino or purchase of a lottery ticket, cash and non-cash winnings from March Madness bets are taxable. All winnings should be reported on Form 1040 as “Other Income” (line 21). In addition, you may be required to pay an estimated tax on your gambling winnings.
Special paperwork comes into play only if your winnings are over $600 or 300 times the wager (lucky you, if that’s the case). Gambling winnings in excess of $5,000 could also be subject to a tax withholding requirement before the winning payout is made to the recipient. If luck wasn’t on your side, take heart-some gambling losses can also be deductible if you itemize and keep good records.
If you enjoy the entertainment of a game like Keno periodically in the year or, in the rare instance that you make a living as a professional gambler, detailed win-loss records are a must.
As for the Buffett/Quicken contest? Not all is lost. While the $1 billion prize is off the table, the contest will still award $100,000 to 20 eligible contestants with the top-performing brackets. To be eligible, you must have…well…entered the contest. Unfortunately, the gentleman who made it furthest along in the battle for the perfect bracket never did. To him we say, better luck next year. To you, we say, don’t forget about your taxes, and Talley & Company is here to help answer any questions you may have.
21 Mar / 2014
March 21, 2014
As fans of the hit show “Shark Tank” can attest, it’s not easy securing funding for your small business. Since debuting in August of 2009, millions of viewers have watched entrepreneurs try to convince one of the five “sharks” to invest in their business, not just financially but also with advice for long-term growth. To quote head-“shark” Kevin O’Leary, “Building fast-growing, globally competitive companies is tough.”
In each episode small business owners make their pitch to the five sharks, all well-known millionaires who started out as entrepreneurs themselves, including Mark Cuban (owner of the NBA’s Dallas Mavericks) and Daymond John (founder of the FUBU clothing line), to convince at least one of them to invest their money and time. But that isn’t easy. Like all investors, the “sharks” have heard it all – from failures like the Life Caps Survival Pill (a vitamin and mineral pill that allows you to live without food for up to two weeks) to successes such as Ava the Elephant (an effective medicine dropper for children). Many contestants on the show get eaten alive by the “sharks” for the same reasons entrepreneurs outside of the reality TV show, by not having their financials in order or having a well-thought-out business plan. As one “shark” put it, “Just because you have a hobby, doesn’t mean you have a business.” This is a reality show that really is, well, real.
Whether you’re appearing on “Shark Tank”, seeking angel investors, or acquiring financing, you’ll need to do your research and be prepared. Talley & Company can assist you throughout the entire process. From reviewing and preparing financial statements in a way that interests potential buyers/investors, to uncovering value from areas financials alone won’t reveal, the experts at Talley & Company are here to help your business ventures succeed.
17 Mar / 2014
March 17, 2014
Since January 1, when Colorado’s marketplace for the legal sale of recreational marijuana first opened, all eyes have been on the state to see what consequences unfold. Already, early estimates are showing tax revenues from pot sales to be far exceeding expectations-from the $70 million provided to voters to $98 million recently predicted by Colorado governor John Hickenlooper for the next fiscal year.
Until recently, processing money from marijuana sales put federally insured banks at risk of drug racketeering charges. But just weeks ago, the Obama administration gave the “ok” for banks to lend to pot sellers, at least with a complicated list of due diligence requirements and over 20 red flags that must be reported to ensure business legitimacy and compliance with federal law. FinCEN, the Treasury Department’s Financial Crimes Enforcement Network, has a vested interest in helping to keep cash off the streets since it writes the rules that banks follow to mitigate money laundering and the financing of terrorism.
Yet many banks are reading the new guidelines as more of an outline to all the risks of doing business with pot sellers than a green light. The American Bankers Association says the new regulations simply aren’t enough, since they don’t change the fact that marijuana sales are still illegal under federal law. That means property used as collateral for loans would potentially be subject to federal drug-seizure laws. According to The Denver Post, Colorado’s two largest banks, Wells Fargo Bank and FirstBank, aren’t offering new loans to landowners with pre-existing leases with pot businesses.
You don’t have to be selling marijuana to run into obstacles with a financial institution, particularly when it comes to getting a loan or line of credit. If you’re seeking to obtain financing for cash flow and daily operations, growth plans or other needs, Talley & Company’s team and relationships with lending institutions can help. Our advisors can present and prepare your company’s financials in ways that increase favorability with lenders, helping to make sure your efforts don’t go up in smoke.
March 7, 2014
Sadly, this isn’t the first time we’ve seen a story like acclaimed actor Philip Seymour Hoffman’s play out. Early this month, the headlines announced the lead Capote star’s premature death from an apparent drug overdose. This week, we find that as his loved ones attend to their grief, so must they contend with complicated issues arising from his poorly planned estate. Though Hoffman had thoughtfully created a will, it was over a decade old. Consequently, it not only contained gross omissions but was poorly designed to minimize the tax burden on his benefactors.
While Hoffman’s will included his son Cooper, his two daughters born after the will was made (and never amended) were effectively disinherited. New York law attempts to protect children with a special provision for this kind of scenario, but there’s no guarantee it will apply. These are not the kinds of matters you want to leave for the courts.
Then there’s the mother of Hoffman’s three children-his longtime companion Marianne O’Donnell. She will reportedly inherit Hoffman’s estate outside the money allocated for his son. Had the couple been married, O’Donnell would have received an unlimited amount tax-free. Because they weren’t, O’Donnell will hand over anywhere from $11 to $15 million in taxes if the actor’s $35 million estate figure is right. No matter how the two felt about the institution of marriage, Hoffman’s estate planners could still have mitigated some tax expenses through other strategies, including trusts and gifted amounts during his lifetime.
Celebrities may be more likely to make the news, but they are far from the only ones with poorly planned estates. We understand how periodic reviews can seem less than urgent against the barrage of all of our growing to-do lists. So what’s our best advice? Schedule a regular time with your advisory team to review your will and update your estate. Once built into your calendar, you’ll not only have peace of mind but a signed legacy of caring and responsibility your loved ones will appreciate.
So go ahead, make that appointment.
February 21, 2014
Michael Jackson had an amazing 13 number 1 hits as a solo artist, but the enormous disparity between the IRS and his estate’s executors in the valuation of his assets – to the tune of more than a billion – really tops the charts.
How bad is it? Well, the IRS will tell you Michael Jackson’s estate was worth $1.125 billion at his death. Yet if you ask the estate’s executors, they’ll say it was more like $7 million. Yes, you read that right: billion versus million. From the IRS’s point of view, the estate’s undervaluation is so egregious that it qualifies for double the typical 20% penalty for underpayment. The agency is asking for the $505 million in taxes it finds the estate owes and an additional $197 million in penalties, totaling over $702 million.
There are points of contention between the two sides on almost every kind of asset, from music rights to automobiles. For starters, the IRS believes the use of Jackson’s likeness to create income is worth $434 million, yet Jackson’s executors assert it’s worth just $2,105. We can’t be sure who’s right on this one, but come on, there are washer/dryers worth more than that. Here’s another one – the IRS claims Jackson’s rights to certain Beatles songs are worth $469 million, not $0 as executors claim. Again, we’ll never know for sure who’s more on target, but a CPA did previously testify that Jackson borrowed $320 million against the music catalog.
As for MJ’s share to the rights of Jackson 5 master recordings? The IRS believes it’s worth $45.5 million, and the Jackson estate says $11.193 million. The battle that ensues over the taxable value of all these assets will be a big one, with both teams already singing vastly different tunes.
Getting agreement from the IRS on an asset’s value doesn’t just affect the likes of pop stars and celebrities. It’s true few of us deal with assets as unique and challenging to appraise as Beatles songs, master recordings, and the marketability of our likenesses. But even so, making sure appraisals of stocks, real estate, businesses, or any other more standard assets are fair and creditable can make all the difference when it comes to sailing swiftly through a potential audit – and maybe even avoiding one altogether.
04 Mar / 2014
February 14, 2014
After announcing the departure of 33-year company veteran and CEO Steve Ballmer last August, Microsoft has only just declared his successor – Satya Nadella. While tech news insiders agree with the internal Bill Gates-like choice, the lack of a clear succession plan from the start, has left an indelible mark.
Ballmer held his position as CEO for the last 14 years, giving Microsoft more than a decade to develop a succession plan. Yet when the announcement was made that he would step down, not only was a successor not named but the timeline and process for finding his replacement was vague. This left the company open to commentary from all sides for potential candidates, and it created damaging uncertainty with investors. Months without a clear, singular vision for any company can also create political minefields, with people unsure of whose approval to attain due to divergent visions and others jockeying for positions in the senior ranks.
If all that alone wasn’t enough to create confusion, only two weeks after Ballmer’s noted departure Microsoft announced that it would be acquiring Nokia for $7.2 billion, the second-largest acquisition from the company behind Skype.
As we can see, even a large corporation with plenty of visionary leaders on its Board of Directors, including Bill Gates, can fumble on a succession plan. While the situation is unfortunate, it is far from uncommon. The reality is, and perhaps understandably so, planning your exit isn’t usually the most exciting task for a leader, but it is essential.
In what can be a harrowing process, many business leaders who doattempt to make a plan take on too many tasks by themselves. Others simply don’t start early enough to identify and prepare the right people for future roles. With so much at stake – both emotionally, financially and professionally – the key is simply to bite the bullet, start early, and be thorough. Doing so can create a smooth transition that keeps confidence strong among customers, investors, and employees. This confidence can play a major role in ensuring the success of your company’s future and enhancing your own personal legacy.
If Only There Was Fitness Tech for Your Business. But Wait—There IS.
These days, we’re tracking everything from our steps taken to our sleep patterns thanks to a proliferating number of wristband devices like the FitBit, Jawbone UP24, and Life Tracker 1. New technologies for monitoring our day-to-day health are making it simpler and easier to catalog and retrieve voluminous amounts of data so that we can better understand how our bodies run and make adjustments to improve our fitness. So the question is: Are you doing this for your business?
If you’re keeping track of income and expenses, you may be doing just enough to avoid financial disaster. But it’s nearly impossible for a business to thrive without the additional data required to make more strategic decisions.
By collecting, monitoring and analyzing our personal health data, we can identify opportunities for improvement and track our progress in a continuous feedback loop. Affordable bookkeeping software and processes work much the same way for a business, helping to automate what would otherwise be a tedious task so we can access timely data on business profitability.
An accountant or financial advisor can not only set up this software but also establish a streamlined process that makes it work for your business. This process includes effective recordkeeping for all expense and income types, properly entering this information into the bookkeeping software, and lastly, generating financial reports. Business owners that attempt to DIY the first two steps often get so bogged down they never get to the last one. This can be a costly mistake.
With up-to-date information in your bookkeeping system, you can track account balances and create sophisticated financial reports, putting vital financial information in easy reach. Everything from profit/loss statements and cash-flow projections help you detect patterns to different aspects of your business’s financial health. You can evaluate whether your goods or services are priced competitively, determine if certain expenses should be cut back or outsourced, and identify profitable revenue lines to pursue further.
In essence, professionally managed statements can help you make data-based decisions for your company more regularly and reliably, taking operations from good to great. The best part is, a good financial advisor that sets up the reporting system for your business can also give you valuable guidance on how to transform data into real-world decisions.
If you’re interested in identifying key numbers, tracking changes and reading trends to reveal tremendous insights on your company’s financial fitness, Talley & Company and its affiliate Group 11 Advisors can help guide you through the essential steps. Schedule a consultation with us to learn more.