So what? Now what?

The head coach of the Indianapolis Colts, Chuck Pagano, has a saying for everything. He may not have coined this saying, but he sure says it a lot: “So what? Now what?”

How I view this quote, in the terms of football, is like this. When something bad happens on the football field and the players come off the field saying things like, “Coach, they held me! They blocked me in the back!” the response is, “So what? Now what?”

There are all kinds of events and circumstances that are out of our control. What we can control, though, is the way we react tho those situations. All you can do is move on from the event and learn from it. So what? Now what?

The more I learn about Chuck Pagano, the more I appreciate this quote. He’s a really neat guy that had leukemia. He overcame cancer and used a bunch of sayings to get through the treatments. He’s really inspirational.

When something challenging happens, you can look back on it and think, it cannot be that bad. It just can’t be because it’s already over. It happened. What comes next?

When I played football, we were very small. Our offensive line was tiny. We shouldn’t have been very successful, not based on the way things looked. But we had a play that we ran so often, we did it better than anybody else. We would run a sweep, running outside toward the sidelines, about 40-50% of the time, and that’s how we got around our bad-looking circumstances.

To me, that’s a great exercise in the “So what? Now what?” mentality Pagano has.

You can use this saying in every aspect of your life:

  • You get a big client? So what? Now what?
  • You scored a touchdown? So what? Now what?
  • You lost a sale? So what? Now what?
  • You get a promotion? So what? Now what?

For me, I’m a driver. When I do something well, I want to do it even better. When I succeed, I want to succeed some more.

This keeps driving me forward. It keeps me leaning into everything so that I can be better, do more, and be more impactful. It also keeps my head level so I don’t get too caught up in my problems. When things go sour, it’s okay. It’s not that bad. It’s just one event in the journey.

I once heard Steve Farrar unpack Psalms 23 for two hours. He really focused on the word “through,” when David talks about going through the valley of the shadow of death. It isn’t about the destination, it’s a journey.

This journey has a beginning, a middle, and an end. In the beginning, it’s not a big deal because you’re just starting. The valley isn’t unbearable. In the middle, it starts to get tougher. The valley begins to seem unbearable. In the end, though, the journey wasn’t actually that bad, because you’re looking back at the end of it.

So what? Now what? Tomorrow, you can ask the same questions in whatever situation comes up then. Go through the journey of the day.

Get 2017’s taxes off to a good start

Now that April 15th has come and gone: congratulations! The 2016 tax season is over. Let’s use this time to start thinking about next year’s taxes.

Everything from this past year is fresh in your mind: your W-2, your mortgage payments, and your contributions to organizations. You know if you had a big refund, if your rental properties did well or not, and how your investments fared. You can use all of that as a launching pad for your 2017 plan!

You’re already a third of the way through the year, so you’ve got some material to start working with when you think about your plan for 2017 taxes. You can track your spending habits, see if everything goes as expected, and decide what changes you may want to make.

That way, you’ve got a launching pad for 2017 taxes with these four months under your belt. With your tax return, you can figure out a multitude of things:

  • what happened/didn’t happen in the previous year that you expected
  • what you like (and don’t like) about your spending habits
  • how much do you want to owe next tax season/do you want a big refund?
  • how can you change your spending habits, if necessary

You’ll want to reevaluate again in July. It should be easy math by then, because the first six months of the year will be done. You’ll be able to transition the first half of the year to the second half, and it should be the same. You can start planning for the 2017 tax season from this plan: estimating your tax liability, your refund, and your estimated tax payment(s).

If 2016 was a problem year, use 2017 to fix it so there aren’t any issues this upcoming tax season. This 2017 plan should allow you to see what your variances, good or bad, are going to be compared to your 2016 plan.

Want to talk with a real-life person to help you figure out your plan for 2017 taxes? Give our office a call. We’d be happy to help.

How do you define poverty?

In my last blog post, I talked about a book I’ve been reading by Robert Lupton called Toxic Charity. In it, Lupton details the impact charitable giving has on people in vulnerable situations, and his findings might surprise you.

In 2011, a study was conducted on 60,000 people in financial poverty in developing countries. They were asked, “How do you define poverty?” Listed below are their answers—in order of most common to least common:

  • Poverty is an empty heart.
  • Not knowing your abilities and strengths.
  • Not being able to make progress.
  • Isolation.
  • No hope or belief in yourself. Knowing you can’t take care of your family.
  • Broken relationships.
  • Not knowing God.
  • Not having basic things to eat. Not having money.
  • Poverty is a consequence of not sharing.
  • Lack of good thoughts.

As you can see, money was mentioned only once and much further down the list of priorities than most Americans would expect. The study highlights that poverty is innately social and psychological.

In the US, our narrow definition of poverty is what’s on a W2 or a tax return. However, people who are truly in financial poverty aren’t only concerned with the money they’re making—they want to feel like they know their purpose, just like everybody else does.

In the past, my answer has always been to give money. I believed if I could give money to someone who is struggling, I could help them get out of poverty. But that’s not the case according to people who are in true poverty. People want to have a purpose. I want to serve others in such a way that they’re going to be truly successful.

Yes, sometimes in emergency situations people need just a little money. But most of the time people need us to breathe hope into them and give them a chance at building a future for themselves.

This message has inspired me and changed my way of thinking about giving. I hope it does the same for you!

Are you doing more harm than good?

I’ve been reading an eye-opening book by Robert Lupton lately called Toxic Charity. In it, Lupton presents a case stating that years of charitable giving at home and abroad have barely made a dent in reducing poverty and often encourage dependency.

In this book, Lupton details the negative cycle of giving related to traditional charity.

  1. Give once and you elicit appreciation.
  2. Give twice and you create anticipation.
  3. Give three times and you create expectation.
  4. Give four times and it becomes entitlement.
  5. Give five times and you establish dependency.

As I begin to think through this concept, I flip the coin and consider instances when I’ve been on the receiving end of a gift. I think about the times when friends or family have helped me with the farm or moving cattle. The first time someone helps me I’m grateful. But as time goes on, I absolutely do begin to expect them to help me—and I even begin to depend on their assistance.

I do a lot of work in Niagara, and this concept has made me think about how I can help people without hurting them. I live a fast-paced life, so I want to do what’s most convenient and has the biggest impact. The biggest immediate impact is usually giving money. But I’m realizing that’s not what I should always be doing.

What is easy for me is probably the most harmful thing that I can possibly do. Giving money makes me feel good, and it doesn’t take a big investment of my time, effort, or energy. It takes me all of eight seconds to write a check and give an investment of my resources.

But what if the people I’m trying to help really need an investment of my time, effort, and energy?

Lupton offers an oath for compassionate service:

  • Never do for the poor what they have (or could have) the capacity to do for themselves.
  • Limit one-way giving to emergency situations.
  • Strive to empower the poor through employment, lending, and investing and use grants sparingly to reinforce achievements.
  • Subordinate your self-interests to the needs of those being served.
  • Listen closely to those you seek to help, especially to what is not being said—unspoken feelings may contain essential clues to effective service.
  • Above all, do no harm.

In the real world, this may look like a church replacing its traditional food pantry with a food co-op. Local residents could pay $3 in co-op dues for $30 worth of groceries, and they buy the food, box it, and distribute it. Another example might be turning a church’s free clothing closet into a revenue-generating thrift store that teaches job skills. Or, transform a soup kitchen into an entrepreneurial venture for female recipients who have a vision for starting a catering business.

This new way of looking at compassionate service has been on my mind lately, and I hope this message inspires you to consider how you can give empowerment instead of entitlement.

Watch out for squirrels!

I came home from work the other day and pulled my truck into the driveway to see several squirrels running through the trees. They were jumping from limb to limb and tree to tree—fast as lightning! I stood there for a few minutes watching them in awe before opening the rear door to my truck and emptying out the backseat.

Suddenly, a squirrel jumped into the backseat of my truck!

He immediately locked eyes with me then screamed in my face before running away. Yes, he screamed! He was just as shocked as I was.

It was as if he was too preoccupied playing with his squirrel friends to notice that anyone was around. When he found himself in my truck, he immediately realized he was somewhere he didn’t want to be, face-to-face with something that could be a potential threat to him.

It made me think about all the times that I’ve been too preoccupied with my own activities, only to take a moment to look up and realize that I was somewhere I didn’t want to be.

It was a good reminder for me to have purpose, vision, and direction, and to keep those things front and center. The ability to stay focused is an important part of daily life, no matter your career, responsibilities, or primary functions. It’s crucial to be able to focus on what you’re doing at all times.

Distractions can sidetrack and even discourage us from staying focused and going positively forward toward our short-term and long-term goals. This encounter with the squirrel was a great real-life reminder for me to stay the course and be intentional with every decision I make.

Date night questions

My wife and I are very intentional about having weekly date nights on Friday. Sometimes our dates are simple–just grilling on the patio. Other times we’ll treat ourselves to a nice dinner out.

After so many years of marriage, it can become difficult to continue improving and deepening your relationship. It’s easy to get comfortable and forget there is still so much more to learn about each other!

Mundane daily questions like, “How was your day?” are important, but they don’t tell the full story. And those questions don’t usually lead to deeper communication.

Throughout our relationship, my wife and I have made it a priority to ask fun, creative, and deep questions to get us talking.

Think about your spouse—you asked a lot of questions while you were dating to get to know each other better, right? There’s no reason that should stop now that you have made a commitment to one another!

Here are some of the questions my wife and I have asked each other recently on our Friday night dates:

  • What was the very first thing you thought about me?
  • What did you learn about marriage from your mom and dad?
  • What do you think is the best thing about our relationship?
  • What did you learn about marriage from my mom and dad?
  • If you could have dinner with one person from history (who is already deceased), who would it be and why?
  • What is the thing that I have done for you that has had the greatest impact on you?
  • Let’s say we can travel anywhere, and money is not an object. Where do we go? Why?
  • You’re marooned on an island, and you are allowed one song, one book, and one picture. What would you choose?

Use only two to three questions each date night, and really talk about your answers in detail. The point is to get to know your partner on a deep level all over again. This will increase your feelings of closeness, connection, and romance, which we all know is the whole point of date night!

Even if you’ve known each other a long time, even if you assume you know the answer, ask anyway. It’s good to hear what you already knew in your spouse’s words, and you may just be surprised.

I hope you and your spouse enjoy asking each other these questions as much as my wife and I did!

Tax planning: based on gross sales or net revenue?

Your business’ gross sales and net revenue figures are both important pieces of the income tax puzzle. You’ll report both numbers on your business tax return, but you’ll also factor in other items that will affect the final amount you’re taxed. Depending on your business structure, taxes are either assessed to the company or to its owners.

Whether taxes are assessed to your company or you specifically, that can be a lot of information to keep track of (and track down once tax season rolls around).

I rarely come across a business owner who knows their net revenue to date. It’s difficult to keep track of sales minus business expenses, depreciation, the cost of goods sold, and other factors.

However, if you ask any business owner how much they’ve made that year, they’ll usually have a good idea off the top of their head.

If you’re practicing the “tax bucket” savings plan I recommended recently, you’ll need to know how much to deposit into your savings account each month. I work with my clients to determine what percentage of their gross sales to deposit into their tax bucket.

For example, if a company has $30k a month in gross sales and we’ve estimated their tax liability, we can then calculate a percentage of their gross sales to be set aside for taxes. In this example, the company’s income tax liability is 3% of $30k, or $900 a month. If sales fluctuate, so does the deposit. When sales are down, they need to deposit 3% of $20k, or $600 a month.

It’s a simple way to approximate your tax liability. The IRS won’t let you use an estimate, but I find it’s helpful for the business owners I work with!

Want to talk with a professional to make sure all aspects of your tax needs are squared away? Let’s have a conversation.

Big tax bill? Try a tax bucket

What happens when paying the balance due after filing taxes seems like an impossible feat? It can be a tough pill to swallow.

With the right preparation, though, you can set yourself up right for next year’s filing!

Some business owners find that they have to beg, borrow, and steal to pay the tax man on time. But that can be avoided with some simple planning!

I recommend creating a “tax bucket” savings account that will do nothing but store all of your tax money until it’s time to send it to the IRS. The name of that account should literally say “Tax Account” or something very similar, so you’ll remember to never touch it—unless it’s time to pay the IRS.

First, you’ll need to work with your tax planner to determine your estimated tax liability for the current year. Then you’ll break down that big number into bite-sized pieces. Depending on whether you want to make daily, weekly, monthly, or quarterly deposits into the account, you’ll estimate the recurring amount and frequency you’ll need to deposit.

In addition, the “tax bucket” savings account has the added benefit of accruing interest. You could actually make money while saving it for the IRS!

If this year’s tax-filing deadline will be a “pay” day for you and you can’t pay your tax bill, make sure you do file your return on time. This way, you’ll avoid the IRS’ failure-to-file penalty of 5% per month (up to a maximum of 25%) of your balance due. You’ll still face a penalty each month your bill is outstanding, but it’s only 0.5% of the amount you owe.

Read to start making estimated payments into your “tax bucket,” but not sure how much to deposit? Call us today to schedule a consultation on tax liability for your business.

How long do I have to keep records?

Good tax record keeping may be the most important record keeping you do for your company.

You don’t want tax time to roll around and have to panic because your company doesn’t have its tax records in order. Tax records in disarray can cost you deductions—and if you happen to be audited, could create a problem costing you money.

After all, you want to get all the deductions you can and be able to back them up.

The IRS requires you to keep the last three years that you’ve filed. In January 2017, that means you’ll need to have records from 2014, 2015 and 2016. But I’m a believer that if a pinch of salt is good, then two is better. If the IRS requires you to keep three years of records, five years would be better. And if you keep those receipts for seven years, you’re never going to have any regrets.

Why would you need to keep records for longer than the required three years? It’s possible that in the fourth or fifth year after the initial purchase, you may pay off a vehicle or make an upgrade to a copy machine. If you do, it would be helpful to be able to reference those receipts for the current year’s deductions.

Once you’ve decided how long you will keep company records for tax purposes, you’ll need to set up a safe and organized system for storing them.

I organize my receipts by month. I put all my receipts for each month in a manila envelope, then file it in a box. After we file our taxes, I stick that box up in the attic with the year clearly labeled. When seven years have gone by, I shred the oldest year of tax receipts. Don’t forget—you never want to throw those kinds of receipts in the trash. It’s important to destroy them.

If you need help navigating the complexities of document management for tax purposes, let’s talk. Give us a call so we can chat about your needs.

What you need to keep to justify your expenses

Keeping track of receipts for your small business is very important: it keeps you organized and on budget, and it can be a big money-saver when you file deductions at tax time. According to the IRS, good records will help you:

  • Monitor the progress of your business
  • Prepare your financial statements
  • Identify sources of your income
  • Keep track of your deductible expenses
  • Keep track of your basis in property
  • Prepare your tax returns
  • Support items reported on your tax returns

Keeping records isn’t just helpful for filing your taxes and monitoring your finances—it’s a legal requirement imposed by the IRS. But which records do you need to keep? And which ones should you send to the shredder?

The IRS is not a big fan of estimating your expenses. If you are going to claim a deduction, you’re going to need to keep track of:

  • When: The date of the transaction
  • Where: Where you bought the item
  • What: What the item was
  • Why: What purpose it served in your business

There are three crucial documents you must keep—I call these three documents the Golden Triangle. You have to keep the receipt from the store, the statement from the credit card company, and a bank statement showing it was accurate. When, where, and what are generally found on the store receipt, which is why the IRS loves when you keep them.

In order to claim a deduction, the purchase has to have proven economic impact. To prove economic impact, you’ll need all three proofs of purchase. Amazon and Walmart are great examples of why you’d need to document well, because you can buy everything from these companies.

If you have a bank statement from Walmart, it doesn’t automatically mean the purchase was for office supplies. You could’ve purchased that night’s dinner or a new digital camera for your family’s vacation. You have to retain the receipt that says you made a business purchase for items like pens, paper and ink cartridges.

While receipts, bank statements and credit card statements are crucial to your business record keeping, there are other documents you may also need to keep on file for the future. Not sure whether or not you’re keeping track of everything you need? Give us a call and let’s talk about your company’s needs.