Archive for General

Resolved to be more organized in 2018?

As the year draws to a close and tax season inches closer, do you find yourself scrambling for invoices, files, and papers you cannot find? Are you kicking yourself for not completing tasks you set out to do a year ago? Are you finding there are still 100 things on your to-do list?

If so, you are not alone. But there are steps you can take at the beginning of 2018 to avoid ending up in the same situation next year, especially as related to your business taxes.

Rethink tax season

Begin preparing for the next tax season by treating it not as a season, but as part of your daily work. Make it a habit. Initially, this may seem like a hassle, but the benefit of keeping all of your documents together will create less work at the end of the year and perhaps help you file your return even earlier. Tax season will not be nearly as stressful for you as it will for most if you rethink the way you approach it.

Get organized

Start by creating a space just for tax documents in the office. Keep your invoices, receipts, and other documents in this area. Organize the space in a standard file folder system or go digital. Using a scanner or even a cell phone app can help you keep track of receipts and invoices.

If you do your own bookkeeping, try using a basic software, cell phone app, or even Excel spreadsheets to track expenses and log business activities. Keep track of these throughout the year and enter them into your accounting system. Be sure to include milage, entertainment, and even meals.

A designated notes app or just writing on the receipt can save time when reviewing receipts and help you explain how this cost was connected to your business. Having these tidbits of information organized is critical, especially if you are selected to be audited by the IRS.

Talk with a professional

Meet with your accountant throughout the year to ensure you are making the most of your potential deductions. Deductions might include car expenses, home office expenses, or startup costs.
Be sure you research and hire an accountant who best understands your business. When meeting with your accountant, they should be able to tell you exactly what documents they will need in order to complete your taxes at the end of the year. By knowing exactly what these are, you can begin to compile them throughout the year.

Share the plan

Be sure your employees who handle billing and accounts understand what is expected of them throughout the year in preparation for tax season. The entire team needs to know the plan and work together. If they don’t, you risk losing or misplacing vital documents.

If you or your employees use personal vehicles for business, you can deduct the cost of business driving. However, this can only be done if you have the records to back up the data, so tracking your business trips with an app is a great idea.

Set deadlines and stick to them

Set deadlines and arrange meetings with your bookkeeper and accountant early. Remember you are not their only client and many other people are trying to complete their taxes by the same deadline. By meeting early, you will get a head start and have plenty of time to be sure both parties have the documents they need.

What season is your business in?

It’s winter in Oklahoma, and the wind is not merely sweeping down the plains. It’s cutting through the cold, and Santa is on his way. It is the most wonderful time of the year, the holiday season. But have you considered what season your business is in right now? Is it in a season of famine or a season of harvest? Do you know how to recognize and deal with each of the seasons?

Let me tell you a story

A client came to me when his business was struggling and in a season of famine. After the struggle came 30 days of what I like to call pop bottle rocket business. Sales shoot up into the sky, and the cash comes flowing in. Excited, my client ran out and began buying a ridiculous amount of video equipment. He spent a substantial amount of money because he anticipated this season of harvest would be his new normal.

What he did not take into consideration is the changing of seasons within business. There are times of famine, when the business is slow, and times of harvest, when the business is thriving. My client did not recognize the season of harvest, nor did he anticipate that a famine would come.

By recklessly spending money, he created a season of famine. When the season of famine came, he panicked. The panic created desperation, and everyone around him could smell it.

What’s that smell?

Have you smelled your business lately? That may sound like a confusing question, but hear me out. Your business has a certain aroma you give off to others. So do you as an individual. Is it confidence? Passion? Desperation?

Desperation is evident. I can smell it miles away, and it is usually the result of a self-created season of famine. When people come to sell me a product, I often can smell desperation on them. However, there is occasionally someone who comes in with such confidence they say, “This is our product. Here is how it works, and we believe in it. If you believe in it, that’s great. If not, see you later.”

Then, they get up and walk out. Sometimes before they get in their car, I am running after them. I want to do business with them because they smell like harvest, not famine or desperation.

During the season of famine, you may be worried abut money, but be aware that people can smell it on you. If you are using too much emotional, mental, and spiritual capital worrying about money, there’s nothing left to serve clients. Plus you smell bed, and no one wants to be around someone who smells bad.

If you’re in a season of famine right now, focus on the actions that can help bring you back to a season of harvest, but be careful to avoid smelling like desperation. If you’re in a season of harvest, don’t take it for granted. Every business has a cycle, and you must to be forward thinking by preparing for the famine during the harvest.

Make sure you’ve paid in enough taxes

As the end of the year approaches, you should think about whether you have paid enough taxes to avoid a penalty.

On the federal side, you’re fine if you’ve done one of two things.

The first option to avoid a penalty is to pay in 90 percent of your current year’s liability. If you owed a total of $10,000 in federal taxes this year and have paid $9,200 in withholding or in estimated tax payments, you’re good.

The second way to avoid being penalized is to pay in as much as your tax was last year. If your tax last year was $14,000 and you’ve paid $14,001, you’re OK.

But there’s an exception to this rule. It’s complicated, and the best way to be sure this exception doesn’t affect you is to check with a CPA.

If you haven’t met one of the two requirements—paying in 90 percent or paying what you paid last year—you still have time to act before Jan. 15. It’s worth the effort now to avoid the penalty.
My point is that you get absolutely no benefit for paying the penalty. It doesn’t save you any money, and it doesn’t save you any pain or angst.

If you haven’t met one of the two requirements, either you should have your employer withhold the needed amount, or, if you’re in business for yourself, make the necessary payments to the IRS.

You should accompany the payment with IRS form 1040-ES. The ES stands for estimate, and it’s due on Jan. 15, 2018.

Now is the time to start thinking about what to do. You can’t start thinking about it on Jan. 13 and hope that you’ve got enough money available to make a payment on Jan. 15.

If you don’t meet the required payment, your penalty for underpayment of taxes can be as high as 5 percent of the unpaid amount. You get nothing for it, except for a bill from the IRS.

As for state taxes, the state of Oklahoma only requires that you pay 70 percent of your tax liability by Jan. 15. If you’ve paid in the same amount as your tax was for last year, you’re good.
What’s important to consider about paying your state tax is that you can deduct it in calculating your federal taxes. The state tax is an income tax deduction.

You deduct it when you pay it. Although the due date is Jan. 15, 2018, I don’t want to pay my state tax then. I want to pay it Dec. 31, 2017, so I can deduct it on my 2017 tax filing.

As an accountant, I get really excited about the state income taxes. I don’t want you to come in on Jan. 2 to have me compute your tax liability and have to tell you, “You owe $5,000 to the state. You’ll get the deduction next year.”

Go ahead and write the check in 2017 and deduct it in 2017 so you get the tax benefit now.

Tax strategy: accelerate or defer income, expenses

Heading into the end of the year, you want to make sure that you manage your income tax liability. One way to do that is by accelerating expenses.

Take a look to see what you can prepay, how you can prepay it, and what you can afford. For example, I’ll prepay my insurance. I’ll prepay my utilities. I’ll prepay some rent. I’ll make sure that my last payroll of the year is not on Jan. 1 but on Dec. 31.

Even if you would typically do payroll on Jan. 1, consider moving it to Dec. 31. The only difference between paying on Dec. 31 and Jan. 1 is that paying on Dec. 31 allows you to deduct that payroll as an expense for this year. I always choose to accelerate my payroll and move it up by a day.

With real estate taxes, you can pay half of them at the end of December and half in March. Pay on or before Dec. 31 so you can claim that expense on your 2017 tax return.

The word “pay” is a little slippery, which we can use to our benefit as a tax-planning maneuver. The IRS considers a check written on or before Dec. 31 to have been paid within the year—in this case 2017—if it clears by March 15 of the following year. That gives 75 days for the check to clear.

Let me give an example. Let’s say I write a utility check on Dec. 31, 2017, and the city deposits it on Jan. 10. I can still deduct it in 2017 because the check is dated in 2017, and it cleared before March 15.

My rule of thumb is to prepay within the next several months for things you know you’re going to pay anyway.

Contributions to organizations are one example. So are utilities, insurance, and supplies—paper, pens, and writing pads. Go buy 50 boxes of pens because that’s what you’re going to need over the course of a year. And don’t forget your internet service and your cellphone bill.

On the other hand, use common sense. If you own a restaurant, obviously you don’t want to buy a three-week supply of salad, because it’s not going to last. But you can certainly buy enough salt or pepper or cups or napkins for three weeks, because they’re not going to go bad in that time period.

This strategy applies to businesses that are cash-based for accounting purposes (in contrast to accrual-based), which is true of almost all small businesses in America. That means that when dead presidents hit the table, you have income. When dead presidents leave the table, you have expense.

I use the terms dead presidents because people remember it. It’s the truth. George Washington is dead. I hate to tell you. It’s sad, and I miss him, but he’s a dead president.

What kind of trail are you leaving?

I have two shire draft horses, Tina and Penny. They are 19 hands high—about one-third higher than the typical quarter horse—and they weigh about 3,000 pounds. Their hooves are the size of dinner plates. From their knees down to their hooves, they have long white hair. They’re beautiful animals, and when they run, it’s unbelievably gorgeous.

I let them into the pasture to graze, and then call them back into their pen. They come running from a quarter mile away, and it makes the ground shake.

They’re smart and responsive and eager to please me. But the other day, my grandson went into the horse pen. I’ve taught him the first rule of the farm: “You open a gate, you shut it.”

The boy’s a rock star about opening gates and shutting them, at least most of the time.

The other day was the one time that he left the gate open. My wife Holly called, and she sounded panicky. “The horse are out, and I don’t know where they are,” she said.

I was at the office, so I called my buddy and asked him to go over there and start looking for them, and I started racing home.

“I’ll tell you what’s going to happen,” I said to him. “They’re going to tell you where they’re at. I promise. You just have to pay attention to what they’re telling you. You might see a field filled with white clover blooms except for patches about two square feet where the blooms will be gone, I said. You’re looking for that kind of sign, something disheveled.”

He walks over to the farm, stands at the gate, and looks out. The first thing he sees is a bale of hay with a corner eaten off to reveal a different shade of green.

He walks over there, and he sees hoof prints. After getting his bearings for a minute, he says to himself, “They had to have gone west because that’s the only place for them to go.”

He walks up the street to the west. Then the trail goes cold. “If I’m a horse, what am I going to do?” he thought. “What am I heading to?”

Horses, especially my girls, want to graze. They can smell what they want. So he thinks, “There’s a pasture right over there. I almost guarantee that they’ve walked down this trail heading for that pasture.”

He walks along the trail, and, sure enough, he sees hoof prints. He walks into the pasture, and he sees that the grass is ankle high except for a couple of dips.

Eventually, the clues led him into the next pasture. Behold. There they are.

He walks over with a rope and tosses it over their necks and walks them back to the barn.

This all got me thinking: “I wonder what happens when I look over my shoulder. What kind of trail do I leave?”

Unintentionally, I leave marks. Some of them I’m proud of, and some of them I’m not.

I have to ask myself these questions:

• What kind of trail do I leave?
• Are people able to follow me, and does it lead them to good places?
• Does it give them enough strength so they can advance themselves and feel better?
• Or, am I leading people down a path that I’m not proud of? One that’s not what I’m called to be?

Build better rapport by listening

I’ve noticed what I call the “me too syndrome.”

Here’s an example. You’re talking to someone who says his or her back hurts. The next thing we say is, “Oh, me too. My back hurts, and my knee hurts. It’s amazing that I’m able to get out of bed.”

It can happen when people says something about their in-laws, their husband, their wife, their kids, or their boss. We’re always tempted to one-up them. We start out with “me too,” then add something else.

The problem is that “me too” blocks the one thing everybody wants—to be heard.

Your young child wants to be heard. “Mommy, mommy, mommy.” Your spouse wants to be heard. Your friends, customers, and co-workers want to be heard.

The moment you say “me too,” you’ve discounted what someone is saying to you. You’re sending the message that they don’t matter, what they said is irrelevant, and you just want to talk about yourself.

Yes, I’m attempting to engage you with “me too,” but my intentions don’t matter. In reality, when I say “me too,” I just stopped listening to you.

The “me too syndrome” detracts from fostering the relationships we desire—as entrepreneurs and as people trying to help other people.

Most of us don’t understand how counterproductive saying “me too” is. We’re coming from a good spot. We want to talk to you, to engage you. But instead of saying something to that effect, we say “me too.”

How can you replace “me too?” The simple alternative goes like this: “That’s fascinating. Tell me more.”

When someone says his or her back hurts, you can respond: “Your back hurts? What part of your back? So, does it go down in your leg? Does it go down to your knee? Tell me more.”

As a coach, I challenge people by saying, “For one day, don’t make it about you. Be very, very specific and conscientious when somebody says something about their back, their husband, their wife, or their boss.”

My coaching continues with advising them to say, “Wow, tell me more.”

I’m amazed that most people report back to me and say, “I’ve had these unbelievably in-depth conversations.”

The cool part about this approach is we still get what we wanted.

When I said “me too,” I wanted to engage in an involved conservation, but I did it in a disrespectful way. When I say, “tell me more,” I engage in a conversation that goes on and on. Eventually, the person you’re talking to will likely say, “You seem to know a lot about back pain, about it shooting down my leg and down my knee. Do you have back pain?”

It goes back to this simple premise: When I approach somebody, I know that they just want to be heard.

It doesn’t matter your religion, whether you’re male or female, or how old you are. Everybody wants to be heard.

If that’s true, let’s focus on thinking, “How am I helping you to be heard?”

If we wait for when, we never get to then

A lot of times, we have the tendency to live our lives by the When-Then Concept.

  • “When I lose weight, then I’m going to start jogging.”
  • “When I get married, then I’m going to save money.”
  • “When I pay off this car, then I’m going to start paying off my student loan.”
  • “When this debt’s gone, then I’m going to start saving for retirement.”

I can go through my life, and I can think of multiple when-thens.

I was talking with a buddy about the When-Then Concept, and he said, “Holy cow. This is exactly what I needed to hear.”

We can all find ourselves stalling instead of saying, “OK, now I’m going to do this.”

When I notice that I’m procrastinating because of the When-Then Concept, this recognition helps remove some of the barriers. It gets me down to what I’m able to give attention to, and it gives me direction.

The When-Then Concept applies in my personal life, my financial life, my relationship with my children, and more.

Being aware of its pitfalls helps me stop from saying, “When the kids get to summer vacation, then…” or “When the kids get back in school, then…”

I live my life waiting for the when, and the then never comes. It never arrives.

My wife and I had to overcome it when we decided to have children. We had been saying, “When we have enough money, we’re going to have kids.”

We realized we were never going to have as much money as we thought we needed.

It’s worked out just fine. Somehow our kids have survived. They eat, and they live indoors.

In what areas of your life are you stalled by the When-Then Concept? Once you realize where it’s holding you back, it’s much easier to move forward.

Birds of a feather flock together

Turkeys are my teachers. I recently changed the type of turkeys I raise, and the new breed of black, broad-breasted turkeys have taught me a lesson about relationships.

The breed I used to raise—standard bronze —would always run from me when I went into the pen. They would squawk like I was trying to get them or like I was a mean-spirited critter there to do them harm.

When I first got my new flock of 20 black, broad-breasted turkeys, I kept them indoors, and they squawked like all the other turkeys I’ve had.

They were growing like crazy, and I moved them to a pen outside. Suddenly, their personality totally changed.

I’ve never seen anything like it with a group of animals.

The black, broad-breasted turkeys come running as I’m leaning over to fill their water and their feeder or doing maintenance on equipment.

They walk up and look me in the eye. They stand on my foot looking at me.

They look down at what I’m doing, and they look back up like they’re saying, “What ya doing?” “You’re doing that wrong.” “Shouldn’t you be doing it another way?” “Does anybody know you’re doing it this way?”

That’s the way it seems to me. The entire flock does it.

I can’t get things fixed in the pen. When one of my automatic waterers broke, I had to take it out of the pen to fix it because they wouldn’t leave me alone. As I’m pouring water in, they’re sticking their heads in.

This behavior got me thinking.

I’m a very relational person, but I’m not very social. I will be social with you because I value our relationship. I force myself to be outgoing. “Hey, how are you?” “How’s your day been?” How are the kids?”

My instinct is to notice you but to act like I don’t see you in Sam’s. I’ll duck down an aisle because I just don’t want to talk. It’s nothing personal; I just don’t want to talk.

I’m only social because I know that it enhances my relationships.

The turkeys I had before, the ones that ran from me, I didn’t see as pets. I didn’t see them as friends.

With the new ones, I’ve developed a fondness.

When I talk to you, it enriches and enhances me. It enriches and enhances you. It enriches and enhances our relationship.

Don’t let all the squawking disrupt your peace of mind

In raising chickens, I house my flock in “chicken tractors” or mobile chicken coups.

Each chicken tractor of 75 birds has three 5-foot feeders, and the chickens can feed on both sides of each feeder. That’s 30 feet of feeders—more than enough for all of them to eat at their leisure.

But they sit at one feeder, and they fight with each other. Then one chicken will squawk because it got pushed out of the way. As soon as that chicken squawks, a chicken from the other side of the feeder that was eating by itself, unmolested, will perk up.

What does this chicken do? It immediately runs over to where it heard the noise and fights its way in, which provokes more fighting and squawking.

I’m amazed that these birds will fight at the same feeder when there’s plenty of food at the other feeders.

It makes me think of how many times I make life more difficult than it needs to be. I hear white noise, and I go running over there. Somebody has a new device, a new calendar, a new five steps to productivity, or three steps to the greatest relationship ever.

Rather than pay attention to what’s important, I’m easily distracted.

How many times do I miss the boat because I’m following somebody else who claims to have the latest and greatest thing that goes “bang”?

That’s all that many things are—attention-getters. It doesn’t benefit me. I would be better off to enjoy peace and quiet.

But, no… I have an idea, and I pick a fight on Facebook so that we can never talk again.

What did the chicken do when it crossed the farm?

I enjoy raising chickens, and they teach me life lessons.

My 300 chickens are Cornish Rocks. They’re not what you think of as Cornish chickens—the cute little Cornish Game Hens.

What I grow, Cornish Rock Chickens, are today’s typical commercial breed. They’ve been bred to grow amazingly fast.

They convert feed better than any other chicken on the market. Most chickens you eat in the store are about six or seven weeks old—that’s how fast these chickens grow.

Cornish Rocks love to eat. It’s amazing how much they love to eat.

My latest life lesson came about through using “chicken tractors.” A chicken tractor is a mobile chicken coup that holds 75 birds and allows me to move my flock from one spot to another spot on my land.

The chickens can eat all the grass and weeds they want, which amounts to about 15 percent of their diet. Chicken manure is 40 percent nitrogen. What does everybody want to put on their yard? Nitrogen.

The chickens are getting grass, which is what they want, and I’m getting fertilizer, which is what I want. What’s more, they’re doing weed control because the grass comes back faster than the weeds.

This approach creates a symbiosis based on the balance of nature. I’m leveraging what the chickens want to do for my benefit. I want beautiful dark green grass, and I’m not using commercial fertilizers to get it.

This is a healthier approach than traditional agricultural practices. The first thing that most farmers do is cut down all the trees and flatten out all the mountains because they don’t like that topography.

I show up and ask, “How can I have the chickens be happy and still give me what I want?”

Nature loves the balance of the chickens eating green stuff and me getting fertilizer.

In my life, how many times do I fight natural balance? I stretch against it, and I attempt the very thing that I abhor—cutting down all the trees and flattening out all the mountains.

What if I looked for balance at every turn? If I looked for balance in my relationship with my wife, my children, my employees, my friends, my church, and my food?

My love of strawberry cake is a case in point. A piece of strawberry cake every now and then is OK and even in balance. Eating a strawberry cake in its entirety is a bad idea. I’ve proven that to be true on several occasions.