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Leadership Thought #313 – You Need To Manage Your Thoughts.

via Leadership Thought #313 – You Need To Manage Your Thoughts.

Section 9006 of the massive Patient Protection and Affordable Health Care Act will mean yet another huge paperwork burden for small business. It has to do with issuing 1099 forms; it has nothing to do with health care.

Beginning in 2012, all businesses will be required to prepare 1099s for all services and goods purchased from all vendors in excess of $600. Current law dictates that only services provided in excess of $600 must be reported via form 1099 and that corporations (with the exception of attorneys) are exempt from receiving 1099s.

Beginning in 2012, corporations will no longer be exempt, and purchases of goods must also be included. The passing of this legislation is an attempt by the government to close the $300 billion tax gap, which will help pay for health-care reform. So I guess it indirectly relates to the Patient Protection and Affordable Health Care Act in which it was included.

Depending on the industry, many businesses must collect, report and pay over a variety of excise taxes, as well. How much does all that cost your business in bookkeeping and payroll preparation fees? Now business owners must report all business-to-business transactions. So purchases your business makes from Staples, Office Depot and other vendors are included as reportable transactions. You must obtain every vendor’s federal ID, track your purchases and prepare the form. This will involve many additional hours of bookkeeping time. It will be mandatory to get an accounting software upgrade because there will be a new form and new preferences to set within the software to track these numbers. It’s great for all of the bean counters who can double, triple and maybe even quadruple their 1099 preparation fees. But at what cost to the small-business owner who is attempting to recover from this recession and keep her business going?

Speaking of 1099 reporting, the situation gets worse. Beginning in 2011, all credit card processing companies must report annual credit card transactions in excess of $20,000 and 200 transactions submitted to them for processing by any business on a new IRS form 1099-K.

I thought there would be overlap, but just as I fretted about this possibility, the IRS came up with a solution. So pay attention! If you pay for purchases with a credit or debit card, you are not required to issue a 1099. The credit card companies will do so. No overlap after all. You are only required to issue 1099s for payments made via check or cash. So I won’t have to ask Office Depot for its federal ID after all. Because the format of form 1099 will change, we will all have to purchase the upgraded version of QuickBooks or whatever software is used for accounting and 1099 preparation.

It’s still going to be a massive amount of paperwork.

Entrepreneurs, such as myself  keep a lot of the financial details of their business in their heads. Doing so has its advantages: No new software to learn, no danger of a system crash that loses all your data, and you can tweak your budget as often as you need without sitting down at a desk.

But when you don’t have a system and some processes in place, unpleasant surprises can pop up, goals can be easily missed and important paperwork forgotten, which I know all to well.

Getting a better handle on your money can help you to make and keep long-term goals, smooth out the seasonal ups and downs of your cash flow and “maybe” improve your profits. It can also help you to stay out of trouble with the Internal Revenue Service, which is no fun place to be in, trust me…been there and done that!

Here are a few tips for entrepreneurs.

1. Track expenses.Why it’s helpful: You otherwise might some miss tax write-offs and may lose out on others.

What to do: A credit card that you use solely for business can be a basic accounting system.

Most card statements categorize expenses, so you can see which outlays relate to which business activities. If you always use your business credit card for business expenses, you’re less likely to pay cash at, say, Staples and lose the receipts, forfeiting tax-time write-offs. Pens and printer paper can add up.

2. Record deposits correctly.Why it’s helpful: You may be less likely to pay taxes on money that isn’t income.

What to do: Adopt a system for keeping your financial activities straight, whether it’s a notebook you use consistently, an Excel spreadsheet or software such as Quickbooks. Business owners typically make a variety of deposits into their bank account through the year, including loans, revenue from sales and cash infusions from their personal savings. The trouble, is that at the end of the year, you or your bookkeeper might erroneously record some deposits as income, and consequently pay taxes on more money than you’ve actually made.

3. Set aside money for paying taxes.

Why it’s helpful: The IRS can levy penalties and interest for not filing quarterly tax returns on time.

What to do: Systematically put a portion of money aside throughout the year for taxes. Then note tax deadlines on your calendar, along with prep time if you need it, to make sure you actually make payments when they’re due.

4. Keep a close eye on your invoices.

Why it’s helpful: Late and unpaid bills hurt your cash flow.

What to do: Assign someone in your organizations to track your billing. Then put a process in place for issuing a second invoice, making a phone call and perhaps levying penalties such as extra fees at certain deadlines.

“You want to have a plan for what happens if they’re 30, 60 or 90 days late”.

This is extremely important. I started this just last year and unfortunately had some clients not pay their invoices on time, which made me fall short on paying my bills, but I did collect over $2500 in late fees. That is alot of money!

Some entrepreneurs believe that once they’ve sent out an invoice, they’ve taken care of billing. Not so,  “Every late payment is an interest-free loan and hurts your cash flow, unless you have terms set in place to protect you.”

Ed Robinson's Blog

I am a firm believer in persistence and determination.  Many people give up just before things are about to break their way.  However, it never makes sense to go off a cliff simply because it is there.  Not every strategy is wise and not every course of action is worth continuing.  You need to pay attention to the signals the universe is sending you.  Trends either move up or down. They rarely remain flat.  Sometimes the objective evidence indicates you should try something different.

I work with a large number of business owners.  One of the things I most admire about them is their levels of confidence and self-belief.  Most people are afraid to take the entrepreneurial leap and bet everything on an idea and their individual ability to deliver on a concept.  It’s much easier to leave the professional heavy lifting to others.  However, just because you believe…

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Don’t Check Your Email for the First Hour. Total Waste of Time

Reading e-mails first thing in the morning is not productive. If something urgently needs you, they will call or text me.

Not all of us can roll into the office whenever we happen to get there, but most of us with jobs that don’t require constant on-call awareness can trade e-mail for organization and single-focus work.

If you need to make sure the most important messages from select people come through instantly, AwayFind can monitor your inbox and get your attention when something notable arrives. Otherwise, it’s a gradual but rewarding process of training interruptors and coworkers not to expect instantaneous morning response to anything they send in your off-hours.

Gain Awareness, Be Grateful

Set up an “Hour of Power,” “30 Minutes to Thrive,” or at least “Fifteen Minutes to Fulfillment.”
Part of it involves light exercise, part of it involves motivational incantations, but the most accessible piece involves 10 minutes of thinking of everything you’re grateful for: in yourself, among your family and friends, in your career, and the like. After that, visualize “everything you want in your life as if you had it today.”

Get your Free “Hour of Power” audio stream.

Do the Big, Shoulder-Sagging Stuff First

Mark Twain said that, if you eat a live frog first thing in the morning, you’ve got it behind you for the rest of the day, and nothing else looks so bad. Combine that with the concept of getting one thing done before you wade into email, and you’ve got a day-to-day system in place. Here’s how to force yourself to stick to it:

Choose Your Frog

“Choose your frog, and write it down on a piece of paper that you’ll see when you arrive back at your desk in the morning. “If you can, gather together the material you’ll need to get it done and have that out, too.”

One benefit to tackling that terrible, weighty thing you don’t want to do first thing in the morning is that you get some space from the other people involved in that thing–the people who often make the thing more complicated and frustrating. Without their literal or figurative eyes over your shoulder, the terrible thing often feels less complex, and you can get more done.

Ask Yourself If You’re Doing What You Want to Do

Feeling unfulfilled at work shouldn’t be something you realize months too late, or even years. Consider making an earnest attempt every morning to ask yourself:

“If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something.”

“Customer Service” (or Your Own Equivalent)

Your own version of customer service might be keeping in touch with contacts from year-ago projects, checking in with coworkers you don’t regularly interact with, asking questions of mentors, and just generally handling the human side of work that quickly gets lost between task list items. Do your customer service on the regular, and you’ll have a more reliable roster of helpers when the time comes.

Take care of yourself

Your health has a huge impact on your finances.

If you’re healthy, you’re free to pursue interests that generate income. If you’re unwell, the cost of health care can sap your savings. All of which makes good health a valuable asset to nurture, Bogosian says. “It has huge implications.”

Eating healthy food, getting exercise, getting enough sleep and ditching bad habits are, literally, putting money in the bank.

Health affects insurance costs. Many “companies today have realized that the biggest reason people are not living a healthy lifestyle is because they haven’t looked in the mirror,” Bogosian says. Toward that end, some employers offer cash premiums every year for employees who take a quick self-assessment quiz, he says.

Is your spouse on the company insurance? If you both take the quiz, you may be able to double your payout, he says.

Your savings can be affected by what you don’t know.

Many of today’s 401(k) plans have automatic enrollment. Unless you indicate otherwise, you’re automatically enrolled in the company plan, Bogosian says, and the default savings strategy might not match your goals.

While having automatic deductions is a great idea, take the strategy decisions off autopilot and think about where the money is going and how it’s being invested, he says.

One big decision is how much to invest. “The easiest thing to do is say, ‘What will they match?'” Bogosian says. “Whatever they’ll match, that’s the least amount you put in.”

Unsure where to put the money initially? “If you don’t like target-date options, just choose a balanced fund,” he says. They have “the best risk-reward trade-off.”

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