If They Can Do It, So Can I

I am a student of business owners. In my line of work I see all kinds of businesses, how they function, and their level of success. My personal experience qualifies me to make comments on the subject. Tax Prep & Accounting Services breathed life under my personal name in 1982, taking on the name Tax Prep & Services in 1989, and its current form in 1992. I have managed real estate and financial services companies. So you don't think bad things of me, I also produce stuff on my farm.

Most businesses fail in the first 5 years. They fail due to too little business or too much business. Too little is easy to understand, but too much? Yes, too much business too fast requires advanced management skills most small business owners lack. A business owner producing widgets is great at making widgets. He has a difficult time delegating the task of production and managing the workforce. Sometimes the owner cannot do it. His skills in management are inadequate.

A new phenomenon (to me, at least) has struck small business. Several of my business clients have hours starting at 9 or 10 in the morning and end at 3 sharp to pick up the kids. Either I didn't notice this before or there is a new business model in town. The funny things about this phenomenon is that it works. The businesses that use it are very successful. Most have employees. The employees work longer, but the boss is out by 3. Period.

Seeing business owners running their business on reduced hours intrigues me. Why does it work? After questioning clients/business owners using reduced hours I discovered an important point. Owners that work long hours get less done due to fatigue, make more mistakes, and poorer decisions. Shorter hours allow for a fresher mind and greater productivity. They also enjoy their work more.

Employees get more work and hours in these businesses. The boss is out talking with new clients while staff gets the work done. Everybody wins. The boss leaves early, but works evenings or weekends when necessary. When the boss works 40 hours a week he is kinder to his clients and employees. He also enjoys his family.

Now you know. This new information has me thinking. Don't call me after 3; I'll be golfing. Talk to Jeff; he'll be there. Wait a minute. It's tax season. Forget it. I'll be in the office from 4 AM to midnight.

I Don't Want to Hear About It

Many people want to tell their accountant things they shouldn't. It is true accountants have limited privilege with clients. Certain matters you tell an enrolled agent or CPA remains confidential and your tax professional cannot be used against you in an audit or in court in certain instances. The key word though is "limited." Now is a good time to review what is and is not covered by privilege with an enrolled agent or CPA.

Accountant-client privilege only extends to noncriminal tax matters before the IRS. In state court, accountant-client privilege cannot be asserted. If you are engaged in tax fraud, your accountant can be compelled to testify against you. What is always confidential is any tax inquiry you make. If you want to explore ways to reduce your taxes, the discussion is covered by privilege.

Your accountant is subject to fines and prison is he knows you cheated on your taxes and signed the tax return anyway. So let me say this as clear as possible: I don't want to hear about it.

By the way, you will sleep better at night if you follow the rules, anyway.

Double Digit Interest Rates Are Back?

Treasury bonds had a really good year in 2011 with the 10-year bond yielding under 2% at the end of the year for the first time since at least 1977 and the 30-year bond under 3%. This is good news for bonds at first glance. But is it?

An improving economy and a Federal Reserve ending Operation Twist, where short-term Treasury bills are sold to buy long-term Treasury bonds, comes to an end, leaving future gains for bonds in doubt. Unless the economy declines, interest rates will head higher in 2012. There are few reasons remaining for the Federal Reserve to continue pushing rates lower.

How high rates go and when is anybodies guess. History has an interesting reference though. When we consider the low 10-year Treasury bond yield at the end of 1977, one concern comes to mind. A few years later interest rates pushed toward double digits and later went well over 10%.

If history repeats, which is no certainty, interest rates could head a lot higher. There are notable differences, however. Inflation is less an issue today than in 1977. Demographics are significantly different. Tax rates are lower and greater global trade should keep inflation lower. Energy prices are less an issue today because of more efficient use of these resources.

The differences aside, one overwhelming fact remains: Interest rates can go from very low to very high very quickly. The good 'ol days of low interest rates are coming to an end. It might take another generation to see these rates again.

Anybody for a 14% 30-year Treasury bond?

Happy New Year

Everyone at Tax Prep & Accounting Services, Inc. wishes you and your family a happy, joyous, and prosperous new year.

Happy New Year

The Bustle is Back

The holidays bring a double workload in the accounting profession. Organizers are all in the mail this week and clients are setting appointments. Part-time staff are back training on the new software and learning new office policies. Clients are calling about last minute tax maneuvers.

The holiday bustle is only the start. Soon, office activity will run 16-18 hours a day with everyone working overtime.

The hyper-activity feels good. There is no feeling like it in the world. That moment of excitement when life explodes with action. I am giddy. I already have an appointment on the New Year's holiday. May as well work. Can't sleep anyway.

Merry Christmas Everyone

From the entire staff at Tax Prep & Accounting Services, Inc.

Merry Christmas

Small Businesses Get Paid to Hire New Employees

As I write this, Congress is debating an extension of the payroll tax cut. Last I heard, Congress will extend the tax break for two months instead of for the entire year. The tax break will not encourage employers to hire more, but the extra money in people's pockets should help the economy, hence encourage employers to hire people to get the extra work done.

Small business owners are not left out. Several tax breaks exist to help defray the cost of hiring new employees and retain them. Credits are also available on health insurance premiums, pension plan start-up costs, Indian employment, and employer provided daycare. These and other credits are good discussion points with your accountant. If your accountant doesn't bring up these issues, ask. One credit, employer paid FICA on tips, is 100%.