The Green CPA

Reasons You Need an Exit Strategy

2012-01-27T20:38:00.000-08:00

Most business owners concern themselves with growth and expansion, and sometimes, how to make ends meet. When starting or buying a new business, the last thing on your mind is how to exit. However, an exit strategy is a key component of a successful business plan and too few owners give this proper consideration.

An exit strategy is nothing more than your plan on how you intend to leave the business. In the end, you will either sell, close, or die. Each of these situations offers different opportunities and challenges, but the main point of this blog post is that a business owner needs an exit strategy and here are some reasons to have one.

An Exit Strategy Allows for Retirement

Most business owners have a significant portion of their net worth tied up in their business. With a proper planning, you can turn this net worth into cash to provide you with a comfortable and worry free retirement.

An Exit Strategy Provides for the Future

Your family and employees depend on your business and without proper planning, your death or disability could be tragic for them. By planning for this fairly common situation, you can make sure your business continues on in your absence and provides for their future needs.

An Exit Strategy Can Provide Cash to Pursue Other Dreams

Regardless of your age, many business owners dream of starting another business or becoming an angel investor to other businesses. Selling your business can provide the cash to follow these dreams and a well structured strategy will help you maximize what you take from the business and provide the liquidity to pursue new opportunities.

An Exit Strategy Will Appeal to Investors

Most outside investors want to know how they are going to get repaid. For many investors, an exit strategy is a must because they want their investment protected. By building this into your plan, potential investors will understand how you are looking out for their interests.

An Exit Strategy Will Help You Know When to Quit

Another reason to think about your endgame is understanding when is it time to pull the plug. Without thinking about this, it is easy to continue throwing good money after bad in a business venture that clearly isn't making it or working the way you planned. By planning for this contingency in advance, you'll have clear mileposts to help you decide how and when to end the business, regardless of its success.

It's important that you plan for your business exit. I guarantee you'll leave your business someday and proper planning can make the difference between a successful exit and one that's not.

Occupy Portland update

2011-11-10T11:57:00.000-08:00

Because I'm a supporter of the Occupy Wall Street movement and specifically Occupy Portland, I need to provide an update here as to my current thoughts about the Occupy Portland encampment.

I live downtown and am able to stop by the camp regularly. My guess is that 300-400 people are camping there each night. Out of this group, perhaps 20% represent Occupy Portland (activists motivated to create change in our society and economic system) with the remainder comprised of homeless folks, street youth, mentally ill citizens, and a variety of others.

Because of this, the camp only partially represents Occupy Portland. The camp is a landmark and a physical space for us but the spirit of the Occupy movement goes well, well, well beyond the camp.

And this word just in as I was writing - Mayor Sam Adams has given the camp until Sunday top vacate of risk arrest.

I for one hope we vacate peacefully and on our terms as we come up with Occupy Portland v2. Stay tuned.

Move Your Money - A National Week of Action

2011-11-02T10:54:00.000-07:00

I've blogged about the importance of moving your money from the large corporate banks and Wall Street institutions to local banks and credit unions. In this blog post about local banking, I provided some criteria for choosing a local bank. In this blog post, I addressed the Move Your Money movement and provided some links to useful information and resources.

Now, the Occupy Portland movement is asking supporters to remove their money from the Wall Street banks this week, and to move that money to a community bank. I hope you will join me in this collective action.

If we, the 99 %, removed our money from the big banks, we will send a clear message that conscious consumers will not support the unethical business practices of the mega banks. The 1% will take notice.

As we know, there are better alternatives than big banks. Safe, convenient credit unions and smaller, local banks can supply all the services you need. People protesting in Occupy Portland are sacrificing safety, home, and family time to shed light on the terrible abuses the banks have perpetrated on all of us. However, the occupiers cannot do it alone; we all need to work together. It is time for you to put your money where your mouth, soul and future are. So here is the plan:

· Open a new account at a local credit union or small local bank.

· Transfer your funds to the new account from your by bank account by Nov 5th

· Follow your big bank’s procedure for closing your accounts.

It's that easy!

Here are some important pieces that will help clarify why this is so important and motivate you to move forward:

1. If you want to know more about this grassroots movement please see this ABC's World News Tonight report click here:

http://www.huffingtonpost.com/huff-tv/abc-news-profiles-move-yo_b_417014.html

2. Check out this cool video about the project to move your money here: http://moveyourmoneyproject.org/watch-video

Also check out there website here: http://moveyourmoneyproject.org/

3. If you want to know the difference between banks and credit unions click here:

Part 1 http://www.youtube.com/watch?v=cawzTSVTP2M

Part 2 http://www.youtube.com/watch?v=-rEW6ff3Zao0

Part 3 http://www.youtube.com/watch?v=RkQUVs-Kghg

4. If you want to find a local small banks and credit unions click here (Note that this document is dated August 2010 and information may have changed):

• http://equitydesign.com/wp-content/uploads/2010/10/MYM-PDX.pdf

5. If you want to feel the power and pure joy we feel when we fight back, check this out.

http://www.youtube.com/watch?v=gdxTcaCS65Y

Please share this information widely.

Occupy Wall Street / Portland - Next Steps

2011-11-01T09:20:00.000-07:00

I live fairly close to Occupy Portland so I'm able to stop by and visit fairly often. At the encampment you'll find a mixed bag of issues, people, demands, strategies, tactics, concerns, and stories when visiting.

One common thing is clear however: The need for systemic change.

While our current system has created vast and concentrated sums of wealth as well as abundant consumer options for Americans with spending money, the current system has also created:

Unemployment that hovers near 20 percent
1 in 4 American children living in poverty
50 million Americans without health insurance
The greatest prison population
Multiple wars for resource control
Ecological devastation that puts the entire planet at peril
A corrupt political system where money buys votes and access
Millions of American home foreclosures
40 years without real wage growth
College students burdened with massive debts owed primarily to the 1%
Wealth for richest 400 Americans that is equal to the wealth of the poorest 150,000,000 Americans

This list could go on and on.

Learning the skills of an MBA, I was taught to look for root causes when solving problems. The list above is a not a list of problems, but rather symptoms of much deeper problems. Problems we must solve.

Because we must solve these problems, it is important for everyone to get involved. How are you engaging with this vital revolution?

My first recommendations is for citizens to find out what is really going on. You won't get this information from mainstream press so you need to find other channels. What would you have known about the Egyptian revolution if you only listened to Egypt's official broadcasts? Do you think Libya's official press did a good job telling the story of the resistance?

If you are getting your information from the mainstream corporate press you are getting filtered information when direct information is easily accessible.

Visit an Occupy camp near you (Portland's is next to city hall and can be visited 24/7. Hop on a bus and go check it out for yourself.
Watch the events on Livestream (www.Livestream.com and search for your favorite Occupy event). Portland's events can be seen here: http://www.livestream.com/occupyptown
Visit the official webpage for your local Occupy event. You can get unfiltered news about Portland's occupation at www.OccupyPortland.org

Two nights ago in Portland we had our first arrests related to the Occupy Portland events. One of the most informative videos I saw about the events is here:

My challenge to you is to get involved. Will you join me?

How Much is Enough?

2011-10-19T16:10:00.000-07:00

In March 2010 I sold my house and moved into a downtown apartment. One of the reasons for moving was to downsize my footprint. I wrote about this in a 2-part blog post (Downsizing Part I and Downsizing Part II). At the time of the move, I got rid of at least 50% of my possessions and felt some relief from the burden of having too much stuff.

Fast forward to October 2011. I've now been in my apartment for 18 months and I've probably only touched/used 50 percent of what I moved from my house to my apartment. Fully 1/2 of everything I moved sits in cabinets, a storage locker, closets, and drawers untouched from the day I moved. Yet, I am still challenged to get rid of it. What is this attraction to our stuff?

As you know, the sustainability mantra is reduce, reuse, and recycle. These actions are listed in decreasing orders of environmental impact because never buying and using something is far better for the environment than buying it and reusing it, or buying it and recycling it at the end of its life.

As I'm writing this I'm thinking about the events at Occupy Wall Street. I understand the need for change and yet the question is in what direction? If we have full employment and a global consumer society we'll destroy the biological systems that make life possible. The "system" is driving all of us to work, work, work and consume, consume, consume yet that isn't leading to the world we both want and need.

The good news about downsizing 18 months ago and the ongoing realization that I still have way too much stuff is that I'm not buying anything.

I already have enough - And less stuff is actually more fulfilling after you've got the basics covered.

Now we just need to figure out how to have a successful economy that isn't based on unsustainable and unsatisfying criteria.

Main Street Businesses should join with Occupy Wall Street

2011-10-13T16:15:00.000-07:00

I've been down at the events at Occupy Portland every day for at least a few hours since the events started here in Portland on October 6th. There truly is a wide variety of people involved. While we need many more voices engaged, one thing clearly missing up to this point is the voice of Main Street businesses and the people who actually create jobs, make payrolls, and contribute to our communities in so many ways. The movement is anti-Wall Street, not anti-business.

When I attend the events, I see the need for far more people to be involved in the discussions than are currently present. While those of us with businesses probably find it hard to get down to the occupation and be involved, it is imperative that we get involved in what I believe is likely to be the biggest social change movement in my lifetime.

Business as usual cannot continue. Business as usual cannot continue.

I wrote that twice to emphasize a point. People are pissed off and in the streets because we have an economic system that is NOT meeting the legitimate needs and aspirations of a free people while simultaneously destroying the biological systems that life depends on.

Here are some sobering facts:

1 in 4 US children in poverty
A corrupt political system controlled by money
20%+ unemployment or underemployment
Multiple wars for resources and control
50 million Americans without health insurance
The largest prison population in the world
A security state second to none
Wealth disparity that rivals third world nations
The daily destruction of biological necessities like clean air, water, land, diversity, and a stable atmosphere

We have an economic system that works amazingly well for the 1%, and pretty darn good for another 10-15% while leaving vast amounts of people in desperate poverty or surviving pay check to pay check. We can do better.

Our system isn't broken, it's actually working wonderfully well according to it's design.

In order to make the necessary system changes, we need lots of people involved. That's how we all can help birth a new society.

I did a blog post more than two years ago about systems I think you'll find interesting. You can read it here.

The sign I'll be carrying at the next rally will say "It's the System Stupid" I hope you'll join me at an occupation near you.

Occupy Portland

2011-10-07T11:58:00.000-07:00

Yesterday, I attended the Occupy Portland march with approximately 10,000 others. We completely filled Pioneer Courthouse square and spilled onto the adjacent streets. Due to work, I was only able to participate for an hour.

I returned to the occupation around 8pm in the evening to join in solidarity with this movement to change the system. The vibe was incredible and everyone was friendly and hopeful. The demands are for systemic change.

Around 10pm a woman came by and asked if anyone wanted to teach a class. I volunteered to teach a class on economics starting at 10:15pm. At the appointed time, we formed a circle on the lawn and about 20 people joined me for an economics discussion. The group eventually grew to well over 50 people.

Without resources, I discussed some of the following:

The SYSTEM
Circulation of money
The FED and the creation of money
A giving economy
Happiness index and other metrics
Labor, capital, and managerial classes
The scale of the system
Alternatives, Alternatives, Alternative as a few different ideas.
The Paradigm of the current system

It was a rich and rewarding experience to share my business and economics expertise. I ended up staying until 1am when I walked home and slept in my warm bed.

Rather than go directly to work, I returned this morning at 7:30am and ended up working as a spokesperson/information sharer as well as doing call in reports for KBOO community radio. I also did a number of TV and radio interviews as well.

When I arrived, the General Assembly (GA) was taking place and there were approximately 500+ people in attendance. I counted more than 60 tents though many had already been packed away. The police had given us until 9am to clear the park as the Portland Marathon had rented out the space for their weekend event.

Behind the scenes were furious negotiations with the police, Portland Marathon, the Mayor's office, and representatives of Occupy Portland. OP moved from two parks and consolidated into one and I believe Portland Marathon made the decision to share the park with us rather than have us removed. That decision allowed the peaceful demonstration to stay in place so we could relax and move forward rather than worrying about the logistics of moving.

Around 9:40am, I again led an economics discussion and gathered probably 50+ people for the discussion.

At 11am I had to return to work. I will back tonight.

We have an opportunity to change the system but we need more people to get involved. Democracy is not a spectator sport. The current system wants all of you to just go back to work so the 1% can get even richer while we destroy the planet through an unjust economic system.

Will you join me in changing it?

If so, you have to get out into the streets. There is something vastly different about speaking face to face in human size groups that cannot be replicated through mass media. Unless you have attended an event, you have no idea what is going on. It would be like trying to taste a meal by listening to the food.

I know the Arab uprising occured and I saw it on TV but the only way to know what was really going on was to be a part of it. This is our Arab uprising. We need a new system and we need it now. We need ALL people of goodwill out to help us create it.

The current economic system in the US produces:

20% + unemployment/underemployment
1 in 4 children in poverty
Multiple wars for resources and control
A security state 2nd to none
The largest prison population on the planet
Ecological destruction
50 million without health insurance
Wealth disparity that rivals third world nations.

We can and must do better. I hope you'll join me TODAY in helping nurture this unbelievable moment.

If not now, when? If not you, who?

Home Office Deduction - Exclusive Use

2011-07-11T12:39:00.001-07:00

If you use your home for work or business, you may be entitled to the home office deduction. The home office deduction is one of those wonderful tax deductions that allows a taxpayer to turn an otherwise non-deductible personal expense into deductible business expense.

Over a series of posts, I'm going to review some of the rules and nuances of this deduction. You can find more information in IRS Publication 587 or the IRS YouTube video.

The first thing to note are the specific rules you must follow to get this special deduction. If you fail to follow the rules, you will generally lose the deduction.

To qualify to deduct expenses for business use of your home, you must use part of your home:

Exclusively and regularly as your principal place of business,
Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business,
In the case of a separate structure which is not attached to your home, in connection with your trade or business,
On a regular basis for certain storage use (Inventory storage or product samples)
For rental use (See IRS Publication 527)
As a daycare facility

If you are an employee, you may also qualify for a deduction if you meet the tests noted above plus:

Your business use must be for the convenience of the employer, and
You must not rent any part of your home to your employer and use the rented portion to perform service as an employee for the employer.

The IRS notes that if the use of the home office is merely appropriate and helpful for the employer, you cannot deduct expenses for the business use of your home.

The key words that often catch the unwitting taxpayer are exclusive and regular use. Many court cases hinge on the interpretation of these two words. In today's post, I'll review the exclusive use test.

The first thing to note is that you don't have to meet the exclusive use test if you are taking the home office deduction as a daycare facility, or for the storage of inventory or product samples. There are some specific rules you need to meet for these exceptions though I'll refer you to IRS Pub 587 to read those yourself.

Because exclusive use seems to be a very high bar, I'm often asked if there are exceptions to this rule beyond those noted above. In other words, does the IRS really mean "exclusive?"

The law [IRC Sec. 280A(c)(1)] is very clear on this matter - the use must be exclusive. Almost any personal use for the area destroys the deduction.

In Speers v. Commissioner (T.C. Memo 1994-157) the court ruled the exclusive use test is an "all-or-nothing standard." Combining business and personal use precludes the deduction - ANY personal use destroys the deduction.

Despite this clear standard, the courts have carved out de minimis exceptions to the exclusive use test.

In one case, a taxpayer claimed a home office deduction for a walk-in closet in his studio apartment. To get to the bathroom, the taxpayer had to walk through the closet allowing the IRS to challenge the exclusive use test. The court ruled in the taxpayer's favor saying this incidental use to walk to and from the bathroom did not violate the exclusive-use test.

In another case [Culp v Commissioner (TC Memo 1993-270)], a taxpayer stored a lawn mower in the garage he claimed as a home-office deduction. The court again ruled on behalf of the taxpayer claiming the space occupied by the lawn mower amounted to de minimis use and did not alter the deduction.

In an example of how even minor personal use can destroy the deduction, look at Langer v Commissioner [TC Memo 1992-46]. Mrs. Langer ran a piano lesson business from her home and had a special area set aside for this exclusive purpose. However, during the year she had an open house allowing guests to use the room. The court ruled that this use violated the exclusive use test and Mrs. Langer lost her deduction.

We'll continue with this subject in future blog posts.

Avoiding Taxes The Way Big Corporation Do

2011-06-15T13:03:00.001-07:00

I'm interested in tax fairness. It doesn't seem fair to me that giant multi-national corporations, with their teams of lawyers, accountants, and lobbyists, are able to rig the game so they pay no income taxes despite significant profits.

By not paying their fair share, the burden on the rest of us increases while at the same time, our nation's financial outlook worsens as a result of what I believe to be both a spending and revenue problem.

Yesterday, I had an op-ed in The Hill, discussing this issue. The article was called Avoiding Taxes The Way Big Corporations Do where you can read more about my views and this issue.

The Willamette Week had a great article back in April entitled 9 Things The Rich Don't Want You to Know About Taxes where they highlighted the impact of corporate and individual loopholes that seem to be available to only an elite few.

Here's an older article claiming most corporations pay no US Income tax and here's a more recent article highlighting 16 profitable U.S. corporations who paid no income taxes.

B Corporation Community Grows

2011-06-13T09:54:00.001-07:00

Last week I attended a local B-Corporation event at The Joinery. The B-Corp community keeps growing and now includes more than 420 business organizations representing more than $2 billion in annual revenues. Oregon has 27 B-Corps.

Four states (Maryland, Virginia, Vermont, and New Jersey) have now passed B-Corp legislation. New York is on the cusp, and bills have been introduced in over half the states. According to Stephanie Ryan from B Lab, the legislation has been passed with bipartisan, and nearly unanimous support, when the final vote was taken.

I still consider the B-Corp certification as the gold standard for green minded businesses due to the rigor, transparency, scope, vision, and accountability of the B-Corp certification mark.

B-Corp is launching version 3.0 of the assessment tool later this summer. I highly recommend that every business benchmark themselves using the free assessment tool. It will help you lead a better business.

Extensions

2011-04-13T08:40:00.000-07:00

Individual tax returns (Form 1040) are due Monday, April 18th. Returns postmarked after this date, unless properly extended, incur a failure-to-file penalty on the balance due of 5% per month (to a maximum of 25%). Additionally, there are also failure-to-pay penalties and interest charges as well.

You can file for an automatic six-month extension by filing Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) on or before the April 18th filing deadline.

The instructions for filing a Form 4868 require taxpayers to:

Properly estimate their tax liability using the information available to them;
Enter their total tax liability on line 4 of Form 4868; and
File Form 4868 by the regular due date of their return.

Normally, filing this form results in an automatic six-month extension of time to file without any late-filing penalty. However, filing this form does not extend time to pay any income tax liability due.

Some people have the misconception that the filed extension also applies to extending the time when taxes are due. This is not true and you should note that balances due in excess of 10% of the total tax shown on the return will incur penalties and interest for underpayment.

One thing to note is the requirement to "properly estimate" the tax liability. It is possible for the IRS to invalidate an improper extension (one that didn't estimate the tax liability) exposing the taxpayer to substantial failure-to-file penalties. This isn't something I've seen a lot of but given the need for additional revenues and computer sophistication, it easy to imagine this becoming more prevalent.

Accordingly, my advice is to make sure you spend a little time properly estimating your tax liability before sending off your extension. It is risky to just put down zeros when you know you owe taxes.

And as a final note, don't forget to properly extend any state and/or local returns as well. Some will accept the federal extension and some won't. You need to check their specific rules. As with the federal government, the extensions to file do not extend the time to pay any taxes due.

Same-sex Marriage

2011-03-10T10:04:00.000-08:00

The Obama Administration and his Justice Department have stated they can no longer defend the constitutionality of the federal Defense of Marriage Act (DOMA). However, the final say on this subject (whether marriage can be restricted to the legal union between a man and women) is likely to be settled by the Supreme Court, and probably not for a year or more.

In the meantime, legally married same-sex couples can file protective refund claims for all open tax years if they would benefit on their taxes by joint filing. If these protective refund claims are filed and the Supreme Court strikes down DOMA, you'll be entitled to your refunds.

It should be noted that DOMA impacts more than just income taxes. Were DOMA to be held unconstitutional, the following would also be affected:

Gifts between spouses would get the unlimited gift tax marital deduction;
Bequests to surviving spouses would not be subject to estate taxes and the survivor would be entitled to any unused estate tax exemption of the decedent;
Employer provided health care for same-sex spouses would be tax free.

Do you have a foreign financial account?

2011-02-21T10:15:00.000-08:00

If you own or have authority over a foreign financial account including bank, securities, or other types of financial accounts, in a foreign country, and if the aggregate value of these accounts exceeds $10,000 at any time during the year, then you are required to report that information to the Department of Treasury, by filing Form TD F 90-22.1.

This form is due on or before June 30 each year (following the year you are reporting on) and is NOT to be filed with your Federal income tax return. There is NO extension of time to file this report.

Failure to file this informational return can result in fines of up to $500,000 and up to 5 years imprisonment. Individuals and organizations that meet the requirements are required to file.

The form is pretty easy though given the potential fines and jail time for not filing, is not one you want to miss.

Tax Cheats

2011-02-15T16:18:00.000-08:00

Cheating on taxes is illegal. Tax avoidance is okay, tax evasion isn't.

Tax evasion is incredibly stupid as there are so many ways to get caught. As a CPA with former tax auditing experience, trust me when I tell you there are many, many, many ways to be caught.

And one thing to remember about an IRS audit is this: Unlike a court of law where you are innocent until proven guilty, when the IRS comes knocking, with them you are guilty until you can prove yourself innocent.

Another thing to keep in mind is that there is no statute of limitations on tax evasion. Failure to report wages or hiding income could come back to bite someone years and years later.

When caught, tax cheats face substantial penalties, interest on the unpaid tax, embarrassment, criminal charges, and potential jail time.

I was recently speaking with two people when one admitted to being paid under the table to tutor children, and the other admitted to hiring household help (landscapers, babysitters, and house cleaners) without checking their authority to legally work in the United States or properly dealing with employer reporting and taxation issues.

Every tax cheat I have ever known has their self-serving reasons for cheating. Both these women tried to justify their actions though their excuses amounted to little more than "I don't want to pay more taxes."

"The subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State." ~ Adam Smith (1776)

I don't know anyone who wants to pay more tax although this is the way we fund our government and the many services it provides us. Though as Adam Smith pointed out, we all ought to pay our share according to our incomes and people who cheat to avoid this public responsibility, hurt the rest of us who do our civic duty.

Small Business Health Insurance Credit

2011-02-02T10:31:00.000-08:00

If you saw President Obama give last week's State of the Union speech, you would have heard him mention how Jim Houser, Co-owner of Hawthorne Auto Clinic, would be getting a $5,000 tax credit to help his small business provide health insurance to his employees under the new Patient Protection and Affordable Care Act.

Jim and the Hawthorne Auto Clinic are customers of ours and we computed the tax savings for him that the President used in his speech. Jim was in the balcony for the speech and I'm both proud of him for his activism and leadership that got him there, and I'm proud of TriLibrium for being just one step removed from the White House.

The tax credit is available to certain small business with tax years beginning in 2010, for those that provide health insurance coverage to their employees. It is also available to certain non-profits and even household employers.

The rules are too complex to go into here but the IRS has a frequently asked questions page that should answer many of your questions. I suggest you start their and then speak with your CPA to find out how you can benefit from this legislation.

1099s

2011-01-28T08:34:00.000-08:00

Who do you need to send a 1099 to?

The following list covers the majority of circumstances that require businesses to issue a 1099-Misc to an individual or business and the situations where 1099s are not required. Let’s start with a list of excluded transactions.

Excluded transactions include:

Most payments to corporations (see exceptions below)
Payments for merchandise
Payments of rent to real-estate agents or corporations
Business travel allowances paid to employees
Wages paid to W-2 employees
Payments to tax-exempt organizations

1099s are required for:

Payment for services in excess of $600 paid during the year
Rent payments exceeding $600 paid to individuals or businesses which are not incorporated
Any fishing boat proceeds
Medical and healthcare payments in excess of $600, including payments to a corporation
Cash payments for fish (or other aquatic life) in excess of $600, including payment to a corporation
Royalties or broker payments in excess of $10
Gross proceeds to an attorney in excess of $600, including any law practices that are incorporated

When are they due?

Copy B and Copy 2 of Form 1099-MISC must be sent to the recipient by February 1st, 2011. The due date is extended to February 16, 2011, if you are reporting payments in boxes 8 or 14. File Copy A of the 1099-MISC with the IRS by March 1st (Extended to March 31st if you file electronically).

What are the penalties for non-compliance?

Failure to furnish correct payee statements can have large consequences. Fines start at $30 per information return if you correctly file within 30 days of the due date; $60 per return if more than 30 days late but before August 1; $100 per return after August 1 or if you don't file. Intentional disregard of the requirements raises the fine to $250 per return.

Additionally, failure to file may also put your deductions at risk.

Solutions

2011-01-26T12:52:00.000-08:00

Something is wrong with our system.

Last night I got the privilege to listen to Van Jones speak here in Portland. It was an SRO crowd which was amazing given that his speech was at the exact same time as the State of the Union address by President Obama.

I arrived early and sat next to a black man about my same age. His name was Craig and we had a super conversation waiting for the program to start. Craig had come to hear Van talk about green jobs as he was desperately looking for work. Here was an American who wanted to contribute and yet, couldn't find any paid work.

Craig's pain was palpable. His pain is no different than millions and millions of other Americans, from every corner of our country.

Everywhere I look I see needs.

Our infrastructure is failing. Our bridges desperately need repair. Many here in Oregon won't withstand the next major earthquake we all know is coming. Our Sellwood Bridge has been closed to bus traffic for years and rates a 2 out of 100 possible points for structural integrity. You think we might be better off fixing it?

Schools, everywhere except newer suburban schools, are in need of significant improvements and upgrades. My daughter attends a Portland HS that is nearly 100 years old.

I'm guessing that more than 80 percent of our housing would benefit from energy efficiency improvements that would save money in the long run. We could put a million people to work within the next 12 months weatherizing homes using a revenue neutral model that is win/win/win for all.

We need more teachers and smaller class sizes. We need more opportunities for our youth and less prisons (American prisons now hold 1/4th of the world's prison population. Does that seem right in the Land of the Free?)

We need more caregivers and support for the caregivers we have.

We need programs for our returning veterans who come home from service with too few opportunities and too little support.

At the same time, everywhere I look I see people who need jobs and want to help.

It is a failure of our system and our imagination that we can't put these two needs together.

We are not some third world country without resources and imagination. We can fix this problem.

Jobs, Jobs, Jobs

2011-01-23T11:01:00.000-08:00

Our culture has a strange obsession with work. I've written about this from a number of angles including our Culture of Insatiability, how a shorter work week would benefit us all , and the impact of this job preoccupation.

Daniel Quinn, one of my favorite authors, wrote Work, Work, Work, a children's book that follows a mole that spends his days digging. From sun up to sun down the mole digs holes, without any thought as to why he spends his life digging nor any appreciation of the fantastic world around him. All he cares about is his work - digging holes.

I bring this up since I was reading this morning's headline that the Tea Partiers would be looking at defense spending cuts as part of their deficit reduction plan. Clicking through to the story, I knew the article would mention the "jobs" trump card. (Our societal trump cards seem to be safety, security, children, and jobs. Just pull those into any discussion and they trump every other consideration.)

And there it was, in the second paragraph of the story:

"Cutting defense and canceling weapons could mean deep spending reductions and high marks from tea partiers as the nation wrestles with a $1.3 trillion deficit. Yet it also could jeopardize thousands of jobs when unemployment is running high."

These marginal defense jobs provide little societal value since we can't eat, wear or beneficially use the output. We'd be better off paying these displaced workers to do community volunteer work which would leave them gainfully employed, with income to spend, creating societal benefits that would be palpable.

If a job is a job is a job, why not pay these folks to dig holes? I suspect most people would see this as a waste of government resources and yet what about the hole digging jobs we'd lose as a result?

In the end, we all need to contribute to our society and there are many ways to do this beyond paid remuneration.

I hope you'll consider these ideas whenever you hear the "Jobs" trump card pulled out in a debate or discussion.

Values = Marketing

2011-01-13T18:42:00.000-08:00

We've been in business a little over two years and have spent relatively small amounts on traditional marketing and advertising. Yet we are growing rapidly and are currently expanding our office.

How so?

We let our values lead. Of course, we do excellent work and have a compelling value proposition but like an ante, those are required to play. We are trying to move beyond that.

In our office expansion we've taken the following steps to walk our triple bottom line talk:

We made sure we had a construction bid from a minority contractor (didn't win but that is business, at least we made the effort to reach out and be inclusive).
We purchased Steelcase Think chairs made out of nearly 40% recycled materials and with Cradle-to-Cradle design, are over 90 percent recyclable at the end of their lives.
We had made a custom built receptionist station built from locally sourced reclaimed wood, designed by a Meld-Design, a customer of ours.
We had custom round meeting tables built from locally sourced reclaimed wood and designed by Endurawood, another customer of ours.
Endurawood is also building us end tables and a coffee service table for our reception area, again from locally sourced reclaimed wood.

While we probably spent 10-20 percent more than we might have had we gone CHEAP and only considered short term costs, I believe these are great long-term investments due to the longevity and craftsmanship of the furniture, the comfort and pride my employees and customers have sitting in excellent chairs while meeting over handcrafted furniture, and the "marketing" story we have communicating our values to our target market.

Richard Seireeni coined the term the "Gort Cloud" which helps describe the network I feel we've tapped into.

Perhaps you could redirect your marketing and advertising budget towards authentic messages about who you are?

Hiring

2010-12-24T13:23:00.000-08:00

We just hired a new office manager at TriLibrium. We had one position and over 200 applicants. Given the economy and the time of the year, I wish I could hire them all.

I want to share with you some of the ways we brought our triple bottom line values to this process.

First, we did an EEOC hiring by widely announcing the position. We advertised on Craigslist, with the State of Oregon Employment Division, and on the Portland Green Drinks, B-Corp, and BGI websites. We also posted this on our company's Facebook page and tweeted it as well.

We used a very sophisticated, objective process that used an assessment tool, somewhat akin to Myers-Briggs, to help us identify the type of candidate we were looking for. Each applicant was given an opportunity to take the 5-10 minute online assessment and received a very detailed report about themselves as a result.

As opposed to sifting through 200+ resumes, we only looked at the resumes of the dozen people whose assessment score matched our profile and eight of these people were invited in for an initial 45-minute interview. (Please contact me directly if you'd like to speak with me about our process).

Upon meeting these eight candidates, I was amazed at how well the assessment tool helped us identify people who would be perfect for the position we identified. Most, if not all of these would not have been selected for interviews had we simply relied on their resume.

After the initial meeting, each candidate was invited back for a second, 90-minute interview. Each team member at TriLibrium was given an equal opportunity to interview and provide input in the selection process. It was OUR decision, not just MINE, and I know this openness leads to better buy in and decision making.

To eliminate bias, we used a weighted decision matrix with each team member voting. This process really helped us with our final decision as we struggled to decide between the top two candidates. Without this objective process, we might not have reached the same decision.

Finally, we sent a note of appreciation to each person who applied, took the assessment, and/or interviewed. This just seems like the decent thing to do and I got at least ten sincere emails and cards, from applicants, thanking me for letting them know they wouldn't be selected. It seems fewer companies are doing this anymore so the applicants send off resumes never to hear another word. I think this small gesture may end up leading to new customers as more and more people learn about us and the triple bottom line values that make us unique.

Non-Business Energy Tax Credit

2010-10-12T14:42:00.000-07:00

Time is running out to take advantage of energy saving investments in your principle residence. The Non-business Energy Property Tax Credit was increased as part of the American Recovery and Reinvestment Act of 2009. I've written about these before (and here)but wanted to bring them to your attention once again as they are set to expire at year end.

First, to qualify, the improvements must be placed in service before January 1, 2011.

Here are some of the important facts to keep in mind:

The law increased the credit rate to 30 percent of the cost of all qualifying improvements and raised the credit limit to $1,500 total for 2009 and 2010 combined
The credit applies to improvements in insulation, energy-efficient windows, and energy-efficient heating and air conditioning systems.
For purposes of the credit, to qualify as "energy efficient", the product must generally meet certain standards. If you have questions, make sure you make the determination before you purchase the product to make sure you qualify.
Manufacturers must certify that their products meet the standards and must provide a written statement to the taxpayer, either with the product or on their website.
The improvements must be made to your principle residence located in the United States. A second home or rental property would not qualify for the particular credit.
You must claim the credit on the tax return for the year that the improvements were made.

Oregon residents should also determine if their investment would qualify for the Oregon Residential Energy Tax Credit (RETC). Oregon residents might also qualify for special incentives from the Energy Trust of Oregon.

You should also check the Database for State Incentive for Renewables & Efficiency to what other local incentives might be available around the country.

Small Business Jobs and Tax Relief Bill

2010-09-28T07:22:00.000-07:00

President Obama signed the Small Business Jobs Act of 2010 (HR 5297) yesterday.

The Act expands loan programs through the SBA, strengthens small business preference programs for federal government projects, provides export incentives, and offers a variety of small business tax breaks. Many of the provisions are effective immediately.

These changes are in effect for 2010 and provide some great tax planning opportunities:

Increased section 179 expensing
Extension of 50% first-year bonus depreciation
Zero capital gain tax rate from IRC Sec. 1202 small business stock
Increased IRC Sec. 195 deduction for business startup expenses
Five-year carryback of general business credits
New deduction for self employed health insurance costs on the Schedule C
Removal of cell phones from the definition of listed property

You can read more details in this Journal of Accountancy article on the House Bill.

Biking to Work

2010-09-01T08:48:00.001-07:00

This month is the bike to work commuter challenge sponsored by the Bicycle Transportation Alliance. Today was the first day of the challenge and I started by riding 5 miles to Toastmasters for a 7am meeting and then 2.2 miles back into work. I feel good and can't wait to see the physical results of commuting by bike every day this month.

Team TriLibrium has a goal of 100% participation on 100% of the days in September. So far so good as everyone rode to work today.

The beauty of this event is the fact that it is a month long. The length will actually force me to deal with all the issues (clothes, showers, commute time, locks, lights, storage, rain gear, etc.) that need to be solved to make daily biking viable. I had a number of logistical issues this morning that I'll get solved before next week so the commute is easy and comfortable.

Having recently completed our FY2010 green house gas inventory, I know that 80 percent of our firm's CO2 emissions is from employee commuting. We will never be sustainable driving to work in single occupancy vehicles.

So many of the changes necessary for us to become sustainable are easy and simply need to be implemented. We know we can't go on driving everywhere like we did 20 years ago but when do we actually make the change? I am hoping that today was a day of significant change. For our firm to be sustainable, we can't rely on fossil fuels to get us around.

I'll also take this time to remind readers that the tax code provides a $20/month non-taxable fringe benefit to employees who ride bikes. I mentioned it in this earlier blog post.

Culture of Insatiability

2010-08-25T08:56:00.000-07:00

Our economic system is broken. We are all tied into a system that creates lots of stuff while it destroys the environment and wreacks havoc on our lives.

The system forces us to work too much. The system forces us to compete with each other for basic necessities like food, shelter and health care. The system is destroying the fragile biosphere upon which our lives depend. The system often destroys communities. The system places the love of money above all others. The system has compromised our democracy and our ability to self-govern.

These are symptoms, not root causes.

The system is on auto-pilot (no one is in charge) and each of us dutifully do our little part to keep the system going. We work, we vote, we pay taxes, we work, work, and work some more.

We are part of a system that believes it has no limits. No limits to economic growth, population growth, having more, living longer, and even being more.

We live in a culture of insatiability and as long as we remain insatiable, we have no choice but to work, work, work leading to a life of destruction.

In this culture of insatiability and discontentment, we never find lasting satisfaction. Is there a wonder where our stress and unhappiness comes from?

Changing this system is a profound challenge however, I see no alternative as this system will grind on until the salmon are dead, the glaciers have all melted, and all of us are working hard to compete against our neighbors. There has to be a better way. Our challenge is to find a new way. This won't be easy but nothing short of a new way will save us.

I believe the first step is to decolonize our minds. We've all grown up believing this is the way and there is no other. That is a mental model that must be challenged.

One book (and author) I'd highly recommend to begin this journey is Ishmael by Daniel Quinn. If you haven't read Quinn, you really ought to. If you've read Ishmael, I highly recommend the other books and writings by Quinn. He really does offer a comprehensive view of sustainability that is often difficult to see with the voice of Mother Culture constantly singing in our ear.

Bush Tax Cuts Set to Expire

2010-07-26T19:39:00.000-07:00

Amongst other things, President George W. Bush was famous for cutting taxes, spending money, and running up the deficit.

While his tax cuts reduced taxes on most if not all citizens, they really helped the super-rich with most of the benefits going to them. In fact, it could be argued that his tax cuts facilitated what might be the greatest transfer of wealth in our nation's history. Of course this transfer of wealth went upwards, from the lower- and middle-class to the upper class where we now have one of the highest concentrations of wealth in the world.

While President Bush certainly wanted his tax cuts to be permanent, passing temporary cuts made them appear less costly to the U.S. Treasury, and provided Republicans a future opportunity to make them permanent. That time is now. Most of those temporary tax cuts expire in 2010.

This is going to be a huge battle. The Republican talking points state that allowing the Bush tax cuts to lapse is the same thing as a tax increase while Obama's plan is to let the cuts expire on high income individuals while reducing taxes on average working families.

Who do you believe? How will these tax changes effect you?

The good folks over at the non-partisan Tax Foundation created the website MyTaxBurden where you can enter some tax information and see your tax obligation three ways:

pre-Bush tax cuts (the system we'll return to if Congress fails to act)
Bush tax cuts (what will happen if the tax cuts are extended)
Obama's budget plan (What he ran on and what he's proposed)

I hope you'll check it out and I'd love it if you posted your results here.