This has been a week of indirect costs…my sister-in-law was wedding dress shopping and Dunkin Donuts announced the release of their new K Cups. Both of these involved eye-opening indirect costs.  I am a firm believer in “you get what you pay for” and I love finding the hidden costs associated with “cheaper” purchases.

So my sister-in-law goes wedding dress shopping and finds a great dress that costs $400 less at bridal shop A than it costs everywhere else.  Seems like a great buy, right?  Possibly, but possibly not.  Digging deeper, she found out that most bridal shops put a cap on how much they will charge you for alterations.  Meaning, if you yo-yo in weight over the next 12 months and they have to keep resizing the dress, they will only charge you a maximum of $300 or $500 depending on the store’s policy.  Turns out that the store that is selling the dress for $400 less has no cap on alterations, meaning that they can charge you $1,000…$1,500…etc. to have your dress altered between now and the wedding date. 

Now, onto the one topic more important than a wedding:  coffee!  I’ve been having the one-cup coffee vs. traditional coffee debate with people for several years.  For some reason, people see the Keurig machines at my house and office and think that they’re “fancy’ or “expensive.”  I tend to think that the one-cup coffee is less expensive than traditional coffee, but in an indirect way.

If an average K-Cup costs $.45 per cup and traditional coffee costs $.33 per cup, then the direct cost obviously makes traditional coffee less expensive per cup.  However, when you look at the indirect costs associated with traditional coffee, you’re going to be spending more on traditional coffee than you will on K-Cup mainly due to the fact that when you use traditional coffee, you typically brew a 1/2 pot or full pot of coffee.

Brewing a 1/2 pot or a full pot of coffee, more often than not, results in some of that coffee being dumped down the drain, making the actual per-cup cost rise.

Brewing a 1/2 pot or a full pot of coffee, more often than not, also results in you drinking more coffee than if you were to just brew a K-Cup whenever you actually wanted/needed a cup of coffee.  By drinking more coffee, you are spending more money overall (even if your direct per-cup cost remains lower).  You are buying more coffee, you are using more sugar/sweetener, and you are using more milk/cream.

These small, personal expense items can teach us very valuable lessons that carry over into our small businesses.  When analyzing various business-related expenses, don’t forget that you get what you pay for.  So, when something seems like a good deal, always be mindful that there may be costly indirect costs associated with that attractive price.

Many of you who read my blog know Mike Thomas – he is an occasional guest contributor, he is a great friend, and he helped me build the initial version of michaelthanley.com

Mike made a splash in the technology world earlier this month when he made the move to AMS Imaging, one of the world’s leading providers of Document Management and Enterprise Content Management (ECM) Solutions and Services.  With 11 years in the Information Management industry and as one of the founders of Shoreline Records Management, Mike has been an early innovator within the content management and document capture solutions fields.

Jim McKenney, CEO of AMS Imaging is “delighted that Mike has joined AMS to drive business development throughout New England and the New York Metro area.  Our current and future clients will benefit from Mike’s wealth of experience in improving back office processes for clients in financial services, third-party administration, and telecom.”

My earliest memory of Mike dates back to August 28, 2007.  I was hosting a business networking event at which we were holding a fundraiser that would allow us to offer scholarships to High School Seniors who planned on studying business in college.  Mike was one of the grand prize winners that night, winning a $500 cash prize.  Mike came up to me right after the event was over and said something to the effect of (I wish I could remember the line word for word), “Having or not having $500 isn’t going to change my life for better or worse, why don’t I donate it back so you can give away an extra $500 scholarship.”  Now, I make it a point to always donate back any cash prizes under $100 and depending on the cause, I’ll typically donate back most cash prizes under $200.  But when I was in my mid-twenties, if I had won a $500 cash prize, I don’t think I would have been selfless enough to even consider donating the entire prize back.  But that’s exactly what Mike did. And that’s the reason why I made it a point to follow up with him and get to know more about him and what he did.  And it’s one of the reasons why I consider Mike to be one of my closest friends inside and outside of the business world.

Best of luck in your newest endeavor!

Since Vince Flynn and Dan Brown don’t have any releases planned for the second half of 2011, the book I’m anticipating most for the second half of the year is The Everyday Entrepreneur by Rob Basso.

Filled with strategies and powerful anecdotes about defining and setting goals and pushing for entrepreneurial success, The Everyday Entrepreneur reveals how readers can apply the ambitions of a go-getter in their own lives, position themselves ahead of the pack, examine how to calculate risk, and understand the mindset necessary to venture forward on their own.

Unlike other books on the market, The Everyday Entrepreneur looks at tangible strategies for business owners to build wealth and financial freedom at any age and inspires those who think they may not have what it takes to get out and put plans into action.

• Filled with valuable lessons about driving business growth and honing your entrepreneurial instincts to the fullest
• Includes thoughtful interviews of successful individuals from diverse backgrounds

With a Foreword by Priceline founder Jeff Hoffman, interviews with many successful entrepreneurs, and Basso’s own personal experiences as a successful entrepreneur, The Everyday Entrepreneur imparts meaningful stories and offers a guide to find your own success.

I pre-ordered my copy through Amazon yesterday – order yours today by clicking on the book cover below:

On September 11, 2001, Kings Park lost seven prominent citizens, Rudy Mastrocino, Thomas Butler, Gregory Staik, Paul Geier, Martin McWilliams, Jeffrey Fox, and Monica Narula.

On September 11, 2011, these men and women along with all the other victims of the September 11th terrorist attacks will be honored at a memorial service in Kings Park.

Members of the Kings Park business, political, religious, and educational communities are coming together to arrange for a solemn memorial service to be held at 1:15pm on Sunday, September 11 at the corner of Church Street and Old Dock Road (RJO Intermediate School), the site of the 9/11 Memorial plaque shown above. 

Community groups, members of the Kings Park community, members of local police & fire departments, members of our armed forces, residents of surrounding towns, and anyone who lost someone close to them on September 11th are invited to attend and help us honor the memories of everyone who lost their lives that day.   Members of the clergy representing several local houses of worship will be in attendance to lead us in prayer and reflection. 

For more information, contact Michael Hanley, Bob Creighton, Fr. Sean Gann, or Leo Ostebo.

On Friday, March 4, Michael Hanley, Managing Partner and Founder of Merl & Hanley, LLP, an accounting firm in Smithtown, will accept the award as Kings Park’s 2010 Person of the Year. The award is being given by the Kings Park Chamber of Commerce at the Hyatt Regency located at 1717 Motor Parkway in Hauppauge.  Tickets to attend the event cost $95.00. The cocktail hour starts at 6:30pm followed by dinner and dancing at 7:30pm.

“Looking back at some of the past honorees that have received this award such as Senator John Flanagan, Town Supervisor Pat Vecchio, Councilman Ed Wehrheim, Larry Flynn, Tony Tanzi, Deanna Varricchio, Leo Ostebo, the Kings Park Fire Department, and Golf Pro Mike Hebron who have dedicated themselves to the Kings Park community for decades, I feel very humbled to have been selected this early in my life and it makes me want to work that much harder to make Kings Park an even better place in years to come, explains Hanley. I know that I have made a significant impact on the Kings Park community over the past several years, but I figured I would need to put in another 10+ years of community service before ever being considered for such an honor.

Since founding his own accounting firm and moving to Kings Park in 2004, Hanley has made a tremendous impact on the Kings Park community. For the past several years he has served on the Board of Directors for the Kings Park Chamber of Commerce. He is the founding member and current President of the Irish Business Network (an organization with strong roots in the Kings Park community) and is the current President of the Smithtown-Kings Park Ancient Order of Hibernians. Hanley is also one of the founding members of the Kings Park St. Patrick’s Day Parade Organization, an association responsible for bringing the first St. Patrick’s Day parade to the town of Kings Park.

In addition, Hanley is involved with many fundraising activities within the Kings Park Community. Each year he hosts a toy drive to benefit technology dependent children. He also hosts a charity golf outing, clothing drive and a food drive to fill the St. Joseph’s Food Bank in Kings Park. 

Hanley is a big believer in promoting a higher education for Kings Park students. Each year he awards scholarships to Kings Park High School Seniors planning to study business in college.  In addition, two years ago, he resurrected the Kings Park Business Directory, which had been out of print since 1985. In doing so, Hanley helped to raise thousands of dollars for the Kings Park Chamber of Commerce, allowing the Chamber to enhance its presence in the Kings Park community and offer additional scholarships to Kings Park students.

For more information on Michael Hanley and his firm Merl & Hanley, call (631) 360-CPAS or visit them on the web at www.merlandhanley.com. For more information on the awards dinner or to purchase tickets, call Dee Grasso at the Kings Park Chamber of Commerce at (631) 804-0443.

Like most small business owners, you probably wear many hats.  If you’re not in a position to completely outsource your billpaying and bookkeeping services, then it’s time to at least make your in-house system more efficient so that you can spend more time on other things…sales, marketing, free time for yourself, etc.

One of the easiest ways to slash your bookkeeping and billpaying time is to setup QuickBooks and to have QuickBooks print your checks for you.  Or if you are already using QuickBooks, but you still write your checks by hand, now is time to start printing your checks directly from QuickBooks.

This will save you time as you write each check and it will eliminate the double or triple entry system that you currently have in place.  In most cases, it will also reduce your accounting fees, leaving you with extra money to spend, either on other areas of your business or for personal enjoyment.

The two ways in which this helps you save time include:

1. No more writing out checks by hand.  Gone are the days of writing “Central Business Systems - 10/25/10 – 145.28 - One Hundred Forty Five Dollars and 28/100 - Invoice #87435″ or “Verizon – $448.32 – 10/25/10 – Four Hundred Forty Eight Dollars and 32/100 – (631) 382-3999.”  Now all you have to do it type “C or Ce – 145.28 – 87435″ or “V – 448.32.”  So, a 30-60 second check writing process becomes a 5-10 second check writing process.  Multiply that by 50 checks each month and you could save up to 45 minutes each month.  If your billing rate averages $150/hour, that’s an extra 9 hours and $1,350/year in your pocket
2. No more double and triple entry bookkeeping system.  If you write your checks by hand, you then record them somewhere else…either on your check stubs, in your checkbook register, in QuickBooks, in Excel, in a handwritten ledger, or in a computerized bookkeeping program.  So, not only were you taking ten times longer to write each check out, but now you have an additional 15-30 second entry that needs to be made each time you write a check.  With the check writing feature of QuickBooks, this second portion of the entry is automatically posted for you as you write the check.  So, that 15-30 seconds you were spending is now completely eliminated.  That is another 5 hours and $750 in your pocket each year

Additionally, as I mentioned earlier, the move to QuickBooks should also result in a drop in monthly accounting fees.  The average small business owner who writes 50 checks per month can expect to save $50-$75 each month in accounting fees, putting an extra $600-$900 in their pocket each year.

So, by purchasing QuickBooks for around $150-$175 (click here to save 20% on QuickBooks) and maybe even bringing in a Certified QuickBooks ProAdvisor to setup your QuickBooks file for another $250, you still end up with an extra 14 hours of free time and $2,700-$3,000 in your pocket each year ($2,300-$2,600 in year one after purchasing QuickBooks and hiring a Certified QuickBooks ProAdvisor) simply by starting to use QuickBooks.

As tax rates continue to rise, more and more investors are looking towards Tax-Free and Triple-Tax-Free Municipal Bonds (Munis) as the investment vehicle of choice. 

The reason why munis look so attractive right now is the fact that the higher the tax rates, the more benefit you derive by investing in tax-free investments.

For example, a Municipal Bond paying 3% tax-free is the equivalent of having a taxable bond pay 4% interest if you are in the 25% tax bracket or 4.62% if you are in the 35% tax bracket.  And that just takes into account the federal tax savings.  If you are in a high-tax state such as New York or New Jersey and you invest in in-state munis, you can actually end up with yields equivalent to 4.35% if you are in the 25% tax bracket or 5.08% if you are in the 35% tax bracket.

However, before you run out and start moving all of your money into Tax-Free Municipal Bonds, it is important to note that many levels of government, especially local governments, are in serious trouble.  Many states and local municipalities are operating with severely unbalanced budgets, which makes these bonds riskier than usual as there is now a serious chance that at least one municipality will default on their bonds within the next 12 months.

To setup a new account in your QuickBooks Chart of Accounts, just enter the following keystrokes:

1) Ctrl+A
2) Ctrl+N
3) Select the Account Type from the drop-down box (Bank, Credit Card, Expense Account, etc.)
4) Enter the name of the new account
5) Click “OK”

Click here for more QuickBooks shortcuts

Click here for more QuickBooks Tips & Tricks

Have any other QuickBooks questions that you want Michael Hanley to answer? Post them in the comments field below.

Okay, so we all know that showing up late (or not showing up at all) for an appointment is extremely rude and I’m sure we all know why, so I won’t delve too deep into the subject.

However, what many people don’t realize is that showing up early to an appointment can be just as rude.

When you show up early for an appointment, the person you are meeting with feels obligated to see you early even if it means throwing off their schedule. If I have a 2pm appointment with someone and they show up at 1:30, I feel an overwhelming amount of guilt for making them sit and wait for 2pm.  If I wait and meet with them at 2pm, I should not feel guilt at all because I saw them at the scheduled appointment time.  However, in my mind, I have just made them wait 30 minutes and I was the one being rude.  

I bounce around from appointment-to-appointment a lot, so I always keep a book in the car and I have an iPhone.  If I’m on pace to be early for an appointment, I’ll call or e-mail ahead to see if it would be okay to arrive early or if the person I’m meeting would like to keep the appointment as-is.  Sometimes moving the appointment up early works great for both parties, but this is something that should be asked and answered, not just assumed.  If the person I’m meeting with can’t see me early, I check my e-mails, I read my book, I’ll write an article or the outline for an article, I’ll brainstorm, maybe I go grab a cup of coffee or run an errand, sometimes I’ll even find a nice quiet place to park and just think or close my eyes for a few minutes.  But what I never do is show up more than 5 minutes early to an appointment.

I think 5 minutes is a pretty good threshold on the early side and 10 minutes is a good threshold on the late side.  Running 5 minutes early or 10 minutes late and there’s no need to call or e-mail.  Anything more than 5 minutes early or 10 minutes late deserves at least a heads-up e-mail if not a phone call.  Amd I think that anything more than 20 minutes late requires a phone call because by that point, the person you were meeting with may not have enough time left to meet with you before they have to move on to their next appointment.

A common question that business owners as me is, “I did some work for a charity and instead of billing them for my time, I figured I’d just write it off as a charitable donation. Is there anything I need to get from them in order to claim the deduction?”

The short answer to that question is, “No.”

However, the longer and more appropriate answer is that your time is not a valid tax deduction.  If you work on a project for a charity, whether it be accounting work, website design, plumbing work, etc. the only things you get to deduct are your direct costs. 

If you design a website for a charity, you can deduct items like domain registration fees, web hosting fees, the cost of any templates/pictures/plugins/add-ons that you purchased for the site, your mileage or automobile expenses to-and-from the charity’s location if you met with them, and any other incidental costs such as postage, office supplies, etc.

If you do plumbing work at a charity’s office, you can deduct the cost of labor if you paid one of your employees to do the work (along with any related payroll taxes, insurance, etc.), mileage or automobile expenses to-and-from the charity’s location, the cost of parts & materials, etc.

So, before you start doing work for charitable organizations, make a decision whether you will be donating your time for free (with no tax write-off for your time) or if you will be billing them for your time.

Efficiency is a great thing in business…getting the most done in the least amount of time possible typically leads to higher profitability (as long as quality doesn’t suffer as a result of increased speed).

However, the exact opposite holds true when working out.  No matter whether you are strength training, weight lifting, running, biking, etc., you want to work as inefficiently as possible in order to maximize your results.  One of the hardest things I found when I started weight training was that my brain was so programmed to work efficiently that I was cheating and taking shortcuts during my workout sessions and I was not getting the most out of my workouts.

When lifting weights, if you move them from point A to point B in the most efficient way possible, you will build muscle slower…when running or biking efficiently, you will burn fewer calories.  The goal should be to work as inefficiently as possible (without sacrificing form or risking injury) in order to get the best results.  Typically, during weight training if you are trying to work efficiently, you are cheating and you are not using proper form and not focusing on the proper muscle/muscle group.  For example, when doing lat pulldowns, you can lift a heavier weight or lift the same weight more easily if you engage your arms.  However, the purpose of lat pulldowns is to work your lats.   So, you want to work inefficiently and ensure to fully engage your lats and make them do all the work by themselves in order to get the most out of each rep.

To work more inefficiently during your workouts, try adding a weight vest when you run, do pullups & dips…add more weight to your barbell/weight machine or use heavier dumbells…do slower reps…take less of a break between sets…

Now, once you have mastered working out inefficiently, apply the exact opposite principles to your business and you will have the best of both worlds.

Ancient Egypt.  The Persian Empire.  The Roman Empire.  The Ottoman Empire.

What do these powerful empires all have in common?

The all came to an end.

And during the last 200 years of existence, the furthest thing from the minds of these empires was the fact that they could fall.  So…when was the last time you thought about the fact that the American Empire could one day come to an end?

Now, all the telltale writing is on the wall and if we do not change course immediately, the American Empire will not last more than another 200 years (if it even makes it that far).

- We spend far too much money on military endeavors, yet our military is spread thin and under-manned.  

- New construction has come to a stand-still and too large a percentage of our existing structures remain vacant or underutilized

- Forein investors, companies, and countries own too large a percentage American assets

- On all levels, local, state, and national, our government is way too big.  There are too many levels of bureaucracy, too many redundant positions, and too many government salaries being paid

- Our social security and medicare systems are eating up approximately one third of our entire national budget when these programs were designed to be self-funded (current workers paying the benefits of retired workers)

- The extension of unemployment benefits from 26 weeks to up to 99 weeks is nothing short of a widespread welfare program that is designed to give unemployed workers $21,060 worth of free money per year, essentially killing their motivation to actually find a job.  And what happens when those workers who take 99 weeks (nearly two years) off go back to work? How long do you think it will take them to get reacquainted with hard work? How many of them will end up getting fired because their work ethic dried up during their two-year layoff?

- Too many government contracts and pork are being given out under a patronage system

- Over the past few decades, not a single law has simply been passed.  Every law that gets past is actually a set of several, if not dozens, of laws all rolled into one.  Most of which are in no way related and were only included in the bill in order to buy certain votes.  For a prime example of this, take a look at this article: Politics Kills Repeal of New 1099 Regulation

- We spend way too much time, effort, and money meddling in the affairs of other countries and not enough time getting our own house in order

- Our middle class is disappearing and being replaced by a stronger, richer upper class and a larger, relatively poorer lower class

- As a nation, we have put ourselves on a pedestal and are operating under the assumption that we will be the first empire in history to last forever

- A vast majority of our politicians hold office for self-benefit rather than for the greater good of America

- We are placing more value on politics, political correctness, technicalities, and making people feel good about themselves above what is right

- Our education system has turned into a “how can we make all students equal” system rather than a breeding ground for great minds (supposedly there are more geniuses in China than there are people in the entire United States)

So, when the American Empire does come to an end, who is there to become the next dominant empire on the map?  The European Union? China? The Islamic Empire?

I saw The Social Network last night and was surprised to see two glaring technical errors.  You would think that a movie with a $50 million budget would at least have their script fact-checked for technical accuracy.

But, apparently they did not have a CPA or a corporate attorney take a look at the script.  Otherwise, the two lines that helped to further confuse the general public about what an LLC is would never have made it into the movie.

At one point in the movie, the attorneys are talking about the Delaware LLC that was setup as Facebook’s parent company.  One of the attorneys states “the LLC was incorporated in Delaware” and “the LLC’s Articles of Incorporation state that…”

I spend a large portion of my time explaining to people that LLCs are not in any way a corporation.  LLCs do not get “incorporated,” they get “formed” or “organized.”  LLCs do not have “Articles of Incorporation,” they have “Articles of Organization.”

So, now over 2 million people at over 2,750 theaters saw The Social Network this past weekend and now those 2+ million people have a seed planted in their minds that an LLC is a type of corporation.

Maybe Aaron Sorkin will read this and when the DVD comes out, they can dub over the words incorporated and Incorporation.  Or maybe they can just point out that the errors were intentional and that they purposely wanted to make the lawyer in the movie look like an idiot.

Anyone paying over $1,000/month in rent should consider the option of purchasing their own office, whether it be an office co-op, condo, or building. 

Have your small business CPA run the numbers to see if it makes sense and then act upon his advice.

A few things to keep in mind:

Financing: The Main Avenues for Commercial Financing

1. Regular Commercial Mortgage – The days of $0 down commercial mortgages are gone. Banks want to see you putting at least 30% of your own money down plus paying closing costs out of pocket (sometimes 20% for professionals such as doctors, lawyers, etc.).  In today’s market, you should expect a mortgage length of 15-20 years (unlike residential mortgages that typically have a 30-year repayment period and interest rates in the neighborhood of 6% that only stay fixed for the first 10 years of the loan.
2. SBA Financing – As long as the building will be at least 51% owner-occupied, this is an option.  In many cases, the SBA loans will allow you to put only 10% down, while the other 90% plus the closing costs get financed.  These deals typically include more paperwork, a longer approval process, higher closing costs, stricter prepayment penalties, and annual audits to ensure that the property is still 51% or more owner-occupied.  But, if you’re short on cash and cannot come up with 30% plus closing costs, this may be your best (or only) option.

Benefits:  The Main Benefits of Owning vs. Renting

1. Making a mortgage payment instead of a rent payment each month will allow you to build equity.  This may allow you to refinance and pull some cash out down the road if you need working capital (or if you want to invest in other properties) and will allow you to have something of value when all is said and done rather than just having a lease to walk away from
2. Having full control of your office rather than waiting on a landlord or building maintenance to make repairs and keep the place up to your standards
3. Your rent payment will be fixed each month for at least 10 years and then will only increase slightly if interest rates increase.  Whereas your rent payments will increase 3-5% per year.  So if you are paying $1,000/month rent right now, you can expect to be paying $1,300-$1,650 10 years from now (a 30-65% increase).  Spread that out over the full 20 year term of your mortgage and your $1,000/month rental payment will be in the neighborhood of $1,800-$2,700 (an increase of 80-270%). 
4. Once your mortgage is paid off, all you end up paying are property taxes, utilities, and maintenance…no mortgage payment and no rent payment
5. Especially in the current real estate market, there are many available properties that can be purchased at a deep discount.  You can get in cheap, make some improvements, and build immediate equity.

Ever find yourself driving around for 10 minutes looking for an ATM that doesn’t charge a $1.50 service fee? Or for 5 minutes to find gas that’s 4 cents cheaper per gallon? Or spending four hours mowing and edging your lawn to save the $30 landscaping fee?

If so, then you are selling yourself short.  When driving around for 10 minutes to save that $1.50 ATM fee, you are valuing your time at $9 per hour.  Spending 5 minutes looking for cheaper gas pegs your time at $12 per hour. And mowing/eding your own lawn puts your time value at $7.50 per hour.

This concept is something that I have been preaching about for years, but what triggered this article was a recent trip to Lowe’s….

We are in the process of redoing our basement, so the other day, I was at Lowe’s placing an order for 5 doors, 30 pieces of sheetrock, 6 sheets of plywood, and various other supplies/materials to be delivered to my house.  The entire process of making a list of SKU numbers, giving it to the guy at the Pro Desk, waiting for him to type up the order, and pay took me a total of 20 minutes.  But when I went to the Pro Desk initially to place the order, the guy gave me one of those whispered, I’m going to get in trouble for even mentioning this money saving tip to you pieces of advice:  “You know, there’s going to be an $80 delivery charge for all this…if you go out to the Medford store, you can rent a truck for $20 and bring it all home yourself.”

I took a brief moment to think about what would be involved in saving this $60:

• Driving to the Medford store (30 minutes further from my house)
• At least an hour shopping and loading up 2-3 flatbed carts with all the materials by myself (or maybe with the help of a Lowe’s worker if I was able to find one willing to lend a hand)
• 15 minutes of paperwork, etc. for the truck rental agreement
• At least 30 minutes loading everything from the 2-3 carts into the truck
• $20 tip to the loader who help me load everything into the truck
• Driving home from the Medford store (30 minutes)
• At least an hour carrying everything from the truck down to my basement
• At least an hour repaying the favor to whichever friend helps me unload the truck
• 30 minutes and $50 at the Chiropractor to undo all the damage I did carrying 30 pieces of sheetrock, 6 sheets of plywood, and 5 doors down basement steps
• Driving back to the Medford store to return the truck (30 minutes)
• 15 minutes of returning the truck, having them inspect it for damage, signing all paperwork, etc.
• Driving back home from the Medford store (30 minutes)

So, if I ignore the $50 Chiropractor bill (even though I guarantee that it would be an absolute certainty that I would need it), I’m spending 6.5 hours to save $40 ($60 minus the $20 tip) and I’m valuing my time at $6.15 per hour.

The day I think my time is worth $6.15 per hour is the day I sell my accounting practice and take a job at Target, where I can at least get an employee discount when I buy deodorant and Vitamin Water in addition to my $6.15 per hour!

1. Have a clear vision

 

2. Ask “Why not?”

 

3. Choose to be different

 

4. Work hard on what you can control

 

5. Be proactive

 

6. Defy the norm

 

7. Surround yourself with supportive and positive people

 

8. Sell yourself

 

9. Enjoy what you do

 

What is the quickest and easiest way to boost your productivity??

Reduce or eliminate interruptions.

Studies have shown that it takes an average of 11 minutes to get back to your previous level of concentration after being interrupted, no matter how brief the interruption was.  It could be an employee, a partner, or a client popping their head into your office to ask a quick question…it could be a phone call, a ding to let you know that you received a new e-mail, or the bing of a text message…

Whatever the interruptions may be, if you do whatever you can to avoid interruptions while working, you will notice a significant boost in your productivity.

A few tips for insulating yourself from common interruptions:

• Work with your door closed
• Don’t take phone calls when working…set aside 30 minutes in the morning and 30 minutes in the afternoon to return all calls
• Don’t constantly check e-mails or keep your e-mail program open…set aside time to read and respond to e-mails

If a small business rehires a worker that it had previously laid off, it can qualify for the payroll tax exemption under the new HIRE Act (Hiring Incentives to Restore Employment), as long as they meet all requirements under the HIRE Act.

In order to qualify, the employee could not have been employed for more than 40 hours during the 60 days prior to being rehired. 

However, the exemption is typically not available for companies that are rehiring a worker in order to replace another worker (unless the worker being replaced was let go for a valid cause).

Under the HIRE Act, employers receive an exemption from the 6.2% employer portion of Social Security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

Additionly, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

One of the toughest concept for new contractors (plumbers, electricians, carpenters, landscapers, etc.) to grasp is in what situations should they charge sales tax and in what situations should they collect a Capital Improvement Certificate from the property owner and not collect sales tax.

Keep in mind that any work performed for a tax exempt organization (most churches, most schools, and some not-for-profit organizations) is exempt from sales tax as long as the organization provides you with a copy of their Tax Exempt Form (remember, just because an organization is a not-for-profit DOES NOT mean that they are tax exempt. The Tax Exempt Form is Form 119.1 and the organization should provide you with a preprinted copy of their form…unlike the Capital Improvement Certificate, it is not your responsibility to give them a blank form for them to fill out.

That being said, the rule of thumb for determining whether something is a repair or a capital improvement is that repairs are done to existing work and capital improvements are new work.  For example, if a new wall is constructed and a painter paints it, this is a capital improvement.  But if a painter is just painting an existing wall (painting over an existing coat of paint, painting a wall that just had wallpaper taken down, painting over paneling, etc.), this is considered a repair and is subject to sales tax.  If an electrician is replacing a switch (even if they are upgrading from a simple on/off switch to a dimmer), replacing a recepticle, or repairing a light fixture, they are performing work that is subject to sales tax.  However, if they are adding a new circuit, upgrading an electrical panel, or installing a new light fixture, they are performing a capital improvement.

For a complete list of jobs performed by contractors, download this Repair vs Capital Improvement.

And be sure that if you are performing a capital improvement, that you obtain a signed and dated Capital Improvement Certificate from the property owner.  In the event of an audit, if you cannot provide the auditor with a copy of the capital improvement certificate, they will consider the job taxable, even if the work you are performing is clearly a capital improvement.  What this means is that you are now paying the 8.625% out of your own pocket!

So, you are planning to attend a stockholders’ Annual Meeting this year?

Hoping to deduct the cost of your travel, lodging, meals, etc. while there?

Don’t spend too much time worrying about organizing your receipts. 

The IRS has ruled on these types of deductions countless times and each time they come up with the same result – in order to deduct any related expenses, you must play a significant role in the meeting.  Otherwise, your presence there is deemed to have no impact on “production of income” and therefore would not qualify to be deducted. 

As many of you who follow my writings already know, I do not endorse the Home Office Deduction for people who own their home (I do support it for some taxpayers who rent their home) – check out Don’t Claim the Home Office Deduction to see why.

Now, many people read my advice and think to themselves, “Well, I’ll claim the Home Office Deduction in order to save some taxes, I’ll just avoid claiming a depreciation deduction.”

Clever, right?

Wrong.  This is actually an even worse approach to the Home Office situation.  When you eventually sell your home and you have claimed the Home Office Deduction at any time during the time you owned the home, you will be taxed on the depreciation deduction that was ALLOWED, whether or not you actually claimed the deduction!!!

So, in this scenario, not only do you increase your risk of an IRS audit…not only do you eliminate a portion of your $500,000 capital gain exclusion, but now you’ve do so for no reason…you didn’t even get to enjoy the small tax savings while you were claiming the deduciton each year.

If Obama continues his effective use of the military, he may end up going down as one of our best and most effective Commanders-in-Chief ever.

Now, I’ll start this off by saying that I am a Republican and that I wish I was able to say these kind words about some of our recent Republican Presidents.  However, none of them have done with the military what Obama has done so far during his time in office.

During the first months of Obama’s presidency, he expanded the scope and increased the aggressiveness of the Predator Drone campaign against militants in Pakistan. Since taking office, Obama has carried out more Predator Drone strikes per year then Bush carried out during his entire presidency.  During Bush’s time in office, only 42 Predator Drone strikes were carried out. In Obama’s first year as president, he carried out 53 and so far during his second year in office, he has already carried out 57 (with a projected estimate of 77 for this year).  While Bush sent out Predator Drones on missions once or twice per month, Obama has been sending them out at least once each week and during certain times, he has been sending them out daily.

He identified the leader of the Pakistani Taliban (Baitullah Mehsud) as his #1 target and effectively took him out during a Predator Drone strike.

He has reportedly taken out 9 of al-Qaeda’s top 20 commanders.

He took out an entire Taliban training camp.

He took out Saeed al-Masri, the 3rd in command of al-Qaeda.

He took out Abdullah Said al Libi (leader of the al-Qaeda faction Lashkar al-Zil).

He took out Jamal Saeed Abdul Rahim (one of the terrorists who was allegedly involved in hijacking Pan Am Flight 73 back in 1986).

In total, he has taken out over 1,200 people during Predator Drone strikes, including leaders of several terrorist organizations, commanders of the Taliban forces, commanders of the al-Qaeda forces, commanders of several terrorist organizations, high-ranking officials of several terrorist organizations, and several hundred terrorists. 

Before hearing that Obama was the Commander-in-Chief during all of these successful strikes, if someone asked you the question, “Who do you think would wield the power of the US Military more effectively, Healthcare and Economic-driven Democratic President Obama or Pro-Military, friend of the Defense Contractors, son of the former head of the CIA Republican President Bush?” wouldn’t your first reaction have been that Bush would have been the one to carry out all of these successful strikes? 

Democrat or Republican, I’m just glad that Obama has been focusing a lot of his attention on continuing and escalating the War on Terror even if the media makes it look like all he’s doing is perpetrating the Wars on Wall Street, the Economy, and Healthcare.

Avoid locking in an installment sale.

Normally, if you are going to receive the proceeds from the sale of property within two or more calendar years, you have the option to spread out the tax on the gain rather than having to capture it all in the year of the sale.

So, if you sell property in 2010 but expect to be paid out in 2011 and beyond, you can opt to realize the full gain in 2010 and pay the full tax in 2010 at the lower capital gains rates.

Keep in mind that although this strategy will allow you to lock in the low 2010 capital gains rates, it will result in you paying 100% of the capital gains tax in 2010 and it may trigger some deduction phaseouts/limitations.  So, be sure to consult with your CPA before making this decision.

Check out Part 1 of this 4-part series: How to Take Advantage of Bush Tax Cuts – Part 1 of 4

Check out Part 2 of this 4-part series: How to Take Advantage of Bush Tax Cuts – Part 2 of 4

Check out Part 3 of this 4-part series: How to Take Advantage of Bush Tax Cuts – Part 3 of 4

Look for dividends in 2010.

If it makes sense in your overall financial plan, you may want to look at investing in some dividend-paying stocks a few months before they pay their 4th quarter dividends.  This way, you can lock in the dividends at the preferred 2010 Qualified Dividend Tax Rate (0% for those in the 10% and 15% tax brackets or 15% for everyone else).

Remember, in order for the dividends you receive to qualify for the preferred Qualified Dividend Tax Rate, you must hold the stock for at least 60 days within the 120-day period surrounding the ex-dividend date.

Check out Part 1 of this 4-part series: How to Take Advantage of Bush Tax Cuts – Part 1 of 4

Check out Part 2 of this 4-part series: How to Take Advantage of Bush Tax Cuts – Part 2 of 4

Don’t cash in your losing stocks in 2010.

If you want to take full advantage of the lower capital gains tax rates in 2010, make sure you don’t dump too many of your losers in 2010.  Hold off and dump those losers in 2011. 

Check out Part 1 of this 4-part series: How to Take Advantage of Bush Tax Cuts – Part 1 of 4

Sell your appreciated stock prior to December 31, 2010.

If you have any winning stocks that you’ve held for one year or longer, you may want to consider cashing in those stocks and realizing the capital gains in 2010.  The capital gains rates are scheduled to increase in 2011:

• If you are in the 10% tax bracket for 2010, you will pay 0% capital gains tax if you sell your winning stocks in 2010 or you will pay 10% if you sell your winning stocks in 2011.
• If you are in the 15% tax bracket for 2010, you will pay 0% capital gains tax if you sell your winning stocks in 2010 or you will pay 10% if you sell your winning stocks in 2011.
• If you are in the 25% tax bracket for 2010, you will pay 15% capital gains tax if you sell your winning stocks in 2010 or you will pay 20% if you sell your winning stocks in 2011.
• If you are in the 28% tax bracket for 2010, you will pay 15% capital gains tax if you sell your winning stocks in 2010 or you will pay 20% if you sell your winning stocks in 2011.
• If you are in the 33% tax bracket for 2010, you will pay 15% capital gains tax if you sell your winning stocks in 2010 or you will pay 20% if you sell your winning stocks in 2011.
• If you are in the 35% tax bracket for 2010, you will pay 15% capital gains tax if you sell your winning stocks in 2010 or you will pay 20% if you sell your winning stocks in 2011.

Okay, so taking life advice from the 21st Century’s version of a hippy is probably not #1 on everyone’s to-do list.  However, if you are going to take advice from someone who got arrested while playing bongos in the nude, the advice you should probably take is how to de-stress.

Matthew McConaughey dishes his seven rules for a stress-free life:

1) See Eye-to-Eye with Your Job - The situation can never be greater than you are,” he says. “If it is, you’re never going to be able to engage and give your full talent, because you’re not looking at it eye-to-eye.” And that cuts the other way, McConaughey says. “You can’t look down on it, either. If you go into anything without respect, you’re going to miss magic, miss truths.

2) Learn the Sneaky Workout – McConaughey has those days, too: no exercise time. He compensates with active bursts throughout the day. “I’ll drop and give myself 20 pushups at intervals throughout the day. 9 a.m., bang out 20. Sitting in a boring meeting at 10:30. Bang out 20. I do that 10 times throughout the day, I’ve done 200. Or even mix it up with crunches, squats, whatever. Also, I have a 12-pound medicine ball. I’ll just think, Pick up the medicine ball and don’t put it down for 30 minutes. Try that once. You will have a workout, man.

3) Customize Your To-Do List – “I’ll put fun things on my list to give me more things to cross off,” he says. “Like, ’surf for an hour.’ When you get to one near the bottom and it says, ‘Watch Monday Night Football,’ it’s like, yeah!”

4) Adopt a Simple Philosophy – Some of life’s biggest stressors are the remains of self-destructive things you do, McConaughey says. So he boils his decisions down to one simplicity. “I don’t like to leave crumbs,” he says. “I like to do things right, and not cheat to get ‘em done. That’s what a man does. I don’t owe anybody anything. I never go anywhere and worry, ‘Oh shit, so-and-so’s here.’ I don’t have crumbs in my past.”

5) Insulate Yourself from Disasters – McConaughey explains with a metaphor straight out of the Weather Channel: “I like to create my own weather so then I can blow in the wind. When I say that, I mean that whether it’s in business or your personal life, if you’ve got positive, like-minded people around you, then your systems are in place.  I don’t have to be looking over my shoulder. I can just blow in the wind. I may bounce off this wall or that wall, but I won’t get caught in any tornados.”

6) Know What You Don’t Know – Fighting to prove you know something when you don’t wastes time and sucks energy, McConaughey says, and “I have to continue to learn that. The amount of time you can save just by going, ‘I don’t know,’ is huge. We’re brought up to be know-it-alls. ‘I don’t know,’ can be perceived as a weakness, but I see it as a sign of intelligence. Then I can experience something so I do know. How else will you ever learn something new?”

7) Always Schedule Pleasure, Too - ”I’ve always said pleasure is good for you,” McConaughey says. “‘Well,’ you reply, ‘duh.’ But wait a minute: How much pleasure do you really allow yourself to have every day? There are some people who are so strict that they become a slave to their healthy lifestyle, a slave to working out, a slave to eating just the right foods. I’ve seen it happen to other people, and I’m guilty of going overboard with it. And when you do, man, you’re no frickin’ fun at all. You have to be more flexible and enjoy having things. I’m not going to a friend’s barbecue and say, ‘I’m gonna stick to salad.’ Who’s gonna enjoy that? Lighten up! It’s your lifestyle, not your life.”

FREQUENTLY ASKED QUESTION:  When do I start getting ready for year end planning and what does my accountant need from me?

Anyone operating a business should consider having their accountant prepare a mid-year tax plan around August or September of each year.

The purpose of mid-year tax planning is threefold:

1. Determine what tax savings strategies will be available in the current year and plan to ensure that your business meets the criteria for the applicable strategies.
2. Identify ways to defer taxes to future years in order to improve current-year cash flow.
3. Calculate the amount of tax that will be due at the end of the year after all tax savings and tax deferral strategies have been exhausted in order to allow time to accumulate enough cash to pay your tax bill without having to work out a payment

Even if you do not have your accountant preparing or reviewing your books monthly/quarterly and even if you opt to forego a formal mid-year tax plan, you should begin to organize your receipts, income items, and expense items around July or August each year so that you do not get overwhelmed at the end of the year when you suddendly find that you have to go through twelve months worth of records.

When shopping (online or in stores), use credit cards, not debit cards.

1) Debit card fraud is much tougher to fight and takes much longer to resolve than credit card fraud.

2) If you have a problem with the product/service that you purchase, credit cards offer a much better dispute resolution process (especially American Express, who almost always takes the side of the buyer)

3) Many credit card issuers provide some type of “low-price guarantee” where if you find the same item advertised for a lower price at another store, your credit card company will match that price

Now, the obvious downside to using your credit card over your debit card is that you need to be able to manage your credit card debt…make sure that just because you are using one card instead of another, that you don’t start spending more money.  Treat your credit card as if it were a debit card, making sure not to spend any more money than you have in your bank account and make sure to pay off the card in full each month in order to avoid finance charges and other fees.

FREQUENTLY ASKED QUESTION:  When do I have to give someone a 1099 and what do I need from them in order to do so?

When you are operating a business and you make payments of $600 or more to a person (or to an unincorporated business, such as an LLC, a Partnership, a Sole Proprietor, etc) for services and/or rent, you may need to issue them a 1099 at the end of the year.  Additionally, if you pay $10 or more to someone for royalties, you may also need to issue a 1099.

The form you will issue them at the end of the year is called Form 1099-MISC and can be found here: 1099-MISC

Before paying these people/companies, you will need to have them fill out a Request for Taxpayer Identification Number and Certification (Form W-9).  This form will provide you with the person or company’s name, Social Security Number or Tax ID #, Address, and they will sign certifying that they are a US Citizen, that the information contained on the form is truthful, and that they are not subject to backup withholding of taxes.

You can obtain a copy of Form W-9 here: Form W-9

FREQUENTLY ASKED QUESTION:  I have money left in my business bank account and December 31st is approaching.  I am going to spend all the money so that I can reduce my tax bill.  Is this a good strategy?

The short answer: Yes and no.  This is actually the most common misconception when it comes to small business tax planning.  It is something that many accountants tell their clients to do without really explaining the concept to them and it is something that business owners tell other business owners about, again without explaining the concept.

Why the answer is sometimes yes: If you have legitimate expenses coming up early next year and you can afford to pay these expenses prior to December 31st, you can spend the money and reduce your tax bill, assuming that you are a cash-basis taxpayer.

Why the answer is sometimes no:

• Make sure you’re actually spending the money and not just taking it out.  Taking a Shareholder Distribution, a Draw, a Distribution of Profits, or repaying your Officer Loan does not create an expense and has no impact on your profit.  Doing this accomplishes nothing other than depleting your business bank account and increasing your personal bank account balance
• Make sure you are actually paying expenses and not just paying off loans and credit cards.  Paying off loans and credit cards does not create an expense and has no impact on your profit.  Obviously, if you have free cash and no upcoming expenses, paying down debt may be a great financial decision.  However, do not do so thinking you will be reducing your tax bill, do so simply to pay down debt. 
• Don’t spend money that you wouldn’t ordinarilty spend just to reduce your tax bill.  Remember, $1 spent does not equal $1 worth of tax saved.  $1 spent creates a $1 deduction, which (depending on your tax bracket, business structure, and state of operation) will only lead to $.00 – $.60 worth of tax saved.
• You may not actually want to accelerate expenses into the current year.  If you had a pretty bad year with a lower than average profit and expect your profit to pick back up in the following year, you may want to defer as many expenses into the following year as possible.  If you are in the 20% tax bracket this year, but will be in the 30% tax bracket next year and you have $10,000 worth of expenses in question, deducting them this year will save you $2,000, while deducting them next year will save you $3,000.
• Make sure you find out whether you operate on the accrual basis or the cash basis.  This strategy only works for cash-basis taxpayers.  Accrual-basis taxpayers report all income in the year that it is earned and all expenses in the year that they are incurred.  So, just because you are paying for a 2011 expense in 2010 doesn’t mean you get to deduct that payment in 2010 if the expense won’t actually be incurred until 2011.

So, before you make any rash year-end moves for tax planning purposes, make sure you fully understand the concept and make sure you run your ideas past your accountant before making any major moves.

The biggest mistake made by people who own a Corporation or an LLC that is inactive is that they assume that since they had “no activity” they do not have to file a tax return.

This line of thinking is what leads to piles of notices of non-filing from the IRS and from your state’s department of taxation along with piles of penalties and interest for non-filing and late-filing.

In addition, some states even charge a higher corporate tax for corporations that are deemed “inactive.”

Take an example of someone who sets up a New York S Corporation, doesn’t start conducting business right away, and decides not to file tax returns for their first two years in business:

• The penalty for not filing a federal tax return is $89 per month that the return is late (typically capped at 12 months).  When they ultimately realize that they need to file a tax return, they will end up paying a $1,068 late filing penalty plus 8-12% interest
• The penalty for not filing a NY state tax return and not paying the appropriate corporate tax will be approximately $250 plus 8-12% interest
• NY is one of those states that “penalizes” a corporation for being “inactive.”  An inactive corporation could end up paying a corporate tax of up to $800, while if they were deemed active, their corporate tax would have only been $25.

So, this New Yorkers who setup his S Corporation and decided that he didn’t have to file a corporate tax return is now out $1,500-$2,500 when he could have just paid a CPA $250-$400 to prepare his “minimal activity” or “inactive” corporate tax return.

Remember, if you own a Corporation or an LLC, you MUST file a tax return every year, even if you claim to have no activity.

So…you just sat down to open your mail and you see that dreaded letter from the IRS (or from your state’s department of taxation)…what do you do? Panic? Call the IRS? Call your CPA or attorney in a panic?

No, no, and no.

Here are the top three things that you should not do:

1) Do not ignore the letter/notice.  The IRS and your state’s taxation department are fully computerized and the issue will never go away by itself.  You must have your CPA or attorney respond in a timely fashion in order to avoid judgements, warrents, liens, and levies (see the difference between liens and levies here: Tax Liens vs. Tax Levies).

2) Do not call the IRS or your state’s department of taxation yourself.  Your CPA should be the one to make the call or write the letter.  Communications with the IRS and with state taxation departments needs to be clear, concise, and void of all emotion.  Calling yourself will almost always result in divulging too much information, confusing the IRS telephone representative, and ultimately end in frustration as you are left on hold, transferred, etc.  Stay calm and contact your CPA or attorney so that they can take care of the issue for you.

3) Do not call your CPA or attorney up in a panic.  Without seeing the letter or notice, there is very little they can do for you and the last thing any CPA or attorney wants to do is sit on the other end of the phone while you attempt to read them whatever portion(s) of the letter/notice you feel are important.  The proper way to handle the situation is to calm down, fax or scan & e-mail a copy of the notice to your CPA or attorney (or if the letter/notice does not indicate that an immediate response is required, you can mail a copy), allow your CPA or attorney a couple of days to research the matter, and then let them correspond directly with the IRS or your state’s department of taxation.

Keep in mind that your CPA or attorney have most likely helped other clients get out of similiar situations in a very pain-free manner.  They are best equipped to handle issues like this and are able to do so with ease assuming you fully cooperate and provide them with all the details and documentation that they request. 

When most people consider refinancing, they think of one of two things: reducing their monthly payment or reducing their interest rate.  However, there is a third and potentially detrimental aspect to refinancing that many people do not consider.

And that is the fact that you are now replacing your existing mortgage with a new 30 year mortgage.  So, if you are six years into your current mortgage and you refinance, you actually end up paying for 36 years instead of 30….if you are 11 year in, you end up paying for 41 years instead of 30…etc.

Now, the person who is simply looking to reduce their monthly payment is the person who will get hit the hardest here, but in many cases the person looking to take advantage of lower interest rates doesn’t come up too far ahead.

Let’s look at an example of someone who is looking to reduce their monthly payment.  They are seven years into their 5% 30-year mortgage and are going to refinance at the current market rate of 5% by paying $5k in closing costs and taking out a new 30-year mortgage:

Currently

At seven years into their loan, they have 23 years left (they will pay off their loan in July 2033)

Their monthly payment is $1,831.22

They will pay $205,416.14 worth of interest over the next 23 years

They will make $505,416.14 worth of payments over the next 23 years

After Refinancing

They now have seven additional years added to their loan and 30 years left on the new mortgage (they will pay off their loan in July 2040)

Their monthly payment is $1,637.31

They will pay $284,430.14 worth of interest over the next 30 years

They will make $584,430.14 worth of payments over the next 30 years

So, while it may appear that they are getting a great deal by reducing their monthly payment by $193.91 per month, they are not only adding an extra seven years worth of payments onto their loan but they are costing themselves an additional $79,014 worth of interest over the life of the loan.  Clearly a poor decision.

Now, let’s take a look at someone who is simply trying to take advantage of the lower interest rates.  They are seven years into their 6% 30-year mortgage and are going to refinance at the current market rate of 5% by paying $5k in closing costs and taking out a new 30-year mortgage:

Currently

At seven years into their loan, they have 23 years left (they will pay off their loan in July 2033)

Their monthly payment is $2006.54

They will pay $253,805.48 worth of interest over the next 23 years

They will make $553,805.48 worth of payments over the next 23 years

After Refinancing

They now have seven additional years added to their loan and 30 years left on the new mortgage (they will pay off their loan in July 2040)

Their monthly payment is $1,637.31

They will pay $284,430.14 worth of interest over the next 30 years

They will make $584,430.14 worth of payments over the next 30 years

Again here, while it may appear that they are getting a great deal by reducing their monthly payment by $369.23 per month, they are not only adding an extra seven years worth of payments onto their loan but they are costing themselves an additional $30,625 worth of interest over the life of the loan.  Clearly another poor decision.

So, next time you are considering a refinance, here are two things to consider:

1) Don’t just look at “how long will it take me to recover my closing costs based on my lower monthly payment” because that calculation is completely irrelevant in the scheme of things.  Do an in-depth analysis or have your CPA perform an in-depth analysis for you to see whether or not the refinance will actually be worth it in the long run.

2) If you are actually just looking to take advantage of lower interest rates and you are not interested in reducing your monthly payment, you can win big time.  All you have to do is find a lender who will give you a shorter-term loan that’s in-line with your current payoff schedule or find a lender that allows you to make additional principal payments each month.  This way, you can keep your monthly payment the same and actually payoff your mortgage sooner while paying less interest over the life of the loan

The First Time Homebuyer and Repeat Homebuyer Credits deadlines have been extended to September 30th.

Initially, the credits were extended to all who were in contract on their home by April 30th as long as those deals were closed by June 30th.

However, due to many complaints about the short window to close (for example, try closing on a home purchase in the state of New York within 60 days of being in contract…not going to happen!), the deadline to close was pushed back to September 30th.

Now, this doesn’t give buyers a chance to enter into a contract and close by September 30th, this extension only applies to those who were in contract by April 30th, but who were unable to close by June 30th.

Over time, the word “corporation” has come to take on a significantly negative connotation.  The word “corporation” is now synonymous with terms like “evil corporations” and ”giant corporations.”

So, I think it’s time to set the record straight so that all of us business owners who operate our businesses as corporations stop feeling the pain.

The term corporation refers to a legal business structure and in no way implies the size of a company or the level of evilness under which that company operates. 

Think of your corner pizzeria…the yarn store that your grandmother shops at…the animal rescue group that you adopted your puppy from…the guy who mows your lawn…the frozen yogurt shop you frequent on warm summer nights…all of these people own a corporation in order to operate their business.

Over 97% of my clients own corporations and not a single one of them would fall under the definition that has become commonplace in America…none of them operate giant companies that put mom-and-pop shops out of business…none of them genetically engineer evil goldfish…none of them tap the tips of their fingers together while laughing maniacally.

So, the next time you want to refer to the WalMarts, the BPs, and the Enrons of the world as “corporations,” please be so kind as to differentiate and call them “big corporations,” “giant corporations,” or “evil corporations.”