accountant los angeles Archives

Don’t Shoot the CPA! Something New This April If You Can’t Pay Your Taxes

You’ve worked hard, but got laid off. Then on April 15th the following year, your CPA tells you that you owe taxes, but you don’t have the money. What are you going to do? Check out what our “compassionate” IRS has to say:

The Internal Revenue Service today announced a major expansion
of its “Fresh Start” initiative to help struggling taxpayers by taking steps to
provide new penalty relief to the unemployed and making Installment Agreements
available to more people.

Under the new Fresh Start provisions, part of a broader effort started at the
IRS in 2008, certain taxpayers who have been unemployed for 30 days or longer
will be able to avoid failure-to-pay penalties. In addition, the IRS is doubling
the dollar threshold for taxpayers eligible for Installment Agreements to help
more people qualify for the program.

“We have an obligation to work with taxpayers who are struggling to make ends
meet,” said IRS Commissioner Doug Shulman. ”This new approach makes sense for
taxpayers and for the nation’s tax system, and it’s part of a wider effort we
have underway to help struggling taxpayers.”

Penalty Relief

The IRS announced plans for new penalty relief for the unemployed on
failure-to-pay penalties, which are one of the biggest factors a financially
distressed taxpayer faces on a tax bill.

To assist those most in need, a six-month grace period on failure-to-pay
penalties will be made available to certain wage earners and self-employed
individuals. The request for an extension of time to pay will result in relief
from the failure to pay penalty for tax year 2011 only if the tax, interest and
any other penalties are fully paid by Oct. 15, 2012.

The penalty relief will be available to two categories of taxpayers:

Wage earners who have been unemployed at least
30 consecutive days during 2011 or in 2012 up to the April 17 deadline for
filing a federal tax return this year.
Self-employed individuals who experienced a 25
percent or greater reduction in business income in 2011 due to the economy.

This penalty relief is subject to income limits. A taxpayer’s income must not
exceed $200,000 if he or she files as married filing jointly or not exceed
$100,000 if he or she files as single or head of household. This penalty relief
is also restricted to taxpayers whose calendar year 2011 balance due does not
exceed $50,000.

Taxpayers meeting the eligibility criteria will need to complete a new Form 1127A to
seek the 2011 penalty relief. The new form is available on IRS.gov.

The failure-to-pay penalty is generally half of 1 percent per month with an
upper limit of 25 percent. Under this new relief, taxpayers can avoid that
penalty until Oct. 15, 2012, which is six months beyond this year’s filing
deadline. However, the IRS is still legally required to charge interest on
unpaid back taxes and does not have the authority to waive this charge, which is
currently 3 percent on an annual basis.

Even with the new penalty relief becoming available, the IRS strongly
encourages taxpayers to file their returns on time by April 17 or file for an
extension. Failure-to-file penalties applied to unpaid taxes remain in effect
and are generally 5 percent per month, also with a 25 percent cap.

Installment Agreements

The Fresh Start provisions also mean that more taxpayers will have the
ability to use streamlined installment agreements to catch up on back taxes.

The IRS announced today that, effective immediately, the threshold for using
an installment agreement without having to supply the IRS with a financial
statement has been raised from $25,000 to $50,000. This is a significant
reduction in taxpayer burden.

Taxpayers who owe up to $50,000 in back taxes will now be able to enter into
a streamlined agreement with the IRS that stretches the payment out over a
series of months or years. The maximum term for streamlined installment
agreements has also been raised to 72 months from the current 60-month
maximum.

Taxpayers seeking installment agreements exceeding $50,000 will still need to
supply the IRS with a Collection Information Statement (Form 433-A or Form 433-F).
Taxpayers may also pay down their balance due to $50,000 or less to take
advantage of this payment option.

An installment agreement is an option for those who cannot pay their entire
tax bills by the due date. Penalties are reduced, although interest continues to
accrue on the outstanding balance. In order to qualify for the new expanded
streamlined installment agreement, a taxpayer must agree to monthly direct debit
payments.

Taxpayers can set up an installment agreement with the IRS by going to the
On-line Payment Agreement (OPA) page on IRS.gov and following the
instructions.
These changes supplement a number of efforts to help struggling
taxpayers, including the “Fresh Start” program announced last year. The
initiative includes a variety of changes to help individuals and businesses pay
back taxes more easily and with less burden, including the issuance of fewer tax
liens.

Generally, an offer will not be accepted if the IRS believes that the
liability can be paid in full as a lump sum or through a payment agreement. The
IRS looks at the taxpayer’s income and assets to make a determination regarding
the taxpayer’s ability to pay.

So don’t shoot your CPA who informs you of bad news. We’re here to help. Always discuss your situation with a tax professional before making any decision.

Source: IRS Site

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IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Strategic Planning for the Artist: A Los Angeles CPA Business Manager’s Attempt to Integrate Business Concepts

Tomorrow, as a Los Angeles CPA business manager, I will be merging two of my skills with a client. My entertainment business management skills, and my strategic planning skills. This client is a singer/songwriter who produced a music demo and video. My question to her was, “So what?” If you pursue the path of other musicians to acquire a contract, a 360 deal, you are no better than them, and may be just one of many homogeneous artists trying to make it.

This actually happened to my dad, Bobby Norris, in the 1950s. He signed with Capitol Records as a rockabilly artist, only to receive very little promotion for his records. It wasn’t until after he died, 2003, that he receives the recognition that he longed for as one of the original rockabilly personalities.

As a Los Angeles CPA business manager, I really don’t see artists driven in their profession from a real strategic planning position. I did stumble onto a book that seemed to address strategic issues. But I will have to buy the book to see if they do more than just scratch the surface.

So how would I, as a Los Angeles CPA business manager recommend how an artist should strategically work their career? Here is a short answer to a long question:

Identify an issue. What are you really trying to accomplish? It has to be more than “be a star.” You have to really focus on something and list your assumptions on why you are equipped or not equipped.
What is your vision? Quantify what you want. For example, to have 1 top ten single on the charts every year, or play to an average of 200,000 per event. See Jim Collin’s Good to Great and Build to Last for big, hairy audacious goals.
Why would the fans want you? You must focus on your fans. Many books like Blue Ocean Strategy help you think on a level of satisfying your fans and creating an uncontested marketplace. Don’t give the fan more of what they heard. Find out their needs and satisfy them.
SWOT analysis and quantifying: Now you can look at your strengths, weaknesses, opportunities, and threats. You must also put some real numbers to your goals.
Lay out your strategy
Reduce the strategy to tactics

I’ve produced this approach, in part, from Johnson and Smith’s 60 Minute Strategic Plan.

In my opinion, as a Los Angeles CPA entertainment business manager, you must think strategically about your career and stop focusing on yourself. Focus on your fan base and serve them the art they deserve and are entitled to. As Los Angeles CPA business managers, we try to work with clients on the front end, not just record the results on the back end. That is where we strategically differ in our profession.

Year End Small Business Tax Tips

As Los Angeles Certified Public Accountants, we have the opportunity to work in different industries. Each industry has its own special personality, yet there are some tax breaks that many are not taking:

Healthcare credit: This credit is not only new to Certified Public Accountants, but to small business owners. If your company pays health insurance for your employees, you may be able to claim this credit. Don’t be discouraged because you, as the owner, pay for your own health insurance. That payment is not included in the computation.
Section 199 domestic production manufacturing deduction: Companies seem to ignore this gem of a deduction if their core process is not manufacturing. However, that is not the proper way to look at things. If there is ANY part of your business that you “manufacture,” then we certified public accountants are interested. Music production, magazine publishing, and metal duct fabrication are some areas that one would not think are manufacturing, but they are.
Tax withholdings: Recompute your tax withholdings for 2012. If you are overwithholding, then the IRS is using your tax dollars interest free. Any certified public accountant or bookkeeper can help you.
Moving Expenses: Times are tough and many are moving to engage new employment. Check with your certified public accountant as to whether you qualify for this deduction. Job seeking expenses also could be deducted if they qualify.
Energy Tax Credits: There still may be a chance that you can take energy credits for things like exterior doors, windows, etc. Also, you may be able to better if you acquire alternative energy equipment. Make sure you speak with your certified public accountant before making these decisions.
Section 179 Accelerated Depreciation: Many businesses know about this, but make sure there are good business decisions for making your purchase. Don’t have tax considerations guide your business decisions.
Retirement Plan: If you don’t have one, get one. With the decrease in the stock market, so many people are ill prepared for retirement. The current tax savings can take a giant chunk out of your tax bill.

As certified public accountants, we try to be proactive in advising our clients. However, you, the business or individual must not procrastinate. Listen to the certified public accountant tax specialists and retain some money in your pockets on tax day. Discuss your situation with your tax advisor before acting.

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EXIMBANK, A CPA Perspective: Small Can Be Global with a Little Help From Your Government Friends

Around 1993, as a CPA I played a pinnacle role in trying to bring 100,000 jobs to Los Angeles. I worked with four non-CPA partners, Chemical Bank, the Dept of Commerce, the Dept of Labor, and Senator Barbara Boxer to use the Export-Import Bank of the United States (EXIMBANK)to insure foreign movie presale contracts. We didn’t prevail.

However, as a CPA, what I learned was EXIMBANK is a great partner to a small business aspires to go global. Their site says, “Global Access for Small Business is a top priority of Ex-Im Bank. This initiative is dedicated to dramatically increasing the number of small businesses exporting goods and services to maintain and create U.S. jobs.”

As a strategists and CPAs, we involve ourselves on various levels of business. One option we suggest for manufacturers in increasing their top line is EXIMBANK. They are a US agency that insures foreign receivables. A small business in turn secures a business loan with the insurance policy removing risk from the bank. If the foreign customer doesn’t pay, EXIMBANK pays off the bank loan.

In 2010, more than 700 small businesses used EXIMBANK to sell their products overseas. By 2015, EXIMBANK aims to approve at least $30 billion in small business transactions.

CPA financial statements really don’t tell a small business owners very much about strategizing. So, we look beyond the horizons and advise small business where they can prosper. In addition, as CPAs we have an obligation to help create jobs with our strategies. EXIMBANK reaches both of these objectives.

Even Entertainment CPAs in Los Angeles Make Odd Business Decisions

In the last few weeks I have received not one, not two, but three phone calls from actors who are looking for a Los Angeles Entertainment CPA. Two of the calls actually were the parents of child actors. The services they requested varied a little, but the one thing that they did not like was the fact that they could not find a Los Angeles Entertainment CPA who prepared tax returns. What they usually found were Entertainment Business Managers who wanted to charge 5% of their income to handle their financial affairs(including tax returns). As one mother told the business manager, “What could you possibly do to justify taking 5% of my daughter’s income? She doesn’t own a house, or require any more than a few bills to be paid a month.”

I told each of the prospects, as entertainment CPA business managers, that we have never gauged services by billing a percentage of a client’s income. Over twenty years ago, I had worked for firms that billed that way. But, I believed it to be an inaccurate way of gauging a business manager’s value of service. Sure agents, personal managers, and some attorneys who help “create” the wealth. They have a legitimate reason to charge in such a way, but not entertainment CPA business managers and accountants. It’s true at times, that I am involved with contract negotiations, but my function is not to promote the client and create the opportunities.

A year ago I heard that entertainment CPA business managers and accountants are shying away from this practice, possibly because of the economy. But these last phone calls seemed to say otherwise.

So, what’s the point? If you are reading this, you are probably not an entertainment CPA business management firm like us. The point is whatever business you are in, you must always, always , always focus on the value you are providing the client and customer. Just because you think you are worth your fees or price doesn’t mean you have convinced the client that you are.

Whenever you are fortunate to get a phone call from a prospect who tells you that your billing structure is obsolete, you should re-evaluate your business strategy and billing practices.

Now some entertainment CPA business managers and accountants may say, ” Fine, you take the little guys and we’ll concentrate on the A+ level actors and musicians.” This attitude is what drove US Steel and Bethlehem Steel out of business. Micro mills slowly chipped away from the bottom up with a better strategy starting with the lowest grade of steel. Eventually, the smaller mills moved up to take the high grade steel, too, driving the big companies out of business.

As entertainment CPA business managers, our company promotes good business strategies, not just for our CPA firm, but for our clients. The small flame client you have today could be the big shining star tomorrow. And the shining star of today may be just a little brighter than what you think.

Business Opportunities: Gas Stations Making Their Own Music

Back in the 1960s, it wasn’t unusual to find four gas stations at an intersection in Los Angeles. These were full service stations who would fill your tank, wash your windshield, and check your oil. You would also just hand them your money (not credit card) from your open window to pay. These stations would try so many ways to attract customers and build a niche market in their neighborhoods.

Union 76 (currently Unocal) distinguished itself by creating a relationship with the former Brooklyn Dodgers. Union 76 would give away many different types of Los Angeles Dodger’s baseball memorabilia when you purchased a certain amount of gas. One such item was a flexible 45 rpm record of a Dodger player interview. Vin Skully would interview a Dodger player like Sandy Kofax. Union 76 had found a niche market with Dodger fans–forget about the gasoline.

Jon Ostrow’s article, How To Conquer Your Musical Niche reminded me of Union 76’s niche serving with automobile/Dodger fans. He laid out a number of items that a band should consider:

Demographic (age, gender location)
Similar / influential artists (remember to start locally, then branch out to the regional, national and global scale)
What are the influential promotional outlets?
Where do the fans exist online?
What blogs do they read?
How do they find out about new music?
Are they into fashion? If so, what brands?
What are their favorite hobbies?

At first glance, you may think this pertains to only musicians. But, look again. Here is the list converted to a 1965 Union 76 strategy:

Demographic (age, gender location)–Are they near a freeway that can lead to Dodger Stadium? Are they male?

Similar / influential artists (remember to start locally, then branch out to the regional, national and global scale)–Unocal may have start in certain neighborhoods and branch out.
What are the influential promotional outlets? Use Dodger radio to advertise Union 76 items.
Where do the fans exist online? What radio stations do Dodger fans listen to?
What blogs do they read? Advertise in the Sports Page of the Los Angeles Herald Examiner.
How do they find out about new music? Who do auto owners learn to about gas? Mechanics? Make sure each station has one.
Are they into fashion? If so, what brands? Sell Dodger hats at the stations.
What are their favorite hobbies? Unocal hit the head of the nail with Dodger fans.

Each business or band can use similar questions in nailing their niche market. The Blue Ocean Strategy is a strategy concept that can help you in searching for it.

How to Launder(for More)Money Without Getting Washed Up

I know that title can get me into trouble, but I couldn’t resist.

I had lunch today with a childhood friend (no he is not nine years old). I hadn’t seen Gary in about 30 years. He still looks the same (except for the white hair and long white beard). Anyway, Gary is in the Laundromat business. His story came back to me tonight when I was reading the article, Grow Your Sales Without Selling by Mike Periu.

All in all, it wasn’t a bad piece. He gave a handfull of suggestions to growing your small business outside the sales cycle. The first suggestion he offered was the one that reminded me of Gary: Grow through acquisitions. He offered his support for it, but then he narrowed it by industry. He wrote, “…if companies in your industry are selling at relatively low valuations, and if existing customers generate recurring revenues then growth through acquisition could be a very viable strategy.”

I always have cautioned clients about acquiring small businesses. (See my video Selling a Small Business for the flip side). Many times, a small business financial statements (and sometimes tax returns) don’t truly reflect the reality.

Gary owned a small business laundromat and found a opportunity to buy another one. The other small business was selling for a low price and it generated recurring revenues. Sounds simple? Not always. Even though these aspects exist, there are many other variables that can sink a laundromat (pun intended). For example, repairs. If you buy a laundry mat whose machines are old and breaking down, your profit margin can evaporate.

Gary, however, had a solution for that. He was (and is) mechanically inclined and had developed systems to personally fix all of his machines. Thus, his cost of repairs was usually limited to parts, even used parts.

I find that so many new small business owners do now look at the threats of a business acquisiation, or if they do, they do not have a plan (like Gary) to address them. So, though Mr. Periu offers an option in growing your small business, he fails to even mention this serious drawback.

A friend of mine bought an accounting practice. He acquired dozens of clients for a fixed fee. To his suprise the seller accountant was grossly negligent in maintaining his client’s financial records. This unexpected turn forced my friend to incur many, many hours to correct the financial records that he did not get paid for because he had acquired the accounting business. In addition, he lost a substantial number of clients.

In the small business arena, I always recommend that my clients prepare a bullet proof contract with their attorney and of course do their due diligence. It is very rare that a buyer can walk into a small business with a plan to comfront the downside like Gary did. That kind of strategy takes a special skill. If you have that skill, then you minimize your risk. If you don’t, find someone that does. Either way, you must look at all possible and develop strategies to

Small businesses usually don’t have the depth to absorb such oversights in an acquisition.

Where Do We Go From Here? Strategic Planning In the Fog

The yellow bus lights glowed in the dark as my only beacon. I couldn’t see 20 feet in front of me on Highway 99 in the central California valley, but we had to get to Lake Huntington. The four cars packed with my companions followed my lead. At last, I saw the exit. Moving off the highway onto a dark farm road, my concern peaked. Where were the street signs behind the foggy shrouds? At last I stopped at an intersection and was able to see a sign, but only after I stood in the middle of a dark intersection looking almost straight up.

If you have been planning for the last three years, this story should sound like your attempt to plan strategically. Hugh Courtney’s Strategy under uncertainty lends us a flare in such dismal times. He offers a four-level framework for determining the level of uncertainty surrounding strategic decisions and for tailoring strategy to the uncertainty:

Level one: A clear enough future: Courtney states that managers can use the usual strategy tools in a clearer future as this. However, I see that medium and small businesses do not know what those tools are. The biggest private producers of jobs in this country, small business, usually work in a strategy void. Thus their decisions and plans are usually uninformed and a product of crises management even in the best of times.

Level two: Alternative futures: Outcomes are clear by hard to predict. Take the Ford Edsel, for example. The car seemed like a good strategy with a ready market, but it went the way of the do-do bird. This is where probability analysis can come in according to Courtney. For small businesses, look at the downside to each alternative. Is one downside greater? You may want to go the other way.

Level three: A range of futures:Taking Courtney’s cue, small businesses must limit their strategic options. Don’t take the shotgun approach and consider ten different strategies, for example, because you can. Your brain will explode, not a pretty site. Again, focus on the downside of your options.

Level four: True ambiguity: This option happens in an economic free-fall, or at least a controlled fall. More than ever, I recommend small business to take a Blue Ocean Strategy viewpoint and focus on the needs of your clients. Eliminate those attributes that your industry is providing clients that they can live with, e.g., meals on a commuter flight. You can take this approach for any other above levels, but at this level, it is usually a matter of survival. The wrong decision could land you in bankruptcy very quickly.

If You Are Reading This, You’ve Proved My Point

Last January, I again participated on the planning committee for the 2011 Entertainment Industry Conference for CPAs and attorneys. We agreed on most of the usual topics to be presented at the conference. Then, I suggested social networking. The idea was written on the board.

Fifteen minutes later, a respectible CPA turned to me and said, “Rick, I know social networking is a sexy topic, but I doubt it is what our attendees are looking for. They won’t come away with anything.” I nodded my head and thought to myself: Thank you. You just gave me an extra 12 months to blow my competition out of the water using social networking and SEO.

Skeptical? 5 Key Social Media Findings That Affect Your Business by Glen Stansberry lists some new findings:

1. Americans spend most of their time online on social network and blogs–If you are reading this blog, you have contributed to the 23% statistic that more time is used reading blogs and social networks than checking emails. You may have also found me because of what I have been doing for over a year. Writing

2. Seventy percent of active online adult social networkers shop online–Sell where your buyers live, online. We are all going there. Have a bigger presence than your competition.

3. Fifty-three percent of active adult social networkers follow a brand(only 32 percent follow a celebrity)–Adults follow brands across social networks.

4. Sixty percent of social media users create reviews of products or services–When was the last time you reviewed a book on Amazon, or rated a restaurant on Opentable? You are contributing the movement. If your business is not on there, then you are behind the curve.

5. The number of mobile Internet users is up 47 percent from last year–I have actually trashed a rude restaurant that made us wait an hour beyond their seating estimate. We were outside with our 85 year old father-in-law on Father’s Day in the dark. My bad review went into Yelp before I reached my car in the parking lot.

If you are resisting the social network, SEO revolution, you are risking the well-being of your business. But, before you jump in, do some research and learn. There are consultants that can help you. Then, create a strategy and stick to its implimentation. Your online presence will not increase overnight, but the constant creation of content will get you noticed.

Small Business Promotion Using Social Media–How We Did It

I couldn’t believe it. Well, actually I could, but I didn’t want to. Gregg Towsley of WSI Quality Solutions sat down with me me 18 months ago and showed me that my business’s social profile was dead. In other words, if you typed in industry key words, we didn’t even show up on ANY page.

I came across What Drives Small Business Social Media Engagement? by Dan Schawbel. He cited a study by Roost which offered advice to small business owners who want to create brand awareness, customer, acquisition, and customer services.

Using only Facebook and Twitter, the study suggested the following:

Publishing photos: The study suggested photos of employees, products, and functions. I remember when I first put up our web page, our most valuable search term was my assistant Maddy Curley. She was an actress that had (and has) some success on television and film. People googled her after seeing her on a TV episode and came up with her picture on our personnel page.
Ask Questions:Start a discussion by asking questions. You see this a lot on LinkedIn. I feel that providing information along with questions is a better strategy. What do you think?
Share Quotes:There are way too many twitter sites and blogs quoting wise people. I don’t like to. I find it is far more interesting to coin my own phrases that display my expertise. You don’t convince others of you knowledge and wisdom by using someone else’s brain. (You can quote that).

The main activity that got our firm on the front Google page ahead of CPA firms much larger than us is our content and consistency. To be successful, you must give to the business community. We provide advice and steps to individual businesses that can help them in managing their finances.