Archives for April 2020

7 essential skills to succeed in finance (and they’re not related to numbers)

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To excel as a financial professional, you need a specialized skillset that goes beyond financial expertise, crunching figures and analyzing operational successes. Because if you can’t perform other basic functions of your job, it’s impossible to fulfill the full potential of a financial position.

Today’s financial professionals need to master these seven non-financial skills:

  • Marketing. You’ll never get anywhere if you can’t market your professional knowledge to your niche market. Potential clients need to know how you can help them better manage their assets. This starts by understanding your personal, as well as your firm’s own strengths, and how to best translate the benefits you can provide.
  • Communication. For a financial pro, verbal, nonverbal and written communication skills are non-negotiable — from the ability to communicate clearly while translating complicated data to recommending the best courses of action to your clients and constituents. Communicating nonverbally especially requires a keen awareness of any possible interpretations of gestures, expressions or body language that can affect how the message is received.
  • Relationship management. Your role at your firm involves lots of number crunching, but it all comes down to meeting the needs of your clients. From listening and understanding different personality types to asking the right questions and resolving conflicts, people skills are key to your job function.
  • Presentation. You know that old saying, “It’s not what you say, but how you say it”? When it comes to discussing financial information, this applies — particularly if you’re delivering not-so-great news.That’s why the finance industry needs professionals who can pitch ideas, present proposals and discuss sensitive data with all types of people.
  • Project management. As a busy financial professional, you need to effectively manage time and budgets, and meet tight deadlines, all while staying organized and paying close attention to the smallest details. With so many balls in the air, your project management skills should be in tip top shape to avoid any oversights or overdue projects can kill your credibility.
  • Problem-solving. With any job, you must be prepared and equipped to troubleshoot issues as they arise — without cracking under pressure. Taking swift and professional action will help resolve problems in a timely matter, without affecting the flow of business. That’s why finance professionals should be at the top of their game when it comes to everyday problem solving.
  • Tech savvy. We’re in the midst of a digital transformation, and financial professionals who want to keep up with the times are required to stay current with the latest software and programs. Developing good technical skills and adapting to new technology is critical for any firm that want to grow and stay competitive.

To succeed in finance, it takes more than a keen knowledge of numbers. By combining an ability to analyze data with the skills to project manage, communicate and acclimate to changing technology, your firm’s financial department will be primed for greatness.

Navigating the new business normal

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No business sector has been spared the fear and uncertainty we’re all currently mired in.

As a firm, Magone & Company has been busy on several fronts — helping business clients seeking financing from the Small Business Administration (SBA) in the form of Economic Injury Disaster Loans (EIDL), applying for the Paycheck Protection Plan (PPP), and getting ahead of the continued business challenges to come.

If this is the new normal for the foreseeable future, here are some tips to help navigate it:

  • Cash is king. If you haven’t already done so, negotiate with landlords and vendors for some accommodation on your payment terms.
  • If you received a PPP loan, bring back your workforce and pay them within 8 weeks of receipt to ensure loan forgiveness. If you have not already done so, establish a separate account for these funds and transfer them into your operating account when paying payroll and related expenses. Keep in mind to reduce the payroll for the fund transfer for any employee making more than $100,000 annually, or $8,333 monthly/$4,166 semi-monthly. If the funds are used to pay payroll in excess of $100,000 they will not be forgiven.
  • If you have an existing credit facility, make certain you are diligent with loan covenants. Making certain to communicate immediately with lenders if you will not be meeting the various covenants — especially reporting covenants for annual financial statements.
  • Update your budgets and cash flow projections. If you don’t usually prepare them, prepare them now! You can’t go by the seat of your pants when negotiating vendor terms, rent and/or mortgage deferral.
  • Stay in touch with your banker. Let them know what changes you have made in your business, how business has been in the last six weeks, and your projections for the remainder of the year.
  • Make informed decisions. As difficult as it is to consider pay reductions, furloughs or terminations, be realistic when reviewing updated budget and cash flow numbers to determine if your business can support your previous headcount.
  • During this period, communicate with customers and vendors. More is better. Let your customers know you’re open for business, and your vendors know you’re still in business and paying their invoices.

The government has stated its desire to replenish the PPP in the amount of $250 billion, so if you missed out on the first round of funding be ready to submit your application for the next round of funding.

Of course, this is general information. Be sure to check with your accountant or financial advisor for guidance specific to your situation. Don’t have anyone to help? We invite you to check in with our team for assistance with any aspect of your business operation or future strategy.

 

3 tax resolution strategies from the IRS

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Whew, tax time has passed! Or has it? While taxes are a fact of life, tax problems shouldn’t be. If you find yourself in hot water with the IRS, they’ll come to collect what you owe by any means possible — from garnishing your wages to putting a lien on your property. Luckily, there are valuable tax relief options out there to help resolve your tax debt and get you back in good standing with Uncle Sam.

#1 First time Penalty Abatement policy
The IRS doesn’t like being ignored, and if you don’t respond to their initial notices, pricey penalties will keep accruing. But under its First-time Penalty Abatement policy, the IRS may provide administrative relief from a penalty that would otherwise be applicable.

#2 Offer in Compromise (OIC)
You’ve probably seen or heard advertisements from tax relief firms that claim they can settle your tax debt for less than the full amount. An Offer in Compromise can help get your debt down to a manageable payment. To even be considered, you must ensure you’re in compliance and file any unfiled tax returns.

#3 Structured payment plan
Can’t pay the lump sum you owe in full? Your specific tax situation will determine which payment options are available to you, including a short-term payment plan (120 days or less) or a long-term payment plan (an installment agreement that’s longer than 120 days).

Ready for a fresh start?
Effective since 2011, the IRS’s Fresh Start Initiative aims to help more individuals and small businesses take advantage of the flexible programs available to settle tax debt. For details, contact Magone & Company at (973) 301-2300 to schedule a no-obligation consultation and learn more about your options.

PPP update: Application delays & foreign-owned businesses

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The Treasury Department recently released a revised PPP application on its website. With the exception of Bank of America, we’re not aware of other banks accepting applications today. It’s likely there will be a 2- or 3-day delay with other banks. We urge you to continue to prepare the necessary underlying documentation to facilitate the computations of the 2.5x monthly average payroll. This new application also removes troubling language related to companies that are more than 20% foreign-owned and/or are not permanent residents of the U.S. The recently released regulations may make the following non-immigrant categories eligible for SBA financial assistance

  • B-1 Business Visitor
  • F-1/OPT Optional Practical Training
  • H-1B Specialty Occupation
  • O-1A Extraordinary Ability and Achievement
  • E-2 Treaty Investor; or
  • L-1 Intracompany Transferee

In addition, businesses owned by Foreign Nationals or Foreign Entities may be eligible. The Lender and Development Company Loan Programs Guidelines issued April 1, 2020 states businesses listed in Appendix 1 are not eligible.

If you are an eligible business, there are additional requirements for businesses owned by non-citizens other than Legal Permanent Residents (LPRs), including foreign-owned businesses:

  • The application must contain assurance that management is expected to continue in place indefinitely and have U.S. citizenship or verified LPR status.
  • Management must have operated the business for at least 1 year prior to the application date. This requirement prevents financial assistance to “start-up” businesses owned by aliens who do not have LPR status.

Lender must require the personal guaranty from management
The Applicant must pledge collateral within the jurisdiction of the U.S. with a liquidation value equal to no less than the approved loan amount at the time of first disbursement and, to the extent that the value of collateral declines during the life of the loan, the Lender must require the Borrower to pledge additional collateral to ensure a sufficient collateral coverage amount. If the Applicant owned by foreign nationals, foreign entities or non-immigrant aliens residing in the U.S. does not have sufficient collateral, the Applicant IS NOT eligible for an SBA-guaranteed loan.

In order for a business not to be subject to these additional requirements, it must be at least 51% owned by individuals who are U.S. citizens and/or who have LPR Status from United States Citizenship and Immigration Services (USCIS) and control the management and daily operations of the business. This can only be waived by the Director of the Office of Financial Assistance (D/FA) or designee.

Development of the regulations is fluid and there may be additional modifications. It’s best to immediately contact your bank or banker for further clarification, but be prepared — they may not have all the answers as these guidelines were released late last evening April 2, 2020.

As always, if we can be of assistance please call (973) 301-2300 or contact us via email.

When disaster strikes, how thorough is your business continuity plan?

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Whether you operate a small company or helm a large corporation, every business is susceptible to events beyond its control. Whether it’s a data breach, a weather disaster or communicable disease outbreak, a solid business continuity plan can help minimize the impact on daily operations and help your organization come out on top.

Your business continuity plan is a dynamic tool that documents the procedures and processes to get back to business as quickly as possible. The time spent developing and maintaining a comprehensive plan is an investment in your company. So, from emergency communications to facilities management, make sure these five areas are covered:

#1. Emergency management. Do employees know who’s in charge in the event of an emergency? Are they aware of appropriate measures to take? Even the best employees won’t automatically know what to do without a plan in place. Appropriate emergency responses should be clearly outlined, and test runs and drills made part of your standard operating procedure.

#2. Crisis communications. When a disruption or threat arises, how do you notify your team, customers, vendors and the greater community? Your plan should specifically address notifications, communication channels and expectations regarding any change in business operations.

#3. Facilities maintenance.  Office space, storefronts, warehouses — are your facilities equipped to withstand nature’s elements? A continuity plan can help ensure that your facilities are resilient, with the ability to tolerate or recover from the potential damage.

#4. Security. Chances are your critical records and data are stored electronically, so can your IT systems hold up against tampering or hacking? Is company data regularly backed up, both on-site and remotely? Are measures in place to protect your inventory, merchandise or equipment? Keeping physical and intellectual property, data records and other valuable materials safe from harm, theft or loss is another vital function of your business continuity plan.

#5. Health and safety. At the end of the day, what’s more important than the well-being of your employees and customers? If a workplace catastrophe occurs, your people are counting on you to protect them. Your business needs systems in place that offer a line of defense against any conceivable threat.

Room for improvement
Even if your business continuity plan is complete and in effect, your work isn’t done. As technology evolves and employees come and go, the plan should be regularly updated. Experts recommend meeting with key stakeholders annually to review and modify the plan. Then, share it across departments and business units, and gather feedback from the entire company to make sure nothing’s being overlooked. When everyone is on the same page, you can best ensure an organized, safe and timely recovery.

Preparing for the storm
There’s no better test of your organization’s resilience than the occurrence of an adverse event — but don’t wait for disaster to implement or evaluate your plan. Build your defense now, and make it a regular part of your strategic planning processes.

The latest guidance on economic impact payments for taxpayers

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You’ve probably heard that IRS will be making millions of economic impact payments (also called recovery rebates) in coming months to help people stay afloat during the economic uncertainty related to the COVID-19 crisis. Here’s what you need to know about this program:

How much will I receive?
IRS will soon begin making payments of up to $1,200 to eligible taxpayers or up to $2,400 to married couples filing joint returns. Parents will get an additional $500 for each dependent child under age 17. Thus, the payment for a married couple with two children under 17 would be $3,400.

Who is eligible?
U.S. citizens and residents are eligible for a full payment if their adjusted gross income (AGI) is under $75,000 (singles or marrieds filing separately), $122,500 (heads of household), and $150,000 (joint filers). The individual must not be the dependent of another taxpayer and must have a social security number that authorizes employment in the U.S.

Not everyone is eligible
For individuals whose AGI exceeds the above thresholds, the payment amount is phased out at the rate of $5 for each $100 of income. Thus, the payment is completely phased out for single filers with AGI over $99,000 and for joint filers with no children with AGI over $198,000. For a married couple with two children, the payment will be completely phased out if their AGI exceeds $218,000.

How will the IRS get me my payment?
The vast majority of people won’t have to do anything in order to get an economic impact payment. IRS will calculate and send the payment automatically to those who are eligible.

If you’ve already filed your 2019 tax return, IRS will use the AGI and dependents from that return to calculate the payment amount. If you haven’t filed for 2019 yet, information from your 2018 return will be used.

IRS will deposit the payment directly into the bank account reflected on the return. It plans to develop a web-based portal for individuals to provide their banking information, so payments can be received via direct deposit rather than by postal check.

People who are not otherwise required to file a tax return will need to file a simple return to receive an economic impact payment. IRS will soon provide instructions on how to do this.

Payments are nontaxable
Economic impact payments will not be included in the recipient’s income for tax purposes.

Have questions about the the relief available to individuals and families? Give the NJ CPAs at Magone & Company a call at (973) 301-2300, we’re here to help.