Small Business

Big-name Firm? Local CPA? National Chain? How to Find the Most Qualified Tax Resolution Professional

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With the stakes so high, it’s surprising how little thought many people give to their taxes. All too often, people simply walk into a neighborhood storefront, hand over their most personal information and trust that the person on the other side of the desk will do the right thing. And that can mean trouble.

If you’re in hot water with the IRS because you chose the wrong tax preparer, you need a qualified tax resolution firm — and fast. Here are four tips to help you find the right one.

#1 Read their reviews online.

Online reviews can give you a good sense of a firm’s reputability, responsiveness and how they treat their clients overall. If you owe back taxes, for example, waiting weeks for a callback can cost you a significant amount of money. Even the most well-known firms that invest in huge marketing campaigns can have the worst customer reviews.

#2 Get to know their track record.

Negotiating with the IRS to settle your tax debt is a specialized skill, and not all tax professionals have it. Ask about their recent case settlements and success stories. A true tax resolution professional will have proof they’ve done this before.

#3 Ask about their communication process.

The IRS moves slowly, and there will likely be big gaps between their updates. But that doesn’t mean the tax firm you’re working with should go silent. The right firm will have systems in place to ensure you’re updated regularly. Find out their expected timeline and how you’ll be informed along the way.

#4 Avoid big firms that don’t deliver on personal attention.

You’ve seen their ads on TV and all over the internet. But if you call a big-name, national firm, you’ll likely get a salesperson who knows very little about taxes or how to settle your tax debt. They may promise you the moon on your initial call, but will fail to deliver because they didn’t take the time to understand your specific situation. They may not even be licensed tax resolution professionals. Find out who will be responsible for your case and try to speak with them directly before signing up.

Need tax relief? You’ve come to the right place  

If you’re looking for a tax resolution specialist who knows how to navigate tax resolution challenges, reach out to the professionals at Magone & Company. Call us today at (973) 301-2300, and we’ll schedule a confidential consultation to explain your options.

Return to the Office: Managing Employee Pushback on In-person Work

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The pandemic fueled a massive work-from-home trend that many non-essential businesses have maintained for the past 18 months or more. But despite the current surge in COVID-19 cases, more and more employers are asking employees to return — causing a fair share of anxiety and fear, especially among the unvaccinated. As employers receive pushback from their teams, what can be done to ease employee comfort and peace of mind around colleagues, customers and clients after an extended hiatus?

A heavy-handed request?

With the FDA fully approving the vaccine beyond emergency use, employers may increasingly be making vaccination a requirement for returning to the office.

As an employer, you have options up to and including termination (in some circumstances) if employees refuse to return to the office or get vaccinated. But will on-site work directly impact or negate your success?

Here are some potential reasons to reconsider a blanket return-or-quit policy.

  • Employees may be genuinely reluctant for legitimate health reasons.
  • It may cause more stress for employees whose lives have already been turned upside down by COVID-19.
  • You risk damaging morale across the workforce.
  • You may have wrongly assessed the legal risks of doing so.
  • It might be harder than expected to recruit replacements for terminated employees.

The first step in formulating a return-to-work strategy is uncovering why your employees are reluctant to stop working from home. Consider conducting a survey, but avoid giving the impression that simply preferring to work at home is a compelling enough reason to allow it.

Coaxing tips

Reassuring employees of your commitment to maintaining a safe environment may help alleviate concerns. Here are some tips to help them get on board:

  • Give a generous heads up. Set the onsite work deadline a month or two into the future to give employees time to adjust and plan head.
  • Have a conversation. If feasible, have one-on-one conversations with employees who express worry about returning to work. They’re more likely to come around if they know you respect their concerns and want to understand them. A reasonable compromise might emerge.
  • Educate, educate, educate. Inform employees about the Centers for Disease Control and Prevention (CDC) workplace safety standards and the scientific basis for those practices, as well as your compliance practices.
  • Enact a policy phase-in period. Instead of setting an all-or-nothing date of return, allow employees to slowly acclimate. You may ask them to return for one or two days a week initially, adding more days over time.
  • Be flexible and fair. Cutting deals with individual employees may create resentment from others. While doing your best to accommodate individual needs, it’s important to ensure that your practices are reasonable for everyone.

Help from Uncle Sam

If you’re considering a mandatory vaccination policy to accompany your return-to-work policy, you may consider incentivizing hesitant employees to get their jab.

One possible solution is to offer paid time off for COVID-19 vaccine appointments. Some employers take this a step further, offering a financial bonus on top of regular pay.

A little compassion goes a long way

No matter how you approach the task at hand, be aware of the many health conditions that may make people more vulnerable to contracting or having an acute case of COVID-19. The CDC’s list includes cancer, chronic kidney disease, COPD, heart conditions, obesity, pregnancy, smoking and diabetes. And some employees with these conditions might worry about COVID-19-related health risks at the workplace, even if they’ve been vaccinated.

In all cases, be sure to review how federal, state and local statutes may impact the approaches you can take.

Overhead Expenses Starting to Accumulate? Manage Them Now Before They Get Out of Hand

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It’s not uncommon for overhead expenses to increase over time. In fact, it’s part of doing business.

But when overhead begins to mushroom out of control, it’s critical to confront the situation in a timely manner to avoid bigger problems down the road. Here are a few tips to help you manage runaway overhead costs:

Oversight is essential. Always be aware of your overhead expenses. Set time aside regularly to review them. Being conscious of what you are spending alerts you to changes that must be made.

Conduct an overhead review. The goal of your overhead review should not be only to reduce costs, but also to make certain those reductions allow you to deliver anticipated service levels to customers and clients. To that end, you must be aware of what your clientele expects from you. Involve employees in making a list of what your customers most value about your services and what they think might be improved. Awareness of customer satisfaction levels gives you a head start in determining what overhead cuts might be detrimental to your business.

Calculating overhead expenses. Use this simple equation to decide if you need to conduct an overhead review:

(Overhead ÷ monthly sales) x 100 = Overhead percentage

Recommended overhead ratios vary by industry. However, an overhead percentage that is no higher than 35 percent of total sales is considered positive.

Classify overhead activity. Overhead activity can be categorized into three areas: core, support and diversionary. Core activities such as sales add direct value to the company. Support activities such as record keeping do not add direct value, but they support the core activity. Diversionary activity such as time spent on correcting errors adds no value to the business. Since diversionary activities can account for as much as 20-40% of total overhead activity, special attention must be given to this category in determining overhead reductions.

Ideas for reducing overhead. These are some of the key areas you should look at in deciding overhead reductions:

  • Renegotiate your lease. The US Chamber of Commerce recommends that you make sure you know how much of a reduction to ask for based on market conditions and your business’s financial projections.
  • Evaluate your utility usage. Determine the levels of service your business actually requires. Odds are that you’ll find you’re spending much more than you need to, especially with the advent of competing utility services.
  • Rethink Insurance. Keeping certain that you remain adequately covered, review your policies to see what might safely be cut. Failing that, don’t auto-renew when your policy comes due annually. Ask your broker to shop around, as rates can vary widely.
  • Rent equipment instead of buying. This eliminates many upfront and maintenance costs. Leasing is not only less expensive, it also helps you keep your technology current.
  • Review your contracts. Cancel contracts you may no longer need, and renegotiate the necessary ones.

Benefits of an overhead review

According to the Managers-Net Archive, a properly executed overhead review can result in at least a 20% reduction in overhead costs, usually within a 10- to 14-week period.  But it also can benefit your company in other ways. The changes you make can result in improved services critical to your customers. It can make you aware of costly diversionary activity and present the opportunity to minimize it. And it can help provide your management team with a better understanding of the current state of the business, resulting in commitment to your proposals for improvement.

Why Preserving a Healthy Cash Flow is Key to Your Company’s Survival

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Cash flow is the lifeblood of a business. It’s what keeps the lights on and the doors open. And lack of it is one of the biggest reasons businesses fail. In fact, 82% of small businesses fold due to cash flow mismanagement.

If you’re spending more on bills, payroll, inventory and interest than your company is bringing in, you have negative cash flow — a key indicator that your business’s financial health is suffering. In that case, it’s time to make some serious changes, as the future of your business depends on it.

Having just enough won’t cut it

Not only do you need adequate funds for day-to-day business expenses, but you need enough cash to pay suppliers, creditors and your employees before you actually generate a profit. Understanding how cash flows in and out of your business gives you the power to plan strategically for the future, improve vendor relationships and increase the likelihood that you never run out of cash.

The sooner you learn how to manage your cash flow, the better your chances of success. Here are some tried and true strategies for improvement:

  • Control inventory. Holding too much inventory ties up cash, but not having enough can lead to a loss in sales and unhappy customers. Through consistent analysis, you can ensure that you’re on top of your needs.
  • Collect receivables. Establish a formal collections schedule and follow up on non-payers. Consider charging interest to penalize late payers or end unprofitable relationships entirely.
  • Control access to bank accounts. Keep the number of people who can access your accounts to a minimum, and be sure to update passwords as needed.
  • Outsource when it’s cost-effective. For certain areas of your business — like accounting, marketing, payroll and HR — it might make more financial sense to subcontract to a firm that specializes in those functions.
  • Consider leasing vs. buying — or vice versa. If you’ve been leasing, your costs are likely predictable. But purchasing equipment can substantially alter your cash flow. Reevaluate your costs and your needs to see what works best.
  • Run monthly cash flow reports. Whether you use Excel (not recommended!) or software such as enterprise cloud versions depending on your needs (Great Plains, NetSuite or Intaact), take time for a weekly overview of cash received and cash paid out to show your business’s cash position.

Understanding the financial environment of your business

According to Inc., “If you haven’t considered cash management an important issue, then you’re probably undermining your business’s short-term stability and its long-term survival.”

There are few things more important to your business than cash flow — especially if you’re striving for growth. That’s why Magone & Company offers business advisory services that look ahead in real time rather than relying on typical rear-facing accounting services.

Reach out to see how we can help get your cash flow on track for the long term.

When Uncertainty’s the Norm, Plan for the What ifs

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Uncontrollable factors can have a profound effect on business operations. Circumstances can change overnight, directly impacting your employees, your customers and your business decisions. When unforeseeable events occur — COVID-19, anyone? — what can you do to keep your business afloat financially and practically?

Risk or uncertainty: What’s the difference?
Business risk is when the odds of future events can be measured and factored into your plans. When you don’t know the probability that something may happen, you’re dealing with business uncertainty.

Unlike calculated risk, business uncertainly cannot be controlled, making it even harder to prepare for. For example, if a competitor sets up shop a few blocks away, do you have a strategy in place to retain your sales? If there’s another mass shutdown, can your business model adapt and carry on?

An astounding three out of every 10 U.S. small businesses report they likely won’t survive 2021 without additional government assistance — that’s nine million small businesses at risk of closing for good as a result of the pandemic. The past year has demonstrated the need for a flexible business plan that confronts all the what ifs. Forward-thinking businesses have a greater chance of growing and thriving in even the most uncertain environments.

What causes uncertainty — and what can you do about it?
Business disruptions can arise from anywhere, but they’re commonly attributed to the following:

  • Whether it’s the stomach bug making its rounds around the office or a global pandemic shutting the entire office down, unexpected illness can shake up your workforce productivity, deadlines, inventory and more.
  • Economic conditions. Sudden shifts in economic activity (good or bad) can have a huge effect on your sales, inventory and cash flow.
  • Consumer behavior. Anything that changes a customer’s needs or how they go about filling those needs can alter the way you do business.
  • From taxes to minimum wage to employee rights, the government can play a key role in who you hire, who you fire and everything in between.

While you can’t plan for everything, you can take steps to safeguard your business:

  • Strategize for various possibilities. Acknowledge the unknowns and be flexible. Think about how your business model would adapt if XYZ were to happen.
  • Develop worst-case scenarios. Face your biggest fears. How would your business work through them to come out on the other side?
  • Educate yourself on the state of the economy. The more you know about how your business can be adversely affected, the better you can brainstorm the potential risks and solutions.
  • Reevaluate your resources. Are you confident in your team, vendors and suppliers? Can your cash reserves carry you through an emergency? Build a strong defense before you actually need one.
  • Remain guided by your vision. Remember why you went into business in the first place. Ensure that your whole team’s goals and efforts are aligned to bring your organization success.

Start planning for tomorrow, today
Uncertainty affects businesses of all types and sizes. That’s why you need solid contingency plans to adapt to the changing variables. NJ CPA firm Magone & Company’s advisory services can help position your business ahead of the challenges to come. Contact us today at (973) 301-2300 to learn more.

Self-employed? Showing Proof of Income is Easier Than You Think

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You’ve found the home of your dreams. Your credit is excellent, and you’ve saved enough for a generous down payment. But when the loan application asks for proof of income, you start to panic. Fortunately, qualifying for a mortgage doesn’t require a nine to five or a weekly paycheck.

For the 57 million freelance workers in the United States, proving an income can be challenging. But with some extra effort and preparation, you’ll be able to demonstrate a stable financial history — and get that mortgage, apartment lease or car loan approval even without a W-2 form or biweekly pay statements. These strategies can help:

  • Use an online payment service. To document income, an online payment service like com records and tracks who pays you, how much money is disbursed and where the money is coming from, so the information is easily accessible when you need it.
  • Ask your bank for an ACH report. An Automated Clearing House (ACH) report can serve the same purpose as a ledger from an online payment service. The ACH report will show when payments were made, along with the amount of each payment for easy tracking.
  • Hold on to your past tax returns. Once your taxes have been filed, keep copies of your returns for at least three years (preferably 7-10). This will help ensure that your income is reported accurately year in and year out.
  • Save your 1099 forms. You may have dozens of clients over the course of a year. To make your life easier, set up a filing system for all those 1099 forms. Take it a step further and scan each form as it’s received, keeping electronic versions on file as well.
  • Average your monthly income. It’s not uncommon for freelancers to have peaks and valleys in income. Over time, you may detect an earning pattern despite the variations. If you hope to qualify for a loan, track your monthly income carefully, averaging out the numbers to reflect your true annual earnings.

Freelance work offers a unique freedom and flexibility, while still affording you the opportunity to make a comfortable living. And if you check all the boxes of meeting a loan’s requirements, proving your self-employment income doesn’t have to be a daunting process. The expert CPAs at Magone & Company assist self-employed workers with our extensive tax and business knowledge. Contact us today (973) 301-2300 for more information.