Moving Up to Your Company’s C-suite? Here Are Some Tips for Success

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C-suite positions usually come with big paychecks and plenty of perks, but these benefits are frequently accompanied by huge accountability, mammoth stress and seemingly impossible time constraints.

To quote the Harvard Business Review: “…the skills that help you climb to the top won’t suffice once you get there.”

How can you prepare to manage your new position successfully? In this series of three posts, we’ll explore what you need to succeed at the top:

  • Essential skills of a successful chief executive
  • Importance of communication and collaboration
  • Significance of a global mindset

 Advanced C-suite skills by title
Executives find they must rely more on the understanding of business fundamentals than they did prior to occupying the C-suite. Top execs also find themselves in the position of providing input on key decisions.

According to the Harvard Business Review report mentioned above, C-suite occupants should strive to achieve the following:

  • Chief Financial Officer — Understand the meaning of risk and how to balance it with performance. A global rather than regional approach to finance is necessary, as is a firm grasp of the role of technology.
  • Chief Information Officer — Possess a universal understanding of the business. He or she must be comfortable with organizational design, be able to process information analytics and know how to use ROI to plan future departmental expenses.
  • Chief Marketing Officer — Know how to use new marketing channels as they emerge. He or she must be prepared to be the CEO’s contact point for marketing, sales and e-commerce.
  • General Counsel — More important today because of intensified attention to risk management. The GC should have the ability to negotiate with regulatory agencies and industry watchdogs and should have knowledge of environmental regulations.
  • Chief Human Resource Officer — Has evolved way beyond administrative functions. The CHRO must understand cultural differences and shifting demographics, excel in change management and take the lead in attracting and developing top talent.

Important skills for all C-suite occupants
If you’ve risen to the C-suite, chances are you’ve already mastered some of the essential executive skills. Now you have to adapt these skills to meet the more rigorous demands of a senior leader.  For example:

  • The ability to prioritize is one of the most important abilities a C-level executive must possess, especially in the face of colossal time demands. Only by prioritizing will you be able to focus and devote time to your most important tasks.
  • All C-suite executives must be able to lead transversally, or across the entire organization. This enables executives to accomplish company objectives in partnership with other teams.
  • C-suite leaders must be able and willing to adapt quickly to changing economic and customer environments.

Personal qualities for chief officers
In addition to the business skills needed to navigate the C-suite successfully, Forbes identifies the personal qualities essential to executive leadership roles:

  • Displaying genuine empathy decreases stress and increases morale
  • Listening in a way that invites others to share
  • Being motivated by what is right rather than what the market demands

In addition, communication skills are critical in the C-suite. According to the Wharton School of Business, “Persuasion and influence are powerful skills for any executives and should be reflected in all aspects of communication.”

That includes asking for help when you need it. Whether it’s coaching to improve your presentation skills, a crash course in the industry if you’re new to it or objective third-party advice on operational matters, remember: You’re expected to be smart, not superhuman.

Editor’s note: We discuss the importance of effective communication in more depth in Part 2 of this C-suite series.

Family Businesses: What it Takes to Keep Them Strong and Sustainable

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Like their public counterparts, nearly all family business leaders are concerned about short-term revenue loss and cash flow these days. However, recent research shows they’re feeling confident about weathering the storm in the long term.

Family businesses, by definition, are survivors, according to Professor José Liberti of Northwestern University’s Kellogg School of Management. “If you start thinking about families that are four generations, three generations, they have learned through experience and faced hardships through time,” he says in an article on the university’s website.

It’s widely acknowledged that family businesses that have endured the hardships of multiple generations share the same traits that will sustain them through the current crisis and beyond. According to a joint study by The Harvard Business Review and the Family Business Network International, some of these traits include:

A shared value system
The joint HBR and FBNI report concludes that shared values not only provide a moral center for family businesses to withstand challenges; they also provide a means for the business to differentiate itself in the marketplace.

A shared vision for the future
With a common vision, the family business is better able to set goals and determine priorities. Shared visions support the family’s commitment because they are meaningful (which supports agreement on difficult decisions), engaging (which encourages talent development) and future-focused (which supports long-term planning).

Clarity about everyone’s role
Successful family businesses are ones in which everyone has clearly defined roles and responsibilities. These definitions are essential for avoiding conflict that often occurs within families. Clearly defined roles avert overlapping responsibilities and expectations.

Cohesion, interaction & communication
The joint HBR/ FBNI report defines this as “mutual understanding, respect and support, and a healthy exchange of ideas and discussion of key and delicate issues.” The study concludes that these behaviors determine the family’s resiliency and ability to respond to change.

Succession planning
An effective succession plan details the succession process and the standards used to determine when the successor is prepared to lead. Again, roles must be clearly defined for family members who will remain in the business. The plan must firmly establish that managerial aptitude is more critical than birthright, even if it means hiring a non-family member to lead the organization.

The good news and the bad news
The bad news is that FBNI’s study found that 40% of family businesses underperform in at least three of the areas noted above. The good news is that definitive action can help family businesses stay strong and sustainable.

Not sure what actions to take? An objective advisor can help take the emotion out of the discussion and get everyone on the same page. At Magone & Company, we know family businesses because we are one. Let us know how we can help keep yours strong for generations to come.

Self-Employed? Here’s What You Need to Know About Taxes

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The gig economy is booming. The COVID-19 pandemic has created a demand and an opportunity for workers to profit off their skillsets outside from traditional employment. In fact, country music star Dolly Parton even updated her classic hit “9 to 5” to speak to the growing number of entrepreneurs who are getting their side hustle on after clocking out of their day job. Now more than ever, people are working “5 to 9” and building a business from their own know-how.

Anyone who earns income directly from clients — as a contractor, freelancer or small business owner — and doesn’t have an employer that withholds money from their pay for tax purposes, is generally classified as a self-employed worker by the IRS. If you’re self-employed, it’s important to understand how taxes work, so you can avoid owing more than your fair share to the government. Being in business for yourself can lead to higher taxes and more complex tax returns than you bargained for.

The self-employed and tax withholdings
Self-employed workers are responsible for paying taxes through estimated tax payments. These estimated payments must be sent directly to the IRS on a quarterly basis — by April 15, June 15, September 15 and January 15 — if you expect to owe at least $1,000 in income tax at the end of the year. Failure to plan properly and pay enough estimated taxes during the year can result in a tax penalty and a large surprise tax bill. By paying at least 90% of the tax you owe or 100% of the total tax owed from the previous year, the IRS will typically not assess a penalty.

If your hustle isn’t very lucrative (yet), a net income of $400 or more from self-employment means you can expect to pay up on those earnings — even if you’re already paying taxes through your traditional job. For example, if you work as an employee year-round, but you take on small contract jobs on the side to make extra cash, that revenue must be reported as self-employment income when you file your tax return.

Traditional W-2 employees split the cost of paying into Social Security and Medicare with their employers, but self-employed workers must pay the full amount themselves. As a self-employed worker, you’re on the hook to pay the self-employment tax, which goes toward Social Security and Medicare, in addition to normal income tax. 

There’s no avoiding Uncle Sam
Preparing your annual return and calculating quarterly taxes as a self-employed worker can be tricky. That’s why the experienced CPAs at NJ accounting firm Magone & Company can help you navigate tax laws and ensure tax compliance. We’ll also help you maximize your return, saving on any tax write-offs you may be entitled to as an independent worker. Send us a message or call 973-301-2300.

Paying Off Student Loan Debt: What They Didn’t Teach You in College

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Once college ends, graduates prepare for life in the real world. Their focus shifts from writing papers and studying for exams to finding a place to live and beginning a new career. But just like the memories of college and the many lessons learned, there’s one more thing that will stay with them for years to come: student debt.

If you’re feeling the stress of student loan debt, here are some tips to help you deal with this often overwhelming financial obligation:

  • Make additional payments. Sure, it might not be an easy thing to pull off, especially when you’re just starting out in the job world. But if you can swing it, extra payments here and there can have a huge impact on the time it takes to settle your debt, as well as the money you’ll save in the long term. Make sure your lender applies the additional amount to the principal balance to reduce the amount of interest you’re paying.
  • Set up automatic payments. Many lenders will offer discounted interest rates for using autopay. It may not make a substantial difference — perhaps a few hundred dollars — but it’s something.
  • Start a dedicated account for student loan payments. Creating a fund reserved for paying off student debt ties into another tip: budgeting. When you get paid, have a portion automatically deposited into this account, and don’t touch it. If you keep this account as a “walled garden”, you’re more likely to resist the temptation to use it for other interests. Shop around for high-interest savings accounts to give your money a boost.
  • Seek out companies or careers that offer student loan forgiveness incentives. Some government and nonprofit agencies, for example, may offer student loan forgiveness programs for employees. And after working for a certain amount of time, you may qualify to have your student loan balance canceled.
  • Refinance — with care. Refinancing your debt can be a good option if your loan carries a high interest rate, or if you have multiple loans that you want to consolidate. Bear in mind, if you refinance a federal student loan, you give up eligibility for government student loan forgiveness or other potential money-saving options.

When it comes to student loans, pitfalls can arise when you don’t know all the rules for managing long-term debt. Advice from a knowledgeable financial resource can save you headaches, complications and most importantly, money as you begin your post-college journey.

 

Amending a Prior Tax Return is Easier Than You Think

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Tax returns can often be filed with incomplete or incorrect information, leading to more tax trouble than you bargained for. If you filed early in years past, you might’ve overlooked income from a temporary job or a side gig. Or you may eventually realize that you’re entitled to an extra deduction or exemption. Lucky for you, the IRS routinely processes a significant number of amended returns each year.

For errors beyond simple math
If you need to change your filing status, income, allowable deductions or credits, amending your return is essential. An increase in reported income, for example, is likely to result in more tax due, while an additional deduction or allowable tax credit could get you a larger refund. And who wants to miss out on money owed?

An amended return adds the corrections to the original return. Individual income tax returns filed with the IRS can be amended up to three years after the due date of the original return by filing IRS Form 1040X. A separate Form 1040X is necessary for each year being amended and must be mailed in its own envelope to the address provided in the instructions. A copy of the original return itself isn’t required, but any added IRS forms must be included, as well as any other supporting documents that can help substantiate the amendment.

It can take several weeks for the IRS to process an amended return. An amendment to a federal return might also require a change to your state return, especially if an increase in income is reported.

Ensure that a tax expert has your back
If your amended return results in asking for a large sum of money back or owed, it may be in your best interest to consult with a tax expert. At Magone & Company, our NJ CPAs specialize in tax resolution and can help navigate the tax amendment process. Give us a call today at (973) 846-8265  to schedule a no-obligation consultation.

6 Millennial Money Mistakes That May be Hurting Your Wallet

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By 2025, Millennials will make up 75% of the workforce. This generation — composed mostly of twenty- and thirty-something children of Baby Boomers — is unique in that it faces the most uncertain economic future of any generation since the Great Depression.

But thanks to factors like massive student debt and a fondness for immediate gratification over long-term savings, Millennials also have a reputation of succumbing to some avoidable mistakes when it comes to finances.

Whether you’re a Millennial or not, be aware of the following six behaviors before they get in the way of your financial goals:

  1. Assuming too much credit card debt on too many cards. Building a credit history is an important step to obtaining a mortgage, car loan or apartment. But letting it get out of control can be risky. Stick to a couple of major cards with reasonable terms.
  2. Not maintaining a rainy-day or emergency fund. A rainy-day fund saves you when there’s an unexpected car repair or plumbing backup — a short-term blip. An emergency fund, however, will get you through a job loss, an injury or a pandemic. Most experts recommend stashing away three to six months of living expenses to create adequate emergency savings.
  3. Making big splurges without considering the consequences. It can be tempting to treat yourself to the best of the best while you have the cash. But buying too much too soon can set you up for future regret. Strike a balance between what you can live with now and your goals for the future.
  4. Failing to put away money for retirement. Yes, it may seem far away, and you’d rather use the money to pay for things in the present. But a retirement plan offered by your employer is free money your future self will be grateful for.
  5. Thinking you can save later. Saving is a habit that’s harder to start as you get older and life gets more expensive. By starting early and living beneath your means, you’ll have more time to build a larger nest egg.
  6. Not making — and sticking to — a budget. There are three main categories: needs, wants and nice-to-haves. You need to pay your rent or mortgage, but a luxury car would be just that — a luxury. Knowing what you should and shouldn’t be spending your money on is key to a financially secure future.

The road to financial security can be a long one for any generation. But it’s not impossible when you’re committed to making smart money decisions. With smart strategies for tax planning, the knowledgeable CPAs at Magone & Company can help keep you focused on financial success. To learn more, give us a call today: (973) 301-2300.