Concierge CPA January 2019
January 2019
8221 Brecksville Rd, STE 205 Brecksville, OH 44141
Borbala@ConciergeCPAs.com
(440) 340-1030
ConciergeCPAs.com
First Things First W e all read it: Putting first things first is Habit No. 3 of Stephen Covey’s book“7 Habits of Highly Effective People.” But do we really put first things first? Do we do the most important things first in life? Are we clear about priorities, and do we act on them? And if we have a business, are we aware of our priorities in it? I recently talked to a business owner who was complaining about not knowing where all her money went every month. She expressed that, in spite of the rapid growth of her business to half a million dollars a year, she felt that her costs grew even faster, and she was afraid of finding out howmuch she’ll owe Uncle Sam this tax season. I asked if she has current financials that we can look at, and I almost fell offmy chair when she toldme that she has NO bookkeeping or financials AT ALL! Half a million dollars in sales and no books at all, not even half-baked ones. No QBO, no Excel, no paper records, not even some notes on a cocktail napkin! She admitted that last tax-time she sent a couple of figures to her tax preparer, and that was all. There is a saying in business that goes something like this:“Sales cover a lot of sins.”It means that if you are able to just keep selling your services or products to generate adequate cash flow, you can get away with flaws in your processes or customer service. And yes, I have to admit that for a while, you can even get away with having no books! You can get away with having no clue about your numbers, costs, your profitability, or the lack thereof. But make nomistake about it: NOBODY EVER BUILT A SUSTAINABLY PROFITABLE BUSINESSWITHOUT HAVINGGOOD BOOKS ANDKNOWINGTHEIR NUMBERS! Side note: Email me if you want my definition of“good books.”And no, it does not include going with the sample chart of accounts Intuit gave you five years ago or logging into your QBO once a quarter. The person I mentioned above expressed tome that she felt she couldn’t afford to hire a bookkeeper or to take a QBO bootcamp that we offer. When I suggested a tax-saving strategy that would If you knowme at all, you knowwhere this story is going, don’t you?
Do You Have an Expensive Hobby or a Business?
save her $11,250 a year —an amount that wouldmore than pay for a bookkeeper —she declined to listen, citing current cash flow deficiencies.
First things first: I always tell people that the best reason to have good books is not your fear of the IRS, but so you canmake better business decisions. You need to be able tomake course corrections today, not 18 months fromnow
when you finally get your tax returns back from your CPA.
Successful entrepreneurs would agree that a lot of light bulbs go onwhen your numbers are finally not only in your head, but on paper and in front of you, in black andwhite.
That’s when you finally realize that some of your products cost you more tomake than what you charge for them. That’s when you spot that a certain staffmember’sW-2 is higher than what they produce for the business. That’s when you finally understand where the leaks are and why in the world you can’t afford what you really want, despite spending 100 hours a week at work and agonizing about your business even in your sleep. I’mnot saying that having good books will solve all your problems and will make you profitable. But please believeme that, without them, you only have an expensive hobby, not a business.
The good news is that it does not have to be that way, and help is just a phone call away to put first things first.
Happy NewYear! Now let’s get to work.
P.S. Join our Facebook Lives onmost Thursdays at 4 p.m. EST, where we discuss finances, marketing, and business, and answer your questions. Search for us at @ConciergeCPAs.
–Borbala Banto, CPA
1 (440) 340-1030
NEW! Join our FACEBOOK LIVE on Thursdays @ 4 p.m. EST. Search for us at @ConciergeCPAs. BORBALA’S SCHEDULE Weekly Live Roundtable Calls Events we go to or host
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Jan. 10 Jan. 17
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Jan. 24 Jan. 31
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Feb. 7
Jan. 10: Entrepreneur Organization Accelerator Jan. 14: The Inspired Treehouse, Board meeting Jan. 25: Regional Income Tax Agency – half-day seminar
Client Advising and Coaching Days
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Jan. 2–3
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Jan. 16 Jan. 23
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Jan. 30
Jan. 9
To schedule a time, go to: Borbala.AcuityScheduling.com Prospective client inquiries: Borbala@ConciergeCPAs.com
Carrots Versus Sticks
Take a look at our Internal Revenue Code. No, really, take a good look. You can buy it on Amazon for just $161.89; two thick paperbacks totaling 4,968 pages. You even get free Prime shipping! At first glance, it’s all about the revenue. For FY 2019, federal income taxes should hit nearly $1.7 trillion. Payroll taxes will top $1.2 trillion. Corporate taxes will top $225 billion. Estate taxes will generate somewhere around $20 billion, depending on how many billionaires die. #DropInTheBucket But taxes aren’t just about the revenue. Washington loves to use taxes to accomplish goals they can’t legislate directly. This generally takes the form of “tax expenditures”— special deductions, credits, or other rules designed to benefit specific favored activities or taxpayers. The mortgage interest deduction may be the most famous of these carrots. For most people, homeownership is a cornerstone of the American dream. But Congress would be hard-pressed to pass legislation requiring or even directly rewarding it. So instead, they use taxes to subsidize it. For 2018, homeowners saved $68.1 billion by deducting mortgage interest on their taxes. But every so often, the government uses taxes as a stick ... or at least they try to. Last week, the Wall Street Journal published an editorial blowing the whistle on one such effort that may violate the First Amendment. Specifically, it accuses the IRS of punishing nonprofit organizations that advocate for legal marijuana: “The innocuously named Revenue Procedure 2018-5 contains a well-hidden provision enabling the Service to withhold tax-exempt status from organizations seeking to improve ‘business conditions ... relating to an activity involving controlled
substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by federal law.’ That means that to obtain tax-exempt status under any provision of the Internal Revenue Code’s Section 501—whether as a charity, social-welfare advocacy group or other type of nonprofit —an organization may not advocate for altering the legal regime applicable to any Schedule I or II substance.” Bottom line, according to the authors: “The IRS seeks to control independent policy advocacy. That’s something the federal government may not do.” If they can’t prohibit the speech directly, they can’t use the tax system to do it indirectly. Yes, the devil’s lettuce is still prohibited under federal law. But 33 states have passed laws legalizing it in some form or another. It says a lot that the buttoned-down stiffs at the Wall Street Journal could publish the same editorial as the stoners at High Times magazine. So why would the IRS choose to wield this particular stick? And is it really the IRS’s job to make those sorts of decisions anyway? Isn’t the IRS just supposed to be the government’s bill collector? As far as we’re concerned, we don’t care what motivates you more, carrots or sticks. We just want to make sure you get all the breaks the law allows.
But we can’t do it if you don’t ask us. So, pick up the phone and let’s see how we can put the rules to work for you in 2019!
–Liao Xiong Staff Accountant, Concierge CPAs, Inc
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CLIENT OF THE MONTH
Yuniku, Inc.
I have the privilege of introducing Josh Lloyd, one of the owners of Yuniku, Inc. They recently became clients when they were seeking to form a proactive tax advising relationship with a CPA firm. While the company is young, Josh and his partners are building a very impressive business that spans across North and South America. Q: What is Yuniku? A: Yuniku (pronounced: yoo-nee-koo) is a custom software development team that acts like a “chief technology officer” for its clients. We recognize that technology is not everybody’s thing, but it’s certainly ours. We – Laszlo Szilagyi, CPA
corporations. It might seem odd to play to the extremes like that, but both are spaces we know well and personally identify with. We particularly excel at developing new products and tools that bring our clients into the 21st century and enable leaps forward in efficiency. Q: How are you different than your competition? A: We take a very personal approach to understanding your actual needs. When we just started out, we built the wrong thing for our clients, because we thought they knew exactly what they needed. Turns out they were wrong and no one was happy in the end. This is also a very common problem our competitors have. So, we vowed to never do that again. Now, we
identify the right technologies to implement for our customers or build custom software to meet your specific needs. I’ve spent my career identifying new technologies and guiding teams to build innovative new software products. Our team was founded with myself and a group of three software developers who have built and managed web applications for billion-dollar, multinational companies. Q: Who is your typical client? A: We focus on providing web and mobile software solutions for small and start-up companies as well as large, multinational Chicken Chop Suey For many, American Chinese food and New Year’s go together like turkey and Thanksgiving. Chop suey was one of the original items served by Chinese immigrants to their new neighbors, making it an important part of America’s culinary history. It’s also easy to make and delicious to eat. Inspired by The New York Times
spend a significant amount of time upfront, sometimes in person, getting into our clients’ and their customers’mindsets to truly understand the problem our client needs to solve. That way, we can help them understand better what they actually need. It’s like having a mini team of entrepreneurs at your disposal. Q: What goals do you have for 2019 and beyond? A: We’d like to break the million-dollar revenue mark with more than 50 percent of that revenue coming from long-term clients, because we believe that long-term, functional relationships are the best marker of success.
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2 teaspoons sugar
INGREDIENTS •
2 tablespoons cornstarch, mixed with 4 tablespoons water 2 teaspoons toasted sesame oil Salt and pepper, to taste
2 large or 4 medium chicken thighs
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3 pounds bok choy, cut into 3–4-inch ribbons 4 tablespoons vegetable oil 3 tablespoons oyster sauce
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DIRECTIONS 1. In large pot, boil three cups of water. Add chicken and reduce to simmer, cooking for 30 minutes. Remove chicken and let cool. Once cooled, remove skin and bones, chop, and set aside. Reserve the cooking liquid. 2. In a large skillet over high heat, heat vegetable oil. Once shimmering, add bok choy and cook for 1 minute, stirring throughout. Add half of reserved cooking liquid, cover skillet, and cook for 2 minutes. Remove cover and cook for an additional 5 minutes. Transfer bok choy to a plate. 3. Add remaining cooking liquid and chicken to the pan, maintaining high heat. Heat chicken, then add oyster sauce, sugar, cornstarch-and-water mixture, sesame oil, and bok choy. Season to taste, toss together, and serve over rice.
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INSIDE
Carrots Versus Sticks Page 2 Client of the Month Page 3 Chicken Chop Suey Page 3
8221 Brecksville Rd, STE 205 Brecksville, OH 44141 (440) 340-1030 The Importance of Keeping Books Page 1 Borbala’s Schedule Page 2
ConciergeCPAs.com Borbala@ConciergeCPAs.com
‘The Score Takes Care of Itself’ Bill Walsh on What It Means to Be a Leader
T he term “game days that it no longer seems to hold enough weight to describe a legendary coach like Bill Walsh. But how do you describe someone who quite literally changed the way football is played on the highest level? It takes incredible willpower to defy conventional wisdom and turn a struggling team into a powerhouse. changer” gets tossed around so much these In Walsh’s memoir on leadership, “The Score Takes Care of Itself,” he explores the philosophy that guided him through his coaching career and led him to success. Working with award-winning author Steve Jamison, the two distill Walsh’s decades of experience into a comprehensive guide that can be used by coaches and CEOs alike.
whose pants may soon fall down.” For long-term success, you have to have a game plan. For Walsh, preparation for leadership begins by bracing yourself for the worst. A mantra repeated throughout the book is “expect defeat.” In business and in football, losses are just a fact of life; how you prepare for and respond to these crises will determine your team’s success. But the most valuable element of leadership in Walsh’s eyes is how you treat the members of your team. You need to have the courage to let them know you believe in them. Using simple but earnest positive reinforcement, this legendary coach turned the 49ers into an incredible team, and the benefits show. Segments of the book contain anecdotes and reflections from players such as Joe Montana and Randy Cross, whose deep admiration for their former leader speak volumes. “The Score Takes Care of Itself” was published posthumously. Walsh’s son, Craig, did much of the legwork to piece
this definitive portrait together. What we are left with is a truly insightful read from one of the most innovative, inspiring minds in sports history. It will be a long time before a book like this comes around again.
One theme throughout the book is the idea that sound fundamentals trump instincts. As Walsh aptly puts it, “Hearing someone described as being able to ‘fly by the seat of his pants’ always suggests to me a leader who hasn’t prepared properly and
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