Love Law Firm's online newsletter for December 2017
BUILD. NOT BILLED.
TM
DEC 2017
BUI LDING BLOCKS 2 INCREDIBLE YEARS Ending 2017 on a High Note
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It’s been an amazing 2017! I have to say, I’m in awe of just how far we’ve come since the day we opened the firm. I opened the doors to Love Law Firm on Jan. 1, 2016. The following day, I met with
what they need from me. They may come to me for a specific service, and during our working relationship, I may learn that they need something more. As I learn about my clients, I can bring more to the table, whether it’s a skill, a program, or a fee arrangement. Ultimately, my clients are my best teachers when it comes to learning about what is best for them. It’s hard to believe I didn’t know a soul in the Long Island business community when I set up shop. Two years later and I know more people than I could have imagined. You helped me realize my dream to establish this law firm, and in turn, I am able to help so many others achieve their own dreams. It’s been quite the journey. I’m looking forward to 2018 and everything that’s in store. Of course, between now and then, we do have the holidays. It’s a time to spend with family and friends, and we get to really focus on what is important in life. I can’t wait until Christmas Eve, when my family opens up our special coordinated pajamas and we gather around the Christmas tree to read our favorite story and set out treats for Santa and his reindeer. As parents with a 5-year-old and a 2-year-old, we are grateful they believe in the magic of the season. We love watching their eyes light up when we hop into the car to tour Christmas lights while listening to festive music. And the look on their faces when they wake up on Christmas morning to discover presents under the tree is priceless.
my first client. Since then, I’ve met so many wonderful people. Before that, I was devoting my time and energy to a career on Wall Street. I was working with big firms, and there was a sort of “facelessness” to it. I wanted to work with real people who
were dealing with real challenges.
Making the shift from Wall Street to “Main Street” turned out to be one of the best decisions I’ve ever made. I couldn’t be happier with my quality of life, both personally and professionally. Every day, I get to live my dream and work with people who are out there making real accomplishments. There are physical therapists helping children to overcome the odds, real estate developers putting roofs over people’s heads, and financial experts helping retirees to achieve their goals. I get to do something that impacts real people, from the business owners themselves to their clients whom they serve. I get to help business owners and entrepreneurs make sure their businesses are protected, sustainable, and that success is part of their future. I love and appreciate that so many of my clients continue to reach out to me for guidance and support. It’s professionally rewarding when people want to work with you and grow alongside you. And that growth is a two- way street.
As you celebrate with your own traditions, I hope you and your family have a wonderful holiday season and a happy New Year!
See you in 2018!
For me, much of that growth is attributed to continual learning. Over the past two years, I have learned a lot from my clients, and I’ve learned
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YEAR-END TAX PLANNING IN UNCERTAIN TIMES
Article Subtitle Will Go Here
Perry A. Shulman, CPA Elizabeth Forspan, Esq.
There is always a certain degree of guesswork that goes into year-end tax planning. This year, with the uncertainty surrounding what the tax code will actually look like after Washington completes the overhaul of our tax system, the guesswork is — to borrow a word from our president — HUGE. The income tax rates for many individuals and businesses may decrease. However, the definition of income subject to tax may change considerably, as well. Many itemized deductions that we have become so used to, such as the deduction for qualified medical expenses, state and local income taxes, real estate taxes, and miscellaneous itemized deductions, may be eliminated. However, if the resulting new rules resemble the proposals put forth by the president, there will be a doubling of the standard deduction and the possible elimination of the controversial alternative minimum tax. Below are some tax-planning suggestions, which consider both the typical year-end planning techniques as well as planning for a potential overhaul: • Consider deferring the recognition of income from a higher tax rate year to a lower tax rate year. • Business expenditures and equipment purchases made in a higher tax rate year may result in greater tax savings than if made in a lower tax rate year. • Maximize the 2017 funding of an IRA, SEP IRA, 401(k) plan, profit-sharing plan, or defined benefit plan contribution if your 2017 tax rate will be higher than your 2018 rate before the maximum contribution amounts may be reduced. A “qualified plan” (profit-sharing plans, 401(k) plans, and defined benefit plans) established by an employer to provide retirement benefits for its employees and their beneficiaries must be established by Dec. 31 or the end of the business’ fiscal year, of the year in which the contributions are to be deducted. SEP IRAs must be established by the employer’s tax filing deadline, including extensions. • Consider prepaying state and local income tax liabilities for 2017 before year-end so long as you are not subject to the alternative minimum tax, as this deduction may be eliminated for payments made in 2018. This prepayment may be accomplished through employer payroll, retirement plan distribution withholding, or through estimated income tax payments. • Consider prepaying real estate tax liabilities before year-end so long as you are not subject to the alternative minimum tax, as this deduction may be eliminated for payments made in 2018. Many real estate tax bills for the first half of 2018 have already been distributed. • Consider paying current itemized deductions and other expenses with a credit card prior to Dec. 31. The expense may be deductible on your 2017 return while you may delay making the payment to the card issuer until 2018. • The current proposals will not allow for itemized deductions in 2018 of unreimbursed medical expenses in excess of the 10 percent of adjusted gross income (AGI) limitation. Taxpayers should consider scheduling elective medical, vision, dental, and acupuncture procedures in 2017, enroll in stop smoking programs, purchase prescription glasses, and pay for these items prior to year-end. Once the 10-percent limitation is met,
health care bills may be deductible. The aforementioned credit card payment rule applies here, as well. • Survivors of Hurricanes Harvey, Irma, or Maria may be entitled to special tax relief including less restrictive casualty loss rules and access to retirement funds. In addition, taxpayers may also want to settle insurance or damage claims this year in order to maximize the 2017 casualty loss deduction. This type of itemized deduction may be unavailable in future years. • IRA owners over the age of 70 ½ can explore making their charitable contributions directly from their IRA accounts to designated charities. Subject to limitations, the distribution will qualify toward the taxpayer’s annual required minimum distribution, but it is not included in their adjusted gross income. The advantage of using this method is that a lower AGI will result in lower AGI-related computations. • The reduction of “net investment income” (unearned income) through deferral from 2017 to 2018 may result in the decrease of the 2017 net investment income tax (potential savings of an additional 3.8 percent on certain income). • Contributing appreciated securities held for more than one year directly to a charity is more efficient than selling the security and contributing the proceeds. The advantage of using this method is that a lower AGI (that does not include recognition of the gain on the sale) will result in lower AGI-related computations. Taxpayers get to deduct the fair market value of the security when contributed, subject to annual AGI limitations. Contributions made in excess of the limitations may be carried forward to subsequent years. • Gifts made to individuals before year-end that are sheltered by the annual exclusion (currently $14,000 per donee) are not subject to gift taxes and will reduce the value of an estate. Gifts can be given to an unlimited number of individuals, which can significantly help reduce the size of your taxable estate for both state and federal estate taxes. The annual exemption amount for 2018 will be increased to $15,000 per individual. Perry A. Shulman, CPA, is the managing partner of his highly respected East Rockaway Long Island-based tax consulting practice. He advises high net worth individuals, business owners, and entrepreneurs in various areas, including income and estate and trust planning and administration. Perry addresses professional organizations and has been quoted in various national news and professional publications. Perry may be contacted at 516-593-8080 or at p.shulman@pascpa.com . Elizabeth Forspan, Esq. is the managing attorney of Ronald Fatoullah & Associates, a law firm that focuses on estate planning; elder care; and Medicaid planning, guardianships, probate, estate litigation, and taxation. Elizabeth is a frequent contributor to professional publications and is a speaker at numerous professional and community conferences. Elizabeth can be contacted at 1-877-ESTATES or eforspan@fatoullahlaw.com .
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Experience: Do you want people to talk about you? It’s no longer enough just to be good at what you do to get a referral. You have to give people a reason to talk and even a reward for doing so. This can come in the form of gifts and contests, or by creating an experience for them to share on Facebook, like inviting them out and asking them to bring some friends. Investment: All relationships need investment. Almost no small business has a budget to invest in people who are already customers. Once they have your cash, it is almost like businesses forget you exist, because they are so busy trying to find the next new customer. This is insanity. Growth only happens when you have new customers plus retention. No business can survive on new customers alone. Not every new customer who walks in the door becomes a loyal customer. Many of them come in, use you once, and never come back again. The first answer is ease. They have one-click ordering. They offer free shipping on most items with a minimum order or free shipping on nearly everything with a Prime account. It’s so easy to hear about a book at a seminar or on a podcast, and with a few clicks, it is at your home or office, sometimes within hours. The second answer is their customer service. Returns are easy and typically free. They don’t hassle you on most things and always put the customer first. During any of his meetings, Jeff Bezos, Amazon’s So, other than price, what makes Amazon different?
chief executive officer, insists a chair at the table be left empty. That chair represents the customer and his needs. Do you care about your customers as much as Amazon does? Are you willing to invest in them, or are you simply invested in your bottom line? Another area of difference is value. Amazon is always trying to add value to their products and customer experience. Look at the Amazon Prime membership. It costs $99 per year and gives unlimited, free two-day shipping. They lose about $300 million per year on Prime membership shipping alone. That loss doesn’t include all the extra features that you get with Prime, like videos on demand. Do they really need to offer free movies and TV shows to get you to buy Prime? Even without the extra features, the value is amazing. What are you doing to add value to your user experience? Are you building a relationship with your customers to keep them locked in and focused on you, or are you resting your quality of service on a hope and a prayer? There is so much to do as a business owner. It’s hard. But with complexity comes opportunity and the advantage that most people won’t make an effort to do hard things or figure out complex things. Most people don’t really care about their customers. They care about themselves. Are you part of the majority? Actions always speak louder than words, so if you’re not part of the majority, what are you going to do to show it?
AROUND THE FIRM
• December 5 Networking luncheon: Havana Central, Noon- 2 p.m. Register at http://www.516ads.com
• December 22 - January 1 Offices Closed. Best Wishes!
“I hope you will have a wonderful year, that you’ll dream dangerously and outrageously, that you’ll make something that didn’t exist before you made it, that you will be loved and that you will be liked, and that you will have people to love and to like in return. And, most importantly, that you will, when you need to be, be wise, and that you will always be kind.” ~ Neil Gaiman
ATTORNEY ADVERTISING. The purpose of this newsletter is to provide information about Love Law Firm, PLLC’s qualifications and experience. The information provided in this newsletter does not, and is not intended to, constitute legal advice. Any prior results described in this newsletter do not guarantee a similar outcome. Love Law Firm, PLLC’s distribution of this newsletter is not intended to create, and will not create, an attorney-client relationship with you.
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What I’m Thankful For INSIDE THIS ISSUE 1 2 3 4 Year-End Tax Planning in Uncertain Times Around the Firm What You Can Learn from Amazon’s Business Tactics
to Gain an Advantage in Your Marketplace
HOW YOU CAN USE AMAZON’S TACTICS
If you’re in retail, you’re likely aware of the Amazon effect, an ongoing disruption of the retail market. It affects prices
volume of sales. How do you compete with businesses like this? How do you overcome the Amazon effect?
The good news is the answer is simple. The bad news is, like everything else, it takes a lot of effort. But that’s also good news, because anything that takes a lot of work is unlikely to be quickly or easily copied. You need to remember one simple formula: R + E + E + I = Profit. Let’s break each section down. Relationship: If you want to stand out among your competitors, it starts by building a relationship to make the customer immune to offers from others. You don’t want customers to shop around. Some people will argue that they can keep a customer from shopping simply by being the low-price leader. That’s not the case, though, because the low-price leader position isn’t defendable. Another business could undercut your prices right now, if they wanted. Entertainment: To get people to consume your message, you need to be entertaining. We live in a world where the next exciting and interesting thing is only a click away. Entertaining people so they want to consume your content is an important step to building a relationship, which will get you maximum profit.
and sales, and it’s devalued and bankrupted what were
some of the most successful and well-known retailers in the world. One reason Amazon has been successful is their price strategy: They are willing to lose money on a customer for up to five years.
But how does the Amazon effect hurt or help your business?
Amazon may not break into your niche anytime soon, but that doesn’t mean one of your competitors won’t copy their model and bring it to your market. Amazon offers one-stop shopping, low prices, free shipping, and they strive to provide as much value as possible. It’s literally a bad financial decision not to do business with Amazon.
There’s always someone willing to be the low-price leader. There is always someone willing to work for less than you, hoping to make up the profit in
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