Personal/Business Planning and Success:
A successful person knows where they are, where they are going, and what the plan is to get there. My mother had a friend in high school that planned to go into the grocery business. He showed her his plans. He knew how much the store and the land would cost and his plan to get his start up money. He knew all about the profit margins and turnover and how many trucks he would need. He knew exactly where he was and where he wanted to go and how to get there. No doubt things changed along the way but he could plan a new strategy to account for those changes. Planning was a big part of who he was and why he was successful.
Now, where are you? Where are you going? How are you going to get there? We are now half way through 2011 and it is time to make sure you know the answers to all three of those questions. First, where you are typically involves how much have you made so far this year and what type of income it is and what are the tax implications. It could also involve other projects and measuring your progress against your expectations at the start of the year. It could also be what completed in the first half of the year and what is left that you wanted to do. Perhaps you still have not filed your 2010 tax returns. These are important things to consider because procrastinating can cause you undue anxiety and adversely affect your ability to perform whatever you need or want to accomplish.
(Sidenote: Of course if you ask me where I am I will tell you on earth. But that is just the way I am. I actually stole that from a Seinfeld episode but I use it as often as I can.)
Where you are going involves your plans for the rest of the year and on into the future. A key to success is to begin with the end in mind so your actions have a purpose and direction. See my previous post “Begin With The End in Mind.” How you are going to get there is your plan. In the world we live in today you need to be ready to constantly adjust or change your plans as conditions change.
Profiting From Your Relationship With Your CPA:
Measuring where you are and estimating where you will be by year end is an area where your CPA can help you. He can help you anticipate your tax situation and take advantage of opportunities available to you. While many wait until the end of the year, often better decisions are made as you analyze your situation at various time during the year. In addition your CPA, because of his exposure to many other clients, should have some ideas for you that you have not thought of. He is especially useful as you plan to make changes. Often I have seen clients save large sums of money and time by consulting with me prior to executing a plan especially a business plan. Unfortunately I have also seen clients surprised because there was no prior consultation and they were not aware of a tax consequence when they made a decision. I like happy clients so I like to talk to my clients during the year about what is going on and especially before they make big decisions. The end of a quarter is a good time to chat to see what is happening. As I mentioned in a previous post you stand to profit from regular conversations with your CPA.
Especially if you are looking to start a new business should you talk to your CPA to make sure you structure the business and get the financing in a manner that provides you the best tax situation. See my previous post about forming a new business.
Tax planning is a means for estimating what your tax consequences will be at year end and making sure you meet IRS’ requirements and pay the least amount possible within their regulations. We will take a look at how much you have made so far this and what type of income it is. Do you have income from a job, a business or from investments or the sale of assets? Then we need to look at what you expect to make the remainder of the year. What we are looking for is the unexpected. Are you making more than you expected? If so what do you need to do? You may need to pay more to the IRS or you may want to take advantage of deductions in the last half of the year to reduce your income for the year. In addition you will want to start considering retirement savings contributions. If you are making less than expected you may be able to reduce what you are paying the IRS to help you with your cash flow situation.
This is also a good time to review your retirement accounts with your financial planner after you receive your June statements. He can help you with your distribution of investment classes and also participate in long term tax planning. What are you going to do when you retire? Where will your income come from to support the life style you desire? How much of that income will be taxable and how much will be yours to spend? Just as you should regularly review your business and your taxes, you should also regularly review your investments and retirement accounts with your goals in mind.
It is always exciting to look at new opportunities. Every day, month, quarter and year presents new opportunities. Call me today to talk about where you are, where you are going, and how to get there.
Jeff Haywood, CPA
I prepare the following types of tax returns:
Federal and State Returns
I especially enjoy discussions about you, your business, your dreams and goals.
For recent US income tax content see the following links:
Tax Tips – Tip Income
Are You Ready to Purchase a Home? Factors to Consider.
Foreign Earned Income Exclusion
A Most Valuable Resource for Entrepreneurs
How to Profit From Your CPA
Begin With The End In Mind
If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return
For a full list of prior posts see the CPA Tax Blog.
As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.
If you have a comment to share about this post or for me, please email me at email@example.com.
This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.