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Monthly Archives: May 2015

Dale Hammernik’s Secret To True Value In A Business: Satisfied Customers

I hate that I have to do this sometimes, but I’ve come to realize that it’s part of the job.

I’ve written recently about the importance of “thinking big” and the value of your dreams, and how to break out of analysis paralysis.

The flip side of that coin is the clear light of harsh reality. And sometimes I have to shine that light — even in the midst of all that big thinking. (Which again, I love to see!)

So, as someone who helps clients evaluate businesses to purchase, and who (even more regularly) comes alongside existing businesses to assist them in valuation and/or in a simple analysis of their profits (or lack thereof), I’ve learned a thing or two about the true oxygen for a healthy small business.

Would you like to hear it?

[And I would be remiss if I didn’t also pause here to say, in light of the recent observance of Memorial Day: We are so very grateful for our servicemen and women who made the ultimate sacrifice. May all of us live our lives as a reflection of their honor, and the gifts we too-easily take for granted.]

Dale Hammernik’s Secret To True Value In A Business: Satisfied Customers
“The magic formula that successful businesses have discovered is to treat customers like guests and employees like people.” -Thomas J Peters

How do you set a value on your business?

Here’s how to think about this: Consider not only your immediate short-term needs, but also your long term hopes; and in that process (this is the clincher), very carefully consider the value of the customer or client.

Every business, every product line, every service organization, even if it is distanced from the ultimate consumer by a chain of distribution, is still dependent on an actual consumer for its lasting success.

The greatest asset a business can ever possess is a known list of loyal, satisfied customers.

Recently, I observed a local business that was for sale. My observations revealed that the store’s inventory mix was poorly selected for its primary clientele, which were business people and office workers. Considerable floor space in the store was being wasted and the store did have excellent traffic during the day.

The asking price for the store was a little high (as asking prices usually are), but it looked to me like the numbers could be made to work. But then I asked the problem question, “How many people with their home addresses are on your mailing list?” This store owner (after five years of operating the business) had never bothered to collect his customer’s names and addresses on a mailing list. He had no way to directly reach out to his past and present customers.

He mistakenly thought that the value of a business is its lease, its furniture and fixtures, its inventory, its financial statements.

He didn’t understand that none of those things are worth much without satisfied customers.

Now let’s take big business. When you buy a new car or a new stereo or a new appliance you are separated from that product’s manufacturer by a chain of distribution that includes manufacturer’s representatives, wholesalers, warehouse operators, and the store or the dealer.

Yet you probably filled out a warranty registration card and mailed it to the manufacturer. Why is that done? One reason is so that the manufacturer can find out who its customer is. Some manufacturers then use these lists to market. Others just accumulate the data unsure of what to do with it, but at least they *have* a customer list.

As you establish marketing objectives, strategies and the VALUE for your business I urge you to carefully consider the value of the customer FIRST.

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890

Hammernik & Associates

Dale Hammernik On How To Stop Analysis Paralysis and Start Dreaming Big

The last few weeks, I’ve been writing with my accountant’s “green shades” firmly in place. Which is fitting, because after all, this is what I do.

But here’s when what we are really about here at Team Hammernik might surprise you a little.

You see, running a business with success requires more than just protecting yourself against audits, needless taxes and profit-sucking overhead. It requires that you keep your heart focused and alive.

Truly, if you can take the time to walk in GRATITUDE for what you’ve been given as a business owner, it makes a big difference in your happiness … and your bottom line.

I’ve seen far too many business owners get trapped into the cycle of stress, fear and being “tight” — that it’s incumbent upon me to point out the very real psychological commonalities in business failure: fear and lack of gratitude.

So, while the last few weeks have been all about regulatory protection and tax-savings, I’ll invite you this week to dream a little bit for your business, and for your life. And, of course, with some simple strategy to make those dreams come true.

And once more, a gentle reminder: Do NOT let the spring pass without meeting with us. There are likely to be many “tweaks” which we can make together that would directly affect your bottom line, and your tax bill for 2015. Call us NOW to set up an appointment, as our calendar is rapidly filling up during this season of mid-year evaluations: (414) 545-1890

Dale Hammernik On How To Stop Analysis Paralysis andStart Dreaming Big
“The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.” – Henry Ford

Yes, we can help you with finances and books (it’s what we do best) … but I can’t “get in your head” and make decisions for you.

I can, however, speak some truth (hopefully, with affection and encouragement) … and prompt you to win big during the rest of 2015, and beyond.

And, it starts with breaking free of analysis paralysis.

You see, part of the reason analysis paralysis occurs, is because we become too hesitant to act upon our ideas or dreams. Once we look at the “realistic” side of things, our natural fears and hesitation take over. And, that’s a good thing! It’s stopped many of my clients from acting stupidly.

Unfortunately, it can also keep us from taking ANY risks. Pulitzer Prize-winning author Annie Dillard said, “If we listened to our intellect, we’d never have a love affair. We’d never have a friendship. We’d never go into business, because we’d be too cynical. Well, that’s nonsense. You’ve got to jump off cliffs all the time and build your wings on the way down.”

Most of the great achievements in life started out simply as a dream. When business owners are able to turn their dreams into goals, and their goals into actions, amazing things happen.

So maybe, even with your established business, it’s time to think bigger? Maybe it’s time to take the mid-year step to start something new that has been burning and building in your heart, but you didn’t have the heart for it?

These might seem like self-evident steps, but there really is power in stepping back and taking the time for them:

Write down the dream. (Then place it where you’ll see it often.)
Think of all the steps/people/objects needed to fulfill the dream.
Jot down short-term and long-term goals to achieve all those needs.
Take it a step at a time.
Keep believing, and keep acting with the knowledge you’ve gained from each step.

One of the most tragic things in life is to see an unrealized dream. As an entrepreneur, you already know that this doesn’t have to be your fate. Be willing to dream a little more, and see what you can do that may break you out of a monotonous cycle.

I hope this helps … these weekly posts are just ONE of the ways we like to serve our clients.

The primary method of assistance, of course — making sure your bottom line is as healthy as possible! All so you can keep your business, and your dreams, alive.

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890

Hammernik & Associates

Dale Hammernik Reveals Five Foundational Small Business Tax Strategies

So, last week I covered 11 basics for ensuring your business doesn’t get audited, and I’m glad to see the response I was hoping for: clients emailing me, thanking us and also a few who are battening down the hatches a little more tightly as a result.

That’s always a good thing.

Now then, I’d like to posit a few foundational tax strategies for my Waukesha County small business owner friends. Those who are already clients would have already had conversations with us around these topics at some point (although things can alwayschange, so if you’d like to take a look at these things, this might be the perfect time — so drop me an email [you can click the button at the top of this page] or a phone call: (414) 545-1890), but if you’d like to get a good foundational review of your business tax strategies, these are really the five places to start:

Dale Hammernik Reveals Five Foundational Small Business Tax Strategies
“Plan your work for today and every day, then work your plan.” – Norman Vincent Peale

After April 15th, we find ourselves in the perfect time to re-assess where your company’s tax strategies are taking you.

For many, these are “training wheels” suggestions (i.e., your issues are much more complex, and a deeper dive is necessary), but even for certain well-established businesses, it might make sense to take a look at …

1) Your expense-tracking system
If your business is somewhat small, and doesn’t create a significant trail of automatic third-party tax documentation, then you might find yourselves someday in the crosshairs of IRS scrutiny. But it’s not just for the sake of beating an audit — it’s always a good idea to have monthly clarity (at the minimum) for where your revenue is going.

Now’s the time to make sure you have a good expense tracking system, receipt documentation and other cash controls in place so that you can not only prove your numbers when called upon by Uncle Sam, but even more importantly, that you can keep a firm grasp on your profit.

2) Basic deduction-taking
A quick example that comes to mind — claiming your home office. Even in larger businesses, the rise of telecommuting means that there are often good deductions to be found in tracking and recording the work done from home. Yes, it can be an audit “red flag”, but that’s only if you don’t claim it properly. It’s just one of the many great tax breaks available in the code, that aren’t terribly complicated but that a good professional (ahem) can easily ensure is getting taken in the most effective and ethical way.

3) Inventory and asset management
These can have a significant impact on your company’s tax liability — for good, or ill. Many small and medium-sized businesses are still using outdated inventory management systems (or they aren’t using available software) and/or they aren’t thinking through depreciation strategies versus other kinds of asset models. Again, these are basic questions for a professional, and can save your company boatloads … but only if you have someone who knows what they’re up to running the point.

4) Entity structure
So, when your company was young, it very likely started out as a sole proprietorship and you filed Schedule C as part of your personal return. That’s perfectly great in many situations.

But have you grown out of it? Chances are good that the answer is a resounding YES. What’s really important here is that you have someone who can dig a little bit into your business model and structure and propose the most advantageous entity. Sometimes the information on the internet (or, ahem, LegalZoom) isn’t as appropriate as you might think. Don’t jump quickly to a new entity (or naively remain in a poor one) without getting some clear advice from someone who deals with these issues on a daily basis.

5) Retirement, schmetirement
I know, I know … we’re keeping our powder dry (i.e., our money) so that we can make sure we are able to meet payroll and keep the business running every month. But as soon as possible you should take a good look at establishing a SERP (Self-Employed Retirement Plan) or an equivalent. Not only will you want to have something squirreled away for when you’re done conquering the world, but the immediate tax deductions can be very nice.

So, let’s make sure that you are clear with a strategy on EACH one of these topics.

Then, of course, we can get really ninja.

But this is where it starts, and the best first step is a phone call: (414) 545-1890

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890

Hammernik & Associates

Hammernik’s 11 Expert Tips To Audit-Proof Your Business

How can I make sure I don’t get audited?

What are my chances of getting an audit?

If I take that deduction, will it raise a red flag?

These are just a few of the questions we receive, probably about every week from our Waukesha County business clients (there’s more, but I don’t want to scare you — or give you any ideas).

And look — I’m not exasperated by the questions. But receiving these questions enough, as I do, means that I should probably write about it.

So, I’ve put together a primer for my business-owner clients and friends on avoiding audits, completely.

Here it is — and don’t make the mistake in thinking that just because the IRS budgets have decreased recently for this stuff, that nobody ever gets audited. Believe me, that’s not the case…

Hammernik’s 11 Expert Tips To Audit-Proof Your Business
“Some people come into your life as blessings, others come into your life as lessons.” – Mother Teresa

I’ve seen a fair share of audits, my friend. And, of course, nobody likes dealing with them.

That said, there are some pretty basic steps which YOU, as a business owner, can take to ensure this doesn’t happen to you. Some of these apply to those of my clients and friends who filed an extension (as they deal with your actual return), while others are year-round necessities.

But I will say right up front: If this is overwhelming to you, there’s a simple solution — have us handle all of it for you. But if you want to tackle it all yourself, here’s what you should be doing…

1. Make sure that any third-party income and reports agree with your records.

2. Make sure you have selected the correct forms and schedules to fill out.Ask yourself: Do the forms apply? Am I stretching the situation? Are there credits that I am entitled to whose forms I haven’t included, but need to?

3. Keep track of bank deposits so that all items will be easy to trace. Write the source of the check directly on the deposit slip, especially transfers between accounts, so that these are not inadvertently counted as income.

The first thing tax auditors request are your checking, savings, and investment accounts. They then proceed to do a total cash receipts analysis, comparing the total to the gross income shown on your tax return. By marking every deposit slip, you know where to look for further documentation to support your notation, and the auditor will have the trail in front of him or her, for the source of the unusual nontaxable receipts such as insurance recoveries, loans, gifts, and inheritances. Surprisingly, it’s not that much work, and is worth the effort.

4. Always keep your checking and savings accounts free of irregularities. Be sure you can explain large bank deposits and increases (especially sudden ones) in your net worth. WARNING: If you have unreported income of more than 25% of your adjusted gross income, the auditor may turn your case over to the CID. If you suspect this may occur, do not provide any leads to the auditor regarding the sources of the unexplained deposits. The burden of proof is on the IRS. You do not have to provide leads that make their job easier.

5. Keep your business and personal accounts separate.

6. If you know you are going to take a business deduction, pay for it by check.

7. Know the proper time to file. IRS computers are not programmed to review only those returns received before April 15th. So who is to say that late returns, those filed after April 15th, won’t be audited, or will be audited less than returns mailed earlier?

8. Be thorough. Don’t leave out any information. Sign where you are supposed to.

9. Be neat.

10. Check your mathematics.

11. Balance your total deductions with your income. Extensive deductions that add up to a substantial portion of your total income are audit flags.

Good tax preparers will make you “audit proof” while being extremely aggressive with your business deductions. A good tax preparer will also save you thousands of dollars a year and give you the security of knowing that all your deductions are legally defensible. We know that’s why you’ve chosen to rely on us … and we’re glad you rely on us to help you be Audit-Proof.

But, let’s posit that for some strange reason you (or a friend) did NOT choose us to file your taxes this year … well, then there’s this:

+++++++++++++++++
“No Charge” Return Review
Special Offer
As a complimentary service this year, we will provide a Return Review To Any Non-Client. We will also review prior year returns from clients who did NOT have us handle their taxes during the year under question. No charge will be made, unless we have to file an amended return. Email our office (using the email button at the top of this page) or call (414) 545-1890 to set up this complimentary service!
Deadline May 8th
+++++++++++++++++

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890

Hammernik & Associates