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Preface: “People rarely succeed unless they have fun in what they are doing.” —Dale Carnegie

How to Address Burnout

In many respects, burnout is just a new term for mid-life crisis. But in some ways, it’s on a much bigger scale. Whereas you might buy a Corvette to quench a mid-life crisis, burnout can sap your energy to the point where nothing can motivate you. This, in turn, can have negative effects on business performance.

When you grow a successful business, you may feel the effects of burnout. Even worse, you may feel them before you’re in a position to retire on your terms. Worse still, by the time you’re in the throes of burnout, you may not have the energy to address it!

Today, we’ll present a process for addressing burnout within the context of planning for a successful future before it hits you.

1. Reduce job-related stressors
According to Harvard Business Review, a key element of addressing burnout is to reduce job-related stressors.

If you’re thinking to yourself, “Easier said than done,” you’re not wrong. For successful business owners, it may seem that job-related stressors are at the very core of running a successful business.

However, one strong strategy for reducing job-related stressors is to seek out and install next-level managers.

Next-level managers are people who have the skill and experience to take your business to the next level. In doing so, they take on some of your responsibilities, which can help reduce job-related stressors.

Additionally, having next-level management is a core element of planning for a successful future. As they take on more of your responsibilities, the business begins to rely less on you. When your business no longer relies on you for success, you have more pathways to leaving it on your terms.
This applies even if you never intend to leave your business, as next-level management can give you more freedom to do what you do best in your business.

2. Reassess and realign goals, skills, and work passions
As the business evolves, so too will your goals, skills, and passions.
For instance, you may have started your business with a goal of achieving financial security and retiring to Barbados by age 45. But then maybe you learned you loved the work itself, or met someone special and had kids, which inevitably changed your calculus.

Regardless of the details, things change. But when your plans don’t change with reality, it can make you feel like you’re spinning your tires in Mississippi mud.

Another core element of planning for a successful future is establishing goals along with strategies to help you achieve them. A huge benefit of planning with an Advisor Team is that as your goals and realities change, so too can your strategies.

When your planning evolves with you, it could reignite the fire you had when your first started the business, giving you more energy to pursue success on your terms.

Conclusion

One of the most difficult parts of addressing burnout is beginning the process before it hits. While it’s certainly possible to address burnout even when you’re in the middle of it—especially when using the strategies above—prevention is much easier to manage than finding the cure.

Fortunately, an inherent benefit of planning for a successful future is that such plans address many of the causes of burnout. From installing a next-level management team to assuring that your plans align with your goals (even as they evolve), planning for a successful future, with help from an Advisor Team, can help you keep burnout at bay.

We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

Don Feldman is the founder of Keystone Business Transitions, LLC, a Lancaster, PA firm devoted to helping business owners smoothly exit their companies. He has been a CPA for over 25 years and a valuation professional for 20 years. For the last 15 years, Don’s practice has focused on succession and exit planning, including transfers of business interests to family members and key employees, as well as sales to outside buyers.

Jesus said unto her, “I am the resurrection, and the life: he that believeth in me, though he were dead, yet shall he live: And whosoever liveth and believeth in me shall never die. Believest thou this?” John 11:25-26 KJV

Easter is a joyous time to celebrate the New Hope His resurrection brings and the new life and new beginnings all around us. All are precious gifts from above.

Sauder & Stoltzfus would like to take this opportunity to wish our valued clients and their families a Blessed Easter, filled with peace, love, and hope.

He is Risen! He is Risen, indeed!

Sauder & Stoltzfus, LLC

Preface: “Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” – Charlie Munger

Selling Mutual Funds – Tax Choices in Figuring Gain or Loss

To figure your gain or loss when you dispose of mutual fund shares, you need to determine which shares were sold and the basis of those shares. If your shares in a mutual fund were acquired all on the same day and for the same price, figuring their basis is not difficult. However, shares are generally acquired at various times, in various quantities, and at various prices. Therefore, figuring your basis can be more difficult. But you have two options. You can choose to use either a cost basis or an average basis to figure your gain or loss.

Cost Basis

You can figure your gain or loss using a cost basis only if you did not previously use an average basis for a sale, exchange, or redemption of other shares in the same mutual fund.

To figure cost basis, you can choose one of the following methods.
• Specific share identification.
• First-in first-out (FIFO).

Specific share identification. If you adequately identify the shares you sold, you can use the adjusted basis of those particular shares to figure your gain or loss.

You are presumed to adequately identify your mutual fund shares, even if you bought the shares in different lots at various prices and times, if you:
Specify to your broker or other agent the particular shares to be sold or transferred at the time of the sale or transfer, and Receive confirmation in writing from your broker or other agent within a reasonable time of your specification of the particular shares sold or transferred.

You continue to have the burden of proving your basis in the specified shares at the time of sale or transfer.

First-in first-out (FIFO). If your shares were acquired at different times or at different prices and you cannot identify which shares you sold, use the basis of the shares you acquired first as the basis of the shares sold. In other words, the oldest shares you own are considered sold first. You should keep a separate record of each purchase and any dispositions of the shares until all shares purchased at the same time have been disposed of completely.

Average Basis  You can use the average basis method to determine the basis of shares of stock if the shares are identical to each other, you acquired them at different times and different prices and left them in an account with a custodian or agent, and either:.

They are shares in a mutual fund (or other regulated investment company);
They are shares you hold in connection with a dividend reinvestment plan (DRP), and all the shares you hold in connection with the dividend reinvestment plan are treated as covered securities (defined later); or you acquired them after 2011 in connection with a dividend reinvestment plan.

Average basis is determined by averaging the basis of all shares of identical stock in an account regardless of how long you have held the stock. However, shares of stock in a dividend reinvestment plan are not identical to shares of stock with the same CUSIP number that are not in a dividend reinvestment plan. The basis of each share of identical stock in the account is the aggregate basis of all shares of that stock in the account divided by the aggregate number of shares.

Transition rule from double-category method. You may no longer use the double-category method for figuring your average basis. If you were using the double-category method for stock you acquired before April 1, 2011 and you sell, exchange or otherwise dispose of that stock on or after April 1, 2011, you must figure the average basis of this stock by averaging together all identical shares of stock in the account on April 1, 2011, regardless of the holding period.

Election of average basis method for covered securities. To make the election to use the average basis method for your covered securities, you must send written notice to the custodian or agent who keeps the account. The written notice can be made electronically. You must also notify your broker that you have made the election.

Generally, a covered security is a security you acquired after 2010, with certain exceptions.

You can make the election to use the average basis method at any time. The election will be effective for sales or other dispositions of stocks that occur after you notify the custodian or agent of your election. Your election must identify each account with that custodian or agent and each stock in that account to which the election applies. The election can also indicate that it applies to all accounts with a custodian or agent, including accounts you later establish with the custodian or agent.

Election of average basis method for non-covered securities. For noncovered securities, you elect to use the average basis method on your income tax return for the first tax year that the election applies. You make the election by showing on your return that you used the average basis method in reporting gain or loss on the sale or other disposition.

Revoking the average basis method election. You can revoke an election to use the average basis method for your covered securities by sending written notice to the custodian or agent holding the stock for which you want to revoke the election. The election must generally be revoked by the earlier of 1 year after you make the election or the date of the first sale, transfer, or disposition of the stock following the election. The revocation applies to all the stock you hold in an account that is identical to the shares of stock for which you are revoking the election. After revoking your election, your basis in the shares of stock to which the revocation applies is the basis before averaging.

You may be able to find the average basis of your shares from information provided by the fund.

It is important to maintain your records as evidence of your basis for tax purposes. Please feel free to contact us if your have any questions about these rules or about any other tax rules regarding sales of investment property.

Preface: For the Lord your God will bless you, as he promised you, and you shall lend to many nations, but you shall not borrow, and you shall rule over many nations, but they shall not rule over you. — Deuteronomy 15:6

Credit History: The Evolution of Consumer Credit in America

History of Credit in America

………It’s all quite impersonal and very different from the way things were in
1800, or even 1900. Just try to imagine how old-time storekeepers and
bankers would react to the idea of granting you a $10,000 line of credit
without ever shaking your handing, looking you in the eye, or knowing
anything about your family. Then try to imagine their reaction if you
asked to borrow money for a vacation: Let’s see. You want to use this money
for a pleasure trip to Florida, where your children will visit a kingdom ruled by  Mickey Mouse? You won’t be doing any trading while you’re there, nor will this journey have any other productive purpose. . . . I think not.

History of Credit in America

Preface: Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all. -Dale Carnegie

Starting a Business | Pros and Cons of S Corporations

For those interested in starting a new business as an S corporation, here is a checklist highlighting advantages and disadvantages of the S corporation form. Especially popular among small businesses, the number of S corporations has increased over the last few years and, hands down, is the most common form of doing business except for the unincorporated sole proprietorship.

While its popularity indicates that consideration of operating your business as an S corporation is certainly wise, “going with the crowd” is not always the best choice. What is right for your business and your unique circumstances should control.

 Some of the advantages of operating a business as an S corporation are:         

• • • • Your personal assets will not be at risk because of the activities or liabilities of the S corporation (unless, of course, you pledge assets or personally guarantee the corporation’s debt).
      • Your S corporation generally will not have to pay corporate level income tax. Instead, the corporation’s gains, losses, deductions, and credits are passed through to you and any other shareholders, and are claimed on your individual returns. The fact that losses can be claimed on the shareholders’ individual returns (subject to what are known as the passive loss limits — S corps pay tax at the highest corporate rate on their excess passive income) can be a big advantage over regular corporations. Liquidating distributions generally also are subject to only one level.
      • FICA tax is not owed on the regular business earnings of the corporation, only on salaries paid to employees. This is a potential advantage over sole proprietorships, partnerships, and limited liability companies.
      • The S corporation is not subject to the so-called accumulated earnings tax that applies to regular corporations that do not distribute their earnings and have no plan for their use by the corporation. Nor because of their pass-through nature do they risk being characterized as a personal holding company.
      • Your income from the corporation may qualify for the 20% deduction for qualified business income.

 Some of the disadvantages are:

• • • • S corporations cannot have more than 100 shareholders (but with a married couple treated as only one shareholder). Further, no shareholder may be a nonresident alien.
      • Corporations, nonresident aliens, and most estates and trusts cannot be S corporation shareholders. Electing small business trusts, however, can be shareholders, a distinct estate planning advantage.
      • An S corporations may not own another S corporation, which can make expansion difficult, unless the subsidiary is a Qualified Subchapter S Subsidiary (a 100% owned S corporation or QSub); and termination of the QSub’s status can be treated as a sale of assets.
      • S corporations can have only one class of stock (although differences in voting rights are permitted, and bank director stock is not treated as a separate class of stock). This severely limits how income and losses of the corporation can be allocated among shareholders. It also can impair the corporation’s ability to raise capital.
      • A shareholder’s basis in the corporation does not include any of the corporation’s debt, even if the shareholder has personally guaranteed it. This has the effect of limiting the amount of losses that can be passed through. It is a disadvantage compared to partnerships and limited liability companies, and is one of the main reasons that those forms are usually used for real estate ventures and other highly-leveraged enterprises.
      • S corporation shareholder-employees with more than a 2-percent ownership interest are not entitled to most tax-favored fringe benefits that are available to employees or regular corporations.
      • S corporations generally must operate on a calendar year.
      • An S corporation may be liable for a tax on its built-in gains, if, among other things, it was a C corporation prior to making its S corporation election.
      • Your income from the corporation is taxed at your individual income tax rate. It does not qualify for the 21% corporate tax rate.

 Some of these factors will be more important than others, depending upon the particular circumstances. If you would like to discuss this matter further, and have us fully evaluate your situation, please do not hesitate to call.

Preface: Allen believes the most important thing to deal with is whatever is most on your mind. – Getting Things Done: The Art of Stress-Free Productivity Book Summary

Getting Things Done: The Art of Stress-Free Productivity Book Summary

Author: David Allen

The Five Big Ideas

1. Getting things done requires defining what “done” means and what “doing” looks like.
2. Mastering your workflow involves capturing what has your attention, clarifying what it means, putting it where it belongs, reviewing it frequently, and engaging with it.
3. If an action will take less than two minutes, it should be done at the moment it is defined.
4. Anxiety and guilt don’t come from having too much to do; it comes from breaking agreements with yourself.
5. Your mind is for having ideas, not for holding them.

The Threefold Model for Identifying Daily Work

When you’re getting things done, or “working” in the universal sense, there are three different kinds of activities you can be engaged in:

1. Doing predefined work. When you’re doing predefined work, you’re working from your Next Actions lists and calendar—completing tasks that you have previously determined need to be done, or managing your workflow.
2. Doing work as it shows up. Every day brings surprises and you’ll need to expend some time and energy on many of them. However, when you follow these leads, you’re deciding by default that these things are more important than anything else you have to do at those times.
3. Defining your work. Defining your work entails clearing up your in-tray, your digital messages, and your meeting notes, and breaking down new projects into actionable steps.

Getting Things Done: The Art of Stress-Free Productivity Book Summary

Preface: “The whole object of travel is not to set foot on foreign land; it is at last to set foot on one’s own country as a foreign land.” – G. K. Chesterton

Supreme Court Rules In Taxpayer’s Favor On FBAR Penalties

Kelly Phillips Erb  Forbes Staff

Alexandru Bittner, a Romanian–American dual citizen, made a mistake when he failed to report his foreign accounts. That much is clear. Neither he nor the IRS has ever suggested that his failure to report funds held in foreign bank accounts was willful. What has been disputed is how much he should pay for that mistake. The answer to that question is $50,000 or $2.72 million—depending on who you ask.

Today, the Supreme Court offered its response: $50,000.

In the 1980s, Bittner moved to the United States, and he eventually became a U.S. citizen. In the 1990s, Bittner returned to Romania, where he became quite successful, generating over $70 million in income through businesses and investment ventures. As he earned income, he stashed it in a number of institutions, including foreign banks.

As part of the Bank Secrecy Act (31 USC §5314), every U.S. person with a financial interest in, or signature or other authority over, one or more foreign financial accounts with an aggregate value of more than $10,000 must annually report the account to the Treasury Department. You do this by filing a Report of Foreign Bank and Financial Accounts—more commonly known as an FBAR. Failure to report can result in a penalty, depending on whether the failure was willful or non-willful. The penalties can be draconian, but typically, the penalty for a non-willful violation is $10,000.

Supreme Court Rules In Taxpayer’s Favor On FBAR Penalties: Forbes

 

Preface: “Food is our common ground, a universal experience.” –James Beard

Deduction for Meals and Incidental Expenses Paid to Leased Employees

Generally, a taxpayer’s deduction for business meal expenses, including reimbursed amounts, is limited to 50 percent of the expenses paid during the tax year (80 percent in the case of certain individuals subject to the Department of Transportation’s “hours of service” limits). However, the limitation does not apply if the expenses are paid in connection with the performance of services for another person under a reimbursement or other expense allowance arrangement.

In the case of an employee, the exception to the limit only applies to the extent the reimbursement is not reported and deducted as compensation paid by the employer. In the case of an independent contractor, the exception to the limit applies only to the extent the independent contractor substantiates the reimbursed expenses to the payor.

 In applying these rules to amounts paid to leased employees for meal and incidental expense, the IRS has agreed that the limit should apply to the party that ultimately bears the per diem expense. Thus, if an employee or independent contractor incurs meals and incidental expenses in connection with the performance of services for another person and is not reimbursed, then the limit applies to any deduction claimed by the employee or independent contractor. However, if an employee or independent contractor accounts for the expenses to a leasing company, is reimbursed under an allowance arrangement, and the payment is treated as compensation, then he or she is not subject to the limit. Instead, the leasing company bears the expense and is subject to the limit.

On the other hand, a leasing company will not be subject to the limit if, in connection with its performance of services for a third party, it is reimbursed under an allowance arrangement with the third party, and accounts to the third party in the same manner that the employee accounted for the expenses. In such circumstance, the third party bears the expenses and is subject to the limit for the deduction that it claims.

 If you would like more information on how this is relevant to your business, or if you would like to discuss your employee meals reimbursement plan, please call our office at your  convenience.

Preface: Truth: Debt makes you weaker, not stronger. Remember: The borrower is slave to the lender.

7 Tips for How to Run a Business Debt-Free

https://www.ramseysolutions.com/business/how-to-run-a-business-debt-free

…….To understand how a debt-free business sets you up to win, look no further than the classic fable The Three Little Pigs (yes, really!). The hero of the story (spoiler alert) is the pig who built his house with bricks—not straw or sticks. In financial terms, those bricks translate to rock-solid cash. Watching the other little pigs cut corners so they could pocket more money and put out less effort probably wasn’t fun for brick-house pig. But when the big, bad wolf came, brick-house pig was the last swine standing. All the huffing and puffing in the world couldn’t shake him or his house.

Just like brick-house pig, you want a strong foundation for your business—and that means keeping it debt-free. When your business is debt-free and strong, you’re strong too. You can keep a clear head and rise above fear, panic and hysteria when bad things happen. Even better: You can take advantage of rock-bottom prices and amazing opportunities as others cut their losses. Not a hair is out of place on your chinny chin chin.

….The bottom line of The Three Little Pigs is this: Hard work pays off. Yes, the extra effort might be rough at first, but it’s totally worth it. You’ve got this! As you strap in for the long haul of running your business debt-free, try out this financial advice for small businesses to get started:

Financial Advice for Small Businesses

Preface: It’s a good idea to know what your business is actually worth – Donald Feldman.

Building Value Outside the Business

Credit: Donald Feldman, CExP™, CPA, CVA, MBA

Many business owners find the bulk of their wealth within their businesses. However, planning for a successful future often means wrangling financials outside the business too. This is especially important when markets may not be as favorable to small and mid-sized businesses as they have been in the past. Here are three things to consider to help you build value outside of your business.

1. Know your Business’ Real Value

Before you begin strategizing about the best way to build value outside your business, it’s a good idea to know what your business is actually worth. In many cases, business owners use rules of thumb, comparisons to competitors, or good ol’ fashioned wishful thinking to estimate company value. And it’s not uncommon for business owners to overestimate their company’s value.

However, using inaccurate estimates of business value can make it difficult, if not impossible, to create a strong plan to build value outside the business. After all, if you think you have everything you need based on inaccurate assumptions, it’s far too easy to take your foot off the planning pedal.
By working with a professional who can more accurately estimate your company’s value—such as via a Calculation of Value—you can begin to create a more focused plan to build value, both inside and outside the business.

In other words, when you know what you have now, you can carve a clearer path toward getting what you’ll need for later.

2. Diversify investments

Any good financial advisor will tell you that diversifying your investments is one of the most basic things you can do to build value.

With the advent of self-service investment tools and newer asset forms (e.g., cryptocurrency), it seems easier than ever to diversify investments.
Nonetheless, it’s prudent for business owners to be responsible when diversifying their outside investments. Even as technology allows easier access to investing, you should still consider how a diverse portfolio works toward your goals in the long term.

The past few years have shone brightly as a bull run in many markets. It may be tempting to try to catch that lightning again. But history often shows that disciplined investing, especially with professional help, makes longer-term planning more successful and manageable.

3. Minimize taxes

In addition to building value outside your business, it’s just as important to minimize how much value you lose. This often comes in the form of taxes.
For example, if your company is a C corporation, you may face double taxation (once for corporate income, once on your personal income). This could reduce the amount of money available to build wealth outside your business.

Likewise, given the inherent complexity of the US Tax Code, it’s possible that you’re simply paying more than you must by no fault of your own.
Legally minimizing your tax burden, often with the help of a professional, could give you more capital to invest outside the business. This, in turn, could help you build more value toward the future you envision on your terms.

We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you.

Please feel free to contact us at your convenience.

Don Feldman is the founder of Keystone Business Transitions, LLC, a Lancaster, PA firm devoted to helping business owners smoothly exit their companies. He has been a CPA for over 25 years and a valuation professional for 20 years. For the last 15 years, Don’s practice has focused on succession and exit planning, including transfers of business interests to family members and key employees, as well as sales to outside buyers.