Become a Tax Advisor

There are countless small business owners just like you; many have waved good-bye to full-time employment and are working tirelessly in their home offices, trying to achieve financial freedom.  Unfortunately some of them are not taking advantage of tax planning in order to protect themselves, their families, and their futures.  That’s where you step in. 

A great way to increase your service offerings, your clientele and your bottom line is by adding tax preparation to your menu.  But don’t mistakenly assume that tax services can only be offered during tax season; you can offer tax planning and advisory services year-round, in addition to accounting. 

As you help clients take advantage of tax benefits, they can use the information you provide to better plan for self-employment necessities like health insurance, retirement, and taxes.

Health Insurance

Without an employer to provide for their health benefits, many small business owners opt not to insure themselves and their families due to the often high costs.  In doing so, they put themselves at financial risk.  Senior Magazine Online claims that of the 41 million uninsured Americans, 60% of them are self-employed.  If small business owners cannot secure coverage through a spouse’s benefits, they should find a medical plan for themselves and their families and then open a MSA (Medical Savings Account).  All the money placed in the account is tax deductible and can be used to cover out-of-pocket medical expenses.  Anything they don’t use remains in the account and is sheltered until withdrawn.

Retirement

Many small business owners also view retirement as an extravagance they can’t afford to worry about in the early years of their start-up.  Unfortunately, those early years often turn into decades and, before they know it, they’ve reached retirement age and have yet to prepare for it.  Some small business owners expect a windfall to cushion them and their lack of planning.  Either way, many of these individuals don’t contribute to a retirement account, and again, put themselves at risk.  Your job is to encourage clients to prepare for their retirement by finding a vehicle that matches their needs: Kreogh Plans, SEPS (simplified employee pension plans), tax-deductive IRAS (individual retirement accounts), annuities, Roth IRAs, etc.

Tax Accounts

Good ole Uncle Sam won’t be making automatic withdrawals from business accounts in order to cover taxes.  So the loyal, self-employed taxpayer must prepare for that time of year when the government requires its cut.  This is where tax planning can help the small business owner take advantage of key tax benefits while retaining and organizing all necessary receipts, bills, etc.  The small business owner should also open a special tax account into which money can be deposited throughout the year so they’ll be ready to file their taxes (and pay them in full) when the time comes.  Nothing can cripple a business more than owing the IRS a lot of money in unpaid taxes.

A tax preparer’s skills are not seasonal; they are valuable year-round, and you can market tax services so that current and potential clients recognize their value.  Consider growing your business to include tax services!

Professional Tax Preparer (PTP)

Many tax preparers make more money in the months leading up to the April 15 tax deadline than others make all year long! Since all individuals and businesses, small or large, are required to file taxes, tax preparation is a respected skill that will always be in demand.  And many of your current clients would probably be happy to have you file their taxes as well as perform the standard accounting services you currently provide.

Also consider who your clients will trust to file their taxes.  Countless individuals are scammed each year by people who claim to know what they’re doing.  More and more are becoming weary of tax preparers without any credentials.  The Tax Preparer Designation will put many of those individuals at ease, assuring them that you have been properly trained in tax preparation. 

Secure your practice’s success by adding a professional designation to your name.  Call Universal at 1-877-833-7909 to enroll now!

 

Resource

–.  “Financial Planning for the Self-Employed.”  Senior Magazine Online

Planning for Retirement

One of the disadvantages in having your own business is that you’re responsible for managing your retirement in a more proactive and strategic way.  This requires you to plan now for that time, years into the future, when you’ll want to slow down, professionally, and enjoy the fruit of your labors.  But unless you’ve been thoughtfully storing away some of that fruit, you won’t have much to live on.  Consider the following three retirement options that will enable you to plan for a more enjoyable retirement:

Rule of ‘72

The Rule of ’72 is an economic formula designed to inform investors of the potential return on their compounded investment. Divide 72 by the interest rate you anticipate earning and that determines how many years it will take to double your initial investment.

Let’s say you start with a modest amount, $10,000, and you decide to open an Individual Retirement Account (IRA) earning 4% interest. Here’s how you could reinvest that initial investment plus its interest to double, triple, and even quadruple that initial investment in preparation for your retirement:

Rule of 72 (divided by 4% interest)

Investment

Years to Double

$10,000

18

$20,000

18 (36 since initial investment)

$40,000

18 (54 since initial investment)

$80,000

18 (72 since initial investment)

$160,000

18 (98 since initial investment)

The most important thing to recognize here is that deciding to double your investment is the only way it will ever happen. As you can see, the longer you wait to start, the longer it will take to see significant results.

IRS-Enabled Retirement Savings

Last March, the IRS detailed four ways they are helping Americans use their tax returns as a means to prepare for retirement, 3 of which can apply to the self-employed:

  1. Automatic enrollment.  The Treasury and IRS have issued more information on their retirement and savings initiatives which enable 401(k) plan sponsors to include automatic contribution increases.  For more information, visit the IRS.gov.
  2. Receive tax refunds as US Savings Bonds.  Consider using some of your income tax return to buy up to $5000 in US Series I Savings Bonds.
  3. Roll over retirement distributions into IRAs or other plansNotice 2009-68 explains how the rollover option works.

Growing Your Business for Resale

If you build your business with the understanding that eventually you can sell it to another entrepreneur, each client becomes an asset that can bring you a great return as you do their accounting. Later, when you’re ready to trade in your calculator for a golf cart, you can sell that client to an anxious wannabe contractor interested in a ready-made practice.

What it’s Worth

The rule of thumb for valuing a bookkeeping practice looks at twelve-to eighteen-month’s billings. That translates to an asking price of $120,000 to $180,000 if you are currently billing out $10,000 each month. The difference between the upper and lower price depends upon how long you have had the client, and how much work you are willing to do to ensure that the client will stay with the new bookkeeper.

This is just a sampling of how ways you can plan for retriement.  It’s important that you understand all the retirement options available, not only so that you can prepare for your own comfortable retirement, but so that you can help your clients do the same.  Take action now to build a better retirement.  The only thing you’ve got to lose is a more comfortable future.

In the Black

The more profitable your business, the more you’ll be able to save for retirement.  Allen Bostrum, president and CEO of Universal Accounting Center, has developed 9 proven principles that help small business owners like you increase profit.  He’s written about these principles in his book called In the Black which is an easy-read that will teach you practical actions you can take immediately to increase your profitability.  For less than $20 you could begin changing the course of your business.  Order In the Black today!

Growing Your Business Now For a Better Retirement

Don’t simply retire from something; have something to retire to. – Harry Emerson Fosdick

The question isn’t at what age I want to retire, it’s at what income. – George Foreman

While your peers are saving money for the “Golden Years” in standard retirement funds you can rest assured that you’re also building retirement assets as you build your practice.  And the bigger your practice, the bigger your retirement.

Yes, I know, when you support them and acquire clients you’re not thinking of retirement, but you certainly could be. Each client is an asset that can bring you a considerable return as service their needs and do their accounting. Later, when you’re ready to trade in your calculator for a golf cart, you can sell that client to an anxious wannabe freelancer that wants a ready-made practice.

How Much Will Your Business Be Worth?

It’s important that you be realistic about how much your practice is worth.  In a recent article for Ellwood City News, Ameriprise Financial representative Robert Powell explains, “It’s difficult to consider accepting less than you believe it’s worth, but if you retire in a down market or sooner than you’d planned, you may need to compromise on an offer. Keep in mind that selling your business may be emotional. Having knowledge about the process before you consider offers may make it less stressful and ensure the decisions you make are financially sound.”

To realistically value your bookkeeping practice, combine twelve to eighteen-months’ billings. If you are currently billing out $10,000 each month that usually translates to an asking price of $120,000 to $180,000.  The difference between the upper and lower price depends upon how long you have had your clients and how much work you are willing to do to ensure that the client will stay with the new bookkeeper.

The buyer will usually want a little help to get started. This might include:

  • Seller financing for three to five years during which you should charge 9% to 18% APR interest, depending on the going rate, and/or,
  • A two- to three-month training period, or overlap time, for the buyer to become acquainted with the clients and your office procedures, and/or
  • A promise that you will adjust the price in the event a client changes accountants within the first three to six months.

You also must be careful in whom you sell to. You don’t necessarily want to sell to the first interested buyer. Your successor should have comparable expertise, dedication, and drive.  Otherwise, the client may change accountants, causing the buyer to adjust the buying price, resulting in an unhappy ex-client, an unhappy successor and an unhappy you!  Lose, lose.

Working with clients can be rewarding and fulfilling. Improving your golf game can be a lot of fun. Work hard for your clients, and they’ll work hard for you when you retire.  And if you’re interested in increasing the value of your practice, you should seriously consider increasing the services you offer.

Universal’s Training Programs are All Online!

If you’re looking to build your business and your clientele, we suggest you complement your offerings with tax preparation and QuickBooks services.  And Universal’s online training make that more convenient than ever, enabling you to enroll today and begin changing your career tomorrow.  We offer 5 programs designed to make your business more profitable.  To sample our online courses for free, visit Universal today!

Resource

Powell, Robert A. “Planning for Retirement as a Small Business Owner.” 18 April 2012 news.ellwoodcity.org

Social Security Worry

The State of Social Security

It’s no secret that the Social Security system is facing serious problems. When all the baby boomers start to retire (around 2010), the system will begin to pay out more than it takes in. As an accountant, my clients and friends often ask me what I think is going to happen, so I thought you might benefit knowing where it stands both for yourself and for them.The trouble can be summed up in one word: demographics. The system is designed so that workers pay into the system to pay benefits to retirees. Well, the ratio of workers to retirees has dwindled to an alarming level–from 40 to 1 when the system began in 1937 to 3 to 1 now. Plus, people are living longer, so retirees are collecting for many more years than before.

What Is Being Done to Insure Social Security Will Be There For You?

A special task force appointed by the government urged in 1997 that action must be taken immediately to save the system, but nothing major has been done to date. A few minor adjustments have been made, such as increasing the normal retirement age from 65 to 67. Also, well-heeled retirees must now pay tax on Social Security benefits. But these efforts alone are not enough to rescue the system.This is not to say that Social Security will vanish. It’s simply unclear what level of benefits you can expect to receive down the road.What to do: Call Social Security at (800) 772-1213 and order Form SSA-7004. This form will allow you to check on your expected benefits. It also shows your credited earnings. You may want to do this every few years to make sure you’re being credited for all of your earnings.Since your benefits are based on your earnings, your benefits may be affected if the system hasn’t captured all of your earnings. Keep in mind that Social Security taxes are paid on salaries up to a certain threshold, known as the Social Security wage base, which increases every year. For 2004, the wage base is $87,900. So when you look at your credited earnings for Social Security tax purposes, it will never be higher than the Social Security wage base for the year.It is hoped that the federal government will take care of the problems with Social Security, but even if it does, will Social Security really be enough? It is very common that when one purchases a home that they do not really take stock of when they will pay off their mortgage. For many of us, the reality is that our home will not be paid for when we hit retirement age. Depending on the amount of income that you make, your Social Security benefit may not even cover the amount of your house payment.

Ensure Your Own Retirement

So what CAN you do? Retirement consultants state that if one person starts a retirement fund at age 20 and another starts at 30, even if the 30 year old pays in twice as much per month into their program as the 20 year old, they will never catch up because of the operation of compound interest. But most of us are beyond 20, many beyond 30 already, so have we missed the boat? Not at all!The majority of those that describe themselves as financially independent own small businesses. Even if you are in your 40’s and have not taken part in traditional retirement programs, you can take control of your own financial future. The Professional Bookkeeper (PB) program teaches you how to make $30-$60 Per HOUR doing small-business Accounting and Bookkeeping services. Even without prior experience in Accounting or Bookkeeping, if you have the basic math skills to balance your checkbook, you have all the math ability to do Accounting and Bookkeeping.

Jump Start Your Retirement Now!

The average small-business client will pay you $300 per month to do their books. The real beauty is that it only takes 6-8 hours per month to service a single client! This means that you can service one client per day. If, for example, you build up your client base to 23 clients, that adds up to $6,900 Per Month or $82,800 Per Year in income! And that is not even working full-time! Would $82,800 Per Year in income give you some extra cash to put aside for your retirement? For most of us, that kind of income is exciting at any age.

Sell Your Business to Retire On Later

When you work for an employer, you are making them wealthy. Your success on the job provides for the business owners retirement, but what do you get long-term? The day that you stop earning a paycheck as an employee is the day that you cease to get paid. When you build your own successful Accounting and Bookkeeping service, you are building equity in something that is valuable to investors. One of our graduates recently was excited to report that they had just sold their 3-year old business for over $100,000 and were moving to Australia. Would $100,000 help towards your retirement?As you build your Accounting and Bookkeeping service, you are earning $30-$60 Per Hour now and creating something of value that you can cash in later. If you are anything but certain that Social Security and your current retirement plan will take care of your needs in the future, be assured that there IS something that you can do about it now. Nobody likes to have their future determined by events that they simply cannot control, so take the first step today to make the income that you deserve now and to retire in comfort later. Your Accounting and Bookkeeping service will ensure you the kind of future that thousands of our graduates rave about today.Learn How to Earn $80,000+ Per Year Building a Successful Accounting and Bookkeeping Service

Rule of 72

Prepare for Retirement by Doubling Your Investments

When working full-time for a company that provides benefits, most people determine how much they want put into retirement each paycheck and let time take care of the rest. If you own your own business, retirement is a greater concern. As a business owner, you must design your own retirement plan, ensuring that you and your family’s futures are taken care of. And while retirement may be decades away for some of you, the longer you wait to prepare for it, the less comfortable you’ll be when that golden age arrives. Because while you may currently love what you’re doing, you may want the freedom to do something else when you’re 65.

As a business owner looking for ways to prepare for retirement, you must become a good investor. Good investors know how to put their money to work earning the greatest return. Good investors also recognize the value of compound interest. That is to say they recognize that they can greatly increase their return by adding the interest to the principal and reinvesting it, allowing the compound sum of the principal and the interest to earn even more interest.

Rule of 72The Rule of 72 is an economic formula designed to inform investors of the potential return on their compounded investment. Divide 72 by the interest rate you anticipate earning and that determines how many years it will take to double your initial investment.

Let’s say you purchased $25,000 in bonds earning 6% interest. The Rule of ’72 would work as follows:

Rule of 72

72 ÷ interest rate = years to double your initial investment72 ÷ 6 = 12 years

After 12 years your initial investment of $25,000 would double to $50,000.

But let’s imagine you don’t currently have $25,000 to invest. Let’s say you have a more modest amount, $10,000, and you decide to open an Individual Retirement Account (IRA) earning 4% interest. Here’s how you could reinvest that initial investment plus its interest to double, triple, and even quadruple that initial investment in preparation for your retirement:

Rule of 72Divided by 4% interest

Investment$10,000$20,000$40,000$80,000$160,000
Years to Double 1818 (36 since initial investment)18 (54 since initial investment)18 (72 since initial investment)18 (98 since initial investment)

The most important thing to recognize here is that making the decision to double your investment is the only way to have it happen. As you can see, the longer you wait to start, the longer it will take to see significant results.

Put Rule 72 to Work for YouFirst, decide how soon you’d like to see your money double. Be realistic; generally the investment vehicles with the highest interest rates are the riskiest. Do your research and see what interest rates are reasonable and worth banking your future on. Pick your investment vehicle: savings account, stocks, bonds, IRA’s, real estate, etc. Then get started! And remember, the more investments you have, the greater your final return. Don’t worry if your initial investments are small; just imagine how much smaller your return will be later if you don’t invest now!

When you’re your own boss, you’re responsible for providing yourself with the benefits you and your family deserve. If you’ve been procrastinating your retirement, then procrastinate no more! Start doubling your money today. It is always sound advice to be able to put the reserves away for your “Golden Years”. We encourage those who currently have their own business to place their working capital and profits to work for them in the long run and to keep away from the “blinders” mentality when you are currently making good money.

For those who aren’t making the money that they can put into a retirement fund or that you are just starting out on this path to owning your own accounting business, Universal Accounting is here to help. No we cannot set up your retirement package, nor make the personal investments that will cause it to grow. However, when you invest in yourself, with the proper training, know-how and resources for sound accounting business principles, then you can make what you want when you want to.

Check out the tools and materials you will receive once you enroll yourself into the program that has changed the lives of thousands of like-minded individuals. Click Here to get all you need to make the best decision!

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