The Power of Public Relations

As I have said to you in the past, the media – newspapers, radio, television and magazines are always searching for stories and angles. The key to good public relations is to determine who will be interested in your particular story or angle.

Just two of the many techniques which you can use to succeed with your long term public relations strategy are:

Provide news — Position yourself as an expert.

If you can do one or more of the following four things in a way which affects enough people — you can turn almost anything into news:

Solve a problem or create an opportunity

  • Identify a trend. Journalists love trends — especially those which affect a lot of people in their audience
  • Provide advice to the readers, listeners or viewers
  • Help the community

Patience is the name of the public relations game — it’s an activity in which there are few overnight successes. You really need to persevere and things will begin to fit into place. Harassing a journalist to publish your story is not a recommended practice.

Let’s focus on just one aspect — providing advice.

The sort of press releases which you can write and distribute which provide advice could include the following:

  • 7 Tips to Reduce Your Income Tax
  • Throw Away the Shoe Box — 10 Commandments for Good Record Keeping
  • 8 Often Overlooked Tax Deductions for Property Investors
  • How to Get the Most out of Your Computerised Accounting System
  • 9 Ways to Reduce your Taxes Which Won’t See You in Jail

It should be noted that these are snappy headlines which should guarantee that you capture the attention of the journalist, presenter or producer to whom you are forwarding your press release. You should always include the major theme of the press release in your first paragraph or you will guarantee only one thing — you will lose the interest of the recipient and you will not achieve publication.

Another strategy worthy of consideration is to add your own story or angle to a popular news item. This can often lead to substantial media coverage. It’s a good idea to keep your eyes and ears open for any tax changes to which you can add a local flavor or personal comment — you are most likely to gain some coverage and enhance your image in the process.

Tax Tips – A Simple Estate-Planning Tip

This article shows you a great and somewhat unknown estate tax shelter and tax planning tip. This is something you can share with your accounting and bookkeeping service clients.

Many people have provided for their favorite charity in their wills. But not many people know about a simple technique that can accomplish their charitable giving goals — and pass more of their wealth on to their loved ones.

Here it is:  Instead of making an outright bequest in a will for charity, the individual should name the charity as a beneficiary of their company retirement plan or IRA. When they die, the charity will still get the amount they want it to — but their heirs will get a lot more.

This strategy is brought to you by a little concept known as “IRD.” This stands for “income in respect of a decedent.” When someone with a retirement plan dies and the proceeds of the plan are paid out, the money flows into the individual’s estate as IRD income. This money is taxable to the estate — and it may also be taxed as income to the person who ultimately receives it. When all of the taxing authorities get finished with IRD income, they can take around 80 percent of it. The individual’s heirs may see only 20 cents of every dollar the plan pays out.

Example:  Wilson has $300,000 in his 401(k) plan. In his will, he gives his retirement plan to his kids and he gives $100,000 to his favorite charity.
Result:  At death, the charity gets its $100,000 and the kids get their $300,000. But the kids also get this: a Form 1099-R. This form is sent to them by the retirement plan administrator because the $300,000 is taxable income to the kids.

In order for Wilson to leave more to his kids, all he has to do is eliminate the $100,000 to charity in his will. He also has to go to his employer to instruct it to send the first $100,000 from his 401(k) plan to charity when he dies.

New result:  The charity still gets its $100,000. And the kids still get their $300,000 — but $100,000 of it is a tax-free inheritance. They still get a 1099-R, but it’s for only $200,000 from the plan. The charity gets a 1099-R for the remaining $100,000 from the plan that it received. But the charity can rip it up because, as a tax-exempt organization, it pays no tax on this money.

This technique can also be used in conjunction with other assets that trigger heavily taxed IRD income. This includes savings bonds, unpaid bonuses, lottery winnings, unpaid rental income, and installment sales obligations.

Tax Simplification: “Yeah, Right!”

This article goes into more detail about the reasons businesses will always have a legitimate need for accounting and bookkeeping services.

A recent student asked me how to respond to a well-meaning relative who felt that accounting was a dying occupation because of tax simplification. I’m often asked if a simpler tax code, meaning flat-tax or federal sales tax, would eliminate the need for accountants. Those who ask this question obviously don’t understand what an accountant does.

First of all, I don’t think such a tax bill could ever pass. Too many special interest organizations with powerful lobbying groups will lose too much to let any such bill pass without a fight.

  • Religious organizations will argue that their funding from contributions will dry up.
  • National homeowners’ associations will argue (and rightfully so) that homes will drop in value as mortgage interest will no longer be deductible.
  • Medical organizations will buy TV ads telling stories about people with debilitating diseases and high medical bills going to ‘tax prison’ because they lost their medical deduction.
  • And, those are just the obvious ones.

Plus, most tax simplification plans will tax the poor heavier and the wealthy lighter than they do now. That’s a hot-potato that neither political party will support.

No, the public will never let such a thing happen.

Even if we were to assume that such a tax program will be adopted, accountants will remain in high demand. Certainly simpler tax laws may eliminate tax preparers. But most tax preparers aren’t accountants.

The primary and most beneficial roles accountants perform are in the area of management controls, and cash management. A company stands to gain much more through staying on top of these areas than saving on lower taxes. Let’s face it, companies don’t go out of business because they are paying too much in taxes, but they will if they have poor controls, or poor cash management.

Big businesses certainly understand this. A large company I once worked for had four thousand accountants. Less than 1% of these accountants worked in the tax department. In other words, 99% of the accountants with this company were working on providing management with crucial information regarding profitability, while monitoring the company’s financial position. This company understood that income taxes are a necessary evil that require some attention, but the potential for business improvement is much greater in other areas.

So, do we ignore taxes? Certainly not! Taxes must be completed, and done correctly according to law. Besides, a good tax preparer may save a tax payer hundreds of dollars, if not thousands in taxes — sometimes many times the cost to have the taxes prepared.

Tax preparation will always be needed. And, my guess is that it will become even more complicated before becoming any easier.

Regardless of the tax law, however, accountants will always be a critical part of the business world.

Also, see the article entitled “Why are Businesses Begging for Your Services?” This is “must reading” for every freelance accountant.

Increase your profits by selling additional services

This article looks at ways to increase the income your accounting and bookkeeping service earns by diversifying and selling additional products and services.

Everyone’s doing it! Mergers, product development, and additional services are the “name of the game” in virtually every industry. Why? Because that’s where we find the greater profits. Services like the following are excellent companions to a traditional bookkeeping service and can be terrific money makers.

  • Loan Application Preparation
  • Income Tax Preparation
  • Payroll Preparation
  • Word Processing
  • Incorporations
  • Notary Public

There are two reasons why you should offer more than the traditional bookkeeping service:

  1. More services mean more revenues. Any fees you earn on additional services to existing customers/clients comes to you virtually free. You’ve already earned the money that you have spent finding the client. Any additional services are gravy.
  2. The ‘one-stop-shop’ concept applies here. Why do people hire a general contractor to build a home, rather than deal with the subcontractors themselves? First, they don’t know how, and secondly, it’s a hassle. The same principle exists with their financial concerns. They don’t know what needs to be done, plus they appreciate it when someone who does can remove the bother.

Traditional bookkeeping is the core to financial services. Certainly, you will offer to provide those services yourself. However, you can provide these other services, or you can sub-contract them out to others. In other words, you do not have to be an expert in everything. And, even though you contract these out does not mean they’re not profitable to you since MOST PROFESSIONALS WILL PAY YOU A ‘FINDER’S FEE’ OR COMMISSION on the service.

For instance, say that a business owner approaches you and asks for your accounting help for his business. Then he asks, “Do you do taxes?” If you haven’t prepared taxes in the past, you may be inclined to say, “No, I don’t.” Wrong! Instead, simply say, “I have an associate that is an expert at tax preparation. I’ll take care of it. No problem.”

I’m sure you would admit that the latter response sounds much better, and will provide better results than your first thought. Then, all you need to do is contact your associate.

Consider the services above, then determine which ones you can and want to do. Find associates that are interested in doing the others.

Most of these services can be performed by people you already know. For instance, you probably know a tax preparer, a payroll accountant, a notary public, and a typist. I’m sure they would love additional business. By the way, if you don’t know somebody in these areas, you can find them listed in the yellow pages.

They will gladly share their fees with you.

When you contact them, explain your purpose in calling, and ask them if they are looking for more business. If so, do they offer a discount, or “finder’s fee”, for referrals. If their answer is “no”, you probably want to look elsewhere. Not because of greed, but it is usually an indication that they are not experienced, sophisticated or networked enough to be an asset to you.

For the more pricey services like income tax preparation, or loan applications you should expect between 15% to 30% of their anticipated revenue to come back to you. For less expensive services, such as notary public, getting a finder’s fee is unusual and not enough to worry about anyway.

Provide customized accounting services

This article shows you how to provide accounting and bookkeeping services that are fit to your clients needs.

Here’s a short quiz I don’t think you’ll have difficulty completing:

  1. All things being equal, would you rather earn $45/hour or $55/hour doing accounting for a business?
  2. All things being equal, would you rather have a $250/month clients or a $400/month client?

These questions may appear to take the record for the all-time dumbest questions ever asked. But, when you are working for yourself, sometimes these are questions that beg asking – it’s a question of economics.

You might recall from your high school economics class that supply and demand drive the pricing structure of the free world. The most obvious contemporary example is the computer industry where competition has been driving the prices of computer hardware down every year. As more computer manufacturers have entered the playing field the supply has increased beyond demand, and prices have fallen, and fallen, and fallen even further.

This principle can work for or against any business — even accountants. When we specialize in providing accounting for industries where there’s high demand, but limited competition, we can find clients more readily and charge a higher fee for our services. This is putting the law of supply and demand in our favor.

Why will some businesses pay more for bookkeeping than others?

The business world is “information hungry.” Managers/Owners want the latest information on the economy, their industry, and most particularly their business — and they want it now.

Fifty years ago a business owner might have been the only “game” in town. They might have been the only hospital, car dealer, or dentist. Not anymore. With competition being what it is, business management needs to keep on top of their business more so now than ever before. If they’re not watching their business, they may not have a business to watch.

That’s certainly where the accountant comes in. Through a well-designed information system, uniquely fit to their business, the accountant can give management the information they want and need when they want it.

THE KEY IS TO FIT THE SYSTEM TO THE BUSINESS. To meet their needs we must understand their business and fit the accounting system accordingly. A contractor, for instance, driving a pickup truck with papers stashed and stuck everywhere imaginable, needs to have a different system in place, than does the local hairdresser. An automobile dealership needs to have a system that will track each car separately for both control and flooring (inventory finance) purposes.

Now, I know what you’re thinking: “Don’t all businesses use debits and credits alike?” The answer is “yes” and “no.” It’s true that debits are on the left, and credits on the right. But each business has different types of transactions and different accounts to follow. For instance, the automotive business has three accounts that are somewhat unique to that industry. Namely, Flooring Payable, Contracts in Transit, and Bank Reserve accounts.

The construction industry, particularly builders and developers, work with Jobs in Progress and Progress Billings. Manufacturing businesses must have a system in place that will track progress of raw materials and labor through to the finished product so that the owners can establish their cost per unit.

Since the universities and colleges don’t teach these small business concepts, the opportunities are great for the accountant knowledgeable about these areas. To confirm this, next time you talk with an accounting graduate ask them how “Flooring Payable,” “Contracts in Transit,” and “Bank Reserve Account” are used. Chances are very good that they won’t have a clue.

Now, before you get critical of their training or capability remember that the colleges are grooming them for the Fortune 500 — not the used car dealer. All these concepts I’ve mentioned in this article are small business issues for businesses typically employing less than 100 employees.

We recognized the value of these concepts years ago, so our course, covers all types of businesses including those that I’ve mentioned above. And the course is suitable for the beginning accountant and for the college graduate. You will even have an opportunity to do the books for these businesses and practice them for yourself before working on the real thing. You’ll find more information on our complete accounting course under Accounting Made Easy.

Well, should you specialize in a higher demand industry? That depends on your answer to these two questions. Do you want to make more money? Do you have the knowledge to work with these businesses? If your answer to both these last two questions is “yes” then you might want to consider answering “yes” to the first question, as well.

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