SBA Changing Lending Rules

SBA Changing Lending Rules

Partner buyouts have become much more reasonable, as the SBA has changed a rule that will now allow a buying partner to qualify for a loan without fronting equity.

This article discusses the new adjustments, and why it is now easier to buy out a partner.

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End of the Traditional Office: Fact or Fiction?

End of the Traditional Office: Fact or Fiction?

Brick and mortar versus the virtual office. It’s a dynamic that’s been ongoing for a couple of decades. But you might be wondering: how much has the traditional office really changed? 

Some Facts to Consider 

For perspective, consider data gathered by the International Workplace Group (IWG). IWG’s study, which included more than 18,000 professionals across 96 companies, found that 70 percent of employees worked at least one day a week somewhere other than the office. (While they didn’t specify, one could guess that this might be home or a “third destination” like Starbucks or a bookstore.) The study also revealed that more than half of the people surveyed worked remotely for half of the week or more, while 11 percent worked somewhere other than their company’s main office location five days a week, which could be a smaller, satellite office. 

In addition to flexible work schedules, which presumably made employees more productive and happier, the study highlighted several tangible benefits: 

  • Business growth (89 percent; up from 67 percent in 2016)
  • Competitiveness (87 percent; up from 59 percent in 2014)
  • Productivity (82 percent; up from 75 percent in 2013)
  • Attracting and retaining top talent (80 percent; up from 64 percent in 2016)
  • Profit maximization (83 percent)¬†

As you can see, the effects of working outside a traditional office can be beneficial both physically (to the employee), as well as fiscally (to the company). 

In addition to the obvious technologies like conference calls and video conferencing, which have influenced work styles for some time now, what else is going on that’s causing this shift? In a word: millennials. 

Millennials: What They Want 

According to the U.S. Census, millennials (born between 1982 and 2000) make up one-third of the workforce and outnumber baby boomers. Millennials place a premium on happiness and a good work-life balance. They believe the more comfortable and satisfied they are, the higher their productivity will be. In fact, these employees who were born in the last decades of the 20th century were pivotal in contributing to the advent of a brand-new work configuration: shared office space. 

The Rise of Shared Office Space 

If you don’t know what this is, here’s another way to explain it: it’s an independent, satellite co-working space that allows for many different individuals and companies to carry on their daily job tasks. These spaces may include perks like a gym, for which they can pay a monthly fee, along with access to resources such as meeting rooms or special equipment. Not a bad setup. 

This phenomenon is not just the flavor du jour. According to Forbes, it is projected that 26,000 new spaces will host 3.8 million workers by 2020. So, what’s the attraction? These shared, open venues allow for more businesses to collaborate, which is attractive to these young professionals, many of whom are entrepreneurs. Here are a few other reasons shared offices spaces are all the rage: 

  • Lower costs. They don‚Äôt have to clean them and keep them maintained.
  • Less commitment. They don‚Äôt have to be shackled to a lease.
  • Start-up friendly. With the small budgets of start-ups and the low rent of shared places, it‚Äôs the perfect combination for this entrepreneurial demographic.
  • Urban-centric locales. According to Nielsen, 62 percent of millennials like cities. They want to be where the action is, such as trendy restaurants, grocery stores and theaters.
  • Reject traditional offices. Yes, they are rebels; they are very much into individual expression.¬† ¬†¬†

However, this is not to say traditional offices are becoming obsolete. The buildings that pierce the sky in most major cities aren’t going anywhere and chances are good we’ll still see plenty of new construction. It’s just that these work places might not be as fully occupied. In terms of long-term growth potential, that’s a positive. 


Old School and Hi-Tech Ways to Keep Track of Passwords

Old School and Hi-Tech Ways to Keep Track of Passwords

In 2017, nearly one-third of internet users reported being victim to online hacking or similar suspicious activity on their accounts. But, as anyone who regularly uses a computer—especially for financial transactions—knows, keeping track of passwords can be a time-consuming task. Even so, it is necessary to ensure your personal and financial information is kept private and secure. 

Unfortunately, one of the biggest inconveniences that has emerged is trying to keep track of different passwords for different websites. This issue is exacerbated by the fact that many websites require you to change your password every three to six months. Trying to keep up with which password is current at which website is mind-boggling and aggravating. 

Here’s one easy trick. If you ever want to find your passwords while online, look in the Settings for your browser. For example, with Chrome you log in, go to Settings, Advanced Settings, Passwords, Manage Passwords and click on the “eye” icon to see the username and password for each website. Similarly, with Safari you can log in and click on Preferences, Passwords, and the asterisk to the right of the username to show the password for each website. Most browsers have similar procedures. 

However, what is convenient about the ease of finding your passwords is also reason for alarm. If you leave your computer unattended while logged into your browser, anyone can find your passcodes. 

For this reason, it’s important to keep your computer password-protected and always within reach. Bear in mind, too, that there are other ways to keep track of passwords. For example, if you’re old school you might write them down in a notebook, crossing them out as you periodically update them. Some folks keep them updated in a spreadsheet software program. However, these tactics are susceptible to theft if, say, your home is burglarized and the thief takes both your computer and your password notebook. It can also be cumbersome if you are away from home and want to log in to websites from your smartphone. 

Today’s smartphones typically provide a way to store password information in their settings or options menu. For example, on the iPhone go to Settings, Accounts & Passwords, App & Website Passwords, (input security protocol for access), then click on the individual websites and apps for each user name and password. 

There also are apps designed to help you keep track of passwords. The following are highly recommended for their ease of use and security measures. 

LastPass – Import saved login credentials from Firefox, Chrome, Safari, etc. If you opt for the Premium suite for $2 a month, you also get the ability to sync information between your desktop and mobile devices, enhanced authentication options and tech support. 

Dashlane – This app is known for it simple, intuitive interface accessible with two-factor authentication. The app lets you change passwords across multiple sites with just a few clicks, and also keeps track of receipts of transactions so you can go back and review them. 

Roboform – This old-school password manager that can generate strong passwords, store and encrypt them, and sync them across multiple devices. It’s an older app that’s recently been updated with a more intuitive interface and features an autofill function. 

There are scads of apps designed to track passwords, so you can search for reviews and rankings to see which one offers features best suited to your needs. One of the perks of apps is that many are free to download and try out. If you don’t like it, delete and install another. When you find one you like, you might want to check out any premium features that are available for a fee.

Social Security Ground Zero: 16 Years to Impact

Social Security Ground Zero: 16 Years to Impact

Every year, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (OASDI) issues its annual report on the Social Security system. The report details the current financial status of both Social Security and Medicare as well future projections. The 2018 report has one key takeaway—both programs are facing long-term financial pressures and potential shortfalls. 

How Social Security and Medicare are Funded 

To better understand the report’s conclusion, you need to understand how the programs are currently funded. Both self-employment income and wages are subject to Social Security and Medicare taxes, known together as FICA (Federal Insurance Contributions Act) taxes. 

Employees pay a Social Security tax of 6.2 percent and the employer also pays the same 6.2 percent again for a total 12.4 percent of every employee’s wages (under the wage cap of $128,400 for 2018) funding the system. Self-employed persons pay both halves themselves (although the “employer” side is tax deductible against total self-employment income). 

Unlike Social Security, all wages are subject to Medicare taxes at a rate of 1.45 percent, paid by both the employee and employer for a total of 2.9 percent contributed to the system. Again, the self-employed pay both sides of the Medicare tax, just like the Social Security tax. In addition, anyone who earns more than $200,000 ($250,000 if married filing jointly) pays a Medicare surtax of 0.9 percent on all wages above those amounts. 

Earning Your Benefits 

Taxpayers need to earn a certain amount of credits in order to be eligible for Social Security benefits, with the amount depending on when they are born. Everyone born on or after 1929 must accrue 40 credits—which equals roughly 10 years of full-time work—to be eligible to collect retirement benefits.

How much you receive in benefits depends on how much you earned during your career. As of the April 2018 tables, individual retirees currently receive an average of $1,411 per month, or just under $17,000 per year. 

Taxing Your Taxes 

Taxes on Social Security benefits themselves also help fund the system. Depending on your filing status, age, how much you earn, etc., you might have to pay income tax on your Social Security benefits. These taxes are added back to fund the system for other taxpayers. 

Historical Perspective 

The Social Security and Medicare systems are more than 83 years old. During this time, the programs have taken in approximately $20.9 trillion in revenue and paid out about $18 trillion; leaving $2.9 trillion in trust fund reserves at the close of 2017. 

Source of the Problem 

Here’s the issue: the initial recipients didn’t pay into the system themselves—their benefits were funded by those currently working. The problem is that those entering retirement today represent a large segment of the population, while the working population is increasingly smaller due to declining birth rates. Together, this means the system is paying out more than it’s taking in.

 For the first time since 1982, Social Security’s total costs will exceed its total income, according to the trustees’ report. As of now, the trustees expect to continue funding Social Security and Medicare using non-interest income (aka taxes), interest income on reserves and trust fund asset reserves. This leaves the system solvent through 2034, when the trust fund reserves will run out. 

How Bad Is It? 

Without structural changes or increased taxes, Social Security will be able to pay only about 75 percent of scheduled benefits after 2034 through 2092. Medicare is facing a similar, if not worse scenario. 

What’s Next? 

The trustees suggest addressing the shortfalls as soon as possible. This is easier said than done, as any solution is going to be untenable to some group of constituents. 

Potential solutions include reducing benefits now, raising the retirement age or increasing the wage cap for Social Security taxes. Even more draconian measures being considered include means testing to receive benefits or an outright increase in FICA tax rates. 

The trustees’ report places a great emphasis on taking action now rather than later. The longer Congress waits, the worse the problem will become. But since all solutions are politically unpopular, legislators are unlikely to take any immediate action.

Key Performance Indicators and Your Business – Part 1 of 2

Key Performance Indicators and Your Business – Part 1 of 2

Key Performance Indicators, also known as KPIs, are core measurements that businesses use to monitor progress toward achieving goals and targets. KPIs, which vary widely by industry and entity structure, can be used to monitor and track all aspects of a business. Management teams pay close attention to KPIs, looking for anything out of line that indicates action is required. In this two-part series on KPIs, we’ll look at the difference between KPIs and metrics, methods for choosing KPIs, how to define KPIs and the best ways to track and communicate findings. 

Metrics versus KPIs: What’s what? 

KPIs and metrics are often conflated because all KPIs are metrics, but not all metrics can (or should) be considered KPIs. 

Metrics are data driven, quantifiable measures that track performance. Created from data compiled periodically (such as accounting-based metrics) or continually from a live data source, metrics allow businesses to monitor progress toward achieving goals and objectives. 

How to determine which metrics qualify as KPIs? 

Peter Drucker, one of the most widely influential thinkers on the subject of management theory and practice, wrote “What gets measured gets managed.” As such, not every metric is truly “key” for your business. If you treat all metrics as equal and don’t differentiate between what really matters, then nothing will stand out and you’ll manage everything equally. This is why it is critical to select the metrics most important to you and your business and designate those as your KPIs. 

Metrics Still Matter 

Your KPIs might be your most important metrics, but this doesn’t mean the other metrics don’t matter. When something goes awry with one of your KPIs, you’ll need to dig into other metrics to understand the problem, identify the root cause and correct course. 

Mirror, Mirror on the Wall: Who’s Performing Best of All? 

Not everything your business gauges will be an accurate measure of performance. Metrics that feel good to track but don’t have much impact on progress are often called “vanity metrics.” Vanity metrics are fun to get excited about, but they don’t actually provide much value or insight. 

The entire point of carefully selecting KPIs is so that you focus on what really matters to your bottom line. 

How to choose KPIs that matter 

Delivering the right metrics to the right people at the right time allows you and your team to collaborate, make decisions and take actions based on data. KPIs can go beyond just providing focus to create a cohesive unity among your team in working toward a common objective, but only if they are well defined and easy to comprehend. Next month we’ll look at how to transform a bunch of numbers into something actionable and meaningful. 

Before we get into the specifics, the simple way to drill down and select a handful of metrics is by asking two central questions. First, what are you trying to achieve and, second, how will you know if you’ve achieved it? 

Stay tuned next month for a continuation of this discussion and more answers to your questions.

Explaining Deductions for Small Business Owners

Explaining Deductions for Small Business Owners

New details have emerged from the IRS that explain how small business owners may be able to obtain different tax breaks.

This article discusses the different rules the IRS has proposed, and what this means for small business owners in the United States.

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The Secret to Obtaining More Clients

The Secret to Obtaining More Clients

The key to obtaining more clients is knowing the differences between what you can provide and how you can deliver results.

This article explains how obtaining more clients begins with marketing your results rather than your services.

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RBG Announces New Hire

The Memphis-based accounting and business advisory firm Reynolds, Bone & Griesbeck is thrilled to welcome Madeline Morgan to the RBG team.

“I’m happy to extend a warm welcome to Madeline,” says John Griesbeck, CPA, managing partner of RBG. “I know she will be a great addition to the firm and our clients will enjoy working with her.”

Morgan graduated Magna Cum Laude from Mississippi State University in 2017 and completed her Master of Professional Accountancy in 2018. Previously an intern, Morgan will now be a member of the audit staff at the firm. Her main area of focus will be in the manufacturing and distribution industries, though she will assist with other industries as well. She is a current member of the American Institute of Certified Public Accountants (AICPA). A resident of Midtown, Memphis, she enjoys traveling, listening to live music, tasting at local breweries and participating in Mississippi State tailgating.

Reynolds, Bone & Griesbeck, PLC Announces New Tax Director

Reynolds, Bone & Griesbeck, PLC (RBG) is pleased to announce the addition of David Craig, CPA, JD to their professional team.

Craig joins the RBG team as a tax director in the firm’s Tax Department. He is responsible for managing and delivering tax consulting, tax compliance, and tax provision services for RBG’s manufacturing, distribution, family office and real estate clients.

“We’d like to extend a very warm welcome to David,” said John Griesbeck, CPA, RBG Managing Partner. “We consider him an exciting new addition to our team and look forward to watching his extensive experience benefit both our clients and teammates.”

A graduate of the University of Memphis, Craig holds a Bachelor of Business Administration in Accounting. After completing his undergraduate studies, he went on to earn his Juris Doctor from the university’s Cecil C. Humphreys School of Law. Craig is currently licensed as a CPA in Tennessee, Mississippi, and Georgia and as an attorney in Tennessee. He is affiliated with the American Institute of Certified Public Accountants (AICPA), the Tennessee Society of Certified Public Accountants (TSCPA), and the Tennessee Bar Association (TBA). Raised in Memphis, Craig currently resides in nearby Cordova, Tennessee. 

The Importance of Failure

The Importance of Failure

Those that take risk and go beyond their comfort zones are more likely to see success earlier in their careers.

This article discusses how professionals can embrace the challenges of failure to ultimately find success.

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