You are currently browsing the monthly archive for January, 2008.
An interesting post here on the upside to recession. Joel Libava says that franchises increase when economies slow down. The reasoning: when the economy slows, people get laid off, and they think, “huh, maybe I’ll start that business my wife told me not to start” (or something like that).
But in the end Joel says everything will be okay. The small business will survive.
I wonder what other potential upsides to recession there are?
Thanks, Jason M. Blumer
1. Time to take the microbusiness survey to determine what is most important to the small business (which is most of our clients). This is brought to you by Dawn Baker’s Microbusiness Research Institute - GoSee
2. Having trouble funding your new venture? How about “crowd funding”? We saw this new concept on the Small Biz Labs blog and it blew our minds! You need to check out this new wave of funding your latest venture - GoSee
3. Try to avoid these Six Mistakes That Look Dumb In E-mail (from the great Productivity blog) - GoSee
Thanks, Jason M. Blumer
Today is my Mother’s birthday, and it is truly a day to celebrate! She has been the cornerstone of strength in our family for so long, and through so many issues. Her boys have put her through the ringer these past 30 or so years, but she’s been long-suffering, accommodating and loyal to us all.
So, in honor of my Mother, I’ll post a poem I wrote for her and my Dad when my brother and I sent them on an Alaskan cruise last year…
TRIBUTE
how great the sun to light each day
to illumine our weary ways
and, too, the moon, its small companion,
a gift in evening rays,
and note the might in nature seen
the tall and aged tree
to span it’s stoutly branches heav’nward
to reach and brush the breeze
though great these gifts from nature seen
gifts from God on high,
a mother and a father
are by far the better prize
for theirs the soul they give each child
to prosper and to give
they lay a lasting legacy
for the child to see and live
worn and weary are their hands
cheeks stained from many tears
with faiths now strong, abiding still
prayers to God span years
a tribute to our father, our mother
paternal strength that guides
a tribute to your legacy
now in our lives abides
This definitely speaks to my Mother’s commitment to our family through some hard times. But she continues on in strength (her strength definitely comes from the Lord). She is a wonderful woman, a grandmother who adores her grandchildren, a committed wife, still a loving Mother to me and my brother and an all-around servant to everyone she meets (just ask the 80 to 90 homeless peoples she feeds every Tuesday night).
Mom, I love you. You are truly the bomb (that means I like you a lot).
Thanks, Jason M. Blumer
This is #5 in a 10 part series on your Company’s Systems (see the original Systems Post here)
This fifth post references how to operate your company on a “flow of information”framework. That is, you want to set up your Company’s Systems to line up with the way in which information flows through your company.
There is a way in which information flows intuitively through your company, depending on your industry, your management style, your geography, your targeted niche and so many more. It may not always seem intuitive (what, with all the chaos going on at the office), but there is probably some kind of recognizable process that information takes on as it enters and exits your organization. Figure out what that process is… and manipulate the crap out of it!
You want to bend this “flow of information” process to your needs… your management tool needs, your reporting needs, your profitability measurement needs, etc. If you can manage this flow, then you can know stuff you’ve never known, and you can serve your client/customer in a whole new way (which to me, typically means more “Benjamins” coming your way).
Here’s how to do it:
1. Study the entry point of information into your Company. All types of info enter into your Company in many different ways. Sales leads may come into your organization through your website. Customer complaints may come into your company through the sales staff. New business ideas may come through regular attendance at trade shows. However it enters the company, and for whatever purpose, you want to know that process in and out. You may want to sit down with some decision-makers in your company and chart this ”flow of information” on a wipe board to become more intimate with it. Then…
2. Grab the information from “the flow” - never let valuable data slip through your company without being captured. ”Many people know many different things that many people don’t know.” In other words, there are a lot of people on the forefront of a company (where info initially enters the entity), and they know a lot of little things that could change the way a company operates. But though these people know many things they aren’t telling other people because they don’t know how these “many” things fit into the “flow of information” model for your Company (whew!). Create new forms to capture that info, get it into sales lead software, require sales staff (or whomever) to assist in capturing the data for future use, etc. Don’t just do it sometimes, announce the new policies and procedures to the whole company to capture this information, then you will be accountable to follow through and commit to capturing it. Explain to everyone why you are accumulating this new information and how it will make you a better company. New databases will be created, problems will arise that you’ve never seen before and new ideas will be generated just by studying the process of how info enters your company.
3. Manipulate this new fat mound of information with a vengeance. I’m never an advocate of implementing procedures and policies unless they have some benefit. Studying your “flow of information” only has benefit when you use the data. Implement new monthly meetings to analyze this new found data, make decisions with it and change your company from the inside out! I teach this simple step with QuickBooks when training so many of our clients. This software has such high-end capabilities to capture financial information, but it all depends on how my clients know their information flow (study it!) and how they grab that information. Otherwise, I can’t help them manipulate it AND CHANGE! And our firm can make QuickBooks do so much more than track financial info - we can make that software a management tool in so many ways, tracking referral sources, client account numbers sorted by state, regional customers, types of customers (ethnicity, age, marital status, etc.), effective branding, and so many more.
The “flow of information” framework in your company is so important to implementing your Systems. You must know it and operate your company around it. If you commit to this, you will know success, or you will at least know why you are not successful. Here’s to the flow…
Thanks, Jason M. Blumer
1. I stink at this awesome game, which I saw on Brant Hansen’s blog. The game is very mind-numbing and fun, but I’m still terrible at it. According to the game, my travel IQ is 88 - GoSee
2. Word up… I love it when the government hands out money (my money!). You can expect your check sometime this Spring, assuming the bill passes - GoSee
3. How would you like to know the 10 most and least profitable businesses to start? Now you can (and my business is at the top! Boo yaw!). Check it out… - GoSee
Thanks, Jason M. Blumer
A few short points about finding joy:
1. Some struggle with what they do (be it a relationship, a job, a situation, etc.). But if you can look back over your life, you’ll see that a lot of those past struggles were preparing you for the abilities and successes you now enjoy. What are you going through now that will bring great rays of light into your future? What is God teaching you now that will change your future for the better?
2. Comparatively, finding joy is difficult. That is, you can always find someone better and in a better situation. You’ll find it difficult to find joy using comparisons. Stop that.
3. We think joy comes in the big things. Not so. There are many joys you experience each day. It’s just that this complicated world of stuff, schedules and to-dos keep us from seeing them. My potentially unnoticed joys (some may seem small to you, but they are “joys” nonetheless): my wife cooks a meal for our family each night so we can all be together, my wife and I love each other deeply (after 15 years of marriage), my parents love my wife and my wife’s parents love me, my three daughters are healthy, my work is hard but fulfilling, I tend to develop deep friendships, we enjoy a great church, my dog doesn’t shed, I get to work in a business with my dad, my brother is a true friend, etc.
4. Finding joy doesn’t mean finding happiness. Sometime our sadness can be joyful. Any examples?
I’m feeling introspective today…
Thanks, Jason M. Blumer
I subscribe to Marshall Goldsmith’s Ask The Coach blog from Harvard Business Review, and I recently listened to a podcast regarding his thoughts on his latest book, What Got You Here, Won’t Get You There. Fascinating stuff on the changing role of leaders in our world. It reminded me of our firm’s Thriveal Theory, why it was developed, and how we operate within that theory’s parameters.
There were five points he made on that particular blog post. Here’s a recap of a few:
1. In the future (which is now!) leaders will have to start thinking globally (he copied this from my Thriveal Theory… just kidding). Not even the small business can resign itself to the local geography anymore. Our world is global, and competition will be gained and lost at this level. The fact that business is global will impact how new leaders think, act, hire, buy, sell and win! I have no doubt that even our tax preparation and consulting engagements could start crossing the US borders in a few years (while we remain in our offices).
2. Businesses will begin developing alliances and partnerships in order to survive. And I feel this will directly impact and enhance the small businesses’ ability to compete in this global marketplace. As larger businesses fail to make quick decisions, respond to market trends (which are becoming faster and faster), and meet the needs of younger more demanding employees, small businesses can step into strategic alliances with larger entities to provide services they can not provide themselves. And expanding on Marshall’s thoughts here, I believe niche markets and “nano-focused” operations will be the place where the upcoming small business thrives! The fact that the world is global (even for small businesses), and that large companies can’t respond to economic change the way they need to, small business will provide the needed lightning-quick support, management, technology, manufacturing, staffing, etc. that is needed for the larger entity. The next 5 to 10 years will truly be the era of the small business. I’m thankful for Marshall highlighting this fact.
3. Marshall shared a great quote from Peter Drucker (the man who invented management) on the changes in new leadership models: “…the leader of the past knew how to tell. The leader of the future will know how to ask.” More and more workers are becoming what is know as knowledge workers. They know more about their tasks than the boss does. They know the information that is needed to run organizations. And leaders in the future will not be able to manage these individuals as they did in the past - “you go here, and do this,” “you do this task at this speed with this result.” Leaders may not know the stuff their employees know - therefore, they have to ask for guidance, how to do certain technological tasks, when to perform specific routines, and how best to perform them. Can you believe the impact this how on you and me as leaders? It’s amazing! If we continue operating under the traditional model of management (tell people what to do), then we are destined to fail in this new trend.
These thoughts impact me in huge ways. I feel like I have to hurry and tell my clients that are practicing the wrong models of management - before their businesses implode. And these models hit home with me in so many ways. I own a media, motion design and high-end videography and cinematography business with some other partners. I have no skills in these areas. I only possess the ability to manage tasks, people, a complicated business model, and obtaining the end product (satisfied clients and cash). Someone asked me, as a consulting CPA, why I own this type of company? I could only answer with the thoughts reflected in this post. You have to know how to manage now, not necessarily how to do what other people in the organization do (I can’t design one freakin’ lick).
The implications to these new management techniques are far-reaching. Don’t just read over them and shrug. Make changes now… and win!
I’m interested in knowing what you think…
Thanks, Jason M. Blumer
I’m a little late on getting this week’s edition out of Thriveal’s Three on Thursday, but here is what I’ve found lately through my feeds:
1. The MacBook Air is soooooooo cool - GoSee
2. These are the coolest shoes I’ve ever seen. They fit the way gloves fit your hands - GoSee
3. If you need to remember something, put your shoes in the toilet (…or something like that) - GoSee
Thanks, Jason M. Blumer
Probably one of the greatest moves I made in life was back in May of 2003 when I decided to join my dad’s small CPA firm and work with him.
He was a young 56 years old then, and today he turns 61. And I’ll be 37 this year, and I just figured out (maybe a couple of years ago) that I don’t know nothing (sorry English teachers), and that my dad knows stuff… turns out, it’s a bunch of stuff. Figuring this out sure would have been helpful a number of years ago. Why did it take me until around the mid-30s to figure this out? That stinks… in a big way. I may have more time, more money and more life… if I just would have listened to my dad.
In honor of my dad’s 61st birthday today, I wanted to share a few things he taught me…
1. He misses his dad more now than when his dad was actually alive. That’s interesting. That makes me want to hang around my dad. I don’t want to say that one day. So I’m glad I get to work with my dad. And I’m going to make sure my children get to spend a lot of time with me (even when they are teenagers)… because of my dad.
2. My dad has sacrificed his life for his kids. My dad is the co-owner/co-organizer of four businesses total, two (seen here and here) for me and two (again, here and here) for my older brother. He sacrificed his time and funded all of the businesses with his own cash. I’ll be sacrificing for my three daughters the way my dad did for me (maybe not the cash part)… because of my dad.
3. My dad taught me to make myself indispensable at my work. This has helped me tremendously in my past employment, and I’ve even taught this concept to some of my clients. By this I mean, put yourself in such a trusted position at your job, and perform so well that your employer seems somewhat obligated to offer you higher positions, raises, promotions, etc. I’ve asked for and received higher positions, raises and promotions… because of my dad.
4. Be a background man. My brother and I are anything but “background”. We love business and loud music and we don’t like to follow people. And we sing REALLY loud at church. My dad is not quite so showy. He is more of a “background” man. You know he’s there, but he’s not going to point that fact out. But when he speaks, me and my brother (and others) tend to be quiet. He is usually saying something worth listening to. I want to be a man worth listening to and hang out more in the background… because of my dad.
5. My dad is a man of faith. Though he will tell you that his faith in God is not very strong, we see a different picture. We see a man who has had to lean on God in so many ways through so many trials in the past (many of those trials caused by his unruly kids), and still rely on God and share Him with others. I want to be a man of faith… because of my dad.
There’s just so many more I can’t list them all, but those are just a few.
Dad, I love you more than words can say, and I’m so glad to be in the office with you today to say Happy Birthday! You freakin’ rule, dude (did I mention that me and my brother are not very respectful of the aged, too?).
Thanks, Jason M. Blumer
…my firm’s website updated after our 10 year anniversary in November of 2007.
We also posted some official descriptions of our Thriveal theory on the site. See ya.
Thanks, Jason M. Blumer
1. The Firm Administrator of our firm just told me that we need to develop a better Employee Review Form for our growing practice. Our current one is vague and not very specific. Maybe this link will help us (and you…) - GoSee
2. Awesome article from The New York Times on blogging as a low-cost high-return marketing tool (passed along to us from Business and Blogging). The article says that only 5% of small businesses with fewer than 100 employees have blogs. The ladies at Business and Blogging expanded on that article a bit and quoted some official U.S. Census numbers stuff to calculate that out to be about 1.25 million blogs. Interesting. I’m only one in 1.25 million - I don’t feel so special… - GoSee
3. Great post on tempering entrepreneurial endeavors from The Entrepreneurial Mind blog - GoSee
Thanks, Jason M. Blumer
Wow! What a plethora of good material I had to read through during this January 8th Edition of The Carnival of Small Business Issues, maintained by the elusive CA. I feel like I just got a freakin’ MBA (maybe I did - hey, where’s my diploma?).
Anyway, on to the good stuff. Here is what I learned…
Operations
Are You Copying Genius? Or Creating Mediocrity? by Debra Moorhead was an awesome post on receiving good business advice. She so eloquently encourages us to hang out with the exemplary (and ditch the mediocre). Surround yourself with good people, copy genius, and so many other points I can’t recount here. Don’t miss this inspiring and accurate article by Debra!
Are You Exploiting Your Strengths? by David B. Bohl offers an interesting view on working on your strengths. That’s right. David points out that we normally tend to work on our weaknesses, but exploiting our strengths makes a lot of sense after reading David’s well-thought out article. It’s definitely worth a read.
Business Performance And Profit by Jim Sansi had a great post on actually calculating and measuring the implementation of business processes (instead of just wingin’ it). Using a simple example (that you should expand on), Jim explained how to measure profitability in order to help you know what type of systems you can and should implement into your company. Great stuff.
Five Things Racquetball Taught Me About Succeeding in Business by Change Your Tree was very informative (and made me want to get on the racquetball court again). Business does mirror so many other aspects of life… this was a great comparison. This game teaches us to be patient, know the competition, know the angles, etc.
An Independent Consultant’s New Year’s Resolution, and How to Keep It, in 7 Steps by Tim King makes some confessions and commitments to improve in the new year. How? With his seven ethereal steps, of course (including): visualizing yourself completing the steps, list the mental challenges and see yourself doing it anyhow, etc. A wonderful New Year’s article (and he got in a few days of his “write 500 words per day” resolution too!).
Starting the Year off Right by Robert D Flach offers good reminders for all you self-employed people - start NOW tracking your income and expenses for 2008. Tax time (in 2009) is no time to get organized. He reminds us of the possibility of IRS audits for the nano business owner, and that you want to be prepared should the IRS chose to show YOU a little extra love this year (i.e. auditing you, that is). Great advice worth heeding.
Marketing
Re-Evaluate and Measure Your Marketing Strategy in 10 Steps by Jay M helps us with the “science” of marketing. With 10 ways to expand your marketing campaign, Jay spells out in clear and easy language how to review what you have done, what you should be doing in the future and analyzing how you did financially. Wonderful material.
Marketing Tip - Train Your Team on Promotions by Ingrid Cliff makes such an important, often over-looked point to train your team on the new promotions offered to your customers/clients. We all get so excited about our new stuff that we fail to brief the team on how to best sell it to the public. Great reminder from Ingrid!
A Subtle Conversion Rate & Response Booster From 3 Masters by James Alenteal gives some straight forward advice on conversion at your site or blog (i.e. turning visitors into readers and/or buyers). He gives examples (here, here and here) of three different people (actually four - see here) who have implemented some interesting conversion pyschology on their visitors. It’s great stuff and takes just a minute to read (watch out - prepare to be converted!).
Bring the Love Back by Edith Yeung offers some quick advice on what your customers need (and the reminder that you might not be providing it). With a funny video reminder, Edith tells us it’s time to give some love back to those customers… after all, they may not feel like you love them anymore.
The Power of Multivariant Testing by Jim Logan speaks to the need for testing of any marketing campaign launch. But testing the success of a campaign can be daunting (how do you test direct mailers, their use and impact in an inexpensive way? You have to change things and send them again). Enter the world of multivariant testing online. This is seemingly a powerful tool that lets you test multiple variables online all at the same time. Jim knows what he’s talking about in this well-written article.
Blogging and PR: Six Principles to Live By by Laura Spencer offers six basic ways to get your business blog rolling. They are straight and to the point, and come from experienced bloggers. This is an article for all of us…
Mortgage Issues
When Should You Refinance? by Ryan from CareOne Credit Counseling offers some very practical advice on the decision to refinance your home, and for what reasons. Use some of CareOne Credit’s handy dandy calculators or budget planner to help you make the right decisions. There’s a lot of useful info on their site for those interested in repairing or enhancing their credit standing.
The Mortgage Loan Process by Ryan from CareOne Credit Counseling urges us to know the mortgage loan process before the surprises arise. Walking you through the three basic steps of acquiring a mortgage (1 Applying for a loan, 2 the processing of your loan, and 3 the loan closing), this article provides very practical advice for the new homeowner, as well as those buying again for the second or third time.
The Power of Pre-Approval by Ryan from CareOne Credit Counseling provides yet another awesome and well-written article concerning a different aspect of the mortgage process: pre-approval. The power of pre-approval during the loan process offers some very basic benefits to the future homeowner, that being ultimate speed of the loan approval, gaining bargaining power while house-hunting and offering comfort to the seller during the process.
Taking Advantage Of The Equity In Your Home by Ryan from CareOne Credit Counseling offers a great example of how much equity you can pull out of your home. Explaining the difference between a line and a loan, Ryan details various terms, rates and costs to the homeowner during the equity-pull-out process. Again, well-written content from this involved and detailed website.
General Business
Evaluating A Business Opportunity by John Crickett offers so many great tips on evaluating your move into business ownership. There are tips on avoiding scams, making sure you’re the right fit for the business opportunity and making sure the move is profitable. John’s blog is chocked full of so much more too. It’s worth a visit (again, again, again and again).
Does Bad Personal Credit = Bad Business Money Management by Scott Allen explores whether the method by which you manage your personal finances spills over into how you manage your business finances (for better or worse). No concrete answers here (except that Scott feels he is better at managing his business finances over his own personal finances), just good exploration into the possibilities. Well written and insightful.
Top Ten Opportunities in 2008 for Personal Businesses (article provided by Dawn as a guest blogger on Small Business Trends) by Dawn Rivers Baker gives a rundown of some upcoming opportunities (along with some convincing statistics on SMBs) for nano-businesses. And Dawn has the experience to backup her predictions. Ready to start your new business in 2008? Why not start with Dawn’s suggestions.
Is the Sky Falling? by Mike Buckleygives us a candid rebuttle to the latest US recession scares in the news. He reminds us that even in a recession, there are still many opportunities for the small business. You may have to work a little harder, but you can do it.
Learn the Proven Money Making Keys to Success E-commerce by Dan-O gives some enlightening information of doing e-commerce well. With a very interesting and brief history of e-commerce, Dan-O explains how personalization and online communities (among other ideas) make e-commerce sites enjoyable. And enjoyable experiences online tend to bring customers back again and again. Good reading from an experienced author.
Social Security by Marc Blumer (is the name familiar… he’s my dad) offers some guidance on whether to take social security earlier or later, depending on your situation. Interesting stuff for those in retirement mode…
Miscellaneous
Finding Your Special Talent by Christine (all the way from France) shows us quite poignantly how trials can be avenues into embracing needed change. And maybe this needed change can be a door to a new money-making venture, a new job, new fields of opportunity, a new life… you never know what’s around the next corner. Go ahead… go look and see what you find.
5 Questions You Need to Ask Yourself Before It’s Too Late by Liz Fuller offers her regular straight forward advice on reviewing what went right this past holiday season, and how to perpetuate that behavior. How? Write it down! With 5 simple questions, Liz encourages you to make a note of the past, and apply it to the future. Good stuff.
Can You Really Achieve Total Success? by Dr. Joe Capista highlights the often-forgotten parts of what Total Success truly is. It’s not only defined by dollars. Where do you stand on his primary four areas of Total Success? They are Family (Relationships), Physical (External), Spiritual, (Internal) and Work (Business). Many decades of wisdom on his blog, and in his books.
Total Success is Determined by Your Thoughts, Beliefs and Actions by Dr. Joe Capista talks about the ingredients to Total Success. They are found in setting goals and being determined to seeing those goals through to the desired outcome. Truly a well-rounded definition to success.
Be A Balanced Mom by Iamawahm gives Moms who work at home 8 helpful tips to make work happen… and stay balanced. From knowing when to ask for help to fighting the guilt that often plagues the work-at-home Mom, this Mother of three speaks from heavy experience.
A Few of My Own Posts
Creating Customer Trust and Loyalty… with Consistency
Selling Yourself… to Your Employees
Excellent Networking… by Playing to Your Weaknesses
Whew! I’m worn out (plum tuckered out, as they say it down here in SC). This material was very enlightening. I hope you enjoy the recaps as much as I enjoyed the reading (I got the best end of the stick). If you are interested in hosting the Carnival of Small Business Issues, feel free to visit here to sign up.
Here’s to another great edition! Take care now, ya hear!
Thanks, Jason M. Blumer
My wife just informed me that…
1. She can implement Systems at home too… but kids don’t buy in to them
2. She can’t “fire” our kids when they don’t buy in to the Systems
3. She never hired those kids in the first place
4. But bribing kids (and employees) always works well
Uh huh
Thanks, Jason M. Blumer
Are Your Resources Stretched? (This is the #4 post in the Systems Series)
A lot of small businesses stretch their resources to the point they may snap! Hey… resources are valuable things when you’re trying to make a living. Quit fiddling with them like they grow on trees. You know, resources like your employees, your money, your line of credit, your computer system, your knowledge, the 24/7 we all have, your amount of sleep, etc.
Implementing Systems (those magic little engines that invisibly run your business like clockwork) in your company will take a lot of resources (mentioned above), so BUDGET those resources. When it comes time to implement systems, you want some resources left to throw at the implementation of your Company’s Systems. You will be glad!
Among others, here are some overarching resources you’ll need to implement those valuable Systems:
1. Money. Moolah. Cash. This stuff really does spend well, doesn’t it? And it helps when you are about to start implementing Systems in your company. Some major assistance you may need when implementing Systems may be professional assistance. We are hiring a PR firm to send our firm soaring in 2008, and it will cost money. This firm will be key to continuing the marketing/branding Systems during this year and in the near term. I hope my clients see the value in my services (and they cost money). My clients’ Systems of tax planning, cash management, business operations can be greatly enhanced with my services. Cash is obviously one of the greatest resources you will commit to the implementation of your Company’s Systems. Make sure you got some when it’s time.
2. People are also a huge resource (I hope that was obvious to you). People cost money, and good people cost more money. Payroll is the biggest expense on a service-based businesses’ P&L. But the resource expense is worth it. You can’t implement good Systems in your company without good people to uphold, carry and better those Systems. It takes people to put “legs” to the Systems. And remember, you get what you pay for. Low pay means low experience and education, which means less effectual Systems. And that hurts EVERYONE in the company. It’s all about the folks…
3. Time. Whoa. That is something nobody has enough of. Time is a valuable resource, and can certainly be wasted. Thankfully, it can be enhanced too… with the right Systems. But you need time to make the right Systems which in turn give you more time (ahhhh… its all so confusing!). Be careful with your day. Each minute wasted is a minute not devoted to the right priorities in your Company… one of those being to implement good Systems to help your company run smoothly, more profitability, and with joy. Take time AWAY from those unprofitable things that are stealing your time and GIVE it to those tasks that enhance your business and relationships.
These resources are huge. There are many other, more specific resources I could touch on, but I felt these overarching ones were the biggest and most important.
Let me know how you manage these three resources…
Thanks, Jason M. Blumer
1. There are a lot of lists floating around the blogosphere about this time of the New Year. Here is Time’s Top List of Lists - GoSee
2. The government will be helping you switch to digital TV in 2009. Did you know that TV viewing as we know it is changing on February 18, 2009? - GoSee
3. This is a cool “Did You Know?” video posted at mine and my wife’s friend’s blog (some of the numbers and technology will trip you out!) - GoSee
Thanks, Jason M. Blumer
[following is a tax update I sent to my clients in our year end update letter]
The long-awaited “AMT patch” was finally signed into law on Wednesday, December 19th, 2007. We wanted to give you an update on the potential for this tax to affect nearly 21 million taxpayers in 2007. Since 1969, the Alternative Minimum Tax (AMT) has been available in the tax code to make sure the very rich pay some tax. However, the income exemption levels protecting the middle class from having AMT imposed on them do not increase each year with inflation. Some consider this a major flaw in the original bill (although the bill provides some pretty nice tax revenue for the treasury each year). Due to this oversight in the original bill, and as incomes have risen, more and more middle class have been subject to the AMT. And this most recent legislation is only a one-year patch, with the quarreling to begin again next year (an election year, no less). Now that the patch has been passed, these AMT tax revenues won’t be making their way into the coffers of the U.S. Treasury.
On the other hand, no offsetting tax savings were passed in this AMT patch bill – less AMT tax revenues means an estimated $50 billion have been added to the U.S. deficit due to this law. Had the exemption patch not been passed, those married filing joint taxpayers with income (slightly modified) over $45,000 would have felt the AMT bite. That would have been nearly 23 million taxpayers this year (consider: only 3.5 million taxpayers paid AMT in 2006). However, the patch has raised this married filing joint income exemption level to $66,250 ($44,350 for single taxpayers) for 2007, safe enough to exempt most middle class taxpayers.
The AMT provisions affect a number of the IRS’s internal programming capabilities, and have estimated a seven week delay in processing returns for this tax season. The IRS is unsure if this needed reprogramming and testing of its system will make both AMT AND non-AMT filers wait for the proper processing of their returns. We at Blumer & Associates, CPAs, PC use some high-end tax processing software, and all approved forms must come through our tax vendor. We will keep you informed on the processing delays as tax season progresses. We don’t expect it to actually take seven weeks (tax legislation was passed last year on Dec. 20th and the delay was only about three weeks).
Other late-year tax news includes a mortgage relief bill for those forced to claim mortgage debt forgiveness as income. Basically, taxpayers facing foreclosure of their homes often have debt forgiveness given to them by mortgage companies who can’t cover that taxpayers full loan balance with the sale of their home (often called a short sale). This forgiveness comes in the form of a 1099, or “imputed” income, to the taxpayer. In this new bill, up to $2 million dollars of this “imputed” income on primary residences can be excluded from income, IF the mortgage is refinanced within a three year window.
OTHER MAJOR LAW CHANGES: The 2008 budget omnibus bill was also passed to keep the Treasury department running, with $70 billion going to fund the wars in Iraq and Afghanistan. An energy bill was also passed raising vehicle fuel economy standards by 40%, and increasing biofuel production.
In addition, victims’ families of the awful Virginia Tech shooting will receive some income exclusion benefits related to payments received from special memorial funds.
Thanks, Jason M. Blumer
What are your Resolutions for the New Year?
Its about time to start making those New Year’s resolutions. Consider a new spin on this popular trend…
Make your New Year about one word. That’s right - pick just one word (or maybe two words at the most) that you want to sum up your New Year and what you want to accomplish. Here are some examples:
Devotion, Beauty, Leadership, Love, Family, Spouse, God, Learning, Perseverance, Change, Belief, Fulfillment, New Opportunities, No Debt, Strength, Less…
I have a lot going on in our firm this year, as well as at home. My word will be “Leadership” this year.
Let me know what you think.
Thanks, Jason M. Blumer
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