This is certainly a good news, bad news message. That the cost of living for all of us, from food to commodities like gasoline, has gone through the roof over the past several years is no surprise and painful. That is clearly the bad news.

The good news is that the tax law provides for adjustments which mitigate some of the damage of ongoing rises in cost of living.

To review recent changes see a recent message from UHY, LLP at the following hyperlink.

IRS Announces 2012 COLA Adjustments

By this point virtually every business owner in Michigan has received a State mailing putting them on notice that they are looking for any unclaimed property businesses may hold. This can include uncashed vendor checks, uncashed payroll checks, customer overpayments, and inactive bank accounts, to name a few.

While this law has been on the books forever it’s only recently that the State has pushed to claim what, according to the law, is rightfully theirs. The reason is simple; they need the money.

For an excellent summary of the State of Michigan’s voluntary disclosure program see the following hyperlink.

Michigan Unclaimed Property

The IRS has recently announced that the deadline to file your 2011 tax return and pay any balance due has been moved to Tuesday April 17, 2012.

For more information on this and other matters impacting your 2011 tax filings please copy the following link into your web browser.

http://www.accountingtoday.com/news/IRS-Extends-Tax-Filing-Deadline-April-17-61316-1.html

Governor Rick Snyder’s tax increase on both private and public pensions was recently upheld by the Michigan Supreme Court. Only a portion of the new law didn’t pass muster with the high court since, in the courts opinion, it created a graduated income and thus is considered illegal.

This was certainly one of the more controversial tax provisions that the Legislature put forth in that it increased taxes to individuals while at the same eliminated $1.8 billion in business taxes through the elimination of the Michigan Business Tax.

For the full article see the link below.

http://www.detnews.com/article/20111119/METRO/111190346/1409/metro/Mich.-Supreme-Court-upholds-tax-on-pensions

Unless you operate on a cash basis, a common problem is getting paid within a reasonable time. Many reports by credit organizations confirm not only that the problem is widespread, but it seems to get worse every year and bad debts are the number one reason businesses fail!

While many small business owners gauge their success based on sales, after all “Nothing succeeds without sales” as the adage goes, any shrewd operator knows reducing costs can be far more profitable than increasing sales. For example, if the company sells a product with a 20% profit margin after all costs-product cost, salaries, overhead, etc.-$1,000 in sales (minus $800 in costs) produces a $200 profit. A 10% increase in sales increases profit by $20. But a 10% reduction in costs saves $80, which is four times as much. Thus, a reduction in costs of only 2.5% will produce as much profit as a 10% increase in sales.

The moral of the story is you need to manage the expense side of the equation and nothing is more critical than that of managing your bad debt expense.

Janet Attard, in her article “10 Steps To Getting Paid on Time” provides practical insights on how to do just that. See the hyperlink below for her article.

http://www.openforum.com/articles/10-steps-to-getting-paid-on-time

For those of you small business owners that haven’t taken the time to check in with your CPA regarding your tax status, it’s time!

The good news is that if you do the planning between now and the end of the year, you can still minimize the amount of tax you will be faced with come April 15, 2012 BUT the window of opportunity is closing quickly.

At this point to minimize the tax bite your CPA should assess the business operating results through your third quarter and then project results through the end of the year. Armed with this projection your tax professional will be able to guide you through the steps necessary cut those pesky tax costs.

Annie Mueller in her article “Timely Tax Tips For Small Business Owners” addresses some planning pointers well worth considering. To see the article copy the following link into your web browser:

http://www.openforum.com/articles/timely-tax-tips-for-small-business-owners?extlink=em-openf-SBdaily

The IRS has announced a voluntary program that provides an opportunity for taxpayers to reclassify their workers for employment tax purposes. The contractor vs. employee controversy is one that has been on the radar screen for the IRS for decades, however, the actual attempts by the government to convert contractors to employees for payroll tax purposes, in our experience, have been few and far between.

The government of course would convert everyone paid by employers from contractor to employee status for one simple reason; for 2011 it adds roughly 12.4% of the Social Security wage base ($106,800 in 2011) to the federal coffers in the form of Social Security for each conversion. Certainly you could argue that this is nothing more than another money grab by the federal government to further fund its failed financial policies but it’s also a reflection of the inability of the IRS to prevail on audit when this item is raised as an issue.

Sarah Needleman and Emily Maltby in their article “Price of Reclassifying Workers” do a very nice job at providing background on the controversy and shed insight as to small businesses view on the matter.

In our opinion, whether you like our governments tactics for extracting more money from employers, or care much about its intentions, this is an opportunity for those businesses that feel exposed by this matter to “come clean” for a relatively modest amount.

See the Needleman/Maltby article at;

http://online.wsj.com/article/SB10001424053111903791504576588811797594764.html?mod=dist_smartbrief

In his article “How Keeping Score Keeps you Accountable”, Mr. Moltz addresses the daily monitoring he must go through in light of his diabetes issue and uses his diabetes to emphasize the significance of monitoring the day to day results for any business. The article serves as a reminder of the importance of both counting our blessings and the daily scorekeeping in our businesses.

Certainly Mr. Moltz is correct in using the financial statements example as being “one of the most important score cards a business owner has”. However, IF your CPA prepares financials at all, it is only once per month and generally the business owners aren’t using them as a tool for keeping score. What business owners need to understand is that if they want to improve their score one way is by having a better understanding of these financials and, at the same time, be able to monitor results daily.

As any business owner knows if your score card is tallied up only once per month there is no way the result will ever be as good as it could be by having daily measures of performance. A good operator knows what operating results are by day, week and month and as such can improve his or her score so that by month end you achieve the result you desire.

And lastly I count my blessings because while I experience the ups and downs of success and failure, yes on a day to day basis, I am healthy.

The article is well done and well worth the read. See below for the link.

http://www.openforum.com/articles/how-keeping-score-keeps-you-accountable?extlink=em-openf-SBdaily

As I read the John Mariotti article “The Power And Danger Of Self Fulfilling Prophecies” I am reminded of a quote I read decades ago “Perception is a mirror not a fact”.  As with the young painter and other characters in the story illustrating Mr. Mariotti’s point, we are all prone to follow the pack, like little lemmings, and walk right off the cliff unless we are very careful to protect our thoughts.

Sadly most of us will let the world (spelled the media, government, political “correctness”, and fear mongers) decide our fate as our own decision making has been relegated to someone else. Simply put, we are no longer willing to assume responsibility for the outcome. Because of this, like the painter, we succumb to influences that may have nothing to do with reality. This also leads to a sort of giving up and thus, consciously or unconsciously, setting in motion a self fulfilling prophesies.

As a personal illustration of how insidious this tendency is, I was recently involved with closing a transaction that was a little difficult. There were many facets, and as such, there were many different ways the deal could fall apart BUT there was really no (meaningful) indication that it would do so. The day before the transaction closed I was obsessing in a discussion with an associate, as I am prone to do, and she said to me “Gary why are you projecting a negative outcome that is so remote it serves no one? Focus on getting this done and a positive result.” While this thought process was my own doing, the point remains the same; whether outside influences or something of our own creation, the results, i.e., the self fulfilling prophesies, are based on choices we make, either consciously or unconsciously.

This article is very timely and right on the money. See the link below and enjoy!

http://www.openforum.com/articles/the-power-and-danger-of-self-fulfilling-prophecies?extlink=em-openf-SBdaily

While the article is very basic, I honestly believe that in many instances that it is exactly what both seasoned business owners and start up organizations need to get and stay on track.

To access the article copy & paste the following address into your web browser.

http://www.openforum.com/articles/does-your-business-have-a-debt-ceiling-problem