Accounting News and Notes

As of November 20, 2007 there are 641,385 of active domestic entities in Georgia and 57,839 which are foreign (incorporated in other states). Of those, 302,688 of the domestic corporations are for profit, 65,153 are non-profits, and 245,915 are Limited Liability Companies. LLC’s continue to be very popular since their becoming possible in Georgia approximately fifteen years ago and continue to be used more than ever before. Due to their ease of formation, the lack of a need for a formal Board of Directors, and that there is no requirement for owner/active members to take a salary, the administrative burden of operating an LLC makes it an attractive choice when considering corporate structure. However, an S Corporation has the added advantage of not requiring FICA/Medicaid taxes to be paid on shareholder distributions as long as a fair and reasonable salary is paid. As your results and how you plan to utilize your corporate entity can vary substantially from that of others, be sure to consult with your CPA for all of the possible tax/operational consequences which you will be facing as your proceed with your business.

Working with any large bank or small bank, as well as the Small Business Administration (SBA) will require pulling together financial information.  A well-prepared business plan will carefully document the amount of the loan you are seeking and the anticipated repayment period you are hoping to find.  Obviously, the marketplace and the overall business climate in which you are operating will greatly impact your final loan amount and provisions.  Working with a good CPA is the best place to start so that they might best help you approach banks that are looking for your type of business.  Commercial lenders, like all of us, want to feel that you are approaching them because of a true desire to do business.  If a bank learns however, that you are “shopping a loan” many banks will often pass on the opportunity as they are looking for long-term relationships rather than that solely of a transactional lender.  For example, each time you fully approach a bank, they will pull a “credit score” on both the business and the primary owners/guarantors, which creates a permanent record for all subsequent reviewers to see.  Thus, it is best to approach only a select group of lenders whose lending model fits that of your business. Writing a business plan is an art that is based on scientific fact.  A business owner will want to write his plan so that it tells a story and is an easy to read and follow description of the business.  The business plan has to have all of the relevant market and financial information of the business including financial projections as well as analysis of relevant present and future demographics.  Although banks almost always require adequate capital as collateral for anything larger than a small signature loan, the last thing the bank wants is for you to fail.  Thus, in a sense, you and your bank become financial business partners and they want to know and believe that your loan will be repaid as agreed.  No bank desires for a loan to fail in being repaid as they are in the business of making loans and not on foreclosing on property. 

If you have taken the first step to considering becoming a business owner, you will want to be well armed and informed of the many issues you will now need to address. For just as a soldier trains for war to avoid being a fatality in battle by surrounding themselves with the needed leadership and tools with which to wage battle, so will you as a business owner want to arm yourself with advisers and information to rise to the top. As a soldier will ready himself before launching himself in the fray, you will want to exercise due diligence in obtaining the financial goals and administrative responsibilities your new mantel will now require.

To determine your new venture choice the initial decision will center around the market in which you are desiring to place your business. Many have failed on this issue alone and their business was doomed from the offset because they did not carefully examine the environment or location sufficiently. When a soldier readies himself for the actual battle ahead his first charge and responsibility is to obtain a lay of the land understanding its topography, population, obstacles, and infrastructure. He then scrutinizes this information in great detail striving to maximize its strength and minimize the negative influences on his plan. Often after such examination he will decide not to fight at all, to move the fight to another day when the circumstances are right, or to move the battle to a location whose environment is more suitable to his liking. It is often during this planning process alone that the battle is fought and won as he is able to overcome the deficiencies in his plan and allow him to overcome those who would dare to defeat him. A new business owner should take no less of a detailed posture in evaluating his business model and carefully craft their business before it starts enabling him to ensure a greater chance of survival.

After you have carefully evaluated your business model you will want to spend great time and care in developing a business plan. This will be the way that you wage economic warfare in determining the how and care of your business. Your business plan will be a source which you can review and update periodically to ensure that you are on track and that your plans are valid. Just as a soldier makes changes during a battle as it progresses so should a business owner adjust his plan and actions to meet the ever demanding needs of both their clients and technology. A well crafted business plan will include the below components:

Introduction which will detail the business, its legal structure, and the talents and experience the owner brings to the fray.

Marketing the business detailing its proposed location, traffic flow if relevant, demographics, who your proposed clients are, as well as your competition.

Financial needs of the business detailing a monthly operating budget for the first year with at least two additional years forecast by quarter. The plan should include the projected profits, cash flow, fixed asset purchases required, capital and its sources, and a contingency fund for unexpected occurrences which are bound to always occur.

Operations section of your business plan will include how the business is to be carried out and managed. Care in this section should be taken to carefully determine the amount of personnel which will be needed as well as any infrastructure and facilities which will be required.

After you have set about your basic business model there are many more components in which you will want to consider such as which legal entity you will want to use for your corporate structure, licenses/permits/local codes & ordinances, payroll/sales taxes, and the protection of your business’s intellectual property. Going into business for yourself, though not for the faint hearted, has substantial quality of life issues for those who are willing to go the distance. Surrounding yourself with professionals who have a track record of success will be the first most important step in beginning your journey into business ownership.

Small Business is the Backbone of the U.S. Economy. Without the presence of small business in our economy it would most certainly fail. Imagine shopping centers along our highways without the presence of small business’s. Absent the major retailers, all of the office space you pass every day would be largely empty. According to the Small Business Administration latest data approximately ninety-eight percent of all small business’s are small. Although these business’s do not make up the equivalent percent of jobs imagine what the American landscape would be like if were not for these entrepreneurs who are pursuing the American dream of owing their own business. To help measure this impact approximately thirty-two thousand net jobs were added in Georgia by firms with fewer with twenty employees. Although owning your own business is not for the faint hearted or the ill prepared, owning ones own business offers financial as well as quality of life issues not afforded to those who work in corporate America. An excellent resource tool in beginning your new venture is www.sba.gov/ga or feel free to contact the SBA’s District Office directly at 404-331-0100.

Have you ever wanted to work with someone whom you felt really cared about you, your business, your retirement, and planning for your family? I have a heartfelt conviction that I really want to “serve” my fellow Business Owners and to give advice that hopefully you will feel are beyond the scope of CPA services you ever experienced. Do you want that ole’ time feeling of being served by someone sensitive to you? I welcome meeting with you FOR FREE to discuss you and your business’s plans.  

I work exclusively with business owners whom are striving to maximize their profit and potential. I bring to the table twenty years of experience as a CPA and 18 years of managing my own successful practice. My credentials include passing most of the CPA exam while still in school, graduating Magna Cum Laude, several honor societies, obtaining the Upcoming Junior Award, working with small rapidly growing privately held companies, a history of success on IRS representation issues, and recently I won the SBA’s Accountant Advocate of the year in Georgia. I strive to anticipate bumps in the road so that you might be able to focus on the business of running your business. I would welcome meeting with you for a free consultation. 

Services Offered

Financial Statements, Tax Planning, Corporate Income Taxes, IRS Representation, Strategic Advice, Personal Income Taxes, Entity Selection, Critical Business Decisions, Banking Relationships, Attorney Relationships, Part Time-CFO

Missions: Spreading the Good News of Jesus Christ

  “But just as you excel in everything—in faith, in speech, in knowledge, in complete earnestness and in your love for us —see that you also excel in this grace of giving.” (2 Corinthians 8:7) 

F-Financial Independence

 “I will instruct you and teach you in the way you should go; I will counsel you and watch over you.” (Psalm 32:8) -Give a man a fish, feed him for a day.Teach a man to fish and feed him for a lifetime.

Economic Independence would be a predominant theme offering long-term rather than short-term relief enabling the community and its leaders to begin the process of taking care of their own financial needs. By passing on the gift out of our abundance we would work with local community leaders and the populace at large. By offering seed capital, a cottage industry idea, or needed livestock, seeds, seedlings, etc., mission trips would center on improving the overall economic development of the community offering an investment, which can lead to independence rather than dependence. This is perhaps the longer-term aspect of missions but also one of its most important. An initial mission trip to a community may not be able to best determine what specific application would work best but work should not be unduly delayed as the “time is short”. Giving the local community to transcend poverty for themselves will not only empower them but also strengthen the community at large. Utilization of organizations such as www.Heifer.org is strongly encouraged as they will already have the existing infrastructure and resources to effect the desired result allowing the mission team to be the hands and feet of Christ rather than developing a program from the ground floor up.  

I-Instruction

 “Come, follow me,” Jesus said, “and I will make you fishers of men.” (Mark 1:17) 

Missions should include an emphasis with working with a local church to both empower and support through active teaching, programs, and active Bible study. Just as Paul frequently visited and wrote to the church at Thessalonica so should we support, develop, and help mature a local church. By working with local church members we will also be better armed to be more sensitive to physical, emotional, and spiritual needs within a community enabling a mission trip to be more effective and to make a bigger impact by getting behind and supporting a local trip. These actions will lean themselves towards a more ongoing working relationship with a local church enabling mission members as well as the local church to have a more positive impact on the community. Constant care and attention should be given to always respecting the norms of the local culture while not watering down the truth of the Word.

S-Support

 “These women were helping to support them out of their own means.” (Luke 8:3) 

 Spiritual, financial, and construction support are all critical components of missions. Emphasis should be directed towards the needs of the community and directives of the local church. Resources should be supplied and left from which the recipients will be able to take the next step in their own economic or spiritual awakening. Age appropriate NIV/study Bible should be left with all active recipients of all church programs and those attending should be actively taught how to read and utilize them. Mission members rather than funding their own support would write “support letters” seeking to raise financial and prayer support. This support should be predominantly centered around non-church members where not only can support and excitement be raised about the project but also telling the good news of Christ to those from whom support is solicited. Care and attention should also be placed to bridge missions to the church congregation at large by active exposure to projects, the mission, and seeking how the local church can be supported on an ongoing basis during the year. An example of this might be for how a local community to produce a product, which could be sold at both the church and locally. 

H-Headmanship

 “Therefore go and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit.” (Matthew 28:19) 

Just as the Apostle Paul developed his protégée Baranabas so should we work to develop local leaders who will take our actions to the next level. Training and instruction with a select few leaders within the local church and community each trip will enable us to not only broaden our influence but to perpetuate it as well. By following the preview of the early evangelism we can best model our success in the present. Care should be given to ensure that leaders are equipped with not only the word of God but materials, resources, and methodologies to ensure they are ready to lead others and to multiply to making even further disciples/leaders. An ongoing relationship of support and resources will assist the local church in furtherance of the word/overall mission.        

No, we are not perfect but we strive to bring the Good News of Christ to our business and to our clients each and every day. We “Serve Him…by Serving You”. Looking to advise our clients on each and every issue taking on the task of walking in our clients shoes being willing to look out for the best interests of our clients and not that of our own.

In many of our free initial client meetings we often share strategic and never before heard of advice that they take back to their present advisers and utilize. Though this might often upset others we feel our responsibility is to impart wisdom and advice to our clients without having to hold them ransom or under contract. We feel that our relationships should be open and not one sided allowing our clients the freedom each and every day to chose what they should do. No, we do not bend on our principles as they are handed down to us from on High, but we do not hold our clients hostage making them bound to continue to use our services. We constantly advise clients on changes in tax law keeping them abreast of changes which they utilize in their business and financial planning. Our long term goal is your financial security and we work hard to accomplish this each and every day.

Everywhere you turn lately, you hear a story about someone who lost their home due to their inability to meet their mortgage payments.  Unfortunately, more and more of these horror stories are appearing everyday because of an overeager real estate surge that made it possible for almost anyone to purchase a home with creative financing.  However, once the creativity is taken out of the financing, you are usually left with a home you can’t afford and no good solution to getting rid of it.  HIS CPA P.C. works with potential homeowners in fulfilling their dream of owning a home or refinancing the home they’re in.  We take great care in evaluating a person’s ability to purchase a home and to afford the mortgage payments, not just today, but also 2, 10, and 20 years from now.  Some things that are crucial to consider when looking for a mortgage company and a home to purchase are:

-Don’t get caught in the hype.

-Under purchase - in other words, don’t purchase what you can afford or a little more, purchase less than you can afford and you allow yourself a cushion should something happen.

-Stay away from promises of creative financing.

-Allow for a cushion - you’ve always heard from every financial advisor around that you should always keep at least a few months rent or mortgage payments stashed away in case of emergency, in today’s volatile job market with downsizing and overseas competition, this has never been more critical.

-Expect Problems - this is where the cushion and the under purchase will really come in handy.

-Be careful in the type of mortgage you are agreeing too - a fixed loan is usually better and not subject to a volatile market where as interest only loans dramatically fluctuate and you should be able to maintain a reserve to pay off the balance in full.

The Truth about Taxes (by Anonymous)

The nine men surrounded the tenth and beat him up.  The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short! And that, boys and girls, journalists and college instructors, is how the tax system works.  The people who pay the highest taxes get the most benefit from a tax reduction.  Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Our tax system heavily depends on the upper class paying a predominant portion of our national operating budget.