A Tale of Two Investments

Investors often wonder whether growth stocks are preferable to value stocks, or vice versa. Although no one can forecast future performance, over the past 10 years, value stocks provided an 11% average annual return, and growth stocks provided a 5.44% average annual return.So what does this mean for the growth and value stocks in your portfolio? Is it time to ditch your growth stocks in favor of value stocks? Not necessarily. Investing fads come and go, but a diversified strategy involving growth, value, or a combination of the two can be a great addition to your investment portfolio.

Room for Growth

Growth companies are so named because they have the potential for future growth. These companies typically have both a strong history of growth and strong projected growth. Their stocks tend to be expensive relative to what they are earning and thus tend to have a high price-to-earnings ratio.Growth stocks typically do not offer dividends because many companies reinvest their profits. However, growth companies may be on the verge of a major breakthrough that could drive up their share prices dramatically. Growth stocks carry significant risk, which should factor into any purchasing decision.

Looking for Value

Value stocks are considered to be undervalued by the market and thus trading below their true value. Many of these companies are established firms with solid earnings. Investors buy value stocks hoping that the market will eventually realize the true value of these companies, elevating their share prices in the process. The return and principal value of stocks fluctuate with market conditions. Shares, when sold, may be worth more or less than their original cost. Diversification does not guarantee against loss; it is a method used to help manage investment risk.

The Reality

It is critical to maintain a fully diversified portfolio of both growth and value.  We recommend taking it many steps further – owning large, mid and small cap companies both domestically and internationally.  The three fundamentals that you need to ask yourself or your advisor: 1)     How do I know if I’m truly diversified?  Ask to see a Morningstar report of your holdings.

2)      How often are you rebalancing your positions, so you don’t get over-weighted in one asset class?

3)      How is your performance?  What are you measuring your performance against?  That is, if the S&P 500 returned 15% and you only got 10%, a review would definitely be in order.

  To request a complimentary consultation, contact Moore and Associates Wealth Management    www.moorewealthmgmt.com or call 770-587-0281

LLC’s can Legally Convert to an S Corporation Saving Thousands Annually

LLC’s came in vogue approximately fifteen years ago when the the state of Georgia enacted legislation allowing both LLC’s (Limited Liability Company’s) to be established. Although the LLC does allow for some greater flexibility and ease of operation it often results in a higher tax obligation that might have been incurred if the business is an S Corporation.

Tax law treats all the earned income from an LLC as being subject to both FICA & Medicaid taxes whereas an S Corporation has to pay these taxes reflected on W-2’s. Tax law allows an LLC to legally convert over to being an S Corporation, for tax services,  as long as all active employee/owners pay their-selves a fair and reasonable salary. This number is best determined by the facts, position, and profit of a business and the truest test of this calculation is what a business owner would have to pay someone else to perform their position.

We offer a free initial consultation to see if converting your business to an S Corporation for tax purposes makes sense to you. Put our decades of experience to work for you ensuring you pay your lowest legal possible tax.

Recently, several corporations registered with the Corporations Division of the Office of the Secretary of State received a letter from Georgia Corporate Compliance, a private company offering to complete corporation meeting minutes on behalf of registered corporations. Although these forms contained a disclaimer stating that the company was not affiliated or endorsed by any government agency, many customers were understandably confused by the official looking documents.

The forms provided by Georgia Corporate Compliance are not required by the Office of the Secretary of State and will not affect your corporate filing positively or negatively. There is no need for a corporation to use Georgia Corporate Compliance or any other business offering similar services for any reason unless the corporation chooses to do so.  The Office of the Secretary of State does not require the use of any businesses offering services like those apparently offered by Georgia Corporate Compliance.

It is important to remember that any official statement or request from the Office of the Secretary of State will clearly indicate its origin by displaying the State Seal and the name of Secretary of State Karen Handel.  

If corporate customers have any other questions, please call the Georgia Secretary of States Corporations Division Call Center at 404-656-2817.

Now that April 15th has come and gone, it is time to dig deep down and pull all of your personal information together.  If you are among the millions who extended the due date of filing their return legally from April 15 to October 15th, you should be in no less of a rush to file and pay all 2007 taxes because:

• A delay to file is not a delay to pay as both the IRS and individual states access a late payment fee/penalty and interest for all monies paid after April 15th
• Now is the time to see what you can begin to do to legally lower your 2008 tax bill rather than being past oriented.  There’s a reason for many success’s of business owners and that is their ability to think and plan ahead.  A good steward is always contemplating what comes next and how to always be prepared.

Tax planning is not for the meek or ill prepared so be sure to get all past filings done today so that you can focus on the success’s and planning for 2008 and beyond.

I believe that in information in the hands of a wise business owner is a wonderful thing. However, that information has to be both timely, informative, and useful. Absent these three factors being fully satisfied then I would suggest changes should be in order.

First: I believe financial should be issue on longer that the fourth workday after the close of a month. Absent their timely relevance, financial’s should not be distributed as much of the cause of their need would have lapsed.

Secondly: I believe that financials should be clear and concise and not uduly culletered with unnecessary accoutns will little or no monies in them or even subaccounts. If an account is not substantive enough to stand on its own merits then it should not exist at all.

Thirdly: And equally as important is that all financials should tell a story but often the subleties and interpetations of their significance can only be adequately expalined or clarified by narratives or substantiating statistics and infromation.

Providing timely and usefuly information is a financial departments primary and most important task and must be achieved in order for the business to both survive and thrive.

Although there has been a general lessening of the lack of rain in recent months, the drought continues and even worsens. To date no substantive proactive directions have been taken to both lessen the use of water, to plan for management of our present resources, and to set up procedures and policies in place to ensure that we do not ever find ourselves in this situation again. We need a public outcry from all citizens to contact their elected officials now to help them know we are not satisfied with our present situation and are determined to see that it does not happen again. We need policies today which stress the vitality and livelihood of people rather than mollusks. Though we always need to pay attention to special interest/need groups we should ever determine that the needs of a few will not outweigh the needs of many. Though we all have rights and valid expectations we should never expect those to be give up or surrendered to others without our consent or valid and wise discernment.

To stay abreast of Georgia’s lake levels you can visit the National Weather Service Forecast Service web site where at http://www.srh.noaa.gov/ffc/html/rrm.php There you can monitor and review lake levels which are updated every twenty four hours, full pool levels, rainfall in the areas listed. Though we often discuss oil as our biggest need and worry, if we were to be honest, we would soon find out that it is water. Also at the National Weather Service’s web-site you can find satellite and radar images, current forecast, and even articles on weather safety. For the sake of all and the continued economic viability of our region we need action today.

Incorporating in Georgia is still the most important decision for all initial business owners. If you have developed your business model, written your business plan, and are now ready to set about the task of actually beginning your business you will want to take care care of this critical tax step. Although you are not indefinitely locked in to a entity choice as an LLC or a C Corporation can elect to be an S Corporation and an S Corporation can become a C Corporation, you initial election is most apt to be the most critical business choice you can make.

While being an LLC or LLP can be most advantages for a law firm or multiple physicians practice, these selections will generally pay more in taxes than an S Corporation as all of their net earnings are subject to FICA/Medicaid taxes while only ones W-2 from an S Corporation would be. I would suggest all multiple physician practices greatly consider the advantages of an LLC or LLP can bring as professional liability statutes allow them to be responsible for professional liability. However a normal tort issue/civil liability cannot be assessed personally so these same concerns will not be of importance to a retail, commercial, wholesaler, distributor, etc. as they would not be subject to professional liability statutes. Real estate ventures are often well suited to considering whether being an LLC,  LLP, or partnership might be in their best interests as you can move real estate both in and out of these entities without any gains being recorded and taxed.

For those looking to consider setting up an S Corporation there are four basic requirements which include being an U.S. citizen or registered alien, having one class of stock, having a calendar year-end, and having less than 100 shareholders. S Corporations continue to be a popular choice among many who do not need/have to be another entity type because of the nature of their operations or needs.

Incorporating is not for the faint of hear so be sure to consult with your CPA to get started as well as periodically to ensure that the entity selection you are presently using is best for you and your business, your tax bill, and legal liability limitation issues.

Congress is working feverishly in conjunction with the White House in an effort to provide a needed kick start to the U.S. economy. Certainly in a recession, and perhaps teetering on a depression our economy is in need of a stimulus to help get consumer and retail goods moving again. In an effort to help get monies into consumer hands the tax rebate act would give most taxpayers from $600 to $1200 with an additional $300 per child. Although many parties varied on the final form the act should include, there was great impetus on both the Republican and Democrat side to see what they might jointly accomplish to get our economy moving. As always it is good to see both parties work together, it is disappointing that more joint efforts to improve our country and world cannot be a consistent point in all of their sessions and dealings.

Now is the time to be pulling together all of the information you will need to prepare your personal return which is due April 15th. Care and due diligence should be exercised to ensure that you have all of the information that you will need to process to prepare both an accurate and timely return. It is recommended that you put all of the information that you will need to prepare your returns in a specific file for preparation of taxes and that you utilize a checklist to ensure that will have all of the information you will need to prepare your returns. The best source of what you will need for this year is a check of your prior years return and then to compare it to any changes that happened during the year such as a new child, starting a new business, moving, or any other expenses/income which will have potential tax consequences. It is always best to list all potential items for a tax review so that they might best apprise of what is taxable and deductible. In this way you are most apt to pick up all of the items you will need to file a just and fair return.

As each every taxpayer is unique it is best to re-visit this list several times annually to stay abreast of what all will be needed by year end. Also, it is well to be reminded that the IRS as well as individual states expect that the taxes due them are due as you earn the money and that otherwise (unless you meet certain very limited exceptions) that late payment will result in additional penalties and interest being assessed. So plan early and plan often so you might avoid the last minute rush and perhaps the filing of an incomplete return.

In an unprecedented move the FED just announced a .75% reduction in the prime rate of lending. This was done in an effort to try to kick life into an already sluggish economy and to strive to keep the U.S. economy from sliding deeper into a recession. Recent economic news for the real estate industry and other sources sent the FED into an emergency session looking to help breathe some life into the marketplace. The Prime Rate of lending is the rate that banks charge their best customers as an interest rate. With the rate reduction in tow, interest payments will fall generating excess cash and hopefully enthusiasm in the marketplace for the already sluggish dollar. Stay tuned for more financial news.