As a business person the best rule to follow in making decisions is, does it make economic sense, can I make money or reduce my cost by making the decision, and if any tax benefits follow then it makes a good decision even better.
In order to make good business decision you need to know key information about your business.
A large part of being a Good Business person is developing Expectations of what is coming. It is important in both your Business life and personal life. Expectations include results and the steps to achieve the results. Expectations include both what you want to happen and what the day to day world causes to happen. The folks in Japan really did not have in their expectations that a tsunami was going to hit. I bet now they have a plan in place that says if a large natural disaster occurs this is our plan. In Oklahoma Tornado, now earthquake, snow/ice storm, power outages for a few days. We need plans for these emergency situations.
Expectations include a budget. I expect my revenue to be $X,XXX, if I achieve those sales my expected margins will be XX%.
But also include steps..
- In order to reach those sales levels I will need three new sales people,
- They need to make 10 calls a day in order to generate 20 new customers a month.
- I will need these new items in inventory,
- The time from order to delivery to our warehouse is XX days.
- I will need to be sure that my order entry system can take this many orders.
- What products do I have in inventory today?
- My expected turn in the new sales and existing sales is xx Days.
- My new inventory will cost $X,XXX.
- Training time on new sales folks is xx days.
- New sales will begin in 180 days...
- I will need $x,xxx in cash in order to fund the new sales folks, new inventory, updates to delivery and order systems.
Understanding your business and the information you need, is the key to success. We can help identify that key information and help you develop a system to capture the data you need. Current data helps you to develop expectations.
In your personal life you need a budget. I will talk later in the year about my philosophy. The main consideration is to set your charitable giving amount or percentage, give it first, Set your saving and retirement savings amounts or percentage, make this your 2nd payment. Then make sure you can live on the rest of the income. Remember there is no rule that says you have to spend all that you make... especially when you are young... Those dollars saved and invested an Early Age become amazingly valuable in your Golden Years, and to this generation it will be worth even more, as the safety net is weaken....
It is important for you to understand the current tax rules, as of today they will be similar to last year, but I am sure that Congress and the President will change them. They have setup the Extension of the Social Security Tax Cut as a perfect time to call each other names, and make some tax changes.
If you talk to us before doing significant transactions, we can maybe help you to structure it to your best tax benefit.
Call us if we can help you in any way.
I hope and Pray that you and your Family Have a Prosperous and Healthy New Year!
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