How the Cost of Business Just Went Up

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Deducting Entertainment Expenses

What You Need to Know Regarding Changes to the Entertainment Expense Deduction

We are all in the relationship business.  Relationships lead to Sales.  Sales lead to Profits.  Many times, to cultivate relationships, we wine, dine, and entertain our current clients and prospects.  Thanks to the Tax Cuts and Jobs Acts the expenses that you previously wrote-off may no longer be deductible.

These new laws apply to small business and big business.

ENTERTAINMENT EXPENSES:  Prior to 2018, as long as the expense was related to conducting business, you were allowed a deduction for entertainment and recreation expenses.  The deduction was usually capped at 50%, but half was better than none.

For 2018 and forward, the deduction for Entertainment is 0%.  Zero.  Nada.

No matter if you’re courting new or potential clients, meeting vendors, or networking, these expenses will NOT be deductible:

  • Season ticket holders of football tickets, or any other sport

  • Golfing and other recreation activities

  • Country club dues and expenses

  • Fishing and hunting trips

  • Spa visits, concert tickets, etc

The entertainment items that are still deductible include:

  • Entertainment expenses that you treat as compensation to your employees (i.e. include in their W-2 wages)

  • Entertainment, recreation, or social expenses where you include all employees (Christmas party, etc)

What about the Meals deduction?  This has been a muddy topic over the past month and a half, and will continue to be, until there are court cases and IRS rulings to back up their position on the matter.  Because of that I think it’s important to contact your tax preparer and discuss your particular situation.

If you are unsure on any of the information please contact our office so we can discuss your particular situation.


 Joy Lizotte, CPA

Joy Lizotte, CPA

About Joy

I help service based businesses GROW by providing coaching and growth planning services that will take their business to the next level.

I promise you, working with a CPA can be much more exciting than crunching numbers and reviewing last year’s taxes. I look at the day-to-day of your business and help you find ways to perform better, grow bigger and generate revenue with greater ease. 

New Brand. Same People + Service.

 Joy Lizotte-Lutz

Joy Lizotte-Lutz

it looks a little different around here...

 

Launching our new brand

For those of you that don't know, I got married in September, so with a new marriage also comes a new name!

After owning Lizotte CPA, LLC for 6 years I wanted a name that spoke more about what we do and how we want to serve our clients.  Out of that, Aligned CPA was born.

It is my vision to serve our clients and "align" their business goals, with their actions and finances. What does that mean?  We don't want to be your form filler.  We want to talk with you and discuss your business operations, what's working, and what's not.  And discuss where you want to be in 3 years, 5 years, or 10 years from now.  Then develop an action plan that will help you achieve those dreams.

There is nothing more rewarding than seeing our clients succeed!

 

Where to find us

You can still find us at 224 E. Duval Street  Lake City, FL

alignedcpa.com

 

Thanks for your support

I'm honored to serve so many great businesses.  Thank you for taking this journey with us.

Truly,

Joy Lizotte-Lutz


Joy-0073.jpg

About Joy

I’m an accounting expert, business coach, and growth planner. I’m dedicated to helping you grow, set goals, and be the business owner you've always wanted to be.

We're Hiring a Bookkeeper. Is That You?

We are currently hiring for a part-time Bookkeeper/Accountant to fill the role of maintaining our client accounting files. Maintaining client accounting files includes:

  • Updating client files on a weekly basis, including:

    • Adding new bank transactions and categorizing them correctly

    • Reconciling accounts- bank accounts, credit card accounts, merchant accounts, payroll accounts, note payable accounts

    • Preparing monthly management reports and corresponding work papers

  • Scheduling bill payments for accounts payable transactions

  • Creating and sending invoices and statements

  • Updating and designing spreadsheets

  • Updating internal project management systems

  • Other administrative duties (we’re a small office so we all pitch in)

This position is for you if:

  • You are available to work 20-25 hours per week, and potentially open to having your hours increase as your workload increases

  • You are comfortable working in a paperless and cloud-based environment (i.e. tech savvy)

  • You enjoy learning new things. We have a core value of Continuous Learning. That means we want to be on the front-end of change in our industry. We think it’s important to learn new things to benefit our clients and to better ourselves

  • You are self-motivated and don’t want to be micro-managed. You will be responsible for managing your time and meeting deadlines

Requirements:

  • Two years of QuickBooks experience

  • Two years of Microsoft Office or Google Suites experience

  • Prior CPA Firm experience is a plus

  • Detailed, organized, and self-motivated

Ready to apply?

If you’re still reading this and think the position sounds like a good fit, send your resume to info@lizottecpa.com

Focus On What Matters

Growth is enhanced by focus. Often business owners will focus on many things at a time and then feel as if they are accomplishing very little.  If you will focus on ONE issue at a time you will have more traction in your business, which will cause change and spur growth.

Here's how to immediately see progress:

  • Take 1-3 minutes and identify the biggest bottleneck in your business

  • Take 5-10 minutes and brainstorm solutions to this issue

  • Implement the solution

To take this a step farther, determine if this is a people issue or a systems issue? :: If you have great Systems, but your people aren't following them, it's a People issue :: If you have great People, but no written process to follow, it's a Systems issue :: If you have bad systems and bad people, it's a Management issue

Once that bottleneck is identified and solved, move on to the next biggest bottleneck.

Identifying and solving one issue at a time will allow you to see change immediately.  This change will create momentum and traction.

 

The One Thing That Can Make You More Profitable

There is one thing that separates your business model from a well-oiled machine. No, it’s not marketing, or branding, or a dynamite product, or even customer service.

It’s one simple thing. Processes. More importantly, written processes.

If you want to…. Hire Grow Add new locations Scale Add Investors Sell your business

You need written processes.

When you started your business you developed processes, even if you didn’t realize it or have them written. It worked for you. You were doing all of the work- handling customers, ordering supplies, making sales, etc. You didn’t see the need for writing down the steps you were taking. But what happens when you add employee Number 1? Number 2? At that point, each person is handling your business the way they think it should be handled, not the way you want it handled.

As you see, the problems start when you add employees. Employees need guidance and processes to follow. They need instructions on how you want them to communicate and represent your business. And since your processes are stored in your head, your employees will be lacking that guidance.

How will having processes make you more profitable? Reduces redundancies Makes hiring easier and faster Makes training easier and faster Employees can be proactive Creates culture Every team member has the right information Employees learn to problem solve without you Business can operate without you (helloooo vacation)

That list should be enough to get you writing!

Documenting and organizing processes can be tedious unless there’s a system in place. If you feel lost but know this is the next step for your business, reach out and we can help you turn your business into a well-oiled machine.

Strategies to Grow Your Business

Growth can come in many different forms (even in pruning… more on that another day). If you’re planning to grow your business this year you need to get very clear on the HOW. How are you going to grow? That can be the overwhelming part, so let’s simplify it! There are three easy growth areas to consider.

Volume - Increase the number of sales you make Volume is all about the quantity. You want to sell more of the thing you already do. This strategy usually involves acquiring new customers which can be costly because it requires more spending in marketing and getting new customers in the door. Be sure you are creating lasting customers and not one time customers.

Price - Increase the price of your service If you want to increase your prices you need to be sure that your value aligns with the price increase. The value you deliver should out weigh your price. This results in delighted customers! If you’re not comfortable with a direct price increase think about how you could add value, then increase the value and the price. Is there a way to enhance the customer experience (this is golden)?

Services - Increase the number of services you offer Adding new services is a great way to increase sales. Figuring out what to add can be simple, but many businesses don’t do it. What is this simple step? ASK. Simply ask your current customers what else you can help them with. What are their biggest frustrations? Now figure out how to solve their frustrations.

These three strategies can be used alone or together. But remember, Focus is key. Depending on your size, your team, and your goals, you should only focus on one to two things at a time. Focus is what gets work done!

What are you going to do to grow your business this year?

If you’d like to grow your business but you’re not real sure where to start, contact us for a free consultation, and we’ll see how we can help you reach your goals.

Growth Cost Money- Avoid the Unexpected

I was recently talking with a client who is at the end of year 1 of his 3 year growth plan. We were recapping with an After Action Review (a report of what worked and what didn’t), and I was surprised by some of his comments. Although, in the beginning of year one he created a written plan for growing his business, he never thought about the additional costs he would have to support that growth.

Fortunately for him, he had savings socked away so he didn’t have any hiccups in his plan. But without that savings his growth plan could have been a flop.

So what costs can increase when you’re growing your business...

If You're Adding New Services-  Many times a business will grow by adding new services. This requires an investment in education, new processes, and marketing for the new service. Learning will not only cost money but time as well. Be sure you have planned for both!

If You're Hiring-  Many times if you are increasing your business volume you will also need to hire. You’ll need to budget for the increased salary as well as payroll taxes, benefits, paid time-off, and workers comp insurance.

If You're Increasing Sales-  If your growth is coming from increased sales you will probably need to increase your marketing budget. This will involve time and money. Will you outsource this or do it in-house? Are you growing online or in a new region? Aligning your marketing needs with a marketing budget will help you plan accordingly.

If You're Increasing Production-  If you’re developing new products, or producing more products, you'll not only need to invest in more equipment but you'll also need more raw materials on hand. This could also lead to hiring, and increased marketing, which increases your upfront costs.

If You're Adding Locations-  If you are scaling your business by opening new locations you need to be aware of not only the upfront costs to open a location but also the ongoing costs. When adding locations you need to be focused on process development and improvement above all else. Clear and concise processes are the only way you can get your business to run without you there… and isn’t that the ultimate goal?

It's important to not only understand these costs but to also have them at the forefront of your growth plan. Failing to plan for these extra costs can be detrimental to your business if you don’t factor them in.

If you’d like to grow your business but you’re not real sure where to start, contact us for a free consultation, and we’ll see how we can help you reach your goals.

We're Hiring!

We are a CPA firm dedicated to supporting small business clients by providing valuable services, innovative solutions, and personal attention. We are passionate about small business and want others who share that passion.  We specialize in outsourced accounting, business coaching, and growth planning. We are currently hiring for a part-time accounting specialist to fill the role of maintaining our client accounting files.

Maintaining client accounting files includes:

  • Updating client files on a weekly basis, including:

    • Adding new bank transactions and categorizing them correctly

    • Reconciling accounts- bank accounts, credit card accounts, merchant accounts, payroll accounts, note payable accounts

    • Preparing monthly management reports and corresponding work papers

  • Scheduling bill payments for accounts payable transactions

  • Creating and sending invoices and statements

  • Updating and designing spreadsheets

  • Updating internal project management systems

  • Other administrative duties (we're a small office so we all pitch in)

This position is for you if:

  • You are available to work 20 hours per week, and potentially open to having your hours increase as your workload increases

  • You are able to track time per firm standards. While we don't bill time to our clients we do measure time for internal benchmarking

  • You enjoy learning new things. We have a core value of Continuous Learning. That means we want to be on the front-end of change in our industry. We think it's important to learn new things to benefit our clients and to better ourselves

  • You are self-motivated and don't want to be micro-managed. You will be responsible for managing your time and meeting deadlines (#adulting)

  • You are comfortable working in a paperless and cloud-based environment (i.e. tech savvy)

Requirements:

  • Two years of QuickBooks experience

  • Two years of Microsoft Office experience

Ready to apply?

If you're still reading this and think the position sounds like a good fit, send your resume to info@lizottecpa.com

  • Your cover letter should be the body of the email.

  • Subject line should read- "I Want To Be Your Next Hire"

(Failure to do those things tells us you're not good with details... and accounting is all about the details)

Growth Companies: 4 Numbers You Need to Know

Service-based business owners have no problem focusing on new customers and serving current customers. But many don’t know how to take their business to the next level. If you’re looking to grow your business, you must pay close attention to your financials and key metrics. Key metrics are financial numbers that you need to hit in order to reach your overall goals. When planning with clients I always tie a goal to a metric or target. How else will you know you achieved the goal?

Here is a list of 4 key metrics that are important to track in your service-based business.

Sales Close Ratio. You get this number by dividing the number of sales proposals made by the number of proposals you closed. This tells you the percentage of proposals you win. Obviously, you want this number to be high, but not too high. Chances are if you’re closing 90%-100% of proposals you make, you are walking away from money on the table.

Project Margin. This metric measures the profit you will make on each project you undertake. It is the percentage of project revenue - direct costs you will pay to complete the project. The higher the number the better!

Profit margin metrics will help you with making profitable proposals and driving overall profits. I recommend determining your lowest acceptable project margin. Then, when you are giving new proposals be sure to never go below your minimum.

Monthly Operating Expenses. Your operating expenses are the expenses you have every single month. Why should you know this number? Because this is what you will have to spend each month just to keep the doors open. You’ll spend this even if you have zero collections. I suggest taking your annual operating expenses and dividing by 12. This gives you a monthly average.

You can also use this number as a target for how much you should have in savings. In an ideal world having 3 to 5 months cash set aside would be sufficient. In reality, it takes dedication and time to get that built up.

Billable Utilization. This rate will help you track productivity. On an annual basis you’ll divide the employee’s total billable hours by 2,000 hours. This gives you each employee’s productivity. You should monitor this to determine if you have space to add more client work or if it’s time to add more employees.

However, I don’t think this number should be monitored by itself. An employee can have a low utilization rate but it’s out of their control. You must also look at overall profit, prospects in the pipeline, and marketing budgets.

Why are these numbers important for growth? Because growth cost money! Your business goals must be aligned with your resources (time, money, and energy) or you’re setting yourself up for failure.

If you’re struggling to monitor and track your financial information, contact us and we can schedule a free consultation to see if we can help get you on track.