By now it would be virtually impossible not to have had a close up and personal encounter with the mobile giant: the smartphone. (more…)
July, 2011
Consider The Time Value Of Money In Making Financial Decisions
Suppose you’re selling a piece of property worth $400,000. You’re offered $210,000 down and lump sums of $100,000 at the end of year one and year two. Should you take the offer?
Most people know that $1,000 now is worth more than $1,000 a year from now. Here’s why. In a year, a dollar will buy less than it would today due to inflation. Over time, the risk increases that some of the money owed you will not be paid. And finally, funds on hand could be invested and earning more money.
Consider the time value of money in making financial decisions
Present value analysis attempts to quantify these variables. It discounts the value of future funds by estimating inflation rates, risks of loss, and rates of return from alternative investments.
Assume you could earn 2% by investing in a $100,000 CD. Disregarding compounding, in a year your investment would be worth $102,000. Conversely, if you postponed receipt of $100,000 for a year and inflation eroded the principal by 3%, you’d receive the equivalent of $97,000 in today’s dollars. (Note that with 3% erosion, even the $102,000 CD proceeds would be worth only $98,940 in today’s dollars.)
In the opening example, your proposed “investment” (a two-year $200,000 note receivable) would be far riskier than a CD. To compensate, you might decide not to accept anything less than an 8% return. A present value table indicates that at 8%, the discount factors for one and two years are .926 and .857, respectively. $100,000 times .926 is $92,600; $100,000 times .857 is $85,700. Thus, in today’s dollars, the buyer is offering $388,300 ($210,000 down payment plus $92,600 plus $85,700). Since your property is worth $400,000, you would be selling for $11,700 less than full value.
A similar analysis can be applied to any transaction involving future payments. For help with the calculations, contact us.
Tax Tip: Does Your IRA Have Unrelated Business Taxable Income?
When you think of taxes and IRAs, early withdrawals and required minimum distributions probably come to mind. But another tax can apply: the unrelated business income tax. (more…)
What’s New: IRS Increases Mileage Rates
IRS has increased the standard mileage rates
The IRS has increased the standard mileage rates to be used for computing the deductible costs of operating a vehicle for business or for driving for medical or moving reasons. The new rates will apply to driving from July 1, 2011, through December 31, 2011. (more…)
Seminar: Get Going with QuickBooks 2011 – Beginner
Date: 2011-08-18 Time: 10:30 AM – 03:00 PM Location: Brockport, NY
Computer lab setting, training manual with practice files and post-class business diagnostic
Cost: $127 Pre-Registration is required as space is limited: 877-223-5740
After completing this course, you will be able to:
* Set up a company * Work with lists * Setting up inventory * Sell your product * Invoice for services * Process payments * Work with bank accounts * Enter and pay bills
This class is geared towards those who have used QuickBooks® for six months or less, INCLUDING:
* Spouses who help with the books on a part-time basis * Business Owners who want to avoid mistakes and improve cash flow * Partners looking for long-term answers to accounting problems * Bookkeepers who need a better understanding of QuickBooks® *Financial Executives who would benefit from a reliable management reporting system
Pay Offs Of Training Staff
Training your team members appropriately and frequently is indeed an investment – and one with a powerful return. When your team members are nurtured with the necessary staples they will make better decisions, their relationships will improve and their opinions will show deeper insight. (more…)
Tax Tip Tuesday! Tax Credits Can Be Refundable
Unlike leopard spots and tiger stripes, tax credits do change. And, in the federal tax equivalent of spots and stripes, some even change from non-refundable to refundable. For instance, the Hope scholarship credit was modified in 2009 and became partially refundable as the American opportunity credit. In 2010, the adoption tax credit became refundable.
What’s the difference between nonrefundable and refundable tax credits? One way to make sense of the distinction is to look at last year’s Form 1040. Nonrefundable credits, which reduce your tax to zero but no lower, are reported on page 2, directly beneath your tax liability.
You’ll find refundable credits further down page 2, in the “Payments” section. That’s because — like income tax withholding or estimated payments — refundable credits can reduce your tax liability to zero, and the difference is refunded to you.
In contrast to actual tax payments, the potential benefit of refundable tax credits can be temporary. As an example, two refundable credits on last year’s federal tax form, the making work pay credit and the first-time homebuyer credit, expired in 2010.
Contact us if you have questions. No matter how things change, we’re here to make sure you get credit where it’s due.
What’s New: Watch Out For E-mail And Phone Scams
The IRS is warning taxpayers not to respond to e-mails and phone calls they may receive which claim to come from the IRS or another federal agency. Such contacts are likely to be scams whose purpose is to obtain personal and financial information from taxpayers, which are then used by the scammers to commit identity theft. (more…)
IT Security As A Competitive Advantage
In 1991 Charles Cresson Wood wrote an article entitled ‘Using Information Security to Achieve Competitive Advantages’. He would later become the recipient of the Computer Security Institutes Lifetime Achievement Award.
In 2004, at its worldwide partner conference, Microsoft pitched security as a competitive advantage. Now seven years later, how has information technology security affected firms and has it indeed proved to be a competitive advantage?
With the rising power and influence of the Chief Information Officer, it seems Cressen’s observations and Microsoft’s pitch was right on target. Information is just as valuable as the money managed by the Chief Financial Officer, and protecting that information is a competitive advantage.
Protecting your IT assets should be your number one priority in business, and information and technology are part of these recognized assets. To be a savvy competitor in your market, your firm should be as protective of its innovations and ideas as it is of its financials.
Ways to ensure security can be simple, including virus protection software and email safety (i.e. deleting archived messages and attachments), setting up firewalls and keeping software systems up-to-date.
“Protecting your IT assets should be your number one priority in business.”
Secure your networks using full encryption when connecting remotely and lock down wireless networks. Other tips include backing up securely and frequently, protecting your office premises and taking extra steps to ensure the safety or your laptop and other mobile devices.
When it comes down to it, digital security keeps information from leaking into the hands of the competition. It may be a costly initiative, and one that requires consistent attention and upgrading. However, the payoff is a simple and concrete benefit: IT security can protect your intellectual property from willing adversaries, disgruntled team members and cutthroat competitors.
The competitive advantages of IT security are not easily measurable – and nor is the risk that your firm may face. In order to take stock of the risks and reap the rewards, avoid using terms such as “monetary” and “measurable” and focus on competitive advantage, long-term survival and compliance.
