A Few Things To Know About Exit Strategies

What is an exit strategy?

As this definition explains: an exit strategy is a method by which entrepreneurs and investors, especially those that have invested large sums of money in startup companies, transfer ownership of their business to a third party, or by which they recoup money invested in the business. Common exit strategies include being acquired by another company, the sale of equity, or a management or employee buyout.

In truth, creating an exit strategy is not a sign of a lack of confidence and can actually help strengthen your chances for success. An exit strategy looks at the signs of a business failure, including the point of no return, which can help you avoid closing your doors too soon and knowing exactly when to stop throwing good money after bad. If you get an offer for your business, an exit strategy can help you determine its worth.

Exit Strategy

In addition, as Small Business notes, if your business doesn’t work out, you can’t just close the doors and walk away. You’ll have personal and legal responsibilities to take care of that will be much easier to take care of if you know what they are in advance. An exit strategy is a plan that helps you go through the procedures necessary for shutting down a business. This includes a list of the government agencies you’ll need to contact, papers you’ll need to file, fees you’ll need to pay and other things you’ll need to take care of as you shut your doors and afterward.

Who needs an exit strategy?

As this report also observes, anyone seeking venture capital funding or angel investment, must have a clear exit strategy planned in advance.

Even if you’re a small company, it’s a good idea to plan ahead and to actually have an idea of how you will transfer ownership of the business down the line, sell the business, or make a return on your investment.

Types of exit strategies

This list should give you an idea of common types of exit strategies, as explained by BPlan:

• Acquisition

The acquisition is often known as a “merger and acquisition.” This is because, when a company decides to sell itself to another company, the buyer will often incorporate or merge the services of that company into their own product or service offerings.

• Initial Public Offering (IPO)

This exit strategy is not suited to most small businesses, primarily because it means convincing both investors and Wall Street analysts that stock in your business will be worth something to the general public.

• Management buyout

If you’ve built a business whose legacy you want to see continued long after you’re gone, you may want to consider turning to your employees. That’s right—not only will they have a good idea of how things are run already, but they will have intimate knowledge regarding company culture, corporate goals, and a pre-existing determination to make it work.

• Family succession

On that note, if your family has been brought up with an intimate knowledge and understanding of your business, they may well be the best people to pass things on to.

• Liquidation

For small businesses, liquidation is a common exit strategy. It’s one of the fastest ways to close a business and may sometimes be the only option in cases where the operation of the business is dependent solely upon one individual, where family members are not interested in or capable of taking over, and where bankruptcy is close at hand.

The Best Exit Strategy

Finally, as The Balance notes, the best exit strategy is the one that best fits your business and your personal goals. Decide first what you want to walk away with. If it's just money, an exit strategy such as selling on the open market or to another business may be the best pick. If your legacy and seeing the small business you built continue are important to you, then family succession or selling to employees might be best for you.

It cannot be over-emphasized how important it is to get started on your exit strategy sooner rather than later.

The foregoing information does not constitute advice of any sort what so ever. Consult with your own legal and tax professionals before making any move. The impact of your exit strategy is strategic.

Tax and Accounting Services inArizona- Compasspointcpa

Tax law is complicated and constantly changing. Through continuous professional education and participation in industry briefings we stay current with the tax laws and regulations that can benefit you. This enables us to offer a full range of tax services and for you to minimize your tax liabilities.

Tax Planning

Proactive planning is the key to minimizing your tax liability. We work with individuals and businesses to help you pay the least amount of tax required by law. Your unique circumstances will determine the strategies that we can employ to maximize the amount of money you keep in your pocket.

Tax Preparation

Even simple tax returns require multiple forms, schedules, and worksheets. The instructions and guidance from the tax authorities can be confusing and often generate more questions than answers. While a computer software program may help, there is no substitute for the personalized quality of service and advice you will receive from our experienced tax professionals.

Tax Problems

If you are currently dealing with the tax authorities, we can help you assess the situation, advise you of your options, and resolve the issue at the lowest possible cost. We will also work with you to review your prior tax years to make sure that all of your tax filings have been submitted accurately and that you have taken full advantage of the tax laws. Then we will help you set up an easy system to keep your records current going forward. Contact for Tax Services in Arizona

Accounting Services

Businesses of all shapes and sizes depend on accurate, insightful, and timely financial information to manage their day-to- day operations. We lend our expert support to meet your accounting needs, so you can focus your time and energy on building a stronger business.

Financial Statement Preparation

Professionally prepared financial statements are an essential resource when dealing with creditors or investors. When we prepare your financial statements we can also help you assess the health of your business and frame strategic initiatives to aid in your business growth. Staff accounting services Arizona

Bookkeeping

To ensure that you have a complete and accurate picture of your financial position we can create and maintain proper accounts to capture all of your business transactions, identify and resolve discrepancies, and prepare all the necessary federal, state, and local tax returns.

Payroll Support

Managing the employee payroll is not a simple matter of calculating the amounts due, writing, checks, and handing them out. There is a host of government reporting and record keeping requirements that comes with the job – and adverse consequences if you get it wrong. We are happy to help you through the complicated payroll process.

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How to Create a Winning Project Plan Accounting Services in Northern Arizona

If you’re contemplating executing a business project and want to be as prepared as you can be then we highly recommend you dig your teeth into the following information.

As Technopedia defines it, a project plan is a formal document that is intended to serve as a roadmap from start to finish of a contemplated project. The plan is made up of elements such as resources used, milestones, and timing to name a few.

The plan is designed to guide the control and execution of a project, and it is the key to a successful project and is the most important document that needs to be created when starting any business project.

It is used for the following purposes:

• To document and communicate stakeholder products and project expectations
• To control schedule and delivery
• To calculate and manage associated risks

The plan answers the essential questions about the project, including the following, also noted by Technopedia:

• Why? – What is the task related to the project?
• What? – What are the activities required to successfully complete the project? What are the main products or deliverables?
• Who? – Who will take part in the project and what are their responsibilities during the project? How can they be organized?
• When? – What exactly is the project schedule and when can the milestones be completed?

The initiation of a project requires detailed and vital documentation to track project requirements, functionalities, scheduling and budget. Formal project plans establish detailed project requirements, including human and financial resources, communications, projected time lines and risk management.

The following seven steps, as noted by Wrike and Computer Weekly, show how to create a successful project plan:

Step 1: Identify and Meet with Stakeholders

A stakeholder is anyone who’s affected by the results of your project. That includes your customers and end users, too. Make sure you identify all stakeholders and keep their interests in mind when you create your project plan. Meet with the project sponsors and key stakeholders to discuss their needs and expectations, and establish baselines for project scope, budget, and timeline.Professional Tax And Accounting Services Arizona

Create a Scope Statement document to finalize and record the details of the project scope. The project scope statement is arguably the most important document in the project plan. It is used to get common agreement among the stakeholders about the project definition. It is the basis for getting the buy-in and agreement from the sponsor and other stakeholders and decreases the chances of miscommunication. This document will most likely grow and change with the life of the project.

Step 2: Baselines

Components of the project plan include:

• Baselines: These are sometimes called performance measures because the performance of the entire project is measured against them. These are used to determine whether or not the project is on track during execution

Step 3: Set & Prioritize Goals

Prioritize stakeholder needs and set specific project goals. These should outline the objectives of the project — the benefits you hope to accomplish.

Step 4: Define Deliverables

Identify the deliverables you need to produce in order to meet the project’s goals. What are the specific products you’re expected to complete? Estimate due dates for each deliverable in your project plan. (You can actually finalize dates when you sit down to define your project schedule in the next step.)

Step 5: Create the Project Schedule

Look at each deliverable and define the series of tasks that need to be completed in order to accomplish each one. Next, identify any dependencies. Do certain tasks need to be completed before others can begin? Input deliverables, dependencies, and milestones into an app similar to a Gantt chart. Involve your team in some of the planning process. The people doing the work have important insights into how tasks get done, how long they’ll take, and who’s the best person to tackle specific tasks.

Step 6: Identify Issues and Complete a Risk Assessment

Are there any issues that you know of upfront that will affect your project, like a key team member’s upcoming vacation? What unforeseen circumstances could create hiccups? (Think cold & flu season, backordered parts, or technical issues.) Consider the steps you could take to either prevent certain risks from happening, or limit their negative impact. Conduct a risk assessment and develop a risk management strategy to make sure you’re prepared.

Step 7: Present the Project Plan to Stakeholders

Explain how your plan addresses stakeholders’ expectations, and present your solutions to any conflicts. Determine roles: who needs to see which reports, and how often? Which decisions will need to be approved, and by whom? Make sure stakeholders know exactly what’s expected of them, and what actions they’re responsible for. Instead of telling stakeholders that their expectation or request is unrealistic, tell them what’s required to make it happen: how much time, money, or manpower? Let them decide if it’s worth dedicating the extra resources.

In short, project planning doesn’t need to be difficult or complicated. However, project planning does need to be thorough if it’s going to be a useful tool for tapping into its potential rewards.  Business Advisory Services Arizona

Deducting Self-Employment Expenses

With the amount of taxes the IRS already collects from taxpayers—as well as the ever-increasing cost of living self-employed—tax payers can ill afford to overlook claiming as many deductions as the IRS makes available. The income and expense situation of self-employed taxpayers are widely recognized as fertile hunting grounds for a wide variety of deductions. This article will highlight a number of potentially significant deductions available to the self-employed taxpayer as well as some of the most commonly over-looked deductions by the self-employed.

Home Office Deduction, as explained by the IRS: If you use part of your home for business, you may be able to deduct expenses for the business use of your home. The IRS provides two methods for calculating this deduction, the “Simplified” approach and the “Regular” approach. The difference between the two approaches is that the Regular approach requires the taxpayer to determine the actual home office expenses. This approach could result in a higher deduction at the expense of more extensive record keeping.

Regardless of the method chosen, the basic requirements for your home to qualify as a deduction are:

• Regular and Exclusive of your home for conducting business, and
• You must show that you use your home as your principal place of business.

Investopedia recommends these additional deductions for the self-employed:

Internet and Phone: Regardless of whether you claim the home office deduction, you can deduct your business phone, fax and Internet expenses. The key is to only deduct the expenses directly related to your business.

Health Insurance Premiums: If you are self-employed, pay for your own health insurance premiums, and were not eligible to participate in a plan through your spouse's employer, you can deduct all of your health, dental and qualified long-term care insurance premiums.

Meals: A meal is a tax-deductible business expense when you are traveling for business or entertaining a client. The meal cannot be lavish or extravagant under the circumstances.

Entertainment: The IRS has numerous restrictions on claiming the business entertainment tax deduction. For starters, you must conduct business with the person you are entertaining during, immediately before or immediately after the event. If your entertainment expense meets all the tests, it’s still only 50% deductible.

            And according to ZipBooks.com:  

Educational expenses: If you go to seminars, take web-based classes, pay professional dues or subscribe to business publications, you can deduct all of those expenses.

Vehicle: If you use your personal vehicle for business purposes, you can deduct a standard mileage charge that is currently 54 cents per mile. Be sure to keep extremely detailed and accurate records. If you have a vehicle that you use exclusively for business, you can depreciate it over its useful life, which will possibly provide a much greater deduction.

Purchase/depreciation of computer and other office equipment: Depending on the price of the things you purchase, you may be able to write them off completely in the year that you put them into service with your company, or you may have to depreciate the cost over the item's useful life.

Retirement plan(s): Even though you do not have the opportunity to participate in an employer's 401(k) plan, there are several ways you can set aside money tax-free for your own retirement. Every dollar that you put into one of these plans comes off your taxable income, and you can put a very large amount into some of these plans.

The IRS does tend to target self-employed and small business owners at a greater rate than ordinary job-holding individuals. This is because there is far more room for “fudging” numbers when you are self-employed than when you receive a paycheck. The legal advice site, Nolo.com, offers the following two rules for the self-employed:

Claim all of your income.

Don't claim expenses for which you didn't actually pay.

To these two rules can be added a third: Keep amazingly accurate records. One way to do this is to use an accounting app designed for small businesses. In addition, a smartphone-based app ensures that you always have the ability to note and detail your expenses, no matter where you are. For more information about Accounting Services Arizona visit https://www.compasspointcpa.com.

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Have You Considered Buying a Franchise?

Do you happen to be one of many who has dreamt about going into business for yourself but couldn’t put your finger on what kind of business to start? Perhaps you have an idea of what kind of business to start but fear has got in the way of taking the plunge. A degree of fear and trepidation are understandable, and maybe even a good thing, in the sense that they translate into being ultra-careful and not impetuous. In other words, becoming a business owner should not be taken lightly.

You might have many reasons for delaying the pursuit of your dream business, and you might have already analyzed your options. But have you ever considered owning and operating a franchise? Operating a franchise can give you a leg up toward being a business owner. The following information will shed light on why you should give the franchise option some serious consideration.

As noted by Market Watch, a franchise is basically a “business in a box.” It's a model for the operation of a business that has proven successful. This proven model includes the investment costs, a manual, and built-in support from the franchiser as well as a network of other franchisees who have experienced most of the challenges you will face while operating this business. The most attractive feature of buying a franchise, at least from the buyer's point of view, is simple: you can investigate purchasing a franchise more easily than purchasing a stand-alone non-franchised business.

Here are some additional advantages that go with buying a franchise, as stated by Entrepreneur:

1. Track Record of Success. Any good franchise company has developed a method of doing business that works well and produces successful results. 
2. Strong Brand. One of the biggest advantages of franchising is that the company is building a brand on a regional or national basis that should have value in the eyes of customers you're trying to attract.
3. Training Programs. A good franchise company has training programs designed to bring you up to speed on the most successful methods to run the business.
4. Ongoing Operational Support. Franchise companies have staff dedicated to providing ongoing assistance to franchisees. 
5. Marketing Assistance. The franchise company has marketing assistance to provide you with proven tools and strategies for attracting and retaining customers. 
6. Real Estate Assistance. Most franchises have manuals and other documentation, as well as staff, to help you find the right site and negotiate the best possible deal on your site.
7. Construction Assistance. Franchise companies can also provide a wonderful benefit in helping you design the layout of the business and select the right contractors to do your build out.
8. Purchasing Power. A good franchise can take advantage of the buying power of the entire system to negotiate prices for everything you need at significantly lower levels than you could achieve as an independent operator.
9. Risk Avoidance. The biggest reason to buy a franchise is that, if you're smart, it will help you avoid much of the risk of starting a new business. 
   

Okay, so far we’ve done a pretty good job of hyping the benefits of owning a franchise. But even a second-grader knows that it’s an imperfect world. Nothing is ideal. Certainly there must be some disadvantages to owning a franchise. Here are a few, as noted by Small Business:

1. Costly Investment. The start-up costs for franchises vary depending on the type of business, demand and industry. Start-up costs often are a disadvantage for franchises. Top franchises like McDonald's and Dunkin' Donuts could cost over $1 million, depending on location.
2. Access to a Limited Territory. Franchise agreements protect owners by not placing franchises from the same brand within a predetermined radius. While that's helpful in many ways, it also limits the number of customers a franchise can reach and service.
3. Strict Operations Guidelines. Owning a franchise does not offer the same freedoms as starting a company of your own. Each franchise gives franchisees a set of guidelines they have to follow or run the risk of losing the right to operate. 
4. Risk Reputation. While there's a benefit to running a business that's visible in the market, it can be a problem if the business has a bad reputation because of other locations. 
5. Limited Exit Strategy. No matter how small or large the business or how long it's been in operation, every operation needs an exit strategy. While most owners have several possible ways to exit their businesses without outside sources interfering, franchises have strict rules. 

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