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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Compasspointcpa- Accounting Services Arizona- Do You Want Help Growing Your Small Business In 2018?

Every business owner wants growth and profit. No one wants to sit back passively and miss out on opportunities. However, as noted in Rhonda Abram’s analysis in USA Today, it’s easier said than done: there’s a certain key combination of factors that must be achieved. The key is coming up with the right combination of resources and steps to take to achieve “growth.” There are big problems with growing a small business opportunistically. Most importantly, you can’t control it or count on it. Stated another way, growth needs to be planned for following a systematic and rational approach, otherwise any so-called growth that comes out of the process will arguably be nothing more than “accidental success.” On the other hand, opportunity, especially big opportunities, often mean demanding clients that can distract you from building your core business.

The following seven keys, as noted by Abrams, are as follows:

1. Know what business you’re in. Know thyself, and know how the business environment sees you. You may think you know what your business does, but in today’s rapidly changing world, with more competitors, it may be hard to figure out exactly what your strategic position is and how your customers perceive you. What are your core competencies?
2. Take care of your bread-and-butter business first. Take care of the things that work the best. What business activities actually bring in the money to pay the bills? Never jeopardize these activities, even if they’re not exciting or “sexy.” Your employees need a paycheck, and your dog has to eat. Taking care of them is your first, though not your only, priority.
3. Don’t bet all your money on one horse. Spread your strengths around. While it’s not always easy to diversify, it shouls be an important goal. Many businesses have only one or two customers or distribution channels that bring in the bulk of revenue. Being dependent on one or two revenue streams is perilous.
4. Be clear about your target market. “Know thyself” was mentioned, but perhaps even more important: know your customers like the back of your hand. If you don’t know exactly who your customers are, you won’t know what they want and how best to serve them. The biggest problem of most small businesses is they try to serve too large a market.
    
5. Identify exit scenarios. Someday, you’ll want to leave your business — sell it, close it, pass it to your family members. Outline a few realistic exit possibilities and the steps necessary to make those happen. 
6. Build one business at a time. Most entrepreneurs have many great ideas and see opportunities to grow in many different directions. But if you try to act on all those ideas — seize those opportunities — at once, you’re less likely to be successful at any one of them.
7. Choose a strategy you can afford. Growing a business takes money: for marketing activities, new staff, inventory. How will you fund that growth? Figure out what kind of financing you can live with, and choose your growth strategy accordingly. 

In addition, the following growth strategies are just a few presented by Susan Ward within the publication “The Balance” on January 4, 2018. These points emphasize the aggressive community-minded outreach strategies that businesses can take—the “extrovert” side of your business, if you will:

1. Draw as Much as You Can From Your Existing Market

When you think about how to grow your business, the first thing that probably comes to mind is getting new customers. But the customers you already have are your best bet for increasing your sales; it’s easier and more cost-effective to get people who are already buying from you to buy more than to find new customers and persuade them to buy from you. Grow your business performance get Tax And Advisory Services Arizona at compasspointCPA 

2. Ask For Referrals.

That's not to say that getting new customers is a bad approach. One of the easiest ways to do this is to ask your current customers for referrals.  Having good products and great customer service and just assuming that your customers are passing the word about your business isn’t going to do much to increase your customer base; you have to actively seek referrals. During or after every job or sale, ask your satisfied customer if he knows anyone else who would be interested in your products or services.

3. Innovate Your Product or Service.

Discovering and promoting new uses for your products or services is a great way to both get existing customers to buy more and attract new customers. Think petroleum jelly and duct tape—and how few of these would actually be sold if they only had one use!

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Money Management Tips For Couples

Having to manage personal finances is one of the stressful realities that makes up a part of normal daily living. As a single person managing his or her finances, he or she doesn’t have to be concerned with coordinating financial management efforts with anyone else. However, if the scenario involves a couple, such as a husband and wife, an entirely new dynamic is introduced. In theory, at least, there should be some sense of coordination between both members of the couple. What affects one member of the couple affects the other member of the couple, right?

If you and your partner are like most couples, chances are, you fight about money. Numerous studies have shown that money is the No. 1 reason why couples argue — and many of the recently divorced say those battles were the main reason why they untied the knot.

We’ll begin with the following quick points, as noted by Key, that address a number of financial mistakes that partners can make that create serious angst in their relationship:

1 - Merging The Finances

The Wrong Approach: United we stand, divided we bank (i.e. separate bank accounts).

The Right Approach: It's yours, mine and ours (i.e. share the bank account).

2 - Dealing With Debt

The Wrong Approach: Your debt will ruin us; you must find a way to pay it off.

The Right Approach: It's our debt: Let's decide how to pay it off together.

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3 - Keeping Spending In Check

The Wrong Approach: I'm a saver and you're a spender. That's the problem.

The Right Approach: We both spend, but on different things. Let's budget.

4 - Investing Wisely

The Wrong Approach: You're a risk-taker, I'm risk-averse. Hands off our retirement savings.

The Right Approach: Let's think in time frames and take as much risk as our goals allow.

5 - Keeping Money Secrets

The Wrong Approach: What my spouse doesn't know will never hurt him/her.

The Right Approach: Big financial secrets can ruin a marriage.

6 - Emergency Planning

The Wrong Approach: We're fine. We don't need to worry about money.

The Right Approach: Anything could happen. Let's plan for emergencies.

Examples of Financial Fights All Couples Have

In a piece by CNBC on the topic, the following examples of conflicts provide more insight about problems to avoid:

1 - Risk Taker vs Risk Avoider

One of you is more comfortable with the ups and downs of the stock market. If your spouse is intent on taking more risk than you're comfortable with - by putting more money into stocks, or investing in start-ups or buying Bitcoin - agree on a small percentage of your money that can be used in that way (no more than 5 to 10 percent) and a similar amount that you can save or invest as you wish. Then stick to your plan with the rest.

2 - Lending or Giving Money to Family and Friends

Forget about loaning money to friends and family in the majority of cases. If you can't afford to do it as a gift, don't do it at all - it won't end well. If you've already done it and you want to preserve the relationship, tell the recipient you're forgiving the debt, but that you don't want to be asked for more in the future.

In conclusion, the above points make it clear that good communication and teamwork is the real key to conflict-free financial partnership in marriage. A health dose of humility, patience, and selflessness will go a long way too because, after all, no one is perfect.

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Benefits of hiring Tax and Accounting Services by Small Companies

Irrespective of the size of the business, tax and accounting services can simplify a lot of official work and synchronise working without much hassle. If you are a tax paying citizen of Arizona or any other country in the world, it definitely helps when you engage a professional tax services in Arizona. Let us see what are the benefits of hiring tax and accounting services companies.

1.      Give enough time to employees: When you are a small organisation, then definitely you do not have enough resources to run various departments. By hiring a tax and accounting services professional, you can ensure that talents of other employees are harnessed in the right direction as they have enough time in hand.

2.      Accounts are accurate: Professionals know their work and promise accuracy in accounts. This is the biggest advantage of working with professional tax and accounting consultants. There is absolutely no need to verify accounts and do multiple checking of data entered in the log book.  Accounting Services Arizona

3.      Updated: Another major benefit is these professionals maintain an updated tax and accounting book. This is particularly helpful as there is frequent change in tax rules and laws and it is not necessary that we as individuals or small entrepreneurs are aware of everything. A professional can guide entrepreneurs about tax obligations and how to control finances in accordance with company laws regarding taxation. Tax Services in Arizona

4.      Financial Planning: Accounting firms foresee future liabilities that can fall on a company or an individual, hence, they prepare a financial flowchart which can reap benefits for the company in the long run and they do not fail to pay tax by the due date or period.

5.      Accountability: When you have hired a thorough professional and a firm who believes in maintaining the reputation of their client, then you would never land up in a problem. You should hire a firm who promises accountability.

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Additional Details About the Tax Reform Act

In last month’s newsletter we presented some general facets of the Tax Cuts and Jobs Act (TCJA). In this article, we will explore some portions of the new bill in greater detail.

In general, the law cuts corporate tax rates permanently and individual tax rates temporarily. It permanently removes the individual mandate, a key provision of the Affordable Care Act, and it changes other policies in dramatic ways, such as the SALT deduction (which will be explained in more detail below).

It should be noted that the impact from the TCJA is not expected to occur until the 2018 (not 2017!) tax filing.

How the Tax Cuts and Jobs Act impacts U.S. Tax Returns

The following items which are now presented with accompanying detail were deferred from discussion last month. Other items not presented yet should be presented in following months assuming they are of sufficient materiality and general interest.

A report by Investopedia notes the following changes that will take place as a result of the new tax bill:

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Income Tax Rates

The law retains the current structure of seven individual income tax brackets, but in most cases it lowers the rates: the top rate falls from 39.6% to 37%, while the 33% bracket falls to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remains at 10%, and the 35% bracket is also unchanged. The income bands that the new rates apply to are lower, compared to 2018 brackets under current law, for the five highest brackets.

Standard Deduction

The law raises the standard deduction to $24,000 for married couples filing jointly in 2018 (from $13,000 under current law), to $12,000 for single filers (from $6,500), and to $18,000 for heads of household (from $9,550). These changes expire after 2025. The additional standard deduction, which the House bill would have repealed, will not be affected. Beginning in 2019, the inflation gauge used to index the standard deduction will change in a way that is likely to accelerate bracket creep (see below).

Personal Exemption

The law suspends the personal exemption, which is currently set at $4,150 in 2018, through 2025.

Inflation Gauge

The law changes the measure of inflation used for tax indexing. The Internal Revenue Service (IRS) currently uses the consumer price index for all urban consumers (CPI-U), which will be replaced with the chain-weighted CPI-U. The latter takes account of changes consumers make to their spending habits in response to price shifts, so it is considered to be more rigorous than standard CPI. It also tends to rise more slowly than standard CPI, so substituting it will likely accelerate bracket creep. The value of the standard deduction and other inflation-linked elements of the tax code will also erode over time, gradually pushing up tax burdens. The change is not set to expire. Professional Tax And Accounting Services Arizona

Family Credits and Deductions

The law temporarily raises the child tax credit to $2,000, with the first $1,400 refundable, and creates a non-refundable $500 credit for non-child dependents. The child credit can only be claimed if the taxpayer provides the child's Social Security number. (This requirement does not apply to the $500 credit.) Qualifying children must be younger than 17. The child credit begins to phaseout when adjusted gross income exceeds $400,000 (for married couples filing jointly, not indexed to inflation). Under current law, phaseout begins at $110,000. These changes expire in 2025.

Head of Household

Trump's revised campaign plan, released in 2016, would have scrapped the head of household filing status, potentially raising taxes on 5.8 million single-parent households, according to an estimate by the Tax Policy Center (TPC). But the final version of the law that Congress passed and Trump signed leaves the head of household filing status in place.

Itemized Deductions

Mortgage Interest Deduction

The law limits the application of the mortgage interest deduction for married couples filing jointly to $750,000 worth of debt, down from $1,000,000 under current law, but up from $500,000 under the House bill. Mortgages taken out before Dec. 15 are still subject to the current cap. The change expires after 2025.

State and Local Tax Deduction

The law caps the deduction for state and local taxes at $10,000 through 2025. The SALT deduction disproportionately benefits high earners, who are more likely to itemize, and taxpayers in Democratic states. A number of Republican members of Congress representing high-tax states opposed attempts to eliminate the deduction, as the Senate bill would have done.

Other Itemized Deductions

The law leaves the charitable contributions deduction intact, with minor alterations (if a donation is made in exchange for seats at college athletic events, it cannot be deducted, for example). The student loan interest deduction is not affected (see "Student Loans and Tuition" below). Medical expenses in excess of 7.5% of adjusted gross income are deductible for all taxpayers – not just those aged 65 or older – in 2017 and 2018; the threshold then reverts to 10%, as under current law.

The law does, however, suspend a number of miscellaneous itemized deductions through 2025, including the deductions for moving expenses, except for active duty military personnel; home office expenses; laboratory breakage fees; licensing and regulatory fees; union dues; professional society dues; business bad debts; work clothes that are not suitable for everyday use; and many others. The moving expenses deduction is also suspended. Alimony payments will not longer be deductible after 2019; this change is permanent.

Alternative Minimum Tax

The law temporarily raises the exemption amount and exemption phaseout threshold for the alternative minimum tax (AMT), a device intended to curb tax avoidance among high earners by making them estimate their liability twice and pay the higher amount. For married couples filing jointly, the exemption rises to $109,400 and phaseout increases to $1,000,000; both amounts are indexed to inflation. The provision expires after 2025.

Student Loans and Tuition

The House bill would have repealed the deduction for student loan interest expenses and the exclusion from gross income and wages of qualified tuition reductions. The law leaves these breaks intact. The conference bill would also have extended the use of 529 plans to K-12 private school tuition, but that provision was struck down by the Senate parliamentarian as ineligible to be passed through reconciliation.

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Common Bookkeeping Mistakes

Before getting into a discussion of common bookkeeping mistakes, it is worthwhile to address the importance of sound bookkeeping in general.

The importance of sound bookkeeping is frequently lost and ignored by management. It is apparent that the main reason management tends to ignore the bookkeeping function is because it is focused on the “big picture.” What management fails to recognize is that there is no “big picture” to look at without bookkeeping first doing its thing in the details.

Bookkeeping

Bookkeeping can help keep your business organized and able to yield a profit. Many small businesses fail due to poor financial management. By applying sound financial principles, you may be able to prevent this fate from befalling your business.

The following are some of the benefits that are generated by an accurate bookkeeping environment, as noted by QB Express:

1.   Improved financial analysis and management

Cash flow management is something that your business should start focusing on right away. Once your invoices are delayed, there will be zero follow-ups on customer payments. With accurate bookkeeping, you can systematize your follow-ups and be invoicing, while making on-time payments to suppliers.

2.   Fulfil your tax obligations on time 

Bookkeeping can help you keep a track on all the information required to accomplish your tax obligations. When the time for tax comes, you will no longer need to rush everywhere to hunt for your bills or try to remember your expenses. An organized Balance Sheet, Profit & Loss, and Cash Flow also make filing your Tax Returns a lot easier. Your tax advisor can also finally give you some sound tax advice instead correcting incorrect entries in your financial statements.

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3.   Enjoy easy reporting to your investors

With regular and accurate bookkeeping, you will no longer need to worry about reporting to your investors and sharing the financial status of your company. From graphs to charts and the lists of data, you can easily present everything to your investor right from your accounting books.

4.   Make informed business plans

With the Balance Sheet and Profit & Loss statements, you can check if your company is on the right track financially. Based on your financial status, you can make informed and effective business plans.

5.   Keep a proper record, as required by the Law 

With bookkeeping, you can keep a record of all your financial dealings and keep everything organized right from your big to small invoices.

Common Bookkeeping Mistakes

The foregoing section above focused on a discussion of the benefits that can flow out of a sound bookkeeping system. Such a system shouldn’t be taken for granted, however. Frequently, bookkeeping mistakes can creep in and weaken the bookkeeping infrastructure as well as the systems in the organization that relies on the bookkeeping system.

The following is a list of common bookkeeping mistakes that bookkeepers and others should always be on the lookout for.

1.   Skipping an Accounting System

As Business2Community notes, your business may be so small that you decide to save money by not using software that is specifically designed for accounting.

However, even if you use spreadsheets and a well-organized file system to keep track of where your money goes, you are missing out. As Doug Boswell, an accounting expert, points out: “…before having your taxes done, the tax preparer needs to cobble together some sort of makeshift system that will allow your tax return to be prepared, but it almost surely won’t capture all your deductions.”

2.   Not Double Checking Everything

Not Double Checking Everything

Another good point from Business2Community: adopt the habit of double-checking everything and be consistent about it. As their report notes, a mistyped number, a lost receipt, and other human errors can result in inconsistent figures. Prevent such problems from piling up by reconciling your records with your bank account statements every month. Keeping track of your businesses money will be easier if you try to use cash as little as possible. Credit and debit transactions will show up on your statements so you know where every penny goes.

3.   Jumbled Invoices

Some small businesses miss out on money because they have an inefficient system for filing invoices. Number your invoices and keep them in order so it is easier for you to find out which invoices have been paid and which still have outstanding balances.For Accounting services and Financila plan read here  Accounting Services Arizona

4.   Not reconciling your accounts

As this analysis of sound bookkeeping observes, after the end of each month your bank, credit cards and even merchants like PayPal will release statements showing your beginning and ending balances as well as all of the transactions that occurred in that month. Take those statements and reconcile your accounts in your bookkeeping software. Not reconciling your accounts each month can lead to errors that copy over month after month.

5.   Not tracking Mileage

Business2Community

Remember: you can be reimbursed for the miles that you drive for your business. The IRS sets a mileage rate for businesses each year that covers your gas, maintenance to your car and general wear. Use an app like MileIQ that will track all of your drives and then you can categorize them as the business or personal. At the end of every month, they’ll send you a report showing how many business miles you drove and what that amounts to. You can take that amount and reimburse yourself from your business account while categorizing it as a business expense. Not doing this prohibits you from claiming this eligible deduction on your taxes.

In addition to the previously noted mistakes, the following links point to additional common bookkeeping mistakes.

Believing you have to do your bookkeeping yourself

Leaving bookkeeping to the last minute

Not using bookkeeping software properly

Using the wrong accounting method

Not separating business and personal bank accounts and transactions

Inadequate filing systems (for bank statements, invoices, receipts)

Lack of documentation or systems regarding cash

In conclusion, it’s fair to say that the fewer bookkeeping mistakes there are in your organization the smoother your organization will operate. It is human nature to seek short cuts and avoid pain points, but this is a crucial area where you can’t afford that approach: you must take a long way and endure the strain of the process, otherwise much bigger pain points could arise down the road.

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Do Good & Save Money on Taxes: 2017 Arizona Tax Credits- CompassPointCPA

Arizona individual taxpayers can direct their state income tax dollars to a variety of Arizona charities through the use of Arizona tax credit contributions.  Taxpayers do not need to itemize to claim the Arizona tax credits. A couple filing a joint return in Arizona can qualify for as much as $4,777 of tax credits for 2017.

Contributions to certain charities or public schools will also qualify for a federal charitable contribution deduction.  However, you have to itemize your deductions on your federal return to take advantage of this.  Check here for Tax Services in Northern Arizona

You can actually make money by donating to a Qualifying Charitable Organization (a charity that qualifies for both the Arizona tax credit and federal charitable deduction) or public school.  Say you donate $100 to a Qualifying Charitable Organization; you will receive a dollar-for-dollar Arizona tax credit worth $100 plus a charitable itemized deduction on your federal return worth between $10 to $39 depending on your federal tax bracket.  If you’re in the highest federal tax bracket then you will receive $139 of tax benefits in return for your $100 contribution.

A taxpayer can contribute and take all the credits, subject to the amount of state tax for any particular year. The credits are non-refundable. Unused amounts of credit carry forward for five years, except for the military credit, which does not carry forward.

Contribution to Qualifying Charitable Organizations

Charity must be on this list:

https://www.azdor.gov/Portals/0/RefundCredits/CertifiedCharities2017.pdf

Single, Head of Household, or Married Filing Separate $400, Married Filing Joint $800

Can make contribution up to April filing deadline for prior year credit

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