Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Jan 19

    When you first join a networking group it can seem difficult to obtain referrals from fellow members. But, instead of giving up and looking for another group to join, there are some things you can do to encourage them to spread the word about you or your company.

    According to the book, The World’s Best Known Marketing Secret, when you first begin developing a referral based business, you receive a few referrals in the first year, twice as many in the second year, and then, in the third year, it really starts to jump. That being said, let’s talk about the three R’s of networking: relationships, reliability, and referrals.

    Word-of-mouth is about “relationship marketing”. If you approach the first year of your involvement in a networking group with the sole motivation of getting to know the other members well, you will be far ahead of the game.

    It’s not really about what you know or who you know; but rather, how well you know them that really matters! People do business with, and refer people to, people they know, like, and trust.

    The time it takes for people to get to know and trust you may vary from profession to profession. Obviously, it is unlikely you can get to know someone very well in the 15 to 20 minutes you might have before each formal meeting starts. You need to have time outside of meetings to get to know each other better.

    For the first year or so in a networking group, you’re putting in your time. Your referral partners are testing you, checking you out, and making sure that you deserve to have their valuable friends and clients turned over to you.

    Therefore, you must be credible to the other professionals with whom you hope to network. Bear in mind that you should feel the same way, too. Before you risk your reputation with your clients by referring them to someone who takes less care of them than you do, you must be very sure that the person you are referring them to is reliable!

    After cultivating relationships and proving yourself to be reliable, you get referrals as the result. Let me make this perfectly clear. You can’t sit next to the fireplace and complain the fire’s not producing enough heat if you haven’t first gathered some wood, put it in the fireplace, and taken a match to it.

    For someone to receive a referral, someone must give. I would suggest that if you’re not seeing the referrals you want to, then you need to check to see how many you are giving.

    This is a natural progression that can’t be rushed. I know it can seem frustrating at times when you’re anxious to see your bottom line increase quickly from all the referrals you’re anticipating receiving, but believe me, if you are patient and apply these techniques, you will see word-of-mouth marketing work for you in a big way.

    You can’t take an orange tree and rip it up from the ground year after year and replant it on the other side of the yard, just because it wasn’t bearing fruit where it was. You have to water, fertilize, and care for the tree where it is. In time, you will produce fruit in relationship to your efforts. You must approach building a word-of-mouth based business this way. In a solid networking group, you’re growing solid roots with the other participants. The worst thing for you to do is to pull them up just as they are getting set.

  • Jan 5

    The new television season has arrived, and I admit, I’ve checked out a couple of the new shows. One which intrigued me enough to watch a couple of episodes is called Wisdom of the Crowd. The premise of the show is that the multitudes of people connected to the internet can provide possible clues and connections for the computer to help solve crimes. Every time they post something to the crime solving app, they immediately have thousands of views because, everyone is waiting on pins and needles for their next post, right?

    And you know what the internet is also overflowing with? Cat videos.

    Look — who doesn’t love cat videos?? But the point is this: just because the crowd thinks something is great or true, doesn’t make it so.

    But, I’m continually gobsmacked by all the tepid “advice” bandied around for recent college grads and business owners. Not that I have anything against inspiration — I truly don’t! — but, so much of what passes for good advice out there can lead you into a trap of your own making. Trust me, as someone who has been there.

    Slavishly conforming to conventional wisdom about how to thrive in your calling is something I think we should all avoid. But, with BuzzFeed and all those other internet sites tossing around conventional wisdom left and right, allow me to question some of it…

    • “Just do your job.”
    Your job description is a bare minimum. Fulfilling it means you’ll probably keep your job, or that client contract, but you won’t stand out when buyers are re-upping contracts or managers are deciding whom to promote. Push the envelope a little so your contact sees that you’re committed to helping the organization, not just safeguarding your position or contract.

    • “Never say ‘No.'”
    You can’t do everything, know everything, or even attempt everything your boss or contractor asks. Be willing to admit when you don’t have the answer, or that you don’t have time for every assignment. Then, work with your contact to solve the problem, and accommodate his or her needs.

    • “Always go for the promotion or the larger contract.”
    You don’t have to accept more projects than you’re ready for, or a management position that doesn’t match your goals. Pursuing advancement for its own sake may lead you on a business path you don’t really want. Be sure of what you’re going for, and let your manager know what you’re interested in. Then, get to work preparing yourself for the position you want.

    • “Network constantly.”
    Aim for quality, not quantity, when you network. A “contacts” list with 700 names of people who barely know you won’t be much help when you need specific assistance. Instead, be selective so you can maintain solid connections with people who can really help you with your career or in the growth of your business. You’re better off with a network an inch wide and a mile deep than one a mile wide and inch deep.

  • Dec 22

    Auto expenses are an important deduction for business owners and employees who must travel. If you use your personal vehicle for travel, in-town or out-of-town, it is very important that you audit proof your auto deduction or risk losing the deduction in its entirety. The last thing you want to do is sit across the table from some burly, growling IRS auditor, with all the sympathy of a moon rock and the understanding of a doorstop, without any records to back up your deduction.

    Can you say bye-bye deduction and hello penalties?

    Auto expenses may be deducted using either the actual cost method or the mileage method. Documentation is the key and the required documentation is different with each method.

    Under the actual cost method, all expenses for purchasing, owning, and operating the vehicle must be documented. Receipts for fuel, oil, repairs, maintenance, insurance, etc. must be kept. In addition, if the business use of the vehicle isn’t 100% then you may also need to keep the mileage log information discussed next.

    You can audit proof your mileage method deduction by keeping a few simple records. A mileage log, diary, expense reports, trip sheets, cancelled checks, receipts, repair bills, and any other relevant information and documents are all that you need.

    What exactly does the IRS want to see?

    • How many total miles did you put on your automobile last year?
    • How many of the total miles on your automobile were for business and how many were personal? (This will show the business percentage.)
    • How many miles were driven for each trip, from business destination to destination? (IRS wants real numbers, not just a guess.)
    • What was the business reason for going to this destination? (Examples: Business meeting with Tom Smith of ABC Corp. or XYZ Store for office supplies.)
    • What other business expenses were involved in this travel? (Examples: Tolls, parking…etc.)

    Caution: There is a general rule which enables taxpayers to estimate business expenses when evidence indicates such expenses were incurred but an exact amount cannot be determined. However, such estimates cannot be used when claiming deductions related to automobiles. You must meet the substantiation requirements, or the deduction will be disallowed.

    If you use a day planner for your appointments, just write the mileage down on it. Or, if you use a wall calendar for your appointments, use that. Or, if you prefer spreadsheets, use that. Or use an app for that. The best method to use is the one that you will use. The IRS requires that you keep these records “contemporaneously”- meaning shortly after the event occurred. It is easier to keep up with it daily and is more acceptable in an audit.  Once you get in the habit it won’t seem so onerous.

  • Dec 8

    There is a success principle that applies to every one of us. No one is exempt and each of us should practice this fundamental way of thinking. No matter what your current level of success is; no matter how difficult your life is today. We should all apply this in our lives each and every day. The amazing thing is that it doesn’t cost us anything.

    What is this critical success strategy? It’s an attitude of gratitude. Each of us has countless reasons to be grateful. We all have hundreds of reasons to be thankful. We live in a great and beautiful country with infinite possibilities. We have families, friends, community, clients, and customers. We have tremendous opportunities to learn and grow. We can start a new business with nothing more than a great idea.

    We are all very fortunate, and we all have a cornucopia of reasons for feeling and expressing our Thanksgiving on a daily basis. I know it’s easy to become consumed with everything around us but an appreciation of what we have. It’s easy to pass through the daily grind and become swallowed up by “stuff.” The attitude with which we face these challenges is significant. A conscientious effort must be made to step back, take a deep breath, and look at our own personal reality in an appreciative manner.

    Developing and expressing an attitude of gratitude is one of the most important things that you can do to maintain a healthy balance in your life. One simple strategy to help maintain this balance is to develop a “gratitude list.” This is simply a list of the top 10, 20, or 30 things you are truly grateful for in your life. Some are easy to come up with – spouse, kids, health, friends, business, wealth, etc. Other things might take a little longer to think about to come up with. But you know that if you do not have them in your life, you would not be whole.

    Keep your gratitude list close at all times and when you’re faced with challenges in situations that seem hard to handle, pull out your gratitude list and count your blessings. It’s important to realize that each of us is really just here for an instant and we ought to be thankful for all that we have. Have a wonderful and happy Thanksgiving.

  • Nov 22

    Most of our clients have never received that dreadful notice from the IRS, initiating an audit — or, much worse, the KNOCK on the door! If you never have, you might not keep much financial documentation.

    If you have, you are probably terrified to part with a single receipt.

    But remember, either way, we’re in your corner.

    However, the IRS is one of the few courts where failure to produce proof of your claims results in the assumption that you are guilty of tax fraud.

    (This is part of the reason why you ALWAYS want a professional on your side in these matters. Would you go to court without an advocate? Would you go before a court with a software-generated defense? “Your honor, here is my lawyer, Siri.”)

    It’s imperative that you are able to protect yourself. And, as great as we are — some of this still does fall in your court. That’s why you must save all the financial documents used to create your tax returns in order to defend yourself in the case of an audit.

    Firstly (and perhaps this goes without saying), retain a paper copy or receipt of any tax-relevant transaction. Scan these documents and archive them electronically, or acquire them in an electronic format. If the purchase has a manual or warranty, store all the documents in the same electronic and physical location.

    Sadly, the IRS has ruled bank or credit card records to be insufficient documentation. As a result, just keep your statements long enough to reconcile your account.

    If the purchase was a business or tax-deductible expense, record the expense and why it justifies the deduction. Store this information with, or on, the receipts.

    Second, keep brokerage statements indefinitely for taxable accounts. You are responsible for reporting the cost basis of any security you sell to calculate the capital gains tax. For a mutual fund with 30 years of reinvested dividends, each dividend payment is part of the cost basis. As a result, the cost basis can sometimes be computed only if you have the complete transaction history.

    Without knowing the cost basis, the IRS could argue that the entire value of the investment be treated as gain.

    If you have lost the record of how much you originally paid for an investment, instead of selling and paying 15% or more of the value in taxes, you can use that investment as part of your charitable giving. Gifting appreciated stock avoids the tax owed and still qualifies for a full deduction. Oddly enough, the IRS still asks for the original purchase date and price for gifted securities, but leaving these blank has no effect on your tax owed.

    Many custodians keep several years of electronic copies of brokerage statements available. And they are now required to send any known cost basis electronically when you transfer securities to a new custodian. If your current custodian has the correct cost basis of your securities, you probably no longer need to keep brokerage statements. However, an approach of “better safe than sorry” is always advisable with the IRS.

    Third, keep IRA nondeductible contribution records forever. You may need those records every year that you withdraw money in retirement to show that a portion of the withdrawal is not tax deductible.

    Or to avoid the hassle, clear out nondeductible IRA contributions by converting all of your IRA accounts to Roth accounts.

    Fourth, keep partnership documents, contracts, commission, or royalty structures forever. This includes property records, deeds and titles, especially those relating to intellectual property. It also includes any transfers of value for estate planning purposes.

    Finally, save all of your tax returns. After you file, save the paper, and/or electronic, copies with the rest of that year’s financial documents.

    Tax returns and all the supporting documentation must be kept at least seven years. The IRS can audit your return for up to three years from your filing date. However, the three-year limit only applies to good-faith errors.

    If the IRS suspects you underreported your gross income by 25% or more, they have up to six years to challenge your return. And because you may file for an extension and then file your return at the October 15 deadline, you must keep your records for at least seven years.

    Regardless of those rules, though, if the IRS suspects you filed a fraudulent return, no statute of limitations applies. Because the IRS is run and organized by fallible people (with all of their attendant biases, emotions, etc.), we suggest keeping your tax returns and documents forever.

    Unfortunately, whenever the IRS challenges you, the burden of producing evidence that your claims are true rests entirely with you, so you had better have your documentation in order.

    Taxpayers collectively spend six billion hours, or 8,758 lifetimes, annually trying to comply with the tax code. Fortunately, as I previously mentioned, YOU don’t have to be the one to do all the heavy lifting. We are on your side…

    “If you don’t have time to do it right, when will you have time to do it over?” – John Wooden

  • Nov 10

    I know in polite company and business communications you’re not supposed to talk politics and religion, but I am SO tired of talking to business owners whose religion is…

    Price.

    At least that’s what some of you believe. Based on your actions – the only way you ever talk about your product or service is that you are the cheapest provider in the city/area/community/street/block — you believe you SHOULD BE and CAN BE the low price leader in your category. Don’t you know you are worshiping at the altar of shortsightedness?

    Yes, there is a place for the lowest cost provider, but that place is fraught with peril. The margins there are razor thin; you must be ever vigilant to honor the gods of cost cutting and pray that someone more committed (or with deeper pockets) than you doesn’t step into your marketplace and undercut your price by a penny.

    Remember a few years ago when Apple® released their newest (at the time) iPhones, the iPhone 6 and iPhone 6 Plus. To say there was a lot of hoopla would be an understatement, right? Apple® released the new and improved phones on Friday, September 19th and by Monday they had sold 10 million units, one million more than the first week of the 5s and 5c the year before.

    Despite the “bad” economy. Despite losing its visionary co-founder and CEO, Steve Jobs. Despite my belief that 10 million people can’t NEED a new Apple® phone. Despite that Apple® products are rarely, if ever, cheaper than the competition.

    Apple® has achieved what every business owner dreams of: the ability to charge premium prices and still attract business. Apple® has successfully refused to bow at the altar of low price—and your business can too. Here are four ways Apple® has accomplished this…

    Can you apply these principles to your business?

    1. POWERFUL BRANDING. Thanks to a well executed branding campaign, Apple® has built a brand that is trendy, cool, and technologically advanced. The iPhone, in particular, has become a status symbol for many.
    2. STRATEGIC MARKETING. Every time a new product is launched, customers line up for hours (if not days) outside Apple® retail locations. And every time, a product shortage prompts anxiety and even desperation from customers who were unable to get their hands on the product. The result is a palpable feeling of scarcity and value—customers feel privileged to fork over $200-300 for the latest model or closer to $650-750 if their plan isn’t eligible for an upgrade! While Apple® won’t admit that they intentionally create product shortages in order to create a buzz, it’s hard to imagine that they wouldn’t be able to meet everyone’s demand on day one if they wanted to.
    3. EXCELLENT CUSTOMER SERVICE. Apple Care, the company’s warranty and customer care program, provides a level of service that is unparalleled in the electronics industry. The peace of mind that comes from knowing that expert help is a phone call away is a big part of the value Apple® provides.
    4. THE PRODUCT THAT DOESN’T DISAPPOINT. Branding, marketing, and customer service don’t mean anything if the product is disappointing. Apple® doesn’t cut corners and doesn’t make promises that its products can’t keep—resulting in customers that are consistently thrilled with their purchase. At the end of the day, if a product can’t live up to the expectations set by its marketing; it won’t be successful in the long-term.

    Apple® doesn’t compete on price—and your business doesn’t have to, either. Apply these lessons… and you’ll find that you have the ability to charge premium prices and still win the business!

  • Oct 27

    Business people seem quite willing to throw lots of money at the newest, unproven tactic for acquiring new customers/clients/patients when they would be better off plugging the holes in their existing processes that are leaking profits…

    Often right into their competitors’ pockets.

    Here are a couple of areas where you could quickly seal the holes and perhaps, double your profits.

    Probably the biggest area of opportunity for most people is following up with non-buyers. Often there is none. No systematized, automated strategy to follow up with prospects to turn them into customers.

    Of course, you have to capture the prospect’s information first and that’s another possible leak. But, if you’ve done something to capture their name and address or email, then you have the ability to stay in touch and perhaps move them from simply interested to paying customer. The higher the cost of your product or service, the more important this is.

    Capturing prospect’s information is an absolute must! It can be done online or offline, in-person, or by phone. Even though it’s easier than ever, many make no attempt whatsoever and it’s costing them thousands and thousands of dollars.

    Most business owners, when asked where their best leads come from, invariably say it’s a referral from an existing or past customer/client/patient. Yet most stumble across these referrals by chance. Almost none have a systematic approach to generating a steady stream of referrals.

    What if you weekly, monthly, or even just quarterly provided your referral sources with the tools they needed to refer others to you, such as useful reports, newsletters, emails, and instructions on your ideal customer and how to introduce others to you. You could create an “unpaid sales army.” By the way, your best referral sources might not ever have been customers. There are others who might champion your product or service. It’s not about who you know, it’s about how well you know them. If you’re curious, look up BNI.com

    Plugging holes in your leaky profit bucket is often all you need to do to provide for all the growth you can handle. It just takes a commitment on your part.

  • Oct 13

    As we transition from our income earning years to our retirement years we begin to realize that each period has a different set of tax pitfalls. Here are 5 of the most common. Each of which can be avoided with a little planning.

    Missing the tax impact on Social Security
    A portion of your Social Security benefits may be taxable. The formulas are complicated (see example later), but in general terms, if your “Modified Adjusted Gross Income” (MAGI) exceeds $25,000 ($32,000 for joint filers) then it’s likely 15% of your Social Security benefits will be taxable at your ordinary income rates. If your “provisional income” exceeds $34,000 ($44,000 for joint filers) then up to 85% of your benefits could be taxable. Receiving income such as retirement benefits or IRA distributions which cause your income to jump from one level to the next can have a severe impact. You’ll pay income tax on the distribution, plus you’ll increase the portion of Social Security benefits which are taxable, sometimes doubling the tax burden.

    Missing the difference between growth, income, and cash flow
    Growth is what you need your portfolio to do in order to have enough money to last your entire retirement. Income is what you will have to pay taxes on, and cash flow is the after tax cash you have to spend on your needs and desires. The goal is to have sufficient cash flow to live your life like you want while paying the least amount of tax possible, and, at the same time, leaving enough in your portfolio for it to continue to grow at a rate that keeps up with, or exceeds, inflation.

    Missing a required minimum distribution
    Failure to take a required minimum distribution could subject you to penalties as high as 50 percent of the missed distribution. You must take required minimum distributions from any qualified plan or traditional IRA once you reach age 70 ½, and every year thereafter. Don’t rely on your bank, or broker, or anybody else to remind you about this. They will not pay the penalty for you! Roth IRAs are exempt from this requirement.

    Missing beneficiaries on qualified accounts
    Without a named beneficiary, the money in a qualified account reverts to your estate. The name, or names, listed on the account supersedes anything named in your will or trust, so it’s also a good idea to name a successor beneficiary.

    Missing the right beneficiaries
    It is generally best to name individuals as beneficiaries instead of your estate or a trust. You also want to avoid multiple beneficiaries with wide age differences. The minimum distribution will be determined using the “life span” of the oldest beneficiary. To avoid this pitfall, consider dividing your IRAs into separate accounts, each with a different beneficiary.

    For those two of you who are interested, here’s the example I promised:
    John and Jane Smith have an adjusted gross income of $44,000 for 2016. John receives Social Security benefits of $7,200 per year and together they receive $6,000 a year in interest from tax-exempt municipal bonds. On their joint return, the couple would make the following calculations:

  • Sep 29

    Claiming Your Homestead Exemption Can Save You Thousands

    Sometimes you rock along from year-to-year doing the same ole thing because it’s what worked in the past… or someone once told you that’s the way things were. Well, things change. Every day. If you’re over 65, or disabled, and are still paying the property taxes you were paying before that milestone, you may be paying too much.

    According to information obtained from the Mobile County (AL) Revenue Commissioner’s office, all property owners 65 or older are eligible for an exemption from all State property taxes. County, School, and Municipal taxes still apply. The exemptions apply even if only one of the owners of a jointly owned property meet the qualifications.

    To apply for this exemption:

    • You must be 65 years old,
    • Own and occupy the property as your primary residence, and
    • You must visit one of the Revenue Commissioner’s offices to present proof of age and sign an assessment sheet.

    Low income property owners 65 and older may also be eligible
    to claim exemption from a certain portion of the County, School,
    and Municipal property taxes. To qualify you must be 65 years
    old, own and occupy the property as your primary residence,
    and your taxable income must not exceed $12,000 – bring your
    tax return as proof.

    If either you or your spouse is totally and permanently disabled or legally blind, you may be eligible for a complete exemption from all property taxes on your residence regardless of your age or income.

    Homestead exemptions granted on the basis of income or disability must be renewed each year and it is the responsibility of the property owner to claim the renewal. If you do not receive an exemption renewal form by mail, you will need to contact the County Revenue Commissioner to have a duplicate form sent to you, or you may visit an office in person.

    Exemptions cannot be granted retroactively or after the December 31 deadline.

    For more information, contact our office or your local County Revenue Commissioner.

  • Sep 15

    In his book: How Rich People Think, Steve Siebold (http://www.amazon.com/Rich-People-Think-Steve-Siebold/dp/1608102793), explores the thoughts, habits, and philosophies among the rich, as opposed to the middle class, when it comes to wealth:

    • Rich people focus on earning, not saving;
    • They understand that leverage creates wealth, not hard work;
    • See that they are in control of their wealth, not luck or fate;
    • Know that money is earned from focused thought, not hard labor;
    • Don’t see money with emotion, but with logic;
    • Are Action-Takers (as opposed to having a lottery mindset).

    So why do I emphasize that last one? Simple — I’m suggesting you take an action now, which could make a big difference on your 2017 bottom line...

    You know how good coaches are usually famous for making adjustments during the halftime of big games? Well, here I am — acting as your financial coach in matters tax-related, and we’ve hit the halftime mark for 2017.

    You have six months of financial info to use for some quick math about your year as a whole, and to prepare for a pleasant upcoming tax season.

    To begin, all you have to do is take your cash flow for the first half of the year, and multiply by two. Add up your wages, dividends, interest, and any other income, and then–if this represents approximately what you’re expecting for the second half of the year — double the sum.

    Once you have your estimated 2017 income, you can give us a call: 251-633-4070 (or send me an email), and we’ll help you determine the appropriate tax rate and deductions to apply. Because once you’re armed with this info, we can help you determine the amount of taxes you might expect to owe for 2017.

    By then comparing this against your projected withholding, you can adjust the withholding on your paycheck in advance as needed, and ensure a happy visit to our office in the winter.

    This can also be a good time to organize your financial papers and/or get started with some financial software. Getting organized now can make gathering a report of all those deductions a breeze, come tax time.

    We’ve been promised tax changes by the Trump administration. That makes it all the more important to review Uncle Sam’s highest-impact tax breaks, such as donations of appreciated assets, tax-free exchanges and capital-loss harvesting.

    Unlike obvious moves, such as contributing to an Individual Retirement Account or a 401(k) plan, these strategies require a higher degree of awareness and active planning.

    Not all high-impact breaks are for the wealthy. Any homeowner can benefit from a provision allowing taxpayers to pocket tax-free income from renting a residence for as long as two weeks, and low-bracket taxpayers can pay zero tax on long-term capital gains.

    Other important moves can help minimize estate, gift, and inheritance taxes. Really, there are a variety of moves we can make to help you with your planning for the year … but you have to let us help you. It is, after all, why we are here.

    “My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have is time.” – Steve Jobs