Players for a Winning Advisory Team

As a business owner or nonprofit leader, you are an expert in your field. But one individual cannot be an expert in all the areas required to run an organization. You need a team of trusted and qualified advisors to guide you through setting up the organization, planning for sustainability and growth, and managing the operations.


Who are the Players you should have on your Winning Advisory Team? Every organization should recruit Players for these five Advisory Team Positions:


  1. Legal – You need input from an attorney to decide what type of entity to form (e.g., sole proprietor, partnership or corporation), know the applicable laws for your organization, develop contracts, and establish human resource and other policies. Nonprofits also need guidance for establishing bylaws and protecting the Board.


  1. Financial – Setting up your financial record keeping, reporting, and processes is not as easy as loading the accounting software. You need a financial professional with experience establishing and performing the accounting, financial reporting, and monitoring necessary for accurate and reliable information to run the organization.


  1. Insurance – Protecting your organization, its people, and its assets could mean transferring risk to insurance coverage. An experienced insurance professional will help you understand what types of coverage are needed and how much. Working with an independent insurance broker provides more choice in coverage options.


  1. Taxes – Even if you prepare your own income taxes, you are probably not equipped to keep up with all the business income, payroll, property, real estate, sales, excise, and other tax rules and requirements. Not to mention the special information filing requirements for nonprofits. A tax professional is needed on every team.


  1. Information Technology – Organizations depend on technology for their day-to-day operations and to secure their information. Every organization needs an IT professional to keep its operating system, applications, phone system, e-Commerce, and other connectivity up-and-running and secure. If your systems go down, you go down.


Your business or nonprofit must have a Winning Advisory Team to set up, manage, and grow the organization. Recruiting for the right Winning Advisory Team members will put you on track for a winning season this year, and in future years.


Summer Camp for Tax Professionals

It’s finally here, the week I’ve been looking forward to for months – Tax Summer Camp! Okay, it’s not really “camp”. It’s three days of tax updates and training at the IRS Tax Forum in Washington, DC. All of us campers will learn about tax trends, changes, and issues from the IRS and experienced tax professionals.


Attending the IRS Tax Forum is one way to keep up with what’s going on with income taxes, but it’s not the only way. What’s important is that every tax professional has the skills, education, and expertise to file complete and accurate income tax returns on behalf of clients.


Surprisingly, anyone with a Preparer Tax Identification Number (PTIN) can prepare a tax return. Being sure that a tax preparer actually knows what she or he is doing is important for many reasons, starting with the fact that taxpayers are responsible for all the information on their income tax return, no matter who prepared it.


Here are seven tax tips to make sure you select a qualified tax professional who keeps up with tax law changes by attending Tax Summer Camp, or by some other method:


  1. Ask about professional credentials recognized by the IRS, such as a CPA or Enrolled Agent. The IRS maintains an online directory of federal tax return preparers with their credentials and qualifications.
  2. Make certain your preparer has a PTIN and enters it on your return filed with the IRS.
  3. Inquire about the tax preparer’s education and training, and how she or he keeps up with tax law changes and IRS processes.
  4. Check the tax preparer’s history for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For Enrolled Agents, go to and search for “verify enrolled agent status” or check the IRS Directory.
  5. Ask about service fees and get a cost estimate in writing.Steer clear of preparers who base fees on a percentage of the refund, or who want their fee paid by direct deposit from your refund. These are unethical practices prohibited by IRS regulations.
  6. Make sure the preparer offers IRS e-file. Paid preparers who do taxes for more than ten clients must file returns electronically.
  7. Make sure the preparer is available all year, after tax season is over, in case you need her or him.


Getting tax preparation services you can depend starts with selecting a qualified tax professional who keeps up with tax law changes and issues. Whether the tax preparer went to Tax Summer Camp or not, following these seven tips will get you qualified tax help.

Delaying your Income and Taxes

A general rule of thumb about managing tax liability is to delay income and accelerate expenses. As much as possible, that is. One way to delay income and taxes is to maximize all of your available deductible retirement savings. After socking away as much as possible in your retirement plans, there could be another way to push taxable income into the future – a deferred compensation plan.


Compensation that employees or independent contractors earn in one year, but that is paid in a future year, is referred to as “nonqualified deferred compensation”. This arrangement has different eligibility rules than deferred compensation in the form of contributions into qualified plans, such as a 401(k) or a 403(b).


A nonqualified deferred compensation plan is a formal written agreement between an employer and an employee or independent contractor. The type of plan is often offered to company officers or other high earners at larger organizations — typically, those making at least $115,000, but often much more. Plan participants can stash away more money than allowed under a qualified retirement plan. Employers may pay interest on the deferred funds, or allow participating employees and contractors to choose from other options.

One benefit of a nonqualified deferred compensation plan vs. a qualified retirement plan is flexibility. Deferred income distributions are not subject to penalty if made before age 59½. Employees and contractors can tailor the timing of payouts from a deferred compensation plan to provide income in the early retirement years, letting their qualified retirement savings and investments grow for later.

One big risk is depending on an employer to remain financial strong enough to pay on its promise. By deferring money, employees and contractors are essentially accepting a promissory note that is not protected if the organization runs into financial difficulty. While funds in a qualified retirement plan are protected in times of trouble, money deferred in a nonqualified plan is not. In case of bankruptcy, individuals with deferrals become unsecured creditors of the organization, and must line up behind secured creditors in the hopes of getting paid.

Looking for more options to delay income and taxes? Check with your employer to see if deferred compensation is an option. Get all the details and see if it fits into your plans.



What to Expect from your Bookkeeper

Outsourcing your bookkeeping is one of the best decisions you can make as a business owner. Your time is too valuable to spend it recording transactions and running reports. Engaging a qualified professional lets you spend more time developing new business and planning for the future.


You are depending on your bookkeeper to provide complete and accurate financial information so you can make good business decisions. How do you make sure that’s what you get? By setting expectations. Sounds simple, but articulating expectations is the best way to get things done the way you want them.


Set expectations for your bookkeeper in these four areas to get the results that you need:


  1. Standard Tasks
  • Clarify the tasks and basic skills necessary to meet your needs, such as using accounting systems, analyzing accounting records for errors, and reconciling financial activity.
  • Establish a schedule for monthly financial statements and other reporting needed to manage your business.


  1. Critical Thinking
  • You need someone who can focus on the little things and understand how they work together. She or he must be a problem solver, gathering information and developing solutions.
  • Make it clear that projects and tasks must be logically prioritized and followed through to completion. Deadlines must be met.


  1. Two-Way Communication
    • If something is not understood, she or he has to be willing to ask for clarification or help. Communication is critical; it is better for the finance person to ask questions, rather than guess.
    • You need a finance person who can handle day-to-day issues and who knows when to escalate an issue to you.


  1. Technical Proficiency
  • A 21st-century bookkeeper can conduct a majority of your financial business electronically, including working the bank and other third-party companies to pay bills and receive payments.
  • Your bookkeeping solution should be explaining and encouraging the use of technology to save time and money through process automation.

Getting the bookkeeping help you need starts with setting expectations. Then, you’ll be able to get complete and accurate financial information while focusing your time on building your business.

Avoiding a Federal Tax Lien

Last week’s blog post described getting rid of a federal tax lien, which can happen when federal taxes go unpaid. This week, we address how to avoid a federal tax lien altogether. First, a refresher on the definition of a federal tax lien:


A federal tax lien is the government’s legal claim to real estate, personal property and financial assets when a taxpayer neglects or fails to pay a tax debt. The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to the property.


A federal tax lien impacts all aspects of a taxpayer’s finances:


  1. Assets— A lien attaches to all assets (i.e., securities and vehicles). Plus, it attaches to future assets acquired during the duration of the lien.
  2. Credit— A Notice of Federal Tax Lien may limit your ability to get credit.
  3. Business— The lien attaches to all business property and to all rights to business property, including accounts receivable.
  4. Bankruptcy— A Notice of Federal Tax Lien may continue after bankruptcy.


Avoiding a Tax Lien

Sounds simple, but you can avoid a federal tax lien by simply filing and paying all taxes in full and on time. If you cannot file or pay on time, do not ignore the letters or correspondence from the IRS. A federal tax lien isn’t filed until after the IRS has sent multiple notices and explanations about amounts due. IRS correspondence generally provides taxpayers the opportunity to make installment payments or other arrangements.


Lien vs. Levy 
A lien is not a levy. As described above, a lien secures the government’s interest in your property until you pay your tax debt. With a levy, the government actually takes your property to pay the tax debt. If you do not pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any property that a taxpayer owns or has an interest in.


Getting Help 
The best “help” is filing and paying all taxes and replying to all letters or correspondence from the IRS. If it’s too late for that, getting advice and counsel from a qualified tax professional is your next step.