Last week, when I wrote my message to our NYC business clients, the biggest news was the second round of the PPP, and that expenses covered under the first round of it would be tax deductible.
Has anything happened since then?
Goodness, even just the “mere” fact that both houses of Congress are under Democrat control now, after the Georgia elections, would have been the subject of many tax and business policy discussions.
But with ALL of the events of the week in view, we really do have a choice to make as business owners:
Will we marinate in fear and anger … or will we take care of our customers, our team, and our business?
I’m going to leave the cultural commentary aside today (we’re being bombarded with it from all sides, after all), and instead I’m going to be the voice that says: you have a job to do; so let’s do it.
I was pointed to that Twitter thread via email (I normally don’t spend large amounts of time on Twitter, nor do I suggest that you do) … but I suggest you read it and digest. As a East New York business owner, there is much there to think about. I particularly liked this:
My team and I find great fulfillment in coming alongside NYC businesses like yours and pointing towards the way of financial hope. And there is plenty to like about the tax and regulatory regime that we will be operating under in TY2021.
And obviously … we don’t know yet exactly how it will all change. (And change, it will.)
But in the meantime, if you need to reach us, we’re here:
Now … last week I went over some specifics of the CAA and how it affects your business (as I alluded to above). If you missed that, let me know.
Today, I’d like to begin a deeper conversation around the foundations of your business. I offer these questions on an annual basis, and they are worth considering AT LEAST that often…
My NYC Small Business Health Quiz (Part 1)
“Be more concerned with your [business’] character than your reputation, because your character is what you really are, while your reputation is merely what others think you are.” –John Wooden
These are questions that might raise a few concerns, and that’s fine — it’s what we’re here for. Alongside establishing clear measurables for success (KPI’s), these are the sort of things that effectively-growing small businesses really need to get a handle on, regardless of their tax situation.
I like to share these questions regularly with my people, simply because it’s good practice to continuously revisit these things and ensure we’re headed in the right direction.
And further, as a business owner, it’s important that you take a REGULAR, clear-eyed look at the underlying legal and financial foundations for your business.
As we all pull our tax documentation together, I can’t think of a better time.
This is a bit of a different approach than I normally take in my Strategy Note, but if you take it seriously … it can be a transformative process.
Take a look at each of these questions, and if you are troubled by any of your answers — send me back an email. If it’s not something we’re equipped to handle, we can equip you with a good advisor.
Regardless, we can talk about them when we do meet for your taxes.
Powell Phillip’s Small Business Health Quiz
#1: Is the value of your business firmly established?
Questions to consider:
- Have I ever had my business value appraised by an outside party?
- Do I have a formal buy/sell agreement in place?
- Is my buy/sell agreement funded?
- Does my buy/sell agreement adequately protect my heirs, my business, and my partners?
- Has this agreement been reviewed in the last 3 years?
If you have any plans to someday extricate yourself from your business (and you should ALWAYS consider your exit strategy), these are critical questions.
#2: Is there an emergency plan?
Questions to consider:
- Do I have a will, and is it up to date with my business wishes?
- Do I have a plan to retain key employees if something were to happen to me?
- Are my assets protected from potential litigation?
- Have I identified and written down my trusted advisors?
Unless you plan to forever cheat death, a business owner would be foolish to not prepare for that event.
#3: What happens next?
Questions to consider:
- Do I have a formal succession plan prepared and on file?
- Does my succession plan have a provision for disability?
- Have I involved both family members AND key employees in my succession planning?
- Do I have a disability buy-sell, or overhead expense coverage?
- Do I have contribution protection for my retirement if I were to become disabled?
Again, these eventualities always seem remote on the front end … but if your answer is “no” to more than a couple of the above questions, it would be a good idea to get in contact with someone competent to help you fix it.
I’ll be back next week with a few more questions for you…
I’m grateful for our partnership, and for your referrals.
Claudine Powell Phillip
Phillip & Associates, LLC
Feel free to share this article with a NYC area (or beyond!) business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.