Year End Tax Moves to Reduce Business Profits

Here are some tax planning strategies to help you reduce profits for the year and thus reduce the taxes you will pay you. (Keep in mind if you want to accelerate profit into this year do the opposite of the strategies listed below)

Delay Revenue

If your business is an accrual basis tax reporting business delay sending out invoices until next year. For a cash basis tax reporting business delay receipt of income. You may need to call people you have already invoiced to request that they make sure you don't receive their payment before the year end. In reality they can send you a payment before year end and you could receive it after year end so this could benefit both you and your clients/customers.

Accelerate Expenses

On the Expense side for an accrual basis tax reporting business make sure you enter all the bills you receive before year-end and make sure they are dated this year. For a cash basis tax reporting business pay as many bills by year-end as possible. If cash is tight mail out checks the last day of the year giving yourself a few days into January to cover the checks. Even better put as much as you can on a business credit card and even though you won't pay the bill until later a cash basis tax reporting business can deduct the expense the date it is charged (assuming it is a legitimate business expense). Charging expenses on a business credit card before year end also works for an accrual basis tax reporting business.

Acquire and Put in Service Capital Assets that Can Be Section 179 Deductions

Any Capital Assets that you acquire and put in service before year can likely (assuming the right conditions) be fully deducted as a Section 179 depreciation deduction this year. Be careful when it comes to list assets that are the type you use in your daily non business life. With these listed assets you will only be able to deduct the percentage of the cost that is attributed to business use versus personal use. 

There may be other strategies too depending on the type of business and situation you have. Keep in mind that these strategies are in reality a shifting of profits and taxes between years. Employing profit reduction strategies for this year will typically mean increasing profits in future years, so plan accordingly. Even though you are shifting profits between years you can delay taxes and perhaps lower taxes depending on the circumstances for you in the different years involved. 

As mentioned above you can also move profit into this year especially if it looks like your income next year could move you into a higher tax bracket or trigger the Alternative Minimum Income TaxThe Additional Medicare Tax and or the Net Investment Income Tax

These tax strategies can be complex and I would be happy discuss your situation with you and become your CPA and work with you on an ongoing basis.  Feel free to contact me using my information below.

Jeff Haywood, CPA
The CPA Superhero

The above information is general information and is not all inclusive and as always in your tax situation everything "depends on facts and circumstances." So call me to talk about your specific facts and circumstances.

Why January 15th Is An Important Date for Your U.S. Taxes

Nobody likes to pay taxes and penalties on taxes are even worse. On your personal form 1040 for your U.S. Taxes you must not only pay enough tax but you must also pay it in a timely manner or pay a penalty. The date you must pay enough tax in to the IRS to avoid an underpayment penalty is typically January 15th. Below is a quote from IRS publication 505 on the subject:

If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty.

So what is the rule for the Underpayment Penalty (not to be confused with the Late Payment Penalty :~/  ) Below is the General Rule from IRS publication 505 for 2014 taxes:
General Rule

Did you catch it. They don't put it in bold print or shine a bright light on it, but the key is timely estimated tax payments. Basically this means you must pay in enough tax with your payment for the January 15th deadline for the fourth quarter estimated tax payment. That is why the January 15th is such an important date for your U.S. taxes.

So first, how exactly do you avoid paying the penalty. As noted above you avoid paying the penalty if you pay in by January 15th of the following year at least 90% of your current year tax or 100% of your prior year tax. (Of course) Except if you are a high income taxpayer then you pay (play) by a different set of rules. From IRS publication 505 here is the rule high income taxpayers pay (play) by:

So for high income taxpayers you must pay in at least 90% of your current year tax or 110% of your prior year tax. Also, note for farmers or fishermen there are also special rules to pay (play) by.

Second, are there any exceptions?  Here are the exceptions as found in IRS publication 505:

Third, what is the penalty amount?  The short answer is "it is complicated" as you need to file form 2210 to calculate the penalty and there are a few different ways to calculate the penalty. But to give you an idea, if you can use the short form your underpayment amount for the year (on the form for 2014) is multiplied by .01995 and then if paid it all by April 15th you get a discount of .00008 times the number of days it was paid before April 15th.

The bottom line is it is best to pay the required amount by January 15th. I have heard but I have not found it in writing yet that the IRS is increasing penalty amounts for 2016. I don't remember where I heard it and it may have been the shared individual responsibility payment or I may have just had it in a dream, but know that the U.S. government needs money and they will continue to find ways to generate more income (obviously without calling it income taxes so they can say they have not raised income taxes). So just count on the penalties to be increased in the near future.

Keep in mind the U.S. government wants you to pay your taxes quarterly over the course of the year. So it is also possible you will owe this penalty if you don't make quarterly payments throughout the year.
Finally, if hit with this penalty, can you get a waiver. Yes. According to publication 505 here is the scoop:

So as mentioned above you possible face penalties for underpaying your taxes by the due dates, and then there are also late payment penalties and interest and other assorted goodies (not specifically mentioned in IRS publication 505).

If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. This is difficult enough for those that do this for a living and you may want to find a little peace of mind by paying me to help with all this (growing) mess.   

The CPA Superhero would be happy to help you on an ongoing basis. I also help clients with reviewing and analyzing business results, plan for retirement and other financial goals in addition to all the various events that come up in the course of doing business. The underpayment penalty really requires an ongoing discussion during the year to determine how much to pay in estimated quarterly tax payments. As with other things the more you make the bigger concern this is for you. Please feel free to call me for help at my number listed below or send me an email at my address also listed below.

Jeff Haywood, CPA
The CPA Superhero

Follow the CPA Superhero on Twitter too at:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

Make It About Them

Successful people do what others won't do.
Often that means doing what you really don't want to do.
If it was easy, everyone would be a success.

Doing what others won't or don't do is really simple to get business and establish your brand. So forget everything (well most everything, except Dale Carnegie's stuff) you have been taught to do and consider this experience.

The best phone solicitation ever:

Hey Jeff, How is it going?
Me: Ah OK.
Just OK. No seriously, I know a guy like you is more than OK.
Me: Who is this?

The point; if you lead with I want to sell you something then you are dead in the water (hung up on, end of conversation). That is a horrible way to position yourself to begin a conversation and it is just unfriendly. Instead, get to a position of strength and friendliness by finding something out about the person. Be someone that others want to talk to. Dale Carnegie taught that you want to start by talking about something the other person is interested in and a genuine compliment helps.

So when starting a conversation ask yourself how can you provide some value to this person. Many times you have nothing because you don't know the person. How do you get over that obstacle? Simply ask questions to find out who they are. Find out what they are interested in and what they need and talk about serving them and their need or desire. I guarantee, if you do that first and continually then people will be open to conversations with you and they will ask you what you do. That's right, they will ask who you are and what you do. They will want to hear your story.

In the example above, the person went to the trouble to find out my name and they used it. They also started by asking about me and giving me a little compliment. The approach, strangely enough, is unique that I asked the caller a question: "who is this?" The door to conversation swung wide open.

That's it.

You will thank me later.

Do the things others won't do to succeed.  Start conversations with the goal of developing a long-term relationship. To get there ask the person about themselves and try to help them. They will get around to asking about you. That is the position you want to establish. Don't be in a hurry to sell, take time to develop a relationship first. Your goal should be to serve first and then everything else will take care of itself.

If you want to have regular conversations with someone who will make it about you, call the CPA Superhero to talk about you, your taxes, your business, your finances, etc.

Jeff Haywood, CPA 
The CPA Superhero

Follow the CPA Superhero on Twitter:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

My Books are a Mess: Business Owners and Quickbooks

Successful People Do What Others Won't Do.
Often that means doing what they don't really want to do.
If it was easy, everyone would be a success.

Why are my books a mess?  Why do I have a bunch of transactions in Unapplied Cash accounts?  It is common for small business owners to struggle using QuickBooks and have some undesirable results.  To really succeed in business you need to get a handle on this.  How and why does this happen and what is the fix.

Why Does This Happen

In this situation the problem is not what it appears.  The problems starts with a focus on entering transactions and neglecting to look at the end product.  Many business owners check the bank register but don't regularly look at their Profit and Loss Statement and even more seldom is a review of the Balance Sheet.  What happens is QuickBooks is being used to track activity in bank accounts and manage invoices and payables and maybe payroll but it ends there.

Failing to look at the end products, the Profit and Loss and the Balance Sheet, causes two problems.  First, as discussed above often times entries don't get put in the right categories and it is not discovered until the end of year when their CPA asks for their financials in order to prepare the tax return.  Then there is a tremendous amount of work at that time to cleanup the books just to have the tax return done.  Many business owners pay someone to cleanup their books at year but interestingly they don't figure how to fix the problem going forward so they repeat the same results and frustration the next year.

The second problem is you are not getting value out of your investment in your QuickBooks software and more importantly you don't really know how your business is doing from month to month.  This makes it really difficult to manage the business and identify problems and opportunities.

The Solution

The solution is to gain competence with QuickBooks.  There are a few ways to do this.  One is to take courses on using QuickBooks and then apply what you learn.  A second option is to hire someone who is competent to do your accounting.

Another option is sort of a hybrid of the first two but still results in you being able to do your books "in house" but enables you to both gain competence in using QuickBooks and getting a real feel for how your business is doing on a monthly basis.  With this option you enter your transactions and I work with you to clean up what you have right now and in the process teach you to use QuickBooks correctly and see accurate results every month and discuss what they mean for you and your business.  Typically the initial cleanup with us working together takes some time but once it is cleaned up then the monthly reviews become easier and less frustrating and you both gain competence with QuickBooks and a get real feel for your business.  Many love this option because they get to maintain control over their accounting, keeping it "in house" and they are empowered to use Quickbooks as a management tool to grow in knowledge about business in general and their business specifically.

The advantage of working with me regularly is the repetition and learning from your actual monthly accounting rather than some hypothetical numbers in a class.  To me this seems a more valuable use of your time and a more effective hands on way of learning and progressing.  It will also empower you to do what you want, which is to do your bookkeeping "in house" saving you some frustration, time, and money.  Right now it is frustrating and maybe something you don't want to think about it but it can become a strength for you as you gain competence and give you real working knowledge of your business.

Keep the End in Mind

Think about when the time comes to cash out and sell your business.  After taking this approach you will know you have good financials to show potential buyers and you can speak intelligently about what those numbers reflect.  As a potential buyer I would feel more secure in making a offer for your business than for one whose books are a mess and it is clear they don't really know what is going on.  On the other hand, the guy who does not really know what is going on might not know what his business is really worth.


Success often results from doing what others won't do and many times what you really don't want to do.  You can become more successful and more knowable about your business and gain freedom from frustration, saving time and money. Please feel free to contact me using my information below to discuss how we can work together to help you with your accounting, your income taxes and your business.

I am Jeff Haywood, your CPA Superhero

Jeff Haywood, CPA 

Follow the CPA Superhero on Twitter:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

Why Can't I Deduct Those Losses: The Double or Quadruple Whammy of Your Losses in the Stock Market

What Do Stock Market Losses Mean For Your Tax Return?

Limited Reduction of Income on Your Tax Return for This Year

The smoke is rising from his ears and he wants to know why he can't use his stock market losses to offset his income on his income tax return.  Yeah, it is a bad deal. To add to salt to a festering wound you are limited to taking capital losses, like losses on your stock trades, up to a net of $3,000.  So net means you can use actual losses to offset any actual gains you had on trades this year plus up to $3,000 of losses.  When you have lost over $3,000 of value that is not enough.

What about the rest of those actual losses?  You can carry those forward and use them in future years.  But remember those are only the actual losses.  

Actual Losses Only

Actual losses are losses from positions you have closed out of.  In other words losses from stock that you have sold.  If you still hold the stock, now a loss position but an active position, those are not yet actual losses you can report on your tax return.  It is only the losses from stock you have sold.

Wash Sale Limitations

Before you think about it, no you cannot sell a position and reenter it within 30 days.  If you do it is a wash sale and not typically deductible on your tax return.  So even if you want to stay in a position for some reason you can't sell to take the loss and then get right back in. You will loose the loss.

No Losses From Retirement Accounts

And no you cannot deduct losses from your retirement accounts on your tax return. You see those funds were never taxed and you do not get to deduct losses just as you don't pay taxes on gains until you take the money out and then they are taxed at ordinary income tax rates rather than the favorable capital gains tax rates.

So that is actually four whammies or a quadruple whammy from your losses in the stock market.  No one likes losses and especially when they are compounded by the tax laws but you need to know how those losses will be treated from a tax standpoint.  It is better to know what to expect now so you can make informed decisions rather than be surprised later.

Of course, if you are classified as Qualified Trader then there are a different set of rules for you and your trading activity.

I would like to help you succeed with your financial plans and with your businesses. Feel free to use my contact information below to contact me to discuss what I can do for you. Yes, we can discuss strategy to deal with those stock market losses.

Jeff Haywood, CPA
The CPA Superhero

Follow the CPA Superhero on Twitter:

My posts contain general information that does not fit every situation and is not all inclusive. When it comes to your tax situation, remember, everything depends on all your facts and circumstances. So contact me to arrange a time to discuss your specific facts and circumstances and what you want to accomplish. 

The Sexy Way To Wealth

One of the best stories about wealth is from a high-flying friend back in the day and about his not so high-flying but wealthy dad.  My friend would make over a million dollars in a few years but had nothing to show for it.  However, the real story is the one he told me about his dad, who is a millionaire who never made over $50,000 a year.  His newly retired dad and his wife raised a few kids sent them to college and along the way accumulated over a million dollars in accessible funds.  How?

His dad followed a tried a true formula.  He saved money out of every paycheck and also put money into his retirement accounts.  Stop me if you've heard this before, but it does work and it is actually very powerful not only financially but personally.

Anything Worth Doing Is Difficult

In reality this strategy is difficult but so is anything worth doing.  The main deterrent is in the mind.  When you are young you want things and you want them now.  The problem is in waiting. What do you want?  You want a nice place to live in a cool neighborhood.  You want a cool car and you definitely want to look good and stylish.  You want all the latest tech gadgets and entertainment centers.  In addition you want to go out and do things with other people, eat in cool places, hangout in cool bars, go to festivals and events.  The problem is, on the average salary you have to live with moderation.  You have to say no to yourself and that does not seem like fun.

Develop a Plan and Recognize It's Value

While you do have to say no to yourself, you can do it with a plan that you control and that gives you a bright outlook for the future.  It means setting a budget that includes setting aside money into a savings account or investment account in addition to funding a retirement account.  Once you put in those restraints figure out how much of your income you want to allocate to housing, a car, entertainment, gadgets, clothes, the unknown, etc.  Then deal with your wants.

Say no to yourself but develop a plan to get what you want.  You will probably realize that what you want is outside your means at this time.  First, feel good about two things, living in control of your own financial life and having a plan to reach your goals.  Second, develop and work with plans on an ongoing basis to get to the things you want.

For most this will require both saying not now and only when I reach certain accomplishments. Saying not now means you won't buy or do something until you have the right circumstances.  Not only is this financially sound but it is also a means to develop maturity.  That maturity is such a valuable trait in and of itself that it will make money for you help you to obtain the things you want faster.  Why do I say that?   People want to do business with mature people. Would you rather have an impulsive business partner that can't say no or a mature person who can control their own life and your business.  If a person can control their own life they can also control a business venture and vice a versa. Take pride in investing in and developing yourself as valuable asset.

While in reality you may have to just flat out say no at this time to something because you can't afford it.  Who really knows what the future will hold.  With a good plan and in developing your own value what seems out of reach now may begin to look more attainable as you grow.  For example, if you want a Mazzerati, you will likely need to develop some very successful businesses first.  It can be done but usually with the development of personal skills first or along the way.

So decide you won't indulge yourself with something you want until you can pay for it.  Then develop a plan to get the money to pay for it by saving and investing.  Investing might be in your own business that can generate higher returns than the stock market and give you the ability to influence how it turns out.  Just having a plan will empower you with a sense of control instead of dealing with the traps that come with a sense of entitlement and the debts that come with a lifestyle you can't afford (yet).  Plan and work for it and develop real wealth, not just material wealth but also personal wealth, the wealth that is from becoming a person with real valuable skills and traits.

Recognize The Value of What You Are Becoming - Sexy

Envision this, an investor asks you and one of your peers why he should hire you to develop his business idea.  All your peer has is looks, education, fancy clothes, car, gadgets, etc. and the debts that go along with it.  You on the other hand can offer the ability to develop and execute a plan and you can describe in detail your financial plan and how you have been executing it.  In addition, you have a better idea of what questions to ask about the business idea so as to develop a plan or proposal since you have experience with developing plans and seeing them through.  Since you know enough to ask the right questions you can use the information you obtain to put together a plan or proposal for developing this business idea and likely you can close the deal because on your value and your coherent plan.

You probably can also see that if you have successfully put together a financial plan and are seeing it through others might invest in your business idea and have confidence in you.  Yes, the value of people having confidence in you is much greater than someone admiring the clothes you wear or where you live.

Understand value.  Maturity has a real value that projects into the future. Cool things along with debt have limited value and it also projects into the future but in a negative way.  Self-control, and the ability to manage and implement a plan has greater value than a stylish clothes that you can't afford.  So as you develop your personal value then your plan to get what you want becomes more reachable in your mind and in the minds of others.  Yes, time and investment in yourself translates into real wealth.  Perhaps saving money does not seem sexy but an investment in yourself sure does.  Also, your plan then becomes sexy because you have a real attainable vision for your future and the skills to make it a reality.

Get to Having Things Work for You

As you grow your savings and investments you will be able to put it work for you.  How does that feel?  You know the feeling of working for someone or something else.  Now you get to turn the tables and have your investment in yourself work for you.  Do you know what that will do for your confidence? Because now things are working for you, both money and your skills and perhaps a business or businesses, your confidence will grow and will show when you talk to others and it will make you attractive as a person and as a business asset.

It's Actually All About You and Not Money

And you thought it was about money.  In reality it is about you and your value. The things you have and do don't make you sexy but what you are makes you sexy.  So be successful and sexy by investing in yourself and your future by developing and implementing plans including an ongoing and developing financial plan.

I would like to help you succeed with your financial plans and with your businesses.  Feel free to use my contact information below to contact me to discuss what I can do for you.

Jeff Haywood, CPA

The CPA Superhero

Follow the CPA Superhero on Twitter:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

Use Business Metrics and Analytics To Reach Higher Levels of Success In Your Business

Metrics and Analytics

Do you like the insight that statistics provide for investments,  the economy, or sports?  Yes, likely you use and may even be excited about many statistics, or the new buzz words metrics and analytics, and what you learn from them.  They also empower you to evaluate investments, sports teams or players as well as your business and understand why you have certain results. You should also be excited to use metrics and analytics in your business to help you evaluate, analyse and develop strategy for your business to reach higher levels of success.

Business metrics and analytics empower you to understand, to compare, and to analyse your business and it's parts and communicate this intelligence with your key personnel.  Much the same way investors have learned to use metrics and analytics to analyse businesses and other investments to identify opportunities and undervalued assets or sports general managers use them to evaluate players, their team, other teams and strategies, you too can use business metrics and analytics to understand, compare and evaluate your business, your personnel, and different strategies.

Do You Understand Your Business

Ask yourself would you invest in your business?  Do you have enough information to make that decision and to use it to sell a share of your business to another investor?  When you look at your business do see areas where you can make changes to make the business more successful?  If you don't like your business as an investment at this time, what developments would you like to see so you would invest in it?  In other words, do you really understand your business and what drives it to success?  If you don't have enough information to have that understanding and to make investment decisions or to sell a portion of the business to others what additional information do you need?

Developing an Informed Strategy

You will be surprised the insight you gain reviewing business metrics and analytics.  I just finished a review with one of my clients and the more we review his business metrics and analytics, the more details he wants to analyze his business and identify opportunities.  He really uses business metrics and analytics to manage his business and have discussions with his managers.  He is getting so good at reviewing the metrics and analytics and understanding what leads to profits and the opportunities for even higher profits that he is talking about starting a consulting business to help others in the same industry.  Currently he uses his metrics and analytics to discuss them with his managers, so they understand what will impact their store or department and as a team they continue to get better at managing labor costs and negotiating material costs reaching higher levels of success.

In addition he has a feel for his level of revenue but has not really quantified it.  There are questions outstanding like what are the relationships between advertising and revenue, between the economy and revenue, between time of day and revenue, and between prices and revenue.  Maybe it should also be determined the relationship between connections on social media and revenue.  Of course gather information to develop analytics comes at a cost so there is a question of the cost and benefit relationship.

For any given industry there are different strategies that you can use to achieve success.  The assets you have available may dictate which strategy to use or you may be able to acquire other assets to help you use a particular strategy.  Often you can obtain intelligence that will help you understand what costs are typical in your industry and it can help you set goals for your business and then with experience and added intelligence you can tweak your strategy and your goals.

Reaching Optimum Levels of Success

Many people dread the review of accounting reports but successful people look for and find the real value in business metrics and analytics for their business.  By understanding your business metrics and analytics you will have real intelligence that you can communicate to your key people, setting expectations, monitoring results, and providing proper incentives.  To understand what standards to set you have to know your business and the metrics and analytics and how they relate to your success.

Think about having data that enables you to know if you are spending too much or paying too much for a product or service.  As you consider metrics and analytics, or intelligence, for your industry you can know how you stack up compared to the competition, why your business is different, and develop plans to improve.  Then you can measure how effective those plans were and decide whether or not to continue with that strategy or to make adjustments.  With business intelligence you can evaluate strategy and run different scenarios or projections and communicate those with your management.  For example one of my clients had a manager that wanted to increase labor costs to retain his key people.  A projection could tell him how much more revenue they would need to generate to cover the additional costs.  Yes, knowledge is power for you and your business.

Identify Unknown Problems and Opportunities

In addition those accounting numbers or metrics and analytics tell a story.  Where is all your money going?  Is it going to legitimate and necessary business expenses or is it being wasted or is someone stealing from you?  The way to find out is to review the financial reports/metrics and continue to monitor them.

To make this work you need to work together with your accountant and your key personnel.  Look at what you have as far as intelligence on your business and what it tells you and what it doesn't tell you.  Then refine it by tracking other performance measures and costs until you get numbers that are really meaningful to you and that help you develop a competitive edge over the competition and reach optimum results.

Metrics and Analytics: Now They Are Sexy

I marvel at the information available now to sports teams and the light it sheds on what really impacts success in different sports.  Just look at the Warriors, who just won the NBA championship, with a team constructed in a very unique way due to their use of metrics and analytics.  They even adjusted way the team was used in the playoffs as they learned from their analytics how to achieve greater success.  Now others teams are investing more in the use of metrics and analytics.

Do you want that same type of success for your business?  Do you want to be able to identify changes that will lead to even greater levels of success and to optimize your business performance?  Yes, the trend in sports is to use metrics and analytics  and you can do the same with your business.  Now it is the sexy thing to do.

With a masters degree in Finance and about twelve years in corporate finance doing analysis of operating results I have been helping managers and stockholders/owners use metrics and analytics to manage their business for many years.  For the last 13 or so years I have been using this experience to help small business owners to achieve greater levels of success.  I would like to help you too with your businesses.  Feel free to use my contact information below to contact me to discuss what I can do for you.

Jeff Haywood, CPA

The CPA Superhero

Follow the CPA Superhero on Twitter:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

Guard Against Employee Theft: The Fake Employee Trick

The Fake Employee Trick

Watch out for the fake employee trick.  Business owners know that embezzlement and theft are growing problems in the business world.  Here is an example of a method used to steal from you. A manager hires someone they know and puts them on the payroll but the person does not actually do any work for you.  This could be a friend or family member and it could easily be costing you money over a period of years.

How to catch the fake employee trick

So how can you catch this trick and more importantly how can you create an environment that discourages this and other deceptive practices.  To catch this trick and others make sure you as the owner check all the bank and credit card statements personally.  Check for unauthorized payments and make sure you are familiar with all the vendors and employees that are getting paid.

Second, talk to hiring managers about the employees they hire.  Do a regular review with them asking who their employees are and what they do.  Even ask when they are scheduled to work and make sure you regularly get a copy of the schedule.  Then every so often actually stop in to check to make sure the people scheduled to work are actually there and working.  One of my clients has cameras setup in his business locations so he can even monitor them remotely.

Create an Environment That Discourages Theft

The point here is to actually check up on what is going on and make sure everyone knows you are checking.  This is how you create an environment that discourages fraudulent practices.  My client with the video will occasionally call and ask the managers about something he notices on the video.  This lets the managers and everyone else know that he watches and they never know when.

Also, reviewing financial reports by comparing expenses related to sales, the prior period and the same period last year can help you spot things that are not right. Then in your investigation you can often find fraudulent expenditures like fake employees.  To make this even more effective develop detailed budgets for each of your locations, departments and job types and carefully review any variances.  This will help you as the business owner to have an intimate knowledge of your business.

Doing What You Don't Want to Bother With Leads to Success

Avoid getting complacent and just assuming everything is fine.  In addition, really get to know your managers and key employees and develop relationships with them.  It is harder to steal from someone you like but it still happens.  In many cases it takes more than one person to pull off a fraud and if you know your employees and have regular conversations with them it makes conspiracy more difficult.  Think about what a manager would be thinking if you regularly to talk to their key employees.  If he hires a fake employee he will wonder if you are asking his key employees about this new hire.  It really helps to create an environment where temptation to commit a fraud is minimized.

These are just a few tips to keep from getting robbed by your employees.  At the same time being aware of all the details in your operation will help you to manage and make informed strategic business decisions.  As you know "the devil is the details".  Additionally success means doing things that other won't do and that you really don't like to do.  Think of this as an investment in your business.

While this is specifically about the fake employee trick the principles outlined here will help you catch and avoid many other fraudulent activities and help give your employees incentive to give your their best.  Keep in mind that a big part of avoiding fraud is to let everyone know you are keeping an eye on things.  This really takes away temptation that can overtake even a honest person in the right circumstances.

How The CPA Superhero Can Help You

My most successful clients use me to help them monitor and review their business activities/results.  I would be happy to do so for you also. As I mentioned above it will help to discourage theft and also help you manage your business and identify problems and opportunities.

The CPA Superhero wants to help you to succeed in business, life, and in retirement.  While my main business is preparing tax returns, I also work with clients to setup accounting systems to start, manage and develop their business(es) and develop and implement a financial plan. Contact me using my information below to schedule an initial phone conversation. 

Jeff Haywood, CPA

The CPA Superhero

Follow the CPA Superhero on Twitter too at:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

How To Schedule Success?

You have heard you need to plan to succeed or you are planning to fail.  You also know that "someday" is code for never.  Like when someone says "hey, let's do lunch someday" it is really code for "it will never happen".  To make it happen you have to schedule it.  It is the same with success, since someday is just code for never, you have to actually schedule it.  How do you schedule success?

The world is setup and programmed for people to be too busy.  People actually like to say "I'm too busy" whether they are or not and some actually like to be too busy.  Are you too busy to succeed?  Take a look at what is really important and make sure you are not "too busy" for those things. The first step is free yourself of the limiting thinking that I am too busy.  Just stop that noise from going through your thought process.  Stop saying it and stop scheduling it or planning to be "too busy".  You can create a life where you are not too busy for what you really need to do. It means determining what is really important and scheduling it.

How to Schedule Success

To schedule success, schedule the things that you need to do to succeed. Schedule what is in your formula for success including the things you really don't want to do. For example, schedule time to investigate ideas.  Here is what happens, when you have an idea and you just leave it in your mind it can get away from you. You may even find yourself later thinking what was that idea I had the other day.  Rather than let it get away from you, schedule it.  Get a calendar and put it in there.  Simply put a half hour in schedule to look into "idea A".  Then when you go to sleep at night and you wake up wondering what was that idea you can go right back to sleep knowing "hey, I scheduled it" ...  it's in my calendar ... and it will come up soon.  Getting ideas into your calendar gives you a shot to capitalize on those ideas rather than losing them and fretting over it.

Schedule making contact with people (networking) but put in specific people to contact and when and why.  For me personally my success in my business is directly connected to conversations. The more conversations I have with people the more successful I am going to be. So I schedule calls, emails, etc. for specific people on a regular basis.  It is a good idea to schedule a follow-up when you first make contact with someone if you want to stay in contact going forward. Schedule it even if that means just scheduling a request to have a conversation.

My success to is also linked to sharpening the sword by training and investigating. In this part of my formula for success more ideas are generated and they are scheduled. The new ideas then need to be investigated and they may lead to something specific and they often leads to other ideas.  As I get these ideas to be investigated into my calendar then they basically compete with one another for attention and a place in my schedule.  The ideas that excite me are in my calendar for the next week if possible.  Others get pushed out and may eventually get deleted.  But all ideas that have some possibility to me are alive in my schedule. If they stay only in my mind it is likely they will die there.

There are always ideas that are not practical for the near future but they should still get scheduled.  You can schedule those ideas out into the future so they pop-up later and you can decide if now is a more realistic time to look at it.  If so you start the beginning steps and if it looks promising you schedule several steps. If it is still not a good time or you are not ready yet you can keep moving it out in your schedule but it is still alive in your calendar so it's still a possibility.  Each possibility potentially means something of value of to you.  You get enough possibilities in your schedule and how you feel about yourself and your prospects begins to rise.  As your self esteem elevates then the real possibility of considering some ideas to make them a reality increases.

Another key event to schedule is the follow-up. Schedule follow-ups for people you meet and messages you leave, like emails. Prepare a course of action if they don't respond and schedule it.  If you don't prepare for a non-response then opportunities and perhaps critical activities fall through the cracks. After leaving someone a message or email schedule a follow-up.  If they have not gotten back to you contact them when you schedule reminds you to.  If they did get back to you then delete the follow-up event from your calendar.

Schedule Everything

To make the schedule work it helps to put everything in your schedule.  Exercise, reading, answering emails, social media, returning calls, projects, regular jobs, paying bills, etc.  If you just get on social media or check emails whenever it can take over your life and ruin your chances for success.  So schedule them.  I schedule checking emails and messages a few times a day and take care of them all during those times and the rest of the time I focus on what I have scheduled.


Guess what happens when you schedule everything. Even if you don't feel well and you can not think of what to do it is OK because you scheduled it when you did feel well and you don't even have to think about it ... you just do what you scheduled.

In my calendar I can setup reminders to be either emailed to me or to popup on my computer screen. So when I have appointments I set reminders for a day or an hour ahead of time, just before I am scheduled to check my emails.  That way I can get a timely reminder during the day.

Planning to succeed by scheduling the things you need to do to succeed will provide results for you and enable you to sleep easier.  If it's in your schedule it is a live possibility for you. Remember it is the little things that most people don't do, like scheduling success, that determine long-term regular success.

The CPA Superhero wants to help you to succeed in business, life, and in retirement.  I prepare income tax returns and I help clients with their businesses and financial goals. Contact me using my information below to schedule a free introductory consultation up to a half hour. 

Jeff Haywood, CPA

The CPA Superhero

Follow the CPA Superhero on Twitter too at:

My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything depends on facts and circumstances.  In addition, the information and, certainly, U.S. tax law are subject to change at any given moment without warning or notice.  So call me about your specific facts and circumstances and let's talk about what you want to accomplish.

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