Baby Boomers and Retirement Plans – Possible Solutions

Now that Baby Boomers are getting older, those in defined contribution plans such as (401 (k) and 403 (b), are finding that they aren’t sufficient to provide income for the duration of the retiree’s life. Although 403 (b) plan annuities are better, the problem still may exist.

 

Although plan sponsors have focused on the need to save for retirement, but have been lax in preparing Baby Boomers to address needs after retirement commences.  Plan sponsors are not required to provide post retirement help, however, when they do, they face fiduciary responsibility.

 

Some of the risks Baby Boomers risk in retirement are:

 

Because they are living longer, retirement savings need to last until end of life. From 2000 – 2014, the life expectancy of a 65 year old has increase by 3 years.  There is a great probability that at least one spouse will live to be 95 or more. Kevin Thompson says “I have come to appreciate that if you allow it, Western Medicine will extend the duration of your life. And, if you let them in, the Western Medicine Practitioners (Your Doctors) will extend the QUALITY of that life.”

 

There are market challenges that could affect their retirement income. If a serious downturn were to occur, either right before or after retirement, the retiree may be forced to use up investment income to pay expenses and has less of a chance to recoup.

 

They may not be sure of how much they can withdraw in order to make sure they have enough left for life.  Many experts recommend that a 65 year old retiree withdraw no more than 4 % per year (adjusted for inflation) in order to have a 90% chance of their money lasting for 30 years.

 

Their mental state may decline as they get older. A person 85 or older is often not capable of making smart financial decisions on their own.

 

Possible Solutions

 

Traditional annuities have a fixed monthly payment that is guaranteed for the life of the retiree and spouse. With an annuity, the retiree pays some or all of his account balance to the insurance company and they in turn pay the retiree for life.  There are no market fluctuations and they know how much they will take in each month and for how long.

 

GWB’s (Guaranteed withdrawal benefits) also guarantee income for life under certain conditions.  The retiree invests all or part of his account in a managed fund. (Usually a target date or balanced fund)  The GWB has two parts.  An Equity factor in which the account grows with contributions and investment gains, and the protection factor.  As long as the retiree’s withdrawals do not exceed a certain percentage of the highest account balance, the insurance company pays at the same rate if the investments are consumed.  The retiree may take larger withdrawals from investments to pay expenses if needed, although this reduces later payments. Thompson goes on to say “there are many annuities that exist that can provide fixed monthly payments just like old school pensions did for our parents.”

 

Fiduciary Concern

 

Sometimes the fiduciary concerns of considering the retiree’s needs and recommending products to meet those needs are overwhelming. Because of this the Department of Labor has created a regulatory safe harbor.

 

The regulation stipulates that a fiduciary must be able to conclude that at the time the selection of the product is made, the insurance company is capable of making all future payments. This requires monitoring.  Cost of the product is also considered but mostly the financial integrity of the provider.

 

Taking into consideration the risks that Baby Boomers face and the need for in-plan solutions, fiduciaries must consider offering products that are guaranteed lifetime income and do so in an informed manner. Thompson adds “be open to the power of annuities. When appropriately inserted into your plan, they can be o’ so powerful.”

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

Are You Setting Yourself Up as a Startup Failure?

In recent years it’s become a sort of badge of honor to declare oneself a failure as a startup. Popular Silicon Valley “failures” believe that since the opportunity to fail is so available there’s no reason to do research as its more trial by error.

 

Taking big risks is much cooler than playing it safe.

 

The backlash of failing is much lower than it was in the past.  Also many startup business owners don’t have an understanding of what doing research actually is.  They use buzz words such as rapid prototyping, lean startup, minimal viable product and other “excuses” to avoid doing in depth research.

 

Risk taking is fine for entrepreneurs personally, but for business organizations it involves financial, cultural and opportunity costs that affect the entire team.

 

Venture capitalists (VC’s) promote this theory as well because higher risk gives them bigger gain.  They are less concerned about individual investment success and more concerned that a percentage of the companies in their portfolio nets them a high return.  Kevin Thompson, CPA, a Partner in Atlas Global Partners says “there is so much money being invested in these startup ventures. We visited a VC firm here in Santa Monica and the lead partner said “we are looking for the next multi-billion dollar deal.” My reply, “send me all your multi-million dollar deals.”

 

An exit or liquidity outcome is fine with them even if the company itself disappears.  Actually running the business itself is completely different from investing.  Therefore doing research makes a huge difference. “VC want in and out and an exponential return on their investment” says Thompson. I try and stress building a sustainable company. For every billion dollar deal there are hundreds of million dollar deals that go unnoticed but are operated by smart entrepreneurs.”

 

Entrepreneurs can have a skewed view of what research is.  Some VC believe it has nothing to do with what their customers want or how they feel. It’s also not a science.  Research is a tool. Smart entrepreneurs know that is does come down to what the market demands are and the ability to sell and get paid.

 

Research doesn’t need to be gathered to appear in a journal and it doesn’t have to be formal.  It simply needs to be useful and requires critical thinking skills.

 

Business owners should rid themselves of the word “like” when doing research. It doesn’t usually lead to the end result. There’s a difference between what is known as “declared preference” (what focus groups do) and “revealed preference” which is reality.

 

Focus groups are more theatre than substance.  They don’t reveal how real people behave in ordinary circumstances.

 

Research needs to be focused on what people actually do rather than what they wish they could do. Some people feel this limits their creativity and so they avoid doing the research. To simply have someone tick a box doesn’t cut it.

 

Real research is basically a set of activities to help businesses gather enough information to help them achieve their goal.  It can be simple or complex depending on a company’s needs.

 

It’s important to be brutally honest and realistic about what you know already.  Identify the most critical assumptions and then figure out how to validate them. An example of this would be delivering the kind of service that the company envisions.  Look at potential problems and find solutions that work.

 

Instead of building a prototype of quickly setting up a company that will learn as they go, many not be as financially sound as doing the research ahead of time.

 

A good rule of thumb is to find people who are the type that you would expect to have a problem, watch how they actually behave, ask what causes them to behave that way, and find out how that person is attempting to solve the problem currently.  Asking these types of questions give a company a basis to solve that problem realistically and into a habit driven and mundane world that may not be as innovative but is real.

 

Mailbox CEO Gentry Underwood, when asked about how customer’s pain points affected their use of email responded that mobile devices changed the way people used email and that platform changes needed to be made to reflect that.  Mailbox was able to appeal to users where other apps had failed because they did their research and were able to understand the problem in order to find a solution.

 

MailChimp is another example of a company that uses research and came up with a humane and transparent marketing plan because of it.

 

Research usually gets a bad rap because of fear. These fears include wasting time, being a follower, losing control, and having to share credit.

 

The human race is not always rational, but when it comes to making business decisions, research helps us understand human behavior and gives us a better chance of succeeding.  All businesses need to ask questions that will lead to insights that create results.

 

Original Article

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

 

 

 

230,000 Jobs Added to the Private Sector in October 2014

According to payroll company ADP, a giant in the industry, jobs in the private sector have increased by 230,000 from September to October 2014.

 

102,000 jobs were added to small businesses according to the ADP National Employment Report with 53,000 in companies with 20-49 employees, midsized businesses with 50-499 employees added 122,000 and large businesses with 500-999 employees adding 14,000 jobs. Kevin Thompson, CPA says “anyone who knows me will agree that I have been saying for ten years that this economy will grow on the backs of Small Business owners. In our seminar series “How to Start and How to Run Profitable Small businesses” we show how the US Economy has made the switch from large employer to small employer based. This is just further evidence.”

 

Companies with more than 1,000 employees or more decreased jobs by 8,000. Large companies use outside consultants and small companies to perform so many of the tasks that used to be done internally. Thompson says “these large companies know that the work can be done so much more efficiently by smaller, more agile providers.”

 

ADP President and CEO Carlos Rodriquez issued a statement saying, “The employment rate is improving due to smaller or midsized companies. October’s job growth is the highest since June and the second highest gain of 2014”

 

The most jobs were added in the service sector with 181,000 added in October.  Goods-producing added 181,000 jobs.

 

Jobs in professional and business including accountants, tax preparers, etc., added 53,000 jobs in October 2014. Financial services added 4,000. Trade, transportation, and utilities added 47,000.  Manufacturing – 15,000, construction, 28,000, franchise jobs 16,970, restaurants, 13,000.

 

Mark Zandi, chief economist at Moody’s Analytics said, “The job market is steadily picking up pace. Job growth is strong and broad-based across industries and company sizes.  At this pace of job growth unemployment and underemployment is quickly declining. The job market will soon be tight enough to support a meaningful acceleration in wage growth.”

 

The U.S. Bureau of Labor Statistics reports that employers in both private and public sectors added 214,000 jobs last month.  This fact is sending the unemployment rate down to 1/10% to 5.8% which is the lowest it’s been since July 2008.  Job gains for Aug and Sept have been revised by a combined 31,000 jobs by the BLS.

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

 

 

Complicated Filing Season Ahead for 2015

IRS Commissioner John Koskinen addressed hundreds of attendees at the AICPA National Tax Conference recently and noted that the 2015 tax season will be one of the most complicated tax seasons ever. This is, in part, because two new provisions introduced in the Patient Protection and Affordable Care Act of 2010.  They include the premium tax credit and the individual shared-responsibility payment or “individual mandate” to maintain minimum essential health coverage.

 

Congress has not made it easier by its late action or inaction on legislation to extend temporary tax provisions that mostly expired at the end of 2013. This continued uncertainty is stressing out the entire tax community, including the IRS. Kevin Thompson, CPA says “I thought things could not have been worse than they were for tax season 2014. This is setting up to be just that.”

 

If nothing is decided into 2015, or contains new or modified provisions, the IRS may need to delay the start of filing season which will delay the processing of returns. Thompson says, “Last year we were delayed until almost March 1 in the ability to file tax returns. It made for a miserable March and April.”

 

Reductions in the IRS’s funding have made it even harder to provide reasonable service to taxpayers, provide enforcement and update old technology systems. Its budget has declined by 7% since 2010.

 

Many taxpayers have found it impossible to get through to the IRS to have questions answered because call centers are not working efficiently. The average wait time has been 34 minutes. For the practitioners priority hotline, the average wait time is 52 ½ minutes.

 

The IRS asked for $430 million for processes, forms and regulations and $300 million to improve its information technology systems for fiscal 2014.  They received zero. “As an organization, the IRS is underfunded and overwhelmed. I am not sure they can achieve any mandate without funding. That said, I am not an advocate of additional spending. Instead, I would like to see the IRS partner with tax practitioners to ensure that taxes are prepared and filed timely and collection matters are dealt with in a timely fashion.”

 

Koshinen has been attempting to improve online taxpayer and practitioner service to be comparable to a typical financial institution. A sore point has been the fact that the IRS had to shut down its e-filing system for maintenance from Oct 11 – Oct 13 on the eve of the extended date for 2013 returns. Generally, the IRS takes advantage of holidays to perform maintenance tasks. Those who filed returns that week will be given relief from late penalties.

 

The IRS is making an effort to combat tax identity theft. Koshinen calls it “one of the three or four most important issues we’re dealing with.” The greatest number of identity theft cases took place between 2010 and 2012.  1,200 – 1,500 people were investigated, arrested, and sentenced and more safeguards implemented. Improper payments to identity thieves are much lower but still a problem with an anticipated 3,000 to 4,000 victims in 2015.  Most amateurs have been taken off the streets leaving organized crime and syndicates all over the world.

 

The IRS has improved in correcting victim’s accounts and has reduced the time from one year to 120 days which is still too long. Ongoing initiatives to fix the problem include consolidating victim assistance in a single IRS unit and a pilot program offering identity protection personal identification numbers to all taxpayers in in regions where identity thieves have operated. Currently the pilot program is available in Georgia, Florida, and D.C.

 

“In summary” says Thompson, “I feel like a psychic predicting a train wreck. Failure seems inevitable.”

 

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

The Donald Sterling Case – A Lesson In updating boilerplate trust clauses

As we watched the Donald Sterling case play out on the news, we were reminded of the importance of making sure our boilerplate trust clauses are as we want them to be. LA Clippers owner Donald Sterling was stripped of his rights to not sell the team by his estranged wife, whose lawyers and doctors deemed him incompetent.

 

Mrs. Sterling gained control of the trust by becoming sole trustee. She was then eligible to control the trust and negotiate the sale of the Clippers Basketball team.  The reason is; Donald Sterling signed a clause in the trust that allowed his wife to take over in the event that he was shown to be mentally incompetent. Two doctors, who were not Donald Sterling’s personal doctors made the determination that Mr. Sterling had early stage Alzheimer’s or another brain impediment and was at risk of making errors in judgment that would be detrimental to the team.

 

Donald Sterling and his lawyers challenged this decision and were unsuccessful in proving that he was perfectly capable of carrying out his business affairs.

 

The moral of the story is that it’s critical go over your boilerplate clauses in detail to avoid a scenario like the Sterling’s are playing out in front of the press.

 

Estate Planning Tips

  • Review all “boilerplate” clauses in your estate planning documents to make sure that you spell out what determines mental incompetence.
  • Make sure to plan for any sort of disability of impairment that could affect your ability to carry on business.
  • Be careful whom you choose as a successor trustee should you become unable to conduct business.  Consider estrangement from a spouse as a reason to disqualify your successor trustee.
  • Avoid conflicts with successor trustees by putting a checks and balances system in place.  Weigh their vested economic benefits as a reason someone would use to unseat you. You might want to consider designating a second trustee.
  • Mandate that a determination of incompetence must come from your own personal physician rather than from an opposing party.
  • If a relationship becomes estranged it’s a good idea to review all estate planning and financial documents that have to do with control issues and otherwise.
  • Determine which trustees will be accountable.  This may be a spouse, children or other advisers.
  • Designate a guardian for yourself and your property in the event of a court proceeding. That guardian will hold your durable power of attorney and give them legal standing to defend you in court if needed.
  • Review your estate planning and financial documents regularly and make sure your boilerplate trust clauses are up to date.

Kevin Thompson CPA can help you review your financial documents. Call him today.

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

Baby Boomers and Retirement Plans – Possible Solutions

Now that Baby Boomers are getting older, those in defined contribution plans such as (401 (k) and 403 (b), are finding that they aren’t sufficient to provide income for the duration of the retiree’s life. Although 403 (b) plan annuities are better, the problem still may exist.

 

Although plan sponsors have focused on the need to save for retirement, but have been lax in preparing Baby Boomers to address needs after retirement commences.  Plan sponsors are not required to provide post retirement help, however, when they do, they face fiduciary responsibility.

Some of the risks Baby Boomers risk in retirement are:

Because they are living longer, retirement savings need to last until end of life. From 2000 – 2014, the life expectancy of a 65 year old has increase by 3 years.  There is a great probability that at least one spouse will live to be 95 or more.

 

There are market challenges that could affect their retirement income. If a serious downturn were to occur, either right before or after retirement, the retiree may be forced to use up investment income to pay expenses and has less of a chance to recoup.

 

They may not be sure of how much they can withdraw in order to make sure they have enough left for life.  Many experts recommend that a 65 year old retiree withdraw no more than 4 % per year (adjusted for inflation) in order to have a 90% chance of their money lasting for 30 years.

 

Their mental state may decline as they get older. A person 85 or older is often not capable of making smart financial decisions on their own.

Possible Solutions

Traditional annuities have a fixed monthly payment that is guaranteed for the life of the retiree and spouse. With an annuity, the retiree pays some or all of his account balance to the insurance company and they in turn pay the retiree for life.  There are no market fluctuations and they know how much they will take in each month and for how long.

 

Kevin Thompson, CPA says “annuities are always under fire and cast asunder by many. I believe they can serve to fill the financial gap created by longer lives.” Thompson went on to say “recently we discovered that a client thought he had retired with income for life. He did, but only his life. If his wife outlives him, and there is a very high likelihood of that, she would not receive his retirement income. We worked with a reputable insurance company to provide an annuity that would kick in and continue the income for her life. Needless to say, she slept better with that sense of relief not having to worry about retirement income.”

 

GWB’s (Guaranteed withdrawal benefits) also guarantee income for life under certain conditions.  The retiree invests all or part of his account in a managed fund. (Usually a target date or balanced fund)  The GWB has two parts.  An Equity factor in which the account grows with contributions and investment gains, and the protection factor.  As long as the retiree’s withdrawals do not exceed a certain percentage of the highest account balance, the insurance company pays at the same rate if the investments are consumed.  The retiree may take larger withdrawals from investments to pay expenses if needed, although this reduces later payments.

 

Thompson says “I am not smart enough to understand the ministrations and fine print of these types of contracts. I just know that more often than not, what people think they have is not what they have. And the sooner they figure that out, the better. With time we can fix so much.”

Fiduciary Concern

Sometimes the fiduciary concerns of considering the retiree’s needs and recommending products to meet those needs are overwhelming. Because of this the Department of Labor has created a regulatory safe harbor.

 

The regulation stipulates that a fiduciary must be able to conclude that at the time the selection of the product is made, the insurance company is capable of making all future payments. Thompson says “in 2008 when the world was collapsing about us, most of the insurance companies (except AIG) stood strong, met their obligations and provided reserves for future needs.” The public believes this requires monitoring. The movie Too big to fail memorialized just how true that is.

 

Cost of the product is also considered but mostly the financial integrity of the provider. “Cost should always be one of the elements of the decision. But the financial stability of the underlying insurance company should be the number one reason to write the policy.”

 

Taking into consideration the risks that Baby Boomers face and the need for in-plan solutions, fiduciaries must consider offering products that are guaranteed lifetime income and do so in an informed manner. Kevin Thompson, CPA in concert with his professional affiliates can work with you to provide sufficient income now and into the future. Please contact him for a complimentary retirement review.

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

 

 

 

Is Your Tax Professional Professional?

After the IRS’s tax return preparer’s regulation program was defeated in federal court, IRS Commissioner John Koskinen made that comment that the IRS should make available a voluntary tax return preparers certification.  The AICPA responded to the commissioner with much concern and noted that the IRS would make much better use of funding to identify and crack down on incompetent and/or unethical tax preparers.

 

Koskinen had urged Congress to regulate tax preparers in the past, but stated that if the legislation did not pass, he recommended the certification as an interim step.

 

The AICPA is not convinced and noted 3 reasons for concern:

  • It would cause confusion regarding what would be considered to be proficiency among preparers.
  • Taxpayers may have the impression that certain preparers would be endorsed by the IRS.
  • It would not solve the issue of regulating unethical or fraudulent tax preparers.

The AICPA also feels that the IRS would be moving to implement the program without a solid proposal or input from the public.  They recommend that the IRS focus on the current tax preparer program (PTIN) as well as increased taxpayer education rather than the voluntary certification they are proposing. “When I purchased Action Tax (www.action-tax.com) I was shocked how little regulation existed in that sector” said Kevin Thompson, President. “That industry operates similarly to CPA and EA practices but with little or no oversight.”

 

The enrolled agent program is already in place for tax return preparers who desire to be licensed by the IRS.  The IRS plan to validate other preparers who have not been subjected to the same regulatory responsibilities as enrolled agents would invalidate the enrolled agent program.  The AICPA recommends that the IRS use the PTIN program to track preparer’s activities, and identify any fraud or incompetence.  The suggest instituting compliance programs to make it more difficult for incompetent or unethical preparers to practice. Thompson says “one of my goals is to grow Action Tax into a multi office and maybe even multi state operation. The high volume practices are often filled with highly talented individuals that perform remarkably for their clients.”

 

The AICPA would prefer the IRS to implement a solid enforcement strategy rather than the certification program.  The current PTIN program allows the IRS to accumulate data on the activities of certain tax return preparers.  It would like the IRS to more clearly define “preparer” for PTIN purposes and exclude non-signing preparers who are supervised appropriately by professional and licensed tax preparers. Thompson says “I am a CPA and I know that we are held to a higher standard. I also know that the IRS is not equipped to resolve this public dilemma. I believe the solution lies in a joint effort led by the AICPA (www.aicpa.org) and NAEA (www.naea.org) to eliminate the confusion, provide order to the marketplace and assist the American taxpayers.” There are two examples of how this might work;

 

First, nearly 100 years ago, there were Public Accountants (PA) and Certified Public Accountants (CPA). Thompson says “except for the CIA (all humor intended) we didn’t have the internet then and I don’t know how it was regulated nor how much confusion existed.” In the early 1900’s, they merged these under the AICPA and grandfathered many of the PA’s into the AICPA. “I am sure this provided some measurable clarity to the American public.” Today there are in excess of 700,000 CPA’s in the US.

 

Enrolled agents were created in the Enabling Act of 1884 to examine and validate war loss claims. The Treasury Department was experiencing an extreme incidence of fraudulent claims and did not have the manpower to handle it. The scope of their jobs was enhanced with the passing of the Revenue Act of 1913. Today the rolls of EA’s stands nearing 50,000.

 

I think these two organizations, with the oversight of the government can provide the process to organize, train and regulate ALL preparers.

 

The second example is in how we handle immigration. Remember in 1986 President Reagan signed a sweeping immigration bill that allowed all immigrants that had entered the country illegally, eligible for amnesty and citizenship. I think we can work with the AICPA and the NAEA to create the process for private regulation of the tax preparation industry by providing an amnesty for existing preparers and a licensing process for new preparers coming into the industry.

 

The AICPA suggests the IRS use penalties and sanctions that are already available to penalize shady tax preparers. Thompson says “there will always be those that are shady and need punishment. But the vast majority of tax preparers are fine, upstanding individuals trying to help US taxpayers perform their civic duty – prepare and file tax returns annually.”

 

In summary, the AICPA proposes the IRS reconsider the voluntary certification program, listen to public and industry concerns and make a more informed decision before moving forward.

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

 

 

Earned Income Credit is a Victim of Tax Fraud

The Earned Income Credit (EIC) was designed to aid needy families but unfortunately is being used by those who are using it fraudulently. Last year, the IRS paid more than $13 billion in tax credits to people who may not be eligible.

 

This abuse of this program is hurting anti-poverty programs and those who truly need its benefits.

 

J. Russell George, the Treasury Inspector General remarked, “The IRS can and must do more to protect taxpayers from waste, fraud and abuse.”

 

The IRS has begun fighting this abuse and is improving its efforts to oversee EITC payments. It has expressed concern and is preparing a major review to find better ways to discern valid claims from excessive ones. Kevin Thompson, owner of Action Tax (www.action-tax.com) attended a conference in Long Beach this year. At that conference the big buzz was “EIC is the largest fraudulent program ever in existence.” Thompson goes on to say “the spokesperson said the IRS does not know how to stop this abuse and we are going to look to you (tax preparers), our Partners, to help reduce and ultimately eliminate the fraud being perpetrated.”

 

The Earned Income Tax Credit is one of the country’s most extensive anti-poverty programs. More than 27 million families received almost $62 billion in credits in 2011.

 

Families must work to earn the credits but there are limits on income. The amount of the credit depends on the amount of income and number of children in the household.

 

For example:  A husband and wife with 3 or more children can earn up to $52,427 and still qualify. A family with 2 children can earn up to $49,186.

 

The maximum credit this year is $6,143 for a family with 3 or more children. For 2 children it will be $5,460.

 

Original Article

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

 

Billion Dollar Business Marketing Strategies That May Work for Your Business

“I get the immediate question” says Kevin E. Thompson, CPA; “what does a CPA know about Marketing?” “A great question” says Thompson and replies  “I know very, very little and it is still worthwhile to share these small, low-cost opportunities to grow business.”

 

Facebook, Mint.com and AppSumo.com have collectively reached almost 1.5 billion people due to their remarkable marketing strategies. An insider relates what he’s learned from working with all three companies.

 

Give your audience something they want as an incentive. – Think about offering targeted promotions, partnerships, special access that’s compelling enough for them to want to have. Mint.com launched their online site with more traffic than their competitors because they incentivized people who opted in early by offering them a badge they could place on their own websites that read, “I want Mint,” or “My money’s on Mint.”  Bloggers from all over the Internet who were in personal finance began to promote the site. They wrote positive reviews and created the buzz.

 

AppSumo became known for their giveaways. One offered 10 free Dropbox pro accounts for life. If they shared the giveaway on social media, they earned more entries. This strategy earned them over 50,000 email opt-ins.  Dropbox had a similar audience so it was a match made in heaven.

 

Tips to incentivize:

  • Offer special access or a giveaway that includes entries for sharing.
  • Be clear to your readers what they will be receiving and emphasize that there is limited time or the incentive is scarce.
  • Work with other businesses to do cross promotions.  This allows you to access their audiences. “This is a great and easy” says Thompson. “My wife owns and operates a bridal salon. On Saturday, the busiest day of the week, she has the local bakery bring in cake samples for brides and family. This allows the bakery to get in front of the bride before they make the decision on the cake for the wedding.”

 

Ask to Sponsor a website - Up and coming sites rather than the most popular ones give you a better chance of developing a strong relationship.  You can find sites that resonate with your customers by checking out the website Buzzsumo and enter in your niche topic or your website address.

 

Contact the creators and influencers sharing your posts about sponsoring their site.

 

Survey your current readers to find out what other sites they visit in your niche.

 

Email sites with the subject line “Sponsoring Your site” and see what response you get.

 

Focus on listening to your audience and create content to educate them. – Add a blog to your site with articles that provide valuable content to gain trust with potential customers.  Mint.com, a website that requires its readers to enter their banking and credit card info, was able to gain trust by providing a blog that educated readers about personal finance issues.  The blog receives high traffic and interest.

 

Learn from failures by listening and deciphering your audience’s fears and desires and then tweak your strategy for better results.

 

Create an email drip campaign using an auto responder system to further educate your audience and build a relationship with them.

 

Expand Internationally – Facebook reported in 2013 that less than 20% of its audience came from the US and Canada.  The company localized language for countries where the social network was available.  Use Facebook ads or other affordable options, targeted at various countries to build international presence. “One of our three primary focuses for growth in 2014-2015 is international tax compliance. Look for us to be using FB to assist in that growth” says Thompson. “My Marketing Director, Hillary, with Top Hat Marketing, has been testing our results with FB for several months. We look forward to an emerging campaign that will drive new international customers to our offices.”

 

Be clear on what your niche is and make sure it is marketable. –

 

 

A successful niche must be able to solve other people’s problems. “For years” says Kevin, “my experts would tell me it was all about niche marketing. Although I listened to what they said, I never heard nor acted on the advice. We have always had a niche in the entertainment business but never really marketed to it. With FB and other social sites, we can get in front of potential customers very efficiently.”

 

Invest in an attractive design for your online presence.  This includes your website and landing pages. Consider how your design communicates your brand’s trustworthiness.

 

Before invest heavily in design, make sure your niche idea is marketable enough and that you can provide a solution for your customers that will make you a profit.

 

Use your knowledge to create content – Find out what readers are looking for on the Internet that relates to your niche. Facebook, for example, has trending topics.  Build content and products based on those trends.  Be willing to show how you may have been wrong, how you changed your mind about something or how you came up with your solution.

 

If something is working, run with it. – Facebook realized that importing address books and emailing those people built their audience significantly. They began to add a variety of address books. They eventually bought a company that imported addresses.  Mint.com was very successful in providing infographics.  AppSumo found that spending money for ads was making them money.  They increased their ad budget.

 

It’s important to track what is giving you results in your business. “My friend Dave Williams, may he rest in peace, always said you get what you measure. So track where customers come from and do more of that.”

 

Focus on the actions that bring you results. “In our Action Tax division, little cards attached to tax returns that said WE LIKE REFERRALS gave us new customers every year.”

 

Survey your customers regularly to find out where they found you and what their experience has been with your company.

 

Find a way to get your customers to give you permission to talk to them.

 

The most important business building tool is to collect email addresses from customers who have opted in to receive your content.  Install an opt-in box with a compelling incentive to get potential customers to opt-in.  It is illegal to communicate with them without permission.

 

Realize that what works for others in your niche may not work for you. – You may read tons of marketing strategy but that doesn’t mean it will work for your particular business.  For example, Facebook never did content marketing.  They relied on word of mouth, SEO and address book importing.  Mint grew from SEO and by targeting small blogs in the personal finance space.  AppSumo didn’t get any bang from using SEO at all.  Their subscribers came from product promotion, free incentives and ads.

 

Summary

Each company must create a marketing plan that works for their own individual needs.

 

Focus on analyzing trends and results to come up with a marketing plan that fits your business.

 

Take other successful companies strategies and only take away what would actually work for your company.  Don’t try to force a strategy that is clearly not a fit. “I call that R & D “ says Thompson “Rob and Duplicate.”

 

Original Article

 

kevin@kevinthompsoncpa.com  or call him @ (310) 450-4625.

 

The Truth About the IRS Compromise Program as Heard in Radio Ads

Have you been listening to radio ads that promise to get you out of paying your taxes?  They claim that a taxpayer can settle their tax balances that are owed to the IRS with an Offer in Compromise (OIC).   Many taxpayers who are unable to pay outstanding amounts are eager to listen to anything that would possibly give them a break.  However, the truth is; most of these claims are over-hyped and have little chance of being accepted.

 

In 2013, the IRS only approved 31,000 applications for OIC.  The IRS, on the other hand, allowed 4 million installment agreements in 2013 to enable taxpayer to repay what they owe. Kevin Thompson, CPA, President of Action Tax (WWW.ACTION-TAX.COM) says “my experience with this process is there is much hullaballoo and not much action. Most taxpayers either do not qualify or cannot navigate the very difficult process that the IRS has created. I cannot imagine entering this trek without experienced, knowledgeable counsel.”

 

The Government Accountability Office (GAO) reported in 2010 that more than 16 million taxpayers owed money to the IRS.  “These taxpayers are under great risk of liens and levies and other devices the IRS can use to collect taxes owed.” As discussed above it takes highly experienced professionals to assist these taxpayers in these circumstances. “It’s the main reason we recently acquired Cool Tax Services into the Action Tax family of services. I see 31,000,000 taxpayers that need our assistance. Matthew Cooling, EA, Founder of Cool Tax Services says “I have been involved with and preparing OIC’s for more than five years. Joining the Action Tax family will allow me the opportunity to apply this experience to clients of Action Tax, both existing and prospective.”

 

In order to be eligible for the OIC qualification, they take into account a computation of your ability to pay before the IRS runs out of time to collect the debt. This is called the collection statute expiration date.   You can use this OIC Pre-qualifier toolto see if you qualify.

 

Cooling says “you will need to be able to prove that you can’t pay the total balance owed before the collection statute expires, using net equity in assets plus any future income. The IRS will then calculate your future income as the amount it can collect on a monthly basis.”

 

Once your ability to pay is determined, the IRS will determine if you qualify for an OIC or if you have to pay the taxes owed to the IRS.

 

Qualifying for an OIC does not mean you will obtain one. To obtain one, you must be able to pay the offer amount, which is the computed amount required to be paid to the IRS to settle the debt.  The formula used to compute the offer is different than the formula used to determine your qualification.

 

In order to calculate the offer amount, you must complete your due diligence. You may at first find that the offer amount is too high to consider an OIC as an option.  You may also discover that your computed net equity and assets and monthly income were miscalculated, which resulted in an offer amount that is larger than you expected and too much to pay.

 

A tax professional will be more accurate in computing the OIC’s financial requirements and help you avoid a long and costly investigational process or find you a better alternative.

 

Although the number of OICs accepted is small, compared with the number of taxpayers applying, more taxpayers are qualifying and obtaining OICs due to the 2011 IRS Fresh Start Initiative, which has made it easier to qualify.  In 2014, the IRS received 30% more OIC applications compared with 2010 and the acceptance rate increased to 42% up from 25% in 2010. Matthew says “The Fresh Start Initiative is the first real effort by the IRS to assist taxpayers in need. Although not salvation for the needy taxpayers, it is a step in the right direction.”

 

If you definitely have a financial hardship, you may want to consider qualifying for an OIC.  However, the process is complicated and it is recommended that you consult your tax professional to make sure you qualify and to expedite the process.

 

Action Tax is here to help.  Contact us at:

 

Kevin Thompson, CPA kevin@action-tax.com or call him @ (310) 450-4625 x102.

Matthew Cooling, EA matthew@action-tax.com or call him @ (310) 450-4625 x109.