4th Quarter Money Moves for Business Owners

By: Kate Welker, CFP®

A Less Stressed Holiday Season

By: Kate Welker, CFP®

It seems that as we close out Halloween night and the calendar turns to November, our thoughts turn to the holiday season and year end planning. I love the holidays and I get so excited thinking about the time with family and friends. Along with all of the happy feelings creeps in something else, a little bit of anxiety and worrying about being stressed. Yes, I’m stressing about being stressed before it happens, but I’m working on that habit. 

If you are like me, you are trying to balance multiple roles at once; business, career, family, and self. Throw in a few extra obligations and it can feel a bit too much. Let’s look at a few things you can do now to have an organized approach to year end planning.

Thoughtful Shopping - I am not generally an early shopper, but with supply and shipping concerns, getting an early start this year is recommended. To get organized, reduce the hectic shopping feeling, and budget I like to make a list of everyone I need to purchase a gift for. Next to their name I write the price range I would like to stick to, when your list is complete you can total and review to see if this matched your total shopping budget or if you need to make adjustments. I either do this on an index card I keep in my wallet or on a document on my phone (both are creatively stored to remain hidden from curious eyes). The next thing I do is to brainstorm ideas for that person, I keep this on hand and if something comes to mind I can write it down. This way if you see a sale you can take advantage of that, or when you are shopping you can be more focused. I also find this helps to find more thought out intentional gifts and does make it easier to stick to the budget.

Time Management - With all of the parties, concerts, and events it can feel like you lose control of your schedule. Be intentional in the things that you say yes to and don’t be afraid to say no to others. At a conference I attended this weekend two speakers said the same quote “Saying yes to something means saying no to something else.” 

Financial Tasks - This is a great time to review your finances and check in on where you stand year to date. The blog post Year-End Tax & Financial Planning that we posted last December has an excellent list of items to review. 

Tax Planning - Run a tax projection to see where you might come out at the end of the year. You can reach out to your accountant to do a tax projection for you. If it looks like you might owe this will give you time to make some adjustments. If you haven’t maximized your retirement plan or HSA, making a contribution will lower your taxable income. If you can itemize, consider moving some expenses such as property tax payments and charitable donations into this year to have a larger deduction. This will also let you know which tax bracket you will fall into and you can then have a conversion with your accountant and financial adviser on topics like recognizing capital gains and Roth conversions. This is also an excellent time to get your tax information organized. For more information on that you can read Tax Time in America- Getting Organized.

These are just a few ideas of things you can do to feel more prepared heading into the end of the year and to enjoy a more restful December. 

An Entrepreneurship's Journey

By: Amy Irvine, CFP®, EA, MPAS®, CCFC 

Five Years of Independence and Entrepreneurship!
June 1, 2020 celebrated FIVE years of independence and becoming an entrepreneur.  I can hardly believe it's been that long.  It's been an interesting journey to say the least.  For those of you that were with me at the start of the journey, the words, "thank you" don't seem sufficient enough words.  For those of you have have joined us along the way, we are so honored you've selected us.  

Starting your own business is hard work, I new it would be when I set off on the journey.  Typical to my personality, I planned for "what could go wrong" and worried about it all the time.  I will admit, it certainly started out a little rocky with significant challenges, as some of you may remember the flash crash of August 2015. 

This was then followed by a decision in early 2016 to create Irvine Wealth Planning Strategies (spinning off from the partnership I had started initially)  This was a hard decision, but was one of the best pivots I made early on and 2016 and 2017 were major growth years for the business, moving from 66 clients at the end of 2016 to 118 clients at the end of 2017.  Yes, that is a 44% growth rate in one year.  I remember being on a podcast and being asked how other's could replicate my "success" and my response was "don't."  That was too much growth and all I did was work VERY long days.

It was also in 2016 that "Monday Morning Quarter-Buck" was "born."  Yes we have over 4-years worth of blogs out in the world, for which I'm very excited and never would have thought possible.

In 2017, we launched the Wine and Dime Podcast, with the first episode releasing on September 22!  It was an episode with my mom.  We've come a long way from those early episodes and with the release of episode 116 this past Friday (see below).  

That's why 2018 was a big hiring year, with the first addition being Kate Welker in February of 2018.  I'm sure Kate would have some funny "stories" about those early days!  As would  Becky Eason who joined us shortly thereafter in April of 2018, and then Kerrie Beene in August of 2018.  Hiring people is one of the most stressful parts of running a company, the realization that their success is dependent on my success.  It's one thing to be a financial planner and understand how clients are leaning on you for guidance and advice, but when you put that business owner's hat on, it's a completely different grape you are tasting (yes, I had to get at least one wine related metaphor in here).  But, helping develop people certainly has made some awesome wine (okay two metaphors).

With the expansion of the team in 2018, we decided to re-brand in 2019 and Irvine Wealth Planning Strategies began doing business as Rooted Planning Group.  If you are a small business and ever want to re-brand, give us a call, we will tell what not to do!  We thought it was going to be an "easy" process.  We were WRONG.   Our growth in 2019 slowed a bit, growing at about 6% for a total client count of 137 at the end of the year.  However, the later part of 2019 was really picking up momentum and both Kerrie Beene and Kate Welker attained their CERTIFIED FINANCIAL PLANNER designation.

Then came 2020.  When I said I planned for what could go "wrong," I left out a pandemic scenario, a major economic correction, one major Act from Congress (but 4 in total, so far), all in the first 5-months of ONE year.  Thank goodness we had the ability to work remotely already, as I can't image trying to figure that out too.   To add "drama" to all this going on, Becky Eason sat for Certified Financial Planner exam in March (which turned out to be the day before they shut down testing) and successfully passed the exam.  It was a bit of a Hallmark ending in my opinion.   We are also thrilled to have added Rachel to the team earlier this year too, and many of you have started to receive meeting reminders from her already.  

Here's the one thing I hope anyone reading this understands, I planned for what could go wrong and I think that is important, but it was a recent podcast guest that got me thinking, what if I had approached this with "What if I Fly" instead.  So in 2020, we want to plan more for "flying" with all of you.  It has been an amazing journey, we are honored to be part of your lives.  Thank you for being the critical part of our success journey and for giving us the wings that will now give us the ability to fly.

Cares Act Part 2 - Small Business Provisions

By Amy Irvine, CFP®, EA, MPAS®, CCFC and Kate Welker, CFP®

With all of the closings that have been mandated as a result of COVID-19 along with requirements to stay in, many small business owners are worried about their operations. If you are a small business owner you are probably wondering how you are going to keep your business sustainable long term, provide for your employees, and provide for your own needs. Thankfully there has been a lot of legislation passed and the CARES act expanded and added benefits for small business owners. There is a lot of information out there so we wanted to summarize what these different benefits are, who qualifies, and what the effect is.

Unemployment
Who is eligible: 

• If you are self employed and have had to close your business due to the pandemic you will be able to file for unemployment benefits. 

• Self employed individuals who were generally not able to collect unemployment benefits  are now eligible. 

How to file: 

• You will file with your state’s unemployment division.

How much?  

• You will receive the payment you are eligible for under your state’s guideline, plus the $600 weekly benefit from the federal government. 

More details:

• You will need to login in weekly to provide an update on your status.

• This is taxable income so keep that in mind as you keep your books throughout the year and prepare for filing the 2020 tax returns.

This topic will be further explored in Friday’s blog release.

Employee Retention Credit

What it is:

• A credit against the employer’s portion of payroll taxes 

Who is eligible: 

• A business that has had to close or suspend operations or has had a significant decrease in revenue and continues to pay employees. A significant decrease means your quarterly gross receipts are down 50%.

• If there are over 100 employees the credit only applies if the business has been mandated to close. 

How to file: 

• We are waiting on final details as to how this will be claimed.

How much?: 

• The credit is 50% of compensation paid up to $10,000 per employee. It will be a refundable credit against payroll taxes.

More details: 

• The credit will be determined on a quarter by quarter basis as long as the business remains closed or gross receipts continue to be down by 50%.

• This also allows employers to defer payment of the employer’s portion of payroll taxes. Half would be due in 2021 and half would be due in 2022.

• If you take the Small Business Administration Paycheck Protection Loan you are NOT eligible for this credit.

SBA Paycheck Protection Loan
What it is: 

• A forgivable loan to cover payroll and basic operating expenses. 

Who is eligible: 

• Employers with under 500 employees, including self-employed sole proprietors, IF you retain the same number of employees.

• This includes the “gig economy” workers as well.

• Sole proprietors and Independent Contractors - wages, commissions, income or net earnings from self-employment is included and capped at $100,000 on an annual basis

How to apply: 

• These loans will be done through local banks who are approved with the SBA.

• Check with your normal bank and if they do not participate check with others in your area.

How much: 

• 8 weeks of cash-flow

• 250% of average monthly wages and salary (calculated monthly average over the past 12 months).

• Seasonal employers use the 12-week period beginning February 15, 2019 (or March 1st if elected) to June 30, 2019.

More Details:

• The funds are to be used to pay for payroll expenses including healthcare benefits, rent, mortgage interest, and utilities, Rent/lease, and utilities. 

• All or a portion is forgivable if the business uses the loan funds to pay for the covered expenses in the 8 week period after the loan is taken. 

• Updated 04/01/2020 - Unforgiven amounts have a maximum term of 2 year term and 1 year deferment, but interest accrues during that time.

• Updated 04/09/2020 - Interest rate may not exceed 1% on Non-Forgivable portion 

• The fees for this loan are being waived

• The fees for this loan are being waived

• Personal guarantee and collateral requirements are being waived

SBA Economic Injury Disaster Loan  
What it is: 

• A small business loan to offer financial assistance due to COVID-19

• Also known as EIDL

• Immediate advance of $10,000 - provide advance within 3 days of request; never has to be repaid, even if you’re denied a SBA loan.  

  • Update 04/09/2020 - this will be limited to $1,000 per employee, with a maximum of $10,000.  Sole Proprietorship will be considered 1 employee.

• Use of Funds - Overhead/Operating Expenses

  • Payroll (including owner payments)

  • Insurance

  • Rent

  • Utilities

  • Phone/Internet

  • Office Expenses

  • Repairs and Maintenance

  • Fixed Debts

Who is eligible: 

• Small business owners who have suffered economic injury as a result of the virus.

• 501c3 or 501c19 non-for-profit

Who is not eligible:

• Agricultural Businesses (Farms)

• Religious Organizations

• Charitable Organizations

• Gambling Concerns

• Casinos and Racetracks

How to apply: 

• For the immediate advance, apply at https://covid19relief.sba.gov/#/

• Through the Small Business Administration. The application can be found at https://www.sba.gov/disaster/apply-for-disaster-loan/index.html. There was an online application but due to high demand it seems to be requiring a paper application be submitted.

How much:

• Up to $2 million with a guaranteed rate of no more than 4%.

More Details:

• 6-months of working capital

• Maximum Loan $2M

• 3.75% interest rate

• Up to 30-Year Term

• 1-Year Deferment 

• Funds are to be used for payroll including paid sick leave, rent, mortgage, debt payment, accounts payable, and other bills.

• You will need to prove economic injury

• Funds come direct from the US Treasury

• There is authorization to approve based off credit score alone

• Apply directly to the SBA

Other Notable Small Business Provisions

• Employers and self-employed individuals can defer payment of the employer share of the social security tax - half due by 12/31/2021 and the other half due by 12/31/2023

• If you have a current SBA Loan - 6 months deferment principal and interest - talk to your lender.

• You can’t take a loan under multiple programs for the same expenses.

• Want more credible information - watch this webinar: https://www.uschamber.com/co/events/national-small-business-town-hall-inc-us-chamber

• Sole Proprietorship Options

  • EIDL

  • PPP (for your income)

  • Unemployment

  • Can not receive Unemployment and Loans

  • Can apply for both loans, but can’t use the funds for the same expenses

• January 23, 2020 the business must have been in operation

• Active Payroll prior 2/15/2020

Women Rocking Business

March is women’s history month and we want to take some of our space this month to recognize that. I love working with small business owners so I wanted to share some thoughts on women as business owners. Rooted Planning Group is owned by women so this is certainly special to us. 

by Kate Welker, CFP®

What are the traits that help women succeed in business? I thought back on some conferences I’ve attended, drew on personal experience, and looked at our team to see how the ways we think or act differently can be beneficial.

Women tend to be more emotionally intelligent, this makes us more attuned to social cues and emotions. This article from Forbes refers to a study listing all the various categories where women outscore men. This can help a woman read a room to pick up on what’s not being said. When working with a client you might better pick up on something that is causing an emotional response. Being able to understand and empathize with employees makes for a better work environment.

As women many of us have had to face hurdles in our careers because of the fact we were women, and to push through that builds determination. Running a business comes with many challenges that are going to be aided because of that. By overcoming the different walls and barriers thrown at us we are cultivating the traits that help to be good leaders- tenacity, resolve, and maybe a little stubbornness. 

In the business world women tend to be better collaborators, aka “team players.” We are not afraid to share ideas and work together to build something better. This also tends to mean women are more often open to mentoring opportunities, to pass on their knowledge, and encourage others. 

Of course the pendulum swings the other way too and there are some traits we need to be aware of that can impede success.

Women tend to be more nurturing and can have the feeling we need to take care of things. This can lead to burnout. Sometimes I think women can be worse at delegating because we want to just handle everything and make sure it’s taken care of or we don’t want it to look like we’re not doing enough. Self care is a buzzword, but it really is essential.  Evaluating where you tend to take on too much or get too involved and focus on ways to manage that is going to be a healthy step for you and your business.

Impostor Syndrome, that feeling that you don’t know enough or aren’t competent. You might doubt yourself and your accomplishments. Both men and women can associate with this, but I hear it more from women. Acknowledging this is important, that way when it's happening you can face it and deal with those feelings. Remind yourself of how far you have come and how much knowledge and experience you have. I once had a very respected person in my industry with lots of letters and designations after their name tell me they sometimes walk into a meeting and still feel like it’s their first day on the job. When I feel this way I like to repeat the phrase “fake it ‘til you make it,” paste on a smile and go in with confidence, because here’s the secret- you’re not really faking it. You ARE the person with the expertise, you just need to remind that little part of your brain of that.

Fun History Fact: In Holland women were treated more equally than in other countries in the 17th century and this carried to New Amsterdam (roughly modern Manhattan). For years women held more rights than in other parts of the country and many owned businesses. They were referred to as she-merchants.*

*Summarized from womenhistoryblog.com

Fresh Starts - How Health AND Wealth Planning Intersect

by Kate Welker, CFP®

January is a time for fresh starts, resolutions, and goal setting. Resolutions notoriously fail so what can you do if you are heading into the New Year committed to making progress in your finances?

One thing at a time - instead of trying to accomplish everything at once, pick one task and focus on that. I also recommend making this a specific task. Some examples could be contributing 3% more to your 401k, saving 10% of your income, increasing your life insurance, or reviewing your will. Once you are comfortable with that item you can choose another task to focus on.

Small Changes - Big drastic lifestyle changes are hard to maintain. We tend to deprive ourselves and then give up and go overboard. Take little steps towards positive change. If you want to spend less on food, pack lunch one more time each week instead of eating out. For those looking to be more educated, choose one article to read each week.

Set up Accountability - Look for a friend or professional to help you reach your goals. Share your goals with a friend so that they can check in with you and keep you accountable. Hiring a financial planner to be your financial life coach will allow you to look at all of your goals and create a plan to reach them.

While January is the month society focuses on for fresh starts every day is a chance to start again. If your plans to make changes in January don't happen, rethink, replan and start again. On the path to progress we may take a wrong turn, don't give up and turn around, correct your direction and keep moving forward.

Kate lives in Hornell, New York with her husband and two children. Go to Kate’s Bio for more about her.