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

SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019

At the very end of 2019 the SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019 was signed into law.  It gave this weeks blog author and Financial Planner, Amy Irvine, CFP®, EA, MPAS®, CCFC, flashbacks to the 2017 tax law changes that happened at the very end of that year too. There are a lot of little nuggets in this Act, below is our interpretation of the Good, the Bad, and the Weird …

The Good

• If you are turning under the age of 70½ this year, you can now push the required minimum distribution down the road.  The new age is now 72.

• Beginning this year (2020), if you continue to work past the age of 72 (was 70.5), you can now make a contribution to your Traditional IRA.  Prior to this Act, even if you had earned income, you couldn’t contribute once you reached the “magic” age.

• This does not change the Qualified Charitable Distribution age though, that is still 70½ 

• If you receive a stipend or fellowship, that is now considered qualifying income for an IRA (or Roth IRA) Contribution.

• Small businesses will be able to join a pooled employer plan (called a MEP or Multiple Employer Plan), which is meant to reduce the cost to small employers  And if the employer plan has an automatic enrollment feature, they get a small tax credit.

• If you are a volunteer firefighter or EMC, then you will have a one-year repeal of the SALT limit on your federal tax return.  Remember SALT stands for State and Local Tax.

• If you are planning on having a baby, or adopting a child, in 2020 you can now take a $5,000 distribution from your retirement plan WITHOUT penalty.  Of course you have to pay tax on it, but if you redeposit it within 60-days of withdrawing it, then it would not be considered taxable.

• We are thrilled that you can now withdraw up to $10,000 during your lifetime from a 529 plan to repay student loans WITHOUT tax or penalty.

The Bad

• If you turned 70½ in 2019 but elected to defer the RMD until 2020, sorry, but you still have to take it before April 1, 2020.  Also, only those that turn 70½ in 2020 can defer until age 72. If you’re 71, sorry, but you still have to take yours.

• Stretch IRA’s won’t be able to stretch as far in the future.  Historically, your beneficiaries have been able to elect to take the remainder of your IRA over their life expectancy.  That has been nixed in the SECURE Act and the maximum number of years they can defer the account is 10-years. This does not apply to spouses, disabled beneficiaries, chronically ill beneficiaries, certain minor children (until they reach age of majority) and existing inherited accounts.  Based on this, we will be looking at our clients situation to determine if it makes sense to convert taxable retirement accounts to Roth Sources.

• Employers will now be able to add annuity options to their retirement plan programs.  This was fought for very hard by insurance companies and we are very concerned about how this is going to play out. We are not the only ones that feel that way.    Read Rick Kahler’s commentary in an article published on December 30 - “Accessing the Damage Done by the Secure Act.”

The Weird 

We think these are weird considering the Act is called Setting Every Community Up for Retirement Enhancement and the following have absolutely nothing to do with retirement.

• The credit for installing an electric car charger has been restored

• Anyone under the age of 21 will be prohibited from purchasing cigarettes and e-cigarette products (i.e. vaping)

• The medical expense deduction was set to go up to 10%, but the Act has it at 7.5% once again in 2020.

• 529 plans can now be used to pay for Apprenticeships

We will be looking at each of our clients' individual situations to determine how this new Act will fit into their financial lives...so more to come!