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Avoid Future Tax Stress: Plan Now for This Year's Tax Bill
Discovering you owe more than you thought on last year's income taxes is about as welcome as the flu.

And the end of the year, when your tax obligation calculated, is too late to start considering how to pay it. Do yourself a favor: start planning for this year's taxes now.

To reduce last-minute tax stress, you need a system to ensure you have funds available when your tax bill is determined. Understand that only a portion of your business income has ever actually belonged to you; basically, you're "holding" a certain percentage for the government, which you will remit at tax time.

So now that last year's income tax has been finalized, your accountant can provide your effective tax rate, defined as your total tax liability divided by your taxable income.

However, you may want to consider this number: total income tax as a percentage of gross income before deductions. Assuming your deductions vary with revenue, applying a tax rate to every dollar of revenue is a reasonable general estimate of future tax.

That said, some deductions are fixed, not variable, and rising sales this year may push you into a higher bracket, but a finely formulated tax estimate can consider these factors in quarterly checkups.

Whether the tax percentage is general or finely calculated, set aside that portion of every dollar earned this year to prevent last-minute scrambling to pay your next tax bill.

And you're also less likely to spend it before you need it for 2017 taxes.

Sadder but Wiser. You Can Move Past a Setback
A setback may result from something you did or failed to do. It may be due to something beyond your control. Or it may just come out of nowhere. Regardless of the cause, the first response to any sort of setback runs the gamut from denial, blame, shame, or guilt to finger-pointing.

Not only are these responses mentally, emotionally, and physically exhausting, they're not productive. Here are some healthy coping mechanisms to help you recover from a setback:
  • Acknowledge the setback and the pain and frustration that goes along with it. Recognition and acceptance are key steps to finding a way forward.
  • End the pity party. It doesn't do you any good, and the victim role can really turn off people.
  • Don't blame others or dodge your own responsibility for what occurred.
  • Talk about the setback with a person you trust. Share your feelings with someone who will keep you honest and give you unbiased feedback.
  • Give yourself time. With the passage of time, you'll gain fresh perspective, digest any lessons learned, and become more open to new approaches and opportunities. Defer critical decisions and refrain from doing anything impulsive.
  • Reflect and readjust. Think about what you might have done differently, or may do differently in the future, to avoid a recurrence of the setback or at least secure a better outcome.
  • Develop a concrete plan. This should list steps to take you to a single goal or a series of interim goals. Include a "Do by" date.
Above all, know that everyone experiences setbacks; they're part of everyone's life experience. And the good news: a setback can almost certainly make you wiser and more prepared to weather future storms.

How to Stay Relevant in This Era of Disruption and Change
Sometimes it feels like technology is advancing so quickly it's impossible to keep up. Unfortunately, anyone who doesn't may risk becoming irrelevant.

According to the Miami Herald's Cindy Krischer Goodman, a lot of people are intimidated by technology. Singer Cher was one of them. But in a determined effort to stay relevant, she mastered Twitter and now has 3.5 million followers.

Writes Goodman, "In an era of disruption, technological advances, new workplace trends, and constantly emerging communication styles, everyone needs to follow Cher's example: embrace change to stay relevant and effective."

Jobs have grown more technical in the past few years, and holding onto one requires staying on top of things.

If you want to protect (and advance) your career, you need to do more than simply maintain the status quo; you need to be relevant.

Relevance is about constantly adapting to changing conditions. It means being open to new ideas so you can relate to everyone, from your peers to your customers.

In a recent article titled "How to Stay Relevant in a Constantly Changing Marketplace," author Michael Hyatt offers a list of essentials, including staying curious. He says, "To save yourself from obsolescence, keep asking questions and poking around the next corner."

Other essentials on Hyatt's list: read new books, meet new people, listen to podcasts, attend webinars and conferences, take courses, hire a coach ...

In effect, stay relevant by continuously learning, embracing change, and constantly exposing yourself to new ideas. It's an approach everyone can, and should, master. No one wants to be irrelevant.

Need a Business Loan? Think Like a Lender
When you apply for a business loan, you have great reasons to want the lender to respond positively: as an entrepreneur, you're confident about the future of your business; you have accepted the risk of devoting your time and knowledge to the venture; and with more cash, your dreams of greater profitability will surely be realized.

Or will they?

Banks are not confronted with the same risks and rewards as business owners. A bank lender doesn't participate in the upside potential of your company. The bank isn't entitled to a huge payoff by sharing in future profits. Lenders only earn a modest amount of interest. And they may not even receive that if the loan doesn't produce the desired cash flow.

Therefore, as a borrower, you must demonstrate that your business is worthy of the lender's risk.

Business financial history

The bottom line, as far as the bank is concerned, is that the loan is repaid. So walking into a bank without proof that you can be trusted to do this is a fool's errand. The loan application process is an informative presentation of facts, not a sales pitch.

When your business is ready to seek a loan, approach the bank with up-to-date, accurate financial records. You will not succeed with financial statements that are like an un-watered Christmas tree with its needles shedding everywhere. Lenders must be comfortable with the completeness of your financial data. Your lender will consider you unfit for borrowing if your accounting is inaccurate.

Ensure you have Balance Sheets, Income Statements, and Cash Flow Statements for each of the past three years plus the most recent month-end. You'll also need the previous year's tax returns that match your financial statements.

These statements reveal profit margins, overhead costs, and cash coverage for loan repayment. Be prepared to discuss these measures and the trends they show over time. Understand each figure and its past fluctuations. Practice sentences that begin with, "This loan has a reduced risk because . . ."

Loan benefit and repayment

You will need to show how you will repay the loan. This is generally a function of how your business deploys the loan proceeds. Therefore, present the borrowing purpose clearly and explain how it will benefit your company's ongoing success. Perhaps the loan will permit the company to expand with new space or equipment, or it may allow you to accept more work while waiting for payment for completed jobs, thus improving cash flow.

Financial forecast

Whatever the purpose, it should define an expected business improvement and demonstrate the advantages - and the loan repayment strategy - with a financial forecast.

These projections of future cash flow are built by using the time and cost of sales to customers, the gross profit on sales, and overhead expenses. Forecasts must be consistent with known facts. So don't be overly aggressive in your assumptions.

Remember that your accounting professional can be a great source of support. He or she will be able to help you construct a conservative, believable forecast so you'll win your loan.
Michele Ball
Perfect Additions
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Worth Reading
Why We Need to Plan for a Future without Jobs
By Sean Illing
Vox Topics
In an interview with Vox's Sean Illing, former union leader Andy Stern makes the case for universal basic income (UBI), a form of social security in which the government pays a regular stipend to all working-age citizens. Technology has rendered the future of work in America extremely uncertain, Stern suggests; he believes UBI is the best way to deal with the potential social and economic disruption that he sees on the horizon.

How to Invest in Yourself
By Jon Westenberg


For those whose January good intentions have faded, entrepreneur Jon Westenberg proposes a framework for investing in yourself and living a purposeful life. His simple, practical steps enable you to identify goals, develop the skills needed to achieve those goals, and track your progress by focusing on your goals. He advises: "(T)reat it like a project you're being paid to do."

You Don't Need a Master Plan - You Just Need to Start
By Bryce Roberts

Startup Grind

Not every billion-dollar business starts with a billion-dollar idea. In fact, many of the world's biggest, most successful companies began with very modest ambitions. Start small, let your aspirations evolve, and, who knows, you may change the world.

This Month: Starting Your Start-Up
To some, entrepreneurship sounds exciting. To others, it's terrifying. So much is involved. Do you have what it takes? Is now a good time to start? Get help here:

What are the biggest concerns for start-ups in 2017? Find out here:
Is 2017 the Right Year to Launch Your Startup

Starting a business puts a lot on your plate. What's most important? Here's an overview of what to focus on as you dive in:
Key Lessons For Entrepreneurs Starting A Business

Is something holding you back from entrepreneurship? Discover the five most common obstacles and how to overcome them:
How To Overcome What's Keeping You From Starting A Business

A poor launch can spell disaster for a start-up. Here are a few tips to help you "just start":
10 Tips That Will Help Launch Your Startup Faster

At the same time, it can be difficult to know whether you're ready. Are you? Watch for these signs:
5 Signs You Are Ready to Start Up
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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