Friday's at Our CPA Firm

We recently decided to change our office hours.  After going to half-days on Friday's a few years ago, we have noticed a steady decline in traffic in our office on Friday's.  One afternoon, Meghan and I decided to close the office to traffic on Friday's but spend time, either in the office or remotely, brainstorming about things...implementing changes to how we currently do things...update our Facebook page, website, or blog...and also wrap up projects (what I refer to as "head-down" work) that are difficult to complete in a regular work week.  Basically, our Friday's have now become what our Saturday's were.

So, what have we been up to?

• We have started using a new project management software called Basecamp.  This software is web-based and allows us to track the flow of work in the office on larger client projects.  We are also in the process of adding a new team member who will work remotely for us from Austin, Texas, and this is a perfect way for him to update me on his progress on work.  And guess what?  We can even invite clients to see a "to-do" list and become actively involved in the work if the client is pulling together information for us.  One of the benefits of learning new technology is that we can then teach our clients how to use it for their businesses.  
• We have reviewed several anonymous client comments from our recently submitted survey, which has prompted us to try new ways of submitting your tax return organizers and electronic copies of tax returns.  We have some exciting new things to unveil as we move forward on that, so stay tuned...
• We have designed and begun sending out a newsletter via e-mail.  We have now discovered a way to embed the newsletter in the body of the e-mail, so you don't have to open a PDF.  This is sometimes tricky on smart-phones.  The next one will come to you in a new, more readily available format, thanks to Meghan's work.
• Our biggest benefit....we spend time planning the next week.  Of course, things happen to derail the best-laid plans, but at least we have a fighting change to stay on target if we actively plan to do so.  One of the most important things entrepreneurs need to learn is time management/resource allocation.  We have spent a tremendous amount of time refining how we do work for you, and it will continue to get better as we move forward.  We are excited about the changes we have made and we hope you are also!  There are more good things to come!

Shareholder Compensation...Rocket Science?

I am a part of a group of CPAs called THRIVEal, as most of you probably already know, and I have seen several conversations through LinkedIn this week with an accounting student.  This guy is asking questions that I never would have even thought to ask in college, like how to get ready to enter the job market and what to expect when working for a small firm versus a large firm.  I really just wanted to get a job and start working.  I didn't ask those hard questions, but I really should have.  I didn't know anything when I graduated, at least not about the real world of work.

I have also been receiving lots of questions from clients lately on how to structure compensation, as most of my clients are S-Corporations owned by one individual and are required by IRS to be on salary.  I get these questions because they have spoken to another fellow business owner who either wasn't paying himself/herself anything at all, or they've received a letter from IRS reminding them to be aware of the stiff penalties for not complying with the law.  Either way, they're scared or interested in finding an answer to the dilemma...to pay or not to pay?  They're asking the hard questions, too.

You must pay yourself.  Period.  How much?  Well, that's a little harder to say....

IRS requires that a shareholder's compensation be reasonable.  Compared to what?  Your friend's payroll?  Mine?  It has to be reasonable based on your particular business.  You can't take a $10,000 salary in a business where you're grossing $250,000 and then take $100,000 in dividends.  Conversely, you should not have to take a salary of $50,000 when you're grossing $60,000 and borrow money from yourself to pay your overhead.  It's something that takes a little work and some advisory.  Rocket science, it is not.  Necessary...it is.

How do we do this?  We sit down and determine the dollar amount that is reasonable based on your particular business.  We help you set up the payroll structure, frequency, and all those other little troublesome things like payroll tax deposits, quarterlies and annual filings.  Yeah, it's compliance and it's not sexy.  Again, it's necessary.  But think of how relieved you'll be when you know we're handling it for you....I feel better already.