Pursuing your passion with the Passion Planner

This is not a paid endorsement and I have never spoken to anyone at the Passion Planner company. I like their product and wanted to share with our subscribers.

Planners, journals, and organization tools are highly personal. I found this planner in late 2014 while browsing around Kickstarter. What grabbed my attention was the name “Passion Planner.”  And the fact that this was a softcover, lay-flat,2-week-at-a-glance, bound 8.5″ x 11″ book.

I have tried all kinds of paper planners over the past 40 years: spiral, looseleaf, and bound; soft and hard cover, as well as 3-ring and 7-ring binder; small, medium and large; Daytimers, Dayrunners, Franklin Planners, blank notebooks, Moleskine, and other long-forgotten brands. It wasn’t until 2014 that I found what I believe is planner that best fits my work style.

For me, it has just the right amount of flexibility and just the right amount of structure. I hope you’ll check it out.

NOTE: A few times in the past, I tried planner software like Lotus Organizer (remember that from the 1990s?) and a couple of other long-forgotten programs, but never for more than a few weeks at a time. Inevitably I would revert back to paper. For me, I like the actual effort of writing stuff down on paper. With paper, I seem to remember things better, plus I like the tactile feel of highlighting things, and crossing things off, and being able to draw diagrams and charts in a free form manner.

What’s great about the Passion Planner:

They use top notch materials; the binding is high quality, the paper is perfect, and the cover is ideal; soft, slightly padded, and durable

2-page per week layout – I personally prefer the “week at a glance” layout rather than the 1 or 2 page per day

For each month, they provide a “month at a glance” view (granted, most planners have this view also)

Stirtched and bound – Yes, looseleaf is more flexible/customizable by allowing you to add pages, but NOT being able to add pages keeps things more simple for me. I keep folders and binders for loose sheets, but these days pretty much everything can be digitized.

The right amount of structure and the right amount of flexibility

You can learn more about the Passion Planner at their website: https://passionplanner.com

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Before setting 2021 priorities, ask “What’s my ‘WHY’?”

This is a Guest blog post from Sales expert Chris Tully. Before setting 2021 priorities, ask “What’s my ‘WHY’?” Before you go all-in on finalizing the 2021 business plan, maybe it’s worth a review of what drove you to start your own company in the first place. Simon Sinek, author of Start with Why, believes that true success comes from a core belief that inspires others and infuses every achievement. When I’ve asked people “Why did you start your business?” over the years, I’ve heard as many unique answers as people I asked, many of which do relate to pursuing a passion or core belief. The Wright brothers did that. They believed that they could make a flying machine – and without financing, higher education, or even much help, they succeeded and changed the world.  In my experience, a business doesn’t have to have such a grandiose goal to succeed – and there are surely multiple definitions of success. So, what’s yours? Make sure you can articulate why you started, and what you are trying to accomplish – as specifically as possible. Take a little time to reflect Examining where you started and where you are now can shed some light on where to go next. Is the original reason for starting your business still what drives you every day? Is everyone who works with you on board with that? Do your colleagues share your values and core beliefs? Do they share your vision and mission or could conflicting priorities be draining some of your momentum? If your motivation has changed, has that motivation been carefully communicated and incorporated in how you run your business? Or is confusion over the goal causing some unexpected consequences? What did you originally hope to achieve? Are you still on track to achieve that? If not, why not? Getting back on track (or adjusting course) should be part of your business plan. Move forward with confidence Only when you can articulate the above concepts with clarity and certainty should you start working on your business plan for 2021. For the coming year you’ll need: SMART goals (for a quick primer on goal setting, check this out). The right people in the right seats on your bus – especially at the leadership level A repeatable sales process  that anyone with the right skills and motivation can follow Simple, easy to understand key performance indicators (KPIs) A CRM (Customer Relationship Management) system to monitor progress A reliable sales management process If any of these are missing, or if you are wondering how to make what’s in place more effective, perhaps we should talk. With everything 2020 has brought (wrought), now is a good time for introspection. If you begin with why you were inspired to start your business in the first place, then I believe you can work out the “what” and “how” steps for a successful 2021. Are you satisfied with your company’s sales effectiveness? If you feel like you need to do a better job attracting and winning the right prospective clients, give me a call.

Chris Tully is Founder of SALES GROWTH ADVISORS. He can be reached at (571) 329-4343 and ctully@salesxceleration.com“For more than 25 years, I’ve led sales organizations in public and private technology companies, with teams as large as 400 people, and significant revenue responsibility.I founded Sales Growth Advisors to help mid-market CEOs execute proven strategies to accelerate their top line revenue. I have a great appreciation for how hard it is to start and grow a business, and it is gratifying to me to do what I am ‘best at’ to help companies grow faster and more effectively.Let’s get acquainted. I am certain I can offer you an experienced perspective to help you with your growth strategy.”

Brace for Economic and Tax Uncertainty After the Election

This is a Guest blog post from Pete Ryan, CPA and Michael Wetmore, CPA, founders of the accounting and consulting firm of Ryan & Wetmore.

Introduction

The next six months will bring a period of uncertainty. Businesses and individuals must plan to react to the many changes in stimulus plans, Covid-19 disruptions, tax laws, estate laws, and other laws and regulations based on election results. This article should not serve as legal advice – companies should plan to consult with attorneys, CPAs, investment advisors, insurance advisors, and others. Regardless of the election results, there will be big changes. Sources of systemic change include:

Comparing Tax Proposals: Income and Capital Gains

• Tax proposals are subject to change during the legislative process and may get watered down by the other party or moderate lawmakers.
• Changes in control of government could still bring big changes and tax increases, expert tax planning by tax advisors and CPAs will be essential.

Overview

• Some notes on the process of passing tax legislation:
  • There is precedent for retroactive tax proposals, so a tax bill passed in 2021 could be retroactive to the first day of the 2021 tax year.
  • Some of Biden’s tax proposals could be phased in over time rather than taking effect immediately.
  • Although it is common for Presidents to have tax proposals, all tax legislation must originate in the House, where Democrats are likely to keep their majority.
  • As changes make their way through congress, they are usually watered down somewhat – especially if control of government is divided.
  • If on party win a simple majority of both houses, they can avert a Senate filibuster by passing a tax bill in a process called budget reconciliation.
  • Many parts of the Tax Cuts and Jobs Act of 2017 (TCJA) are temporary and will expire in the next several years even without legislative action.
• Biden’s tax proposal includes corporate tax increases and income tax increases for people making over $400,000. Trump’s plan is mainly to expand/extend the TCJA tax cuts, though he has issued few details about second-term tax plans. Both candidates have committed to not raise middle class taxes.
  • Components of the Biden tax plan.
  • Components of the Trump tax plan.

Payroll Taxes

• Biden’s proposal imposes a 12.4% Social Security Payroll tax on wages above $400,000, creating a payroll tax “donut hole,” where income between $137,700 and $400,000 does not incur the payroll tax. This also affects self-employment taxes for individuals. (It’s not clear when or how this will be implemented.)
• Trump’s plan institutes a payroll tax holiday for the employee-side payroll tax deferral that is currently taking place.

Corporate Taxes

• Biden’s proposal increases the C-Corporation income tax rate from 21% to 28% (lower than the top rate of 35% in effect prior to the TCJA) and establishes a corporate minimum tax on book income.
• It also doubles the tax rate on GILTI and imposes it country-by-country.

Individual Income Taxes

• Biden’s plan would raise the top individual income tax rate from 37% to the pre-TCJA level of 39.6%.
• It would cap itemized deductions at 28% of value for those earning over $400,000, temporarily increase the Child Tax Credit to a maximum of $3,000 and the Child and Dependent Care Tax Credit to a maximum of $8,000 from $2,100. Biden’s plan includes other middle class tax relief.
• It would also bring back a first-time homebuyer tax credit of up to $15,000.
• Biden’s plan would reduce 199A 20% deductions over 400k.
• Trump’s plan would maintain and extend the tax cuts in the TCJA and possibly cut middle class income tax brackets.

Capital Gains

• Currently the top long-term capital gains bracket is taxed at 20%.
• Trump has proposed lowering the top rate to 15% or indexing it to inflation.
• He would also expand the TCJA “Opportunity Zones” program, which provides capital gains tax relief to encourage long-term investments in economically distressed areas.
• Biden has proposed taxing long-term capital gains and qualified dividends at the ordinary income tax rate of 39.6% on income above $1 million and eliminating the “step-up in basis” for inherited assets.
• Many individuals and businesses will want to consider selling or donating appreciated assets (such as marketable securities) by December 31, 2020 or before new laws are enacted in 2021 – consult your advisors and CPAs.

Estate Planning

Estate Tax

• The TCJA extended the estate tax exclusion from about $5.5 million to $11.4 million, but this is set to expire in 2026.
• Biden has previously said he supports both lowering the exclusion to “historical norms” (which could mean the pre-TCJA level of $5.5 million) and returning estate taxes to “2009 levels” (which could mean a $3.5 million exclusion and an increase in the top rate to 45%).
• Biden also supports ending the “step-up in basis,” which allows estates to realize capital gains without incurring capital gains tax upon the death of their owners.
• Many individuals are rushing to their estate attorney before December to discuss making large gifts.

Grantor Retained Annuity Trusts (GRATs)

• A GRAT is an irrevocable trust that is set up for a period (a tax is paid upon establishing the trust). An annuity is paid from the trust every year, and when the trust expires, the beneficiary receives the assets tax-free.
• The TCJA increased the estate tax exemption to $11.4 million, but it would decrease if the provisions expire in 2026 or if it is repealed, making GRATs more attractive.
• Also, GRATs are most effective when interest rates are low – as they are right now.
• Neither candidate has proposed changes to GRATs, but the way they are treated for tax purposes could change in a new tax proposal.
  
  

Sales to Intentionally Defective Grantor Trusts (IDGTs)

• IDGTs are irrevocable trusts where trust income is treated as the grantor’s for income taxes, but the assets are not treated as the grantor’s for estate taxes.
• Just like with GRATs, the candidates have not talked about IDGTs specifically, but the way they are taxed could change in a new tax bill.

Accelerating or Deferring Income or Deductions

• Given the potential for big changes to the tax system, accelerating or deferring income or expenses into a certain tax year can have big advantages (though the effectiveness depends on projections of the future).
• These strategies are complex and depend on future conditions – talk to your advisors and CPAs about them.

Accelerating Income in 2020

• Accelerating income in 2020 has three main advantages: (1) The TCJA cut the top income tax rate; (2) losses due to the economic downturn may push taxpayers into lower brackets this year; (3) accelerating income increases a taxpayer’s AGI limitation for charitable contributions.
• If taxes are hiked in 2021, the changes could be retroactive to the first day of the 2021 tax year, so receiving income in 2020 could be preferable to 2021.
• Some income acceleration strategies include: Converting an IRA to a Roth IRA, electing out of installment sales, triggering an inclusion event for opportunity zone investments, harvesting capital gains, foregoing like-kind exchanges, exercising stock options, and declaring and paying C corporation dividends.

Accelerating Deductions in 2020 or Deferring Deductions in 2021

• Biden’s tax plan caps the tax benefit of itemized deductions to 28% of value for those earning over $400,000, potentially increasing the benefits of deduction acceleration.
• On the other hand, income and payroll tax hikes in 2021 could increase the benefits of deduction deferral to 2021 (since they would have a greater tax benefit in 2021).
• Most cash-basis businesses normally accelerate deductions at the end of year to reduce taxable income. In 2020, they may decide not to this.

The Wider Economy

• The state of the economy is evolving day-by-day and new stimulus is likely to be the top priority after the election. Be sure to monitor email updates from Ryan & Wetmore.

New Stimulus

• After briefly ending negotiations on new stimulus, the Trump administration proposed $1.8 trillion in stimulus, but the proposal was immediately rebuked by House leadership (as not enough) and Senate leadership (as too expensive).
• The Trump Administration also pushed for a bill repurposing $130 billion in unused funding from the Paycheck Protection Program for a second round of PPP, but House leadership rejected it.
• The House originally passed the $3 trillion HEROES Act (which was rejected by the Senate) and then passed a reduced $2.2 trillion HEROES Act.
• New stimulus after the election will be a top priority after the election no matter who wins. Make sure you get updates from your advisors.

Other New Bills

• No matter who wins, stimulus will probably be the top priority after the election.
• However, if Democrats do well, they will probably push for one or more other big initiatives (such as a big infrastructure package). Some of their priorities include:
  • Healthcare, green infrastructure/climate, police reform, immigration reform, and guns.
• Two top priorities are expanded on below:
  • Healthcare reform: The House has already passed a bill to expand Obamacare subsidies and lower drug prices. Joe Biden’s plan also includes creating a public option.
  • Green infrastructure: The House has already passed a $1.5 trillion green infrastructure plan (similar to Biden’s $2 trillion plan) that includes money for roads, bridges, transit options, housing broadband coverage while emphasizing reduced emissions and transitioning the electricity grid and generation to renewables.

Long-Term Interest Rates

• The Fed has cautioned that the pandemic will continue to weigh on growth, employment, and inflation in the near and medium terms.
• As a result, “dot plots” from the Fed Open Market Committee show that most members do not expect to raise interest rates above 0-0.25% before 2024.
  • Similarly, bond markets imply that traders do not expect the Fed to substantially hike rates until late 2023 or early 2024.
• In August, Fed Chair Jerome Powell said the fed will likely pursue an inflation target of “moderately above 2 percent for some time,” indicating plans for low rates.
• Low rates mean that it is potentially a great time to talk to advisors to consider refinancing existing loans.
  
  

Banks and Deferred Loans

• When states began locking down in March, banks rapidly implemented forbearance programs, allowing borrowers to defer loans and avoid default. Stimulus programs also allowed some people to keep making payments when they might otherwise default.
• In the third quarter, JPMorgan reduced reserves for loan losses, indicating that it expects fewer nonperforming loans, but it also noted a lot of uncertainty.
• There may be a real estate stimulus plan – all borrowers should monitor stimulus plans and review loans for refinancing opportunities, stimulus, and forbearance agreements.
• Businesses should be in regular communication with their bankers about extending lines of credit, terms, etc.

State and Local Taxes (SALT)

The SALT Deduction

• Prior to the TCJA, taxpayers could deduct all state/local property taxes and the greater of income or sales taxes from taxable income, but these deductions were capped at $10,000 annually by the TCJA.
• In late 2019, the House passed a bill to eliminate the SALT deductions cap except for taxpayers with AGI above $100 million (which then died in the Senate).
• The Biden campaign has confirmed that he supports repealing the $10,000 cap.
• Paying your fourth quarter 2020 state income tax estimates between January 1, 2021 and January 15, 2021 may be a prudent planning move for most taxpayers – talk to your advisors and CPAs.

Sales Tax

• Tax revenues of states and localities are projected to fall a lot in fiscal year 2021 and beyond while spending on public health will soar – and many states have requirements that they balance their budgets.
• This could lead to big revenue shortfalls and state and local tax hikes if the balanced budget provisions are not repealed and there is no federal government aid.
• Sales tax is set by states and localities so elections to national government do not have a direct effect on them.
• However, the original version of the HEROES Act passed by the House included over $1 trillion in state and local aid, which could reduce state budget shortfalls.

Health Insurance

• Employers expect about 4 to 5% benefit cost growth on average in 2021 compared to 2020, roughly in line with previous increases.
• People may use more medical services in 2021 because they put off routine care and elective procedures for much of 2020 due to the pandemic, and treating COVID cases carries large healthcare costs (especially given the potential for a case spike in the winter).
• Some likely trends in health insurance in 2021 include: Cost increases of around 4 to 5%, expanded options for virtual care, increased focus on mental health, more on-site clinics, greater access to “Centers of Excellence” (options that encourage employees to seek specialized care at hospitals known for high quality).
• Employers and employees should monitor the costs of health insurance, changes in plans, self-insured plans by employers’ costs, changes in taxability in benefits to employees and meet with advisors and CPAs to plan for them.

The State of the ACA

• On November 10 (a week after the election), the Supreme Court is scheduled to hear oral arguments for California v. Texas, a case that that could render some or most of the Affordable Care Act (ACA or Obamacare) unconstitutional.
• The ACA could be struck down wholly or partially, and a series of provisions could go down with it, including:
  • Protections for people with pre-existing conditions, individual healthcare subsidies, expanded Medicaid eligibility, coverage of people up to age 26 under their parents’ insurance, coverage of preventative care with no patient cost-sharing, and the tax increases that fund these provisions.

Planning for Increased Economic Activity

• Current pandemic conditions won’t last forever. Businesses should start preparing for the possibility of increased economic activity (possibly from a vaccine or treatment breakthrough).
• Over 200 vaccines are in early development. Over 40 are in human clinical trials. At least 10 have reached the final stage of testing (Phase 3) worldwide. At least one vaccine will probably prove effective.
• It will still take several months to distribute a vaccine widely to the public and significantly decrease risk of transmission.
• Federal and state governments have already started planning rapid vaccine distribution.
• Interest in rapid testing (where results are less accurate but can take as little as 15 min) is increasing. HHS has started sending rapid tests to states, and some states say they plan to use rapid tests at schools and nursing homes.
• Businesses should be prepared to accelerate activity based on testing and vaccine conditions – this may require additional working capital.

PPP Loan Forgiveness

• A PPP Loan recipient is eligible to have the entire amount of its loan forgiven if it was used for eligible payroll and nonpayroll costs, with at least 60% being used on payroll (subject to certain conditions).
• Forgiveness will be reduced if full-time headcount or salaries / wages declined during the loan period.
• Employers may be exempt from the penalty to loan forgiveness that is tied to pay, headcount, or hours reductions if they can show:
  • They restored pay and headcount to original levels.
  • They attempted to restore headcount / hours but were unable.
  • They were unable to operate at pre-pandemic levels due to COVID restrictions from HHS, CDC, or OSHA.
  • (This is not an exhaustive list.)
• Loan forgiveness applications may be submitted any time before the maturity date of the loan, but loan payments are deferred only until 10 months after the last day of the loan forgiveness covered period.
• The most important things for business owners and accountants to do now is to document everything to show compliance and use their best judgement. (Payroll reports and other records must corroborate loan / forgiveness application numbers.)
• Participants in other relief programs (especially healthcare firms and government contractors) should take special care as they usually are not able to “double-dip” and include expenses in multiple programs – consult advisors and CPAs for guidance.
• Talk to your advisors and CPAs about taxability of loan forgiveness in 2020 or 2021. A second round of PPP is possible – keep up with updates from Ryan and Wetmore. ersonal note: Ryan & Wetmore has been providing tax, accounting, financial analysis, due diligence and M&A services for our portfolio companies and investors since 1986. Great firm and I highly recommend!

Personal note: Ryan & Wetmore has been providing tax, accounting, financial analysis, due diligence and M&A services for our portfolio companies and investors since 1986. Great firm and I highly recommend!

Having CPAs and advisors you can trust is crucial heading into this historic period of uncertainty. Contact us here.