When the clock turned 12:00 a.m. on January 1st I yelled out, “Yeah!  It’s a new tax year!” My husband kissed me and whispered in my ear, “Honey, you are such a nerd, only you would say such a thing.”

2008 was a hard year for everyone. Every IRA and 401k was pounded by pitiful stock market conditions.  We watched the smartest-of-smart fumble in guiding our economy. Elected officials agonized and politicized a bailout for a corrupted banks and fledgling car companies. We had record high gas prices and we lived to tell about it. Sigh. Aren’t you glad it’s over?

Now that 2008 is over, you have some work to do for your business!  Whether you are new to the business, have been in forever, or know someone who is new to the business we want to translate some of the New Year mumbo-jumbo so that it makes sense to you.  As you read this, remember that we are having several special webinars over the next month.   On January 29th at 4:30 pm PST we have a special webinar called It’s Not Too Late for 2008  https://www2.gotomeeting.com/register/338642031

Physically Count Your Inventory
Most MK professionals know they need to physically count the inventory at the beginning of every new year, but very few know why. Count your inventory because it gives you a start and end point to calculate the value of unsold product on your shelf.  This value will be measured against your total product purchases for the year.

Example:
Let’s say on Jan 1 you had $3600 wholesale on your shelf, and through the year you purchased $600 wholesale every month.   If you sold $1000 retail monthly, you’d net out with a total year end inventory of $4800.  Here’s how the math looks:
•Jan 1  $3600 ws beginning inventory
•Purchased $600 ws every month = $7200 total
•Sold $1000/mo. retail ($500ws) = $12000 total
•Dec 31 year end inventory is $4800

Most of our clients don’t understand that you cannot deduct the cost of inventory until AFTER you’ve sold it. This becomes known and reported as Cost of Goods Sold (COGS). If someone told you that you get to write off the cost of your unsold inventory, be clear that IRS will put a big kibosh on that one!
Yet another great reason to get out there and sell, sell, sell your shelf!

What’s the best way to do a physical inventory count?
We think the best way to do your count is to start an Order in InTouch as if you were going to create a new product order.  Then systematically go thru the catalog and enter the quantities you actually have on hand for every item on your shelf.  The GREAT thing about this is that InTouch will be doing the adding for you, all you have to concentrate on is putting the right quantity in each field.   We recommend that you print the order up after it is complete and save it in your permanent tax year records.

As much as we are raving fans of our sister company Pink Office and all the fancy inventory reports that you can get from it, IRS says you have to do a physical count, so don’t try to cut corners.  Also, try not to touch any box more than once. Doing a count like this is a perfect time to identify expired or unsellable product (e.g. if it isn’t in the Look Book, you may not be selling it).  Expired product needs to be removed from your shelf and tossed; unsellable products may be donated and you may deduct it. It is way better to give it away for a deduction then to let it sit there collecting dust, in our humble opinion. Talk to your accountant for more specifics on handling unsold, expired product where your taxes are concerned.

Yikes!  I didn’t count my inventory on Jan 1.  What do I do now?
Don’t panic.  This is common, and fairly easy to fix.

1. Start by counting what is physically on your shelf.
2. Then take your pink tickets (or) invoices from Pink Office and add up the wholesale cost of everything you’ve sold in the month of January.
3. Take the total wholesale cost of your sales in January and add them to the total you got when you did your physical count.
4. Breathe, you did it!

As our raving fans know, our passion is to help the entrepreneur, solopreneur, mompreneur, and small business owner succeed financially.  We find that most of our clients and fans feel this impending doom first quarter of any new year.  First quarter is when business owners think about possible financial sins they committed in the previous  year (e.g. not keeping up w/their books, or the condemning box of disorganized receipts hiding under the desk ), they  dread the weeks leading up to April 15th,  and all the work it takes to get ready for that appointment with the tax person.  A bunch of time and energy is wasted Jan-April of every year cleaning up the financial sins of the year before and many of our clients miss the opportunity to set up financial systems and strategies to avoid what they’re cleaning up.  It’s a pitiful cycle.

Nobody is perfect, and everybody is busy.  So cut yourself some slack, and read up on What Do I Do Now (WDIDN) if you’ve had some financial indiscretions in your business during 08:

4 Financial Sins and WDIDN (What Do I Do Now?)

Sin #1:  Good intentions, lack of follow thru.
Did not keep up with the “books and records” part of my business.  Subscribed to Ascend Live, but didn’t actually use it (I wanted to though!).

WDIDN? If you were more naughty than nice in actually using Ascend Live last year, we do NOT recommend you go back and enter a full year of income and expenses line by line.  No, no, no!  Not unless you have nothing but time on your hands. Instead, make a commitment to fulfilling the “good books and records” requirement that IRS has for your business for 09…and move on.  In order to do your taxes, your accountant needs a comprehensive total of your business income and expenses.   If you would like to learn a work around in Ascend Live so you can have “some” records for income in 08, sign up for our It’s Not Too Late for 2008 webinar or contact our education team support@ascendlive.com

Sin # 2: Shoeboxes, ashtrays, and handbags, oh my!
I have business receipts stashed all over the place—junk drawers, shoeboxes, handbags, etc.

WDIDN? Envelopes.  Get 12 paper envelopes and label them January – December 08.  Organize the receipts by the month and stuff them into the right envelope. Make sure every receipt is clearly readable, and that it’s is noted with appropriate documentation about what expense category it is related to. Examples:  Supplies, Gas, Biz Meals, etc. Take each envelope and staple it to the corresponding bank statement for the year. April envelope stapled to April Bank Statement.

Tip for 09: Hang an envelope somewhere in your house or office, and drop all your receipts into that one envelope all month long. After you’ve reconciled your account(s) in Ascend Live, staple it together w/ your envelope for the month.  Take the Categories and Receipts webinar.

Sin #3: My business has been sleeping with my family
I have been co-mingling business and personal funds all year long; and I’ve used my business bank account to pay for personal things (like clothing, groceries, presents, etc.). Whoops!

WDIDN? Stop doing it right now! Your business is your business; your personal life is your personal life financially. They must be separated. Separate bank accounts, separate usage-rules, separate everything.   Think it’s negotiable? Remember this:  If your business is audited at some point, co-mingling will open you up to a personal audit too. Always assume the position as a business owner, “It’s not a matter of IF you’re audited, it’s WHEN.”

If you have been robbing-Peter-to-pay-Paul or just didn’t know any better, here’s our advice. Make sure you have clearly noted books and records and don’t try to write off something that isn’t a legit biz expense (e.g. life insurance premiums) to compensate for it.  Take the Setting Yourself up for Success webinar or request some time w/one of our financial coaches to help you get set straight.

Sin#4: Filed my bank statement and did nothing with it.
I did not reconcile my bank statement against my own books and records—that’s kind of a grey area to me.

WDIDN? The #1 way that identity theft is caught is by reconciling your own books and records against your bank statement. Have you ever noticed funny little charges that you couldn’t account for? (we found one from a domain company this month.) You only find those things when you reconcile.  We find that most people don’t reconcile because they were never taught how and they think it involves something about writing on the back of their bank statement in all those boxes.  Reconciling your statement to your records in Ascend Live is a cinch! It helps you know what transactions have cleared, and will help you recognize financial trends of your business. To learn how to reconcile your bank statements, take the Reconcile and Anti-Identity Theft Webinar

Financial sins are easily covered up or forgiven.  We are standing with you in 09 to help you be an angel w/your finances and to be wildly profitable.

The Ascend Live Team

Blood might be thicker than water, but it doesn’t keep a legacy afloat.

Let me be morbid for a second.  Imagine that you worked the last 20 years to achieve your dream: You have built up a million dollar company from the ground, changed the face of your local community, and made a difference in 1000s of people’s lives through the jobs you provide and the services and products you offer.  The same day you realize the vastness of all you achieved, you die.

Everything that you worked so hard for is now in someone else’s hands. The result of your sweaty brow could have the longevity of many lifetimes or be destroyed in only a fraction of the time it took you to build.  Would you avoid such a wager if you could?

What if I told you that the person who took over your business was not only skilled and passionate, but also educated and disciplined about stewardship.  Compared to the alternative, you probably love the idea of someone “qualified” taking over, instead of just any old “Joe” off the street. You have good reason to feel this way.  Studies have shown that the most important value in the success of family businesses from generation to generation is stewardship.

These family stewards see their role in long term goals instead of short lived visions.  They are motivated by a desire to build on the foundation that they received in effort to pass on more abundance than the prior generation.  They see their wealth and value beyond their own pocketbooks, and see themselves as the director of every resource.

Rather than simply working monotonously laying bricks, they see a wall coming together and can imagine the grandeur of the building that is underway.

Stewardship is the make or break of a lasting legacy – whether it is family or not.

IT matters.