Trinity Tax & Financial Solutions Inc. - Newsletter - July 2012

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Ju ly 20 12

Continued on page 2

Iwant to wish you a Happy 4th of July. I hope you had an enjoyable and relaxing holiday weekend.In this months issue of the Straight Talk newsletter, weve focused on the very important issue of succession

planning; something that too many business owners fail to consider until its too late. Although it may sound

confusing and something to address later, today is the day you should take the rst steps in establishing an

effective succession plan to address the future of your business, and by extension, your familys nancial

well being.

We also look at a simple way that you can revitalize that stalled to-do list and we explore how to improve

leadership skills and who needs them (hint: everyone!) Surprisingly, its not all about bossing people around,

but managing and guiding expected behaviora learnable skill.

Finally this month we answer a readers question regarding the deductibility of rental property acquisition costs for

business owners and, as always, share a couple of funnies to lighten the mood.

Until next month,

Succession planning is an invaluable toolto aid in the transition o a businessrom one person to another, most oten in

anticipation o retirement or as a way o

minimizing negative

impacts o a business-

owners death on the

business. The process can

be lengthy, sometimes

spanning several years,

and at times it can be a

little conronting, but

eective succession

planning can be the dierence between

a ailed business due to a massive tax bill

and dissatised customers and sta, and

a thriving business that may take a slight

stumble at handover but then movesonwards and upwards.

There are two primary areas that business-

owners tend to ocus on. Firstly, money.

How can the transition be eected without

being marred by taxes and nancial

upheaval? An unplanned transition oten

results in parties scrambling to take out

loans or nd the money to nance estate

taxes which is a dicult predicament to be

in. Furthermore, customer loyalty and other

business relationships may be in jeopardy

i the new owners are suddenly thrust upon

them without a plan or the transition

urther impacting on the prots and

wellbeing o the business.

Secondly, business ownerswho have spent their

entire lives establishing

and building a protable,

successul business want

assurance that upon their

retirement or death their

legacy is in good hands and

will continue to prosper or

many years to come. Those planning to hand

things over to their children want to eel

condent that their years, perhaps decades,

o hard work were worth something and that

the benets will pass to their children andgrandchildren.

7 tips to boost the effectiveness ofyour succession plan

1. Dont wait until youre ready toretire. As mentioned previously, eectivesuccession planning may take many

years. Dont wait until you are ready to

retire to start thinking about the uture

catastrophic illness, injury, and death can

occur at any age. By having the business

transition planned and accounted or, youll

not only have a retirement plan mapped out

but, should the worst happen, youll have

lited a heavy burden rom your loved ones

shoulders as they deal with a dicult and

emotional time.

2.Know the value of your business. Itsalways prudent to have a good idea o how

much your business is worth at any time. I

transition requires the business to suddenly

be sold or liquidated, a current valuation

on hand will make things that much easier.

For inheritance purposes too, the valuation

o your business will be required. So ensure

that trusted amily and intended successors

are kept aware o the businesss value as well

as its loans/debt so that tidying up o thenancials is an easier process.

3. Who do you want the successor/sto be? This one is airly sel-explanatory,but has the potential to be a tumultuous

decision. Your children may or may not be

interested in continuing your legacy. They

may or may not be trustworthy individuals

or have the appropriate skills and experience

to take on your business. They may or may

What is aSuccession Planand Why You Absolutely Need One For Your Small Business!

HHHHHHHHHHHHHHHHHHHHHHHH

HHHHHHHHHHHHHHHHHHHHHHHH

The newsletter designed to keep you on course to build a successful small business

Sushil Kumar, CPA, MBA

Sushil Kumar, CPA


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Do You Have A Tough Accounting /Tax Question You Want Answered?

I love hearing rom my smallbusiness clients and riendswho enjoy reading my monthlynewsletter. Im always looking toanswer pressing questions youmight have relating to smallbusiness. I you have a question,tip or idea, please call me at (718)261-2090 or email me at [email protected]. Perhaps Illeature you in a uture issue!

SUCCESSION PLAN

Continued from page 1

Business Question/Tip:Q: I own a business that I operate ona full-time basis. I purchased a rental

property last year. What closing costs can

I deduct?

A: The only deductible closing costs arethose for interest and deductible real estate

taxes.

Other settlement fees and closing

costs for buying the property become

additions to your basis in theproperty and part of your depreciation

deduction, including:

Abstract fees Legal fees

Charges for installing utility services

Recording fees Surveys

Transfer taxes Title insurance

Any amounts the seller owes that

you agree to pay (such as back taxes or

interest, recording or mortgage fees, charges

for improvements or repairs, and sales

commissions).

not have an already ull plate and simply be

unable to take on more responsibility. They

may or may not

assume that

things will be

handled in a

certain way. Iyou intend to

transition your

business amongst your children unevenly,

or on to a non-amily member, this too can

raise all sorts o conficts, resentment, and

questions. So although it may be dicult to

broach the subject today, explore the options

now and ensure that your successors are

ready and able to take on the responsibility.

4.Consider your estate as a whole.Chances are a good chunk o your net

worth is entrenched in your business. When

preparing your will and your succession

plan, remember that those heirs who dont

take on the business will probably eel

entitled to a share o the inheritance anyway.

Ensure your will and your succession

plan address this issue to hopeully negate

confict. Also, as horrible as it is to think

about, children do sometimes die beore

their parents. What is your plan i your

planned successor should pass away beore

you do? As with any will, ensure that this

issue is addressed also in your succession

plan.5.Plan for temporary transition.Retirement and death arent the only

reasons that would take you out o the

business. Severe illness or disability can

be disastrous. In addition to assigning

power o attorney, make sure you have a

living trust speciying who shall handle

the business while you are out o action; it

could be months or even years! Dont orget

to incorporate disability insurance and

proessional overhead expense coverage in

your business.

6. Identify key employees. As dicultas transition is or your successors, its oten

also hard or your customers. However, they

dont have to stick around and can easily

go elsewhere i it all gets a bit much. By

identiying key employees and making a

plan or their role in any transition, you can

help minimize the disruption experienced

by your customers which will hopeully

keep them loyal to your business ater

youre gone. Dont orget that sometimes

employees can eel just as much a part o

the business as you, especially i theyve

been there rom the beginning. Share your

plans with these employees and incorporate

steps and possibly incentives to increase the

likelihood that theyll stay on throughout

the transition and beyond.

7. Practice. You can begin to train your

employees and get your customers usedto the idea o dealing with others within

your business by delegating decisions and

allowing your key employees to take on

more leadership-type roles. This delegation

can be commenced any time ater the initial

startup business cycle; with the goal being

that i you were to be hit by a bus tomorrow,

your business could continue to run

smoothly until nal decisions and changes

are implemented. Although business owners

oten work in their business, it should be

because you want to, not because everything

would all apart i you didnt.

A sound succession plan is a must-have or

any business. It should certainly not be one

o those things you do when you get around

to it. Get in touch with us so we can guide

you through the planning process. Once

your succession plan is in place, youll be

able to rest assured that, should the worst

happen, your businessand thereore the

livelihood o your amily and employees

will be secure, even without you at the helm.

A Few Wise Words(or maybe not so wise)

Some Proverbs For Modern Times:

Before you criticize someone, youshould walk a mile in their shoes. That

way, when you criticize them, youre a

mile away and you have their shoes.

Its always darkest before dawn. So if

youre going to steal your neighbors

newspaper, thats the time to do it.

Do not walk behind me, for I may not

lead. Do not walk ahead of me, for I

may not follow. Do not walk beside me,

eitherI pretty much want to be left

alone.

If you lend a friend $20 and never seethat person again, it was probably worth

it. Experience issomething you

generally dont get

until right after you

need it.

Never pass up a

good chance to shut up.


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I hate using smoke signals to fle my taxes. Everybody sees my numbers!

Having a to-do list is a great ideaas long as you

dont let it deplete your energy and creativity

because its unrealistic.

Follow these tips or

revamping your to-dolist so it doesnt drive

you crazy:

Combine separate lists

into one list. I you keep

one list at work and the

other on the rerigerator

at home, sooner or later

something will all through the cracks. Keep one

notebook or calendar and nothing more. Keeping

track o multiple notes or lists will wipe you out.

Be realistic. Set your priorities, and be ready to

let some items go. What is it that you absolutely

have to accomplish? I youre never going to do

something that you continually write on your list,

take it o. Youll save energy and gain peace o mind

by being honest with yoursel.

Make a schedule. A to-do list without a schedule

doesnt give you much guidance. Estimate how

much time each task will take, as well as how high

a priority it is, and determine the best use o your

time. I a three-hour task isnt vital, dont put it at

No. 1.

Leave room for emergencies. Dont try to cram

activity into every minute o your day. Build in

sufcient time to deal with the interruptions that

will undoubtedly occur.

Whether you are a solo entrepreneur orhave a large team o people workingunder you in your business, strengthening

your leadership skills will help you to take

things to the next level.

Leadership isnt just about telling people

what to do. It starts with sel-knowledge and

confdence. Heres how to cultivate your

potential:

Commit to learning. Youre never too

old to learn new skills and dierent ways o

getting things done. Ask questions, explore

the world, and listen to everyone, leaders and

subordinates alike. You never know who may

have something valuable to teach you.

Be ready to take risks. Success at

anything is usually a gamble, and nothings

guaranteed. Practice something new every

so oten to learn how you handle uncertainty

with confdence that inspires other people to

support you. Dont be reckless; learn how to

assess risks so you can decide when to commit

yoursel ully and when to walk away.

Cultivate patience. Worthwhile success

takes time. I youre in a rush, youll cut

corners, ignore warning signs, and push

your employees too hard. Take a step-by-step

approach thats ocused on long-term results,

and go or quick wins only when theyre

realistic and valuable.

Engage your passion. I a goal isnt

personally important to you, you wont be

motivated to give it your best eort, and youll

have trouble persuading others to help you.

Yes, sometimes youll have to work on projects

that youre not excited about, but pick a long-

term objective thats meaningul to you and

keep it in your sights even when secondary

goals take center stage.

A short Zen tale for your spare timeThe study and practice o Zen can fll a lietime

yet its stories are oten surprisingly simple and

short. Heres a quick one:

A student asked a Zen master this

question: Master, what should a

ollower o Zen do in his or her spare

time?

The master looked puzzled and then

began to laugh. Spare time?

BuildYourSuccessPo

tentialWith

Skills

Congratulations to Mr.

Janak Shah, owner of D.B.E

Electric Corp. as

Julys

CLIENT

OF THE

MONTH

Mr. Shah has

been a client

of our rm for

more than 7

years. D.B.E

Electric Corp.

offers Electrical,

Communication,

Data-Material

Supplies,

Construction

Management Services,

Computer AidedDesign & Drafting

Services, Computer

Networking and Data

Management services

to government

contractors.

The ofce is located

in Valley Stream,

NY. To learn

more or schedule

an appointment

please contact Janak Shah at

[email protected] or call

516-825-7878


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See Whats Inside...Succession Plans For Your Small Business!

Client O The Month A Short Zen Tale

Build Success Potential With Leadership Skills

Rewrite Your To-Do List For More Time & Energy

Wise Words: Some Proverbs For Modern Times

In Search Of More Fun

Funny Words: Both Ways?

Quotes of the Month Funny Words: Why Dont

These Work Both Ways?

Ever notice how some words seem tobe one-sided? Something may beoutrageous, but nothing is ever

rageous. Here are examples o

words that work one way but not the

other: Were overwhelmed, but neverwhelmed.

Too much inormation may be

redundant, but just enough data isnever dundant.

You may eel nonchalant, but neverchalant.

One can eel rejuvenated, but beorethat, one doesnt eel juvenated.

Something can be outlandish, but notlandish.

You can eel distraught, but not traught.

People are intrigued, but theyre nevertrigued.

A act can be indubitable, but a alsehood

isnt dubitable.

You can be provocative, but never vocative.

In Search Of More Fun

Are we having fun yet?

According to the Trident FunIndex, apparently not. Sponsored

by Trident brand sugar-ree gum,

the Index surveyed some 1,400

Americans and found that 19

percent o us cant remember the

last time we had some un. Worse,

18 percent of us dont even

manage to have a tiny bit o un

on a daily basis.

Maybe youre in the wrong city

or having un. The Fun Index

ranked top U.S. cities or their un

factors. The top 10:

1. Atlanta 2. New York

3. Chicago 4. San Francisco

5. Dallas 6. Los Angeles

7. Washington, D.C. 8. Boston

9. Houston 10. Philadelphia

Surround yoursel with people

who take their work seriously,

but not themselves, those who

work hard and play hard.

Colin Powell

Everyone has his burden. What

counts is how you carry it.

Merle Miller

The saddest summary o a lie

contains three descriptions: could

have, might have, and should have.

Louis E. Boone

Take away my people, but leave

my actories, and soon grass willgrow on the actory foors. Take

away my actories, but leave my

people, and soon we will have a

new and better actory.

Andrew Carnegie

Trinity Tax & Financial Solutions, Inc.

Close Personal Attention to increasing your profts.

116-16 Queens Blvd Suite 245Forest Hills, NY 11375

(718) 261-2090 www.bestcpasolutions.com

Email: [email protected]

Member: NY State Society of CPAs

Member: Queens Chamber o Commerce

Trinity Tax & Financial Solutions Inc. - Newsletter - July 2012

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