March 2023 — an eventful month so far
Giving us a crush course in banking/financial literacy
Top of the news: the collapse of Silicon Valley Bank (SVB)
(Founded in 1983, SVB became the biggest bank in Silicon Valley.
And one of the largest in United States.)
Financial reporting in WSJ, and other publications, attributes its
collapse to various factors — some starting as early as 2020
But what sealed its fate was the bank run.
What is a bank run?
Panic-driven bank customers withdrawing their deposits.
That’s what happened on March 10th.
$42 billions in deposits were withdrawn from SVB
Yes, in ONE day
In one day $42 billions left the bank.
The bank collapsed
And was taken over by FDIC
One more thing: just few days before the collapse, SVB
was ranked (Forbes) as one of America’s Best Banks.
For the 5th straight year.
Interesting, isn’t it?
Across the pond things aren’t going that well, either.
Credit Suisse, Switzerland’s second-largest bank has been
having many problems
And it was faced with a bank run as well.
Bank’s customers pulled out over $121 billion in deposits
(It happened over a 3 months period.)
This “bank virus” is contagious
Financial stocks lost billions in market value
Banks
Investors
Startups
Harsh lessons for all to learn
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With 2023 just few hours away, small business owners are looking ahead.
Thinking how to solve ongoing problems:
Inflation, supply chain issues, anticipated recession, and labor shortages.
Given these, small business owners’ top three priorities are:
1. Cash Flow
They know the importance of cash flow.
It’s what will keep the business afloat should we have an economic downturn.
2. Employees
They are an important asset for the small business.
Its backbone.
That’s why many business owners are offering higher wages and training.
3. Technology
We all know technology will become even more important.
Smart business owners look at technology as a tool.
A tool that will help them achieve their goals.
* * * * *
Optimism
Entrepreneurs and small business owners feel optimistic about the new coming year.
They plan to increase their opportunities by doing more online marketing.
Hire more employees.
And pay them higher wages.
Their attitude toward the new year is one of tough-minded optimism.
New year.
Fresh start.
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Remote work opened up a whole world of possibilities.
Especially for the people living in states with a higher cost of living.
They can now move to much more affordable areas.
And keep their well-paying jobs.
Good for the employees.
And good for the companies.
All these advantages come with a few challenges as well.
One of the major one being taxes.
Nexus
As a company, when one of your employee is working remotely from another state, then the tax authority of that state can impose taxes on your business.
Why?
Because your remote employee can establish nexus (connection) between your business and your employee’s home state.
And this triggers tax obligations for your business.
The solution?
Keep informed — know the tax requirements.
In situations like these the rules require that the connection must be “substantial” before nexus applies.
Yes, remote work can create some tax complexity.
But, overall, it’s a win/win — for the company and its employees.
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http://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.png00Mariana Fieraruhttp://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.pngMariana Fieraru2022-07-31 11:56:572022-07-31 11:56:57Remote work and its tax implications
If 2021 was your first year in the gig economy then tax time will be full of surprises for you.
Most likely not very pleasant surprises either
Higher than expected tax liabilities
Even some penalties
Not much fun dealing with all of that.
What to do now?
Get some strong coffee (or your favorite give-me-energy drink)
And start on your paperwork.
Process your paperwork (get help, if necessary).
And file your taxes.
Tax time it’s a stressful time for many.
Now it’s the best time to start thinking, and planning, for next year
Think about how to make it easier on yourself when next tax filing comes around
Here are three things to get you started on the right track:
Income
Keep track of your income.
Make sure to keep good records.
The companies you work with will issue you 1099-NEC and other 1099s
Do remember:
The companies will also send copies of these forms to IRS
Expenses
Keep track of work-related expenses: car maintenance and repairs, work supplies, etc.
These expenses will help lower your tax bill
Taxes
Put aside ~20% of your income. Save that money for taxes.
(If necessary, and to avoid penalties, you may want to make estimated payments.)
That’s it!
Develop a system when you se aside time (weekly or monthly ) and do these.
And I promise you:
Consistently doing these 3 things will make tax time much less stressful.
Wishing you success in all you do
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Simple country life style.
Small town not many people know about it, right?
Wrong.
Russian billionaires know about it.
And so do wealthy people from Argentina, India, Italy, Venezuela.
Why?
Two words:
Tax haven
Yes, the rich of the world are moving their wealth to Jackson, Wyoming.
The millionaires and billionaires have their attorneys set up trusts.
Washington Post article:
“Wyoming trust and layers of private companies with concealed ownership – allow the world’s wealthy to move and spend money in extraordinary secrecy, protected by some of the strongest privacy laws in the country and, in some cases, without even the cursory oversight performed by regulators in other states.”
Incidentally, they call this “The Cowboy Cocktail.”
So would you like one?
Better question — can you afford it?
How much money are we talking about?
Washington Post:
“Trust companies in Wyoming now manage at least $31.5 billion in assets, according to the state.”
That’s right.
Law professor Allison Tait, a trust and estate expert, regarding the anonymity/privacy of these trusts:
“It’s like a wrapped gift inside a wrapped gift,” she said. “The more wrapping you put on, the harder it is to figure out if there has been tax avoidance or evasion or even financial crime. Very few people know what you’re doing, basically.”
How is this possible?
It began with a 1977 law.
The brain child of an oil company.
As the years passed the lawmakers “improved” the law. And made it easier for company owners to hide their identities.
Adam Hofri-Winogradow, a law professor and trust expert:
“Wyoming is now among the 10 least restrictive, most customer-friendly trust jurisdictions in the world.”
In the WORLD!
Got that!?
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http://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.png00Mariana Fieraruhttp://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.pngMariana Fieraru2021-12-30 20:58:252021-12-30 21:08:42What gets Small Town, USA on the World Map?
These are trademarks (just a few) of an absentee leader.
Research published in German psychology journal Zeitschrift für Psychologie:
The effect of absentee leadership is far worse than any other type.
You think this ‘leader’ was bad before?
The impact is much stronger in the current (remote work) environment.
That’s when bad leadership becomes destructive.
As employee you are looking for feedback.
You want to know where/how to best direct your efforts.
But the leader is absent.
You have no guidance.
The results?
Stress and poor performance.
Significant problem
This leader (in title only) has a negative impact throughout the organization.
Heavy price to pay.
For the employees, the organization and its customers.
Why do they get away with it?
Because other (bad) leaders have a more glaring incompetence.
So we prioritize their removal.
And we let the quiet, incompetent (absentee) leader to continue to slow-kill the productivity and success of the organization
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http://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.png00Mariana Fieraruhttp://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.pngMariana Fieraru2021-03-31 16:08:042021-03-31 16:09:34Absentee leader: the most destructive type of leadership
Husband and wife start a small family business.
And they want to keep things simple.
(Since neither is fond of formalities.
Or too much paperwork.)
At the same time, they do want to make sure they
1. Use the right business organization type for them, and
2. They employ the right tax strategy.
After some research they both decide Qualified Joint Venture meets most of their requirements.
What is a Qualified Joint Venture (QJV)?
As its name imply, QJV is a joint venture where both spouses materially participate in the business.
And elect not to be treated as a partnership.
For federal income tax reporting they are treated as sole proprietors.
The business’ income, deductions, and credits are allocated to each spouse.
(On separate Schedule C.)
According to each one’s interest/participation in business.
IRS requirements for QJV
For the husband and wife business owners (aka the averse-to-paperwork team) the QJV seems to fit the bill for what they want.
But are they eligible for it?
IRS’ requirements for a business to operate as QJV
Not incorporated: if your business is incorporated then you no longer fit the QJV requirements
Partnerships: with the exception of general partnership no other type of partnerships qualify for the QJV.
LLCs: if you reside in a community property state, an LLC does qualify for QJV (just like a general partnerships).
Husband and wife must be the only owners of the business AND materially participate in the business’s operations.
They must file a joint income tax return.
Our friends, the husband and wife business owners, have decided on QJV.
Now they need to move on to the next decision on their agenda:
Who’s the boss?
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Want money? No problem. How many millions?
And don’t worry about paying it back.
Enjoy.
What’s that all about?
Paycheck Protection Program (PPP)
The PPP was supposed to help struggling small-business to keep afloat during this economic crisis.
But it turned into “free money,” grab-as-much-as-you-can for publicly traded companies.
(Results of intense lobbying efforts prior to passing the CARES Act.)
Some of these companies are worth hundreds of millions.
These businesses pay seven-figure salary to their top executives.
The only thing ‘small’ about these businesses is their sense of decency.
How much money we are talking about?
The CARES Act allocated $349 billion for PPP.
Funds were completely gone within 2 weeks.
Yes, you read that right: 2 weeks.
True, some of these companies returned the money.
How magnanimous of them, right?
(No. They got caught; and exposed in social-media.
Returning the money was part of their damage-control PR.)
How did this happen?
Well, they didn’t do it alone, for sure.
They’ve had help.
Some say “they took advantage of the loopholes.”
Others say the loopholes were built-in the program.
I do know one thing for sure:
You and I helped as well.
How?
We elect the politicians.
We vote; then we go about our daily life.
And trust that they are doing what they got voted in for.
Meanwhile, big business and other special interests know better how the system works.
They hire lobbyists.
And sent them to Washington.
Then Congress starts giving out ‘party favors’ to the highest bidder.
(Read that: the ones with the best lobbyists.)
And they keep doing it.
Why?
Because we don’t hold them accountable for their actions
What’s been done about this?
No problem, we’ve taken action.
We’ve allocated another $310 billion to the Paycheck Protection Program.
This brings the total up to $659 billion.
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http://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.png00Mariana Fieraruhttp://obileadershiptraining.com/wp-content/uploads/2014/03/OBI-Consulting-Final-2.pngMariana Fieraru2020-04-30 12:09:332020-04-30 12:20:54Lobbyists, Loopholes, and the Paycheck Protection Program
Imagine soft music playing in the background.
And a soothing voice saying:
“Once upon the time, we used to get home visits
From the milk-man; the doctor.
Home visits — those were the days.”
Nostalgia for the days gone by
But be nostalgic no more.
Good news: in 2020 home visits are back in vogue
This time from IRS
(Did the soft music abruptly stopped?)
Home-visits from IRS agents
Do you know someone who has an outstanding tax liability?
And has this someone repeatedly ignored IRS’ payment-request letters?
Then you may want to warn them of impending IRS agent home visit.
Yes.
IRS is now going to send their agents on home-visits.
Furthermore, the visit will almost always be unannounced.
(Never underestimate the element of surprise!)
How will you know he (or she) is from the IRS?
Ask for ID’s, obviously.
Your rights as taxpayer:
The IRS officer needs to show you two (2) forms of identification.
That include serial number and photo.
You have the right to request to see both.
Now go make sure you have a fresh pot of coffee on.
You gotta show some hospitality when your friendly IRS agent drops by for visit, right?
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