The State of Social Security

It’s no secret that the Social Security system is facing serious problems. When all the baby boomers start to retire (around 2010), the system will begin to pay out more than it takes in. As an accountant, my clients and friends often ask me what I think is going to happen, so I thought you might benefit knowing where it stands both for yourself and for them.

The trouble can be summed up in one word: demographics. The system is designed so that workers pay into the system to pay benefits to retirees. Well, the ratio of workers to retirees has dwindled to an alarming level–from 40 to 1 when the system began in 1937 to 3 to 1 now. Plus, people are living longer, so retirees are collecting for many more years than before.

What Is Being Done to Insure Social Security Will Be There For You?

A special task force appointed by the government urged in 1997 that action must be taken immediately to save the system, but nothing major has been done to date. A few minor adjustments have been made, such as increasing the normal retirement age from 65 to 67. Also, well-heeled retirees must now pay tax on Social Security benefits. But these efforts alone are not enough to rescue the system.

This is not to say that Social Security will vanish. It’s simply unclear what level of benefits you can expect to receive down the road.

What to do: Call Social Security at (800) 772-1213 and order Form SSA-7004. This form will allow you to check on your expected benefits. It also shows your credited earnings. You may want to do this every few years to make sure you’re being credited for all of your earnings.

Since your benefits are based on your earnings, your benefits may be affected if the system hasn’t captured all of your earnings. Keep in mind that Social Security taxes are paid on salaries up to a certain threshold, known as the Social Security wage base, which increases every year. For 2004, the wage base is $87,900. So when you look at your credited earnings for Social Security tax purposes, it will never be higher than the Social Security wage base for the year.

It is hoped that the federal government will take care of the problems with Social Security, but even if it does, will Social Security really be enough? It is very common that when one purchases a home that they do not really take stock of when they will pay off their mortgage. For many of us, the reality is that our home will not be paid for when we hit retirement age. Depending on the amount of income that you make, your Social Security benefit may not even cover the amount of your house payment.

Ensure Your Own Retirement

So what CAN you do? Retirement consultants state that if one person starts a retirement fund at age 20 and another starts at 30, even if the 30 year old pays in twice as much per month into their program as the 20 year old, they will never catch up because of the operation of compound interest. But most of us are beyond 20, many beyond 30 already, so have we missed the boat? Not at all!

The majority of those that describe themselves as financially independent own small businesses. Even if you are in your 40’s and have not taken part in traditional retirement programs, you can take control of your own financial future. The Professional Bookkeeper (PB) program teaches you how to make $30-$60 Per HOUR doing small-business Accounting and Bookkeeping services. Even without prior experience in Accounting or Bookkeeping, if you have the basic math skills to balance your checkbook, you have all the math ability to do Accounting and Bookkeeping.

Jump Start Your Retirement Now!

The average small-business client will pay you $300 per month to do their books. The real beauty is that it only takes 6-8 hours per month to service a single client! This means that you can service one client per day. If, for example, you build up your client base to 23 clients, that adds up to $6,900 Per Month or $82,800 Per Year in income! And that is not even working full-time! Would $82,800 Per Year in income give you some extra cash to put aside for your retirement? For most of us, that kind of income is exciting at any age.

Sell Your Business to Retire On Later

When you work for an employer, you are making them wealthy. Your success on the job provides for the business owners retirement, but what do you get long-term? The day that you stop earning a paycheck as an employee is the day that you cease to get paid. When you build your own successful Accounting and Bookkeeping service, you are building equity in something that is valuable to investors. One of our graduates recently was excited to report that they had just sold their 3-year old business for over $100,000 and were moving to Australia. Would $100,000 help towards your retirement?

As you build your Accounting and Bookkeeping service, you are earning $30-$60 Per Hour now and creating something of value that you can cash in later. If you are anything but certain that Social Security and your current retirement plan will take care of your needs in the future, be assured that there IS something that you can do about it now. Nobody likes to have their future determined by events that they simply cannot control, so take the first step today to make the income that you deserve now and to retire in comfort later. Your Accounting and Bookkeeping service will ensure you the kind of future that thousands of our graduates rave about today.

Learn How to Earn $80,000+ Per Year Building a Successful Accounting and Bookkeeping Service

Prepare for Retirement by Doubling Your Investments

When working full-time for a company that provides benefits, most people determine how much they want put into retirement each paycheck and let time take care of the rest. If you own your own business, retirement is a greater concern. As a business owner, you must design your own retirement plan, ensuring that you and your family’s futures are taken care of. And while retirement may be decades away for some of you, the longer you wait to prepare for it, the less comfortable you’ll be when that golden age arrives. Because while you may currently love what you’re doing, you may want the freedom to do something else when you’re 65.

As a business owner looking for ways to prepare for retirement, you must become a good investor. Good investors know how to put their money to work earning the greatest return. Good investors also recognize the value of compound interest. That is to say they recognize that they can greatly increase their return by adding the interest to the principal and reinvesting it, allowing the compound sum of the principal and the interest to earn even more interest.

Rule of 72
The Rule of 72 is an economic formula designed to inform investors of the potential return on their compounded investment. Divide 72 by the interest rate you anticipate earning and that determines how many years it will take to double your initial investment.

Let’s say you purchased $25,000 in bonds earning 6% interest. The Rule of ’72 would work as follows:

After 12 years your initial investment of $25,000 would double to $50,000.

But let’s imagine you don’t currently have $25,000 to invest. Let’s say you have a more modest amount, $10,000, and you decide to open an Individual Retirement Account (IRA) earning 4% interest. Here’s how you could reinvest that initial investment plus its interest to double, triple, and even quadruple that initial investment in preparation for your retirement:

The most important thing to recognize here is that making the decision to double your investment is the only way to have it happen. As you can see, the longer you wait to start, the longer it will take to see significant results.

Put Rule 72 to Work for You
First, decide how soon you’d like to see your money double. Be realistic; generally the investment vehicles with the highest interest rates are the riskiest. Do your research and see what interest rates are reasonable and worth banking your future on. Pick your investment vehicle: savings account, stocks, bonds, IRA’s, real estate, etc. Then get started! And remember, the more investments you have, the greater your final return. Don’t worry if your initial investments are small; just imagine how much smaller your return will be later if you don’t invest now!

When you’re your own boss, you’re responsible for providing yourself with the benefits you and your family deserve. If you’ve been procrastinating your retirement, then procrastinate no more! Start doubling your money today. It is always sound advice to be able to put the reserves away for your “Golden Years”. We encourage those who currently have their own business to place their working capital and profits to work for them in the long run and to keep away from the “blinders” mentality when you are currently making good money.

For those who aren’t making the money that they can put into a retirement fund or that you are just starting out on this path to owning your own accounting business, Universal Accounting is here to help. No we cannot set up your retirement package, nor make the personal investments that will cause it to grow. However, when you invest in yourself, with the proper training, know-how and resources for sound accounting business principles, then you can make what you want when you want to.

Check out the tools and materials you will receive once you enroll yourself into the program that has changed the lives of thousands of like-minded individuals. Click Here to get all you need to make the best decision!

6 Tips for Enjoying a More Lucrative Business

As a small business owner yourself and as an accountant who continually interacts with small business owners, you should always be on the lookout for ways to increase profits: your own and that of your clients. Doing so makes you a much more valuable accountant, not to mention, a much more profitable small business owner. What are some simple things you can do to accomplish that?

1. Remember the 80/20 rule

Also known as Pareto’s Law, this rule states that 80% of your business comes from 20% of your customers. Do you know which of your customers comprise that 20%? If not, it’s time you found out. You can then target them for special promotions and service offerings.

2. Getting that 20% to retain more services more frequently

Now that you know which clients comprised that valuable 20%, you must try to get them to use more of your services more frequently. In these newsletters we often return to the concept of geometric growth which means you expand your service offerings so that you are billing current clients more often. Geometric growth also enables you to attract new clients who might be interested in more than just your new services. This tip may require you to add complementary services to your menu, like QuickBooks consultations or tax preparation. But the effort would pay off in increased profits.

3. Determine what motivates the 80%

By focusing on the 20%, don’t forget there is still value in the 80%. Studies show that it’s better to spend your time retaining current clients than it is trying to find new ones. That 80% represents a client base that is familiar with your services and value as an accountant. Now you need to determine what motivates them and how you might be able to get them to join the 20% by retaining more of your services more frequently.

4. Ask clients what they want

No one can tell you how to best serve your clients than your clients themselves. What do they need? Are there other services they wish you offered? What might get them to more readily refer your services to friends and family? You may discover things that are difficult to hear. You may also get the most valuable business advice yet! These clients will definitely offer more personal and specific information than you could get from any other source.

5. Demonstrate gratitude

Nothing makes a client feel more valuable than by a genuine show of gratitude. This is also a good way to increase client retention and inspire loyalty in your clients. Whether you do this by giving them a modest gift (movie tickets, a gift certificate, or free lunch) or by thanking them personally for their business, it will be a gesture well remembered.

6. Show your face

You just can’t put a price tag on becoming a familiar face in the community. The more exposure you get the more free exposure your business gets. Ensure you’re aware of all the community events and, when possible, become a permanent fixture. Be especially aware of those that would afford you the opportunity to have a little booth from which you can distribute business cards and brochures about your services. Remember that everyone you meet is a potential client and may associate with hundreds of other potential clients. In this it becomes a numbers game. The more people you meet, the greater your potential for increasing your client base.

These six simple tips can help you take the necessary measures to increase your business’s profitability as well as the profitability of those small businesses you work for. Allen Bostrom, President and CEO of Universal Accounting Center, has a lot of experience helping small businesses do just that, and he’s written a book about it called In the Black: Nine Principles to Make Your Business Profitable. Practical and easy-to-apply, you can finish this book one day and begin implementing those principles the next. To learn more about this book and some of the principles he shares, visit his website today!

How To Develop Your Child’s Financial Skills

As a financial professional you understand, more than others, how important it is to train a child early to understand the value of money so that he or she will grow up to make good financial decisions. Try the following strategies to develop young people’s financial skills:

* Encourage family discussions on finance. At some point each day, discuss finance with your child. For example, have a conversation about whether an item’s value is worth its price.

* Play savings games. For example, if your child is going to the movies, agree to match the money he or she brings back home. This trains your child not to spend everything in his or her pocket at a given time. You can also encourage your child to come up with game ideas.

* Emphasize the benefits of savings accounts. Let children know that it’s good to save money in a piggy bank at home but better to have their money in a savings account. Explain that they will get more for their dollar. When discussing interest, always use language that children will understand.

* Relate stocks to companies that young people recognize. Talk about companies like McDonald’s and Disney. Tell your child that “if you owned stock in McDonald’s, every time you see cars in the parking lot, you’re getting some of that money.”

* Discuss security issues. Explain that if someone steals your child’s piggy bank, nobody replaces that money. If your house should burn down, his or her money will probably be gone. But if something happens at the bank, he or she has insurance.

* Encourage goal-setting. If your child wants to save for a bicycle, suggest that he or she price the bicycle and divide that by the amount he or she is saving per week. Then your child will know how long it will take to save the money.

Learn How to Make $80,000 per year with your own Accounting and Bookkeeping Business.

For the small business owner it is always a question of when to get something or when not to get something for the business. As an Accounting Business we may be more keenly aware on how our business is doing and if we can or cannot afford to move on a piece of equipment or some additional help around the office. When it comes to getting additional help you must be sure that the business is ready for it, so that you can make the new position pay for itself.

Planning is Key

As a business owner, on a limited budget and little or no access to working capital (especially in the first stages of your business) you need to be able to plan out how you would like to grow your business. By setting the goals, milestones, and criteria that is needed that would signify the achieving of the milestones and goals is an essential way you can avoid many of the growing pains you hear from other business owners. With proper planning you can go around the pitfalls, or missteps that plague those who fail to plan and move on someone or something before their business is ready for it. When you plan and work to accomplishing that plan, you can then clearly see the overall situation, and act accordingly. And when it comes to hiring and personnel this is invaluable in keeping your business profitable.

Pain & Necessity vs. Comfort & Luxury

There’s no doubt about it, having another hand around to be able to lighten your work load would be nice. Perhaps the fantasies and wishful thinking of that type of an expansion could get the best of us, who are in business for ourselves, and if we don’t plan out what / who we need when we need them. It can be very easy to get ahead of ourselves. I have seen it with many businesses that because they have landed a new account or “feel” like it’s time to move forward on acquiring personnel and equipment they over extend themselves and have to turn around and make the harder decisions later. The pain and necessity you feel now when you are diligently working to increase your business billable hours, clients and accounts and the hours you are spending to bring in the “bacon” needs to be measured against the comfort you would feel building your business with someone else helping to bear the work load and the luxury of being in that position. You have to gauge this Need vs. Luxury closely according to the plan you created before the need arose. Is it worth going another month, 3 months, 6 months etc. going full boar by yourself to build profits and capital? Or would you be able to better accomplish your goals and milestones for growth when you are freed to bring in the accounts and share in the write up duties?

A Side Note: Inaction on this is also a decision, when you fail to act on the need and do nothing about it you risk peaking out the business, the quality customer service you are providing and burn out becomes a real concern for both you and those clients you have. No matter how you do things, the day will come when you have to ask, “Am I at that point where the decision to bring someone on board needs to be made?” When you are able to follow the plan you set out, then those decisions will become easier to make.

So You’ve Decided to Hire

You have weighed the options, looked at your criteria and found that you’re ready to hire someone to help you. What else do you need to consider? best way of doing this is to take it from the perspective of the person you’ll hire. First of all, what is the job description? What am I expected to do? What do they need to perform the job? Questions like these will help you to transition smoothly the person you hire into the work flow you’ve already established. Consider and plan for the equipment this person will need to perform his/her duties. Will they need a computer? Will they need a printer? What else would they need?

What training are you going to need to perform with the new hire? Is it the case you hire someone just starting out and has a “clean slate” on how to do accounting and bookkeeping or do you hire someone with previous years of experience? (More on this later in the article.)

The support you will need to provide to your new employee. Not speaking about the health insurance, or 401K benefits - for most of us those things may be further down your Growth Road. What I’m talking about is the communication with the new hire on the accounts, the clientele, the procedures, and the issues of quality assurance so that the customers you have now will not feel the bumps of change within your company.

The Bootstrap Hire Process

More likely than not, when you put out the “For Hire” sign you won’t get former CFO’s and CPA’s knocking down your door for an interview. And frankly, you don’t want someone that demands more money than you to do the job. Because you don’t have many of the fringe benefits more established companies may have to offer, you need to get creative in the hiring process.

For instance, determine the level of experience you need for the position. Can you hire someone brand new to the industry and spend the time in training? Is it a question of getting someone experienced but only on a part time basis to start? When you are creative in the hiring process you’ll be able to find those people, the gems in the rough, that will make the positive effect on your accounting business.

Consider the aging population among us. Many who have done this type of work and have “retired” may be looking for a way to be able to gain that extra money they lost during the busts in their retirement plans. Or perhaps they can fill some time from the front porch rocker in assisting with the duties called for in the accounts you have. Truly, what we are doing is not digging ditches or running marathons, the older among us are a wonderful well-spring to tap for our open position.

Consider the student or the intern. Many universities and colleges are requiring their accounting students to do internships. They are an excellent way to be able to get those tasks done that may fall in the category of minutae, while giving them a worthwhile experience and improving the company’s bottom line. Those who are eager to learn can be the best for a business, so you can train them the right way of doing things in small business accounting.

Consider the disabled, military and their families, stay-at-home-moms, and your own teenagers. With the proper training anyone can be a good bookkeeper. And especially when you consider how much you are able to pay and the time it takes to do the books for each account, maybe a stay-at-home-mom who can dedicate 4 hours a day is the right solution for you.

When you are on a budget, creativity gets the extra “gold star on the forehead”. You need to consider the options of the hiring process and your readiness to bring another person on board. When you have, and its truly time to hire, don’t think the box is rectangular by any means, you can find the solution that best suits you, your accounting business, and the goals and growth you have set for it.

To get more principles on the Accounting business and to get you business set up right, click here to find out more of what’s involved in the Professional Bookkeeper’s Program.