ABC Solutions

Five Expenses to Cut During Tough Times

If revenue hasn’t come back as fast as you expected it to, it may be time to review your budget and determine if some planned expenses can be cut. Here are five places to look to do just that.

1. Travel

Since most events have been moved online or cancelled altogether, you can likely redirect any money you’ve budgeted for travel this year to other more urgent expenses. And if you have prepaid these items, you may be able to get a refund. Hotels have flexible refunds up to the date of the stay unless you took a prepaid deal.  And airlines have begrudgingly provided refunds, although in some cases, it did take time to get them.

Now that so many employees are familiar with Zoom and other videoconferencing tools, you may want to rethink any future travel requirements that could easily be accomplished virtually with a much lower budget.

2. Training

While it’s never a good idea to cut training, there may be ways to deliver it more affordably. You may be able to purchase subscriptions to online courses that include an “all-you-can-eat” component to them.  A good example is Lynda.com, now owned by LinkedIn.

Any unnecessary training that can be delayed is another way to free up funds.

3. Dues and Subscriptions

If money is tight, evaluating your memberships is one area where you may be able to free up money. Especially since many in-person events have been cancelled, this might be a good time cancel any renewals you are not able to fully utilize.

Subscriptions are also something you can review.  Can any of these be cancelled to free up cash?  You can always re-subscribe when things get better.

4. Employee Perks

If you provide your employees with benefits and times are extremely lean, cutting them is an option to keep from laying off workers.  Some of the options might be:

  • Eliminating perks like movie day, free car washes, or onsite chair massages
  • Stopping coverage of paid volunteer hours
  • Cutting education expenses if you are paying college tuition for some employees
  • Cancelling employees’ memberships and subscriptions as described above
  • Slashing training budgets as described above
  • Converting event attendance and sales meetings to online versions
  • Disallowing overtime work
  • Holding off on employee bonuses
  • Reducing vacation or holiday pay
  • Cutting down on health care options such as vision and dental plans
  • Reducing 401(k) matches on a temporary basis (watch out for plan requirements, though)
  • Cutting regular hours

All of these are steps you can take to avoid having to reduce your workforce.

5. Layoffs

One painful place to look for more cash is your workforce. If work has slowed due to demand, you can raise cash by furloughing or laying off workers.  Unfortunately, many businesses have already had to do this.

By looking deeply at all of your business expenses, you can find places to cut spending so that you will be in a better position for the future.

How to Reduce Stress Around Money

Many families and small business owners have seen decreases in income over the last several months. Money struggles can cause us to experience stress and worry, and none of us need that right now. Instead we need to boost our immune systems and decrease stress.

Here are some tips on how we can take back control of our finances and reduce our stress around money.

1. Assess your situation.

Take an inventory of your bank accounts, credit cards, and other financial accounts.  This helps you to see the entire picture. You can be financially healthy in different ways. For example, you might be low on income coming in but if you have healthy savings or plenty of assets, you might be just fine.

2. Track your spending.

When you can see where the money is going, you can make good decisions about what changes you need to make. Use tracking software like Quicken® or simply a spreadsheet so you can see how much you really need for things like the rent or mortgage, food, utilities, and other necessities.

3. Make any changes that you need to.

If you have more expenses than income, here are several ways to get back in balance:

  • Cut any unnecessary spending. For example, trade the expensive $100+ cable bill for a $15 Netflix subscription, at least for a while.
  • File your taxes early, especially if you have a refund coming.
  • Avoid temptation spending if you don’t have enough for the basics. Remember what’s important and find the will to curb impulses.
  • Sell some of the items you own that you no longer need to raise money.
  • Get a second job.
  • Get support from local nonprofits that can help you if you qualify.
  • If you must, dip into your savings or 401(k).
  • Ask family members to help.

4. Build a budget and stick with it.

Making a plan helps some people reduce their stress a great deal. They feel good that they now have goals and can develop new habits that will work for their lifestyle.

In your software or spreadsheet, commit to monthly spending limits for each major category: housing and utilities, food, transportation, clothing, entertainment, savings, paying off debt, and other.

Each month, track how you did by comparing your actual spending with your planned spending.  Give yourself a grade on how you did, and either reward yourself or make the changes you need to.

5. Pay off debt.

If you have debt, make a plan to pay it off systematically.  Here are some ways you can speed that up:

  • Pay down the debt that has the highest interest rates. You might even be able to consolidate and refinance your debt to a lower rate.
  • Make a payment every single month, even if it’s small.
  • See a credit counselor for more ideas on how to get out of debt faster.

6. Build a cushion for the future.

If your spending and income is balanced, but you don’t have a savings cushion, that can also be stressful. You need a safety net to fall back on for times just like these.

Decide on an amount that you can put away for a “rainy day” fund, and stick to it.  It’s also never too early to start saving for your retirement years.  The younger you start, the more your money will grow into a significant nest egg, providing comfort and flexibility in your final years.

7. Identify any other stressors related to money.

Perhaps a relative constantly asks you for money, and this causes you stress. In this case, you may have to make a “tough love” decision to reduce your stress while maintaining family relationships. These are very personal, individual decisions that include factors far beyond finance.  But if they are causing stress, some kind of action should be taken.

8. Make your accounts work for you.

If possible, select credit cards that give cash back, miles, or other perks. Keep you bank balance high enough so that you don’t get charged a monthly fee, and try to get an account that pays interest.  You won’t get rich from these things, but they are fun perks that help you save.

9. Invest wisely so you can sleep at night no matter what happens.

Understand your risk tolerance level when it comes to investments, and avoid investments that are too risky.  You’ll sleep better at night knowing your money is safe.

Hopefully, these tips will help you decrease your money stress and improve your control over your finances.

MSPs: Stay Ahead of the Curve

As the global pandemic brings business and the economy to a grinding halt, you may wonder what steps you can take now to protect your business, your employees, and your customers. CISA.gov lists the Information Technology Sector as one of 16 critical infrastructure sectors needed to stay open and operable during a national crisis. Here are some steps you can take right now to alleviate stress on your business.

Payroll

The IRS outlined provisions for the Families First Coronavirus Response Act (FFCRA). The new law will take effect on April 2, 2020 and remain in effect until December 31, 2020. Here is a quick rundown of the provisions. Consider finding a way in your PSA or payroll system to track COVID-19 related leave separate from normal PTO.
– For COVID-19 reasons, employees receive up to a maximum of 80 hours paid leave
– Employers receive 100% reimbursement for the wages
– Employers face no payroll tax liability
– Self-Employed individuals receive an equivalent credit
– Employers with fewer than 50 employees are eligible for an exemption, but can voluntarily comply. Employers with 50 – 500 employees are mandated to comply within 30 days. Employers with over 500 employees do not qualify for the credit.

Complete details can be found in IR-2020-57 at: https://www.irs.gov/coronavirus. If your employees are forced out of work, please take advantage of this program to keep them paid.

Income Taxes

The IRS has announced the April 15 tax filing date has been moved to July 15, 2020. If your return has been filed and you wish to cancel your automated payment, you can call the IRS e-file Payment Services at 1-888-353-4537. This is an automated service available 24 hours a day, 7 days a week. This relief also includes estimated tax payments for 2020 that are due on April 15. Take advantage of this extra time to save for the tax balance due. Contribute to a SEP or IRA, since those deadlines are extended, too.
For information on your state income tax response, please see this link: https://www.taxadmin.org/state-tax-agencies.

Inventory Purchases

Dust off your crystal ball and peer into the future for this one. There are two possible outcomes that will invoke Economics 101 – Supply and Demand. Hardware and computer supplies may become limited and pricing could return to that of a 1991 personal computer. Therefore, it may be tempting to stock up on computers now when the price is low. However, if the economy continues to sink, you could be left holding those computers with no one to sell them to. It may be a waste of valuable company resources.

Reduce stock and inventory purchases to keep on hand. You may need that cash in the coming weeks. Consider keeping only one or two computers on hand for a quick turnaround. Otherwise, only order equipment that your customers have paid for.

If you are not already doing this, immediately implement a policy in your company to collect on all hardware invoices prior to ordering. Now is not the time to extend credit needlessly. You will only harm yourself by charging the purchase to a credit card and paying interest on those charges if your customer slow-pays the invoice. If they want to slow-pay the invoice, they can slow-wait for the hardware.

The End of AYCE Managed Services

For those working around the clock to get your customers’ employees set up to work remotely from home, this is for you. You may have an all-you-can-eat managed service agreement that covers everything, and you may struggle with whether you should charge your customers for this extra work that no one saw coming.

The answer is, “Yes! Absolutely charge them.” These are new installations, new connections, and far outside the normal course of your managed services agreement. To be expected to connect 100 remote workers in 48 hours for free is unreasonable.

Explain to your customers how securing remote connections and the home offices of their employees is time-consuming and you want to devote all the resources possible to getting it right. This cannot be done for free. Offer to spread the cost over future months if it will help the customers, but remind them that you are still required to pay your people overtime for working to keep them safe and operational.

We already knew that the all-you-can-eat concept is going out of style. This pandemic may pave the way for AYCE to go the way of the leisure suit.

Check Your Subscriptions

You should do this on a regular basis anyway. Review the subscriptions you purchase and make sure you have a customer being invoiced for it. Often, we switch subscriptions like AV or security and fail to cancel the old vendor when the new one is implemented. Check each vendor to ensure you have a legitimate reason for sending them money each month. Are the bills accurate? Do you have any services you can consolidate for a lower monthly cost?

Stay Connected with your Financials

With so many other things needing our attention, it is easy to let your accounting system go. Don’t do it. If there is a problem with profits, you want to know that now, not later. Stay on top of the accounting reports, financial metrics, and any slump in revenue. Any changes should be scrutinized and corrected as quickly as possible.

Money and Marriage

One of the biggest things that can cause fights in a marriage is money. No matter where you are in a relationship, it’s a good idea to discuss these major money topics so you’ll know where you stand. 

Show me the money:  Combine or keep separate or both

One of the best ways to avoid conflict is to put your money into three separate piles: yours, your spouse’s, and a joint set of accounts. In this arrangement, each of you has control over some money that is all your own. The household spending will then come out of the joint account, and you both will make contributions to it on a regular basis. 

As a couple, you’ll need to discuss who will pay for what as well as what your regular contribution will be to the joint account. This is no small discussion. The more thorough you are, the less conflict you’ll have over money.

One spouse or partner will normally handle the joint finances, and it’s typically the person with the most accounting knowledge. However, you both should have access to this account in case of emergency. 

Savings and future purchase goals

Do you have goals about upcoming large purchases?  These might include:

  • A home purchase or improvement
  • Children’s education
  • Health care needs
  • Saving for retirement
  • A car purchase
  • A second home purchase
  • A vacation
  • Another item such as a boat, furniture, technology gadgets, a plane, or something else
  • A nest egg or cushion

If so, calculate how much you need and make a plan to set aside the money you need in the time frame you agree on. 

Spending

Do you like to spend more than your spouse? Or is it the other way around? When money is flowing, there is usually no problem. When money is tight, that’s when the problems come in. 

When there are conflicts in the area of spending, the best course is to focus on priorities. If you can agree on your priorities and goals, it can often shift spending habits.  

Budget

You may want to set a budget to stick as close as possible to expected spending limits. Start by recording current spending in these areas, and then agree on the amounts you want to spend in the future. 

  • Rent or mortgage payment
  • Utilities, including electric, gas, water, garbage, phone, internet, cable
  • Food and supplies, including grocery, kitchen items, liquor, and eating out
  • Entertainment, including travel, vacations, local events, holiday decorations, Netflix subscriptions, tech gadgets, books, etc.
  • House maintenance including repairs, cleaning, lawn care, appliances, and decorating
  • Automobile, including gas, insurance, licenses, and maintenance
  • Clothing and accessories, including dry cleaning
  • Health care, including pharmacy, doctor’s visit, and HSA contributions
  • Personal care, such as haircuts, nail care, etc.
  • Tuition and/or education expenses
  • Contribution to retirement and savings accounts
  • Charitable contributions
  • Taxes, including federal, state, local, school, and property
  • Paying down credit card or student loan debt

Retirement

What does retirement look like to both of you? Having this conversation will be enlightening. Know that dreams and goals can change over time as retirement approaches.

You’ll want to have an idea about what you’d like to spend during your final years so that you can make plans to start accumulating that wealth now. The sooner you start, the more years you have to build up your retirement assets. 

Monitoring your progress

Keep an eye on your account balances to make sure everything is as it should be. Review bank and brokerage account statements and/or your budget once a month or at least once a quarter so there are no surprises or trends that sneak up on you.  

When you reach your goals, reward yourself. Managing money is hard work, and you deserve to pat yourself on the back when a goal is achieved. If there is anything we can do to help you make your financial dreams come true, please reach out any time.  

Five Tips to Get Ready for a Pain-Free Tax Time

With the holiday season just around the corner, it’s a perfect time to get your financial records in order.  Tax moves you make now can mean finding more “green” to spend on family gifts and festivities.  Here are five quick tips for you to feel more prepared about your financial status as you go into year-end.

Avoid Penalties

This time of year is ideal to double-check your tax payments to make sure enough has been paid in, and even more important, to avoid overpaying so your money is not tied up unnecessarily. If you’re not sure of your 2013 tax liability, check with your tax preparer.

Balanced Books

Rather than wait until the busiest time of year for accountants and bookkeepers, you can get a head start now on catching up your books  You’ll have more of their attention and you may even avoid a rate increase if you get your books done early.  Completed bank reconciliations are a very important part of catching up.

Forms

It’s not too early to get your orders in for the forms you need at year-end like your W-2s, W-3s, 1099s, and 1096s.  That way, your forms will be onsite when you’re ready.

Records

Information that’s missing at the last minute can take up extra time and be costly.  It’s a great idea to do an audit now of W-9s to grab missing addresses and tax ID numbers of your contractors.  Also do a scrub of your employee payroll records so that your W-2s will be complete and accurate.

New Tax Changes

Be sure to check with your advisors on new laws affecting individuals and businesses next year.  One of the biggest ones making news is avoiding the fine involved regarding the new health care requirements for individuals.  And there are many more you’ll want to get up to speed on so that you’ll know how they affect your situation.

We know it’s early to be talking about taxes, but we’re also all about saving you money and time.  Try these five tips so you’ll have better peace of mind and be more prepared for year-end.