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June

Five Common Sense Time Management Mistakes in Project Accounting — and Tips to Avoid Them
By Curt Finch

Chances are you’re quite familiar with project accounting, and you understand how financial reports that track the financial progress of projects can be used by managers to aid project management. Project accounting gives businesses insight into the comparative value of current and past projects, as well as the projected value for future endeavors. However, if project accounting is approached primarily from the top down, these estimates may be flawed. Project knowledge must be granular, and individual team members should contribute and review that information on a per-person basis to determine its accuracy.

Unfortunately, it is often the case that businesses implementing a project accounting system, even if done with the goal of tracking individual time and resources to projects, might run into a snag: team members just do not have the time, desire, or know-how to accurately account for activities and expenditures. This doesn’t mean they’re lazy. In fact, the most productive team members may be the worst at documenting their activities since they might view any time not spent actively completing the project as wasted time.

Project Accounting’s Five Most Common Mistakes

Following are the top five most common mistakes made in project accounting, and the best ways to make sure you avoid them and stay on track.

1. “Tracking time is a waste of time.” Unlike many decades ago when traditional manufacturing and farming were the predominant industries and employers, most of us today are knowledge workers, dealing in numbers and information. Whereas in the past, profitability could be measured by comparing the cost of individual components with the profit of that completed product, now the profitability that knowledge workers provide is their knowledge and expertise. Therefore, time itself becomes a critical piece of data to measure. It is necessary to know the relative worth of your people’s time, as well as their expenditure of that resource, to get a clear insight into costs relative to budget.

Further, it is important to know where exactly a project stands in relation to the approved schedule. If, for instance, it is determined that a project has used 80 percent of its resources but is only 50 percent complete, a reevaluation of resource distribution is in order. To enable this level of control, project team members should track time and resources by individual project. This will highlight larger trends and enable micro-corrections to be made as necessary.

2. “Any system will do the trick.” One of the biggest benefits of tracking time to projects is the backlog of specific data that it provides. Project managers can review previous information on both successful projects and those that failed to make accurate forecasts for future projects. A poorly configured system can cause significant problems if data is lost or misapplied.

If it is difficult to enter data, the system will not be successful. Employees may submit simplistic, incomplete information just to be done with it. Time data has to be easy to enter, retrieve and view. When selecting a system, look for ones that allow anytime, anywhere entry screens so employees can always access information. Also, check the reporting capabilities of potential software. These reports should be easily understandable and available to any authorized individual in an organization so information can be shared.

3. “That doesn’t count.” The old Boy Scout motto of “Be Prepared” applies perfectly to project accounting. It is necessary to have insight into both what is and is not happening. There will be times when unforeseen expenses arise. A time management system can help mitigate these surprises. If a system allows employees to schedule vacations in advance, then it will be no surprise when a key resource takes two weeks off in the middle of a project to go out of town. If no one realized the vacation was coming up, it could jeopardize the completion of a project. You need to see all expenses relative to the budget, even if they are not directly related to the project itself. These can include travel expenses, facilities maintenance, and even meals provided to a hard-working team that has to stay late.

4. “I’m sure they’ll figure it out.” There is a fine line between complexity and simplicity with any software. Too simple, the data won’t be of much use. Too complex, users will have difficulty inputting or interpreting it. That’s why it is important to make the system simple on the front-end, yet robust internally.

An automated system that accounts for the human element will greatly enhance the availability and value of time data. Issuing daily or weekly reminders for data entry safeguards against common errors, and will reduce the time necessary to “clean” project data. It will also provide insight into ongoing projects. Determine who should approve the data and then make sure that the time sheet gets filled out every time by using built-in system reminders. By automating these tasks, you will save time and ensure the quality and consistency of time data.

5. “We’re all set for the next decade.” Employees should be able to see the benefit of spending extra time entering analytic data. There is nothing more frustrating to knowledge workers than feeling like their time is wasted on unnecessary bureaucratic actions that are initially extolled by higher-ups but later abandoned — simply becoming a pointless recurring action. Failure to review and act on data totally undermines the rationale behind implementing a time-tracking system in the first place.

Without consistent application of time data to business operations, a company will leak money and resources unnecessarily. Keep your system up to date and closely monitored so actionable metrics are only a click away. When possible, discuss relevant data used to make decisions with employees so that they will understand the rationale behind any “game-changing” decisions from the top.

About the Author
Curt Finch is the CEO of Journyx, a provider of Web-based software, located in Austin, Texas. The software automates billing, payroll and project management by tracking time, expenses and mileage, and enables customers to invest their time and resources intelligently to achieve per-person, per-project profitability. Curt can be reached at curt@journyx.com.

 

 

 

Seven Dos and Don’ts for Projecting Instant Credibility
Cara Hale Alter

You’ve got smarts and skills in spades, and you’re brimming with potential. Still, in a high-speed, hypercompetitive business world, you have little time to make a big impression. You have to project credibility in an instant or risk being overlooked or rejected.

Today your credentials may get you in the door. Yet, to really succeed, you’ve got to look credible when it matters most: in face-to-face interactions. Whether you’re meeting one-to-one or presenting to a packed audience, your credibility is immediately being assessed.

But what does credibility look like? And, more important, why do some smart, capable people project credibility, and others—who are just as smart and capable—don’t?

In studying this phenomenon with thousands of clients, I’ve identified 25 specific visual and auditory cues—explicit “codes of conduct” for posture, gestures, vocal skills, and eye contact—that affect the perception of credibility. And unlike countless other cues, such as gender, age, or physical features, these 25 cues are within your active control. What’s more, small changes can make a big difference.


Seven Dos and Don’ts
 

To get started, consider the following:

1. Do keep your head level. In the dog world, renowned trainer Cesar Millan has exceptional “executive presence.” Dogs recognize his alpha status by the way he carries himself. In the business world, one of the best ways to project such presence is to keep your head level when speaking — no raising or dropping your chin, which can appear aggressive or submissive. The power of this one skill—to literally be levelheaded—can be transformative.  Fast Tip: Lengthen your spine and level your head. Now, moving only your head, like a camera on a tripod, scan your environment while keeping your torso still. Stillness is an authoritative behavior, so try not to let your shoulders twist with the movement of your head.

2. Do keep your hands in the gesture box. In poker parlance, a “tell” is a subtle signal revealing the strength or weakness of a player’s hand. Similarly, in meetings or presentations, your gestures alone can be telling to others. The most effective hand gestures happen inside the “gesture box” — no higher than your sternum, no lower than your hips, and no wider than your shoulders. The sweet spot is your navel, where gestures tend to look the most natural.  Fast Tip: A common tell of self-consciousness is when your mouth is engaged but your body language isn’t. To appear comfortable, get your hands involved immediately, reaching out to your listeners with interactive gestures. In short, if your mouth is moving … so are your gestures.

3. Do speak with optimal volume. If you’re a Seinfeld fan, you surely remember the infamous “low talker.” Likewise, in business settings, a common problem with volume is speaking too softly or dropping volume at the end of sentences. The good news is that volume is the easiest vocal skill to adjust. First, however, you must know the difference between adequate volume and optimal volume. Most people err on the side of merely adequate. If you want to be a powerful voice, speak with a powerful voice.  Fast Tip: Your diaphragm, the small muscle separating your chest and abdominal cavity, is your engine for volume. Strengthen this muscle with five minutes of isolated exercises a day. One such exercise: Say the days of the week in a single breath, drawing out the vowels to prevent your diaphragm from resting between words. Later, move on to the months of the year.

4. Do hold eye contact for three to five seconds. “Eye contact is the best accessory,” says writer Takayuki Ikkaku. It is also a key indicator of confidence and credibility. Still, there is a difference between making eye contact and holding eye contact. Duration is critical, and in the Western world, holding eye contact for three to five seconds is considered optimal.  Fast Tip: As you converse with coworkers, try speaking one phrase to one person. Then, when you reach a natural pause, speak the next phrase to someone else. Continue in this way, letting the structure of your sentences guide your rhythm. You may look away momentarily, but keep your eyes on the horizon—no looking up or down—and each time you come back, hold eye contact for three to five seconds.

5. Don’t use speech fillers. Speech fillers are superfluous sounds or words, like “um” and “you know.” Today, such fillers are pervasive in our culture, including the business world. A smart, young technology CEO recently said to his team, “So, I actually sort of passionately believe that we have an opportunity to, uh, you know, sort of really take this platform to a new level. So we just kind of, uh, need to jump in, you know, with full force.” He wanted to fire up his people, but his fillers extinguished his passion.  Fast Tip: Embrace the tactical pause. Instead of interjecting fillers, simply pause while your mind searches for the next word.

6. Don’t make extraneous movements. Extraneous movements—such as jiggling your knee, bobbing your head, or shifting your weight—weaken your personal power. You might say, “I can’t help myself. I just can’t be still.” Truth is, excessive fidgeting is a self-comforting behavior. Stillness sends a message that you’re calm and confident.  Fast Tip: Test your ability to literally have a level head. Fold a thick pair of socks and balance it on your head. Try talking for several minutes without losing the socks.

7. Don’t make yourself smaller. If you’re like most people, when you feel intimidated, you make yourself smaller so as to avoid being an easy target. You might place your feet closer together, tuck your arms to your sides, dip your chin, or pull back on your volume. Any or all of these behaviors say, “I feel threatened.”   Fast Tip: Practice optimal standing posture throughout the day, not just in important situations, to help make it habitual. Balance your weight over your feet, lengthen your spine, and elongate your neck.


About the Author
Cara Hale Alter is president of SpeechSkills, a San Francisco–based communication training company, and author of The Credibility Code: How to Project Confidence and Competence When It Matters Most (Meritus, 2012). For more information, visit thecredibilitycode.com.

 

 

 

The Payoff in Customer Service
By Dr. Alan Zimmerman

 

Where’s the beef?

Almost 30 years ago, Wendy’s devised one of the most memorable commercials of all time. It featured several old ladies in a hamburger shop examining the hamburgers they had just purchased. When they opened the bun, the burger was so miniscule that they cried out, “Where’s the beef?”

In essence, they were saying there was nothing to be found in the hamburgers sold by Wendy’s competitors. In a similar sense, there are some people who say there’s nothing to be found in the hoopla surrounding customer service. In other words, customer service is nice in theory, but it doesn’t pay off. And if it doesn’t pay off, why bother?

 

The Financial Payoff in Great Service

Back in 2009, Petouhoff, Leaver, and Magarie answered that very question when they released their research findings in “The Economic Necessity of Customer Service.” They concluded, “Customer service experiences either generate or diminish company revenue.” In other words, customer service is not a neutral factor in your business. It either makes you money or costs you money.

They went on to say, “Customer service has a profound effect on a corporation’s bottom line.” How can that be? A simple formula says it all: Great Service = Customer Retention = Profits. A Harvard Business Review article found that companies that boosted their customer retention by as little as five percent saw increases in their profits ranging from 25 percent to a whopping 95 percent. 

But the reverse is also true: Poor Service = Lost Customers = Lost Profits. A US News and World Report article stated that the average American business loses 15 percent of its customer base annually. And 68 percent of the customers who stop doing business with a company do so because of “poor or indifferent customer service” and another 14 percent because of an “unsatisfactorily resolved dispute or complaint.”

The most shocking discovery is that only nine percent of customers stop doing business with a company because of price. Indeed, price may be one of the least of your worries when it comes to keeping customers. You need to be more concerned with the total 82 percent that stop doing business with you because of a customer-service related issue.


The Financial Cost of Poor Service

If you’re still not convinced that good customer service pays off big time, then consider this: Bad service costs you big time. In a groundbreaking study, the Genesys organization conducted one of the first global surveys on customer service. In their research findings called “The Cost of Poor Customer Service,” Genesys concluded that 16 countries they studied lost $338.5 billion annually due to customer defections as a direct result of poor service.

Of course, the cynics can say, “Big deal. So we lose a customer once in a while. You can’t please everyone.” True enough. But it’s a much bigger deal than you might think … because that defecting, disgruntled customer will hurt your future business.

After all, that one unhappy customer doesn’t just shut up and slink away. Consider the word-of-mouth dynamic: It’s quite well known that an unhappy customer will tell 10 other people face to face about his bad experience with your company … and another 100 people on Facebook and Twitter. And chances are they won’t buy from you either.

If you give your customers poor service, it’s going to cost you financially in lost sales, lost customers, and lost future customers.


A Few Ways to Retain Customers and Profitability

To retain your customers and boost your profitability, you must have quality products and services. That’s a given. But in today’s marketplace, that’s not enough. As Pine and Gilmore make clear in “The Experience Economy,” you must also give your customers a memorable experience. You must give them something to talk about as well as an extra reason to come back.

Over the years, I’ve learned that customers who experience three of the five following emotions when doing business with you will become your enthusiastic ambassadors. You need to make them feel—

  1. Welcome. Let them know you’re glad to see them and welcome the chance to work with them.
  2. Comfortable. Give them the assurance that their needs will be met.
  3. Understood. Listen to the meaning of their words as well as the feeling behind their words.
  4. Important. Show respect. Make them feel like an individual rather than a number.
  5. Appreciated. Show appreciation for the individual as well as his or her business.

    My recommendation? Sit down with your team and brainstorm 15 specific ways you can make your customers feel welcome. And then brainstorm another 15 ways you can make them feel comfortable, and so on. Publish the list. Give everyone a copy. And look at it daily to make sure you’re doing exactly that.

When customer service is done well, everybody wins. The service provider feels good about his or her ability to make a difference. The customer feels good about his or her needs being met. And the company feels good about its extra nice financial payoff.

About the Author
Dr. Alan Zimmerman, the best-selling author and developer of The Journey to the Extraordinary program, outlines the 12 steps you must take if you want outrageous success on an off the job. He has spoken in 48 states and 22 countries on how to lead others through change. His keynote and seminar presentations empower people and organizations to be peak performers all the time no matter what. Interested readers may contact him at alan@drzimmerman.com.

 

 

 

What Kind of Listener Are You?
By Robert L. Finder, Jr.

Everyone needs a financial professional who listens and who offers an explanation for what’s happening that makes sense to them. Being a good listener shows you truly care and is vital to relationship building. But what kind of listener are you?

Are you a “non-starter”? Do you pretend to be interested in what the person has to say, but you never quite seem to allow him or her to tell you because your lead-ins morph into self-promotional presentations?

Are you a “fact-finder”? Do you capture vast amounts of factual information and data, especially anything relating to the number and type of accounts, account values, and performance, but avoid topics that are more subjective or emotional?

Are you an “iceberg listener,” on watch for the first signs of a problem you’re able to address to the exclusion of other problems (or opportunities) that you leave unexposed?

Are you the “judge,” agreeing or disagreeing with your clients, and if you disagree, setting them straight?

Are you a “pretender”? You try to listen to you clients, but you’re just not that into them. Your approach is mechanical. It feels forced. You find yourself wandering at times. Thinking about ways to speed things along; thinking about what to ask next; and thinking when will this end. Pretenders aren’t very comfortable listeners, and their clients can tell, but they won’t say anything.

There may be some of each of these listening types in all financial professionals, but self-awareness helps you control these tendencies. It’s far more effective to be a fully engaged, patient, and respectful listener. And that’s what your clients want, too. Imagine that you’re the client. How does it feel to be talked at or lectured to, unable to get a word in edge-wise? All you want is someone to help you if only they would stop and listen to your ideas, to take you seriously, and to demonstrate that what you tell them matters.

Listening can get pretty “touchy-feely.” And let’s face it, listening is a lot harder than it seems. But, if you’re still not convinced that listening to your clients is critical, how often have your clients told you that you listen to them “too much”?

In fact, if you’re a good listener, you may be the only person they can talk to and confide in. All you have to do is ask and then encourage them to “Please tell me more.” These four simple words will do more to reveal important and relevant information about your clients than anything else you can do or say. You can repeat it a dozen times and you know what will happen?

Sure, you say, “The client will stop and ask me if something’s wrong — thinking maybe I’m stupid or something. Why do you keep repeating that silly phrase?”

Wrong.

That will never happen. If you’re sincere, your clients never even think about it because they will be so appreciative of the interest you’re demonstrating, the respect you’re giving them, and the self-restraint you’re exercising, unlike all the others they’ve encountered throughout their lives. They’ll simply keep telling you more.

Try this approach. Try it on your spouse, partner, or your kids. Try it on your colleagues and associates, friends and casual acquaintances. Try it on your doctor. And then, try it on your clients.

About the Author
Robert Finder, Jr. is a St. Louis-based managing director for a national financial services firm, where he works closely with leading financial professionals to develop wealth management solutions for high net worth individuals, institutions, foundations, and retirement funds. He is also the author of The Financial Professionals Guide to Communication. Robert can be reached at bobfinder13@gmail.com.

 

 

 

Six Steps to Dealing With Anger in a High-Pressure Job
By Jude Bijou

Does your job require an impossible number of tasks to be completed by unreasonable deadlines? Or perhaps you have a perfectionist, controlling boss who micromanages everything you do. These are examples of high-pressure jobs. Whether it's fast-paced work, difficult work, too much work, or a stressful office populated by difficult personalities, many of us have jobs that leave us feeling frustrated, resentful, and angry.

At its extreme, job-related anger can lead to workplace violence, which ranks among the top four causes of death in workplaces during the past 15 years, according to the Bureau of Labor Statistics. More than 3,000 people die from workplace homicide annually, and more than 15,000 workers a year suffer nonfatal injuries as a result of workplace violence.

What do you do when you're so angry that you have the urge to break something, yell at someone, or worst of all, strike out? Here are six approaches that will help.

  1. Recognize that anger is a physical state.

Realize that frustration means anger, and anger is just a pure physical sensation. You can literally work anger out of your body like a masseuse works a kink out of your muscles. You need to move that energy out—physically and constructively—to a safe place. Do it where nothing of value is harmed—including yourself—and no one is around to inhibit you.

  1. Feel how the anger affects your body.

Look for anger's physical clues: ears getting hot, face flushing, chest pounding, rage moving up your spine, sudden sweating, muscles tensing, and a feeling as if you're about explode. This is good! Once you can identify the feeling as physical, it's not difficult to move the energy up and out of your body.

  1. Get yourself to the nearest private bathroom.

When you're ready to lose it, instead of biting your co-worker's head off or throwing verbal darts at your boss and losing your job, excuse yourself to a private bathroom and lock the door. To release anger from your body, push against a wall as hard as you can. Or grab the bathroom stall door and shake it on its hinges as if you were going to break it off the foundation. Or jump up and down, stomping your feet and shaking your fists.

  1. Let the tears flow.

It's not uncommon for people to feel the urge to cry when releasing anger from their bodies. If you feel like crying, allow the tears to flow. According to Minnesota research scientist William Frey, crying can help to wash chemicals that trigger the stress hormone cortisol out of our bodies. This is one of the reasons we feel much better after a good cry.

  1. Purge the rest of your anger at home.

When you get home, pound a mattress with your fists, hit a tree with a rolled up newspaper, scream into a pillow, growl, or hit old telephone books with a flexible hose. After all this physical activity, your face will be relaxed and you'll sleep very soundly. Watch how good you feel the next day when it's time for work.

  1. Reprogram your thought patterns.

A side effect of workplace anger is blame or feeling victimized. Interrupt destructive thinking about how people and things should be and accept what is. You can change your thought patterns the same way you memorized the times tables as a kid through repetition. Repeat out loud: "People and things are the way they are, not the way I want them to be." Say it and think it hundreds of times, until it's absolutely automatic. It's a powerful phrase to use before work, throughout the day in your high-pressure job, or just in general.

The results? Expressing the emotional energy and focusing on acceptance dissipates anger and restores balance. You'll feel more centered and loving. Your thinking will be clearer. And you'll be able to calmly accept what is, or be able to say or do what you need to in order to resolve the situation.

About the Author
Jude Bijou, MA, MFT, is a psychotherapist, professional educator, and workshop leader. Her theory of Attitude Reconstruction® evolved over the course of more than 30 years working with clients as a licensed marriage and family therapist. She is also the author of the award-winning book, Attitude Reconstruction: A Blueprint for Building a Better Life. Interested readers may also visit attitudereconstruction.com/.

 

 

 

Everyone Has Gone Home
By Doug Williamson

Everyone has gone home—more than once—at the end of a long, hectic, frustrating day wondering exactly what they accomplished during their eight hours at the office. Endless meetings, mind-numbing PowerPoint presentations, inconveniently timed phone interruptions and of course, way too many e-mails. There has to be a better way!

The challenge we all face is figuring out how to rescue our individual sanity and improve our collective productivity. The fact is most offices are simply not efficient because most people are not efficient. However, contrary to popular belief, it's not a matter of how well organized we are. This is not another lean Six Sigma project, findings ways to streamline the processes. No, this it is a matter of choices, practices and disciplines to improve our mental acuity — the net result of which will be greater efficiency.

Here are some ideas that have worked well for me over the years and may be helpful for you as well. As you will see, these 10 ideas fall into three broad categories and it's all about getting the balance right.

 

How to Maintain Smart Discipline

Develop a strict time budget and stick to it. Decide how you want to spend your time and then track it relentlessly until you get it right. Make tough choices. Don't allow random events to make you a prisoner of someone else's agenda.

Schedule internal meetings only in the mornings between 9am and 11am. Your team needs guidance to stay on course and remain efficient. Give it to them early in the day, in small doses as a group — like a huddle. Standing is even better. Don't waste their time and yours with impromptu end-of-day meetings that typically add confusion and raise anxiety levels.

Label your meetings ahead of time. Not all meetings are created the same. Some matter more than others. Some are for decision making, others for information sharing, and others for administrative updates. Be respectful, let people know what the expectation of the meeting is and don't confuse one thing with another.

Ruthlessly organize and categorize your personal priorities. There are some great web-based tools out there for tracking your various priorities and tasks. I use Priority Matrix and find it invaluable in ensuring I remain focused.


How to Eliminate Noise and Distraction

Don't keep piles of paper on your desk. The endless piles of paper are not only distracting but they create a subliminal level of stress that is totally avoidable. Your desk is a working space, not a storage system.

Ignore reading e-mails where you are not the primary addressee. If the e-mail is not addressed to you then ignore it. Most of these particularly wasteful types of e-mails are either intended to show artificial self importance by the author or are the plain “CYA” variety. In either case, you have more important things to accomplish with your time.

Read your e-mails only during set time periods. Whether on your mobile device or desktop, the constant scanning of the In-box is a habit you can and must break. In the process, you will allow your mind to get in a groove rather than having it wander aimlessly from one issue to another.


How to Decompress

Work from home one day every two weeks. We all need a mental break and a solid block of time to address the top tier — the more thoughtful and contemplative work we all have. You will find this type of work is often best done when you change things up, put yourself in a different atmosphere and maybe even work in your pajamas.

Block off your Friday afternoons for unscheduled time. Use the end of the week to sort out any loose ends. Allow yourself a 3-4 hour buffer at the end of the week so you can reflect, tidy up and go into the weekend with your mind at ease, knowing that all the little, annoying loose ends have been attended to.

Coach, teach, talk and connect. Consider giving yourself an adrenaline boost by using some of your unscheduled Friday time to connect with people — to coach, teach or talk. Engage in some good old-fashioned relationship management to provide a sense of personal accomplishment.

Whatever you do, avoid the tempting embrace of being seduced by sweat. Instead, fall in love with the idea of working smarter.
 

About the Author
Doug Williamson is president and CEO of The Beacon Group, a Toronto-based firm that specializes in organizational transformation and effectiveness programs, as well as talent identification and leadership development. To learn more about Doug, contact him at douglasw@thebeacongroup.ca. You may also visit his website at www.dougwilliamson.ca.

 

 

 

Forsaking Multi-tasking for Your Own Good
By Jeff Davidson

     When you attempt to do two or more things at one time, you are multi-tasking and, unfortunately, you’re more likely to do unsatisfactory work.
Researchers at the Medical College of Wisconsin have found that if you perform as simple a task as tapping your foot, you activate the primary motor cortex in your brain. If your task is more involved—for instance, if it includes planning in order to tap your foot to a sequence such as one-two, one-two-three, one-two, one-two-three—then two secondary motor areas in the front portion of the brain are engaged. You are drawing upon more of your brain's functioning capacity.

Don't worry, your brain can handle it. The point is that when you engage in multi-tasking (i.e., attempting to watch TV while eating, or doodling while you talk on the telephone) your brain functioning changes to incorporate the extra activities.

    "Men give me some credit for genius. All the genius I have lies in this: When I have a subject at hand I study it profoundly. Day and night it is before me. I explore it in all its bearings. My mind becomes pervaded with it. Then the effort which I have made is what people are pleased to call the fruit of genius. It is instead the fruit of labor and thought."

Alexander Hamilton

If you want to do the best at whatever you're doing, allow your brain to concentrate on one activity — focus on one thing at a time. It sounds simple enough, but this advice goes against the grain of a society telling you do many things at once in order to be more efficient. People double their activities in an effort to make things easier and better.


What is Your Hurry?

Consider some of the greatest people in history, such as Gandhi or Martin Luther King. Were they in a hurry? They acted urgently because the things they did were important, but they did not walk faster, talk faster, or try to do any of the things you do today in the name of efficiency. They had mastered the art of doing one thing at a time. I sometimes do a little exercise when speaking at conventions and executive retreats. I ask audience members to take out their watches and do nothing but stare at them for a solid minute. No one can do it! In this society, we're fed a message that emphasizes the importance of motion and activity.

When you read, think, or reflect, you "don't look busy" enough. Has the following ever happened to you? Somebody walks by your desk and, horror of horrors, you're reading! Worse yet, you're reading the newspaper! Maybe the person looks at you a little funny, or perhaps you feel a bit guilty because you're not "in motion." Yet studies show that people in executive positions need to read two to four hours each day. To be as productive as you need to be, you often act in ways that run counter to what society tells you is "productive activity."

You have to break out of the mindset imposed by others. Sometimes the best way to be productive is to sit at your desk and do nothing — at least nothing that looks like anything to people walking by. Reading or looking out the window in contemplation could be the single most important and productive thing you do in a day. Too often, you probably throw your time away at tasks when what you really need to do is reflect on them first.

The single best way to cope with a number of different projects is to begin working on one thing until its completion, then go on to the next project, and then the next, until you are finished.


Focus on Just One Task

What happens when you jump between different projects? It may feel dynamic — after all, you're exerting lots of energy. Yet there's a loss of productivity. You and a friend can test this easily at your desk or table. Decide on any three minor tasks in which the two of you can engage simultaneously. For example, one task could be stacking pennies, another could be drawing 15 stars on a blank sheet of paper, and yet another could be linking paper clips together. You each have the same number of items.

You and your friend both engage in these tasks. You stack a few pennies at a time, make a few stars on a blank piece of paper, and link some paper clips, indiscriminately alternating between the three tasks.

Meanwhile, on the other side of the table, your friend stacks an equal number of pennies to completion until he has no more. Then he turns to making stars on a page, and reaches 15. Finally he turns to linking paper clips, and finishes linking all of them.

Who do you think will not only finish faster and easier, but be in better shape mentally and emotionally? Without question, your friend. Why? He was able to focus on the task at hand, take it to completion, then turn to the next one, while you were bouncing back and forth between activities. You may have been more prone to errors, such as knocking over one of your stacks of pennies. Though you handled the situation well and were quite adept, you simply couldn't keep pace. The quality of your work was not as good. Perhaps your work was not as precise, or the 15 stars you drew on the page left a little to be desired in terms of artistic merit.

Multiply what happens in a simple test such as this by what happens all day and all year long when you flip-flop between activities, and it's easy to understand why you're not getting the best of your activities. Mentally switching from task to task is not as productive as staying on one job until completion.


Give Yourself a Break

For today, give yourself the benefit of working on one thing at a time. You may have to switch gears when the boss comes in, when that important phone call comes through, or if you receive an e-mail that has to be acted on right away. When you switch gears, switch them entirely. Give your complete and undivided attention to the pressing issue at hand. This is the most effective way to work, and you will be happy.

  If you notice yourself falling into patterns that resemble multi-tasking, try these solutions:
• Take a 15-minute break once during the morning, and once in the afternoon.
• Don't eat at your desk; get away so that you can recharge your battery.
• Invest in equipment or technology that offers you a significant return, (i.e., pays for itself within one year or less, or saves at least two hours a week of your time).
• Hold regular meetings with your team to discuss how everyone can be more efficient – without multi-tasking. Focus on the big picture of what everyone is trying to accomplish. Often, new solutions to problems will emerge and activities that seem urgent can be viewed from a broader prospective.
• Furnish your offices with plants, pictures, art, or decorations that inspire creativity. 

About the Author
Jeff Davidson, CMC, MBA, is The Work-Life Balance Expert®. A speaker at many large companies, Jeff believes that career professionals today in all industries have a responsibility to achieve their own sense of work-life balance. He supports this quest through his websites www.BreathingSpace.com and www.Work-LifeBalance.net. Jeff can be reached at jeff@breathingspace.com
 

 

6 Money Rules You Can Break

For most people, following basic money rules makes sense. But like everything else in life, there are situations when following tried-and-true advice might not work. Our professionals weigh in on when to consider the exceptions.

Rule No. 1: Pay off debt and build an emergency fund before saving for retirement.

Saving enough money to pay three to six months of living expenses will lessen the chances you'll have to sell assets or go into debt in case of an unexpected big-ticket expense or job loss. J.J. Montanaro, a CERTIFIED FINANCIAL PLANNER™ practitioner at USAA, says building this emergency fund — in something safe and liquid, such as a savings account — should be a top priority, along with paying down any high-interest consumer debt.

When to break it: If your debt is of the low-rate, tax-reducing variety, such as a mortgage or student loans, and your retirement plan at work offers a match, you might be better off contributing enough to receive the full company match before focusing on building your emergency fund and eliminating debt, says Montanaro.

Remember that contributions to a traditional employer-sponsored retirement account, such as a 401(k) or Thrift Savings Plan, may reduce your tax bill. Add the money from your employer match, and you've got a hard-to-beat combination. If you don't participate in these plans, you could be missing out on valuable benefits and tax savings.

Rule No. 2: Save up to 10% of your income.

Contributing at least $1 to your savings (or 401(k) or TSP) for every $10 you earn — or 10% — is an old rule of thumb. And it's certainly better than the current national savings rate.

When to break it: If you didn't begin saving for retirement until you were in your 30s or older, it may take more effort to achieve your retirement goal.

"A late start means you’ve probably got ground to make up, and 10% is probably not enough to close the gap," Montanaro says. To find out how much you need to save to meet your financial goals, use USAA's online calculators.

Rule No. 3: Always max out your employer-sponsored account.

If you need to increase your retirement savings and are not already contributing the maximum amount allowed to your 401(k), a reasonable reaction is to immediately boost your contribution rate.

When to break it: To create a better tax-management plan, you may need to look beyond your employer's plan.

"If you don't have a Roth 401(k) available, you may be better off contributing just enough to take full advantage of a match (if your employer offers one), but then sending additional savings to a Roth IRA, if you're eligible," says Scott Halliwell, a CERTIFIED FINANCIAL PLANNER™ practitioner at USAA. A Roth contribution won't lower your tax bill today, but the possibility of qualified, tax-free withdrawals during retirement is a benefit.

"You'll likely have control over future income tax bills by having money in pretax and Roth accounts," adds Halliwell. What if your income exceeds the IRS limit for making Roth IRA contributions? Consider opening an after-tax traditional IRA and converting it to a Roth. Since 2010, income is no longer a factor in Roth IRA conversion eligibility. Conversions from a traditional IRA to a Roth are subject to ordinary income taxes. Please consult with a tax advisor regarding your particular situation.

Rule No. 4: Send your kid to college — it's a great investment.

Yes, the average college graduate earns $26,618 more a year than someone with just a high school education, according to the U.S. Census Bureau. As a result, most financial planners agree that helping your child get a college education is important.

When to break it: If helping pay for your child's four-year college degree places an extreme burden on your finances, you should consider other, more affordable ways to accomplish this goal.

The return depends on the price you pay and where that money comes from. The nonprofit research group Project on Student Debt reports two-thirds of college seniors who graduated in 2011 had student loan debt, with an average of $26,600 per borrower.

To avoid overpaying for a diploma, Montanaro suggests looking for cost-effective ways to get an education, such as spending the first two years at a community college, then transferring to a four-year college. For 2012-13 enrollment, annual tuition and fees at a community college cost an average of $3,131, compared to in-state tuition of $8,655 for public four-year colleges and $29,056 for private universities, according to the College Board.

Rule No. 5: Buy a house if it costs 2.5 times your annual income or less.

This is a reasonable guide when determining whether you can afford to buy a home.

When to break it: If it doesn't suit your circumstances, disregard this guideline.

What really matters is whether you can afford the monthly payment, factoring in taxes, insurance, maintenance, current mortgage rates and the size of your down payment. Plus, consider how long you'll live in the house. If you plan to move in a few years, renting may be the better decision.

Rule No. 6: When you retire, consider a withdrawal of 4% of your portfolio, then adjust every year for inflation.

Historically speaking, the so-called 4% rule calls for a retiree to make annual inflation-adjusted withdrawals and be reasonably sure the portfolio will last 30 years. For most retirees, it's a fine starting point to determine how much they can spend.

When to break it: Your plan for retirement is not a smooth glide path.

Retirees may prefer withdrawing more in good times and cutting back when times get tough, or varying distributions based on their investment results. Also, adjustments should be made according to other sources of income. For example, Montanaro says some retirees may wish to withdraw more at first and delay taking Social Security, but then withdraw less once the Social Security benefit kicks in. "Whatever your plan, it should be monitored and adjusted as necessary," he says.

Source: USAA Financial Services.

 

 

Six Reasons a Leader’s Personal Business is the Company’s Business
By David Gebler

Just after Gen. David Petraeus resigned from his post as head of the CIA, there was an outpouring of media sympathy. Before possible national security issues came to light, friends, allies, and commentators wondered aloud why the four-star general's private behavior should have any relevance to his performance as a valuable leader in the war against global terrorism.

New developments in the story might have quieted those critics a bit. However, it's important for all business and government leaders to grasp how their personal behavior affects their organizations' culture. In short, reckless risk taking by a leader begets reckless risk taking by his or her subordinates, managers, and employees. Dishonesty begets more dishonesty.

Here are six reasons a leader's private behavior really is the company's business.

  1. It condones rule breaking. A leader has to be the role model for his or her people. "Do as I do, not as I say": That's the mantra leaders need to live by in order to get their people to follow company rules. It's particularly true in organizational cultures, such as the military or innovative firms that require stringent ethical behaviors, conformity and loyalty.
  2. It confuses the rank and file. Some military insiders have pointed out that our all-volunteer military has created a "military-apart" culture that operates off the public radar screen with its own rules and cultural norms. But this is also true of businesses headed by powerful or charismatic founders who see themselves as commanders of their own business universe. The problem is when employees are fiercely loyal to a brilliant but unethical leader, they may lose touch with their own ethical objectivity.
  3. Leading demands good judgment. The ability to make difficult decisions consistently and use good judgment is part of why leaders get paid the big bucks. If leaders are vulnerable to self-denial and self-deception about their ability to manage an affair undetected, it raises the obvious questions about whether they are also in denial about other matters that more directly impact the business.
  4. Leaders are responsible for reputation. A sullied leader lowers the reputation of the whole organization, calling into question its cultural norms and core values. Like it or not, stakeholders expect leaders to uphold the organizational reputation and enhance—not degrade—its standing by having an impeccable character.
  5. It creates conflicts of interest. If one is the CEO, everyone is a subordinate. Whether by having an extramarital affair or by engaging in inappropriate favoritism with a co-worker, the leader creates allegations of unfairness that impact people's reliability and performance. Relationships that are unprofessional and inconsistent with the organization's values cause a ripple effect of dissension.
  6. Integrity matters. Whether they like it or not, when leaders betray their spouses and families, it's human nature for their employees to wonder if their leader is trustworthy. People will begin to wonder: if a leader can treat loved ones like that, how will he or she treat us? Without trust, a leader has no authority.

About the Author
David Gebler is the founder and president of the Skout Group, a consultancy that helps companies evaluate the cost-effectiveness and scandal-potential of their corporate cultures. He's a lawyer specializing in business ethics, and is the author of The 3 Power Values: How Commitment, Integrity, and Transparency Clear the Roadblocks to Performance (2012, Jossey-Bass). David can be reached at dgebler@skoutgroup.com.

 

 

 

Effective Ways to Grow and Connect with New Customers Using E-mail Marketing
By Crystal Gouldey

It's a challenge to find cost-effective marketing solutions that really work. But you know that marketing is a necessary part of any business’s' budget, and done right it can lead to more sales and more growth.

E-mail marketing is perfect for the budget-conscious business looking to get the most bang for their buck. Here's why you need to consider its use and some of the more effective ways of accomplishing it.


You Don't Let Prospects Get Away

If people visit your website or business, that's a pretty good indicator they're interested in what your company has to offer. They might not buy something right away, but they could be thinking about it. These are not people you want to forget about you because they could stumble upon your competition.

So you need to find a way to keep in touch with these prospects, and that's where e-mail marketing enters the picture. All you need is their e-mail address. So how do you get it?

You can—

  • Put up a sign up form on your website for people to subscribe.
  • Ask people who hand you their business card if they'd like to join your e-mail list.
  • Invite social media followers by posting a link to your sign up form.
  • Have a sign-up sheet at your place of business.

Once you have a list of subscribers, you can start sending them e-mails on a regular basis.


You Keep Prospects and Customers Involved

Regular e-mails not only keep you on subscribers' minds, they also encourage frequent interaction. For prospects, it might mean clicking around your site, learning more about you and eventually making a purchase. With customers, you might learn that the often-used phrase: "It's easier to have a repeat customer than getting a new customer," rings true for your business.

In order to keep your subscribers clicking on links and interacting with your business, make sure you—

  • Set up a series of messages to go out to new subscribers.
  • Include links to what's happening on your social media pages (contests, discussions, etc.).
  • Track what subscribers are most interested in (most e-mail marketing service providers will show what links people click on).

Your E-mails Get Shared

It's pretty easy to forward an e-mail from one person to another. It's also gotten a lot easier to do things like share an e-mail on Facebook, Twitter and other social media platforms.

If you create content that people want, chances are they will share it with others who might be interested. Make sure it's clear that this is okay—if you want it to happen, of course—and make it even easier by—

  • Including a note with a link to your sign-up form for those that received a forwarded message.
  • Adding social media buttons for subscribers to share on their favorite social network.

You Get More Sales

It makes sense that e-mails can bring in more sales; if you have more people learning about and interacting with your company, it's only a matter of time before some of them start purchasing.

But you can do more to bring in the sales. E-mail marketing service providers can track click-throughs, and this information can be used to get more sales. This is accomplished through segmenting, which is when you send an e-mail to a small group of subscribers that had a similar behavior, such as clicking a specific link. So you need to—

  • Send targeted information or coupons to a segment of your list.

By following these tips, you'll be able to grow your audience through an e-mail list and increase your bottom line by interacting with more people and driving more sales.


About the Author
Crystal Gouldey is Education Marketing Associate at Chalfont, PA-based AWeber, the leading e-mail marketing service provider for small businesses, where she works with business owners to grow their marketing efforts. An experienced optimization consultant, Crystal has consulted with over 500 businesses to improve their e-mail marketing efforts for optimal results. She can be reached at crystal@aweber.com.

 

Keep the Child Care Credit in Mind for Summer

If you are a working parent or look for work this summer, you may need to pay for the care of your child or children. These expenses may qualify for a tax credit that can reduce your federal income taxes. The Child and Dependent Care Tax Credit is available not only while school’s out for summer, but also throughout the year. Here are eight key points the IRS wants you to know about this credit.

1. You must pay for care so you – and your spouse if filing jointly – can work or actively look for work. Your spouse meets this test during any month they are full-time student, or physically or mentally incapable of self-care.

2. You must have earned income. Earned income includes earnings such as wages and self-employment. If you are married filing jointly, your spouse must also have earned income. There is an exception to this rule for a spouse who is full-time student or who is physically or mentally incapable of self-care.

3. You must pay for the care of one or more qualifying persons. Qualifying children under age 13 who you claim as a dependent meet this test. Your spouse or dependent who lived with you for more than half the year may meet this test if they are physically or mentally incapable of self-care.

4. You may qualify for the credit whether you pay for care at home, at a daycare facility outside the home or at a day camp. If you pay for care in your home, you may be a household employer. For more information, see Publication 926, Household Employer's Tax Guide.

5. The credit is a percentage of the qualified expenses you pay for the care of a qualifying person. It can be up to 35 percent of your expenses, depending on your income.

6. You may use up to $3,000 of the unreimbursed expenses you pay in a year for one qualifying person or $6,000 for two or more qualifying person.

7. Expenses for overnight camps or summer school tutoring do not qualify. You cannot include the cost of care provided by your spouse or a person you can claim as your dependent. If you get dependent care benefits from your employer, special rules apply.

8. Keep your receipts and records to use when you file your 2013 tax return next year. Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your return.

Source - IRS

 

IRS Reminds Those with Foreign Assets of U.S. Tax Obligations

WASHINGTON – The Internal Revenue Service reminds U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2012, that they may have a U.S. tax liability and a filing requirement in 2013.

The filing deadline is Monday, June 17, 2013, for U.S. citizens and resident aliens living overseas, or serving in the military outside the U.S. on the regular due date of their tax return. Eligible taxpayers get two additional days because the normal June 15 extended due date falls on Saturday this year. To use this automatic two-month extension, taxpayers must attach a statement to their return explaining which of these two situations applies. See U.S. Citizens and Resident Aliens Abroad for additional information additional information on extensions of time to file.

Nonresident aliens who received income from U.S. sources in 2012 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be April 15 or June 17 depending on sources of income. See Taxation of Nonresident Aliens on IRS.gov.

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B to their tax return. Certain taxpayers may also have to fill out and attach to their return Form 8938, Statement of Foreign Financial Assets.

Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Instructions for Form 8938 explain the thresholds for reporting, what constitutes a specified foreign financial asset, how to determine the total value of relevant assets, what assets are exempted and what information must be provided.

Separately, taxpayers with foreign accounts whose aggregate value exceeded $10,000 at any time during 2012 must file Treasury Department Form TD F 90-22.1. This is not a tax form and is due to the Treasury Department by June 30, 2013. For details, see Publication 4261: Do You Have a Foreign Financial Account? Though this form can be filed on paper, Treasury encourages taxpayers to file it electronically.

Taxpayers abroad can now use IRS Free File to prepare and electronically file their returns for free. This means both U.S. citizens and resident aliens living abroad with adjusted gross incomes (AGI) of $57,000 or less can use brand-name software to prepare their returns and then e-file them for free.

Taxpayers with an AGI greater than $57,000 who don’t qualify for Free File can still choose the accuracy, speed and convenience of electronic filing. Check out the e-file link on IRS.gov for details on using the Free File Fillable Forms or e-file by purchasing commercial software.

A limited number of companies provide software that can accommodate foreign addresses. To determine which will work best, get help choosing a software provider. Both e-file and Free File are available until Oct. 15, 2013, for anyone filing a 2012 return.

Any U.S. taxpayer here or abroad with tax questions can use the online IRS Tax Map to get answers. An International Tax Topic Index page was added recently. The IRS Tax Map assembles or groups IRS forms, publications and web pages by subject and provides users with a single entry point to find tax information.  

 

 

Use a QDRO to Divide Qualified Plan Assets in Divorce

When a couple divorces, it is often necessary to divide assets held in qualified retirement plan accounts [e.g., Section 401(k), profit-sharing, or pension plan accounts] to equitably divide the marital property. When your qualified plan assets are divided in divorce, a qualified domestic relations order (QDRO) is critical. A QDRO is any judgment, decree, or order that (a) creates or recognizes the existence of an alternate payee’s (e.g., your former spouse’s) right to some or all of the participant’s (your) qualified plan benefits; (b) is made pursuant to a state domestic relations order; and (c) relates to providing child support, alimony, or marital property rights of a spouse, former spouse, child, or other dependent of the plan participant. IRAs are not qualified plans and, therefore, not subject to the QDRO rules.

Without a QDRO, distributions from your qualified retirement plan to another person are treated as paid to that person on your behalf. Thus, you are taxed on the distribution as if you had received it and then given the cash to the other person (e.g., your former spouse). In this situation, you receive no deduction for the deemed transfer to, for example, your former spouse, and the entire distribution is taxable to you in the year received. Clearly, this is the worst possible result you might expect. However, distributions under a QDRO are taxed to the recipient (e.g., your former spouse) when received by that person. The 10% early distribution penalty tax does not apply to any distribution to an alternate payee pursuant to a QDRO, regardless of the alternate payee’s age when he or she receives it.

Generally, the alternate payee is assigned the participant’s tax attributes under the plan. If the alternate payee is your spouse or former spouse, any distribution received by that person will qualify for rollover treatment to an IRA. A properly rolled over distribution is not taxed until it is subsequently withdrawn from the IRA. To qualify for tax deferral, the distribution must be rolled into the IRA within 60 days of receipt. The funds should be transferred directly from the distributing plan to the receiving IRA (a trustee-to-trustee transfer) to avoid the 20% withholding that is imposed if a distribution is made directly to the recipient. However, the QDRO exception to the 10% early distribution penalty tax does not apply to distributions from IRAs, SEPs, and SIMPLEs.

A rollover to an IRA allows the alternate payee to control the account’s investment. It may also be attractive when the alternate payee wants to sever ties that connect him or her to the former spouse.

If the alternate payee is under age 59½, rolling over a plan distribution made under a QDRO to an IRA may not be advisable. Subsequent IRA distributions before age 59½ would generally be subject to the 10% early distribution penalty tax, unless an exception applies. If the plan allows, a better solution may be to leave the funds in a segregated account with the plan trustee. Distributions from the segregated account pursuant to the QDRO are not subject to the early distribution penalty tax even if made before age 59½.

 

Higher Education Costs Continue to Escalate

The cost of attending college continues to increase. The College Board reports that 2012–2013 tuition and fees have risen significantly (www.collegeboard.com). Private four-year colleges are up 4.2% (to an average of $29,056)from 2011–2012 for tuition and fees. Public four-year colleges are up 4.8% (to an average of $8,655) from last year for in-state tuition and fees. Public four-year colleges are up 4.2% (to an average of $21,706) from last year for out-of-state tuition and fees. Even public two-year schools are up 5.8% (to an average of $3,131). The report indicates that the subsidies provided to full-time undergraduates at public universities through the combination of grant aid and federal tax benefits averaged $5,750 in 2012–2013.

 

 

Help Grandchildren with College Costs

Contributing to a Section 529 college savings program is a great way for grandparents to help their grandchildren pay for college. It is also a great way to remove assets from the grandparent’s estate without paying estate tax. As an added feature, money in a 529 plan owned by a grandparent is not assessed by the federal financial aid formula when qualifying for student aid.

Grandparents, as well as other taxpayers, have a unique opportunity for gifting to Section 529 college savings plans by contributing up to $70,000 at one time, which currently represents five years of gifts at $14,000 per year. ($14,000 is the annual gift tax exclusion amount for 2013.) A married couple who elects gift-splitting can contribute up to double that amount ($140,000 in 2013) to a beneficiary’s 529 plan account(s) with no adverse federal gift tax consequences.

Example:  Electing to spread a 529 plan gift over five years.

In 2013, Linda contributes $75,000 to a 529 plan account for the benefit of her grandson, James. She makes no other gifts to James in 2013. Because the gift exceeds the $14,000 annual gift tax exclusion, Linda elects to account for the gift ratably over five years beginning with 2013. Only $70,000 (five times the current annual gift tax exclusion) is eligible for the election; therefore, Linda is treated as having made an excludible gift of $14,000 in years 2013–2017, and a taxable gift of the remainder ($5,000) in 2013.

 

 

Selling a Home to Your Child at a Bargain Price

As part of an estate and gift planning strategy, a taxpayer may consider transferring ownership of a family home to an adult child. Note, however, that the tax implications of such transfers can be significant. When a taxpayer sells a home (or any other asset) for a bargain price to a relative (or any other person), they are actually treated as making a two-pronged transaction. The first prong is considered a sale for an amount equal to the bargain sale price. Their entire basis (cost) in the transferred property is offset against the sale proceeds. The second prong is considered a gift equal to the difference between the fair market value (FMV) of the property and the bargain sale price. The following example illustrates the tax consequences for the seller.

Example: Gwen, an unmarried taxpayer, sells her $600,000 home in 2013 to her unmarried adult son, Frank, for a bargain price of $350,000. Gwen is treated as selling the property to Frank for $350,000 and making a related $250,000 gift ($600,000 FMV – $350,000 sale price).

Gwen’s taxable gain from the sale prong equals the difference between the $350,000 sale price and her entire basis (cost) in the transferred property. For the gift prong, Gwen can use her $14,000 gift tax annual exclusion to reduce the potentially taxable gift amount to $236,000. The $236,000 gift then reduces her $5.25 million (in 2013) federal estate and gift tax exclusion dollar-for-dollar.

Assuming the parent has most or all of the $5.25 million federal estate and gift tax exclusion available to shelter the gift prong of the bargain sale transaction, this type of transaction generally works out quite well for the parent because it removes an appreciating asset from their estate. Also, assuming the parent lives long enough to benefit from any future increases in the federal estate and gift tax exemption, the hit to that exemption will be partially or completely restored.

The sale prong of the bargain sale transaction obviously has income tax implications for the parent. The parent’s capital gain is determined by subtracting his or her entire basis in the home from the sale price. Of course, if the home is the parent’s principal residence, the $250,000/$500,000 federal gain exclusion privilege will usually be available to offset some or all of the gain.

In a bargain sale scenario, the child’s tax basis in the home will generally be the sale price plus the amount of any federal gift tax triggered by the transaction (if any). When the home has appreciated significantly in value (as will often be the case), the child may be stepping into a substantial built-in taxable gain that can cause future problems. This is not a great tax outcome for the child, but complaining about the tax results of an otherwise favorable bargain sale deal seems petty.

On a more positive note, if the child uses the home as a principal residence for at least two years, the federal home-sale gain exclusion privilege will become available. Also, if the child is able to arrange financing for the purchase prong of the transaction, the mortgage interest will generally be deductible as qualified residence interest.

The bargain sale scenario can produce great tax results for the parent. However, as the analysis illustrates, it may produce less-than-great income tax results for the child if the home has appreciated significantly.

 

 

10 Steps to Stop Procrastinating to Increase Your Productivity
By Jude Bijou

Everyone procrastinates. We usually do it to avoid a task that's unpleasant or daunting. But when procrastinating starts to interfere with performance at work—by causing us to feel worried, fearful, and stressed out, or by causing others to feel anxious because we're holding up progress—then it's time to stop putting the task aside and get on with it.

Here are 10 ways to get out of the quicksand of procrastination and reap numerous benefits, which include improved productivity, enhanced mood, less stress, better coworker relationships, a sense of accomplishment, and restored reputation at work as a "doer."

  1. Identify the situation. First, write down the specific task you've been putting off. For example, "I have to convert all of my client contacts and notes into the new file-sharing software system and learn how to navigate its tools and folders." Writing down the task helps you deal with the job at hand.
  2. Pinpoint your emotions. What's preventing you from diving into this task? It's typically one or more of three core emotions. Perhaps, to use the above example, you're intimidated by all the new bells and whistles you'll have to learn (fear). Maybe you're resentful about having to do this when the old system worked perfectly well (anger). Maybe you’re bummed that you're just not tech savvy (sadness). This step helps you see the act of dragging your heels for what it truly is: an emotional reaction.
  3. Deal with those emotions. It's helpful to know that emotions—sadness, anger, and fear—are just pure energy in your body. Look at the word "emotion." It's energy (e) in motion. Take some time in private to express those emotions constructively. By crying to express sadness, punching or yelling into a pillow, stomping around to release the anger, or doing exaggerated shivering for the fear, you will give yourself permission to express the emotion. The energy dissipates and you won't feel stuck. It's like letting steam out of a pressure cooker.
  4. Do some planning. Good planning is the foundation of success for most any project. It's helpful to write it down so you have it for ready reference. Start by getting clear on your goal. Your goal is your beacon to keep you on track in treacherous waters. For example, "I want to be adept at using this new software so it's an effective tool, not an impediment to my progress." Having a clear and precise idea of your goal will keep you oriented and stay motivated.
  5. Find some "truths." Identify sabotaging thoughts that are hanging in the wings, ready to pounce in a weak moment, then come up with a couple of truths to contradict them. For example, if you continually tell yourself "I'll never be able to learn all this," you might say to yourself, "I can do this" or "If others can learn this, so can I." That's a plain and simple truth. To neutralize your frustration at having to do this task, you might say, "I'm doing this because I want to be a team player" or "My boss thinks I'm the best person to do this."
  6. Break your goal into a series of small, doable steps. You've envisioned the task, dealt with what's been holding you back and fixed your destructive thinking. Completing the task requires deciding when you'll get started and figuring out a doable step-by-step game plan. Write it down, schedule it and commit to it. Then go on a mental journey, plotting out each part of the task, including details such as whom you will talk to; what about; where and when you'll be working; and how long you expect each part to take.
  7. Anticipate roadblocks. Once you've created a game plan, step back and imagine challenges and obstacles that are likely to pop up along the way. For example, other projects with shorter deadlines might land on your desk. How will you tackle such challenges in order to keep moving forward with the big task at hand? For every such scenario, have a tactic ready for sticking to your original plan. You may also want to find someone to support your efforts and with whom you can check in on a regular basis.
  8. Take the leap. With all this preparation, it's time to tackle the task you've put off. Before you do, acknowledge your emotions —whether it's anger, fear, or sadness. Take just a minute or two and release the pent-up emotion in a physical and constructive way. Without the emotional energy dragging you down, you'll feel prepared to take the leap and be amazed how easy it is when you just focus on one step at a time.
  9. Battle resistance. As you move through the task, you're likely to meet with resistance in the form of excuses, bad moods and discouragement. Meet resistance with tenacity and stubbornness, and continue to deal with any emotions that surface. Say to yourself, "I can do this. I'll feel better when I handle this." Say it over and over until it's set in your mind. Any time you feel discouraged or are tempted to procrastinate, refocus on the goal.
  10. Focus on the upside. Getting through a daunting task is incredibly satisfying. Praise each little step along the way. Remind yourself at every step that you'll feel incredibly virtuous when you get the task off your plate once and for all. Accomplishing what you're avoiding will simplify your work life. You'll feel more energetic. You'll sleep better at night.


About the Author
Jude Bijou, MA, MFT, is a psychotherapist, professional educator, and workshop leader. Her theory of Attitude Reconstruction® evolved over the course of more than 30 years working with clients as a licensed marriage and family therapist. She is also the author of the award-winning book, Attitude Reconstruction: A Blueprint for Building a Better Life. Interested readers may visit attitudereconstruction.com.

 

 

 

Officer Liability: What You Need to Know About Michigan’s Revenue Act
By Sam McKim

A recent article labeled Michigan’s current officer liability statute a “trap for the unwary tax responsible officer.” This provision, buried in Section 27a(5) of Michigan’s Revenue Act (MCL 205.27a(5)) (“Section 27a(5)”), makes some persons personally derivatively liable for delinquent entity state taxes who would not have been liable under other states’ officer liability statutes or under the Internal Revenue Code (IRC). Further, the Michigan Department of Treasury (“Department”) has been aggressive in pursuing “officer liability.” Some of the Tax Tribunal cases have approved the Department’s broad and aggressive application of Section 27a(5).

Those who have been familiar with the officer liability provisions formerly found in the Michigan Sales, Use, Income and other Acts will find serious differences in Section 27a(5). The old provisions (prior to the 2003 amendment to Section 27a(5)) only covered corporations, and for an officer to be liable, required that he/she be responsible for both “making” the return and paying the tax. Section 27a(5) has for twenty-seven years imposed liability where the “officer” was responsible for either making the return or paying the tax. This far broader approach to officer liability had not been applied, however, until the controlling provisions in the individual tax acts were repealed in 2003.

Section 27a(5) was also amended in 2003 to impose personal liability on “members, managers, or partners” of limited liability companies, limited liability partnerships, partnerships and limited partnerships. Only the officers of corporations were formerly covered. (All are herein referred to as “officers.”) That 2003 amendment to Section 27a(5) also added a provision making signatures on “returns or negotiable instruments submitted in payment of taxes” prima facie evidence of that “officer’s” personal derivative liability. A signature on such a document almost always invites an “Intent to Assess”; creates a presumption of personal liability; and shifts the burden of defense to the “officer.”

Delegation of authority by an otherwise tax responsible “officer” is not an acceptable excuse. Also, more than one “officer” can be liable at the same time. Resignation/termination before the return due date is not an excuse. The out-of-state location of the entity’s “officers” and offices is not an excuse. Holding oneself out as an “officer” has been held to be enough for Section 27a(5) personal liability. The Department has even successfully asserted personal liability against an “officer” who had not even joined the entity until years after the unpaid tax had become due.

In this statutory and case law context, Section 27a(5) has truly become a potentially devastating trap for the unwary tax responsible officer, member, manager or partner. The Legislature has been asked this session, as in the preceding session, to address this serious disincentive to doing business in Michigan. Senate Bill 64, passed by the Senate last month is, at this writing, before the Michigan House of Representatives. It addresses many of the problems with Section 27a(5) and its administration. Professionals who are or who work with such tax responsible “officers” of entities paying Michigan taxes would be well advised to pay careful attention to Section 27a(5) as it is being applied and amended.

Sam McKim’s article entitled, “Officer, Manager, Member or Partner Personal Liability for Unpaid Michigan Entity Taxes – A Trap for the Unwary,” can be found at here

About the Author
Sam McKim is of counsel to Schiff Hardin LLP and a member of its State and Local Tax Practice Group. He practices in Ann Arbor and Detroit, Michigan. He has served as an adjunct professor of law at Wayne State University Law School, where he taught state and local taxation. Sam can be reached at smckim@schiffhardin.com.

 

 

Disclaimer: This article is for general information purposes only, and is not intended to provide professional tax, legal, or financial advice. To determine how this or other information in this newsletter might apply to your specific situation, contact us for more details and counsel.

 

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