Category Archives: Uncategorized

A Smart Guide to Paying For College: How Not To Go Broke

Your child has just graduated from high school and is headed off to college in a couple of short months.  Are you having nightmares trying to figure out how are you going to pay for that?  Let’s try to break it down into something that is easier to wrap your head around.  College costs are typically paid through a combination of the many options available.  One common rule of thumb is that it is paid 1/3 from savings, 1/3 from loans and 1/3 from current earnings.  That alone helps to break the total down to a more manageable figure.

If you started a college savings account (i.e. 529 plan) when your child was younger, you will have some savings to put toward college.  All the earnings in a 529 account are tax free if the proceeds are used for “qualified education expenses.” For 529 plans, those qualified expenses even include the cost of room and board for most students.

Your student can also qualify for some direct student loans that they don’t have to begin to repay until after they graduate.  This can be a good way for your student to have some skin in the game.  The loans are available to everyone regardless of need, however, your student (or you) will need to complete the FAFSA (Free Application for Federal Student Aid) form in order to apply. You may be able to get subsidized loan or grants if you can prove need.   You will probably want to minimize the loans as much as possible so your student isn’t saddled with a huge amount of debt to repay.  While the government is working to make payments more affordable for recent graduates by offering payment deferrals in certain circumstances including unemployment, loan payments can still be as much as a car payment or even a house payment!

Student loans in addition to the direct government loans mentioned above, as well as parent loans are also available, but should be used with caution.  The interest rates are typically going to be higher and the repayment may begin right away.  A better option may be to consider a home equity loan where the interest may be tax deductible.

Your day to day living costs will go down when they go off to college and stop eating your food and using your water, so you will be able to get some additional money out of your monthly budget.  Setting aside a little each payday can make the big tuition payment much easier to make.  There are also some tax credits available that may help with funding.  The above-the-line tuition deduction expired at the end of 2011, but you can still take advantage of the American Opportunity Tax Credit or the Lifetime Learning Credit.

Make sure your student looks into every opportunity to obtain scholarships.  The school guidance counselors and college financial aid offices have the resources to find many of the opportunities available.   Also, be sure to check with organizations you may be a member of such as a church or labor union.

You can borrow tax and penalty free from your retirement plan for college, but this should be a last resort.  If you are going to use this money, always do it as a loan rather than a distribution. Your child can easily get a loan for school, but you cannot get a loan for retirement. Too many parents have the dream of paying for their child’s education, but they reduce their retirement savings to make it happen.

If you can put together a workable plan for how you can accomplish this in smaller increments, it will help you sleep at night and allow you to enjoy your students last few weeks at home.

By: Sandi Towns, CPA/PFS, CFP

Social Media: The NEW Generation of Marketing

Before the Internet became mainstream most marketing campaigns used traditional channels such as broadcast and print to communicate with their target market. Billboards, phone book ads, flyers and other collateral marketing materials are now a thing of the past. Where advertisers once controlled the content and direction of their campaigns, consumers now have the ability to “like,” “follow,” or “fan” the brand that most appeals to their wants and needs. Plainly put, social media has revolutionized the way in which companies market their products.

The advantage of social media marketing is the relative ease of using such a medium and at such a low cost. Mobile phone applications allow users to connect to Facebook, Twitter & LinkedIn from virtually anywhere! Now consumers can have a link to a product or website posted in mere seconds. According to a recent study, more than two-thirds of social media users, and 60% of all Americans, believe the Internet and social media have made it easier for them to be well-informed consumers. A plurality of Americans (47%) and social media users (55%) say these technologies have made them more well-informed and active as citizens and in the political sphere.

Social media represents an unprecedented marketing opportunity for companies to connect directly with their customers.  With more than 550 million people on Facebook, 65 million tweets posted on Twitter each day, and 2 billion video views daily on YouTube, social media has become THE platform for marketing. Companies like Pepsi have taken advantage of social media marketing landing themselves on U.S. News’ list of America’s Most Connected Companies.  Last April the beverage giant launched its digital dashboard that features “sweet” info referring to pop culture and other content that can also be found on their website, Pepsi.com. These actions were part of Pepsi’s all-new marketing campaign “Live for now.” The site also featured users’ messages generated from Twitter and Facebook that include tweets from famous music artists such as Katy Perry, Joe Jonas and Nicki Minaj.

Understanding what tools are available and how to use them effectively is key to success in social media marketing. Businesses also need to understand how they can reach out to their customers and, more importantly, why they need to reach out to their customers. If you haven’t taken the plunge into the realm of social media, there is no better time. Check out these 5 Must Read Social Media Articles to help you springboard your business into this new world of marketing. Sites like Social Media Examiner offer daily articles focused on various social media tools and how to use them to your benefit to create brand awareness and increase sales. As Social media becomes the new word of mouth, make sure your consumers have something to say about your product!

By: Jessica Sloan, Marketing Coordinator

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Mobile Banking: Are you Secure?

Do you remember the days when you could only make an account deposit or withdrawal by visiting the local branch of your financial institution?  For some of us, those days are a distant memory given the increase in options to complete financial transactions.

With the rise in individuals owning smartphones, tablets, and data plan cell phones, mobile banking is becoming increasingly popular.  But, is mobile banking safe and secure?  What steps can you do to ensure that your personal information remains protected?  Here is a list of some tips to help minimize your risk of becoming a potential victim of the tech savvy crooks and identity thieves that are lurking in the shadows.

  1.  Don’t Follow Links:  If you receive a banking link sent to you in a text message or email, never follow the link.  It is always a good practice to navigate to the website directly.  You never know when the link that you received could be a fake website and by entering your personal information on this bogus site, you have just shared your personal information with the crooks.  You should also never send your account information or password via text message or email.  It could be another way that they thieves are trying to obtain your information.
  2. Avoid Mobile Banking on Public Networks:   Many public networks aren’t secure.  If you are in an area that has Wi-Fi, simply disable your Wi-Fi and use the cellular network.  Once on that cellular network you can resume your banking transactions.
  3. There’s an App for That:  If you are using a smartphone or tablet, use the app that is associated with your financial institution for your banking needs.  These apps are more secure that using text messaging or email.  Most information that is sent across networks through these apps is encrypted.  To ensure that the app is supported by your financial institution, visit their website to see if they have made reference to an official app for mobile banking.  Once you get the financial institution’s seal of approval, download and install the app to your device.
  4. Keep Track of Your Mobile Device:  Mobile devices are easy to carry everywhere, but they are also easy to misplace.  These devices can contain very valuable information such as passwords, contact lists, appointments, and other personal information.  If your device has a digital locking mechanism you should use it.  In the unfortunate event that your phone disappears, you can notify your bank that your phone was stolen before the thief can access your bank account information.

So, should you steer clear of using mobile banking?  Absolutely not.  Just remember to follow these few simple steps to ensure that your personal information remains yours and does not fall into the wrong hands.

By: Kristin Metzger, CPA

What Makes Your Company Successful?

According to the AICPA in conjunction with the CIMA (Chartered Institute of Management Accountants), it’s your people.

Rocket science, right?  Why do we need to keep wasting money doing studies like this to come to that conclusion?  The March 2012 issue of the Journal of Accountancy summarized some of the main findings of the research, and one particular quote completely took me aback:

The most critical theme to come from this research:  “Senior business leaders agree that it is understanding and unlocking the value of the human dimension that is most critical to an organization’s success.”

It goes on to say that the employees and customers will have a much greater impact on determining the future success of a business than financial markets, government, and regulators.  Again, this seems obvious to me.  The value of trained, experienced employees far exceeds their “fully loaded” cost, and the impact of those people either being unhappy or leaving is truly a large negative impact to the bottom line.   Unhappiness creates apathy and the rippling effect will influence many aspects of the business.  The list of negative effects can be endless, but here are just a few important ones:

  • Potential negative impact on peer employees and subordinates, directly or indirectly
  • Decreased productivity
  • Lack of attention to detail which results in poor work
  • Relations with customers and/or vendors can be compromised  due to the lack of attention and detail

The facts are that employees ARE the most important asset of your company, regardless of how many millions of dollars of machinery and buildings you have. Treating them as such will allow them to fulfill the strategic vision you have in mind.  People who are happy in their work go the extra mile and make the extra effort to help the Company.  They will be more productive, make for positive internal and external customer experiences, stick with the company longer and they care.

The results of this report are not something that every employer out there should not already know.  If you tell employees “you are lucky to be here—work harder and longer,”  you are (or already have) created an acrimonious environment that inherently breeds e a culture where people will never take their productivity up to the next level.

You have accountants analyzing every number imaginable related to the efficiency of the machines and labor and downtime, the list goes on.  Is anyone truly assessing the cost of your unhappy employees?  Do you even recognize it?

By: Jennifer Kinzel, CPA, CMA, CGMA

Federal Census Bureau: Did You Know?

You may have heard on the news this week that the Census Bureau released information associated with the 1940 Census. By law, personal information is withheld from the public for 72 years after collection. Genealogists all over the world jumped online on Monday (except those of us that work at accounting firms – it is April after all) to see what new and different information became available for their family trees.

But, the U.S. Census Bureau collects much more information than just where people are living on April 1st in the first year of each decade. On the Census Bureau home page, the Quick Facts section shows the population in Ohio was at 11,544,951 in 2011, which is up slightly from 2010. How many veterans?  936,383 in Ohio, 32,483 in Lucas County.  How long is the mean travel time to work in Lucas County?  19.8 minutes.   How many building permits were issued in 2010 in Lucas County?  210.

The Census Bureau’s economic indicators are heavily relied on, and while the news is not all good, new orders for manufactured goods in February 2012 increased $6.0 billion or 1.3%.  Manufacturing and Trade Inventories and Sales also showed a slight increase in January 2012, up 0.4% from December 2011, and month-end inventories were up 0.7% (http://www.census.gov/cgi-bin/briefroom/BriefRm).

The Local Employment Dynamics (LED) provides data on local labor market conditions, supplies statistics on employment including job creation, turnover, and earnings by industry, age and sex, and it also provides dynamic information on the rapidly changing economy.

In most states, including Ohio, you can also review Quarterly Workforce Indicators (QWI) – the most recent information is from 2011’s first quarter.  In Lucas County, for example, the QWI reports employment of 19,131 people in the manufacturing sector, with a turnover rate of 5.9%.  Monthly earnings averaged from all employees in this sector in Lucas County were $5,572 – up from $5,378 for the previous three quarters’ average.

Industry Snapshots in just about every NAICS code are also available… but data from 2007 doesn’t seem relevant.   These snapshots are updated every five years, so in late 2012, about 5 million businesses will receive 2012 Economic Census forms to complete.  This time, we will be able to complete them online or in paper form; they are due back in February 2013.  (More on that as we get closer to Economic Census reporting time.)

All this data may be overwhelming, but since our tax dollars are paying for the compiling and reporting of the information, it behooves us to at least know it’s out there and use it when and where we can in making decisions that affect our businesses.

By: Sharon Trabbic, COO

Monitor Cash Flow For a Healthy Bottom Line

If you want your business to grow and remain competitive, a solid financial plan and a well-conceived strategy can mean the difference between boom and bust.

The obvious place to start is with a cash-flow analysis.

Review your company’s cash flow statements to understand the cycle of inflows and outflows that stem from accounts receivables, inventory, accounts payable and credit terms. This helps identify any problem areas that need improvement.

A cash flow statement also highlights important distinctions, such as the differences between cash and sales or inventory. A ledger full of credit sales may look good on your Statement of Income, but that won’t help if you can’t pay your employees until you collect on those accounts.

By the same token, a warehouse full of inventory may represent great potential, but the electric company wants to be paid in cash, not with a gross of glow-in-the-dark shoe horns. Once you have analyzed your company’s cash flow statement, you need to create a cash flow projection.

This is an important cash management tool that lets you see when expenditures are likely to be too high or when you can expect a cash surplus and may want to arrange some short-term investments. The cash flow projection also provides a good idea of how much capital investment your business may need.

Cash flow statements and projections help your business in other ways, too:

  • If you are going to approach a lender for financing or potential investors for a cash infusion, they are going to want to see a cash flow statement based on generally accepted accounting principles (GAAP), as well as a cash flow projection based on industry averages, solid business assumptions, and market trends.
    The cash flow statement demonstrates how you manage your available cash. If you have borrowed from the lender before, the loan officer is going to want to see what you did with that earlier cash. If you managed the money well, your cash flow statement will provide the evidence.
  • If your business hits seasonal low-cash cycles every year, cash flow statements and projections will highlight those periods.With that information you can shop around for low-interest short-term financing to help keep your company running smoothly through those anticipated lean times. If your company hasn’t projected those cash crunch cycles, your choices become limited. You may wind up letting your bills slide and damaging vendor relationships, or you may be scrambling to arrange emergency financing that is likely to carry a high interest rate.

Knowing when you are approaching the threshold of a traditionally high or low cash period also can help you determine the timing for launching a product or service or the need to trim or expand your company’s staff.

Meantime, your company’s cash flow projection will show you, as well as potential lenders and investors, what to expect six months or a year from now. Cash flow projections are the key to making smart and profitable business decisions.

But, you may be thinking: My company has a Statement of Income. Why does it need a cash flow statement?