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Business Growth

Patti ONeill and Gale Bergado’s System To Turn Upset Clients Into Happy Clients

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I am simultaneously eager while also being slightly horrified that tax season has officially begun. Horrified, simply because the IRS has been significantly behind the 8-ball this year, and I still can’t believe that we’re already halfway through February 2021. EAGER … well, because there are so many new credits available to San Francisco Bay Area business owners this year, and I’m pretty thrilled about the opportunity to save YOU some money on your tax obligations. That said, the newest round of PPP loans have been plagued by delays and confusion, and while there are fantastical rumors of the next round of stimulus … I’ll believe it when I see it. And it might not be as weighted to SMB owners as previous rounds have been. We’ll keep you posted. This has been an interesting year (to say the least). Even in the middle of the intensity of the busy tax filing season, we can occasionally become the target for somebody’s frustration. Over the years, and especially when things are busy and stressful, we’ve had to learn how to best handle matters when a San Mateo client is becoming (for some reason or another) very upset. Again, this is rare — but in some cases, the client displaces their anger towards the IRS and puts it into their interactions with us. (“No, John, we actually aren’t the ones who are sending you all of that audit correspondence. That would be the nice people at the Department of Treasury.”) However, what we’ve discovered is that when we handle it rightly, we can leave upset clients even happier with us than even some of our most “reliable” and happy clients. And I should hasten to add that “John” is a fictional name, and we wouldn’t ever be as rude as what I just typed up there. 🙂 No, we have tried to train our people with an actual plan for handling such matters, so that in the rare instance it does occur, we handle things properly. Patti ONeill and Gale Bergado’s System To Turn Upset Clients Into Happy Clients “Always forgive your enemies; nothing annoys them so much.” -Oscar Wilde In ANY San Francisco Bay Area business it is inevitable that there will be an instance of misplaced expectations between the customer and business. And you can choose to allow these interactions to happen at random, trusting in the emotional competency of your staff … or, well, you can develop procedures that will make things right and do so almost every time. We came across a simple system years ago that I’ll share with you now — because no matter what level of frustration comes forth, this is truly the best way to regain happy clients. It can be summarized by the acronym “HEAR”… 1) Hear the customer and don’t interrupt. You don’t interrupt for two reasons: A. It’s rude to interrupt B. When people are upset they practice what they are going to say. And they practice it from the beginning. If you interrupt, they are going to start all over again and go off script.  So … don’t interrupt. Obviously, if the client is getting loud and unruly you may need to quietly interrupt. But, in almost all cases, don’t. 2) Mirror back (Empathize) with something like: “I can understand why you’re upset.  I would be upset too.” Or, “I’m really sorry that happened to you.” 3) Ask: “What can I do to make this right?” It doesn’t get much easier than that. Often, you won’t even have to ask the question because it’s pretty obvious what needs to be done. What’s most important in this step is that the attitude is right. Empathy is everything! 4) Resolve – Unless the request is absolutely ridiculous, DO IT! What’s so great about this approach (and this has been studied, proven, and established with myriad scholarly studies): Often you leave the San Francisco Bay Area customer even HAPPIER with you than before the problem occurred! Yes, that’s actually a likely scenario because they will appreciate how you bent over backwards to make them happy again. When you put in place a regularized plan, good things happen. We’re here to help. Let me know if you have any questions. Use this:(408) 241-4100  I’m grateful for our partnership and for your referrals. Warmly, Patti ONeill and Gale Bergado (408) 241-4100 ONeill & Bergado Feel free to share this article with a San Francisco Bay Area area (or beyond!) business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.

Business Growth

How San Francisco Bay Area Small Businesses Should Handle A Crazy Customer

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We’re keeping our powder dry over here at ONeill & Bergado, as it relates to the “American Rescue Plan” proposed by Biden. There’s plenty of talk about it … but as of yet, nothing has passed. I prefer to live in the world of what *is* — instead of speculation. When something gets passed, I’ll have more to say to my San Mateo small business tax clients. In the meantime … it’s tax time. If you need to get on our calendar, NOW would be a good time to do so:(408) 241-4100 The March 15th deadline for San Francisco Bay Area corps is coming, and while extension is always an option … it would feel great to get things handled. Clean up your 2020 books, and let us dive in on your behalf. Now … last week I wrote to you about some of those struggles, specifically as to when you and your team are dealing with angry customers over some sort of problem. And I gave you a framework for that which involves hearing the customer and making things right. However … sometimes that’s actually not enough because you are dealing with a customer who has completely lost control. (Sadly, I’ve heard from some San Francisco Bay Area business owner clients who deal with a large volume of customers that this kind of behavior has increased over recent years; which I find concerning for our culture.) So, here are some ideas for that particular circumstance… How San Francisco Bay Area Small Businesses Should Handle A Crazy Customer“Being deeply loved by someone gives you strength, while loving someone deeply gives you courage.” – Lao Tzu Last week, I wrote about handling upset customers, and I laid out a simple four-step method: 1) Hear the customer and don’t interrupt.  2) Mirror back (empathize) with something like: “I can understand why you’re upset.  I would be upset too.” Or, “I’m really sorry that happened to you.”3) Ask: “What can I do to make this right?” 4) Resolve – Unless the request is absolutely ridiculous, DO IT! But what happens if the customer in your San Mateo business is completely ridiculous? It starts here: as the owner or general manager of the business you’ll need to decide just how much empowerment you’ll give your staff to resolve an issue. Let’s assume you have 3 levels of personnel in your business — front line, manager, and you. You might give the front line person the authority to give $100 worth of satisfaction (credit, whatever) when the customer isn’t just being ridiculous — and up to a $50 credit even if the request is ridiculous. You might then give the manager the authority to give up to a $300 credit even if the customer is ridiculous — and a $1,000 credit otherwise. Notice that the ridiculous requests still get handled, just … not as generously. Credits over this amount may need your personal approval. You’ll need to determine where these levels are and put them in writing. But just as important as where the levels are, is how everyone is trained to handle the ridiculous customer. If your people think the client is being ridiculous, or the amount is more than they are comfortable with, they should be trained to pleasantly stall for time and refer it to you later with something like, “I’m sorry, I’ll need to talk with my supervisor about this.  I’m sure you’ll be hearing back before noon tomorrow. And if we can’t, I’ll be sure to call you.” Then be absolutely certain to get back to the client before your associate said you would. When you have a PLAN in place, you can handle just about anything in your San Mateo business. No matter how crazy. We’re here to help. Let me know if you have any business tax or financial questions. Use this:(408) 241-4100  I’m grateful for our partnership and for your referrals. Warmly, Patti ONeill and Gale Bergado(408) 241-4100ONeill & Bergado Feel free to share this article with a San Francisco Bay Area area (or beyond!) business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.

Real Estate

Commercial Real Estate Opportunities In San Francisco Bay Area NOW

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As a San Francisco Bay Area small business owner, you’re no doubt fully aware of the importance of your business location. This is especially the case if you have a retail store or deliver a service where San Francisco Bay Area customers come to you — you need a location with ease of access and foot traffic. Even if you just need an office from which your staff can work – perhaps a blasphemous concept in the current work-from-home era – your choice of office location and amenities is an important decision. Beyond just location considerations, you are also concerned with the financial aspects of this decision. And this, of course, is right in our wheelhouse. So let’s explore these financial considerations. But before we get there, a few quick tax things: 1) If you are subject to estimated tax payments (you should know who you are), that deadline was NOT extended. Your first quarter estimated taxes are due THIS Thursday April 15th. Yep, this is just one of the multiplicity of things that has made this tax season … special. The easiest option at this point, if you have not paid them, is to go to the IRS website and pay directly. If you need help figuring out what to pay, feel free to get in touch: Patti (408) 241-4100 Gale 408-775-7800 Please do be patient with us in communication — we have been, and continue to be, flooded with inquiries because of the confusing nature of these shifting deadlines this year. But this is always the case (despite this year being a little “extra”) … and we have prepared for it, and are in your corner. Commercial Real Estate Opportunities In San Francisco Bay Area NOW “You may be disappointed if you fail, but you are doomed if you don’t try.”  – Beverly Sill Before you dive into the current opportunities for your working space, let’s get our facts right. Commercial leases are a completely different animal than their residential counterparts. If you’ve ever rented a home or apartment, then you’re familiar with the basics: You pay the rent every month, don’t trash the place, and you get to live there. Easy peasy. Commercial leases can be that simple, but they rarely are. A commercial lease will have the common things you’d expect, such as the duration of the lease and the things you can and cannot do on the premises. The financial terms, however, might be completely foreign to you. The simplest type of commercial lease is a gross lease, which is most similar to a residential lease. In this type of arrangement, your landlord will pay most of the costs associated with maintaining the property. They will take care of the maintenance, pay the property taxes, and may even pay some or all of the utilities. These types of leases are nice and simple for us as San Francisco Bay Area business owners. Unfortunately, they are the rarest breed of commercial lease. A net lease gets much more complicated, and is the most common type of arrangement that you’ll find. In a net lease, you’ll pay a set amount of rent each month to occupy the space, but you’ll also be required to pay some of the variable costs of keeping up the property. For example, you might be required to pay all or part of the property taxes, insurance, and maintenance. You’ll definitely be on the hook for all of the utilities, too. A common term that you’ll hear in commercial real estate is triple net lease. This may be indicated by the initials NNN in an ad for the space. This is a net lease in which the tenant is expected to pay everything. The three N’s correlate to property tax, insurance, and maintenance. While more complex, a net lease gives you the opportunity to know and review the operating expenses of the property, and negotiate with the landlord. During challenging economic times, when landlords are a bit more under the gun, they are more likely to be open to negotiating the items you pay. This way, you may end up paying less than on a gross lease. Should I move my existing business premises? A year ago, millions of businesses across the country were closing their doors. Many of them will never reopen. This has left commercial real estate landlords in a pinch, and desperate for a paying tenant. This creates opportunity for you. If your current lease is up and you’re open to moving, or you’re just starting your business, right now could be an incredible time to snap up a premium location at a below-premium price. Building owners just want somebody in the space paying rent to cover the costs of running the building or paying the mortgage. Empty space in a commercial real estate building also just doesn’t look good, and can reduce foot traffic due to perception of issues on the property. Take advantage of this situation by asking about empty spaces that might work for your business. If you happen to know other business owners that have had to vacate their space due to cash flow issues, ask them to put you in touch with their landlord, as you might be able to take over a lease under good terms. This becomes win-win for the landlord and the other (or perhaps “former”) business owner. If your business has been in the same location for a long time, and you’re well-known for being in that location, you may need to give pause to the thought of moving. If money is tight and getting tighter, moving may be the smart thing to do even if you’re well established in an iconic location. This is a conversation we’d be more than happy to have with you. Should we buy or lease my business location? Now might be a good time to consider buying your business location, if you’re in a financial position to do so. Leasing obviously gives you a lot more flexibility for your future, but if business is going well and you can see yourself being

Cybersecurity

5 Cybersecurity Steps all San Francisco Bay Area Business Owners Should Take

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From making sure that nobody is doing Zoom calls in their bathrobe to ensuring that work actually gets done on time, you’ve got a few extra things to worry about as a San Jose area business owner these days. Chief among those new concerns, however, should be cybersecurity. Cybersecurity steps are one of those painful, annoying topics that nobody wants to think about in a small business environment (kind of like *ahem* taxes and accounting) … but one that rears its head as a terrible, business-killing beast when left unattended. There’s an entire slew of “information security” concerns that may not have been top of mind back when all the files and sensitive data were locked up nice and tight back at the office, but should be at the forefront now for all San Jose area business owners. Before we dive into that, though, a quick reminder on an important business tax deduction… As your favorite San Francisco Bay Area restaurants re-open, don’t forget that recent stimulus legislation bumps the business meal deduction all the way up to 100% for both takeout meals and meals consumed at the restaurant. If you’re traveling for business or take a customer or prospect out to eat, that totally counts. What doesn’t count are prepackaged foods, such as prepared sandwiches and wraps, that are purchased from places like San Jose area convenience stores. During that customer meeting at your favorite local eatery, let’s delve into some important tips that you should pay attention to before connecting to the restaurant wi-fi (among other things) … 5 Cybersecurity Steps all rea Business Owners Should Take“You may have to fight a battle more than once to win it.” – Margaret Thatcher Whether your San Jose area business is in full-on work-from-home mode, or your business is such that this is a totally foreign concept, the reality is that cybersecurity steps are something you absolutely need to address. Your office computers, employee laptops and tablets, cloud services (which can be accessed remotely), and even company cell phones all have an insane amount of information on them that hackers would love to get their digital hands on. Along with customer credit card numbers and employee SSN’s and DOB’s, your digital records contain a wealth of valuable information. Even something as seemingly innocuous as customer estimates and invoices can look like hidden treasure to the world’s digital pirates. Taking basic cybersecurity steps is cheap protection against potentially embarrassing and expensive data breaches. If you do have employees working remotely, it’s your responsibility to protect customer and employee data. Just like the IRS sets minimum requirements for us to protect YOUR private information, you should also set minimum standards for cybersecurity in your own business. A recent study by Shred-it (business document destruction company) stated that a whopping 96% of American consumers consider a business’s employees to be the largest risk factor for a data breach. So, how do you put your San Jose area customers at ease, do the right thing, and help prevent data breaches and ensuing expensive lawsuits? Step 1: Have a Written PolicyThe first of the five cybersecurity steps you need to do in order to protect against data breaches is to have a written policy at your San Jose area company about data security. You need to put rules in place that both protect data and prevent your employees from taking shortcuts that put valuable information at risk. For example, you’ll want a policy that covers minimum password complexity as well as a process in place for ferreting out all those “abc123” and “password” passwords. Your written cybersecurity policy should outline the basic things your staff should do to keep things secure. Be sure that your policy includes the use of proactive defenses like anti-virus/anti-malware scanners, drive encryption, and software firewalls. You’ll also want to specify what software programs and apps are okay for your employees to use when accessing company information. Step 2: Use Secure ConnectionsUsing secure connections is the next one of the cybersecurity steps to take. One of the most common ways that criminals access company data is when employees are using unsecured, public Wi-fi networks, and that includes those in San Jose area. Even if they’re at home, most people don’t properly secure their home routers. It is essential to provide some level of technical support, at company expense (deductible, of course!), to help at-home employees secure their Wi-fi connections. You should also consider subscribing to a secure VPN service. These services are affordable and provide a secure “tunnel” between an employee’s home internet and your business network. Make sure to choose a service that uses top level encryption across the entire span of that “tunnel.” Step 3: Use Password ManagersOf the many cybersecurity steps you should take, this might be the most important one across the board. Weak passwords (remember “abc123”?) are everywhere. This tends to be one of the weakest links in cybersecurity, especially for small San Jose area businesses. With all the services and software that your business runs on these days, your employees likely have a metric boat load of passwords that they can’t possibly remember. Which means they are probably “recycling” their passwords. (Yeah, that’s not a good thing.) While choosing more secure passwords is a good starting point, it may be worth investing in a password manager for every member of your team. Tools like LastPass and 1Password are very affordable and go a long way with helping your employees create secure, unique passwords for all the services they need to access. Step 4: Use 2-Factor AuthenticationTwo-factor authentication (or 2FA as the cool kids call it), adds a layer of security on top of passwords. Even if a password gets hacked, 2FA is one of the very difficult cybersecurity steps to hack. 2FA requires that you enter a code to access an online service. This code can be sent as a text message to an approved cell phone or can use a special security fob that shows a number

Business Growth, Business Tax Planning

The New Stimulus Update and Tax Issues for San Francisco Bay Area Filers

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The “American Rescue Plan” has been finalized. And there are things about the new stimulus update our San Francisco Bay Area clients should know. While I normally write weekly, there is information in this strategy note that you need to know about now that might even impact how you proceed in the following days. As of this writing, Congress has agreed — but this is so fresh off the presses that many of my industry colleagues are scrambling, and the research services are still compiling all the data. But I felt it important to get ahead of all of that on your behalf. If you know anyone in San Mateo who needs assistance, we are tracking all of this for our clients and are taking on new clients even now. Feel free to send people our way, and have them use this to get in touch: (408) 241-4100 There is a lot to discuss about the new stimulus update, and I will have more to say early next week, but this is important for you to know about NOW. So let’s dive in… Stimulus Payments (and how they might impact your tax paperwork) These are different from previous stimulus programs: $1,400 dollars per taxpayer and dependent (with significant income limitations). 1) Previously, if you had a child over 16, or an adult dependent, they would not qualify. In this round, you’ll receive a payment for yourself and each dependent — depending on your income. 2) The “phase out” for this is significant and steep. What this means is that in previous rounds, the phase out was much more gradual. The phase out began at the same numbers (75K for individual,150K for joint-filed return, and112,500 for HOH), but they were so gradual that it didn’t significantly impact filing decisions. Now — you will NOT receive these payments if your income is anything over 80K for individuals or 160K for joint. How This Might Impact ~ProfileMarketArea~ Taxpayers NOW (Tax Planning) We want to get you the most out of the new stimulus update as we can. And once the IRS issues you a stimulus payment, it’s yours. TIMING matters, and so might how you file (in certain unusual cases). TIMING: If your 2020 income increased versus 2019 … Congratulations on your income increase … and let’s work on other ways to reduce your tax obligations in the future. If your 2020 income decreased versus 2019 … The new stimulus update has two phases for distributing payments. In phase 1, the IRS will take the data it already has and pay out of that. If you didn’t file a return in 2019 or 2020, you will not get a stimulus. But fret not … in phase 2, there will be a second date on which the IRS will calculate stimulus payments. This will be for those who had an income decrease. That date will be the earlier of 90 days after the tax deadline day (whatever it might be — more on that later), or September 1. So as long as we get your taxes filed on time, you WILL get it. You do not have to FILE YOUR TAXESRIGHT NOW. Don’t let any scammy San Francisco Bay Area tax pros or marketers tell you differently. Fortunately, this issue was (miraculously) considered within the text of the bill. HOW YOU FILE: In certain odd cases, it might actually make sense to file “married filing separately” for your 2020 taxes even though you will (as a result) pay slightly more in taxes — because by doing so, you will be able to receive a greater stimulus payment. It would then outweigh the greater tax you might pay. This will not be the case for most of my clients, and it mostly will concern San Mateo filers whose income hovers around the phaseout thresholds. If this is you, get in touch with us: (408) 241-4100 “When Will I Get My Stimulus?” Unclear, but likely these will begin by the end of this month for those who already are under the thresholds and qualify. For the rest, it will be after the second phase that I already mentioned. Unemployment Now (Partially) Non-Taxable (for most)I already mentioned in a recent post, and it has been confirmed in the the new stimulus update– the first 10,200 of unemployment benefits are untaxable — but only for those whose income is below 150K. This is a very real benefit for many, probably meaning about 1,500 in savings. But the timing on this will take some time because the IRS will have to issue guidance. If you know anyone in San Francisco Bay Area who has unemployment who has already filed their return, it is likely that they might have to amend … but not necessarily. We are here to help if you want to make sure: (408) 241-4100 There are (obviously) many more elements to the new stimulus update, and I will unpack them in the following weeks. There are changes to child tax credits, earned income credits, and more. Look out for my update next week on those items. In the meantime … know that we are in your corner. (And also, extend us grace as we are handling these matters for a variety of clients, many of whom have very difficult circumstances. We are here to serve, and have prepared for these kinds of legislative curveballs … but they are curveballs nonetheless.) Warmly, Patti ONeill and Gale Bergado

Business Growth, Business Tax Planning

What San Francisco Bay Area Business Owners Need to Know About Commercial Real Estate Mortgages

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Does the thought of paying rent to your San Jose area commercial landlord for eternity make you cringe? Do you get a little bit of FOMO when you hear stories about other people building empires with real estate? The decision to purchase your own space from which to operate your San Francisco Bay Area business is a major one. MAJOR. And one of the biggest complexities of that decision has to do with the vagaries of commercial real estate mortgages. Before we get into that, we do have a very time-sensitive notice for San Mateo restaurant owners: THIS WEEK, the SBA opened applications for the Restaurant Revitalization Fund (RRF). This new program provides relief funds for restaurants, bars, and other food and drink establishments that have lost revenue due to the pandemic. To read the SBA program guide, go here. Please share this helpful info with any San Francisco Bay Area restaurant owners you may know, to make them aware of this program. It is expected that the funds allocated to this program will go quickly, so we want to make sure that all San Francisco Bay Area restaurant and bar owners are aware of it. Now, let’s explore how to make your dream of owning your office, store, or shop a reality. What San Francisco Bay Area Business Owners Need to Know About Commercial Real Estate Mortgages“You just can’t beat the person who won’t give up.” – Babe Ruth For many people, the American dream includes a cozy home with a manicured lawn, and our home loan system is merrily set up to make this dream a reality for quite a few people. But for entrepreneurs dreaming of owning their own store, shop, or office location, the dream is a lot murkier. There are quite a few differences between residential mortgages and commercial real estate mortgages, and you need to be sure you fully understand what you’re getting into before taking the plunge into commercial property financing in San Francisco Bay Area. Primary Differences from Residential LoansThe United States has some of the best home loan options in the world. The most common loan type, which you’re probably familiar with, is a 30-year, fixed-rate loan. These residential loans are readily available, have low interest rates, fairly low fees, and carry no prepayment penalties. Commercial real estate mortgages tend to be the polar opposite. Commercial mortgages tend to be much shorter time periods. Five to ten years is a typical loan term. The monthly payment is often calculated based on a 20 or 30 year time period, but the loan itself comes due much sooner. At that time, a balloon payment is required, which means that you must either have the cash to pay off the loan, or you must refinance it. Most business owners end up refinancing into a new loan. But you don’t want to refinance too soon. No, no. Unlike residential mortgages, commercial loans almost always have a prepayment penalty for refinancing too early. For example, a five year loan will typically have a two or three year prepayment penalty. It’s pretty common for a 10-year loan to have a 5-year prepayment penalty. These penalties are pretty stiff, also. A common structure is to have a gradually decreasing percentage of the loan balance as the penalty. For example, a loan with a 5-year prepayment penalty period might charge 5% of the loan balance if you pay it off in the first year, 4% in the second year, 3% in the third year, 2% in the fourth year, and 1% in the fifth year. This is referred to as a step-down prepayment penalty. There are also other methods for assessing this penalty that get pretty complicated. You may be able to avoid prepayment penalties by agreeing to other terms that benefit the bank, such as a floating rate loan. As the name suggests, this is a loan with a variable interest rate. Your mortgage contract may stipulate a min and max interest rate, and the time period in between adjustments. In a low interest rate business environment like we have right now, it can be a difficult decision to choose between fixed and floating rate loans. You’ll also find that interest rates on commercial mortgages will usually be higher than on residential loans. This is because of the government-backed entities, such as Fannie Mae and Freddie Mac, that buy up residential loans. Since this doesn’t exist in the commercial mortgage world, banks must manage their lending risk themselves, and thus they tend to charge higher rates for that risk. Commercial properties are going to require significantly greater down payments than residential loans. While no money down, 3.5% down, and 5% down loan programs are quite common for homes, commercial loans will almost always require a minimum of 20% to 30% down. Lastly, the fees that you’ll pay in obtaining a commercial mortgage might make you shed a few tears. Residential mortgages tend to have total fees in the range of 1% to 2% of the loan amount, whereas commercial mortgages frequently have fees in the range of 3% to 5% of the loan amount. Still craving your own San Mateo office building? Let’s talk about qualifying for this loan… Commercial Mortgage QualificationAs crazy as this may sound, it’s absolutely possible for a person to buy a home with no money down, a 580 credit score, a bankruptcy filing on their record, and even while owing back taxes to the IRS. Such loan programs not only exist but are also promoted and backed by federal agencies. Qualifying for a commercial real estate loan is another beast altogether. Qualification for commercial real estate mortgages is primarily based on the ability of the property to support itself. In other words, banks want to see that the property can generate enough rent to cover the mortgage payment, taxes, insurance, and other expenses, plus have a little extra left over every month. This is far more important than your own personal credit score or personal income. A lender will want to evaluate

Business Growth

5 Helpful Tips for San Francisco Bay Area Businesses To Be More Resilient in Crisis

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The overall economy is on a tear right now, but for some businesses, things don’t look so rosy. By the way, if that is you and your business (not so rosy), there are a multiplicity of grants, tax credits, and very favorable loans available — though doing it properly can be tough to navigate. Let us help you: (408) 241-4100 According to the latest federal estimates, about 200,000 MORE businesses permanently closed last year than would have in a normal year. And I sincerely hope that your business is either back open, will be soon, or never fully shut down in the first place. But regardless of which bucket you fall into, there are a number of “best practices,” which have been put forth by management consultants, business advisors, and those MBA “thought leader” types about howlargebusinesses should be opening back up. So, I thought it would be useful today to distill some of those lessons down into practical tips for small San Francisco Bay Area businesses to become more resilient in crisis. A couple quick reminders first… Now, let’s dive into some tips for getting your San Francisco Bay Area business back up to speed as the events of 2020 start to fade into the rear-view mirror… 5 Helpful Tips for San Francisco Bay Area Businesses To Be More Resilient in Crisis“The future belongs to those who believe in the beauty of their dreams.” – Eleanor Roosevelt As the economy reopens and things begin to return to normal, one thing is clear: Normal ain’t what it was. I cringe every time I hear the phrase “new normal,” so I won’t use that phrase. Oh, drat, I just did. That was the only time, I promise! So, as lockdowns are lifted, vaccines are doled out, and people leave their caves to see sunlight for the first time in a year, what can San Mateo business owners do to not only ease the transition back into business-at-full-speed, but also make your business resilient in crisis? TIP #1 To Be More Resilient in Crisis: Make a Plan You Can Believe In We don’t get into politics around here. We understand that everybody has different opinions on various things, and we respect that. Whatever your personal opinion happens to be about various actions over the past year, what’s been done has been done. That’s just the reality of where we are. Thus, your San Francisco Bay Area business re-opening plan has to take that reality into account. As you re-open your business, expand services, and the like, you need to be comfortable with how you operate. So do your employees and customers. If they don’t feel safe interacting with your business, then employees won’t show up for work, and customers won’t give you business. Be sure to have a rational conversation with your employees about their expectations (and yours) regarding things like disinfecting surfaces, use of PPE (which is tax deductible!), social distancing, and other factors. Everybody should be on the same page, and you can’t get there with your employees if you don’t have the conversation. Most importantly, don’t ignore your customers. Develop an understanding of what YOUR customers will want your business to look and feel like as things return to normal. This doesn’t even necessarily have to be about whether you require customers to wear masks or not. No, this is about bigger picture things, and I want those in San Mateo to be bigger picture thinkers. For example, many consumers have been spoiled by home delivery. This is now a permanent part of the business paradigm. Is this something San Francisco Bay Area customers expect? Can you increase revenue by adding this service if you don’t already have it? Consider the different products and services that you sell. Will some start to sell again faster than others? For example, it’s a great time to be a homebuilder right now because demand is so high. Figure out what will be in highest demand from your customers, and be prepared to meet that demand with extra inventory or expanded service capability. If your business requires you or your employees to physically visit San Mateo job sites, make deliveries, or other on-site services, what are your customer requirements going to be for your staff? Some businesses are mandating that visiting service personnel be vaccinated, for example. You’re going to need to determine how to address this within your own business and with your own staff. TIP #2 To Be More Resilient in Crisis: Shore Up Your Supply Chain Sawmill shutdowns (resulting from a combination of government orders and sick employees) have caused the price of lumber to more than triple. Computer chips (and a current shortage of them) needed to make everything from cars to talking children’s toys have caused shortages of other goods and price spikes. One tiny boat plowing into the sand disrupted the global supply of motorcycle parts. Supply chain disruptions happen all the time. Always have, always will. But as the business norm has shifted in recent years to “just in time” delivery, these little hiccups cause more harm than they used to. Just because you’re a small San Francisco Bay Area business doesn’t mean you’re immune to them. Several of our clients have already shared such stories with us. Here are some quick tips to help ensure the survivability of your supply chain: TIP #3 To Be More Resilient in Crisis: Embrace the Digital Another permanent change to the economy is a greater reliance on all things digital. If you’re a bit of a technophobe, or you know that your business is technologically backwards, it’s time to step up to the plate. There are certainly some big changes such as some jobs now becoming permanent work-from-home situations. If you have jobs like this in your company, you’ve already had to embrace the change. If not, take the time to evaluate which roles can be performed in this manner, and embrace the change. Some employees may need it, plus it can reduce your costs in other areas, like how much office space you need to lease. Certain sales and service items are worth moving online

Business Growth, Business Tax Planning

Expense Reimbursement vs Company Credit Cards: What San Francisco Bay Area Business Owners Need to Decide

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If you’ll forgive us, we’re going to get pretty geeky today. You probably didn’t realize that there are actual pros and cons to expense reimbursement for employees, etc. or using a company cc. Oh my San Jose area readers, we’re going to take you down a little rabbit hole today, yes we are. But first, a quick update on some relief programs we’ve previously discussed. First, the SBA has stopped accepting new PPP applications as most of the funds for the program have been allocated. So, if you didn’t already apply for a PPP loan for your San Jose business in this funding round, you’ll no longer be able to do so. Second, the Restaurant Revitalization Fund (RRF) program that kicked off last Monday is now in full swing. So far, the fund has received almost 200,000 applications from bars, restaurants, bakeries, and similar businesses. In our opinion, this is still a small proportion of those who actually need it. If you run such a business in San Francisco Bay Area, or know somebody that does, funds are available to help with payroll and rent. Funds are on a first come, first serve basis for approved applicants. So, just like applying for PPP loans, timing is of the essence. This is a great program for the right business. To read the SBA program guide on the RRF, go here. And as we mentioned last week, please do forward this email to any San Jose area restaurant owners you may know to make them aware of this program. It is expected that the funds allocated to this program will go quickly, so we want to make sure that all San Francisco Bay Area restaurant and bar owners are aware of it. Now, let’s dive into handling business expenses paid by employees. Expense Reimbursement vs Company Credit Cards: What San Francisco Bay Area Business Owners Need to Decide“The secret of getting ahead is getting started.” – Mark Twain You gotta spend money to make money. All businesses need supplies, materials, and services to help produce their own goods and services. Depending on the nature of your business, your employees may need to make independent purchase decisions on a frequent basis. Empowering your employees to make these purchases on their own can make your business run much more efficiently. After all, do you really need to be involved in the decision to buy a new toner cartridge for the printer? Common expense types your employees may need to pay for include: All of these expenses, and many others, are necessary to complete tasks required to run your San Francisco Bay Area business. The critical question you need to address up front is this: Will you reimburse employees for expenses they pay or provide them a company credit card to pay such expenses? This decision comes with important tax and accounting consequences, and you as the business owner need to know the pros and cons of each method. Time SavingsOn the surface, issuing employees a company credit card may seem to be the better option in terms of saving time. With a credit card there are no expense reports to be completed, no reimbursement checks to be cut. Sounds good, doesn’t it San Mateo friends? But think about this: Do you need to allocate expenses to specific clients? If your employees are, for example, purchasing parts and materials needed to complete a job for a customer, then those credit card charges ultimately need to be assigned to that customer’s account for invoicing. This means somebody has to go through the credit card statements and reconcile them against receipts and job orders. Oops! There went the time savings. If you don’t need to do this for tracking expenses back to specific customers, then a company credit card can certainly save a lot of time. Otherwise, having employees complete expense reports and reimbursing them for business expenses they paid out of pocket may actually be faster and easier for your business. Trust IssuesWhen you provide a company credit or debit card to an employee, you’re placing a significant amount of trust in that person. You need to have faith in your employees that they won’t go on a wild Amazon shopping spree. If this is a concern, running a reimbursement program might be the better way to go. We’d say this is particularly true if you happen to have a fair amount of employee turnover, or if you operate multiple locations inside and outside of San Francisco Bay Area wherein you don’t necessarily know each and every employee. As your business grows, you won’t have direct connection with every single team member, which can exacerbate trust issues. Use Tax AuditsAs more people have worked from home over the last year and have taken their company credit cards with them, one issue in particular has grown quite a bit larger. This has been compounded by state budget issues, causing states to step up their enforcement efforts in order to collect more revenue. What are we talking about? Use tax. Use tax is a tax you’re supposed to pay when sales tax wasn’t paid on items used in your San Mateo business. If your employees are working from home and order supplies online, for example, those supplies may be being ordered on a website that doesn’t collect and pay sales tax in our state. Thus, you’re supposed to pay the equivalent sales tax in the form of use tax and file a separate tax return for this purpose. The credit card statement that shows the transactions your employee is making can be demanded by the state when they conduct a use tax audit. As they scrutinize purchases that you may not even really be aware of, they’re looking for those online transactions for items used in your business that were shipped in from out of state, and then you may be liable for a use tax bill or, at the very least, have to pay the cost of us to represent you to fight that tax bill. This is a clear downside

Business Tax Planning

4 Next Steps for Business Tax Return Review

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This week marks the end of another tumultuous tax filing season. I can’t remember anything like it. With the last minute legislative changes, software update delays, and IRS service issues — this very well might have been the most disrupted and difficult tax season in decades. But despite an exhausting tax season, we’re never done, and we’re always here for YOU – including for a business tax return review. More on that in a moment. We know that it probably hasn’t been easy for your San Francisco Bay Area business either, and we sincerely appreciate the trust you’ve placed in us to guide you through the difficult time we’re living through. Despite all the challenges in the world right now, we’re incredibly optimistic about the future, and look forward to continuing to work with you as you build a bigger and better business through the rest of 2021 and beyond. 4 Next Steps for Business Tax Return Review So, let’s talk about just that (your San Francisco Bay Area business), shall we? Just because tax season is over doesn’t mean we’re not still here for you. In fact, right now is a great time to devote yourself to a business tax return review. This means we want to help you look at your business finances and make improvements that’ll put you in a better position for the future. Here are a few “what ifs” to mull over, that we could help you with over the coming months. Business Tax Return Review Step 1: What if you could reduce some business expenses? It’s very rare for a business to be operating as lean as it possibly could be. There’s also a point of diminishing returns when it comes to trying to reduce your operating expenses. But we can help you find a happy medium. Let’s discuss how to: – Eliminate software that you’re paying for but don’t actually need.– Identify things that you’re doing yourself that could be done better and cheaper by hiring another company to do it — and vice versa.– Seek out ways to reduce the cost of the administrative work that is required to run your business.– Look at what could be automated in your business — without sacrificing quality of work. Some cost reductions are simpler than others. For example, switching company cell phone plans or finding a cheaper credit card processing service are the low-hanging fruit. But with some analysis, we might be able to help you find other ways to save money without introducing any negatives. Business Tax Return Review Step 2: What if you could streamline some business processes? We’ve worked with businesses in a lot of different industries in San Francisco Bay Area over the years. In that time, it’s been interesting to see both the differences and similarities in what makes each type of business “tick.” One of the most fascinating things is that ideas from one industry can often be applied to a totally different industry to make significant improvements in the efficiency of how that business operates. For example, we can help analyze who does what within your business to ensure you have the right people doing the right tasks. We can also take a look at how information is communicated at all levels of your business, finding ways to reduce unnecessary back-and-forth stuff and eliminating wait times for key decisions. You likely have workflows that can be digitized to make them more efficient, too. These are just basic examples of the type of process improvements we can help you out with Around here, we like to say that Efficient Business = Profitable Business. We can help you evaluate some of your business processes to identify areas for improvement helping your business become more profitable. And all without paying the insane management consulting fees that a giant consulting firm would charge you! Business Tax Return Review Step 3: What if you could increase your prices? You may have noticed that the prices of everything from food to lumber to used cars has gone up lately. While Jerome Powell of the Federal Reserve recently shared that these price increases are short-term as the economy reopens, I think it’s easy to see that some prices will never come back down. And many of you in San Francisco Bay Area are feeling this. When was the last time you evaluated your own prices for your San Mateo business? If it’s been a while, let’s talk about it. Your supply costs have likely increased, as have your labor costs. Not to mention the fact that you need to increase your own net profits in order to maintain your own lifestyle as costs go up around you. So, let’s take a serious look at all the inputs into your business and determine whether it’s time to raise your prices and exactly how much. Business Tax Return Review Step 4: What if you could build up some cash reserves? A year ago, many small businesses were running really, really tight. In fact, news articles at the time showed that most small businesses had only 29 days of cash on hand. That meant when lockdowns hit, they didn’t have the cash reserves to survive. If your business had an emergency fund, then your business could weather most short-term economic shocks. If you’ve ever seen gigantic corporations report taking multi-billion dollar losses during a quarter and wondered how on earth they can do that, it’s because they either: As an example, a little computer company you may have heard of called Apple has over $195 billion in cash on hand. That’s…wow… Yeah, that’s a LOT of money. It’s so much money that it’s hard to envision anything being able to destroy Apple as a company, short of an asteroid obliterating the entire planet. While you may not need to hoard that much cash, wouldn’t it be nice to have a 3-6 month cushion in case something else happens? That’s definitely a conversation worth having. So, just because your business tax return is filed and done, doesn’t mean there isn’t still

Business Growth, Business Tax Planning

5 Tax Planning Tips to Give Your San Francisco Bay Area Business a New Look This Summer

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Before we talk about some tax planning tips to give your business a new look this summer, we first want to say that we hope your Memorial Day weekend was special. Even though this San Francisco Bay Area business owner had some work to do, a quiet office is my friend. In thinking about the spirit of this past weekend, we are reminded of how very grateful we are for our servicemen and women who made the ultimate sacrifice. May all of us live our lives as a reflection of their honor and the gifts we too easily take for granted. Let us never take those freedoms as “automatic.” And as Memorial day also serves to remind us, summer is finally here.But, lest you think we just sip margaritas by the pool all day after tax season… What we really spend a lot of time doing in the summer issitting down with San Jose area business owners to carefully analyze their tax situation — BEFORE the winter strikes and the moves become much more limited. This is called “tax planning,” an essential move to get the maximum tax savings possible. And with what *might* be coming down the pike from Congress, wisdom says it’s time to get your ducks in a row and plan for what lies ahead. If you’re ready for some tax planning tips, let’s chat: Patti (408) 241-4100  Gale 408-775-7800 These sort of issues are what we specialize in worrying all about — so you don’t have to. Because YOU have to keep your head in the bigger picture. Some thoughts for that below… 5 Tax Planning Tips to Give Your San Jose area Business a New Look This Summer“If you think you are too small to be effective, you have never been in the dark with a mosquito.” – Betty Reese Entrepreneurs know that hard work and a great idea don’t guarantee success. Fortunately, most of them also know that failure isn’t final — almost every successful business owner has crashed and burned at least once in their career. One of the best ways to pick yourself and your San Jose business back up off the ground is to take a fresh look at things you “thought” were set in stone. Here are some strategies that could give your business a fresh lease on life this summer… Tax Planning Tip #1: Re-target your market.In the heat of start-up passion, entrepreneurs frequently try to interest too broad a market: “Everyone will want to buy this!” The result: getting lost in the crowd. The more closely you define your market, the more success you’ll experience. Tax Planning Tip #2: Re-examine your price.Price is obviously supremely important. See how you can lower your overhead or cut production costs. Perhaps there’s a new way to package your products, so that your average transaction value can go up? Tax Planning Tip #3: Identify and push your best product.Focus on what works. If your hot product is coffee cups, look for ways to highlight and expand that niche instead of veering into new territory. How about different colors and holders for those cups? Tax Planning Tip #4: Make your marketing materials more memorable. Emphasize the benefits — SPECIFICALLY how features of your product or service will improve business or the quality of life for your customer. And scrutinize your advertising. Using big media is not always the answer, especially when you have narrowed your market. Don’t overlook narrowly-targeted marketing efforts or joint promotions. Tax Planning Tip #5: Keep promoting.Make sure your message sinks in. Find affordable ways to reach your target market, and use these avenues as often as you can. Try social advertising! These are just a few ideas to get you started. There may be longer conversations to be had. And that’s what I’m here for. To getting things done, Patti ONeill and Gale Bergado

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