And let the changes begin! This tax season is bad enough; wonder what next tax season will look like? :(
Follow the link below to read more.
And let the changes begin! This tax season is bad enough; wonder what next tax season will look like? :(
Follow the link below to read more.
About 3 years ago, I launched the Business in Hawaii series for Think Tech Hawaii. After 150 shows and becoming one of the most popular business shows in Hawaii, I decided to pass the hosting duties for the show to Ray Tsuchiyama and Dailyn Yanagida. This is the first interview I have done for Business in Hawaii since June 2018.
This year has been a year of transition for me. I have decided to personally begin the transition to a semi-retirement mode. I remain on the US Small Business Administrations Regulatory Fairness Board advocating for small businesses for Hawaii, Nevada and the nation. I remain an active CPA in Hawaii and Nevada with a focus on assisting companies and individuals with their taxes, retirement plans and expansion or relocation to the west coast, primarily southern Nevada.
This current episode of Business in Hawaii explores the advantages of the Las Vegas Valley and how businesses and individuals can benefit from a move. Maybe this is not for everyone, but for those struggling in Hawaii, it might be worth exploring the possibility. You will be surprised what you might find! Over 80,000 from Hawaii already have!
Please enjoy the video and hope to see you in Vegas soon!
Hawaii Business Magazine
Headline: What Happened to 2018?
By Reg Baker
Another year has fallen, and we are moving forward. Whether 2019 is a better year than 2018 is pretty much up to you. You can make it happen.
If you want history to repeat itself, then do nothing and maybe it will. But if want to do better, then identify what worked well in 2018 and what did not work so well (consider cash flow, profit, budget, sales, expenses, marketing, hiring, moral, employee success, etc.). A time-honored management concept is to “manage by exception”. In general, things that worked well in 2018 can be pretty much left alone; just keep doing them right. But those things that did not work well needs attention and a solution to make them better. Identify the areas with room for improvement and plan to improve them. Get some expert help if needed. Be proactive, tweak the processes and track results.
A quote that is very meaningful to me is, “a vision without a plan is just a mirage”. Do some planning and make it happen.
One significant change that requires some serious attention are the new 2017 federal tax reform rules passed in December 2017. Hopefully you have already been communicating with your tax advisor about how the federal tax reform changes will impact you. Most will benefit and see reduced federal taxes being paid, but the process will be different and possibly more complicated. Being aware of how to maximize the benefit of federal tax reform could save you significant federal tax dollars. You may have noticed that I have been emphasizing federal taxes. The Hawaii legislature initially elected not to follow 2017 federal tax reform and keep the older higher tax structure for state income tax. Unless this position changes (anything is possible), Hawaii will have two sets of tax rules to follow; one for Hawaii tax returns and another for federal tax returns. So much for tax simplification.
Other than the reduced 2018 income tax rates impacting everyone and the doubling of the standard deduction which helps many, here are a few more significant changes that you should be familiar with or ask your tax preparer about:
Depreciation – Bonus and Section 179. If you bought any business property in 2018, there is a good chance you can immediately expense it rather than depreciate it over several years or more. This might be good for reducing taxes but will reduce your profitability, which might need to be explained to the Banks.
QBI or Section 199A - For certain flow through entities and self-employed individuals, you might be able to deduct 20% of your qualified business income (QBI). This could be huge but complicated. Work with your tax preparer asap to maximize this potential tax saving opportunity.
SALT Limitation – State and Local Tax (SALT) is limited to $10,000. For high income tax states like Hawaii this could catch a few people. Your income tax and real estate taxes are capped at $10,000. Rental and business properties are not included in this cap.
Mortgage Interest - only deductible for $750,000 of mortgage debt and no deduction for home equity loans if not specifically used to buy or improve your home. There are some dates, twists and turns to the mortgage deduction rules so check with your preparer for your specific situation.
Good luck in 2019. With proper planning and a dash of discipline it could be the best year yet!
Here is my April 2018 article in Hawaii Business Magazine.
Everything is running great: Cash is coming in, bills are being paid and life is good. But then something happens and you can’t work for a few weeks or more. What happens to your business if you’re not there? If that’s scary, you need to address it and the sooner the better.
You must have someone trained, experienced and ready to step into your shoes to run the business, no ifs, ands or buts. Even if just for vacations (hopefully you know what vacations are), someone must be ready to temporarily take over management of the company in your absence.
The first step in making that happen is to hire a qualified individual with the right attitude, skills and corporate culture. This could be a family member but normally it’s not. Rarely do you find a family member who is interested, motivated and capable of filling your shoes.
Once you find the right person, the training begins. Remember, it may have taken you many years to learn what you know now. You need to begin the training process well before it’s needed.
How to train your backup depends on many factors. Was this person an internal or outside hire? Do they have your industry and executive-management experience and the maturity to deal with uncertainty? Identify this person’s greatest weakness and begin training there. Consider all training opportunities, including: on-the-job training, training by you or your staff, formal outside training and coaching by experienced consultants. Using all these options may expedite the training process.
Your No. 2 will also need a lot of hands-on experience actually doing your job, under your careful and patient supervision. Yes, they will make mistakes and yes, they will not always do it the way you would have but that is all part of the learning experience. And who knows? Maybe they will discover a better way of getting things done.
If you begin now – selecting the right person, training them well and providing a healthy dose of experience – the next time you are out of the office for a while, the business will be there when you get back.
Very educational video on our tax system. Humorous but pretty much right on.
Aloha and Happy New Year!
This has certainly been a very busy week. In addition to the Business in Hawaii Show, I was interviewed three times by KHON2 about tax reform and had two articles published in the Hawaii Business Magazine. See the links below for more information:
· Business in Hawaii Qtrly Commentary on Tax Reform and Diversification - https://youtu.be/0TaycFovAns?t=25
· KHON2 Interview 1 Tax Reform - http://khon2.com/2017/12/27/how-to-be-prepared-for-the-tax-reform/
· KHON2 Interview 2 Prepay Real Estate Taxes - - http://khon2.com/2017/12/28/should-you-rush-to-pay-your-property-taxes-early-it-may-save-you-money/
· Hawaii Business Magazine Article 1on Tax Reform – http://www.hawaiibusiness.com/most-hawaii-small-business-owners-will-save-on-taxes/
· Hawaii Business Magazine Article 2 on SMB Planning for 2018 – http://www.hawaiibusiness.com/make-next-year-better/
Everyone please have a safe and happy New Year. See you next year!
Are you ready for the current tax reform? Follow the link above.
This morning on Wake Up 2day, CPA Reg Baker, a nationally recognized wealth management specialist and Hawaii Financial Advocate of the Year, joined us in studio to talk about the new law.
Baker says it remains uncertain how this will affect each person because everyone’s tax and business circumstances are unique, but also because the signing of the Tax Cuts and Jobs Act is only the end of the beginning.
Baker says if you have not already done so, take all the deductions you can for 2017, prepay expenses if possible and defer revenue to 2018 by depositing checks or process invoices after January 1, 2018.
He believes most Hawaii small business owners will save on taxes but how that happens and how much you save will depend primarily on your unique situation and how your tax preparer completes your tax return.
His biggest suggestion is to stay in contact with your tax preparer, ask them to keep you informed and bounce ideas off them during the year. These efforts could bring huge tax savings and let you keep more of what you have worked so hard to earn.
“Remember, what matters is not how much you make, but how much you keep,” says Baker.
Uber was recently in the news, resulting in its CEO stepping down.
From my perspective, Uber’s CEO did not understand nor appreciate his limitations and the ramifications of his actions. Everyone owns a business can learn from this serious but common management failure.
As an owner of a SMB, you need to know your limitations. This is not as easy as it may first appear. Knowing what you don’t know can be challenging. And sometimes egos get in the way, like with Uber.
Most SMB owners have an inherent sense of knowing when they are entering areas that they have no real knowledge or experience with. But these same owners are also comfortable making quick decisions and moving on to the next challenge. Frequently this tends to cause these owners to not always recognize all risks involved.
Having a competent and experienced management team is the first line of defense again addressing your limitations. Having a team that has different strengths and talent is essential to a company’s success. When you hire in your own image, like many new business owners do, this results in duplication of talent and one of you becomes redundant.
Uber apparently hired many individuals with the same interests and talents. This created an “us and them” mentality resulting in a weak and dysfunctional management team. A “frat” environment was created and the problems accelerated. The owner finally had to step down.
Having a diversified and experienced management team with different skill sets and talents, being confident enough to discuss management issues openly would have potentially saved Uber and created a much stronger company.
A company needs talent in a variety of areas, like production, operations, management, accounting, finance, human resources, legal, insurance, technology, sales and marketing.
This diversification of talent can be achieved for smaller companies (SMB’s) by combining the hiring process with an advisory board or advisory team. Your attorney, CPA and Banker can help balance out the skill sets temporarily until the company can afford to hire someone full time. As a business owner, you might know some experienced managers (even retired ones can work) that would be willing to help out. The SBA Score/ACE program might be a worthwhile resource as will your Chamber of Commerce’s.
Please join me for this very popular year end event. It could save you some big dollars!
– Editor-in-Chief, Pacific Business News
3 hours ago
A way to speak up
PBN reporter Anna Hrushka caught up with Reg Baker, managing partner of Reg Baker & Company, for an update on the regulations and taxes that affect small business in Hawaii. Reg was recently appointed to the Hawaii Small Business Regulatory Review Board and already sits on the federal Small Business Administration Regulatory Fairness Board.
One of his top goals is making sure small businesses even know the opportunity exists to speak out and be heard because, as he tells PBN, too few businesses are taking advantage of that opportunity right now.
He makes a good point so I wanted to echo it here. The state’s Small Business Regulatory Review Board was established in 1998 and has these responsibilities:
Many business owners grumble to us about how hard it is to start and operate a small business in this town. If you have time to grumble, you have time to attend a meeting or, at the very least, submit a complaint online about a specific rule or regulation that is making problems for you. You can do that at the website I listed above, too.
I am flattered and honored to receive such a strong endorsement from Senator Green. Thank you Senator and all the best to winning the Lt Governor's race in 2018 and governor soon after that!!
There are good reasons for the old cliché, “You don’t ask the bank for money when you need it.”
First and foremost, rushing to a bank in a cash-flow crisis tells bankers that you are ineffective at planning and management. Both traits are critical to running a business. It also signals that you are ineffective at projecting and controlling cash flow, which suggests you might have trouble repaying loans. So the best time to ask a bank for money is well before you need it.
Building a banking relationship takes time, just like any relationship. You need to demonstrate to your banker that you are trustworthy, dependable and very knowledgeable about how your business generates and uses cash.
Take the time to talk with your banker. This might be a branch manager or someone at a central location. Every bank has a point of contact or a process within the bank to monitor every business account. Find out who or what this process is and begin relationship building. Work with your banker to learn about them and have them learn about you.
Maintain a healthy cash balance in your account. This will not only help you build a good credit score but will potentially catch the attention of the banker. (Bankers get rewarded for maintaining high average customer deposits.) When the time comes to borrow to grow your business, the groundwork has been done.
Be prepared when asking for a loan with three years of tax returns and financial statements. Prepare a cash-flow projection showing how much you need to borrow, how it will be paid back and when. Be able to explain how the financials, tax returns and projections all tie together.
Remember, that ultimately the bank is not lending you its money. The money is the community deposits that others have in the bank. The bank needs to protect those deposits and ensure its loans are repaid fully and on time. Many laws and regulations are aggressively enforced by the federal government to protect depositors from bad lending by banks. The bank is obligated to comply with those laws and regulations, which is why it needs to be so intensely careful.
Reg Baker has been a CPA and nationally recognized small business consultant for over 30 years. He serves on the SBA’s National Board of Directors for Regulatory Fairness and chairs Region IX. He also chairs the Hawaii Chamber of Commerce’s Small Business and Entrepreneur Committee and is a two-time winner of the SBA’s Financial Services Advocate for the state of Hawaii. Baker hosts the Business in Hawaii Show for ThinkTech Hawaii.
I wanted to share some exciting information with you.
Governor Ige has appointed me to the Hawaii Small Business Review Board. Please see attached appointment letter.
This state of Hawaii appointment, combined with my role on the federal SBA Regulatory Fairness Board will be powerful and allow me to work more effectively at helping small businesses with regulatory challenges at both the state and federal levels.
I am very excited about this new opportunity!
Reg Baker’s Report from Washington DC
Small Business Administration
Regulatory Fairness Board Annual Board Meeting August 2017
I just finished three days of providing testimony and participating in the national Small Business Administrations (SBA) Regulatory Fairness Board meeting. We had 22 Board members from across the US attend and represent their states and regions. I represented Hawaii and served as Chair of Region IX, which includes Hawaii, California, Arizona, Nevada, Guam and American Samoa.
I coordinated the testimony provided by Keli’s Akina, CEO of the Grassroots Institute and OHA Trustee on the negative impact the Jones Act has on businesses nationwide. I also provide testimony on behalf of the four Liquor Commissions in Hawaii (Oahu, Maui, Kauai and the Big Island) I regards to the challenges they and the states licensees were experiencing with the IRS tax clearance process. The IRS was very responsive and the issue has been resolved (in less than 4 weeks). We’ll have to wait and see what can be done about the Jones Act.
During the Board meeting I had the opportunity to hear reports and speak directly with senior administrative officials of the SBA, ONO, DOL, CMS, OSHA and the IRS. Below are some of the highlights:
Over 300 rules and regulations negatively impacting small businesses have been identified for elimination.
For every new regulation proposed two need to be identified for removal.
The President’s Cabinet is currently focused on Tax Reform, Healthcare Costs and Infrastructure. All of which will be approached with helping small businesses.
I have been asked to lead the efforts to explore collaboration opportunities with the AICPA (American Institute of CPA’s) and State CPA Societies to support small businesses nationwide. Contact has been made, the AICPA is very recitative and collaboration looks promising.
Outreach to the small business community in Hawaii and throughout the US is being encouraged and will include the local SBA offices, Chamber of Commerces, Trade and Professional Groups and other interesed stakeholders. The SBA is aggressively looking for any rule or regulation that has a negative impact on small business. Email me at Reg@regbaker.com for more information on how to offer a comment on a bad regulation and potentially get it fixed.
Loans and assistance to Veterans have been lagging in some Regions. Renewed focus on supporting and assisting Veterans to start and be successful with their own businesses has been requested by the SBA Administrator.
Overall, it was a very successful Board meeting and I am very encouraged that the President’s Administration will be working hard to address small business issues and assist these businesses to grow and thrive.
I am launching a CFO service that allows any SMB (Small Mid-Sized Business) to afford a top notch and experienced CFO to assist with managing and growing their business. These highly qualified CFO’s serve as business navigators and work on a “as needed” basis and priced accordingly. Starting at just a few hundred dollars a month you can get the financial talent of large companies. We can also train and coach your in-house CFO and help them reach a higher level of performance.
Please take a look at www.cfonav.com and let me know what you think.
Homeless in Hawaii - Very powerful and informative video! We can and should do more!
So honored to have been named a Hawaii State SBA winner twice. Once in 1993 and again in 2017. It helps to love what your doing!!
What an honor to be named as the 2017 SBA advocate for business in Hawaii. Attached is the certificate from the Hawaii State legislature.
Old song but still powerful. Only two minutes long but explains a lot. JC will always be loved by those who were "in country". It don't mean nothing!!