People moving to the state of Ohio and our own residents are often confused with the city income tax structure.
In general, you owe a city wage tax for each city you work in. In addition, you owe city tax for your resident city.
Now most cities allow a resident credit for the wages you pay for working in another city, but not all do.
Hopefully that gives you a background to city tax. Now the tax tip is this. If you travel a good bit for your job, you may find that it's worth filing for an out of city work refund. For instance, Let's say your office is in the city of Cincinnati but you are out of the office for 10% of the time. You may receive that 10% back as a refund.
Wednesday, March 28, 2007
Monday, March 26, 2007
Personal Financial Tip Vol. 3
Anyone who knows me for any considerable amount of time has heard this from me
I don't know if it's a "misery loves company" scenario or if people naturally evolve to fit in with the group. Regardless, if you really map out the most influential people in your life you'll see the common threads.
So if you have issues around money, you'll find that you're surrounded by people with issues around money. Maybe when you look at your family and friends, you say "we never talk about money" and that may be the point. People can be so stressed about money that they can't really have an honest conversation about it.
So whatever problems you find in your life look at the people in your life. As a good friend of mine says... "If you can't change the people around you.... you need to change the people around you".
"You are the people you hang around with"If you find that you are stressed about anything going on in your life, you'll find that you are surrounded by people with same issues.
I don't know if it's a "misery loves company" scenario or if people naturally evolve to fit in with the group. Regardless, if you really map out the most influential people in your life you'll see the common threads.
So if you have issues around money, you'll find that you're surrounded by people with issues around money. Maybe when you look at your family and friends, you say "we never talk about money" and that may be the point. People can be so stressed about money that they can't really have an honest conversation about it.
So whatever problems you find in your life look at the people in your life. As a good friend of mine says... "If you can't change the people around you.... you need to change the people around you".
Friday, March 23, 2007
Business Tip Vol. 2 - Core Competencies
Last week, I posted some thoughts about your company's core competencies.
If you would place your business in only one of these three categories, which would it be.
1) Low cost provider
2) Product or service innovator
3) Exceptional service provider
Most small business owners make the mistake of attempting to straddle between low cost provider and exceptional service provider, mainly because they maintain a low overhead operation. Big mistake.
I would offer that almost any small business needs to position themselves as the exceptional customer service provider. Most small businesses don't have the economies of scale to compete with larger competitors.
As a result, don't give away pricing and provide the quality service the extra pricing pays for. Listen to customers in the market place, most of their complaints are usually focused on the vendor becoming a problem for the customer to manage, not the other way around.
The fact that you may maintain a low overhead operation allows you the resources to offer a higher quality product and service.
The other reason you don't want to position your self as the low cost provider is that the market place will never allow you to be anything but the low cost provider. Just look at a company like Walmart, who attempted to offer high quality more expensive merchandise... it was a complete flop.
Next week, I'll address the other pitfalls of being the low cost provider.
If you would place your business in only one of these three categories, which would it be.
1) Low cost provider
2) Product or service innovator
3) Exceptional service provider
Most small business owners make the mistake of attempting to straddle between low cost provider and exceptional service provider, mainly because they maintain a low overhead operation. Big mistake.
I would offer that almost any small business needs to position themselves as the exceptional customer service provider. Most small businesses don't have the economies of scale to compete with larger competitors.
As a result, don't give away pricing and provide the quality service the extra pricing pays for. Listen to customers in the market place, most of their complaints are usually focused on the vendor becoming a problem for the customer to manage, not the other way around.
The fact that you may maintain a low overhead operation allows you the resources to offer a higher quality product and service.
The other reason you don't want to position your self as the low cost provider is that the market place will never allow you to be anything but the low cost provider. Just look at a company like Walmart, who attempted to offer high quality more expensive merchandise... it was a complete flop.
Next week, I'll address the other pitfalls of being the low cost provider.
Tuesday, March 20, 2007
Tax tip Vol. 2 - State of Ohio Marriage Penalty
The state of Ohio has one of the most injurious marriage penalties in the country.
Most people are not aware that by filing separate tax returns they dramatically reduce their state income tax liability. In general, the closer the spouses wages are, the more like a separate filing will save tax dollars.
In our practice, approximately 15% of married filers benefit from filing separate returns.
The trap... your filing status for Ohio must be the same as the federal return. However, any extra tax on your federal returns may be offset by the the savings on your state returns.
Recommendation. Prepare your return both ways to see which way results in more money in your pocket.
Most people are not aware that by filing separate tax returns they dramatically reduce their state income tax liability. In general, the closer the spouses wages are, the more like a separate filing will save tax dollars.
In our practice, approximately 15% of married filers benefit from filing separate returns.
The trap... your filing status for Ohio must be the same as the federal return. However, any extra tax on your federal returns may be offset by the the savings on your state returns.
Recommendation. Prepare your return both ways to see which way results in more money in your pocket.
Monday, March 19, 2007
Personal Financial Tip of The Week 2
I get lots of question regarding home ownership and here are my main thoughts on such.
In general, I believe that people in today's market are buying way too much house. Let me show you some math.
Let's assume I buy a $200,000 home, the appreciation in that home is going to much higher than if I buy a $150,000 home, isn't it?
Let's do the numbers...... Let's assume you buy a $200,000 home (100% financing) and you're able to get an 8% annual return on investment (generous for a home), at the end of 5 years your home is now worth 293,000 (a gain of $93,000). Now compare that to the home I bought for $150,000, assuming the same 8%, after 5 years, my home is worth roughly $220,000, a gain of about $70,000.
On it's face, looks like a great deal... right?
Except that you can't forget to factor the extra $386/month I got to put in a mutual fund because I had a lower monthly mortgage payment. After 5 years, 8%, I have an extra $27,000 in actual liquid assets in the fund bringing my total increase in net worth to $97,000. In addition, I have the benefit of diversity in my net worth whereas you have your's tied up in the real estate market.
But let's assume that the increase in net worth is a push. How much more do you have to pay in real estate taxes, insurance, PMI insurance, plumbing repairs, homeowner association dues, maintenance, furnishings, roofs, water heaters etc, etc.. No one ever factors these costs in the return on their real estate and the fact is, the more expensive your home, the more these things cost.
In addition, by saving the money instead of having it locked into a mortgage payment, I have the ability to weather financial storms and the freedom to vacation, etc.
Yeah, but what about the write offs related to owning a home? As I tell clients all the time, I'd rather have tax on income rather than the deduction for losses. If you ever want a write off to lower your tax liability, I'll give you a tax preparation bill equal to your income, that will wipe out any tax liability you might have and I'll have to pay the taxes. Yet, I'm still waiting for the first person to take me up on my offer.
My advise on homes.... buy it like you would an apartment, find the location, budget, schools, etc. Don't over buy. You wouldn't rent a four bedroom apartment for two people would you? Don't do the same for your house. You'll find that being able to sleep at night is a lot easier when you don't have bill collectors calling your home.
In general, I believe that people in today's market are buying way too much house. Let me show you some math.
Let's assume I buy a $200,000 home, the appreciation in that home is going to much higher than if I buy a $150,000 home, isn't it?
Let's do the numbers...... Let's assume you buy a $200,000 home (100% financing) and you're able to get an 8% annual return on investment (generous for a home), at the end of 5 years your home is now worth 293,000 (a gain of $93,000). Now compare that to the home I bought for $150,000, assuming the same 8%, after 5 years, my home is worth roughly $220,000, a gain of about $70,000.
On it's face, looks like a great deal... right?
Except that you can't forget to factor the extra $386/month I got to put in a mutual fund because I had a lower monthly mortgage payment. After 5 years, 8%, I have an extra $27,000 in actual liquid assets in the fund bringing my total increase in net worth to $97,000. In addition, I have the benefit of diversity in my net worth whereas you have your's tied up in the real estate market.
But let's assume that the increase in net worth is a push. How much more do you have to pay in real estate taxes, insurance, PMI insurance, plumbing repairs, homeowner association dues, maintenance, furnishings, roofs, water heaters etc, etc.. No one ever factors these costs in the return on their real estate and the fact is, the more expensive your home, the more these things cost.
In addition, by saving the money instead of having it locked into a mortgage payment, I have the ability to weather financial storms and the freedom to vacation, etc.
Yeah, but what about the write offs related to owning a home? As I tell clients all the time, I'd rather have tax on income rather than the deduction for losses. If you ever want a write off to lower your tax liability, I'll give you a tax preparation bill equal to your income, that will wipe out any tax liability you might have and I'll have to pay the taxes. Yet, I'm still waiting for the first person to take me up on my offer.
My advise on homes.... buy it like you would an apartment, find the location, budget, schools, etc. Don't over buy. You wouldn't rent a four bedroom apartment for two people would you? Don't do the same for your house. You'll find that being able to sleep at night is a lot easier when you don't have bill collectors calling your home.
Friday, March 16, 2007
Business tip of the week
After last week's post, hopefully you've come with a couple of adjectives that you want to resonate though out your business.
Now I'd like to for you to consider this.
You would consider your business to be which of the following.
1) Lost cost provider - Are you the lowest priced product or service in the market place?
2) Product or service innovator - Do you have the latest/greatest product or service available in your market?
3) Exceptional customer service - Are you the leader in tending to your customers' needs?
Give some thought to these. Consider that you can only be one of these not a combination of two and just like last week, are all your relationships within your business (customers, suppliers, employees, competitors) consistent with being one of these.
Next week, I'll go over the common mistakes that most business owners make in their analysis.
Now I'd like to for you to consider this.
You would consider your business to be which of the following.
1) Lost cost provider - Are you the lowest priced product or service in the market place?
2) Product or service innovator - Do you have the latest/greatest product or service available in your market?
3) Exceptional customer service - Are you the leader in tending to your customers' needs?
Give some thought to these. Consider that you can only be one of these not a combination of two and just like last week, are all your relationships within your business (customers, suppliers, employees, competitors) consistent with being one of these.
Next week, I'll go over the common mistakes that most business owners make in their analysis.
Wednesday, March 14, 2007
Wednesday's tax tip
I receive lots of questions about items that are deductible against business income. The IRS deems any expense that is "ordinary and necessary" as a deductible expense.
What I usually tell clients is that any expense you incur with the intent to generate income is going to be deductible to you in some manner. My goal is get people to develop peoples' antennae for identifying deductible expenses.
So if you use your cell phone for business purposes, keep record of it; you buy a prospective client a gift, keep record of it; you drive to the office supply store for business supplies, keep track of it.
Some expenses such as cell phones, computers, etc. have personal usage limitations related to them but the point is still the same; keep track of those expenses.
What if I am an employee? The same rules apply, expenses such as union dues, unreimbursed mileage, professional licenses, uniforms, special shoes, etc. Again, are all deductible employee business expenses.
I think that often too many expenses incurred by taxpayer's are never deducted simply because the taxpayer never thought about them being deductible. So let's start keeping track of those now.
What I usually tell clients is that any expense you incur with the intent to generate income is going to be deductible to you in some manner. My goal is get people to develop peoples' antennae for identifying deductible expenses.
So if you use your cell phone for business purposes, keep record of it; you buy a prospective client a gift, keep record of it; you drive to the office supply store for business supplies, keep track of it.
Some expenses such as cell phones, computers, etc. have personal usage limitations related to them but the point is still the same; keep track of those expenses.
What if I am an employee? The same rules apply, expenses such as union dues, unreimbursed mileage, professional licenses, uniforms, special shoes, etc. Again, are all deductible employee business expenses.
I think that often too many expenses incurred by taxpayer's are never deducted simply because the taxpayer never thought about them being deductible. So let's start keeping track of those now.
Monday, March 12, 2007
Personal Financial Tip of The Week 1
This weeks personal financial tip of the day.
If you are annoyed with the barrage of pre approved credit card solicitations you can go to this website https://www.optoutprescreen.com and put your name on the list. This is supposed to prevent credit bureau operations from selling pre screen credit rating information.
For instance, I can buy a listing of everyone with a credit score of 700 or better. By enrolling on this website, you prevent the credit card companies from including you on these lists.
If you are annoyed with the barrage of pre approved credit card solicitations you can go to this website https://www.optoutprescreen.com and put your name on the list. This is supposed to prevent credit bureau operations from selling pre screen credit rating information.
For instance, I can buy a listing of everyone with a credit score of 700 or better. By enrolling on this website, you prevent the credit card companies from including you on these lists.
Friday, March 9, 2007
What are you passionate about?
Too often when I'm talking to clients and friends about business I'm always struck by the answer to this question.
Why do you own your business?
The first response is usually, money. But frankly, money is not the reason. You can earn money working for someone else. It has to be other things.
This is the exercise I offer every person I talk to. If you were to name 2-3 adjectives that you want every person that does business with your company to use what would they be?
Thorough? Personable? Professional? Timely? it could be a myriad of things. Regardless, I then challenge my clients. Are these traits applicable to every relationship in your business? to your employees? vendors? customers? prospects? If the answer is no to any of these then it's no for all of them.
So think about what it is that makes you touched, moved and inspired about the ownership of a business and let's start by making those things consistent throughout the business.
Why do you own your business?
The first response is usually, money. But frankly, money is not the reason. You can earn money working for someone else. It has to be other things.
This is the exercise I offer every person I talk to. If you were to name 2-3 adjectives that you want every person that does business with your company to use what would they be?
Thorough? Personable? Professional? Timely? it could be a myriad of things. Regardless, I then challenge my clients. Are these traits applicable to every relationship in your business? to your employees? vendors? customers? prospects? If the answer is no to any of these then it's no for all of them.
So think about what it is that makes you touched, moved and inspired about the ownership of a business and let's start by making those things consistent throughout the business.
First post
Here is the first post for this blog. This my goal for this blog.
Every Wednesday I'll post a relevant tax tip for the week. Each Friday, I'll post a relevant financial advice tip and/or business tip.
Enjoy.
Every Wednesday I'll post a relevant tax tip for the week. Each Friday, I'll post a relevant financial advice tip and/or business tip.
Enjoy.
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