Tag: Blog | Page 2 | McMill CPAs & Advisors

Inflation Concerns Webinar

Jared Faltys

Specializes in financial planning, business tax planning, investment advisory services

Business Valuation Services: Why You Need to Know Your Value?

Clint Weeder

Specializes in business tax planning, investment advisory services, business valuations

The COVID-19 pandemic, uncertain market conditions, and potential tax law changes continue to impact small business owners and their families nationwide, and our community is no different. It has left many owners unsure of what the future may hold for their business and what planning they should consider to keep their business viable for years to come.

Business valuation services will help you get your footing as we slowly but surely put the pandemic behind us and as we learn more about the potential tax law changes. A business valuation gives you the state and health of your business and can assist you with many planning tools as you continue to grow your business and as you start to plan for your exit.

Most importantly, it can provide an essential component of your legacy planning for you and your family.

Warren Buffet quotes that “valuing a business is part art and part science.” Here at McMill CPAs & Advisors, we’re proud to combine art and science to offer complete business valuation services to business owners in Norfolk and throughout Northeast Nebraska.

What Are Business Valuation Services?

A business valuation is a process of evaluating the economic value of a company. Business valuation services come into play to find the true value of a business due to several reasons.

Determining The Sale Value

A business valuation protects you from short-changing yourself during a company sale. It ensures that the asking price is ideal for prospective buyers while you receive the best return on your investment as possible. We’ll help you analyze your business compared to peers, including metrics that set you apart so you can negotiate favorable terms.

Estate Planning

In the uncertain tax world today, it will be as important as ever to understand how your business will be treated as part of your estate, to ensure the legacy you want to leave behind holds intact. A business valuation can provide an estimated value of your business, so you can make the appropriate decisions when planning for the future and potentially avoid a costly estate tax bill.

Litigation

During court cases such as divorce or injury, where settlements are due, a business valuation is vital. You will need to determine the company’s value to avoid an unfair determination.

Planning an Exit Strategy

If you are looking to sell your company, establishing a base value is important. It helps you understand the financial strengths and weaknesses of your company so you can plan on how to increase the company’s overall value. We can assist in generating a plan forward, including tracking key performance indicators (KPIs) that are essential in your industry.

Business Buying

Buyers and sellers may voice different opinions on the true value of a business. A business valuation indicates the amount a potential buyer should pay for a business. The valuation looks at potential income and market conditions to ensure you don’t get overcharged.

Partnerships

When you want to incorporate with other members, a business valuation helps determine the value of your ownership. A valuation is an essential component of any buy-sell agreement, and it should be one that is easy to understand. This will avoid potential disputes in the future between members. It will provide for the smooth transition of new members into the company and the exit of existing members. It will also protect the families of those members on both sides of the table.

Strategic Planning

A business valuation helps entrepreneurs come up with a plan to boost their ventures. Present-day valuations will help you determine the business’s state and the decisions you need to make to improve it.

Funding

Before facing investors and banks for funds, you need a business valuation to enhance your credibility. It helps gain investor’s trust when they know how much your company is worth and it will help the bank better understand your financial position.

How Is a Business Valued?

There are various elements of a business valuation that establish the worth of a business. They include the following:

Net Assets

Valuators use the asset-based approach to gauge the value of a business that is asset-intensive. Under this valuation method, the spotlight is shined on the business’s net asset value. The value is determined by assessing the fair market value of all assets less liabilities.

The Market Value Compared to Peers

The market value approach method entails assigning the business a value comparable to that of similar businesses in the market (relative to size, sales, and industry). The transactions used for comparison can be a previous transaction with the same company, transfer of ownership involving comparable companies, and a market quotation from listed securities by a company in a similar industry.

An Analysis of Cash Flow

The discounted cash flow method (DCF) method is one of the most effective approaches to a business valuation. It looks at the potential future earnings of the business to establish worth. The approach can either analyze historical cash flows, or forecasted/budgeted cash flows to estimate the future cash flows of the company. The method is widely used for service-oriented businesses, and with businesses where cash flows can be projected with a higher degree of certainty.

The McMill Way

McMill CPAs & Advisors use the above methods to estimate your company’s business value. A business valuation helps you to assess the current “health” of your business, assess the viability of business deals, and plan for the future. Our professional team will help you understand your business and its value so you can make the best decisions for you and your family. Contact us with any questions you may have regarding our business valuation services and how they can assist you and your business in Norfolk and surrounding communities today!

5 Questions to Ask Before Hiring a Personal Financial Specialist

Jared Faltys

Specializes in financial planning, business tax planning, investment advisory services

As a business owner, if you are considering partnering with a personal financial specialist (PFS), you are on the road to mastering your financial future. You may have reached a position in your small business where you have accumulated enough assets and feel the need to work with an expert.

And most importantly, you want an expert that understands you and your family — your goals should become their goals.

You are also likely consciously living to a financial philosophy of saving and investing for retirement. Many people are usually unsure about the right time to start working with financial planners as they have many presumptions. While nothing is ever assured with the volatility of the market, it’s natural to have reservations.

With that in mind, it is always prudent to first do some research geared towards getting your business to a good financial position. Certainly, you can approach a financial planning agency, but how can you be sure they are right for your business? You will be involving a third party to manage significant aspects of your business’s finances, from investments to retirement planning.

Personal financial specialists can give business owners peace of mind that their finances are in good standing, even amid a volatile market. Couple that with the expertise of a CPA, and your business will be in good hands. Here are five questions you need to ask before hiring a personal financial specialist to understand if you are ready for the partnership. To learn more about how we help serve small business owners throughout Norfolk, Nebraska and the surrounding communities, browse our additional resources.

1. What Is Your Investment Strategy?

This is a critical question as it gives you a quick snapshot of your position in terms of savings and investments. It guides you on which assets and goals can gradually build a portfolio.

A successful investment portfolio comprises four elements — diversification, passive allocation, tax efficiency, and cost-efficiency. However, there is no standard portfolio as your objectives and goals will keep changing.

So, how often do you monitor and adjust it? Are you setting SMART goals and objectives? Anytime you decide on a strategy these are the kind of questions to ask among others.

Bringing in a financial planner will ease the pressure of ensuring your strategy aligns with your objectives. The key is to generate the long-term plan and adjust as needed with the guidance of a financial planner.

2. How Organized Are Your Finances?

In a 2019 CNBC and Acorns Invest In You Savings Survey, it was reported that 75% of Americans were managing their finances without professional help. While working with a financial planner is a personal decision, one may be essential regardless of how organized your finances are.

As your business portfolio keeps growing, you may struggle with managing the planning, risks, and budgeting. A financial planner not only has experience and knowledge, but they are also a trusted fiduciary. Having the fiduciary quality means they are professionally and ethically obligated to you.

Your personal financial specialist will recommend high-quality investments while lessening any risks that could erode them. In addition, you get to be in the driver’s seat of your investments as the planner handles all the complex tasks.

Lately, there is an increasing trend of unconsolidated 401ks and IRAs of millions of Americans due to moving jobs and other life changes. As a result, they lose out on capitalizing on their retirement accounts, likely because they have no idea what to do.

A financial planner can help you decide on the best options, such as rolling over an old 401k to an IRA while dealing with technical tax matters. They can also help you consolidate your 401ks, IRAs, and other investment accounts. Overall, having an organized financial plan will help you have a good idea of where you stand regarding your finances.

3. Are You Making a Life-Changing Decision?

Involving a PFS in significant financial milestones and decisions such as selling your business or buying new machinery is sensible. For instance, with selling a business, you have to consider multiple factors such as the correct business valuation and taxation issues.

A financial planner has the patience and skills to read through the fine print to avoid being shortchanged. Also, they will ask the right questions which will give you a unique perspective about any important financial moves. They will help you avoid making potentially costly mistakes such as undervaluing your business or missing tax-saving opportunities.

4. Is Tax Planning Becoming Overwhelming?

Financial planning and tax planning are interconnected. Taxes are part of everyday life and unfortunately, many small businesses tend to overlook their tax planning.

Currently, advisors are influencing their clients to take prompt action after President Biden proposed the doubling of the capital gains tax from the current 15-20%. If it passes, you will pay double the tax after selling an asset.

At this point, a financial planner is valuable as they engage in wide areas including income tax planning, estate tax planning, and individual income tax return preparation. You will be able to stay on top of strategies such as claiming tax credits and minimizing taxable income.

Your planner will be in the middle of managing important financial decisions that have tax implications. If it is a solo project, you can easily overlook costly tax mistakes accompanied by complex jargon and policies affecting your business’s longevity.

5. What Is Your Retirement Plan?

Do you know where finances will come from when it’s time to retire? Are those finances substantial enough? Having a clear picture of your retirement assures you of a comfortable future.

When a PFS comes into play, they will have to ask questions about your goals, objectives, and vision. This helps them customize a comprehensive financial plan for your retirement. It will guide them on which investment allocation is most suitable depending on your income level and the time factor.

As more people continue to work beyond the retirement age of 65, retirement planning is evolving too. What matters is that your plan is safe from market changes, ensuring that you will enjoy a golden retirement.

Ready for a Personal Financial Specialist?

The road to financial independence is not an easy one, but it is possible. It is worth noting that anyone can benefit from a financial planner, despite their income level and net worth.

You are also right to question the credentials and commitment of a financial planner to your financial goals and plans. Does their financial philosophy match yours? Are they capable of streamlining your investment strategy, retirement plan, and tax planning?

Hiring a financial planner is a personal decision that requires careful consideration, and asking the above questions will guide you to choose the best one. At the end of the day, the planner becomes an extension of your family.

McMill CPAs & Advisors in Norfolk has helped many business owners and their families work on their financial and wealth plans. Beyond offering investment advisory services, we help our clients manage complex tasks such as tax planning, estate planning, and business consulting services.Our client-friendly online platform will help you get acquainted with our resources, services, and our industry-wide experience. As financial planners, we understand any concerns you may have about your financial plans. If you are looking to work with dedicated and experienced financial planning experts in the Norfolk, NE area, please contact us.

5 Compelling Reasons Why Small Businesses Need a CPA

Andrew Steffensmeier

Specializes in small business preparation and planning, investment advisory services, business tax planning services

Many small businesses lack the capacity and the financial muscle to manage specific functions effectively. Preparation of financial statements and complying with the federal tax laws are among the most challenging functions that can put small businesses at risk.
As a business owner, do you find yourself wondering if your business is maximizing profit? Do you struggle to take advantage of the always-changing tax laws? Is your business running as efficiently as it should?
What’s more, the IRS has a string of tax-rel ated penalties that can result in substantial fines and cripple your business. How do you avoid these penalties while ensuring you’re maximizing your earning potential?
Partnering with a Certified Public Accountant (CPA) can help comply with IRS regulations, improve efficiency, and be accurate in your operations. Here are some of the ways we help business owners in Norfolk and surrounding communities throughout Northeast Nebraska.

1. Improve Efficiency

Preparing the book of accounts, end-of-year reports, or taxes is a complex and time-consuming operation. Businesses without the requisite set of skills cope through experiments and consultation.

Accountants possess a unique set of skills to incorporate historical data, dissect numbers, and give sound financial advice. Certified public accountants can also analyze data for the decision-making process.

Here’s how partnering with a CPA can improve business efficiency.

Take over Financial Tasks: Bookkeeping is a daily task that a business must undertake to track performance and prepare financial reports. The daily entries include entering checks and deposits, invoicing customers, reconciling the bank account, and maintaining other sub-ledgers.

Partnering with an accounting firm takes away the burden and time required to perform these tasks. Consequently, the business owner and the employees can focus on the core operations of the business. In addition, a CPA will take minimal time to prepare the books and other statutory reports, effectively improving business operations.

2. Increase Accuracy

A regular employee or business owner dispenses duties to the best of their knowledge. On the contrary, a Certified Public Accountant operates by following a code of conduct set by the American Institute of Certified Public Accountants, among other professional bodies.

As a result, a professional accountant must demonstrate competence and due care to clients. They must also uphold professionalism and integrity while performing their duties. The accountants can face disciplinary action that includes license revocation for failure to follow the code.

Besides professionalism, a CPA increases accuracy through:

Provision of Core Services: A business owner who combines running the operation and doing the work of an accountant is likely not operating at an efficient pace. On the contrary, a CPA specializes in maintaining financial records and statements. A CPA is, therefore, best suited to analyze trends and make sure the books are up to date and accurate.
Accurate Accounting: Professional accountants have a set of tools that enhance the accuracy of their work. Some of the items they employ include a double-entry system, trial balances, balance sheets, and financial ratios. Ultimately, an accountant has knowledge, skills, and tools that’ll help your business achieve accurate books and reports.

3. Saves You Money

Running a profitable enterprise is among the top objectives of every business owner. Resource optimization also complements efforts to run a healthy business. Therefore, when you partner with an accountant, the business greatly reduces mistakes that waste money.

Here’s a breakdown of how an accountant can save you money:

Tax Advice: The failure to file the proper taxes on time can attract considerable penalties for a business. Tax is also applied differently to entities like corporations, sole proprietors, or partnerships. Accountants, in general, offer essential insights like tax planning, business consulting, deadline management, and transactions that can mitigate your tax bill. These matters affect your bottom line, which is why it’s critical to involve an accountant.
Outsourcing: Hiring an internal accountant has additional costs like benefits, welfare costs, and office space. You can bypass the associated labor cost by partnering with a firm that offers you accounting services on demand.
Optimize Your Time: Time that is improperly utilized equates to lost money. For example, if you suspend your operations every two weeks to prepare books, you’ll lose an opportunity to close sales or concentrate on your operations. An accountant frees the schedule of an employee or a business owner, effectively saving money.

4. They Are Experts

A Certified Public Accountant undertakes professional exams and is registered independently. As such, CPAs perform their work in conformity with IRS rules and global standards of financial reporting.

Here are some of their skills that can add value to your business:

Industry Knowledge: The subscription to professional bodies offers them constant updates and changes in reporting standards. They also work as a network which boosts their knowledge of the practice.
Time Management: By partnering with a CPA, you will be able to focus on growing your business by outsourcing the routine financial tasks that a CPA can manage.

5. Gain Unparalleled Insight

An accountant has analytical skills that they can apply to analyze financial data. Business owners can tap on the professional relationship to gain valuable insights on how to improve their businesses.

For example, CPAs can analyze year-over-year trends to determine if you are spending too much on payroll or if a business owner needs to raise their bill rates.

Partner With McMill to Ease Your Operations

A professional accountant brings years of experience, reporting standards, and a supporting team. Therefore, your business will gain from improved efficiency, reduced cost of doing business, accurate financial reporting, and tax planning.

Here at McMill CPAs & Advisors, we are proud to serve Norfolk and all of the Northeast Nebraska community. We treat your family like ours and can’t wait to help you improve your operations. We serve clients ranging from medical, construction, specialty contractors, family farming operations, manufacturers, among others. Contact us for more information.