At Strothman and Company we help entrepreneurial businesses grow. At every stage.  Every day. That's why we keep you up to date on relevant issues.
 
 

SeminarSeries2017 Strothman and Company Seminar Series
  
We have two seminars remaining in our 2017 Seminar Series.  We hope you can join us for these informative and educational programs.  Please invite friends and associates to attend these FREE seminars with you.



New Tax Law Update**

 
POSTPONED

Real Estate & Construction
Conference
Industry Specific Strategies for Growth
November 16, 2017
8 AM - 12 PM
University of Louisville - Shelby Campus

22nd Annual StroCo University 
Growth and Independence
 
November 30, 2017
8 AM - 12 PM
University of Louisville - Shelby Campus

**NOTE: We will be postponing this seminar until the new tax law is passed by Congress.  This was originally scheduled for October 19th. 

Strothman and Company seminars are designed to qualify for Continuing Professional Education ("CPE") for CPAs.   

If you have any questions, please call Leah Fulner at 502.585.1600 or email  lfulner@strothman.com 
To RSVP for any of the seminars online, please Click Here
 
   Q42017
Stock Market: What's Ahead for the U.S. and Global Markets in QA 2017
 
The U.S. equity markets ended the third quarter of 2017 seemingly impervious to acts of nature, as major Hurricanes Harvey and Irma hit Texas and Florida, as well as to escalating tensions between North Korea and the Trump White House. Other issues that potentially affect the markets include possible changes to the Federal Reserve's leadership and to the Fed's monetary policies. One major issue - funding the U.S. government - was resolved when President Trump resisted the die-hards in the GOP, including his own Treasury secretary, to side with Democrats in support of a deal that will raise the debt ceiling, continue to fund the government into December, and ensure passage of disaster relief funding to aid victims of the recent hurricanes and floods.
Here are some of the key talking points and forecasts for the last quarter of 2017 from economists and investment advisors:
  • The difference in sentiment between bond investors and equity investors has become even more apparent. The exuberance in the U.S. stock market has continued whilst the ongoing mood in the bond market, characterized by low and/or declining Treasury yields, remains dour.
  • Despite skepticism, stock market experts know that momentum can keep a market going for a long time, even when market fundamentals appear to be weakening. Although U.S. equities continue to post new highs, the economy is seen as lackluster and likely to remain so. As noted above, in sharp contrast to stock prices, disappointing economic data has had a dampening impact on the outlook for bonds. Some experts - nervous about overvaluations in equities - are looking abroad for better growth prospects. Others cite concerns that corporate earnings - a major driver of U.S. stock prices that has offset worries about geopolitical risk and mediocre economic data - are slated to head downward.
  • Stanley Fischer, the respected and influential number two to Federal Reserve Chairwoman Janet Yellen, resigned in an unexpected move in September. This move generated more worries - both here and overseas - because uncertainty and inconsistency makes financial markets and economists jittery. Rumors that President Trump plans to replace Yellen when her term expires were thrown a curveball when two potential candidates removed themselves from consideration - Fischer by tendering his resignation, and Gary Cohn, current director of the president's Economic Council, by criticizing the president following the Charlottesville fallout. Many Wall Street experts believe that the new administration's promises to cut taxes and boost infrastructure spending might spur the Fed's so-called normalization policy. Yellen's approach to raising interest rates has been slow and steady - easing out of the stimulus package as carefully as the Fed initially implemented the original program. Trump is believed to favor a more aggressive change in direction.
  • In Europe, analysts are generally bullish. European companies are performing well, the economy is growing and showing strong signs of recovery, and inflation rates are low. On the down-side, in the U.K., Brexit and the uncertainties stemming from the minority government currently in power continue to cast a shadow.
  • Investors in U.S. equities might have shrugged off the rapid escalation of North Korea/U.S. political tensions, but the friction between the two countries has affected global markets. The dollar declined following the heated exchange between the two leaders, (the currency index is now down almost 10 percent since January), and global investors began to show more favor toward European equities.
  • China is seen by some as a potential risk to the global economy because of its significant debt, while others expect China's economy to remain healthy and cite various indicators like rail freight volumes as evidence of continued strong expansion.
The commentary above is a general overview. It is not intended to be a substitute for advice from professional tax and investment counselors .
  GoalsBased
High Concept Strategies: Goals-Based Investing
 
This is the first of a series of articles discussing various types of high-concept investment styles. This month we start with goals-based investing.
 
Goal-based investing became popular after the Great Recession of 2008-09. Many salaried, middle-class workers lost their jobs, had to stop contributing to their 401(k) plan or, worse yet, had to make hardship withdrawals from it. These events triggered a realization that this blip in their long-term life plan could derail retirement dreams. For many, it may have been the first time they equated retirement investing with actual retirement income.
 
Goals-based investing is just as it sounds: You start with specific goals. It's not focused on investing automatically with salary deferrals throughout your career, or obsessing over the right asset allocation based on your tolerance of market risk, or constructing an aggressive portfolio because you're young and have a 40-year investment timeline. It isn't about earning a certain percentage - like a 10 percent average annual return over 20 years.
 
The goals-based return on an investment is defined as achieving a certain goal, such as a sustainable income throughout a 30-year retirement; paying for two kids to earn a four-year college degree; or buying a second home on lakefront property.
 
In short, the goals-based approach is about achieving specific life goals utilizing investments as a tool to help you get there. This is an important distinction, as people learned during the most recent recession, because it ties your daily, monthly and annual decisions about money directly to your specific life goals. Once you buy into the goals-based philosophy, you may start better prioritizing money management decisions, such as not buying a motorboat until you've purchased the lakefront home.
 
Goals can and should be both short- and long-term. The first step once you've identified a specific goal is to determine the timeline for when you'll need the money to fund the goal. This is easy with things like buying a house or your son's college tuition. If he's 2 years old, you have 16 years. If he's 11, you have only seven.
 
Once you've established your investment timeline, this helps inform your asset allocation. At this point it's important to define risk. In other types of investment approaches, risk refers to your tolerance for market volatility. But with the goal-based approach, risk refers to your fear of undershooting your goal. If you have only seven years to pay for college and you're determined to get there, your asset allocation may be more aggressive than if you're content to let your son start out at a community college, or consider the possibility he may earn a scholarship.
 
Once you've established your timeline and evaluated the risk of not meeting your goal, then and only then do you evaluate what types of securities in which to invest. That's because the goal itself will help determine what types of securities to hold as well as the appropriate investment vehicles. For example, there are tax-advantaged plans specifically designed to help pay for college, healthcare and retirement.
 
With the goals-based strategy, note that other variables can affect investment decisions. For example, the more you save and contribute to your retirement portfolio, the less it needs to earn to meet your goals. Or, if you're earning ahead of schedule, you might decide to modify your goals: retire early or buy a bigger lake house.
 
As you move closer to the time when you need the money, you might want to consider transferring portions of your portfolio to more conservative holdings to reduce risk of loss. Remember that with the goals-based approach, timeline is a key ingredient. As that timeline shortens, you'll need to actively manage the portfolio to protect accumulated earnings while still working toward the specific goal.
 
And finally, you may wish to consider separating investments to achieve different goals. This is easiest to do with specific vehicles, such as a 529 savings plan for college, or an IRA for retirement. However, never lose sight of the fact that all of your investments combine into a single portfolio. Occasionally, take a bird's-eye view of the asset allocation of the overall portfolio to ensure that your goals-based investment approach is not skewed too aggressive or too conservative.
And as always, it's best to seek the knowledge of a tax and investment professional.
 
 
 valuewebsiteHow to Value and Sell a Website Effectively

Whether a business owner wants to sell a website or he has been approached by an individual expressing interest in purchasing it, understanding what it's worth is essential to a fair sale for everyone involved.

Initial Factors
To determine what a website is worth to a potential buyer, it needs to undergo a performance review. Evaluation factors can include looking at the number of sales the website has generated over the past year compared to previous years or other competitors. Additional considerations include how much the website is used to gain new customers relative to other sales channels, such as in-person and cold sales calls or in-bound customer calls.    
 
Valuing a Website Based On Its Attributes
A different way to look at a website is by its attributes. One of these attributes is what Top Level Domain the website address ends with. Most web users are familiar with the .com ending on a website, but many websites and associated email addresses end with .net, .org, .biz or .info. This often depends on the type of the organization that owns and uses the domain and the website they've built. If a website ends with a .com, it can have less confusion than a website with a .net or .biz domain.  
 
Other considerations include how customers remember the name. For example, a long website that needs to be spelled out in person or over the phone, makes it less likely for customers to recall it and later visit it. Another attribute is to ensure the domain name is not subject to copyright protection.

Valuing a Web Site Based on Its Search Engine Relevancy
One way to value a website is through its ability to garner visibility and traffic through a backlink. A backlink is when a URL on a third-party website points visitors to the owner's website. One consideration when building backlinks is whether or not the backlink is from a well-respected and relevant source, compared to a website known for producing spam or one that might be blacklisted. Backlinks on well-respected websites increase SEO value, while backlinks on lesser-trusted websites may detract from SEO rankings.    
 
For example, if a backlink for a law firm is on a local bar association's website, the backlink will generally gain greater favor for the law firm. If, however, a backlink is on a legal website known for spam, the backlink will not have the same effect. Websites with better reputations that provide backlinks to the website for sale can potentially increase the site's value.  
 
Another important area to focus on is a website's traffic statistics. Measuring how much traffic is generated from search engines is important because it shows how well traffic is garnered from an existing search engine optimization strategy. Depending on the SEO efficiency, value can be determined based on if the existing strategy can be built upon or if the website needs a different SEO approach.  
 
Valuing a website is highly subjective, and these are not all the factors that buyers and sellers take in account, but understanding what the marketplace looks for is a good place to start.

HurricaneBe Smart About Giving to Hurricane Victims
 
From Texas to Florida, a large swath of the United States was recently slammed with back-to-back hurricanes, leaving flooded streets, damaged buildings and wreckage all around. Huge economic costs will be associated with these hurricanes.
 
Economic Impact
AccuWeather President Joel Myers believes the combined costs of the two storms could collectively cost the United States as much as $290 billion. This figure considers a broad range of factors, including business disruptions, higher unemployment, infrastructure damage, crop losses and elevated gas prices. The economic impact will extend and eventually also impact consumer spending, higher prices on items shipped out of Florida and Gulf Coast ports, manufacturing and construction backlogs, as well as tourism revenues.
 
Some of these losses will be covered by insurance, but many will not. Regardless of insurance coverage, millions of people are already impacted economically and face financial burden. Some estimates put the impact from Irma alone as leaving approximately 6 million Floridians without power and more than 200,000 in protective shelters.
 
Coming to the Rescue
In response to the hurricanes, President Trump signed a $15 billion disaster relief bill. Congress is expected to provide additional funding over the coming weeks; however, many residents need help immediately. As a result, there is an all-out effort on many fronts to raise funds for those impacted by the hurricanes - and many people are still considering giving or giving again.
 
Minimizing Your Taxes
The majority of people simply donate in the form of cash or via credit card to a charity. This is easy and simple - and as long as your donation goes to a tax-deductible charity, you'll get the opportunity to itemize it. If you are considering a large donation or are ready to minimize your tax burden, consider the two strategies below.
 
Appreciated Stock Gifts
One of the first places to look if you want to give to hurricane victims is donating appreciated securities. To better understand the advantages of this strategy, let's look at a comparison.
Say you own stock in Sample Co., which you purchased for $6,000 and is now worth $10,000. If you sell the stock, you'll owe taxes on the $4,000 gain (assume a 25 percent tax rate for simple math). So, in the end, you'll have $9,000 after selling the security and paying taxes on the gain. Then donate this $9,000 and you'll save 25 percent - or $2,250 in tax deductions.  
 
Donating that same appreciated security gives you a tax deduction of $10,000. Assuming the same 25 percent tax rate, this means you'll receive a $2,500 tax benefit. By donating an appreciated security, you've saved yourself $250, showing it can pay to be generous.
 
IRA Charitable Rollover
Taxpayers 70½ or older have to start taking required minimum distributions from their Individual Retirement Accounts, which are treated as taxable income. In lieu of taking distributions, you can specify money be sent directly to a public charity (up to $100,000 per year) by using an IRA charitable rollover. What's great about this form of donating is that you reap the tax benefits even if you don't itemize since the impact is a reduction in taxable income. Further, since your Adjusted Gross Income is reduced, this might even aid you in saving on Medicare B premiums.
 
As always, consult a tax professional who can help you make the most of your money when giving to a charity.For more information, please contact our tax partners, Joe Johnston at jjohnston@strothman.com or Quinn Hart at qhart@strothman.com.
 
 
 busterTip:  Are You Plagued by Productivity Busters? 
 
  
How much time do your employees squander on various distractions that take their time and attention away from work? Recent surveys from staffing organizations suggest that almost half of participating employers believe the majority of their workers lose one to two hours a day in productivity due to distractions. In some instances, employers estimated that workers were distracted for as much three or even four hours a day.
 
If you are thinking that personal technology is the problem here (it is an important factor), be aware that good old-fashioned gossiping and snack breaks also feature in the top issues cited by major employers. Here's a list of the most common distractions:
 
1)      Internet, including social media
2)      Cellphone use and texting
3)      Gossip and coworker chit-chat
4)      Email (personal communications)
5)      Interruptions from coworkers
6)      Breaks for snacks or smoking
7)      Meetings (onsite)
8)      Disruptive, noisy coworkers
 
What can an employer do to help employees manage their time well without coming down too hard on employees? The following are a few strategies to help boost individual productivity.
 
Good Two-Way Communication
Get your employees involved in identifying not only the issues but also possible solutions. Make this a two-way process from the very beginning.
  • Start by scheduling a short meeting - one hour should be the maximum (onsite if possible or by video if not) to let employees know that the firm is launching an effort to boost productivity by identifying and reducing distractions. Before the meeting, provide a short briefing document to share general statistics on daily time loss. Identify some of the biggest productivity busters (see above list) and explain how greater productivity helps everyone.
  • Ask workers to come to the meeting prepared to suggest ways to reduce or eliminate some of the named issues and identify any others.
  • Provide a meeting agenda and keep the discussion on track. Make it clear that the goal is to find ways to reduce distraction and that finger pointing will not be allowed. Try to make sure everyone who wishes to contribute gets a chance to share their ideas.
  • Be prepared to kick off the meeting with some examples from your own experience. Share how you manage your emails or deal with well-intentioned (but disruptive) drop-in visits by colleagues. Be candid about where you fall short of your own goals, and strategies you use to address this.
  • If you have developed some ideas for tackling the problem, let your workers know what you are considering. Your goal here is to solicit buy-in rather than to impose measures that may seem punitive or breed distrust. You might share ideas that other companies have implemented to gauge how your employees react. For example:
    • Block certain Internet sites
    • Install programs that monitor individual email and Internet usage at work
    • Schedule break and lunch times
    • Limit personal calls during work hours by having cellphone-free zones (particularly useful in open office settings where noise levels can be problematic)

  • Have a meeting secretary record discussion items and decisions made/or tabled for further discussion. Distribute copies of the meeting minutes - noting not only decisions made, but deadlines and who is responsible for each action item.
 
Trying to get a handle on productivity is not easy, and there is no foolproof way to enforce and monitor it. Encouraging employees to take ownership of their own issues and be proactive in developing practical solutions is a good start.
 

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