If nothing else, the recent financial meltdown provided an important learning experience and reinforced time-tested concepts about risk in investing. None of these lessons will comfort investors. However, we can still evaluate investment risks, at least on a relative scale.
Conservative investors fear loss of principal above all. They flock to lower-risk vehicles, such as Treasury bonds, CDs, and money market funds, which are comparatively well known and easy to understand. They’re willing to accept a lower ceiling on their potential earnings in exchange for a lower risk of losing principal. However, this reasoning ignores or underrates a different but no less serious risk: that inflation will outstrip the earning power of the investor’s savings, causing the principal to lose value even when achieving its maximum rate of return. In the worst case, conservative investors can outlive their investments.
Aggressive investors have no problem with risky investments if the investments carry a high profit potential. The more rational risk-takers recognize a corresponding loss potential and accordingly risk no more principal than they can afford to lose. Less rational people may continue to risk everything until little or nothing remains.
The wisest investors take a balanced approach. Since most have neither the time nor the resources to analyze individual investments in depth, they generally refer to advice and analysis provided by outside sources. They also diversify their holdings so that if one investment fails, their portfolios are not irreparably damaged.
The mix of assets in your own portfolio should reflect your risk tolerance, but it also should be tempered by an awareness that both extreme caution and excessive risk-taking can be pathways to ruin. In general, no one stock or other single investment (excluding mutual funds, which are bundles of investments) should comprise a major part of your portfolio. Varying the types of assets in your portfolio (foreign vs. domestic stocks, bonds, mutual funds, Treasury bills) can provide an additional margin of safety.
You can’t escape risk in the world of investments, but you should try to choose the investments that fit both your risk comfort level and your personal financial situation.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
Will Congress cause your Paycheck to be incorrect?
/in Accounting, Individual Tax Issues, Tax Updates/by baybizUnless congress acts by December 10, your paycheck may or may not be correct. It all depends on the if the Bush-era tax cuts are extended. If they are extended to some degree, which most expect that they will be the IRS may not have enough time to update the information used by your payroll department to withhold the correct amount of tax from your paycheck.
See this for more infomation –
Senate tax-vote delay causes headaches for payroll departments
Evaluate risk in your investments
/in Investing/by baybizIf nothing else, the recent financial meltdown provided an important learning experience and reinforced time-tested concepts about risk in investing. None of these lessons will comfort investors. However, we can still evaluate investment risks, at least on a relative scale.
Conservative investors fear loss of principal above all. They flock to lower-risk vehicles, such as Treasury bonds, CDs, and money market funds, which are comparatively well known and easy to understand. They’re willing to accept a lower ceiling on their potential earnings in exchange for a lower risk of losing principal. However, this reasoning ignores or underrates a different but no less serious risk: that inflation will outstrip the earning power of the investor’s savings, causing the principal to lose value even when achieving its maximum rate of return. In the worst case, conservative investors can outlive their investments.
Aggressive investors have no problem with risky investments if the investments carry a high profit potential. The more rational risk-takers recognize a corresponding loss potential and accordingly risk no more principal than they can afford to lose. Less rational people may continue to risk everything until little or nothing remains.
The wisest investors take a balanced approach. Since most have neither the time nor the resources to analyze individual investments in depth, they generally refer to advice and analysis provided by outside sources. They also diversify their holdings so that if one investment fails, their portfolios are not irreparably damaged.
The mix of assets in your own portfolio should reflect your risk tolerance, but it also should be tempered by an awareness that both extreme caution and excessive risk-taking can be pathways to ruin. In general, no one stock or other single investment (excluding mutual funds, which are bundles of investments) should comprise a major part of your portfolio. Varying the types of assets in your portfolio (foreign vs. domestic stocks, bonds, mutual funds, Treasury bills) can provide an additional margin of safety.
You can’t escape risk in the world of investments, but you should try to choose the investments that fit both your risk comfort level and your personal financial situation.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
Will the kiddie tax apply to you?
/in General, Individual Tax Issues, Tax Updates/by baybizGot college-bound kids? Then you might have questions about the kiddie tax, since these federal rules can apply to the unearned income of full-time students up to age 24.
Here’s an overview of the rules.
* The basics. The kiddie tax affects how much you’ll pay on part of the investment income your child receives, such as interest or dividends. When the rules come into play, this “unearned income” is taxed using your rates.
* How the tax is applied. For 2010, the first $950 of your child’s unearned income is tax-free. Tax is calculated on the next $950 using your child’s federal tax rate, which can be as low as 5%. Unearned income over $1,900 is taxed at your federal income tax rate, when that rate is higher than your child’s.
For an 18-year-old, the kiddie tax applies when your child’s earned income â?? that is, money received from wages, salary, tips, commissions, and bonuses â?? is less than half the cost of providing necessities such as food, clothing, and shelter.
The same 50% support exception applies when your child is a full-time student and age 19 through 23.
* Planning tip. Consider hiring your college student in your family business. Wages are earned income and can lessen or eliminate the kiddie tax.
Still have questions about the kiddie tax? Give us a call. We have answers, information, and planning strategies.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
New Law saves education jobs
/in Tax Updates/by baybizOn August 10, President Obama signed into law the “Education Jobs and Medicaid Assistance Act of 2010.” The law will fund the jobs of an estimated 140,000 teachers who would otherwise have lost their jobs, and it will help states with Medicaid costs.
To pay for these provisions, the law makes a number of changes to the foreign tax credit and eliminates the advance payment option for the earned income credit.
If you need details of provisions that affect you or your business, contact our office.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
IRS extends filing deadline for small charities
/in Accounting, Tax Updates/by baybizÂ
All nonprofit organizations (except for churches and church-related groups) must file an annual return with the IRS. Failure to do so for three consecutive years results in the loss of the organization’s tax-exempt status. The filing deadline for the 2009 return was May 17, 2010, and thousands of small charities hit the three-year failure to file point on that date.
The IRS had conducted an extensive notification program to remind charities of their filing obligation, but large numbers still have not filed. Now the IRS has extended the filing deadline to October 15, 2010, hoping that small charities will bring their filings up to date and avoid losing their tax-exempt status.
If you are responsible for a nonprofit organization and need details or filing assistance, give our office a call.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
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Monitor your business, your competition on the web.
/in General/by baybizKeeping updated is always a challenge, espically if you run a small business or a non profit. The web is a great resource, but sometimes it can be overwellmiing to keep up to date.
Google has a great tool that you can use to monitor items on the web and automatically get an email update when a new item appears in your search. Its called Google Alerts. I use it to monitor searches for “Bay Business Group” and every time a new item appears about Bay Business Group, I get notified via email. Other uses include monitoring competitors, industry news, a hot topic, or just keeping track of your “internet reputation”
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Check it out at:Â Â http://www.google.com/alerts
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
Small-business credit card holders remain vulnerable to gouging
/in Accounting, General, Investing/by baybizThe consumer protections outlined in the Credit Card Act don’t apply to holders of business cards, even though such cards provide the biggest source of capital for the vast majority of small businesses. Card companies appear to be taking advantage of the gap: Three out of four small businesses have faced higher interest rates, lower credit limits or higher card fees in the past six months, according to a survey by the National Small Business Association. This article lists the things you should look for in the fine print of your card agreement, including reasonable notice about fee increases and fixed billing dates.
Read more in this article from Entrepreneur.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
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Virginia is for Businesses!
/in General/by baybizAccording to the latest CNBC ranking of Top States for Business, Virginia came in #2 ! Not bad!
The ranking is based on 40 metrics in 10 categories, including economy, workforce, quality of life, and cost of doing business.
2010 Top States for Business via CNBC.com
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
Financial Reform
/in Accounting, Investing/by baybizNo one knows if the current financial reform package will become law, best best is that it will. Will it solve all the problems we have, of course not. Will it protect us from another financial melt-down, doubtful.
   Here’s a great picture of what the current bill will do.
David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.
The Best Stock of the Past 5 years
/in General, Investing/by baybizArticles like this make me sick!
You read them and say – Damn, if I only bought 1000 shares of priceline five year ago (yes I spoiled it) – I’d be rich …
The problem is how would you have know ?  The answer- there is no way possible to know.
Even worse what if you had picked :
             Fannie Mae, Freddie Mac or Lehman Brothers
Ah well!
     The Best Stock of the Past 5 Years
 We believe that:
 David Bradsher, CPA  is a Washington DC / Northern Virginia area CPA who works with small business owners and non profit leaders on a monthly basis to provide them with guidance and advice on how to grow their organizations, minimize their tax liabilities and increase their bottom line.