Scholl & Company, LLP - February 2022

Scholl & Company, LLP - February 2022

YOUR FINANCIAL SUCCESS

FEBRUARY 2022

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DO YOU KNOW YOUR FINANCIAL REALITY? Why This Is the Best Way to Prepare for the Unknown

Throughout the years I have helped business leaders establish and maintain successful financial goals for their companies, I have found there is a clear distinction between newer business owners and those whose businesses are more mature. In almost every scenario with a business owner who is just starting out, they struggle to know their exact financial forecast and realities at any given time, compared to experienced business owners who are well-versed in these answers. It’s understandable. There are only so many hours in the day, and new entrepreneurs are still navigating the complexities of ownership and leadership. When we begin to work with these new owners, I often equate our process like that of going to a doctor or dentist for the first time. We have no background knowledge of their “medical history,” so we have to run all sorts of tests and exams to find exactly what we’re dealing with. By understanding what their financial realities look like today and what their goals are, we can help new business leaders create plans that not only help them achieve said goals, but also allow them to always know where they stand. Being able to do so is vital to business’ success — no matter how well-established it is. That’s the one thing all businesses share in common. As we enter into a limbo period, one between the start of a new year and looming tax deadlines, I would encourage you to make this a priority. Given the volatility of the market, the current unknowns of this lingering pandemic, and the stalemates in Washington, D.C., the best way that you can protect your business, your employees, yourself, and your future is to know where you stand.

Familiarize yourself with your current situation and possible outcomes to gain greater understanding of not only the health of your business, but also how you could possibly respond as things change. You should always know what business resources are at stake, how your working capital is faring, where your debt- to-income ratio lands, and how fluctuating interest rates may impact your standing — just to name a few suggestions. When you have “your finger on the pulse,” a few pieces come together. For starters, you gain greater confidence in your business. Even if understanding your financial reality has led you to realize major changes are needed, at the very least, you have a place to start. (And how much better will you feel once your business does start to trend upward, and you think back to where you began?) Secondly, this is the easiest way to prepare in a world full of unknowns. We live in a world that is highly unpredictable, and being expected to get the answers right all the time is impossible. You will guess wrong sometimes, but when you have the knowledge of where your business stands and potential solutions — and potential resolutions that could come from those solutions — you’re armed with some of the greatest weapons a business owner can have. There really isn’t much that can stand in your way. At Scholl & Company, we do our best to keep our clients informed. While we don’t have all the answers, we understand the power behind arming yourself with knowledge when it comes to creating possible outcomes. That’s why we host webinar events, provide regular digital and print newsletters, and collaborate with our clients regularly. With our expertise and your passion for your industry, we can collaborate to create an effective partnership that gives you the confidence you need to be prepared for the unpredictabilities as they inevitably come.

BUSINESS IS GREAT, AND WE'RE LOOKING FOR MORE.

We hope that you will keep us in mind if the opportunity arises to refer family, friends, colleagues, and neighbors. Thank you for your continued support .

If this article prompted any questions from your team or you, please contact us today.

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At Scholl & Company, we pride ourselves on not just being tax experts; we work diligently to be well-informed, up-to- date tax experts. As you can imagine, this hasn’t been simple in the past few years, nor will it return to a pre-pandemic place in the coming years. But we educate ourselves daily on the potential updates, concerns, and changes that our clients can expect as it pertains to their taxes. How to Approach 2 Common Concerns This Tax Season We Have Your Answers!

Concern No. 2: Cryptocurrency Is on the IRS’s Radar

This tax reporting season, every individual taxpayer is being asked about cryptocurrency transactions — and yes, that means all of us. The IRS is typically very behind on this sort of engagement. It often takes them years to take up new revenue and financial streams, like this one. And this is the year for crypto. Cryptocurrencies, also known as virtual currencies, have gone mainstream. The 2021 version of IRS Form 1040 asks if at any time during the year you received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency.

And this season, it’s been no different.

Now that the new tax filing season is already here, we want to keep you updated about the challenges we will all encounter. Below, we have outlined two concerns you may have about the upcoming tax season and two solutions to help you find some peace of mind. Concern No. 1: Tax Administration Complications Abound National Taxpayer Advocate Erin Collins expressed deep concerns this January about the upcoming tax filing season in her annual report to Congress on the 2021 filing season. She warned of tax refund delays due to staffing shortages stemming from budget cuts and the pandemic. The IRS has also been coping with the complexities of administering this past year’s tax relief measures, including advance child tax credit and economic impact payments. The IRS is also managing millions of unprocessed tax returns and many millions of unanswered correspondence from taxpayers and their representatives The IRS received 6.2 million taxpayer responses to proposed adjustments and took an average of 199 days to process these, which is an increase from 74 days in fiscal year 2019.

What Should You Do?

If you did do any of the above actions with crypto, check the “Yes” box. The fact that this question appears on the first page of Form 1040 — right below the lines for supplying basic information like your name and address — indicates that the IRS is serious about enforcing compliance with the applicable tax rules. This means if you had any balance or interest in any crypto account during the year, regardless if you sold it or made any profits, you must report it to the IRS. The same goes if you have an account open. You will need to have this question on your return answered as “Yes.” Do not forget about this information!

We Will Help You

Our expert team at Scholl & Company will work with you to ensure you follow all the reporting rules and pay the lowest legal tax on your cryptocurrency investments. We will also help you navigate new regulations and slowdowns within the IRS. Our goal is to help you protect your wealth. If you have any questions this season, please don’t hesitate to contact us.

What Should You Do?

The bottom line is to prepare and expect long delays for refunds and a lot of frustration in getting IRS errors corrected. We wish we had a magic pill to help with this broken tax process. However, we will always advocate on your behalf and fight to get your case cleared as quickly as possible.

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3 HABITS LESSONS FROM OUR CLIENTS SUCCESSFUL ENTREPRENEURS HAVE

The myth of the “perfect” entrepreneur and a seamlessly growing business is

false. Through our work with countless business leaders through the decades, we’ve noticed a trend among our highest-performing business leaders. Leaders like our clients Jose "Jesse" De Jesus Rodriguez, who transformed his popular family business La Plaza Bakery into a local empire, and Thomas Marshall, whose ethics motivated him to swoop in on the sale of a business and turn it into a powerhouse called Cedar Valley Manufacturing, are inspiring. These entrepreneurs have acquired a few traits that make them successful and stimulate further growth. Harnessing those secrets could be the key to finding greater success in your business.

Through the years that it has been under Marshall’s reign, Cedar Valley Manufacturing has fine-tuned and perfected its craft with the help of industry experts and collaboration. The result is a trustworthy brand, and an excerpt about the company (from our December 2020 feature article) explains just that. “Forty years later, Cedar Valley produces handcrafted shingle panels from recycled cedar products, creating a lasting home maintenance material that is much easier for contractors to use. Cedar Valley has locations in the U.S. and Canada, and Marshall’s sons also worked in the business; his youngest son, Scott, currently leads as its president.

LA PLAZA BAKERY

CEDAR VALLEY

Habit No. 1: They build a business, not a job.

Remember, your business is just that — a business! It’s not a job for you to fulfill. You are building something that could extend far beyond yourself, so don’t expect that you need to “do it all.” Entrepreneurs have the grit and determination to build something great, but why reinvent the wheel? Instead, hire professionals or those you trust who can create great content, better organize your systems, or adeptly manage your team.

"Today, Cedar Valley uses repurposed cedar material and wood from old-growth trees. The end product is sustainable and durable, creating a best-of-both-worlds situation for environmental activists and contractors who require a sturdy product.”

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Habit No. 2: They never stop learning.

Just as the first habit implies, you don’t know it all. Successful business leaders not only understand this, but they also strive to remedy it. One of our clients, Geoff Mace, began Calerrain Wines after leaving the Marine Corps in 2010. The business began as a passion for winemaking, but Mace had a lot to learn before selling his first glass. As we wrote one year ago, “[Geoff] learned all he could about wine and viticulture from Fresno State University — well-known for their prestigious winemaking education — and earned his MBA in the process. As he found his way to starting Calerrain, Geoff worked for large-scale wine producers in Central Valley and then joined a startup that was in need of a winemaker. Eventually, the couple bought a chunk of land along Jean Ellen Court in Gilroy, California, planted half of a vineyard, and converted the property’s barn into a tasting room.” But lifelong learning habits are not just for business leaders. Your employees can benefit from regular professional development training, too. Commit to offering or supporting professional development practices to boost your employees’ morale, confidence, and skill sets. The results will show in the quality of the work they provide for your company.

FORTRESS FIRE RETARDANT SYSTEMS

"‘That would have been almost impossible [to get] if we didn’t have the documentation and consultation from Scholl & Company,’ Burnham says. ‘Bret immediately impressed me with his strategies … He’s far beyond the horizon on how to set things up and looking at the long- term picture.’” Our partnership with Fortress and their diligent review of their financial plans made these tax credits a reality for this company. They prove a point we readily convey to our clients: If you don’t have your nose in your books on a weekly and monthly basis, you’re missing a lot. Weekly reviews allow business leaders an opportunity to see an in-the-moment analysis of the financial shape of their company, while monthly reviews provide a big-picture view of the company’s projected revenue, expenses, and more. Furthermore, our most successful businesses adapt and plan for tax changes as they happen, rather than focusing on taxes once every year. Our team is willing to help you improve your habits for better business success. Please call Scholl & Company today if you need help with tax planning or interpreting your financial records.

CALERRAIN WINERY

Habit No. 3: They do regular financial and tax planning.

"Together, Scholl & Company was able to help Fortress secure $2.4 million in tax credits from the California Office of Business Development. Fortress was just one of nine companies to secure that offering — a big pull for a company focused on public service.

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Feel Confident in Business! 3 Steps to Identify Your Value

No. 2: Be open to receiving — and giving — love. Accepting compliments can be tough, but in business, compliments can be powerful catapults to your continued success. When you take time to notice all the people you’ve helped, the accomplishments you’ve achieved, and the difference you’ve made, the motivation it fosters is monumental. Keep your happy emails, texts, and reviews from clients and create an easy reference for instant, uplifting support. If a client seems happy, never be afraid to ask for a testimonial. Many people simply need to be asked, and they’ll be happy to provide one. In the same stride, consider the people who help you and your business every day and find ways to show appreciation. Passing that love around can make a huge difference in energizing the way you perceive your value. No. 3: Make the final game plan. After considering what your offerings are likely worth, whom you’re looking to serve, and what they’d be willing to pay, you can name your final price. After all, prices don’t fall from the sky. Without obsessing over it, look at what kind of value your competitors have set for themselves. That’ll give you a great starting point. Take good care of yourself, friends — and don’t forget that a confident price tag is a great way to do just that in your business.

We've all been taught that bragging is annoying, but when you’re afraid to identify your worth, it can really hurt your confidence and success in business. To prevent that from happening, here are three tips to make it easy to name your price!

No. 1: Get to know your value. How do we figure out our value? Specifically, how do we come up with a quantifiable method to reach an exact, irrefutable number? Well, we don’t. The best place to start is deciding who you want to be in your business and industry and building from there. With a solid mission statement and concrete affirmations that support your value in the business, you’ll gain more confidence in arriving at a price point. HAVE A Laugh

A Big NYC Attraction Becomes Illegal

If you were an immigrant who just arrived to New York City in the 1880s and had at least 10 cents, you could rent a pushcart and become a business owner. For more than 50 years, pushcart markets in New York City offered immigrants immediate access to an $828 million industry (in today’s money) that sold competitively priced goods like

groceries, household items, and clothing. However, those who were wealthy and in anti-pushcart movements complained primarily about poor sanitation in these markets. So, in 1938, Mayor La Guardia proclaimed in The New York Times that “peddling on the streets of this city is a thing of the past.” To ease opposition, La Guardia opened indoor markets, which required pushcart sellers to apply for limited spots and pay higher fees. Thousands of pushcart sellers lost their jobs afterward, and some brick-and-mortar stores lost as much as 60% of their business with the decrease in nearby foot traffic.

To this day, pushcart selling is still illegal.

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Inside This Edition

1.

The Greatest Way You Can Prepare for the Unknown

2.

How to Address 2 Concerns You May Have This Tax Season

3. 5.

Lessons From Our Monthly Features

3 Steps to Identify Your Business Value Why This NYC Attraction Became Illegal

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How Mary Barra Helped GM

From ‘Car Girl’ to CEO of GM Meet Mary Barra

According to an interview with Stanford Magazine,

Faulty switches resulted in 124 deaths and 275 injuries, which prompted the Senate to conduct an investigation. Barra’s court appearances led to a public outcry against GM, forcing the company to recall nearly 30 million cars due to their defective ignition switches. Although no federal charges were pressed against Barra or the GM executives, the company paid $120 million in settlement claims and offered $595 million to victims and families affected by the scandal. Barra’s subsequent actions became key. She fired 15 employees, including eight executives, for failing to respond quickly to the defective ignition switches. Additionally, she initiated GM’s shift toward electric-powered cars, including the Chevrolet Bolt EV, which became the first electric car with a range of 200 miles priced under $40,000, a milestone that warranted significant coverage. According to GM executives, a major reason for Barra’s corporate and entrepreneurial success is not only her passion for cars, but also her skill to listen and communicate well with others. Her “consensus approach” involves conducting town hall meetings to seek input from the majority of people, not just top management. This allows every employee to be heard, and that inclusive environment remains a crucial part of GM’s ability to thrive far beyond its darkest days.

Mary Barra is a self-proclaimed red convertible "car girl.” Her eyes gleamed as she talked about the day she first saw her cousin’s Chevy Camaro convertible, a late ‘60s vintage model. At that moment Barra knew she’d love cars forever, so she worked on cars as soon as she could. In fact, she was only 18 years old when she started working for General Motors (GM). She worked her way up while earning a couple of college degrees, and she held multiple engineering and administrative positions at GM, including managing the massive Detroit/ Hamtramck assembly plant. By 2014, Barra became the CEO of GM and was the first female head of a “Big Three” automaker in the United States. It was a dream come true — her appointment even earned her a spot on Time’s 100 Most Influential People in the World of 2014. However, during her first year as CEO, GM faced one of the worst scandals in the U.S. auto industry: the GM ignition switch scandal.

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