Reducing the Tax Impact of Equity Compensation: The 83(b) Election

Employees or company founders that receive equity compensation often must cope with complex tax rules. Utilizing the 83(b) election is a valuable method of reducing tax liabilities, though there are some important caveats.

In this piece, we break down what it is and what you can do about it.

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The Federal Reserve vs. Inflation: Round One

Wednesday’s long-anticipated announcement by the Federal Reserve that the key Fed funds rate would increase by 25 basis points and the accompanying statement by Chairman Powell had the immediate impact of reassuring the markets. St. Patrick’s Day may not have brought pots of gold, but after thirteen no-good, very bad weeks for the S&P 500, we’ll take a push back into positive territory.

Will it last? Given the invasion of Ukraine, the impact of sanctions, the downstream effect on supply chains and food supply, and the geopolitical uncertainty unleashed by Russia’s aggression, the Fed’s job in fighting domestic inflation is much harder now.

We walk through the Fed’s move and Powell’s language, the impact of the rate increase, and what investors can do to prepare their portfolios and budgets.

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GMB Ep #122: How to Retain Top Employees Amid the Great Resignation With Jeff Kortes

In today’s day and age, it takes more than just money to keep top performing employees from moving on to better opportunities. Jeff Kortes joins us today to discuss employee retention amid the Great Resignation. Jeff possesses a wealth of experience in this subject, and spent ten years in human resources before resigning and establishing his consulting practice. Throughout the episode Jeff shares the importance of workplace culture, as well as tips for hiring and retaining the right people for your business.

Show Notes

[02:51] Great Resignation – Jeff describes the Great Resignation and how the COVID-19 pandemic has affected the workforce.

[05:41] Shifts in the Workforce– Jeff explores the implications of younger workers seeking other opportunities or relocating within an industry.

[06:36] Give Your Employees C.R.A.P – Jeff discusses the correlation between workplace culture and employee retention, and shares a few ways that businesses can kill employee loyalty.

[13:33] Jeff’s Work – Jeff describes how his practice helps companies diagnose the underlying cause of their issues.

[17:52] Employee Retention Problems- Jeff describes how he determines whether a business has undetected or misdiagnosed staff retention issues.

[20:30] Strategy and Correction – Jeff shares their top strategies for correcting issues they find along the way.

[27:35] Finding the Right People – Jeff provides his perspective on how to know that you are hiring the right type of individual for your company.

[34:19] The Future of Work – Jeff discusses the recent shift in the workplace, and how this will affect future generations’ work habits.

[36:17] Virtual Connection – Jeff and Grant discuss how to develop and sustain culture in the day and age of remote work.

[44:04] Jeff’s plans – Jeff shares his future plans and how people can connect with him.

Resources

Small Business Retirement Plans — SIMPLE, SEP-IRA and SOLO 401(k)

Small companies shouldn’t forgo retirement savings just because a 401(k) plan can be expensive to set up and maintain. There are options specifically for smaller businesses: a Savings Incentive Match Plan for Employees (SIMPLE) plan, a Simplified Employee Pension (SEP) plan, and a SOLO 401 (k).

If your company has more employees than just you and your spouse, you may want to consider either a SIMPLE IRA or a SEP-IRA. The plans have similarities and a few differences that must be considered when deciding between the two. Knowing the details of each type can help you decide which is the best choice for you, or which to offer your employees if you own a small business.

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GMB Ep #121: How & Why Your Index Funds No Longer Hold Russian Stocks

Russia’s recent invasion of Ukraine and the economic sanctions that were imposed sent shockwaves through the global financial markets. As a result, the Russian Ruble plummeted to a record low, Russian stock markets were shattered, and Russian equities were removed from emerging markets indices. This week on Grow Money Business, Grant discusses how this situation affects the investment accounts and portfolios of U.S. investors and the ramifications of these phenomena.

Show Notes

[04:04] Index Funds – Grant dives deep into index funds, explaining market capitalization, the roles of index providers and fund managers, and depository receipts.

[12:54] Russia’s Present Condition – Russia has been obliterated from the list of index providers. As a result, Russian equities are no longer on the list. Grant provides his perspective on the background of what’s going on regarding index funds and Russian exposure.

[16:00] Inflationary Problems – Grant highlights Russia’s inflationary difficulties, emphasizing the importance of currency.

[23:36] Remedies – Grant outlines two alternatives available to a country if the value of its currency falls through the floor .

[28:15] Greece – While noting that Russia is a growing market, Grant discusses the events Greece experienced a few years ago.

Resources

Retirement is About Income … and Taxes

You’ve figured out your budget, your retirement nest egg is substantial, and you’re ready to make the transition to living on income from savings instead of income from work. But have you thought through the tax implications? It’s very common for tax planning to be overlooked, under the assumption that you’ll be in a lower tax bracket and Social Security payments aren’t fully taxed. In fact, a recent study found that 57% of Americans rarely consider the taxes they will pay/are paying in retirement.¹This can be an expensive mistake, and it has implications for other retirement benefits.

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Buy-Sell Agreements: Ensuring Smooth Business Transitions

Building a business is all about the day-to-day decisions. But what happens to the business if the primary decision-maker isn’t there? Creating a continuity plan that outlines transition planning should be part of the foundational documents of a business at any stage. Valuing the business, codifying the steps that will be taken and planning for transfer of ownership can help protect both the business and the interests of everyone involved – including family.

When partners start a company, they may document how to maintain its management and control if a partner dies, becomes disabled, or leaves the company. A well-designed, buy-sell agreement, or buyout agreement, is a legally binding agreement between co-owners of a business that stipulates the procedures if a co-owner dies, chooses to leave the firm, or retires.

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Estate Planning for Small Business Owners

Building a business is all about taking risk. You put your belief in yourself, your money, time, and more on the line to create something that can grow and succeed. But whether your business will fund your retirement plan, or you hope to create a multi-generational family enterprise, there’s one area of risk you shouldn’t be taking.

If you own a business, you need an estate plan. And not just any plan. It needs to cover your wealth and safeguard your family. It also needs to ensure that the business can carry on or that there is an orderly plan for a sale or wind-down.

You’ll most likely need to consult with a financial advisor, a trust and estates attorney, and a tax accountant to get a comprehensive plan in place.

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GMB Ep #120: A CFO’s Perspective on Managing Cash, M&A, ESOPs, & the Changing Business Environment

Have you ever heard the saying that revenue is vanity, profit is sanity, and cash is reality? Today’s guest, Robert E. Bendetti, is the CFO at Life Cycle Engineering. He holds a master’s degree in accounting and financial management and an MBA specializing in small business management and entrepreneurship, as well as being a certified public accountant. Throughout the episode, we cover several key concepts that help business owners grow their businesses and adapt to ever changing markets.

Show Notes

[03:21] Background – Robert shares his background and the company’s operations.

[05:20] Cash Flow Management – Robert emphasizes the importance of cash flow management and gives his perspective as a CFO on appropriate cash management for small enterprises.

[08:48] Cash Conversion Cycle – Robert discusses approaches to optimize the cash conversion cycle, emphasizing the importance of timely invoicing, collection challenges, and the smoothness of the payment process.

[11:50] Tips – Robert shares an approach for reducing turnaround time and illustrates a simple mechanism to increase collection rates.

[20:29] Profitability – Robert points out how to convert cash to profit, describing what balance sheet and income statement items need to be monitored.

[23:25] Paying Yourself vs. Reinvesting – Robert outlines how to decide whether to invest additional funds to boost profitability and future growth or pay yourself.

[31:41] Transition – Robert addresses what individuals approaching retirement or transition should consider 18 months before leaving a firm.

[40:25] Employee Stock Ownership Plan – Robert dives deep into ESOP and related topics.

[51:31] Global CFO Council – As President and Founder of Global CFO Council, Robert mentions what he hopes to accomplish through the organization.