Deflation and How It Will Affect Us All

Everyone fears inflation. Of course, unless you were working and paying bills during the 1970′s, you have not experienced inflation. We are simply taught to fear it. Bad inflation beast!

We have been told for the past several years that inflation, taxes, healthcare and deficit spending are the Four Horsemen of the Apocalypse. We must stand guard against their perpetual onslaught. Agreed. These concerns are real. They should be acknowledged and addressed. The process is slow, cumbersome and hindered by our political wanderings between the Scylla of Socialism and the Charybdis of Capitalism. Scylla grabs six sailors from the deck and swallows them whole; Charybdis destroys whole ships that venture too near and spits out the refuse. Hopefully, November of 2012 will find us finally out of this whirlpool, into clear waters.

There is another beast. It lurks in the depths. It name need not be pronounced, for fear of bringing it forth from its lair. The Kraken lies quietly, as large as an island, seemingly asleep. Once disturbed, it becomes like the sea itself, engorging itself upon all life, sucking up even the very oxygen of the atmosphere. To put it to rest… well, no one has done that yet. Better to ignore it, tiptoeing past the graveyard of ships crushed upon its shores.

Extended metaphor? Perhaps. The beast within is deflation. Japan is being consumed by it now. For the past twenty years it has ravaged the Japanese economy, you only need to look at the USDJPY exchange rate to see that. Government spending, private wealth, public discourse from all sides, even nationalistic jingoisms, have failed to suppress the beast. An aging population incapable of even replacing itself has become one of the beasts tentacles. Low interest rates have not stimulated the economy. Excessive government spending on bridges to nowhere has failed, only piling up further debt. Health care costs, while borne by the beautiful Japanese family, still rip capital from the nation. Savings rates far surpass ours, yet the capital is underutilized, resting quietly at the Post Office account.

Once deflation emerges, chaos reigns, a slow churlish, cancer that soaks the very lifeblood from an economy. How? Interest rates remain rock bottom, discouraging lenders and applicants both from risk appetites. Consumers quickly learn to avoid spending, first on capital items, then on necessities; why buy today when the item will be ever cheaper next week, next month and next year. Cars and computers, fridges and furnaces are put off. Let’s just fix the one we have and wait. Companies reduce capital expenditures. They build up capital, even more than today’s massive $2T+. Layoffs become more prevalent. Those with jobs do more, just to keep them. An aging population saves rather than enjoys their retirement. Flexibility of spending habit becomes a crutch. Saving becomes a cancer. Debt disappears, except at the government level. The friendly folks at the Fed and the Treasury swap newly printed dollars for newly issued notes, like a snake swallowing its own tail.

Read More

Closing A Business – Why It’s Important To Have A Plan

Having a plan for closing a business is almost as important as having a plan for starting a business. A well thought-out course of action will save you time, money, and aggravation.

The following information will provide you with some of the procedures for closing a business. It is always a good idea to consult with your CPA and attorney before making any final decisions.

Collect All Receivables

Collect all of your receivables before the closing of your business. Start this as soon possible as collecting receivables is almost always a slow process and will usually be more difficult after you have closed your business.

Carry Out All Obligations

Inform your customers or clients and fulfill any obligations you have with them. This includes but not limited to: completing any work (warranty or otherwise), returning deposits or coupons for goods and services that have not been delivered or performed.

Besides the obvious legal consequences, satisfying your obligations to your customers, employees and suppliers is always an excellent idea since this will reveal your good character and professionalism a business owner. Should you decide to start up another business this will have a positive impact on your image and should make any future business relationships go much smoother.

Pay Any Outstanding Bills

The one thing you do not want to hear after closing your business is that you still unpaid bills. Make sure all of your bills and financial obligations have been paid. Consider requesting letters from your suppliers confirming they have been paid in full.

Close All Business Accounts

Close out all of your business checking accounts, credit cards and any lines of credit. Also, don’t forget the obvious accounts for heating, electricity, phones, cable and any arrangements you have with your landlord as well as your lease.

Announce That Your Business Is Closing

You many want to publicize in the media that your business is closing. It’s up to you to determine which media outlets will best. Announcing the closing of your business could help guard you from liability and make sure you’re not held responsible for mistakes made by another company with a similar name.

Call The Secretary Of States Office

Be sure you call the secretary of states office to get a comprehensive list of your obligations when closing a business in your state.

Filing Your Final Tax Return

You will need to file your annual tax return for the year that you close out your business. If you have employees you will be required to file employment tax returns and pay final tax deposits due for these returns.

Misc. Returns

Normally you are required to file a return after disposing of business property. You should consult with your CPA for advice and assistance concerning the filing of any final returns due and other obligations you may have. For legal questions consult with an attorney in your state.

Read More

Learn How To Manage Time Effectively

By the time you glance up from your computer screen, the clock reads 4pm. Only two hours left in your workday. Damn. There’s no way you are going to finish everything you have to do for the day before you clock out. Sound familiar? There just never seems to be enough time in the day. When you arrived at the office this morning, you were prepared to tackle the day, vowing that you would get everything done before quitting time. So what happened?

When you started your day, there were eight items on your to-do list: three leftover from yesterday, and five new ones for today. Two hours into your day, your list has swelled to ten items, and by noon, 13. At lunchtime you make the dreaded call to your spouse that you are going to be late for dinner-again. As if you weren’t already feeling stressed enough, now you have the pressure of your disappointed partner weighing on your mind.

This pattern is not only reoccurring, but it is gaining steam. Every day that you cannot finish what is on your agenda means another item that is added to your list for the next day. The good news is there are ways to break the cycle, if you are willing to switch your mindset and put in a little extra effort up front. These few changes will help you make the most of your time, and hopefully cut down on that overwhelming feeling that has been piling up.

Keep a short list. One of the biggest reasons that we do not get everything done in the day is because we are setting ourselves up for failure. By stacking your day with 20 items on your to-do list, you are putting an incredible amount of pressure on yourself. That pressure will continue to build throughout the day as unexpected items come up, and eventually render you ineffective. A little stress is good, but a lot is counter-productive, and will slow you down. Keep your list short, usually about three items. It may be difficult for you to visualize how you can possibly have so few items for the day, but it will become easier with practice, as well as incorporating some of the tips below.

Learn to delegate. It can be hard to let go of things, but at some point, you are going to have to relinquish your control to someone else. If you are a business owner that spends countless hours balancing the books each month, consider hiring a part-time bookkeeper. The time that you’ve just freed up will allow you to accomplish much more important items on your agenda.

Know when you’ve reached your limit. Sometimes you just have to say no. If your boss keeps dumping trucks full of tasks on you and you can’t keep up, say something. Let him know that there is currently a lot on your plate with the 47 other things he already gave you this week, and you need a few days to catch up. If you are a hard worker, and produce quality work, your boss will understand. When you constantly say “yes” to everything that people throw your way, they are going to keep throwing. They probably have no clue that you have other projects going on, and staying silent will only disappoint them when you’ve missed your deadline.

Set a timer. Busy days can get away from you if you aren’t paying attention. Set a timer for every two hours to help you keep a pulse on the amount of time you are spending on specific tasks. Similar to when you were in school, when the timer goes off, put your pencil down. It’s time to move on to the next section. You may not want to leave a task unfinished, but this type of conditioning will help you better pace yourself throughout the day, and your speed will increase over time.

By incorporating these tips, you will be flying through your to-do list with time to spare. What to do then? Get started on your list for the next day. The more you can prepare ahead of time, the better off you will be. And handling those unexpected items will become much less daunting, knowing that you have time in your schedule to tackle them.

Read More