Are there holes in your safety net?

user-gravatar

Small Business Administration has launched a website, Business.gov, that serves as a gateway for U.S. businesses to connect with federal agencies. The site provides links to business development, financial assistance, laws and regulations, international trade, taxes, buying and selling, workplace issues and federal forms.

Internal Revenue Service says its recent partnership with states to share information and data to catch tax cheats has helped to generate more than 28,000 leads and uncover tens of millions of dollars in previously unidentified abuses of federal and state tax collections. Tax administrators are looking into further joint efforts to identify non-filers, detect illegal use of offshore payment cards and uncover money laundering.

The Department of Agriculture and the Small Business Administration last month announced the Rural Business Investment Program to stimulate rural business development and jobs by providing greater access to venture capital investment. The RBIP will allow newly formed venture capital investment companies to leverage private capital funds with government financial assistance and to obtain government grant resources for technical assistance.

Fleet One will administer a private label fuel card program for fleet customers of South Carolina-based convenience store operator The Spinx Company. The Spinx Fleet Card will allow operators of cars, vans or small trucks to control purchases and access real-time account information online 24/7.

Most Americans think business owners and corporate executives live on Easy Street with few financial worries. Yet even highly compensated individuals may have significant holes in their financial safety nets that set the stage for disaster – emergencies that require the intervention of attorneys and certified public accountants. In more than 20 years as a CPA and financial planner, I have been involved in many such “clean-up operations.”

Obviously, the best thing to do is avoid the crisis in the first place. To do this, you need a disciplined review of all the key areas that affect your financial life. Such a “fiscal checkup” should be done annually, preferably not during the winter holidays or spring tax filing madness. You will need your CPA or certified financial planner to help. I recommend the following 11-part “safety net” analysis.

Check overall life goals. Most people think of finances in weekly terms, but to be successful you need to think in terms of years – often five, 10 and 20 or more years into the future. The most important concept to grasp is that money should be for what we need and want most in life. People usually have goals for their money, but rarely if ever do they write them down, share them with spouses and then work together to achieve them.

Review net worth and spending. Get a good software package, such as Quicken, to help you understand and review personal spending. Understand and review savings as a percentage of income.

Income tax planning. Most people think of taxes only in the spring, but good planning requires year-round attention. Focus on a handful of strategies that make real financial sense – good retirement accounts, smart real estate strategies and clever corporate tax planning. Most other tax schemes require very careful review to understand their near- and long-term implications, and it’s best to consider them at times outside the spring tax crunch.

Investments/retirement plan checkup. I have led investment clubs and invested personal funds in publicly held stocks, private ventures and real estate. But too many people chase get-rich-quick schemes and overlook the tried-and-true methods. Good investment advisers that focus in their segment of the market are worth the 1 percent that you pay them. You will make much more money by focusing on your company or your career than by trying to follow the stock market.

College/wedding/assistance to children. Kids turn 16 and want a car. They turn 18 and want to go to college. And in their 20s they get married or want their first house or first business. The march of time is inevitable and predictable. Yet so few people ever begin disciplined funding of these goals when the kids are young, using tax-smart 529 plans or other tools. Even fewer ensure that this assistance does not become a lifetime payroll for the kids.

Business continuation. It may not be obvious, but failure to plan for business continuation is the source of most holes in the safety net. Very few business owners really follow the 15 or so critical planning points necessary for business continuation. One’s business interests usually are the “wealth engine” of the family finances. But in my experience, 9 out of 10 business owners never cover all the basic preventive maintenance techniques, such as written buy-sell agreements, life and disability-funded buyouts, exit plans, succession plans, use of coaches and mentors, key employee retention and incentives and numerous other important tactics.

Estate and asset protection. You might be surprised to learn how many business owners don’t have basic wills, healthcare proxies and powers of attorney on file. They are unwittingly waiting on their local probate judge to decide who manages their affairs. Other good practices should be considered, such as a “letter of instructions” and annual reviews by the financial team.

Insurance matters. Most of us have some life insurance, but is it adequate? Fewer of us have the more critical disability or personal umbrella insurance, or have considered long-term care coverage. When was the last time you checked your beneficiaries? Marriages, divorce and children often render insurance policies obsolete and make for a very unpleasant surprise.

Main household issues and protection. Whether you are settling into that dream home or planning a move in the next five years, some of the biggest financial concerns center on your residence. Consider the possibility that someday you may face a fire, flood or other disaster. Protect valuable papers and document your possessions for insurance purposes with video or photo records.

Other financial planning issues. As a “catch-all” category, there are often other issues, such as contingent losses or guarantees of debt, pre-marital agreements or potential lawsuits.

Your financial team. A good CPA, attorney and banker are givens. Consider also adding to your team a trusted and informed family member, financial planner, investment adviser, insurance agent, key employees and perhaps others. Most importantly, appoint one of these as the “quarterback” of the team to coordinate all safety net efforts. And then you can sleep better at night knowing your safety net is securely in place.

Financial Calculators – A grouping of 10 sections with almost 90 separate decision aid financial calculators courtesy of “CCH Financial Planning Toolkit” – can be found at this site.


Truck Tonnage Index hits another record
The American Trucking Associations’ seasonally adjusted Truck Tonnage Index increased 2.2 percent to a record high 160.8 in April. April’s improvement was the third straight increase and the seventh in the last eight months. Year-to-date, compared to the same period in 2003, truck tonnage was up a hearty 6.7 percent.

“There’s a significant amount of freight to be hauled from this much stronger economy”, says ATA Chief Economist Bob Costello. “Solid manufacturing production, inventory rebuilding and strong retail sales will keep motor carriers busy for some time.”

ATA calculates the tonnage index based on surveys from its membership. The base year for the index is 1993.


Freight index up 6 percent
The Freight Transportation Services Index in March was 123.3, up 6 percent over March 2003 and the highest level recorded during the 14 years covered by the index, the Department of Transportation’s Bureau of Transportation Statistics said. The base year for the index is 1996. On a seasonally adjusted basis, the Freight TSI was 1.4 percent higher than February’s level of 121.6.