Starting a new business? Remember the following: Cash Flow, Cash Flow, Cash Flow. Track it and know where it is going. Not on the back of an envelope. At a minimum, set up you books via the free Microsoft Office Accounting software (www.ideawins.com). It is basic but will serve as a good start to tracking expenses and most importantly cash flow. I’ve heard it from other CPAs, college professors, and business owners – Staying on top of cash flow is an absolute essential. It is not the only factor that contributes to small business success. You still need a good product, etc. However, cash flow or rather the lack thereof will put the brakes on even the greatest of products and plans.

The New Delta Airlines is back. Good for the company but not yet good for the consumers, at least by my unscientific analysis. The deals are just ok but nothing great. We take the same trip to Colorado each summer and are scrambling to find deals anywhere close to those of a year ago. Then again, maybe that was one of the problems for Delta, underpriced fares. On second thought, that wasn’t the main problem. Try being handcuffed by a union agreement paying the highest wages in the industry and having a business plan that tries to be all things to all travelers. The airline industry is in a period of change. Just look at the business models of Southwest Airlines, AirTran, and Frontier. Keeping it simple with standard planes and routes. Making it cheap for consumers and profitable for the company.

The Dow hits another record! The key driver is that earnings are coming in much better than analyst expectations. CNN reports that analyst were in general expecting earnings growth of approximately 3%. Actual growth is coming in around 7-8%. Mergers and other corporate deals have contributed to the rise. Then again, the foundation – the Bush tax cuts! Hard to argue with the thriving economy that results and yes, increased tax revenue for the government.

Buying a new car? Got a plan? Consumer guru, Clark Howard, advocates doing your homework and checking out carsdirect.com

Have you seen the Starbucks new business model of music and books? We all know that Starbuck stores can generate foot traffic via their core coffee based products. Well, why not put something else out there for the consumer. Sounds good to me. While out of town recently, I had coffee at one of the Starbucks Hear Music coffeehouses. They must have had twenty flat screens for reviewing full songs of your favorite music with obviously the opportunity to buy it by the song or CD.

Have you seen the newest venture from Donald Trump? Yes, Steaks! Come on, I don’t doubt that Trump has tasted some fine culinary in his days but what makes The Donald an expert on steaks. See The Shaper Image in order to purchase the steaks. They are not cheap. I’m sure that they are a fine cut of meat. However, I think I’ll pass on this one. By the way, does anyone ever watch the Apprentice anymore? Is it still on? Tells you how much I watch TV.

We have all heard of the Millionaire Next Door, well how about the Billionaire Next Door. Warren Buffet still lives in the house that he bought 40 years ago for $31,500. I consider myself quite frugal. However, I must admit that I would be tempted to upgrade if I ever hit his wealth level.

Ever scratch you head at the thought of why managed mutual funds rarely beat index funds, especially after considering taxes and fees. Ever wonder why even the smartest economists all have different views of the market direction and sectors. How about stock picking? Again, the smartest market minds differ greatly. What does this tell me? Don’t throw out your back by jumping on the latest bandwagon. Rather, stick with what has worked historically – Index funds and diversification into other areas such as real estate.

Remember the glory days of IPOs. They are Gone! Notice what is making news these days – Companies going private! In today’s’ world of Sarbanes-Oxley, public companies are really under the microscope. With the focus on increased transparency, regulation, and cost, it is understandable that companies might weigh that option of going private. Today, Cablevision reported that it is going private – In a $10.6B deal. That is no small chump change. There is also a rumor that they want to buy the last place New York Yankees. Sorry, I can’t see Steinbrenner parting ways with the Yankees or even parts thereof.

Do you watch “The Office”? Few shows make me laugh like that one. Total political incorrectness! Here is a jewel from the man himself, Michael Scott – “Speaker at the sales convention. Been there, done that. Went there again, did it again. Two years in a row. Consecutive.”

Early statistics indicated that approximately 30% of taxpayers did not claim their telephone excise tax refund. Again, money left on the table for Uncle Sam is as good as spent.

Gas prices are going up. Why? Increased demand and supply not increasing to meet demand.

I’m Back! Thanks to my blog subscribers who did not drop me in the past month. Between tax deadlines and life in general, the schedule can really get crunched. Oh well, I’m back and will hopefully provide some insightful thoughts in my coming posts. So strap on your seatbelts, I’m full of new material. Thanks again.

A software less computer? At first glance, it would seem that these words are inconsistent together. Surely, a softwareless computer is nothing more than a glorified paper weight or perhaps a future boat anchor. However, in the never ending evolution of software, computers, and related technology, a softwareless computer is actually becoming both a reality and source of efficiency. Most recently, Google with Google Apps and Microsoft with Office Live have taken the lead in this quest. Other lesser known entrants into the market are adding to the competitive landscape as well.

As any potential user might ask, “What are the available applications?” Glad you asked. Over at the Duct Tape Marketing blog, a list was started of web only based applications. I think that you will find the list quite surprising. Even more so, check out the comments of which you will see further suggestions.

Now, I must admit that I love a free market competitive environment because from such we do see great innovation and creativity. This has given us the benefit of having many applications that are in fact free! However, I’m also a realist in that there is really no free lunch, especially in the world of business. Yes businesses are charitable. But, in the world of free tools, make no mistake, there is generally an underlying motive. It is textbook marketing to offer something free with the hopes of the individual or business upgrading to the full feature tool with all the bells and whistles. Perhaps, it will come to pass in the near future that some of these free applications will charge a fee once users get hooked on the tool. However, we can let the free market determine that scenario. In the meantime, it is great to have such an array of essentially free softwareless tools.

In a prior post, “Starting a Business on a Shoestring - Yes it is possible!”, I included some resources for starting a business on a tight budget. Looks like some additional items need to be added to the list. I welcome any insights into Google Apps or Microsoft Office Live most especially as they relate to accounting and tax. I do know that Office Live is the functionality by which accountants can interact and access the Microsoft Office Accounting software of clients. Again, any insights welcomed.

Congratulations to the United States government, the pork barrel spending can resume (then again, I guess it never stopped). You are the proud recipient of $300 million in which you will now not have to distribute given that approximately 10 million taxpayers filed their federal tax returns but did not claim their telephone excise tax refund. Thus far, approximately 30% of all taxpayers who have filed did not claimed the credit.

Per the IRS, “To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. Taxpayers only have to fill out one line on their return, and they don’t need to present proof to the IRS.” What could be easier?

Well, the disturbing statistic is that approximately 4.8 million of those missing the exemption were completed by a tax preparer. Thus, if you are choosing the standard amount, which most should (unless of course, you enjoy going through 41 months of old phone bills), you can simply fill in the amount as indicated on the lines below:

• Form 1040, Line 71;
• Form 1040A, Line 42;
• Form 1040EZ, Line 9;
• Form 1040NR, Line 69; or
• Form 1040NR-EZ, Line 21.

For those who don’t need to file a return, simply complete Form 1040EZ-T to choose the standard amount.

The standard amount is based on the number of exemptions that you are eligible to claim on your 2006 tax return. For those claiming the following, see the standard refund amounts below.

• One exemption, the standard refund amount is $30;
• Two exemptions, the standard refund amount is $40;
• Three exemptions, the standard refund amount is $50;
• Four exemptions or more, the standard refund amount is $60.

This is an easy one. Thus, before filing, check to make sure that you capture your telephone excise tax refund.

Former Federal Reserve chairman, Alan Greenspan, recently expressed his displeasure with Section 404 of the Sarbanes-Oxley Act. The January 2007 issue of the Journal of Accountancy, provides a quote from the former chairman at a Massachusetts Technology Council meeting. His quote, “One good thing: Sarbox requires the CEO to certify the financial statement. That’s new and that’s helpful. Having said that, the rest we could do without. Section 404 is a nightmare.”

I can appreciate the efforts of our political leaders to address such matters as the Enron, Tyco, WorldCom and similar other debacles. Specifically, it is good that the CEO take responsibility. I do find it somewhat disturbing that we needed SOX to tell CEOs to take note of and responsibility for financial matters. I would think that most CEOs have significant knowledge of the financial dealings and position of their respective company. Then again, I’m sure that many Enron shareholders probably had the same thoughts about Ken Lay before the Enron collapse.

Of course, we all know that our government works in more of a reactive mode rather than proactive. Looking back, all of the significant financial acts were the results of market collapses or other significant events. The Securities Act of 1933 (“Securities Act”) followed the stock market crash of 1929 and was signed into law by President Franklin Roosevelt as part of the New Deal. The Securities Act dealt with the original issuance of securities. Subsequently, the Securities Exchange Act of 1934 (“Exchange Act”) was signed into law to regulate the secondary trading of securities.

It should be interesting to see how SOX plays out in the future, most especially as it relates to the requirements being imposed on small companies.

Strap on your seat belts, the perfect storm is coming. Tax storm that is! With the current Congress not giving any indication of extending the tax cuts of President Bush from 2001, we are in for a day of reckoning. The U.S. budget shortfall in 2011 is estimated in the range of $127 billion. In the private sector, the obvious choice would be to cut spending to the extent possible and then reevaluate the need to raise additional revenue. However, the words “cutting spending” have rarely touched the lips of our friends in Washington, much less ever been applied. Thus, where does that leave us? I’ll tell you where, in a bind! Add to this storm the aging Baby Boom generation along with the incredible funding needs of Social Security and Medicare and we have the making of multiple perfect storms. It doesn’t take a Harvard economist to figure out the coming collision course. I’m not trying to be a pessimist but rather lay reality right there on the table. This is the 10,000 lb guerilla that politicians seemingly want to ignore or just hope that it goes away.

So what is the solution? Who knows but one thing I do feel strongly about is that spending cuts are essential. In addition, it would seem that growing the economy is the better solution than zinging the population with tax increases. Again, I’m not a Harvard economist with the perfect solution. However, I truly think the Congress should take a strong look at the very favorable economic results over the past six years and the method by which they were achieved. This is even more impressive given the 9/11 aftermath, wars, gas price fluctuations, and a significant housing slowdown. As I’ve mentioned before and for the life of me, I can’t figure out why the White House has not touted the economy more. The story is nice - continuing growth in tax revenues and employment along with a falling budget deficit.

This coming perfect storm should make for an interesting Presidential campaign and election. Let’s just hope that this issue is brought to the forefront.

When Home Depot and Dell are on the radar screen for private equity buyouts, you know that the landscape is primed for mega deals. CNN Business provides a good summary on the state and potential of such mega deals. In my initial outlook at 2007, this was one of the key factors mentioned with regards to IPOs or rather the reverse (i.e. private equity buyouts). Ripe with funds or the availability thereof, it seems that the trend is to take private a public company that is underperforming yet has great potential and then flip it in a few years via a sale or public offering. Obviously, the dollars amounts being tossed around are huge. Should be interesting to see the resulting 2007 landscape change of Public Companies, IPOs and Private Equity Buyouts.

With enthusiasm and boldness, you head into 2007 with hopes of greater discipline in spending, saving and investing. However, much to your dismay, the first part of 2007 brings the inevitable day of reconciliation with Uncle Sam in the form of filing your annual 1040 tax return. Furthermore, perhaps your situation worsens even further when you realize that you can’t pay the amount due Uncle Sam per your 1040 tax return. Don’t worry, you are not alone. This is an all too common occurrence of which the IRS is keenly aware of such circumstances. Accordingly, they provide certain tools for arranging payment by taxpayers. However, let’s first examine the steps prior to engaging the IRS tools.

First and foremost, file your tax return! A common occurrence is that taxpayers freeze at this point not knowing what to do. In many cases, they just don’t file. Don’t fall into this type circumstance. An individual should file the tax return to avoid further penalties for failure to file. Also, you could file an extension via Form 4868 but this does not give your six months of relief from paying. Rather, you must estimate with reasonable accuracy and still make payment.

So, now I’ve filed, but can’t pay! Well, take a deep breath. You are not going to jail. However, you are still obligated to pay. Before engaging the resources of the IRS to make payment, first explore further your own personal resources. Can you temporarily borrow from friends or family? In not, go to plan B. Do you have credit card availability? You can pay with a credit card but the flip side is that you will pay a much higher rate with the credit card company than with the IRS. You can go this route if you want to get the IRS off your back but then again you are really putting yourself in a bind with the high interest rate.

Let’s now assume that you have extinguished all potential sources of funds and you are ready to jump off a cliff. Again, take a deep breath. As mentioned, the IRS does provide tools for arranging payment. The first route is via Form 9465, Installment Agreement Request. You supply the terms based on your ability to pay over the next few years. If the amount owed is under $10,000, the IRS will accept most reasonable offers to pay within 36 months. Otherwise, larger amounts may require further correspondence and data gathering for the IRS. By entering the installment agreement, the taxpayer is given some space in paying over time but also pledges to stay current on future taxes.

Still, let’s say the installment agreement just won’t work for your circumstances. What now? The taxpayer is entitled to file a Form 656, Offer in Compromise application and Form 433-A, Collection Information Statement. This is essentially based on economic hardship given the circumstances. Now, please know that is more of a tool in extreme circumstances. Obviously, the IRS has a vested interest in getting some payment rather than nothing at all. They want to settle but at a fair amount given the financial resources or lack thereof for the taxpayer. As always, taxpayers in such circumstances should consult with a CPA to adequately address the circumstances.

The final course of action is bankruptcy. However, this does not relieve all tax debts rather just suspends collection. In any event, this is a situation that requires the engagement of a qualified attorney for such matters.

Regardless of the course of action, one key to the entire process is respectful and voluntary communication with the IRS. Put it in writing

For further information see IRS Topic 202 at www.irs.gov

According to my calculations, the market capitalization of Home Depot increased by approximately $1.86 billion on Wednesday, the day the company announced the abrupt resignation of CEO, Bob Nardelli. Subsequently, Nardelli is leaving with a sweatheart severance package of a cool $210 million. Yes, that is an obscene amount of cash. However, if one considers the big picture result of what happened at HD yesterday with regard to the market cap, the departure was a win for HD and its shareholders.

Now, CEO compensation is another matter. Yes, the amounts are beyond the comprehension of most wage earners. However, I do strongly believe that the free market forces should dictate pay rather than any governmental restrictions. That said, if the actions of a superstar CEO result in significant accretion to the market capitalization of a company, well then, perhaps that is money well spent by the company. Obviously this was not the case for HD which posted very favorable revenue and earnings over the past several years yet didn’t experience comparable market capitalization accretion. That is until Wednesday!!!

Speaking of market capitalization, here is some interesting news from the analyst community? Google is currently trading at $470. One bullish analyst has a 2007 target of $630. That is some large cap accretion if it comes to pass!