Archive for November, 2005

Identify theft, human resource privacy laws and rules of confidentiality dictate that you protect sensitive financial, personnel and customer information. Lower your company’s liability in this regard through simple but effective document security measures.

For soft copy or electronic documents:

• Password protection, updated regularly
• Anti-virus, firewall and other electronic safeguards
• Daily data backup

For hard copy or paper documents:

• Organize your file system- it’s not secure if you can’t find it!
• Locked file cabinets
• Safe deposit box and/or fireproof safe
• Timely document destruction

Locked facility doors and activated alarms are an added good, but document destruction is one easy, high impact way to lower liability. Read: shredding!

Though tedious, this task got a lot easier at SBL when, for less than $200, we upgraded to a larger, higher quality paper shredder. It crosscuts documents into the less easily reconstructed confetti versus the spaghetti strips of paper, has a 15-sheet capacity and reverse mode to un-jam it. It cuts CDs and credit cards to boot. Best of all, the slide out bin means no one shirks off emptying the machine like we did when we had to remove our old, ungainly top-mounted shredder. We oil the blades monthly and keep dust off the electronic eye for seamless operation.

There is document destruction for everyone: engineers and architects can purchase large format shredders. If you generate lots of sensitive documents, consider a high volume, super-fast shredder or a document destruction service. Though more expensive and less immediate – your documents might sit temporarily in a locked box on premises – services handle higher volumes and some offer document storage and HIPPA compliance assistance as well.

For the shredder we purchased, the Fellowes C-14, we found the best price through www.cnet.com. Don’t forget to order the shredder oil.

Take control of your fiscal year end in five easy steps.

1. Tax return checklist. What tax returns does your company have to file, and when are they due? The most common: income tax (state and federal, business and personal), payroll tax, 1099s, sales tax, city business tax, county property tax, and annual 401K filing. Aggressively work this punch list so you can file your returns then focus on a successful 2006.
2. Tie up the loose ends in your books. Have your bookkeeper do a line-by-line analysis of each account. Enter all out of pocket expenses and mileage; tie out year-to-date payroll and retirement plan calculations; resolve items in suspense; and get ready for year-end inventory physical count. Prepare to close the books by February 15th, 2006, then ship them off to your CPA.
3. Tune up your paycheck. If you get a W-2 paycheck from your corporation, make sure it’s tracking toward your target levels of income tax withholding to avoid penalties, interest and an unpleasant surprise on April 15th. Check your rate of retirement plan deferral: on track to meet your target? These are all tax-smart strategies. See Paycheck as a Financial Tool for more information on this topic.
4. Year-end tax planning. Call your CPA if you haven’t done your year-end tax planning yet. It’s not too late to rough out your strategy and make end of year moves that combine business and personal, this year and next. Remember that in most cases, the December 31st deadline is unforgiving. Two common examples:
   • To take the section 179 accelerated depreciation deduction, new equipment is supposed to be placed in service by year’s end – not just ordered or paid for.
   • If your last payroll period ends 12/31/05 with checks cut 1/5/06, that money will not be included on your 2005 W-2. Gear your strategy to the actual paycheck date itself.
5. Make money. Optimize, not necessarily minimize, your income tax liability this year. Early stage entrepreneurs shouldn’t focus so much on beating down this year’s taxable income that they leave dollars on the table. Bankers and investors want to see a profit on your tax returns. Close the deal, ship the product, and work the billable hours – astute financial managers know how to make a profit year after year.