"How is my business doing compared to others?"

November 28, 2006
I receive this question from my clients on a regular basis. The survey below compares a sample of my clients in the southern United States using 2006 vs 2005 data.

.................................Percent of Sales..Variance from last year
Sales................................100.0%..................+10.2%
Cost of goods sold...............50.5%..................+10.8%
................................=============================
......Gross Profit....................49.5%..................+09.6%
Administrative Expenses
...Advertising..........................1.0......................+16.2
...Auto Expense..................1.3...................... +37.6
...Bank Charges......................0.4......................+41.7
...Contributions......................0.2.......................-23.6
...Dues & Subscriptions.........0.1.......................-30.1
...Insurance............................2.0.......................+12.6
...Office Supplies.....................1.2......................+01.1
...Outside Services............3.1...................... +66.8
...Professional Fees.................0.6......................+13.7
...Rent-Lease Payments..2.6..................... +26.3
...Repairs & Maintenance.......0.4.....................-05.8
...Salaries & Wages.................21.0....................+14.9
...Taxes & Licenses..................0.7.....................-13.0
...Telephone..............................0.8.....................+17.3
...Travel & Entertainment.....0.0......................-54.0
...Uniforms................................0.2.....................+05.1
...Utilities...................................0.7.....................-04.0
...Other - Miscellaneous..........0.2..................+302.6
................................=============================
.....Total Administrative........36.4%..................+17.7%
................................=============================
Net Income..........................13.1%................... -07.9%

The survey does not take into account depreciation and interest expense. Sales are up, but Administrative expenses are way up from last year. Notice a large increase in auto expense and outside services even rent and lease payments, causing actual profits to go down. Photo above taken this past spring, with my wife and I, on our 24 foot Sea Ray Sundeck. Henry (CEO)

"As a business owner, can I collect Social Security at age 62?"

November 10, 2006
Before you decide to take early retirement at age 62, please do research on the rules. As an owner of my own business just like yourself, the Social Security Administration will look at us very differently compared to our employees who want to retire.
In my opinion:
..1) You should NOT be an officer some 6 months prior to retiring.
..2) The new officers should NOT be related to yourself.
..3) If you want to work part-time after retiring, it should be a lot less than 45 hours per MONTH
..4) You should NOT collect any rent or dividends from the company nor your spouse.
..5) Do not receive any additional retained earnings while retired.
..6) And according to my congressman's assistant, your cell phone and home phone should either have NO voice mail or at least make NO reference to your business.
These are tough rules if you want to retire early. We just got back from our recent Caribbean cruise. See photo above. Henry (CEO)

Professor Tax USA now celebrating 25 years in business

July 19, 2006
Our company is now celebrating its 25th anniversary. We began operations on July 1st, 1981. About 9 years ago, our company was ranked in the bottom 78th percentile. Now we have climbed into the top 15% in the nation. Indeed, we have made considerable progress. Photos above taken at a recent party hosted by our friends Doris & Russell, their first Hawaiian luau party! (You can click on the photos to make them larger.) Henry (CEO)

Mason-Dixon Dragway

April 27, 2006
While visiting clients in Pennsylvania, I was invited to the Mason-Dixon Dragway to see Erik racing his Camaro and his friend Dave taking his cycle on the 1/4 mile run. Dave set his all-time record for the quarter mile at 9.86 seconds. Unfortunately when it was Erik's turn, it started to rain and the race track had to close. Erik was the only one in his class that showed up because of the weather. Had it not rained for another 30 minutes, Erik would have won $1,000 big ones just by running the 1/8 mile. Don't ask me how Erik feels about that, unless you want me to type some weird symbols! Henry (CEO)

"How long should I keep my records in case of an audit?"

January 15, 2006
It depends on the kind of audit and whether it is the Internal Revenue Service or the state Department of Revenue that is doing the audit. Currently the I.R.S. is auditing the 2003 year tax returns.
However when they audit one year they usually want to see the year before and the year after which means that your 2002 and 2004 tax returns will also be looked at. Generally the statute of limitations runs out three years after you filed your income tax returns.
However the rules are different when it comes to payroll and sales taxes.
One of our clients got a notice from the I.R.S. in December, 2005 asking about the 3rd quarter Form 941 for the year 2001! So obviously they waited more than 4 years to inquire.
Another client got a notice in January, 2006 from the state Dept. of Revenue about their 2002 sales tax figures that did not seem to match the Schedule C that they filed on their 2002 federal income tax return. Again the state waited more than 3 years to inquire.
So it seems that it would be good to save your records for at least 5 years to cover normal income tax, payroll tax, and sales tax audits. Pictured above is our room at the La Mansion Del Rio where we stayed on the Riverwalk in San Antonio, Texas. Henry (CEO)