Converting to a Roth IRA in 2010

The IRS provides limited opportunities for changing existing traditional IRA accounts to Roth IRAs. In the past, taxpayers who had adjusted gross income (AGI) above $100,000 were precluded from converting a traditional IRA to a Roth IRA. Beginning with the 2010 tax year, however, this limitation is lifted, thereby allowing many more taxpayers the opportunity to convert to a Roth IRA. The amount that you convert would be added to your taxable income this year and you would have to pay the additional tax, but amounts that you withdraw in retirement would be tax free. Additionally, a special provision may allow you to postpone reporting the income until the two following years.
Traditional IRAs allow you to fund a retirement account with pre-tax dollars. You pay tax on the money that you withdraw, presumably during retirement. You fund Roth IRAs with earnings on which tax has already been paid, but you do not have to pay tax when you withdraw the funds. Choosing which type of IRA best suits your personal situation involves a number of considerations, including projections of what your tax rate will be when you withdraw the money.
The rules governing IRAs are complicated. You should seek competent advice before making any decisions.

How Quickly Can Your Business Grow?

As a business grows, it needs more resources and therefore more capital. It is important to understand another fact. The availability of capital for any business is limited, and it therefore follows that the growth rate a business can sustain and still survive is also limited. In other words, a business that grows too quickly will fail. A business that grows too slowly will deny its owners potential returns.

The fundamental issues which determine how quickly a business can grow are:

• The magnitude of its net profit and hence, market demand and cost structure.
• The willingness of the owners to reinvest after tax profit to finance additional resources.
• The availability of debt finance, which depends on the capacity of the business to service and the security that can be offered to lenders.

To determine how fast you can grow your business, you need to look at your projected cash flow. You can only grow your business as fast as your cash flow allows.

To learn more about projecting your cash flow and planning your growth, please attend our free, interactive workshop entitled "New Year: New Business Plan." For more information and to RSVP, visit www.simonsbitzer.com.

Common Mistakes Made During Business Planning

The performance of your business depends on whether or not you have a vision and more importantly a plan to realize that vision. At the end of the day, your business plan can be reduced to a couple of pages. During the planning process, however, there are some common mistakes that can be made.

• Many owners rely on a gut feeling rather than analyzing what is really happening.
• Few actually examine external factors affecting the business, such as completing a competitor analysis.
• Many owners are excited by their business and fail to have their plan reviewed by a neutral sounding board.
• Sometimes the plans are too lengthy and full of good ideas that may not get implemented.
• Tasks can be assigned to the wrong manager.
• Profit and cash flow forecasts based on actual activities are not used to plan the financial side of the business. They may be the result of guesswork (last year + 5% for example.)

If you are experiencing any of the above, please join us for our upcoming interactive workshop entitled "New Year: New Business Plan". Visit www.simonsbitzer.com for more information about this complimentary event!

New Year: New Business Plan

Every business should have a plan – yet few actually do. There are many reasons why you should plan properly. A focused business plan can provide you with direction. It sets, if you will, a lighthouse-something for which to aim.

A business plan can also help you make the right decisions about where you should allocate your resources and what actions should be prioritized. You cannot do everything at once (whew), so having a vision and a plan keeps you very focused.

Your business plan will also help you identify where the gaps are in your business model. If you follow the plan, it will be very clear where you need to take action first to address any areas of weakness.

Once you have your plan in place, share it with your team to ensure everyone is aligned with your vision and understands the strategies you are putting in place. Finally, it is important to measure everything, which is why Key Performance Indicators play such an important role in the business planning process.

If having a vision for your business is one of your resolutions for 2010, please join us for our upcoming interactive workshop where we will help you create a short form business plan that will keep you focused on your business performance!

Thursday, January 21st, 11:30-1:00, catered lunch included in this complimentary event. Please visit www.simonsbitzer.com for location and directions. RSVP by January 19th to rpotter@simonsbitzer.com.