Avoiding IRS Trouble in the Wild World of Cryptocurrency
5 Essential Accounting Reports & Why You
3 Easy Steps to Help You Review, Reboot, & Succeed!
Make Productivity Easy with These 4 FREE Project Management Tools
How to Find Focus & Clarity with Our 5-Year Strategic Planner
Our motto is Promote, Connect, Succeed, and all our programs a designed to help you do it!
Promote Your Business
Ads & content in Flackery magazine
Member-to-member ads in our newsletters & email campaigns
Host classes & share your expertise to other small business owners
Connect to People
Online groups & forums
Virtual & in-person events
Success Starts with the Right Tools & Resources
Downloadable planning tools
Classes & workshops
Curated partners & resources
Member Discounts & More!
Back to Contents
Grow your business with The Business Guild!
$25/Month Join Today!
Get two months FREE with annual membership!
Wondering why the heck we named
The Business Guild magazine
Here's a quick video with all the answers...
Without envisioning where you want to end up, it's impossible to get there.
With the end of the year fast approaching, I hope you're on target to achieving all that you wanted this year with your business. If not, fall is a great time to re-energize yourself for the final push.
We've all heard adages such as, "Take that first step forward" and "Leap and the net will appear." While "putting one foot in front of the other" will get you somewhere -- will it be 'where' you want to be? I'm a proponent of planning a route to a destination -- to know where I'd like to end up and create a plan to get there.
Start with your goal and work backwards to fill in the steps necessary to achieve it. You may not know how you'll do a step, but accounting for it in your plan will make sure it's addressed sooner rather than later.
Yes, it's rare to have the perfect route mapped out from the start, because detours always appear, but at least with a plan to reach our destination, we're able to work through the detour and get back on track faster than if we're meandering down every trail we find.
Flackery is the digital magazine busting its seams with resources for small business owners and produced by The Business Guild, where our purpose-driven mission is to help you promote your business, and connect you to the people, information, and resources you need to succeed.
We hope you find the articles and resources in this goal review & reboot issue inspiring and that they help you on your road to finishing 2021 strong. "If you think it, you can achieve it," especially if you plan it and write it down.
Lisa J. Jackson
Editor of Flackery
Co-Founder of The Business Guild LLC
Please feel free to share this issue of Flackery with other small business owners!
PowerUp Relationship Building
Real world tools & strategies to build a strong foundation to help your business stay profitable when the economy is slow.
Success Funnel Podcast
The 12-Week Year: Get More Done in 12 Weeks than Others Do in 12 MOnths
3 Easy Steps to Help You Review, Reboot, and Finish the Year Strong
Recession-Proof Your Business
Check out our website: thebizguild.com
Be Fearless & Own the Room with a Go-To Presentation
3 Reasons Your SMART Goals Aren't Working & How to Fix Them
In every issue
Why We Called the Magazine Flackery
Advertise in Flackery
5 Essential Accounting Reports & Why You Need Them
Status Check Planner (click to open in a new window)
Do you remember January?
It was the start of a brand new year, and you saw 365 days of opportunity to grow your business.
You made your plans, broke down your goals, and started working.
Now it’s September and everything since January is a blur.
Are you still on track for a strong finish?
Have you accomplished anything big?
You’ve been working hard; you also know you had some detours and setbacks along the way. And now when you look, you realize you aren't where you want to be.
Sometimes, despite your best efforts, detours pop up, and the next thing you know, you’re off schedule and diving down another rabbit hole.
It’s not your fault.
It’s not like you spent the last eight months doing nothing. You just have to take a few minutes to review and reboot your plans.
With a little luck, all you’ll need is a minor adjustment, and you’ll be back on track in no time.
The good news is you’ve got this. You know how to dive into new routines.
From your first day of kindergarten all the way through college, September was the recognized time for new beginnings.
It’s a familiar type of energy, and no matter how much you may have grumbled at the idea of getting back into a routine after a summer break, you got used to it.
To make this check-in easy, we’ve put together a three-step process to review, reboot, and succeed with your plan.
Routine status checks make an incredible difference to staying on track and completing projects.
This is particularly true for solos and small teams whose members wear many hats.
We all start projects with high hopes and expectations, but it’s easy to get distracted and lose track of time.
Scheduling set check-in points and using a tool, like The Business Guild’s Status Check Planner, make a status review quick and easy so you can adjust and adapt as needed.
This planner has six areas and doesn't take long to complete.
The top section looks at where you are right now.
Completed tasks, milestones, and benchmarks
A brief summary of the current situation
Outline of next steps
The bottom section takes on the what-ifs.
Solutions for the challenges or a way to leverage those new products and markets
This section is important because it’s where you develop a direction about how to adapt to changing circumstances.
The most frustrating thing about goals is that no matter how well you prepare, plans can change.
Simple goals are usually easy to manage, but larger business goals can be more fluid.
For instance, if your goal is to write a blog post every week, you can probably get caught up quickly, but if your goal is to get a medical device approved by the FDA, there are a lot of variables outside your control that you may have to re-adjust.
This is why we review and update.
Is the goal still relevant?
Is it something you still want or need to do?
Why or why not?
The pandemic really showed how we can't plan for all unknowns.
If you’re on target and the goal still supports your overarching business plan, then you’re golden.
However, if you’re behind or the mission has changed, take a few minutes to open up a Goal Planner Canvas and update or redefine your goal.
Don’t let its simplicity fool you; the goal planner canvas is a sophisticated tool designed to help you write solid, achievable business goals.
What you want to do
How you’re going to do it
What resources you’ll need
Relevance to your mission
Timeline and benchmarks
These are all components of a SMART goal presented on an easy-to-use page.
The planner isn’t something you would take to an angel investor, but it will help you create a workable goal that will take you from where you are now to the next step in your business plan.
The last step is to review and update your business plan.
The Business Planner Canvas is a one-page snapshot you can use for your primary business plan or for a separate plan for each product or service you sell.
In most cases, your goals will support a specific product.
If you used the business canvas to write your business plan, then it will be easy to compare your goal to your plan.
Does it support your stated mission?
Will it move your core goals forward?
Do you have the people and resources needed to achieve it?
The answer to each of these questions should be yes. If it’s not, then you need to go back and rethink your goal or change your business plan.
For example, maybe you discovered supply chain issues increased your costs, production schedule, or delivery times. These things will affect your short-term goals and may require a minor edit to your business plan; they shouldn’t cause a complete rewrite.
And that’s the most important thing to remember:
Review, reboot, and succeed are about taking stock of where you are right now and adjusting your actions so you can achieve your goal, not scrapping an entire plan.
These three steps should take less than an hour total and will give you the information you need to review, regroup, and plan your next steps.
Four months is plenty of time to get back on track for a strong finish.
You can do it. ✔
3 Easy Steps to Help You Review, Reboot, and Finish the Year Strong!
Step 1: Review your current status
"Plan your work and work your plan." -- Napoleon Hill
Business Planner (click to open in a new window)
Goal Planner (click to open in new window)
Step 2: Reboot your business goals
Step 3: Succeed with your updated business plan
The value of networking is developing strong business relationships.
The Business Guild’s virtual bi-monthly PowerUp Relationship Building events are focused on building those relationships between like-minded business owners to “know, like, and trust” each other.
PowerUp Relationship Building is designed to foster strong business relationships by sharing ideas, collaborating, and connecting each other with the people and resources they need to succeed – creating a space to help each other grow their businesses.
These bi-monthly virtual evening events offer:
Break outs for 1-to-1s
In Episode 6 of the Success Funnel podcast, Pat and Lisa chat about the value of networking with PowerUp.
For more information about The Business Guild's PowerUp Relationship Building events, please visit our page on Eventbrite or click on the events page on thebizguild.com under Connect. ✔
Have you seen The Business Guild’s new bi-monthly PowerUp Relationship Building event?
By LISA J. JACKSON, The Business Guild
The 12-Week Year: Get More Done in 12 Weeks than Others Do in 12 Months Months
Brian P. Moran & Michael Lennington
$23.00 hardcover / $14.00 Kindle
I thoroughly enjoy finding a book that gives me a vibrant "ah ha" epiphany, and this is one of those. When we have more time to do something, it's easy to put it off, to stretch the deadline as far as possible. Or at least I do.
The 12-Week Year proposes shifting 'annualized thinking' in measuring success to twelve weeks.
It's a straightforward and engaging read with clear explanations for why changing our mindset about goal deadlines is beneficial and how shifting our mindset from an annual focus to a quarterly one can reap more benefits through greater productivity.
The authors talk about the advantages of time blocking and creating the time management system that works best for you to remove the tendency to move goals forward month to month or quarter to quarter.
Shifting from a 12-month to a 12-week mindset is about breaking our ingrained habits and updating the systems we've grown comfortable with. And how about this bonus: every quarter has 13 weeks, so after working through your 12-week goals, you have a week to review your achievements and celebrate them before tackling your next 12 weeks.
There are case studies and additional resources in the book to support their suggestions. The authors push their own program, which may appeal to some readers, but a lot is gleaned from these pages alone.
I'm thankful someone recommended this to me this year. Give the book a read and try the 12-week goal setting method for one quarter. I bet you'll feel inspired and amazed when you review your results in the 13th week.
You know what a SMART goal is, I know what a SMART goal is, everyone knows what a SMART goal is. Yet despite this knowledge, most of us fail when it comes to creating effective goals that get us from idea to accomplishment.
Why is that?
The concept of goals is straightforward. Create incremental tasks that need to be completed to achieve the desired outcome.
It’s no different from baking a cake.
You know what the end result is supposed to look like, all you have to do is have the project broken down into progressive steps that will take you from the first step to the finished project.
It sounds simple enough, so why do so many of us get it wrong?
There are a lot of reasons SMART goals fail, but here are the most common ones:
SMART goal isn’t actually smart
Setting the right goal starts with having a clear vision of your desired outcome.
This holds true whether you’re looking at your core overarching goal or the smaller incremental goals you need to achieve to reach the goal line.
It sounds obvious, but this is where many people go wrong.
Maybe you want to increase revenue by $3 million or you want to book five new clients next quarter. Whatever the goal is, it has to be clearly defined and something you want or need to do.
The best way to get that clarity is to create a plan.
The Business Guild has a one-page goal planner canvas that can guide you through basic questions to help you identify the key components that go into building a solid business goal. It has you answer the questions:
What do you want to do?
How are you going to do it?
What resources do you need?
Does it align with your mission?
How long will it take?
This is goal planning 101, and the answers to these questions are the foundation of SMART goals.
A SMART goal has to do five things. It has to be:
A lot of this goes back to planning. You have to be explicit and define what you want to achieve.
“I want to make a lot of money” doesn't meet any of the SMART criteria.
You could say, “I want to increase sales to existing customers by $3 million by December 31, 2023.”
This sets you up to explain how you will do this (attainable), how it aligns with your mission (relevant), and what your timeline and benchmarks are (timely and measurable).
Setting goals has to be done with intent. New goals represent new beginnings and new opportunities. It’s an exciting time, and it’s easy to rush through and gloss over one or more of the steps. Take your time and be deliberate. If you whiff any of these pieces, your goal will not be SMART.
Murphy’s Law says anything that can go wrong, will go wrong.
It’s a fact of life.
No matter how well you plan, there is always a chance something will go sideways.
It could be something crazy like your best employee winning the lottery and moving to Montana the day before you’re set to pitch an investor, but most of the time it’s something more mundane.
In any case, you need to plan for it as much as possible.
You don’t have to make a what-if scenario for every potential pitfall, but you should have a backup plan for things that are difficult to replace if something happens related to:
Access to critical skills
Also, think about adding a little wiggle room to your deadlines.
Having an extra two or three days will give you some space to breathe if your laptop dies, or a client has an urgent issue that needs your attention.
These things happen every day in the real world.
If it’s a big project, you might even consider having a contingency plan for catastrophic events like natural disasters, ransomware, or, hey, a pandemic.
The appeal of SMART goals is that they require a level of planning and buy-in that almost guarantees some measure of success. If you find your SMART goals aren’t working for you, chances are good that you have the wrong goals, have strayed from the SMART format, or didn’t plan for contingencies.
Assuming you’re tracking metrics, you should be able to catch the issue quickly and address whatever is holding you back.
If metrics and a system for measuring success is the part you left out, it’s a straightforward fix.
All you need to do is review your metrics and adjust your goal based on your findings. If your goal doesn’t include metrics and a system for measuring success, here’s your opportunity to do a quick edit. You may find that’s all it takes to get you back on track to achieve your goals.✔
Reasons Your SMART Goals Aren't Working & How to Fix Them
Create the right goal
Why your SMART goals fail
Let's discuss your writing/editing needs and options for how I can help you take your content to the next level and attract new customers.
Schedule a time to chat
You want to tell your story to your clients/customers, but you struggle a bit with getting the words written. You’re looking for someone to help you create the content you need using “your words, only better.”
Write Your Way offers the writing and editing experience you want with dependability you can rely on.
Every business has a voice, let's capture yours.
Tip: Open the planner file in a browser window to tab from question to question
Building a successful sustainable business is not something you can do on the fly.
Knowledge is power and a 5-year strategic plan forces you to look at where you are now versus where you want to be. It also tackles hard questions early on, which leads to greater flexibility when you need to make difficult decisions quickly later.
The strategic plan helps you gather information and define your overarching corporate goal, which lays the foundation for creating the individual business plans to achieve it. (Yes, that was plans, plural.)
It helps you organize your actions and puts you in a position to know what you need to do today, tomorrow, next week, next, month,...two years from now, and so on.
With five content boxes and a few general questions, the 5-year strategic planner will help you organize your thoughts and clarify your vision so you can plan for success with confidence.
The first question is the most important. You must define what you want to achieve before you can figure out how to do it.
Don’t worry about having fully formed goals. It’s fine to start with a general idea and flesh it out as you work through the planner. You could even make an argument that starting with something a little vague means you’ll be open to other ideas and opportunities that pop up as you work through the planner.
Taking stock of your company’s current status helps determine your starting point.
What’s your current cash flow?
What’s your market position?
What’s your employee situation? (That’s a big one right now.)
It will make a tremendous difference to your plan if you need to find funding or hire a team before you can start production.
You also have to look at potential challenges and opportunities.
If you’ve been in business for a while, you probably already have a list of things that could disrupt the production and delivery of your product. You should also have a list of ideas for new markets, products, or partnerships. Be sure to talk with managers and team leaders to hear about what they’ve observed in their departments.
The third section is where your idea takes shape.
Now that you have a sense of where your business stands, what the challenges are, and where to find new opportunities, it’s time to define your desired outcome and test it.
Be specific about what you want to achieve, then explain why.
It doesn’t matter how large or small your business is, a 5-year plan requires a significant commitment of resources.
This is why you have to challenge your idea to make sure you’re doing it for the right reason and it aligns with your company’s mission.
Section four is where you get into the details and lay the foundation for actionable goals.
List the steps to get from where you are to where you want to be.
State how you will define and measure success.
This is just an overview, so it’s okay to think in terms of general benchmarks rather than specific tasks.
You will create the goals needed to move you from concept to activity to achievement after you’ve completed the 5-year strategic planner.
The last section asks you to think about the resources you’ll need to work through the steps outlined in section four.
Again, it doesn’t have to be specific, but you should have an approximate idea of who has to be on the team, what skills they need, and what type of materials you will need.
As I said earlier, this is your starting point. By the time you finish this planner, you should have a sense of whether your idea is worth pursuing.
If it is, then the next step is to create a more formal plan that incorporates the general information from your planner, as well as more detailed facts and figures.
The length and details will vary depending on what you want to achieve, but using the 5-year strategic planner will give you the clarity and focus you need to write a strong long-term strategy to succeed. ✔
We spend a lot of time talking about different types of planning and we've created several planner tools to help you develop focused plans for things like marketing, sales, and product development, but this time we're going for the gold. We're pulling back the curtain and introducing you the idea of creating a strategic plan that will guide all of your business goals for the next five years.
3. What do you want to do?
2. What is your current status?
1. What do you want to achieve in the next 5 years?
5. What resources will you need?
4. How are you going to do it?
Visit thebizguild.com for more planning canvases
The concept of keeping track of income and expenses is simple enough. If you don’t track your transactions, how will you know if you’re winning?
For many business owners, that’s all accounting is, a method for keeping score.
The thing people don’t realize is the value of your accounting system extends well beyond counting your pennies.
Modern accounting platforms contain a wealth of information about almost every part of your business, and if you’re not tapping that hidden value by running reports, you are missing opportunities.
Today, we’re looking at five standard accounting reports. Each of these has a different purpose.
Some give an overview of your overall status, and others provide details that will help your team adjust and respond to the ebb and flow of business.
Income Statement (P&L)
Accounts Receivable - Aging
Revenue by Customer
Accountant Robyn Neveu from Fay Accounting says the three most important accounting reports for small business owners are the balance sheet, income statement, and cash flow statement.
These three reports show the general health of your business.
1. Balance Sheet
A balance sheet is a snapshot that shows assets, liabilities, and owner’s equity at one specific moment.
Assets: Cash, Accounts Receivable, Prepaid Expenses, and Inventory
Liabilities: Accounts Payable, Accrued Expenses, and Unearned Revenue
Owner’s Equity: Equity Capital and Retained Earnings
With this information, a business owner can get a good overall sense of their business standing.
2. Income Statement
An income statement, also called a profit & loss (P&L) statement, is a report that tells you how much money you’ve earned or lost within a set time frame.
This report subtracts expenses and the cost of goods sold from total revenue to determine whether you’ve made a profit for a given period.
Cost of Goods Sold
Neveu says income statements should be run on a monthly basis. She also suggests running regular revenue reports to track sales, payments, and refunds.
3. Cash Flow
A cash flow statement looks at actual cash on hand within a specific period.
As you would imagine, cash flow can have a critical impact on day-to-day operations and your ability to react to changes in the marketplace.
Many businesses offer terms like net 30 or net 45 that give customers 30 or 45 days to pay an invoice. While a sale counts as income, it doesn’t count as cash on hand until the invoice is paid.
The distinction is significant because you may have $100,000 in sales, but that doesn’t mean that you received $100,000 in payments.
The cash flow statement has three sections that review cash flow from operating activities, investing activities, and financing activities.
Some people can find this report a little challenging compared to the others because it is a little more in-depth and includes things like adjustments to net income, depreciation, and non-sales revenue.
Although these are the first three reports most people think of, Ed Carter, CPA explains that balance sheets, cash flow, and income statements are what lenders and angel investors look for.
Lenders like these reports because they are formatted to a uniform standard; a bank or other entity can easily see things like your assets or debt-to-income ratio.
While they give a quick snapshot a lender wants, “These statements do not provide the level of detail or informational perspective a business owner or manager needs,” Carter points out. “If you can’t respond to what your business is doing quickly, you’ve missed the boat.”
That’s where managerial-type reports come in. Things like what your margin is and details about specific products and markets. “That’s where you see the anomalies that have to be addressed,” Carter says.
Reports such as Accounts Receivable - Aging, and Revenue by Customer, can provide incredible information about potential cash flow issues and give insights into changing markets.
These types of reports are crucial for the business owner, manager, or other decision maker who needs prompt information.
4. Accounts Receivable - Aging
An aging receivables report is a simple statement of unpaid invoices.
This is important because you’ve already done the work. You’ve purchased the materials, provided the service, and need the customer to pay so you can pay yourself, your people, and/or your vendors.
More pressing is the fact that the longer a bill stays unpaid, the less likely it will be paid. By running a monthly aging receivable report you can stay on top of outstanding invoices.
If a customer doesn’t submit payment by the due date, you can put them in the queue to make a phone call or send a reminder notice. (See How to Stay Ahead of Your Receivables in 3 Easy Steps - Flackery - Winter 2019 for more information about recovering unpaid invoices.)
5. Revenue by Customer
The revenue by customer report provides a listing of total revenue broken down by customer within the reporting period.
The primary role of this report is to identify who your largest customers are and how much they spend.
Overreliance on one or two customers for most of your revenue is a red flag that your business model may be unsustainable should you lose that client.
On the other hand, generating recurring sales with existing customers should always be a key goal.
In both cases, the revenue by customer report provides the information you need to both diversify your customer base and identify new opportunities with existing clients.
With this perspective in mind, you can understand the value of this report for sales and risk management.
Carter adds that although these are the five most common accounting reports, you can also create specialized reports that focus on specific products, channels, or customer types. Although most accounting programs will not allow you to create custom query reports, he says you can download data into a spreadsheet and sort it to get the perspective you are looking for.
While there is no doubt it’s easy to get mired in accounting terms and principles, by embracing accounting reports, you’ll gain important information about the overall health and well-being of your business.
Once you understand that, it becomes much easier to see the benefit of making time to run and review regular reports. ✔
“Staying on top of accounts receivables is huge. If you don’t review them consistently, they can get away from you and become impossible to collect.” Robyn Neveu, Fay Accounting
Need help with accounting or taxes?
Ed Carter, CPA
Audits & Business Taxes
We all want to get our business in front of an audience so we can wow them with our fantastic products and services, but how many of us take the time to put together a go-to presentation we can use when we get the call?
It’s not a ridiculous question.
You use templates for everything from lead generation to onboarding to abandoned carts. Why not have a favorite presentation you can dust off and update every time you are invited to address a group or make a pitch?
You are a business professional who creates an incredible amount of content for the sole purpose of driving people to your website or landing page where you encourage them to connect with your business. You ask them to:
Follow you on social media
Sign-up for a newsletter
These are fantastic fix-it-and-forget-it channels that provide a lot of value, but the one thing they don’t do is put you in front of your audience.
Note the emphasis on you.
People want to do business with people they know, like, and trust. They need to put a face on your business before they buy.
Video comes close. People can see you and get a sense of your personality, but like reality television, it can come across as staged.
The viewer knows you had a script and probably took 15 or 20 takes before you got everything perfect.
As a micro-business owner, you are the founder, CEO, and visionary for your organization.
You are the face of your business, and people want to know you. They want to hear your expertise, and they want to get a sense of who you are and how you can help them.
The problem is that for most of us, the idea of creating a slide deck, memorizing a presentation, and standing in front of a group is terrifying.
What if you lose your place?
What if people don’t like what you’re saying?
What if you sound like an idiot?
The list of what-ifs is long and varied, but the result is the same, embarrassment.
The best way to prepare for a business presentation is to practice.
This is not breaking news.
We all know that the best way to hone a skill is to keep doing it. Even professional athletes and musicians who have reached the pinnacle of success continue practicing until they retire and stop playing.
The thing you may not realize is that there is no rule that says you have to create a new speech every time you’re invited to present.
This is how you conquer your fear.
Psychologists have yet to identify the root cause of glossophobia, the fear of public speaking, but they do know it is the most common form of social phobia.
Most of the dread people feel stems from a lack of control.
It makes sense, right?
A typical presentation takes us out of our comfort zone. It requires us to put ourselves in front of strangers, in an unfamiliar environment, using unfamiliar tools like slide decks and microphones. It seems so simple when you’re in the audience, but it’s overwhelming when you’re the one in the spotlight.
This is where the concept of having a go-to presentation comes in.
The two biggest steps to overcoming the fear of public speaking are being comfortable with your topic and practice.
Lots and lots of practice.
It may feel like cheating, but developing one presentation that you can polish and reuse every time you’re tapped to be the guest speaker is a fantastic way to boost your confidence.
It’s easy to find advice for how to create an engaging presentation that connects with an audience, but very few people talk about the fact that professional speakers have a limited repertoire.
Like you, they are experts in their field and they don’t have time to create multiple presentations about the same subject. Instead, they create a core presentation they can use every time they need to speak about that topic.
This is important because a large part of finding confidence is putting yourself in a position where you are in control of your situation.
The first step to gaining and maintaining that control is to have a familiar go-to presentation.
It’s much easier to find the confidence to speak in front of an audience when you know your topic and don’t have to worry about what you’re going to say.
Consider your own what-ifs. How many of them revolve around how you sound, feeling like an imposter, or simply getting lost in the middle of your presentation?
How many of those fears could be eliminated by having one speech you can hone and practice?
How much more confidence would you have knowing you don’t have to find time to make new slides or memorize a new speech?
Take the time to set yourself up for success.
When you develop a solid presentation that you can use and reuse, you will step on the stage with the confidence that comes from familiarity and practice.
You will own the room.✔
Reality TV isn't real...
Be Fearless and Own the Room with a Go-To Presentation
Fear is an illusion...
Owning the room starts with confidence...
Luck favors the prepared...
7 Tips to Nail Your Next Presentation
Know your topic
Stories make it relatable
Limit presentation to 6 - 10 slides
Keep your slides simple -- minimal text
Ask questions to connect with the audience
Tape yourself to identify rough spots & nervous habits
Practice until you're comfortable, then practice some more
By Pat Hammond, The Business Guild
“For federal tax purposes, virtual currency is treated as property” and not a foreign currency.
Cryptocurrency is a hot topic right now. When we originally decided to write about it, I had a hard time figuring out how it applied to the average business owner. Then Congress started talking about taxing digital assets, and companies like JP Morgan announced they were planning to launch an investment fund based on cryptocurrency, and suddenly, that gee-whiz topic we talked about last winter was hotter than Vegas in June. With so many changes on the horizon, it is worth looking at where we are now and how the IRS treats virtual currency so you can make sure there aren’t any surprises later.
ntil a few months ago, Congress had taken a wait-and-see position with legislation, reporting, and taxation of virtual currency and digital assets.
Now that they are taking an active interest in virtual currency, it's a good time to review some of the basic uses of virtual currency and how the IRS handles them right now.
The first thing to know about crypto, or virtual, currency is that it is generally treated as property.
Although it’s been around for a while, we are still very early in the process of establishing virtual currency as a standard form of payment.
Except for hackers holding companies’ data hostage, and El Salvador, which recently became the first country to classify Bitcoin as a currency, most people do not know where to buy it, how to store it, or how to use it.
In Notice 2014-21 the IRS specifically states, “For federal tax purposes, virtual currency is treated as property” and not a foreign currency.
This makes sense because when you strip away the idea that crypto is an actual legal tender, it is easy to wrap your head around the idea that using virtual currency to make a purchase is no different from Jack trading the family cow for magic beans.
As we all know, whether you make a profit or take a loss, any time you trade a capital asset (stocks, bonds, or other property) for something of value, the government wants you to report it on Schedule D when you file your taxes. (see Publication 544, Sales and Other Dispositions of Assets)
Most of this is straightforward.
If you use virtual currency worth $600 or more to pay an independent contractor for services, you would report it just like a standard cash payment with a 1099-MISC.
Along the same line, if you pay an employee’s wages with virtual currency, it would be subject to the same standard withholding and employer reporting as when you pay an employee with US dollars. Continuing that theme, anyone who is self-employed and mines virtual currency as their occupation has the same reporting and tax standards as anyone else required to report self-employment income.
This part is simple. In most situations, the IRS expects you to report and pay taxes as you normally would when you exchange something of value for something of value.
The confusion comes in when you get away from simple, clear-cut transactions and look at things like hard forks and airdrops.
In October 2019, the IRS released Revenue Ruling 2019-24 and an update to the Frequently Asked Questions on Virtual Currency Transactions to address questions about hard forks and airdrops. (NOTE: Frequently Asked Questions are not considered official IRS guidance and should not be used as a definitive resource for IRS policy or procedure.)
Revenue Ruling 2019-24 tackled two questions.
Does a taxpayer have gross income, under § 61 of the Internal Revenue Code, as a result of a hard fork of a cryptocurrency the taxpayer owns, if the taxpayer does not receive units of a new cryptocurrency?
Does a taxpayer have gross income, under § 61, as a result of an airdrop of a new cryptocurrency following a hard fork if the taxpayer receives units of new cryptocurrency?
In the absence of any other regulation specific to virtual currency, the IRS took a logical approach to both situations.
For the first scenario where the taxpayer did not receive units of the new currency, the answer comes down to an understanding of what happens when a virtual currency hard forks.
A hard fork happens when the peer network that controls the blockchain that manages the currency changes the original blockchain protocols and the change splits the currency into two separate blockchains.
There is no definitive rule that states people who own currency in the first blockchain will receive new currency after the fork.
They could, but they could also continue to maintain it as usual with the original blockchain.
With that in mind, the question becomes whether they received units of the new cryptocurrency.
In this example, the answer is no, and the IRS determined the fork did not generate gross income.
The second question is a little trickier because the taxpayer may not control whether they receive an airdrop.
An airdrop is a marketing ploy that deposits into an existing crypto wallet or account to generate interest in a new currency.
It’s kind of like sending someone a dollar bill in the mail with the hope the recipient will try their product.
The person can’t control if it’s mailed to them and they don’t know it’s there until they open the envelope.
In that context, whether a taxpayer has gross income from an airdrop comes down to dominion and control.
If the taxpayer can manage, control, or dispose of the property, then they have dominion and control and have gross income.
As you can see, the IRS has stuck to the tried-and-true approaches for profit, loss, and reporting of transactions involving virtual currency.
This is changing.
Governments are looking for new ways to raise tax dollars to fund COVID-19 recovery programs and virtual currency is an untapped market.
In July 2021, Congress announced a plan to tax cryptocurrency to help fund a portion of the proposed infrastructure bill. (H.R.22 - Build America Act of 2021)
When you consider that the United States is not the only player, and countries such as Japan, the United Kingdom, and Canada all have similar bills or requirements on the books, it’s safe to assume that sweeping changes to the industry are forthcoming.
This likelihood is reinforced when you look at companies like Morgan Stanley and JP Morgan that have started offering clients the opportunity to invest in virtual currency.
With major players like these in play, the crypto market will undoubtedly gain legitimacy in the eyes of the government.
While Notice 2014-21 and Revenue Ruling 2019-24 are easy to digest by IRS standards, you can expect the rules for reporting virtual currency transactions to become more involved once Congress passes new laws and interpretations of those laws are tested.
As always, be sure to keep good records and work closely with your tax accountant or attorney to stay abreast of changing reporting requirements so you don’t get caught short at tax time. ✔
In most cases, using virtual currency to pay for products or services falls under the same guidelines as a regular cash transaction.
Key Terms & Definitions
Cryptocurrency: A digital currency created to be "decentralized" to avoid the fluctuations of specific markets or economies. It is independent and is neither controlled nor guaranteed by any specific nation.
Blockchain: Blockchain is a program that both secures cryptocurrency and creates a ledger that provides a history for each block of a currency's transactions.
Note: Blockchain is thought to be virtually unhackable, but as the recent Coinbase robbery illustrates, anyone who wants to get in, will find a way.
Key Terms & Definitions
Hard Fork: A fork is a tech term to describe when a program's code is split so another team can take the program's design in a different direction without changing the original program. In the crypto world, a hard fork happens when the people who manage the blockchain decide to change the protocol. That change splits the chain into a separate entity and creates a new currency.
Airdrop: Airdrops happen when a company drops free cryptocurrency in someone's account. This is usually a marketing ploy to encourage people to buy the new currency created by a hard fork.
Miscellaneous IRS Guidance & Publications used for reporting virtual currency
Publication 544, Sales and Other Dispositions of Assets)
Publication 551, Basis of Assets
Publication 525, Taxable and Nontaxable Income
Revenue Ruling 2019-24
We bring you the best in
Are you a solo practitioner or attorney in a small office?
(603) 860-7268 ● email@example.com
With over 25 years of experience our team of paralegals can help you minimize cost, maximize efficiency, and bring your clients the prompt, professional attention they are looking for.
Small to mid-size law firms
Companies with in-house counsel
We reviewed 4 productivity tools to help you overcome your overwhem.
You’re juggling projects, almost missing deadlines, and don’t know which tasks you’ve finished and which are still pending.
All you want to do is find the one perfect system to keep you organized, but every time you start looking, you’re faced with hundreds of fantastic productivity tools screaming for your attention.
With so many options, finding the right productivity tool can be overwhelming.
The good news is we’ve selected four tools that will meet the needs of most micro-business owners.
Each of these tools includes standard tasks or to-do lists, calendars, collaboration, and integrations with common third-party apps. Each has a generous free level with affordable paid tiers for people who need more resources.
Pros: Ease of use, can import/export files as non-Google file types, a lot of apps and add-ons to expand limitations, can work offline and from almost any device.
Cons: Can feel like big brother is watching, and it only comes with 15 GB of free storage across your entire Google account, including files, photos, and email. It's difficult to organize, and you can’t create dependencies.
Pricing: 15 GB Free; Basic 100 GB $1.99/month, $19.99/year; Standard 200 GB $2.99/month, $29.99/year; Premium 2 TB $9.99/month, $99.99/year. There may be an additional cost for third-party apps.
Google Drive is more like a file system than a true productivity tool. Hard-core fans will say that you can track and organize everything through spreadsheets, but you may need to add third-party apps to manage or collaborate on complex projects.
While we love the convenience of being able to create and share a document or spreadsheet, the limitations for generating, tracking, and assigning native tasks and dependencies are a big drawback.
You can improve Google Drive’s functionality by adding third-party apps, but the best apps come with a premium price and every tool added to your Drive folder increases your risk for a data breach.
It’s cheap, easy to use, and designed to connect with just about every productivity platform. Google Drive is a super option for soloists who only need a repository for shared documents, but it is not the best choice if you need extended functionality.
Pros: Easy to use and works in any browser so you can use it on any internet-connected device.
Cons: No native desktop app, only 30 items per list on the free version.
Pricing: Free; $2.99/month Standard; $4.99/month Plus
Toodledo is a nice, solid task management tool. This no-frills platform has apps for Apple and Android but is the only one that does not offer a desktop option for offline use.
Despite its simplicity, Toodledo does an excellent job keeping tasks organized so you can manage tasks, take notes, and collaborate on projects.
Like the other platforms, Toodledo tasks include scheduling alarms, recurring tasks, tags, and attachments. While each task can hold brief notes, there are also separate sections in the app for note-taking, creating outlines, and lists.
One unique feature many people will find useful is the habits tab.
This feature is like a daily journal where you can set goals and log activities as you work towards creating a permanent habit. The pre-built templates cover most common habits such as exercise, stretching, reading, and eating better, but if you don’t find what you’re looking for, you can easily build a custom habit.
Pros: Easy to use, and works on almost all devices.
Cons: Limited features in the free version.
Pricing: Free $3/month; Pro $5/month per user for Business (teams)
Todoist does not have extended features like notes or embedding documents, but it is a nice choice for anyone looking for a straightforward program that focuses on managing tasks without too many bells and whistles.
We love the simplicity of the platform’s design and that it offers both lists and board views for tasks.
They limit the free version to 5 active projects and collaborators, but it is more than enough for someone with minimal needs to manage a few small projects and collaborate with people.
Pros: The free version does almost everything. It’s easy to use, and it integrates well with Google Calendar and Docs. This platform works on almost any device and offers many add-ons to expand core features.
Cons: There is no desktop app for Linux and there aren’t as many native tools as some of the other programs. You’re limited to board view unless you’re on the Premium plan.
Pricing: Free; $5/month Standard; $10/month/user Premium
Trello continues to be one of our all-around favorites for productivity. They’ve recently redesigned their plans and the free plan now includes unlimited powerups and all the features of the former Gold plan.
If you’ve never used Trello, powerups are add-on tools that extend the core program and create greater functionality. For example, the Google Drive powerup lets you access, create, or attach new docs to your card.
Trello is a robust, intuitive platform with more than enough built-in functionality for the average solo or small team.
The thing we like the most about Trello is that it’s easy to use for anyone who needs to organize and manage a project on their own or with a team.
These four platforms cover the basics and will meet or exceed the needs of budget-conscious soloists and micro-business owners.
No matter which system you choose, please remember to include your team in the selection process and listen to their suggestions and concerns. People are creatures of habit, and as much as they may complain about your current workflow, a new system won’t work if your team is unwilling to buy into it. ✔
Screenshot of Google Drive
Screenshot of Toodledo
Screenshot of Todoist
Screenshot of Trello
Promote Your Business With Feature Stories & Sponsored Posts
Flackery is now accepting feature stories and sponsored posts from The Business Guild members and non-members.*
How does it work?
Lisa will interview you about your business and story idea then craft it into a written article featuring your ideas and expertise.
No struggling to find the right words
No issues finding the time to write
Content marketing is a key component of your successful marketing strategy and we provide the perfect marketing tools, using the perfect marketing vehicle, at a price you can afford.
Targeted small biz audience
Shareable evergreen content
Make YOUR content marketing easy!
Your Words, Only Better
Your Original Content
Deadline: October 29, 2021
Book Today -- Your Words, Only Better Deadline is October 29th!
* see submission guidelines for details
No time to write? No problem!
We've teamed up with Lisa J. Jackson from writeyourwaynh.org to bring "Your Words, Only Better" to Flackery!
Submit your content today!
The Business Guild & Flackery make it easy for YOU to share YOUR expertise and promote YOUR business.
Save 25% when you buy a 1-Year ad package (4 issues)!
Get the biggest bang for your buck with a digital ad in Flackery!
The great thing about a digital publication is that your ads are digital too. This means your ad isn't limited to basic content and contact information.
Link to Website, Landing Pages, and Social Media Platforms
Embed Video, Coupon Codes, Special Offers, & More!
Even better, your Flackery ad is shareable, pinnable content that is available 24/7.
When was the last time a print ad did that?
Do you want to reach a diverse, dedicated business audience?
Get your ad today!
* Video cannot be added to 1/3 column ads
Promote YOUR Business in Flackery!
Full Page (approx 8.5" X 11")
1/2 Page (approx 8.5" X 5.5")
1/4 Page (approx 4" X 5")
1/4 Page - Video (approx 4" X 5")
1/3 Page* (approx 2.83" X 11")
Business & Strategic Planning
This includes federal business resources, useful tools, and all of The Business Guild's business planning templates.
Web & Graphic Design
The web graphic design resources feature useful tips for choosing a CMS, building a website, improving page speed, and site maintenance.
It also covers graphic design tips and links to several free graphic design programs.
Sales & Marketing
Sales & Marketing has info about ERPs and CRMs; tips, tricks, and strategies for boosting sales; top picks for email marketing programs; templates for sales and marketing campaigns; and links to community partners.
Classes & Training
The classes & training section offers a collection of live and on-demand classes, events, and seminars from The Business Guild, our members, and community partners.
This section contains a variety of back office tools and resources for your HR, accounting, and IT questions.
It would take the entire magazine to list resources for every city, state, or county, so we're including direct links to the corresponding resources pages on The Business Guild's website. If you're looking for a resource that isn't listed, please send an email to firstname.lastname@example.org and we'll try to help you find what you're looking for.
Free and Budget-Friendly Resources for Your Business
SUBSCRIBE TO GET FLACKERY IN YOUR INBOX
Book Your Appointment Today!
167 S River Road, Bedford, NH 03110 603-738-6393
Check out our new service -- Thai Massage
Join Us for the Success Funnel Podcast!
The Success Funnel Podcast is your one-stop source for everything you need to succeed.
People & Resources
Click the links below to hear the latest episodes or join us as a guest!
Check out our latest podcast!
Promote your business & share your expertise as a guest on an upcoming podcast.
Thank you for reading Flackery.
If you liked what you read, be sure to check out our back issues for more tools, tips, and business insights at Flackerymag.com
SUBSCRIBE TO GET YOUR FREE COPY OF FLACKERY IN YOUR INBOX
Did you enjoy Flackery?
Planstin offers unique health plans through medical cost sharing designed for self-employed and small businesses.
Coverage provides lower monthly and out -of-pocket costs .
Members typically see healthcare savings from 40% -60% .
Coverage is available to business across 50 states
Large national PPO network of doctors and hospitals
Members enjoy low-out-of pocket costs and flexible plan design
Contact: 603-560-3851 Timothy@planstin.com
Our Plans Are Available All Year
Did you miss open enrollment?
We've got you covered!
Small Business Taxes
IRS Audits & Demand Letters
Estates & Trusts
If you have received an IRS demand letter or are being audited, I can help.
Skip the overwhelm, I can help you make sense of your taxes.
Ed Carter, CPA
Allegra Boverman Photography
Let me tell your story
Family, Engagement, & Children's Portraits
Special Events - Conferences, Galas, Etc...
Business & Industrial Photography
Editorial - News, Features
Community & Public Relations
“Don't you dare underestimate the power of your own instinct.”
- Barbara Corcoran