Jeff Standridge:
Hey guys, welcome to another episode of the Innovation Junkies podcast. I’m Jeff Standridge.
Jeff Amerine:
Hey, it’s Jeff Amerine here. What are we going to talk about today, Jeff?
Jeff Standridge:
Well, what I thought we would do, Jeff is, you know, we’re, coming up on the last three, four, maybe weeks of the year, right here at the end of 2024. And I thought we’d spend this episode talking about what are some things we need to be thinking about or what our listeners need to be thinking about as they’re trying to finish strong and close out the year. What do think about that?
Jeff Amerine:
That sounds like a plan.
Jeff Standridge:
Good. So, I start with, probably the most common comment I ever got from a coach and, he used to use the track analogy, and he would always say, run through the tape, Standridge, run through the tape. Right. So I think maybe we start there, you know, we’re coming up on the last, the last few weeks of the year and to be very honest, we say it’s, even if you start December 1, you really only have about three weeks left in the year because you take a big week out for the most part between say, Christmas holiday and New Year for those who celebrate those. so, let’s talk a little bit about what running through the tape looks like from your perspective.
Jeff Amerine:
Yeah, well, so a couple of things that I think about and a lot of it is sector-dependent. It really depends on what kind of business you’re in and who you serve. The challenging thing about this time of year is it’s often been said that if you’re trying to close sales, there’s no sign of intelligent life in your customer base from Thanksgiving through probably the 50th January. So what that means is it can be exceedingly difficult to get things closed with customers during that timeframe. People are out, people are trying to relax a little, people have maybe been hustling if they’re in supply chain-related businesses or retail-related businesses because this is peak going into the holiday season. you know, extra emphasis on making sure that your salespeople are properly motivated and that they’re also being realistic in their forecasting so that you can take into account that sort of seasonality.
Jeff Standridge:
Yeah. Revenue always comes in lower and slower than what you anticipate. And in the last three weeks or last four weeks of the year, it’s even slower than that.
Jeff Amerine:
Yeah, that’s really true. That’s really true.
Jeff Standridge:
You know, and, and, and there was really no time to start thinking about that than 60 days ago, no better time than about 60 days ago, right? To be, to be thinking about that end-of-the-year kind of thing. So what else, what else would you point toward?
Jeff Amerine:
Well, so other things, and this is potentially kind of a one-off, but I know it’s been top of mind for a lot of small businesses. The making sure that you’re diligent in getting all of your financial crimes certification paperwork submitted. Now, this is something that our audience may or may not be familiar with, but it was essentially a ruling that came some time ago, beginning of this year, that said, I think it’s that the end date is coming soon, you have to file to talk about the beneficial ownership in LLCs of every description and there are some exemptions and you need to get it done or else there’s this onerous sort of daily penalty that they will assess you. Now the thing is, it’s good to legal counsel, good to get CPA counsel and guidance on it because there was a fair amount of gray area or murkiness around who actually had to do it versus who didn’t.
My advice is to err on the side of going ahead and filing even if you think you’re exempt. It’s not difficult to do. It takes probably 15, 20 minutes to do. Anybody can figure out how to do it, but assume that you have to do it rather than assuming that you’re exempt. That would be my advice.
Jeff Standridge:
Yeah, completely agree. I would say, where I thought you were going, you said, be sure you get all your financial crimes. I thought you were going to say committed before the end of the year. Yeah. Yeah, that’s right. But yeah, it’s, you might, if you’re, if you’re looking for it, might heard it. have heard it referred to as the corporate transparency act, the CTA and the BOI, the, the, beneficial ownership, something, but, anyway,
Jeff Amerine:
You avoid financial crimes altogether. Yeah, I mean, if you’re not money laundering, you’ve got nothing to worry about.
Jeff Standridge:
it literally takes 15 minutes maximum, maybe even more like five to 10 minutes. and what you need to have available, or anyone that has a 25 % ownership or above, if I remember correctly in an LLC, you need to have their full name, a copy of their driver’s license or passport. a photo of it that you can upload as well as their home address and their birth date. So those are all the things that you need for all the beneficial owners of 25% or more. And you literally go in, fill it out. It’ll seem like some redundant information that you’ll be putting in multiple times for the person who’s actually filling it out. And then you just click on, you know, add new beneficial owner, add new beneficial owner, add new beneficial owner for as many of them as you have at 25 % or above, theoretically no more than four, right? And you’re done. You submit, you’re done. get a, you get a designation that it’s completed and you, save that, you know, you save that confirmation as well.
Jeff Amerine:
Yep, yep. I mean, it’s essential and it’s one of those sort of obligatory things where you don’t have a lot of choice and the penalties are high. it’s exactly, exactly right. The other thing and completely unrelated, maybe a little bit on a happier side of the equation. If you have had a good year and you have a bonus plan in place, this is a little bit of advice and I would say also cautionary.
Jeff Standridge:
Yeah, minimum penalties like 10 grand or something like that, but then it aggregates daily.
Jeff Amerine:
It’s good to have all of that figured out to understand how you’re going to bonus, who you’re going to bonus. All that should have been structured long before now. The key thing I would say though, depending upon the method of accounting you use and how you reconcile, even though it’s great for everybody to get their bonuses prior to the holiday season, sometimes it’s better to hold off on those annual bonuses until all the financial accounting is done, you’ve reconciled where you’re actually gonna end up. I’ve seen all too many times companies that go ahead and pay out on a bonus based on what they think the projection’s gonna be for the end of the year. And then there’s the myth. And the last thing you wanna have to do is claw back money that you paid out to key employees. So it’s better if you can set the expectation to say, listen, we’re gonna do this in January or right around the 1st of February, if possible, particularly if you’re a medium sized to a little bit larger firm rather than a really small firm because you just want to make sure you’ve got 100 % accurate numbers and you don’t have to have a miss or something or have it lower than expected and then not have the ability to claw it back.
Jeff Standridge:
Yeah. One company that I’m working with, and I’ve seen others do this as well is, know, they don’t, they don’t want to take the tax hit because of, of carrying that cash forward. Right. So they can certainly do some accounting, some accounting wizardry with that in terms of accruals and what have you, or, what I’m, what I’ve seen them do is go ahead and pay out about 75% of what you think you’re going to go payout and then threw it up come January 15th, January 31st, somewhere, somewhere like that. Spread your tax liability out like that as, as well. so, and, know, and I actually know some bonus programs that say, you know, of your eligible bonus of your eligible annual bonus, we’re going to pay out 20% of it in Q1, 20% in Q2, 20% in Q3, and then 40% at the close of Q4 after the close of Q4, which, which then, you know, prevents overpayment allows true up what have you. So good, good, good guidance there.
You know, it’s also important talking about tax liability and what have you is, know, if you, if, if it’s looking like you’re, going to have a good year, in other words, if you’ve, if you’ve racked up, a good, net income on the first 11 months of the year, now we’re in the last, month of the year, you have no reason to believe that’s going to be drastically different than what you’ve already experienced then looking for opportunities to prepay some items that you can legally prepay into the next year, you know, for the next year, be able to, you know, pay out a portion of those bonuses that, wouldn’t be overpayment and, and, and look for opportunities to, to take advantage of those as well. Any others that come to mind as you’re thinking about really finishing strong?
Jeff Amerine:
It just highlights the having a good you know, good controller, good CFO, good CPA firm supporting you so that you can make those wise decisions coming into the end of the year. It’s good to have that kind of a bench strength in that area because it can really make a difference in bottom line of the company and how the money gets used.
Jeff Standridge:
Yep, for sure. What about outside the financial arenas and the sales arenas? Anything others that come to mind for you?
Jeff Amerine:
I think end of year is also just a good time to take stock. If you do happen to have slack time at the end of the year where the pace of activity slows down, as leaders, I think it’s important to be reflective on what worked well, what didn’t work well. Are there any team issues that you have to think about? Do you have the right people in the right seats? I think it’s a good time to be reflective of what went well and what didn’t go well and where do you need to make some changes? A lot of times, the first three quarters of the year, it’s pretty manic. Everybody’s pretty strapped and busy. When you do have a little bit of the slack time, don’t waste that time. Be thinking about, in a reflective way, of what worked and what didn’t in the previous year.
Jeff Standridge:
Yeah, we always talk about our team is that throughout the course of the year, and we just had a new person join. And so was having this conversation with, with him, is it throughout the course of the year, you know, we expect a good, healthy jog throughout the, you know, the average of the year, you know, maybe it’s not a seven-minute mile. Maybe it’s a, you know, 10-minute mile, right? Just a good, healthy pace throughout the year. Now, sometimes you’re going to have to sprint. And so we have several periods throughout the year that we have to sprint for a week or two weeks, or sometimes even three weeks at a time. so either in anticipation of a sprint or immediately following a prolonged sprint, we have to walk too. But, but that, that averages out to that good healthy clip throughout the year. so the period between, you know, about mid-December till the first week of January admittedly is a bit of a time that our team starts to walk a little bit, right? Because we’ve been sprinting the entire year and, we know that we’re going to hit the ground running in January. And so we take a little bit of time to
Let our tongues hang out and get our breath back if you will. So very good. So we’re talking about finishing strong, running through the tape, some things that you need to be thinking about as you go into the closing of 2024 for your business and or the businesses that you serve. With that, Jeff, I say we call this one wrap. See you next year. This has been another episode of the Innovation Junkies Podcast.