Monthly Archives: February 2017

How Much Money Can You Make in 2017?

golf pro advisor

In the January issue of the Golf Pro Advisor (Are You Ready for the 2017 Season?), I discussed the importance of setting both “performance” goals and overall financial goals.

A performance goal, for instance, would be the number of lessons you want to generate this year. That in turn drives your overall lesson revenue (financial goal).

In this issue, I provide an Excel model that will help you forecast your revenue with performance targets. Here is a link to the model.

To achieve your goals, you must have very specific performance targets such as “x” number of lessons per month.

How the Model Works

As an illustration, the model uses a hypothetical example -  the Fictional Golf and Country Club (FGCC) with a six month golf season. You, of course, should input the numbers that apply to your club.

FGCC has 500 member families. There are 1500 potential golfers (husbands, wives, and juniors). But there are only 500 active golfers.

The model covers four “revenue streams”:

  • Lessons
  • Clinics
  • Driving Range
  • Tournaments

Golf shop revenue is generally a big part of a head pro’s income. But that is a more complicated model. I plan to address the golf shop model in a future issue of the Golf Pro Advisor.

This model assumes that a certain percentage of Active Golfers will take lessons and clinics, spend time on the range, and play in tournaments. Key “performance drivers” are:

  • Active Golfers - Number of active golfers
  • Participation -  % of active golfers taking lessons, participating in clinics etc. (Participating members)
  • Frequency - Number of lessons, clinics etc per participating member per month
  • Fee - Average lesson fee, average clinic fee etc.

Here are FGCC’s performance drivers, based on 500 active golfers:

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The Excel model has two tabs: “Targets” and “Summary”. The “Targets” tab has grids for each of the four revenue streams (Lessons, Clinics, Tournaments, Range).

The “Summary” tab shows a summary of the performance drivers (see grid above) and a revenue summary (see “Set Your Targets” section below)

Make assumptions about your club’s performance drivers (Active golfers, Participation, Frequency, and Fee) and then set performance targets for each area.

Input that your performance drivers into the appropriate grid in the “Targets” tab and the model will generate monthly and seasonal performance goals as well as monthly and seasonal revenue.

The summary for all four revenue streams will appear in the Summary tab.

An Example

Let’s look at lesson revenue as an example. The other three revenue streams. (clinics, range, tournaments) work the same way.

unnamed (1)

 

The model assumes that 25% of active golfers take an average of two lessons a month during a six-month season. That’s a total of 250 lessons a month. Here are the calculations:

  • 500 active golfers x 25% = 125 Participating Golfers
  • 125 Participating Golfers x 2 lessons/month = 250 lessons a month
  • 250 lessons/month x $100 a lesson= $25,000 a month x 6 months = $150,000

Set Your Targets

Here is an overview of the annual revenue generated for FGCC. (See “Summary” tab in the Excel Model)

unnamed (2)

 

The key point is to set monthly goals for your golf operation. A lesson target of $150,000 is very vague. How are you going to achieve it?

A target of 250 lessons a month (10 lessons a day) is very specific.You can easily track it. Set monthly performance targets for each of your revenue streams.

If you have good records, you can set targets based on history. If not, make assumptions and then tweak them as you get more experience tracking activity.

Also, your targets should be ambitious but realistic.

Is it realistic to assume that on average each of your active golfers will take three lessons a season?

  • 1500 lessons divided by 500 Active Golfers = 3 lessons per golfer

Is it realistic to assume that that on average that each of your active golfers will spend $500 a season to improve his/her game?

  • $256,000 (Total Season Revenue) divided by 500 Active Golfers = $500 per golfer

Achieving Your Goals

Now comes the hard part. How do you achieve your goals?

If your goal is 250 lessons a month, does that mean:

  • 250 members each take one lesson?
  • 50 members each take five lessons?
  • 500 members take one lesson every two months?

There is a big difference.

If it’s 250 members, the challenge is to get each member to take more lessons. If it’s 50 members, the challenge is to get more members to take lessons.

In the next issue of the Golf Pro Advisor, I will explore this further.

I am happy to discuss the model at no charge. Interested golf pros should feel free to email me at paul@hermancpa.com to schedule a 30-minute consultation. 

7 Milestones In Life That Trigger Taxes: Birth, Marriage, Work, Homeownership and More

 

 

 

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

taxes

You were blissfully unaware of it, but taxes became a part of your life on the day you were born.

From that beginning as a spanking-new tax break for Mom and Dad, taxes have had an important role in all your major life events, from getting a job, saying “I do,” buying and selling homes, having kids of your own and even retiring.

In some cases, the involvement of the IRS is not such a good thing.

But in many ways, the tax code can be your best friend. You just need to know how it applies to your personal circumstances so you can take advantage of it. Read on to learn more about tax breaks for life’s big events.

Getting Your First Job

Uncle Sam gets a portion of your paycheck via payroll taxes. You do, however, have a bit of a say in how much comes out of your pay by adjusting your withholding.

If you have too much withheld, you’ll get a refund when you file. That’s not necessarily bad, but wouldn’t you rather have your own money year-round instead of giving the IRS an interest-free loan?

On the other hand, if you don’t have enough taken out, you could face a major tax bill, and possible underwithholding penalties, at filing time. Ask your boss for a new Form W-4 so you can run the numbers and adjust your withholding. You can change your withholding amount as often as you need to get your tax amount just right.

Your job likely offers several tax breaks. If your employer provides health care coverage, your medical insurance is a tax-free benefit to you. You’ll find out how much that’s worth on your W-2 earnings statement.

A flexible spending account, or FSA, also might be part of your job benefits. Here you can save pretax dollars to pay for medical care not covered by insurance.

You also want to take advantage of your workplace’s tax-deferred 401(k) retirement plan.

And if you move to take a job, even your first one, you can write off many of your relocation costs.

Getting Married

Uncle Sam probably wasn’t a guest at your wedding, but he becomes a big part of your life when you are a married taxpayer.

Most couples filed jointly because it generally produces the best tax result.

If both partners work, coordination of employer fringe benefits after marriage is key, says Mark Luscombe, principal federal tax analyst for Wolters Kluwer Tax & Accounting.

Reassess your individual retirement accounts. Your new combined income could affect your retirement contributions. Income limits apply to tax-free Roth accounts and also to how much of a traditional IRA contribution you can deduct if you or your spouse put money into a workplace retirement plan.

Marriage also is one of the changes in family circumstances that allows you to revisit your tax-favored FSA. Newlyweds also should reevaluate how much each has withheld from their paychecks.

And what about your once-in-a-lifetime honeymoon? The tax code’s annual gift exclusion amount for 2017 is $14,000, the same as it was for 2016. It’s usually adjusted annually for inflation.

That means both a well-to-do mom and dad could give each newlywed $28,000 or a combined total of $56,000 to the wedded couple. That definitely would pay for an extravagant post-ceremony getaway.

Having Children

Congratulations on your new baby. Let Uncle Sam help cover some of your growing family’s costs.

A dependent youngster is an added exemption. Kids also allow parents to claim the child-tax credit as long as the youngster was 16 at the end of the tax year. Large families might be able to get money back from the IRS via the refundable additional child-tax credit.

If your family grew via an adoption, there’s a tax credit to cover some of the many costs of that process.

Working parents can use the child- and dependent-care credit to pay for some of the costs of caring for their kids while they are on the job.

And the tax code also offers several ways to save and pay for higher education costs, including 529 college savings plans, the Coverdell Education Savings Account and the American opportunity and lifetime learning tax credits.

Starting a Business

Once you decide it’s time to break out of the corporate cubicle and start a new business, the tax code can help.

Filing is relatively easy for sole proprietors. They report their income as part of their annual individual tax filing by attaching Schedule C to Form 1040. Schedule C also offers many ways for individual entrepreneurs to write off many of their business expenses.

Among the deductible small-business costs are home office expenses. Business use of a vehicle also is deductible, as are health insurance premiums and contributions to self-employed retirement plans. New businesses also are allowed to deduct thousands in certain startup costs.

If you have kids, putting them to work in your sole proprietorship could be a tax-smart move. Depending on how much you pay them, they might not owe income taxes and you can deduct the salary as a business expense.

But starting a business is not all about tax breaks. Sole proprietors also must pay self-employment taxes. These are the equivalent of the payroll taxes collected from wage-earning employees. As both the employer and employee, a sole proprietor has to pay the boss and worker components of Social Security and Medicare taxes.

And running your own business usually means you must file more tax forms, including estimated tax payments four times a year.

Buying a Home

Your home is probably your biggest investment. Homeownership also provides many tax breaks.

Interest paid on a primary residence mortgage up to $1 million is deductible as an itemized expense. If you take out a home equity loan or line of credit, interest on those loans up to $100,000 also is deductible. Even the interest on a second home is tax-deductible.

Property tax you pay on your main house — and any other residences you own — also is deductible.

The tax benefit of a home is even better when you sell it. Up to $250,000 in sales gain ($500,000 for married joint filers) on your home is tax-free, as long as you owned the property for two years and lived in it for two of the five years before the sale.

Many home improvements, such as structural additions, kitchen modernization and landscaping, can increase the basis in your home. This is essentially your investment in the home. A larger basis means less profit that might be taxable.

And some home upgrades, such as installing solar energy systems, also will get you an immediate tax credit to help offset the high cost of this type of improvement.

Dealing with Divorce

As with marriage, your filing status is determined on the last day of the tax year. If your divorce is final on Dec. 31, then you are considered unmarried for the full year.

One of the stickiest divorce issues is child custody. The parent who has physical custody of the children for most of the year usually gets to claim them as dependents. That means that parent gets the exemption, child-tax credit and child-care tax credit savings.

One spouse typically is granted sole ownership of the family home. This could, however, pose a problem for the solo owner. When the lone ex sells the property, the amount of profit exempt from capital gains is just $250,000 versus the $500,000 that married filing jointly homeowners can exclude. Because of that, some couples sell the house before they divorce and split the tax-free profits.

Similarly, take into account the cash the recipient partner will net after taxes when dividing other marital assets.

And note that alimony has tax implications for both ex-spouses. It is taxable income to the recipient and can be deducted by the paying ex. Child support, however, offers no tax breaks to the paying ex, as it is not deductible. However, to the recipient, it isn’t taxable.

Retiring

Your golden years will be more enjoyable if you take advantage of the many tax breaks afforded by retirement plans.

A traditional IRA contribution could produce a tax deduction when you file your tax return. Remember, though, that you’ll have to pay taxes on this account when you start taking out money in retirement.

With a Roth IRA, you put in already-taxed money, but that means eventual distributions from a Roth are tax-free. The biggest drawback to a Roth is that you can’t open or contribute to a Roth if you make a lot of money. However, regardless of your income, you can convert a traditional IRA to a Roth.

Workplace retirement plans, usually known as 401(k)s or Roth 401(k)s, offer similar retirement saving options, but with a nice bonus. Many employers match some of your plan contributions, which helps your retirement savings grow more quickly.

Social Security benefits generally are tax-free as long as you don’t have a lot of other income.

And if you do have to file a tax return when you’re older, you can claim a larger standard deduction amount simply because you’re age 65 or older.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

How long does it take to get your tax refund?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

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Your annual income tax return may seem quite complex to fill out, but its structure is actually quite simple. On this document you calculate all of your earnings and subtract eligible deductions and credits.

The remaining amount is your taxable income, and you multiply this by the applicable tax rate to determine how much income tax you owe to the government.

However, in most cases, you prepay your income tax through deductions from your regular paycheck. If the amount you paid through these deductions during the year is greater than the amount you owe, you receive a tax refund.

After you file your taxes, you wait for the IRS to review your return and issue a refund. The IRS claims that it approves most tax refunds within 21 days but it can take longer.

Understanding this process can help you move the process along to get your refund.

How the IRS evaluates the return

Once your tax return reaches the IRS, an auditor confirms or questions the information you have provided, starting with the first section of the return. The auditor inspects the amount of money you claimed as income, which should accurately show every source of income you had over the course of the tax year.

If you are employed, you should have a form W-2 from each employer. This document contains the total wages the employer paid you during the preceding year.

If you are an independent contractor, you should have a W-9, which contains the same information. Copy all relevant earning and taxation information from these slips accurately on to your income tax return.

If you make a mistake entering information, the IRS must spend more time looking for the correction figures. Double-check your amounts before sending in your tax return to avoid this problem which extends the length of time you wait for your refund.

Tax deductions and credits

The more tax deductions and credits you claim on your annual tax return, the longer you wait for your refund. This is because the IRS must spend more time verifying the deductions and credits. This does not mean you should refrain from claiming legitimate tax deductions. Instead, just make sure to include clear documentation for each deduction.

For example, if you made a donation to a registered charity, you can deduct the dollar amount of the donation and lower your total taxable income. To make sure that the IRS agent auditing your tax return can confirm this deduction expeditiously, include the receipt. Do so with every deduction, reduce the wait time for your refund.

Conclusion

The IRS claims that it approves most tax refunds within 21 days of receipt of the return. However, the IRS does not issue refunds for anyone claiming earned income credit until after Feb. 15 so it has time to match the income you claim on the return with the amount reported by your employer.

If you request an electronic deposit, you receive your refund within one business week after your approval. Checks take up to four weeks to arrive in the mail.

Waiting for your refund may feel like a long time, but if you double-check your math and properly document each deduction and credit, you improve your odds of receiving your refund within the average 21 day period.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.