Greetings!

Welcome to this edition of the Business Success Newsletter, dedicated to helping business owners build a better business...today!

Did your start your business with an end in mind?  At some point you may want to sell your business or pass it on to your children or key employees.  This month we encourage you to consider the value of your business and what situations indicate a need for a valuation.  We hope our article on the subject will give you some food for thought.

We also bring you more valuable information from guest writers Teri Milligan on QuickBooks Tips and Chris Olmsted on Employment Law to help you incorporate best practices into your business operations.  Look for new guest authors in 2008 to add even more value to Business Success!    

Don't miss our schedule of Teleclasses and Webinars. Our monthly Businesses Getting Results series is open to the public as well as Advisors On Target clients.  

With the year end approaching, December is a great time to reflect on your successes and challenges and to look for opportunities to make 2008 even better!  

Wishing you a happy holiday season,
Linnea Blair

In This Issue

Upcoming Events

Quotable Quotations

Realizing The True Value of Your Business

Using QuickBooks to Produce Your 1099s

NEW I-9 Forms Effective Immediately

Upcoming Events:

Creating An Effective Marketing Strategy

A business can survive for some time with poor records, insufficient finance or a lack of management skills, but it can't last long without a market. Something has to be done to make the phone ring - and that thing is marketing. A good strategy implies that a business cannot be all things to all people and must analyze its markets and its own capabilities so as to focus on a target market it can serve best.

This Teleclass explains the core concepts of a marketing strategy.  You will learn how to:

Identify your target markets · Develop a marketing mix · Develop a marketing plan

Measure the effectiveness of your marketing strategies.

Thursday, December 13, 2007 - 1:00 PM Eastern
(12:00 PM Central, 11:00 AM Mountain, 10:00 AM Pacific)

For more info. or to register for Tele-classes, click here

Quotable Quotations

"Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations."

~ Steve Jobs

If you are planning to sell your business, it's clearly an advantage to have an objective idea of what it is worth. Even though ultimately a business is worth what a buyer is willing to pay, it's easy for a seller to undervalue and lose out in the deal or to unrealistically overvalue and miss out on attracting buyers.

 

Many companies are oddly reluctant to invest in getting an accurate valuation. Even among owners who had tried to sell their business at one stage, a survey reported by CFO.com found that only 12% of them had ever had a formal valuation done. This is surprising. Guessing the value to put on your biggest asset is really risking your future.

There are a number of different valuation methods and different methods may be appropriate for different types of business. For example, if you run a services business there's little point in evaluating it based on the value of its physical assets. Other methods consider intangibles such as 'goodwill', which are difficult to put a figure on but can represent a significant element of the value of some businesses. And value may also be in the eye of the beholder - it will actually be worth different amounts to different people depending on their reason for wanting a business.

A variety of factors are taken into account in ensuring that a valuation is accurate and useful. Primarily, the valuation needs to be in line with hard data, particularly your current and past financial position. Some valuation methods focus on financial data such as profit levels, asset value, cash flow and debt carried by the business. Other factors are not so cut-and-dried. The valuation might incorporate financial projections for the next three to five years. It might consider intangible assets, such as intellectual property like patents and trademarks, brand names and goodwill. You also need to consider the context. Your own company may be doing very well but its value will be diminished if it is part of an industry that is in serious difficulty or in decline overall.

There are over a dozen different valuation methods. The crudest methods operate by rule-of-thumb or 'multiples'. For example, landscape businesses are estimated to be worth 1 to 1.5 times their discretionary earnings plus the value of their capital assets. However, multiples only give a rough, industry wide ballpark figure for business value. They do not necessarily give the real value of a particular business. More accurate methods include the 'balance sheet' approach, which basically subtracts business liabilities from assets. The 'adjusted book value' method is similar but uses current market value rather than purchase price or depreciated value.

Retail and manufacturing businesses are generally assessed according to the value of their assets, given that they tend to store large amounts of value in their inventory or capital assets while service company valuation is based on the 'capitalization of income valuation' method, which places a heavy emphasis on intangible assets. It's also possible to calculate the value of a private company by comparing it with an equivalent public company and making appropriate adjustments. Business value can also be estimated by anticipating cash flow over a three to five year period and adjusting that into current dollar terms.

A current valuation can be important at times other than sale. There are numerous business and legal situations that require a detailed valuation, among them: when considering a merger or acquisition; when seeking investment capital; when buying out a partner or implementing an employee stock ownership plan. A properly determined valuation inevitably enters into less pleasant activities such as shareholder disputes and divorce settlements. Tax minimization planning can involve business value, for example in developing estate and gift transfers.

A valuation can also indicate how your business compares to its direct competitors. It can identify the strengths and weaknesses of your business. When a valuation identifies weaknesses, it can help you focus on building long term value into your business. This will improve your outlook in terms of succession and estate planning.

With this many potential situations requiring a business valuation it's important to have an up-to-date professional estimate of the real value of your business. To get a valid and commercially useful valuation you will need to work closely with a professional who has experience in the area. Your accountant already has a good understanding of your business and will be able to advise you on which valuation method will be best suited to your business circumstances.

Information for this article is sourced from RAN ONE.

Using QuickBooks to Produce Your 1099's

By Teri Milligan, QuickBooks Consulting and Implementation

One of the greatest tools in QuickBooksTM is the ability to print 1099's from within QuickBooksTM.

To set up your system for this feature, go to the preferences, from the Edit menu, then click on Tax: 1099 on the left side, then on the company preferences tab.

Answer the question, "Do you file 1099-MISC forms?", yes.  Then under the account column across from Box 7: Nonemployee Compensation, click the account(s) to which you have coded your vendors that are eligible for 1099's.  click OK.

Make sure that you have coded all of your vendors as eligible for 1099's and have entered their address and social security number.  You can access all of these fields on the "Additional Info" tab after clicking on Edit Vendor for each applicable vendor in the Vendor Center.

Run a QuickBooksTM 1099 detail report to verify that all of the information is correct.  You can create this report by going to the reports menu, then choose vendors and payables, and then click 1099 detail.  You can alter the report by changing the "1099 Options" at the top of the report, which will give you more information to review.

Once you have set your preferences and verified all your eligible vendors have complete information, it's time to print your 1099's.  Be sure to purchase preprinted, red paper stock from an office supply store.  Your 1099's must be printed on this particular paper stock or they will not be accepted.  Then go to the Vendor menu, click on Print 1099's/1096 and click on Print 1099's.  From the print screen you will be given the choice to print 1099's or 1096.

To order QuickBooksTM 2008, review the new features, or compare products, go to www.terimilligan.com and click on "Order QuickBooksTM".

To learn how to use QuickbooksTM more efficiently in your business you can contact Teri at 619-463-6851 or by email at teri@terimilligan.com.

NEW I-9 Forms Effective Immediately

By Christopher W. Olmsted, Attorney

The U.S. Citizenship and Immigration Services (USCIS), an arm of the Department of Homeland Security (DHS) announced that a revised Employment Eligibility Verification Form (I-9) must now be used for all new hires. The revised Form I-9 is a further step in USCIS' ongoing work toward reducing the number of documents used to confirm identity and work eligibility.

FAQ Regarding the New Form I-9

Q: Where can I obtain the new Form I-9?
A: The easiest way is to download it from the DHS website, www.uscis.gov, or click here.

Q: When should employers begin using the new Form I-9?
A: Employers must use the new Form I-9 for all individuals hired on or after November 7, 2007. However, DHS will not immediately penalize employers who fail to do so. There will be a short transition period while DHS publicizes the new form. As the DHS has not yet announced when that transition period ends, the best practice is to begin using the new form immediately.   

Q: Do I need to complete the new version of Form I-9 for all my employees or just the new ones?
A: Employers only need to complete the new version of Form I-9 for new employees. Employers do not need to complete new forms for existing employees. However, employers must use the new Form I-9 when their employees require re-verification.

Q: What should I do if I rehire a person who previously filled out the old Form I-9?
A: You must complete the new Form I-9.

Q: What if I currently employ an employee hired before November 7, 2007-I filled out the old I-9 form, and verified eligibility using documents no longer accepted by DHS?
A: Apparently DHS requires no action unless you are required to re-verify (e.g. old documents expired, change in eligibility status, or you are re-hiring the person). If such an event occurs, then use the new Form I-9.

Q: What is the difference between the revised Form I-9 and the old one?
A: Five documents have been removed from List A of the List of Acceptable Documents:
    ·    Certificate of U.S. Citizenship (Form N-560 or N-561)
    ·    Certificate of Naturalization (Form N-550 or N-570)
    ·    Alien Registration Receipt Card (I-151)
    ·    Unexpired Reentry Permit (Form I-327)
    ·    Unexpired Refugee Travel Document (Form I-571)
The forms were removed because they lack sufficient features to help deter counterfeiting, tampering, and fraud.

One document was added to List A of the List of Acceptable Documents:
    ·    Unexpired Employment Authorization Document (I-766)

Mr. Olmsted is an attorney with Barker Koumas & Olmsted, LLC, in San Diego. For more information about labor and employment law issues, you may reach him at (619) 682-4040 or by email at cwo@barkerkoumas.com or you may visit www.barkerkoumas.com.

The article presented herein is intended as a brief overview of the law and is not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney.

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