Featured Posts, Small Business, Tax

Understanding 1099-MISC and 1099-NEC: Reporting Rules and Key Changes in 2026

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Issuing Forms 1099-NEC and 1099-MISC is a key compliance responsibility for business owners — and also one of the most common areas of confusion. With new reporting thresholds taking effect in 2026 under the One Big Beautiful Bill Act, now is the right time to make sure you understand the rules and prepare your systems accordingly.

This guide covers:

  • When 1099s are required
  • When 1099s are not required
  • How payment method and entity type affect reporting
  • What’s changing starting in 2026

What Are Form 1099-NEC and Form 1099-MISC?

Form 1099-NEC (Nonemployee Compensation)

Form 1099-NEC is used to report payments for services performed by non-employees, such as:

  • Independent contractors
  • Freelancers
  • Consultants

If you pay a qualifying contractor $600 or more in a calendar year (through 2025), you are generally required to issue Form 1099-NEC.

Form 1099-MISC (Miscellaneous Income)

Form 1099-MISC is used to report other types of payments, including:

  • Rent
  • Royalties
  • Prizes and awards
  • Certain legal settlements

These payments have also historically been reportable once they reach $600 in a year.

Important: When 1099s Are NOT Required

Many business owners over-file 1099s because they are unaware of the key exclusions. Two factors determine whether a 1099 is required:

  1. How the payment was made, and
  2. The entity type of the payee

Both must be considered.

1. No 1099 Is Required for Non-Cash or Third-Party Payments

You generally do not issue Form 1099-NEC or 1099-MISC if payments were made using non-cash payment methods, including:

  • Credit cards
  • Debit cards
  • PayPal
  • Venmo
  • Zelle (business accounts)
  • Stripe, Square, or other third-party payment processors

Why this matters:
These payments are reported by the payment processor on Form 1099-K, not by your business.

Key takeaway:
If a vendor or contractor was paid entirely through a credit card or third-party platform, you should not issue a 1099, even if total payments exceed the reporting threshold.

2. 1099s Are Often NOT Required Based on the Payee’s Entity Type

Even when payments are made by check, ACH, wire, or cash, a 1099 may not be required depending on who you paid.

Typically NOT Required to Receive a 1099

You generally do not issue a 1099 for payments made to:

  • C corporations
  • S corporations

Important Exceptions

A 1099 may still be required for certain payments to corporations, including:

  • Legal services (attorneys and law firms)
  • Medical or healthcare payments
  • Certain gross proceeds paid to attorneys

These exceptions are common problem areas and should be reviewed carefully.

Typically REQUIRED to Receive a 1099

You generally must issue a 1099 when thresholds are met and payments are made to:

  • Sole proprietors
  • Single-member LLCs
  • Partnerships
  • Multi-member LLCs taxed as partnerships

This is why collecting a completed W-9 before issuing payment is critical.

Bottom Line

A 1099 is generally required only when:

  • Payment is made by cash, check, ACH, or wire, and
  • The payee is a non-corporate entity (or a corporation subject to an exception)

Standard Filing Rules (Through Tax Year 2025)

For payments made in 2025 (forms due January 2026):

  • 1099s are required when payments total $600 or more
  • Copies must be provided to recipients by January 31
  • Forms must be filed with the IRS by the applicable deadline
  • Electronic filing is required if you file 10 or more information returns

What’s Changing in 2026 Under the One Big Beautiful Bill Act

Beginning with payments made in 2026 (forms filed in early 2027), important changes take effect.

1. Reporting Threshold Increases to $2,000

  • 1099-NEC threshold: $600 → $2,000
  • 1099-MISC threshold: $600 → $2,000

This significantly reduces the number of forms many small businesses will need to file.

2. Threshold Will Adjust for Inflation Starting in 2027

Beginning with the 2027 tax year, the $2,000 threshold will be indexed annually for inflation — modernizing a rule that hadn’t changed in decades.

3. Backup Withholding Threshold Also Increases

The threshold that triggers backup withholding when a payee fails to provide a valid Tax ID also increases to $2,000, with future inflation adjustments.

What This Means for Your Business

  • Less administrative burden due to fewer required filings
  • Improved efficiency for businesses working with multiple contractors
  • Continued need for strong recordkeeping

It’s important to remember:
Income is still taxable even if no 1099 is issued. Reporting thresholds and exclusions do not change the taxability of income — only the reporting obligation.

Best Practices for Business Owners

✔ Collect W-9s before making payments
✔ Track payment method, not just payment amount
✔ Confirm vendor entity classification annually
✔ Review contractor activity before year-end
✔ Update accounting systems for 2026 changes

Featured Posts, Tax

Top 10 Tax Changes You Should Know About from the One Big Beautiful Bill Act

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On July 4, 2025, the One Big Beautiful Bill Act was signed into law, bringing some of the most meaningful tax changes we’ve seen in years. These updates impact high W-2 earners, business owners, families, and retirees alike — and many of the changes affect tax planning decisions starting now.

Below is a clear breakdown of the top 10 changes and what they may mean for you.

1. Individual Tax Rates Are Now Permanent

The individual tax brackets and lower rates that were originally set to expire at the end of 2025 are now permanent.

Why this matters:
This provides long-term certainty for tax planning and helps avoid unexpected tax increases in future years — especially for higher-income earners.

2. Higher Standard Deduction (Indexed for Inflation)

The standard deduction has increased and will continue adjusting for inflation:

  • $15,750 – Single
  • $31,500 – Married Filing Jointly
  • $23,625 – Head of Household

Why this matters:
Most taxpayers benefit from a larger automatic deduction without needing to itemize.

3. New Deductions for Tips and Overtime (Through 2028)

Eligible taxpayers may deduct:

  • Up to $25,000 of qualified tip income
  • A portion of overtime pay

These deductions apply even if you take the standard deduction, with income phaseouts.

Why this matters:
This lowers taxable income for many workers and households with variable compensation.

4. Auto Loan Interest Deduction (U.S.-Assembled Vehicles)

Interest paid on loans for new, personal-use vehicles assembled in the U.S. up to $10,000 annually may now be deductible (through 2028), subject to limits.

Why this matters:
This can reduce the real cost of financing a vehicle purchase — especially when coordinated with other tax strategies.

5. SALT Deduction Cap Increased (Temporarily)

The State and Local Tax (SALT) deduction cap has increased from $10,000 to $40,000 for tax years 2025–2029.

Why this matters:
This is a major benefit for homeowners and taxpayers in high-tax states.

6. New $6,000 Senior Deduction

Taxpayers age 65 and older may qualify for an additional $6,000 deduction, subject to income limits, through 2028.

Why this matters:
This helps reduce taxable income during retirement years and may improve the taxability of Social Security benefits.

7. Child Tax Credit Increased and Indexed

The Child Tax Credit has increased (e.g., $2,200 per child for 2025) and will now adjust for inflation going forward.

Why this matters:
Families with children receive greater and more predictable tax relief year after year.

8. 20% Qualified Business Income (QBI) Deduction Preserved

The 20% QBI deduction for eligible pass-through business owners remains in place.

Why this matters:
This continues to be one of the most powerful tax benefits for small business owners, contractors, and professionals.

9. Bonus Depreciation and Capital Investment Incentives Remain

Businesses can continue to expense certain equipment and capital purchases more quickly through bonus depreciation and expensing rules.

Why this matters:
This encourages reinvestment and can significantly reduce taxable income in high-profit years.

10. Estate and Gift Tax Exemptions Made Permanent

The higher lifetime estate and gift tax exemption is now permanent and indexed for inflation.

Why this matters:
This provides clarity for long-term wealth transfer, estate planning, and gifting strategies.

Tax law is never one-size-fits-all. What creates savings for one taxpayer may require careful planning for another.

That’s why proactive strategy matters.

If you have questions about how these changes apply to your situation, are concerned about potential risks, or want to explore ways to optimize your tax position under the new law, now is the time to have that conversation.

At K Smith Company, we partner with our clients to provide clarity, foresight, and strategic guidance — not just tax filings.

Featured Posts, Small Business

Top Financial Mistakes of Small Business Owners

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Starting and managing a small business successfully is a complex task that requires a good understanding of various aspects of business, especially financial management. Here are some of the top financial mistakes small business owners tend to make in their first five years:

**Lack of a Business Plan**: This is the foremost mistake that many small business owners make. A business plan gives you a roadmap of how your business will operate, including financial projections. Without a plan, you may lack a clear idea of your income, expenses, and profitability.

**Mixing Personal and Business Finances**: Many small business owners fail to separate their personal finances from their business finances. This can lead to a lot of confusion when it comes to tracking revenue, expenses, and tax obligations.

**Not Setting a Budget**: A budget is essential to keep track of your income and expenses. It helps you to understand where your money is going and how you can control your costs.

**Neglecting Cash Flow Management**: Cash flow is the lifeblood of any business. Failing to manage your cash flow can result in not having enough funds to cover day-to-day operational costs or unexpected expenses.

**Underestimating Expenses**: Many small business owners underestimate the costs of running their business, which can lead to financial difficulties. It’s important to consider all possible expenses, including rent, utilities, employee salaries, taxes, insurance, and so on.

**Not Saving for Taxes**: Many small businesses get into trouble by not saving for tax obligations. It’s important to set aside money for taxes and to understand your tax obligations.

**Not Investing in Growth**: While it’s important to control costs, it’s equally important to invest in growth. This could mean investing in marketing, new equipment, or hiring additional staff.

**Poor Debt Management**: Taking on too much debt or not managing existing debt effectively can lead to serious financial problems for a small business.

**Not Tracking Expenses**: Keeping track of all business expenses is crucial for financial planning and tax purposes. Failing to do so can result in a lack of understanding of where your money is going and potential tax problems.

**Lack of Financial Knowledge**: Many small business owners have great ideas and skills related to their business, but they lack knowledge in financial management. It’s important to either learn about business finance or hire someone who can manage these aspects.

Avoiding these mistakes can help small business owners increase their chances of financial success in their early years and beyond. If you want further guidance on how to avoid making these mistakes and a trusted partner in helping your entrepreneurial wealth grow, explore our services today at K Smith Company.

Featured Posts, Small Business, Tax

How to prepare your small business for tax season

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Preparing your small business for tax season involves several essential steps to ensure a smooth and compliant process. Here’s a step-by-step guide to help you prepare:

  1. Organize your financial records: Gather and organize all your financial records, including income and expense documents, receipts, invoices, bank statements, and any other relevant financial documents. Ensure that everything is neatly categorized and easily accessible.
  2. Review tax deadlines: Familiarize yourself with important tax deadlines, including the deadline for filing your business tax return and any estimated tax payments. These deadlines may vary depending on your business structure (e.g., sole proprietorship, partnership, corporation) and the tax jurisdiction you operate in.
  3. Separate business and personal finances: Establish separate bank accounts and credit cards for your business to keep your personal and business finances separate. This separation simplifies recordkeeping, ensures accurate reporting, and reduces the chances of errors.
  4. Classify expenses correctly: Ensure that all your expenses are correctly classified as either business expenses or personal expenses. This includes keeping track of deductible expenses such as office supplies, equipment, marketing costs, and employee wages. Consult with a tax professional or review the IRS guidelines to ensure proper classification.
  5. Understand deductible expenses: Familiarize yourself with the deductible expenses applicable to your business. The tax code provides deductions for various expenses, such as home office expenses, travel expenses, and health insurance premiums. Identifying and documenting these deductions can help lower your tax liability.
  6. Keep track of mileage: If you use a vehicle for business purposes, maintain a mileage log to track your business-related mileage accurately. The IRS provides a standard mileage rate that you can use to calculate your mileage deduction. Alternatively, you can track actual vehicle expenses, such as fuel, maintenance, and repairs.
  7. Calculate and pay estimated taxes: If your business is expected to owe a significant amount of taxes, you may need to make quarterly estimated tax payments throughout the year. Estimate your tax liability and make timely payments to avoid penalties and interest.
  8. Review payroll and employment taxes: If you have employees, ensure that you have accurately withheld and paid payroll taxes, including federal income tax, Social Security tax, and Medicare tax. Verify that your employee records and payroll reports are up to date and accurate.
  9. Seek professional assistance: Consider consulting with a tax professional or accountant who specializes in small businesses. They can provide valuable advice, help you navigate complex tax regulations, and ensure compliance with applicable laws.
  10. File your tax return on time: Complete your tax return accurately and file it by the deadline. If needed, file for an extension in advance to avoid penalties. Double-check all calculations and review your return for any errors or omissions before submitting it.

Remember, tax regulations can be complex and vary across jurisdictions. K Smith Company is always available as a trusted tax professional who can provide personalized guidance based on your specific circumstances. Schedule a consultation with us today!

Financial Freedom Journey, Personal Finance

Navigating Student Loan Repayments: A Guide for the Post-Grad Generation

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It’s finally coming to pass. The chapter of relief – the pause on repayments and interest for the colossal $1.6 trillion federal student debt carried by 44 million Americans – is undeniably drawing to a close this time. Mark your calendars for August 31st.

Initiated as an emergency measure in the face of the Covid-19 pandemic, the repayment hiatus took root back in March 2020. It was a lifeline extended repeatedly, sometimes even at the eleventh hour, which inadvertently led some borrowers to disengage from the matter. But a pact forged between President Joe Biden and congressional Republicans has definitively sealed the fate of the moratorium. Additionally, a Supreme Court verdict quashed Biden’s proposal to forgive either $10,000 or $20,000 of debt for a majority of borrowers. This decision has far-reaching implications, affecting nearly 20 million individuals and wiping away forthcoming payments.

With the recent news of student loan repayments resuming, we wanted to take a moment to share some essential insights on what you need to know and do to effectively manage your student loans. At K Smith Company, we understand the significance of financial planning and strategy, so let’s dive into the key points you should be aware of.

**1. *Know Your Loan Details:* Familiarize yourself with the specifics of your student loans. This includes understanding the type of loan, interest rates, and repayment terms. These details will impact your payment amounts and overall repayment strategy. Since the start of the moratorium, tens of millions of borrowers have gotten a new loan servicer. You will want to take action now to make sure your contact information is up to date with the correct company. This is an easy step: Go to the Department of Education website: StudentAid.gov to review your contact info, and update as needed.

**2. *Review Your Budget:* Now is the time to revisit your budget. Assess your income, expenses, and financial goals. Allocate a portion of your budget for loan repayments, ensuring that you’re comfortably covering your obligations without compromising other financial priorities.

**3. *Consider Loan Consolidation or Refinancing:* If you have multiple loans, consolidating them into a single loan or refinancing to a lower interest rate could simplify your repayment journey. However, make sure to carefully evaluate the pros and cons before making this decision.

**4. *Explore Repayment Plans:* Federal loans typically offer various repayment plans, such as the standard repayment plan, income-driven plans, and more. Research and choose the plan that aligns with your financial situation and long-term goals. If your employment situation has changed over the last 3 1/2 years, you may no longer be in the right repayment plan, and changing could save you money.

**5. *Automate Payments:* Setting up automatic payments can help you stay consistent and avoid missing deadlines. Many lenders offer interest rate reductions as an incentive for automatic payments, which can save you money over time. If your loan has moved to a new servicer you will need to reauthorize any previous automated debiting.

**6. *Prioritize Higher Interest Loans:* If you have multiple loans, consider focusing on paying off loans with higher interest rates first. This approach can help reduce the overall interest you pay in the long run.

**7. *Save for Emergencies:* While repaying your loans is crucial, don’t forget to build an emergency fund. Life is full of unexpected twists, and having a financial safety net will provide peace of mind during uncertain times.

**8. *Take Advantage of Tax Benefits:* Certain student loan interest payments may be tax-deductible. Be sure to consult with a tax professional or utilize tax software to ensure you’re maximizing these potential benefits.

**9. *Stay Informed:* The Biden Administration has launched a string of relief initiatives for older borrowers. For example, last month, the Education Department said it would be providing $39 billion in debt relief to more than 800,00 borrowers who may have been paying for decades and could have benefitted from an IDR program. Another initiative, recently put on hold by a court, is designed to provide loan forgiveness to borrowers who were misled by their schools. If you are an employee there are also two other helpful programs available through your employer. A Covid-era tax provision allows employers to pay up to $5,250 towards your student loans each year without it counting as taxable income to you, through 2025. Beginning in 2024, employers can opt to count your student loan payments the same as they would your contribution to the company’s 401(k) plan, for the purposes of providing an employer 401(k) match The financial landscape is always evolving. Keep yourself informed about any policy changes, loan forgiveness programs, or opportunities that could impact your repayment strategy.

**10. *Seek Professional Guidance:* If you find the world of student loan repayment overwhelming, don’t hesitate to seek guidance from financial advisors or professionals. We can help tailor a plan that aligns with your unique circumstances and goals.

Remember, navigating student loan repayments is just one aspect of your financial journey. While it may seem daunting, taking proactive steps now will set you on the path to financial freedom and success. At K Smith Company, we’re here to support you every step of the way. Feel free to reach out if you have questions or need personalized advice.

Let’s face these challenges head-on and build a secure and prosperous future together.

Click here to schedule a consultation
Tax

Tax Credits vs Tax Deductions: Understanding the Difference

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Introduction:

Navigating the complexities of the tax system can be a daunting task for individuals and businesses alike. When it comes to reducing tax liability, two common strategies are tax credits and tax deductions. While both options can potentially lower your tax bill, it is crucial to understand the differences between them and determine which one is more advantageous for your specific circumstances. In this article, we will explore the key distinctions between tax credits and tax deductions and help you make an informed decision.

Tax Deductions: A Brief Overview

Tax deductions lower your taxable income, which ultimately reduces the amount of income subject to taxation. Deductions are typically based on eligible expenses or contributions made during the tax year. Common deductions include mortgage interest, medical expenses, charitable donations, and certain business expenses. The value of a deduction is equal to the deduction amount multiplied by your marginal tax rate. For instance, if you have a $1,000 deduction and are in the 25% tax bracket, your tax bill will be reduced by $250.

Tax Credits: A Brief Overview

Tax credits, on the other hand, directly reduce your tax liability dollar-for-dollar. Unlike deductions, which lower your taxable income, tax credits are applied directly to the tax owed. This means that a tax credit of $1,000 will reduce your tax bill by the full $1,000 amount. Tax credits can be categorized into two types: non-refundable and refundable. Non-refundable tax credits can reduce your tax liability to zero, but any excess credit is not refunded to you. In contrast, refundable tax credits can result in a refund if the credit amount exceeds your tax liability.

Key Differences:

1. Impact on Tax Liability:

   – Tax Deductions: Deductions reduce your taxable income, indirectly lowering your tax liability.

   – Tax Credits: Credits directly reduce your tax liability, potentially resulting in a dollar-for-dollar reduction in taxes owed.

2. Value:

   – Tax Deductions: The value of a deduction depends on your marginal tax rate. Higher tax brackets generally yield greater savings.

   – Tax Credits: Tax credits provide a fixed dollar amount reduction, offering more predictable and potentially significant savings.

3. Refundability:

   – Tax Deductions: Deductions do not directly result in a refund. They only reduce the amount of income subject to taxation.

   – Tax Credits: Refundable tax credits can lead to a refund if the credit exceeds your tax liability, providing an additional financial benefit.

4. Eligibility and Limitations:

   – Tax Deductions: Deductions have specific eligibility criteria and may be subject to various limitations, such as income thresholds or percentage caps.

   – Tax Credits: Tax credits also have eligibility requirements, but they often target specific activities, such as energy-efficient home improvements or child and dependent care expenses.

Choosing the Better Option:

Determining whether a tax credit or a tax deduction is better depends on your individual circumstances. Consider the following factors:

1. Amount: If you have significant eligible expenses that qualify for deductions, and your marginal tax rate is high, deductions may provide substantial savings.

2. Eligibility: If you qualify for specific tax credits, such as those related to education, energy efficiency, or childcare, they can deliver direct and predictable tax savings.

3. Refundability: If you anticipate a tax liability lower than the potential credits you are eligible for 

Small Business

Streamline Your Small Business Finances

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Are you a small business owner and find yourself struggling to make sense of your numbers month after month? Efficiently managing your financial records, choosing the best financial software, and understanding your tax position is crucial for the success of your business. Read on for three essential practices for financial organization and streamlining.

  1. Organize Your Financial Records:

a) Create a filing system: Establish a logical and consistent system for organizing your receipts, invoices, bank statements, and other financial documents. Consider using categories such as income, expenses, taxes, and assets to make retrieval easier.

b) Digitalize your documents: Embrace technology by scanning and storing your paper documents electronically. Digital files are easier to search, access, and back up. Cloud storage solutions offer convenience and security.

c) Use accounting software: Utilize accounting software to streamline your record-keeping process. We’ll discuss this in more detail shortly.

d) Regularly reconcile accounts: Reconcile your bank and credit card statements with your financial records to identify any discrepancies and ensure accuracy.

  1. Choosing the Right Accounting Software for Your Business:
    Consider these factors when selecting the best option for your business:

a) Features and scalability: Assess your business needs and choose software that offers essential features like invoicing, expense tracking, financial reporting, and inventory management. Ensure the software can accommodate your business’s growth.

b) User-friendly interface: Look for software with an intuitive and user-friendly interface. A steep learning curve may hinder adoption and productivity.

c) Integration capabilities: Check if the software can integrate with other tools you use, such as point-of-sale systems or e-commerce platforms. This integration streamlines data flow and reduces manual data entry.

d) Security and data backup: Confirm that the software provider employs robust security measures to protect your financial data. Regular backups are vital to safeguard against data loss.

  1. Tax Considerations for Small Business Owners:
    Tax obligations can be complex for small business owners. Here are a few key considerations:

a) Understand your business structure: Different business structures have varying tax implications. Familiarize yourself with the tax obligations for sole proprietors, partnerships, LLCs, and corporations.

b) Keep thorough records: As mentioned earlier, maintaining accurate financial records is crucial for tax compliance. Document all income and expenses, including receipts and invoices.

c) Track deductible expenses: Deductible expenses can help reduce your taxable income. Familiarize yourself with deductible business expenses and ensure you have the necessary supporting documentation.

d) Consult a tax professional: Engaging a qualified tax professional can provide expert guidance on tax planning, ensuring compliance, and maximizing deductions.

Remember, while these tips provide a solid foundation, it’s advisable to consult with a tax professional or accountant to tailor your financial practices to your unique circumstances.

That wraps up our insights for this month. We hope you found these tips helpful in streamlining your small business finances. As always, if you have any specific questions or require further assistance, don’t hesitate to reach out to our team of experts.

Stay tuned for next month’s edition, where we’ll explore another important aspect of tax and accounting. Until then, may your business thrive and your financial records remain organized!
Small Business

Strategic Performance Monitoring: A Business Owner’s Guide

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As a business owner, you have to keep your finger on the pulse of your company’s performance. Performance monitoring is essential for identifying areas of strength and weakness, setting and achieving objectives, and ensuring the sustainability and growth of your business. In today’s dynamic and competitive business environment, it’s more critical than ever to understand the metrics that matter and how to use them effectively.

**Understanding Performance Monitoring**

At its core, performance monitoring involves tracking various aspects of your business to understand how well it’s functioning. This can include everything from financial metrics like revenue and profit margins, to operational metrics like production efficiency, to human resources metrics like employee productivity and engagement. By keeping an eye on these indicators, business owners can spot trends, anticipate problems, and make informed decisions.

**Key Performance Indicators (KPIs)**

Key performance indicators are specific, measurable values that demonstrate how effectively a company is achieving its key business objectives. KPIs differ depending on the nature of the business and its strategic goals. For instance, a retail business might focus on metrics like sales per square foot or customer satisfaction ratings, while a software company might prioritize metrics like monthly active users or customer acquisition cost.

It’s essential to select KPIs that are not only measurable but also closely aligned with your business goals. These indicators should give you a clear sense of whether you’re on track to achieve your objectives or whether you need to adjust your strategy.

**Performance Monitoring Tools and Techniques**

There’s a range of tools and techniques available for performance monitoring, from simple spreadsheets to advanced software solutions. These can help you collect, analyze, and visualize data, making it easier to understand your business’s performance.

Business intelligence tools can provide an in-depth look at your company’s data, allowing you to spot trends and correlations that might not be apparent from a surface-level analysis. Additionally, customer relationship management (CRM) systems can help you track customer behavior and engagement, providing valuable insights into your sales and marketing efforts.

**Performance Monitoring Best Practices**

To make the most of performance monitoring, consider these best practices:

1. Set Clear Objectives: You need to know what you’re aiming for before you can measure your progress. Make sure you have clear, actionable objectives that are aligned with your business’s overall goals.

2. Choose the Right KPIs: The metrics you choose to track should be closely tied to your objectives. They should give you a clear sense of whether you’re on the right track or need to make adjustments.

3. Use the Right Tools: Make sure you have the tools and resources necessary to collect and analyze your data. This might mean investing in business intelligence software or hiring a data analyst.

4. Review and Adjust Regularly: Performance monitoring isn’t a one-time activity. It’s something you should be doing regularly to keep track of your progress and make adjustments as needed.

5. Communicate Results: It’s important to share your findings with your team, stakeholders, and employees. This can help keep everyone on the same page and ensure that your strategies and decisions are data-driven.

**Conclusion**

Performance monitoring is a critical part of running a successful business. By keeping a close eye on your KPIs, using the right tools and techniques, and following best practices, you can use performance monitoring to drive growth, improve efficiency, and keep your business on the path to success.

Featured Posts, Investing, Personal Finance

What Is Your Net Worth?

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How many times have you googled Net worth of *insert celebrity name* ?? I know I’ve done this quite a few times. We often hear people mention the term, but do you know how to calculate your net worth? If not, let’s sip some latté and break this thing down…

Quick Accounting 101 Lesson:

Assets are anything owned of use or value that can be converted into cash. Assets include cash, investments, land, building, equipment, etc. On the other side, we have liabilities. A liability is money owed; an obligation against an asset.

Your net worth is basically everything that you own minus everything that you owe. If you sold all your assets and paid off all debts, how much money would you have left over? Consider this your financial report card. It’s a reflection of your financial health. Calculating your net worth should be one of the first steps to achieving your financial goals. You can’t plot a financial goal map if you don’t know where you currently stand. 

How To Calculate Net Worth:

List all assets and the estimated value.

  • Checking and savings account balance
  • Brokerage/Investment accounts
  • Estimated house/vehicle value
  • Jewelry and collectibles

List all debt.

  • Credit card debt
  • Mortgage balance
  • Car loan balance
  • Medical bills owed
  • Student loans

Subtract your total debt from your total assets. You have now calculated your net worth!!!

Net Worth Analysis:

Okay, so you’ve calculated your net worth. If your assets exceed your liabilities, then you have a positive net worth. Now, if your assets do not exceed your liabilities, then you have a negative net worth. If you calculated a negative net worth, don’t worry. A negative net worth is common for young millennials. This is often due to high student loan debt. This means that you have not earned enough money to offset the debt that you currently owe. The goal is to focus on increasing your net worth. In order to increase net worth, you should increase assets and/or decrease liabilities – paying down debt, building equity in your home, purchasing more investments (stocks, bonds), etc.

There is no standard when it comes to net worth expectations. Every individual has different financial needs and based on his/her lifestyle will have different financial goals. A formula that is often used as a benchmark when it comes to determining your “target” net worth is:

Net Worth = (Your age – 25) × (Gross Annual Income ÷ 5)

Regardless of where you currently stand financially, it is very important to know and understand your net worth. Understanding where your money is going will hopefully help you make better financial decisions, especially when deciding between if something is a need versus a want. Whether you are using an excel file or your favorite finance app, tracking your finances is key. If you need a recommendation, head over to Mint. It’s a free tool, that makes tracking your money easy for all levels.

 

Personal Finance

Increasing Your Financial Literacy

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April is National Financial Literacy Awareness Month! Statistics show that only 24% of millennials have basic financial literacy knowledge. Regardless of your age, NOW is the perfect time for you to decide to take control of your finances. Understanding your finances and money management are essential tools for success. Over the last couple of weeks, several people have asked me, “WHERE DO I START??”.

Well… here are some good places to begin your financial awareness journey:

Search the internet – this might sound pretty basic, but it works. Do you have a particular topic that sparks your interest? Debt Management. Credit Report. Investing for Beginners. GOOGLE IT!  The world wide web is a great resource tool which is available to most 24/7 by using his/her cell phone. Top financial education sites:

Read books, articles and magazines. Picking up a book, financial magazine and/or newspaper is another great way to increase your financial literacy, and these are typically more credible sources than what you may find searching the internet. Top picks:

  • Forbes Magazine
  • Money Magazine
  • Wall Street Journal
  • Rich Dad Poor Dad by Robert T. Kiyosaki
  • Money: Master the Game by Tony Robbins

Watch finance based television programs. Reading isn’t everyone’s cup of tea, but don’t let that stop you from increasing your financial knowledge. There are several television programs that will provide you with the tools you are seeking. Top picks:

  • CNBC TV
  • Bloomberg TV
  • CNN
  • Fox Business News

Listen to talk radio/podcasts – Personally, I’m an avid reader, but lately podcasts have become my go-to. With the daily demands of life, it is often hard to sit down and focus 100% of my time to reading. For those individuals who are often on-the-go, podcasts are the ideal solution. I often listen to my shows while driving or while I’m working. Top picks:

  • The Clark Howard Show
  • Listen Money Matters
  • The Dave Ramsey Show
  • Stacking Benjamins

Take a financial literacy class – You can often find personal finance classes offered at your local public library. If your local library does not have classes available, then you may be interested in enrolling in a course at a 2 or 4 year college. Depending on the school, you may be able to find an online course which will enable you to learn from home. 

Start and investment club – Starting an investment club can have multiple benefits (networking, accountability partners, increased capital for investing, etc). Whether it be for the purpose of increasing your knowledge around personal finances or actually investing (real estate and/or stock market), being around like-minded individuals is always a plus. I will caution you to vet all individuals when it comes to investing your money with a group.

… and last, but definitely not least.. THE MOOLAHTTÉ BUZZ™ *sips latté* .. this site was created for the purpose of increasing financial literacy by sharing the wealth of knowledge I’ve gained over the last decade from books, mentors, and personal experience. 

Please comment and share your favorite books, TV programs, and podcasts below!!