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    Hosting Effective Online Meetings

    Video conferencing has quickly become the primary mode of communication used in our day to day lives.

    With the uptick in usage being directly linked to current world events, it is even more so important that we make business meetings using video as engaging and lively as what we are used to when we meet in-person. The best method of keeping people interested in what you are talking about is making sure that they not only hear what you are saying, but also feel connected to it. In fact, one of the main advantages to holding your meetings virtually, is the potential to prevent your audience from tuning out. Hosting an engaging and effective virtual meeting, however, all starts with what is done before the meeting is called.

    In order for employees to use popular teleconferencing platforms like Zoom, Google Hangouts and Microsoft Teams, they need proper training on how to actually operate the software. Although more people are using these online tools than ever before, many are not technologically advanced causing some problems.

    In our experience, these problems can usually be summarized under employees not fully understanding how to efficiently and effectively utilize the platform. Luckily, most video conferencing platforms provide online tutorials on their website and social media that can be easily shared with your team. Alternatively, you can host hands-on mock meetings to give inexperienced members of your team time to learn how to use at least the basic features correctly.

    The basic features each team member should be comfortable with include: the mute button, directing which participants can speak, turning on and off video, the screen layout options, screen sharing, and private and public chat.

    By investing in your team’s technical skills and thus making them feel comfortable with virtual meeting technology, you allow them to focus less on whether or not everyone can hear them and more on their presentation skills and the actual meeting taking place.

    One of the challenges of working from home is ensuring that you maintain the same level of professionalism as you did while working in office and this is an area of hosting online meetings that many people are still concerned about.   We are all trying to adjust to the new normal and with everyone working from home we have to make concessions to the fact that each of us has a different situation at home. As such, don’t be too unyielding about how and from where the video conference will take place and also put out some guidance for them to consider.

    One way you can instantly boost your home environment’s appeal is by carefully selecting what will be in your background, also known as the backdrop, during the video. Backdrops make a big difference – even a blank wall is better than seeing someone’s entire living room or worse behind them. Many of the video conferencing platforms offer virtual backgrounds, which present a viable solution over another in home alternative.

    Many people are also concerned about how they look on camera. To create a picture perfect setting try putting a lamp or other light source in front of you (instead of behind) to illuminate your face while sitting with a wall close behind you. Don’t focus too much on being photogenic, however, as it would be better to just show your humanity -, let’s face it, this is not the time to be absolutely perfect.

    We also encourage everyone to practice video meeting presentation skills by recording yourself presenting on video, most of the platforms offer a recording feature. Use the recording to see what you may want to remedy before the actual meeting takes place.

    We recommend that you follow usual meeting protocols to best undertake virtual meetings. just because your meeting is online doesn’t mean that you should overlook traditional meeting best practices like scheduling and reminder messaging, supplying relevant documents and an agenda beforehand, handling administrative issues such as questions and time limitations early on. The less traditional online meeting issues include things like who is muted, highlighted, and can share their screens.

    Work toward keeping your video meetings lively and think of opportunities to engage attendees. This will lead to success and positive feedback. The more active participation you can include, the more you can keep others from tuning out.

    The video conferencing platforms offer many extra features to make video meetings more dynamic and interactive, including polling (for when you want to quickly gauge views on an issue), breakout rooms (for when you want a video meeting to break into subgroups) and emoji reactions.  Workto familiarize yourself with these and incorporate them when it makes sense.

    Here are a few video presentation skills to train your team on:

    • Looking into the camera when talking.
    • Smiling when talking—and listening—to portray a friendly, engaging image.
    • Using gestures when appropriate, making sure the people on video can actually see them.
    • Moving through presentations quickly, aiming to spend no more than two minutes on each slide.

    As video conferencing takes on a larger role in the business world, you will want to make sure you and your team become pros at it.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    How to Manage Your Building’s Restricted Cash During COVID-19

    So you have a reserve fund, but with the various challenges presented by COVID-19, do you really know if it is reasonable? In these times you have to ask yourself if that amount will be enough when unit owners are not able to pay or worse yet, the commercial space your budget relies upon does the same or becomes vacant.

    To have a well-dressed annual financial statement during the COVID-19 era you need to have more than just the minimum. In the past roughly $2,000 per unit held in the reserve fund was an acceptable minimum, but now we believe that you need to double that to $4,000.

    We suggest doubling the amount because your reserve funds must be available to cover more than just the minimum. Think about it, if you have the minimum by spending any of those minimal amounts you would be forced to lose the designation of meeting the minimum.  We all must be prepared to spend reserve funds, thus the concept that you may need to double the minimum amount to have a reasonable reserve fund in uncertain times should not be surprising.

    In this era your board needs to think beyond what is available in the existing fund. Let’s face it, properties have unexpected events happen all the time and also need long term repairs. So it’s not just about ’what we have now‘, but ‘what we need in the future‘.   Further, the amount of future costs cannot be predicted so it is best to err on the side of caution. Prospective purchasers will want to see an adequate cash reserve fund and although from time to time unexpected bills may show up or reserves may be dwindled down by operating losses without notice, it is imperative that you periodically monitor the activity in the cash reserve fund. This is more important now than ever.

    There are three aspects of your restricted cash to consider: what you need to offset the loss of revenue and increased expenses from the COVID-19 pandemic; what’s left in the account(s) after that, and how much needs to be spent on improvements over the next few years. Your board can window dress your finances by focusing on where those funds come from which means that the receipts from owners of any specific assessments will all make it there.

    There are a number of actions other than assessment that can enhance the reserve fund. If you don’t take adequate steps to protect your property you may find that after surviving COVID-19 issues,  coupled with increased spending,  it is quite easy to get to the point where any previously reasonable reserve fund becomes inadequate.

    It is important for your board to work together on the level of reserves and the plans to replace them as needed during the COVID-19 era. By working together to window dress the reserves on your annual financial statement, you can enhance the financial success of your property.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    Capital Contributions

    Not a piggy bank for everyday funds

    Making sure your building’s finances present well can be challenging in the best of times. But doing so in the COVID-19 era adds a layer of complexity. Here are areas that need special attention:

    FINANCIAL STATEMENTS
    A lot of boards don’t like to look at the financial statement because they think it’s complex. Financial statements can be challenging to look at, but we try to make sure that they are clear and explainable to the shareholder or unit-owner.

    RESTRICTED CASH
    Money comes into the buildings, and the biggest question is: “Where is it being spent?” Coops and condos have an operating account, which is used to pay bills. It’s the reserve account where there’s a lot of scrutiny. What are those funds for, and are they being used correctly?

    One of the things that gets put into the reserve fund are assessments. And a lot of times those assessments are done either for specific projects or to build up reserves for future projects. When we perform an audit, we make sure that if a board is collecting money for a specific purpose, that it’s set aside for that purpose.

    Many times we’ll find when we’re doing a year-end audit, or even an interim, a board will say, “Oh, we needed some money to pay utility bills or legal bills that came up.” But the money was set aside as a capital contribution, and apartment owners can add this capital contribution to their basis when they sell their apartment. Plus, the association probably did not pick up the capital contribution as revenue for tax purposes. So using restricted cash for operating purposes is a problem.

    BUDGET CHALLENGES
    This is something that is pertinent not only with the pandemic going on but also in general. Most budgets assume everyone’s going to pay their maintenance or their common charges.

    But now let’s say that in June you have a couple of units where owners lost their jobs or the owners passed away, and you’re not collecting monthly fees. In a bigger building, it might have less of an effect because you’re dividing that among 350 units. But in a smaller building, that could be a significant amount of revenue that the building’s relying upon.

    Now you get into the fall, and you’re doing your budget. If the same owners are still not paying, that’s six months of nonpayment. And now you have a continuous issue that’s going into 2021 that you need to take into account. On the financial statements and in your monthly management reports, that’ll be reflected as a receivable. But you’re going to have to find a way to deal with this shortfall.

    Because most budgets are prepared to break even, if you’re not getting an anticipated $20,000 in revenue, either you hope and pray that you have an expense category that’s down $20,000 – which does happen – or you take money out of reserves. Or you don’t pay the bills, which is another option. The other option, which is not my favorite, is to tap into a line of credit. Lines of credit usually are set aside for emergency capital projects. But if buildings don’t have the operational revenue, or if the unit-owners or the shareholders can’t afford to pay an assessment, the board might tap into the line of credit to pay bills.

    DEFERRED PAYMENTS AND ASSESSMENTS
    A lot of boards might defer payments for other expenses because the revenue is not coming in. If you’re behind on your bills because people aren’t paying maintenance because of the situation with COVID-19, a special assessment would not be the wrong thing to do.

    Especially if you’re telling shareholders that they don’t have to pay their maintenance. So that’s something to look into when you’re doing your current budget.

    PLAN NOW FOR NEXT YEAR
    I always tell boards to look at their budgets throughout the year. You’re getting updates every month in your management reports. See how you’re doing. If things are not going in the right direction, you need to act now. Otherwise, it’ll get to be October, November, and you’re not going to be able to pay real estate taxes or your utility bills. You want to look at it in time. We look at the audit a couple of times a year, in different stages, then call our clients and say, “Do you realize you’re over budget in this category?

    What are you doing about it?”

    This article was originally published in Habitat Magazine’s ‘June’ issue, which was free to access for everyone in the co-op/condo community. Click here to read the original version.

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    How to Effectively Conduct a Virtual Annual Meeting

    With the stay-at-home orders issued in the tri-state area, we are all adapting to a new reality. As social distancing works to slow the spread of the virus, we are all trying to get back to something that feels normal. For cooperative and condominium boards who are looking at the rapidly approaching annual spring meeting season the decision so far has been to postpone, postpone, postpone. However, we all know this is not a sustainable strategy.

    With an eye on finding a resolution we gave some thought to how a cooperative or condominium can run an effective meeting without owners being physically present to participate. Doing so benefits almost everyone as those most susceptible to the virus should not be in the presence of anyone other than their household members and most everyone else would appreciate the chance to practice social distancing. Board members should not have to risk exposure to fulfill their volunteer duties, building staff have put their lives on the line enough already and the potential risks to outside professionals should be considered as well.

    The Light at the End of the Tunnel

    As we heard Governor Andrew Cuomo mention in one of his briefings, we should try to see this situation in some small positive ways – like how it has nudged us into more fully embracing available technology, which is something we honestly should have already been doing. In fact, the pandemic has made it clear that we should have all had the complete ability to work from home, just as we are finding our children are also able to learn virtually too.

    We suspect that beyond when stay-at-home orders are lifted in New York, Governor Cuomo will extend the portions of New York on PAUSE that suspend specific requirements for annual ownership meetings. The suspended requirements include that prior notice must be given and that the meeting must be held at a physical location. These changes mean your board has the option to conduct a virtual annual ownership meeting. The idea of conducting the meeting virtually should not be something foreign to board members as more people have been using technology to tele-work and home school than ever before. After your first try, we think you will find that the annual meeting is enhanced and more effective in numerous aspects by going virtual.

    Preparing for Your Meeting

    The notice of the meeting, which is usually sent by hard copy, can be sent by e-mail to all necessary owners who have designated an e-mail address to receive notices. The notice should mention that the annual meeting will be held online in accordance with the governor’s executive order and good social distancing practices. Afterwards send virtual invitations containing the required links and related login information by electronic means to ensure everyone has access. These days it is almost expected that all owners and professionals can effectively use technology to join the meeting but be ready to provide assistance to anyone who requires it. You, or your property manager, probably already know who those persons are so do not hesitate to reach out them with offers to help if you think that may be appropriate.

    As for the official and legal requirements of notifying owners of the meeting, boards can use any form of communication (post, e-mail, BuildingLink, or even your building’s Facebook group) to keep owners up to date.

    We have also seen success with clients who have setup a way for owners to submit questions in advance of the meeting thus reducing the amount of back and forth that can sometimes derail it. Virtual meetings should not be run any differently. We recommend providing owners with the topics of board interest and asking them to submit comments and questions up to seven days before the meeting. That way, the comments and answers can be reviewed during the meeting instead of completed during the meeting, ultimately saving time.

    To err on the side of caution, legal counsel should be consulted to ensure the meeting is held in accordance with by-laws and statutory requirements.

    Technology Requirements

    Using software like Zoom, ScreenLeap or Google Hangouts allows you to host your virtual annual meeting with ease. These programs have browser enabled use ensuring you won’t have to download a new program or application, allow for audio only participation via phone call so owners can participate even if they don’t have a smartphone, PC or laptop; and have a highlight feature that shows whoever is speaking. However, an experienced meeting host is the real key to running an effective and efficient meeting.

    The host has control over attendees – they can mute everyone while reports are given, conduct elections, recognize (and un-mute) individual owners during a designated Q&A, exclude a participant who was not invited or is not supposed to be attending, and otherwise ensure the meeting runs as smoothly as possible. The effective use of the mute function is one of the most useful tools at the host’s disposal as it reduces annoying background noise and other interruptions that more unfamiliar users of teleconferencing may run into.

    When choosing the software you want to use for your meeting carefully consider your objectives and whether or not the features offered will best help you meet them. We generally recommend Zoom because it has a lot of great features like the gallery view which allows you to view up to 25 faces on a PC or laptop, the ability to vote and more. If you choose Zoom, be careful to setup the meeting with a password as there have been reports of “Zoombombers” who, when they find a meeting ID posted publicly, join meetings and become disruptive. However, Zoom (and most other meeting platforms) provides additional safeguards, including requiring users to be authenticated so that should not be too much of a problem.

    To allow owners access to the meeting, do not forget to post reminders with the meeting’s web address, including the meeting ID as well as the passwords.

    Host Dress Rehearsal

    Just like a regular annual meeting, board members will want a virtual meeting to run as smoothly as possible. No one wants to have long breaks spent trying to figure out technology issues. Therefore, we recommend that boards have a dry run in advance of the official meeting to test any security settings (passwords, authentication, etc.) and have the designated host practice muting, unmuting, giving another presenter control, and screen sharing; along with properly executing voting through the chat feature.

    Zoom has best practices on their website, so take a look and see what else they recommend.

    Conducting the Virtual Meeting

    On the day of the meeting we suggest initiating the video conference 15 minutes before the scheduled start time. This should be included in the meeting notice and will provide time to iron out any access issues participants may have. Then start the meeting on time – everyone appreciates a well-run meeting and starting on time is important.

    Boards should consider recording the meeting, something easily done with the programs we mentioned above and many others. If the meeting is going to be recorded, this should be mentioned prominently in the meeting notice, again in any reminders and other notices, as well as at the beginning of the meeting and when the recording actually starts. Note that recordings may become part of the legal record of the organization, with all the attendant record keeping and archival requirements.

    Other thoughts to consider while preparing for your virtual annual meeting include

    • Consider using a registration form or other means of taking attendance, such as a roll call or acknowledgement of each participant.
    • Turn off the chat feature except during Q&A and voting. This eliminates cross talk and allows presenters and the host to stay focused on the agenda.
    • The agenda and any other material to be shared during the meeting should be included in a PowerPoint or similar presentation and screen shared by the host and any other presenters.

    Special Considerations for Elections

    While for many annual meetings board elections are a quick formality, this is not true for all. To ensure compliance with board election policies and procedures, attendees must be given an opportunity to put forth nominations “from the floor”. Decide in advance how this is to be done – we recommend allowing chat and audio and including the chosen procedure in the meeting notice. The usual process includes all those on the ballot offering a brief statement of their background, qualifications, and vision for the building. Allowing nominees to take questions, while not an unreasonable approach, can significantly slow the process. The host should remain firmly in control during this part of the meeting and not allow it to get out of hand. When it comes time to vote, attendees should be directed to the chat room which allows them to privately cast their votes.  A great benefit of Zoom is that chat room voting is automatically recorded. Setting the privacy parameters before starting the vote limits the disclosure of individual votes. The votes should also be directed to the designated inspectors of election. Again, ensuring these procedures run smoothly is a primary objective of the practice session(s).

    It’s best to allow each participant to cast their vote privately. For those who will either not be participating via videoconferencing or are uncomfortable voting that way, we suggest enabling voting privately by e-mail to a designated e-mail address during the voting period. This will, of course, be necessary for telephone participants. Texting to a designated cellphone is also an option. Account for any ballots or proxies obtained before the meeting as the inspectors of election tally the results. Normal completion of the certification, and the announcement of results can follow.

    Conducting virtual meetings can be beneficial on multiple levels. Costs of room rentals are eliminated and professionals (attorneys, accountants, engineers, architects, etc.) can easily participate in your meeting without wasting time traveling or waiting around for the relevant portion of the meeting to begin.

    Most importantly, during these difficult times not subjecting staff and at-risk unit owners to a physical meeting helps us all.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of COVID-10 that affect our clients. However, as this is all developing quickly we are here to offer support in any way we can. You can email us at info@czarbeer.com or call 212 397 2970 with any questions you may have.

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    We’re Here to Help

    The sudden appearance of and subsequent upheaval caused by the novel coronavirus, COVID-19 is certainly unprecedented. While we have all as a result entered into quite unfamiliar territory, at Czarnowski & Beer we have been working around the clock to create resources that help our clients navigate these uncharted waters.

    With all non-essential businesses shutting down and the added sense that we have no idea how long this will continue, we are doing what we can to help reduce the sense of fear and overwhelm that is plaguing many persons in the cooperative and condominium industry by creating the following guides and resources:

    CARES Act Summary

    To help our clients better understand the new programs that are available to them, we have created a comprehensive guide outlining the provisions laid out in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The document provides an overview on the three most popular options in the Act that can provide a significant boost to your struggling cash flow. Click here to download.

    How to Prepare for Disruptions to Your Property’s Cash Flow

    The scenarios playing out in our present-day reality are so daunting they can create an extremely challenging situation for even the most well-prepared coop and condo boards, but fear not, we have identified a few action steps that can help you identify ways to manage your property’s cash flow and handle bulging budget deficits. Read the full article here.

    Everything You Need to Know About the Paycheck Protection Program

    There has been a lot of publicity concerning the Paycheck Protection Program (PPP) and in this post we dive deep into what it is, how you can apply and raise important questions that will help you determine if applying would be the best decision for you at this time. Read it here.

    The Cash Flow Checklist: Actions Your Board Can Take to Protect Against Shortages

    While it is ultimately best to consult a trusted Certified Public Accountant to help you navigate your way forward, The Cash Flow Checklist quickly outlines ways you can prepare for disruptions to your property’s cash flow and significantly help you manage your property’s financial during these uncertain times. Click here to access the entire list.

    Why Coops and Condos Should Apply for an Economic Injury Disaster Loan

    Since the enactment of the CARES Act the spotlight has been shown on PPP loans and provisions made by that program, but what many people don’t know is that the Economic Injury Disaster Loan (EIDL) may at present provide even better opportunities for coops and condos. Read the reasons why here.

    The Czar Beer team is dedicated to providing timely, accurate information on all aspects of the CARES Act and the current economic crisis that affect our clients. The information in the resources listed above should provide some assistance and give you confidence that you’ll be able to weather this storm.

    However, as this is all developing quickly we are here to offer support in any way we can. Download our proposal document here for more guidance. You can also email us at info@czarbeer.com or call (212) 397-2970 for more information.

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    Income Statement Basics

    income statement

    There are several components of a financial statement for a Condominium or a Cooperative.  Through a series of articles, we wish to offer a basic understanding and, where helpful, benchmarks for you to consider versus your specific property.  These articles are in no way intended to provide a comprehensive analysis, rather, more of a resource to provide a basic understanding of the component, and answer certain questions that you may have about specific line items in order to expand the value of the document that you receive from your Board.

    These components include

    • Report letter which details the extent of procedures that were applied, any limitations on those procedures and conclusions reached by the accounting professional.
    • Balance Sheet which presents a snapshot of the financial position of the property
    • Income State which presents the revenues and expenses for the period
    • Cash Flows which presents the sources and uses of cash for the period
    • Notes which presents required and requested disclosures

    Each of the five common exhibits will be presented as separate articles which will also attempt to explain when and where another exhibit may interact or affect the component being showcased.  The articles will have a summary or explanations of the most basic components as well as a discussion of more details for each broad component.   The article on required disclosures that are included as notes to the financial statements, will attempt to offer insight into the most common disclosures for these properties and unfortunately may not include each financial statement note that is included in your property’s annual report.  As certain supplementary information is often included with these financial statements, the most common sections are all showcased together into one article.  We urge you to evaluate all of the articles to fully understand every important aspect of the finances of your property’s financial statements.  We also make ourselves available to attempt to assist with specific questions that you may have that are not covered by the articles by emailing us at info@czarbeer.com.

    The income statement transverses the entire year.  In the most basic terms, its attempting to show how much net profit there is for the year.  However, for these entities a result not close to breakeven is generally not a good thing.   That is, lenders don’t want to see recurring losses and prospective buyers might believe that monthly charges are inadequate to cover costs.  Worse, a net profit can be interpreted by owners saying that they were over charged in their monthly charges as expenses are less than what they were charged.  Always best to see a roughly breakeven as the bottom line, except…..

    Generally Accepted Accounting principles for Coop accounting makes this almost impossible because assessments for capital are considered revenue. However, where the money is spent is not an expense, its an asset for improving the real property owned by the Cooperative.  Thus, capital assessments for cooperatives seem to create a lot of income, which for you as property manager or shareholder is gone, without a deduction for an expense.  Further, a totally unimportant amount to the operation of a cooperative, Depreciation is recorded as an expense. But since the Board didn’t wish to bill shareholders (monthly maintenance) for anything more than what is needed to fund expenses, nothing is budgeted for depreciation.  We can tell you back out this and add that, but the best solution is when the accountant includes a “supplemental schedule” of financial results to the operating budget.  If they haven’t been, our guess is you would more easily review a cooperative financial statement if it was.

    Returning to the income statement, Condominiums can prepare this statement on the fund accounting approach, which is somewhat different from more general Corporation or business accounting, and not allowed for Cooperatives.  This fund style approach, though, does bode well in our presentation here as it breaks up the revenue and expenses into three categories: operating, other and capital or designated fund.  Thus, capital assessments are revenue and capital projects, improvements to common property, owned by the unit owners individually, are the offsetting expenses.  Thus, when an assessment is made to fund a project, these revenues and expense net out on a Condominium Financial Statement.  There are caveats concerning how assessments are reflected as revenue for generally accepted accounting principles.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Leadership Concepts

    leadership and teamwork

    Leadership tips for those who are data-driven without losing sight of the customer, we all want to make a place where our patrons enjoy spending!  We all learn from those we have worked for and wish to offer our experience as decision-makers for what it takes to be a good manager.  We also need to work to sell to our supervisors funding into our department budgets to implement each.

    Many of us have trouble remembering the chapter in the University management course textbook on how important it is to hear.  But that chapter should have been drilled and drilled as it is most important and a foundation of being a good manager.  Listen to everyone, not just your bosses, but also listening to customers and employees. Talk! They offer you insights, therefore, simply have the humility to ask…or just listen!  The manager who has the patience to manage by walking around and listening.  This makes you both visible, as well as accessible, which truly does make leading easier.

    It’s easy to get caught up in the details, but we are here to remind you it’s the overall experience as much of what we do these days that is the commodity. Make it an experience as opposed to competing on price. Competing on price might offer short-term rewards but why would we want to lead to the bottom? Put your emphasis on each aspect of the presentation of product and staff interactions in order to provide a better overall experience that would effectively differentiate you from competitors.

    There is never a time to not be innovative.  Staying on top means watching for and detecting changes in tastes and habits, embracing new technology, creating a culture of detection of ideas and work towards improvement.  This doesn’t mean simply managing the product. It also means innovative in managing the procedures and the sequences of how they are executed throughout our day-to-day operations.  As our department budgets seem to not grow and with adding the pressures, we experience to grow revenues, you need to excel at doing more with less. Good managers get by, great ones innovate.

    Can you be a servant leader? The days of just telling other people what to do are long gone.  If we want to retain our best staff, we should always be asking where they want to go, observing what they want to do, and help them grow. It builds support, camaraderie, and a team. Finding out how your team works helps you determine talent and helps employees loosen up to you and share the hidden talents that you have no other way of knowing about. Seeking to understand before seeking to direct is an essential skill.

    We want you to be open.  You just plain must be available to change.  Let us stop attempting to experience in the world and preach. Truly exceptional managers transcend stress to be warm personally and open to new ideas. Instead of hunkering down behind mathematical models and their own preconceptions, they make themselves open to trying new things.  Find your ability to engage, to demonstrate your brightness by always being friendly, and thus being the one open to new ideas.

    We want to close with something that truly demonstrates managers who succeed. They turn negatives into positives! Work to transform negative experiences, into at the least, a partially positive one.  This can be achieved through experience, consideration and thought.  By not accepting the negative as the final experience, you are well ahead of those who accept that negatives happen and that the implications are unavoidable.  Move to the level of finding the positive and make your employee and customer experience to be a Yes!

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/tax-offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    The Tax Law and 401k Plans

    happy retired couples

    So, are you one of those who dreams of a comfortable retirement, but struggle to maximize your contribution to your company’s retirement plan and the amount you can save just isn’t large enough for you to retire comfortably?

    The good news is that the new Tax Law may be coming to the rescue. While certain high-profile companies provided employees with bonuses last year after the tax overhaul law sharply lowered the corporate tax rates, some are instead increasing their contributions to employee 401(k) retirement plans.  Thus, the company’s contributions are added to what we all struggle to sock away each year and the increments can be substantial.  What goes around, comes around as companies moved from footing the bill for retirement and now its the executives who aren’t vested into huge employer contributions, and the tide begins to turn.  By returning overall compensation to other than salaries and bonuses, some are taking a longer-term view and working to motivate a company’s most important asset, their employees.

    Let’s review.  An individual 401(k) account is generally a worker’s retirement savings vehicle, as we have all heard what to expect from social security as the baby boomers retire. Presently, you can contribute up to $18,500 a year in 2018 into your company’s 401(k) plan, while those 50 and older can put in up to $24,500 a year. These investments grow tax-free until they are withdrawn, and employers typically match with a percentage, essentially providing workers with tax deferred compensation.  The more of the latter, the less of the former is what is needed.

    It’s always surprised us that many employees don’t take the full advantage of company-sponsored 401(k) plans by maximizing the matches.  We are seeing trends where it is hard to see how many will have enough to retire comfortably.

    So, let us all get on the “add to your worker’s retirement savings” mentality and all suggest to everyone that we know that the additional compensation that companies should provide from their post-tax reform profits be returned to employees in this manner.  Let us stress the goodwill of “making the employee in America considered great again”.  Send the message on to all you know and become part of the movement.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/tax-offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Moving Out of State to Avoid High Taxes? Think Carefully

    union square in new york

    After 2017’s end-of-December decision regarding whether to prepay taxes is set, the limitation of deductibility of state and local taxes seemed to drop off the radar. However, it seems to be coming back into the limelight as the first milestone of its effect rears its head this spring.  For the wealthy tri-state area set, there’s more buzz than ever about fleeing south to Florida, the land of mild winters and, more importantly, zero state personal income tax.

    We have known for years that the tax collectors in states like New York make it really hard to leave. Those who hope to maintain a home in a high tax state are realizing that, after they hear about the scrupulous records that they would have to keep showing they’ve really uprooted their lives and severed ties with their former states. Their other realization is that it’s not as easy as just spending a few more days a month in a Florida vacation home, it’s easier to just stay put!

    New York’s Department of Taxation and Finance will go to great lengths to keep wealthy residents on their tax lists. The states’ methods can be aggressive: issuing subpoenas to pour through credit card statements, bank transactions or phone records to track a taxpayer’s location; and even sending auditors to interview the building doormen.

    Before you take this plunge, be sure that you understand how you have to change your life circumstances to qualify as a Florida resident. What’s involved is a truly huge life change and we are observing that less than 10 percent of clients who express an interest in moving are actually going through with it. As we have always suggested, except for the ultra-rich, it’s rare to find a situation where it’s worth uprooting just for tax reasons.  We stress family considerations and community ties over a few dollars.

    For those of us who choose to stay, more than 10 percent of New Jersey residents will see a tax hike this year.  In New York, it’s 8.3 percent who will see higher levies.  As the politicians expected, life comes first and many of us will just absorb these additional costs to maintain the lives we have chosen.  But please be prepared for what might seem to be a different tax situation this April than you have been used to over the past few years and contact your tax professional before deciding to move to a lower tax state.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/tax-offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    High Income Filing and Avoiding the IRS Audit

    irs tax forms

    We all know that the IRS looks at less than 1% of returns filed. The good news is that they are short on personnel and funding and a vast majority of those audited simply get a letter that they have to pay.  The likelihood of the dreaded, and it should be, tax audit escalates depending on various factors: income level; types of deductions/tax breaks that you claim; the business that you are engaged in; and whether you own foreign assets.

    So, the number one way to get their attention is to do something we all try to do, year after year: make lots of money!  But we are talking about those that make “real” money, so, report $1 million or more of income and there is a 1-in-23 chance that your return will be audited.

    Then, your deductions should be statistically proportionate with your income. Your accountant can comment on whether you are stretching things and where, we believe, if you have a valid deduction and reason for claiming it, to stand tall.  Many deduction investigations can be cleared with discussion between us and the IRS.  There is rarely a reason to pay the IRS more tax than you owe.  But what we do advise is to make sure you consider higher-than-average deductions with knowledge and thought.

    While we wish to remind you that if your charitable deductions are disproportionately large compared with your income, it raises the audit risk flag, we know that we all do our fair share of charitable assistance, whether in the form of contributions or our volunteer work.  It’s hard to overlook the big charitable gifts you made during the year, but the little things add up too. For those of us who volunteer, we can easily miss the write-off of out-of-pocket costs incurred while doing work for a charity. Just a reminder, if you drove your car for charity in 2018, remember to deduct 14 cents per mile, plus parking and tolls paid.  Ways to support these possibly questioned deductions are by keeping journals and when your contributions total more than $250, protect yourself by obtaining an acknowledgement from the charity documenting that support that you provide.  This potential audit is quite easy for us to close as it’s hard to question well documented generosity.

    Many of us run a business in order to make our above average incomes, however, the IRS believes that self-employed people may sometimes claim excessive deductions and may not report all their income.  So, higher-grossing sole proprietorships, those reporting at least $100,000 of gross receipts on a Schedule C, and business owners who report a substantial loss can expect a greater  chance of having to go through one of these audits. But still, some self-employed taxpayers get a big break under the new law, and Schedule C is a treasure trove of tax deductions for self-employed people.

    Agents are on the lookout for personal meals or claims that don’t satisfy the strict substantiation rules. Remember, in order to qualify for meal deductions, you must keep detailed records for that document for each expense: the amount; place; people attending; business purpose; and nature of the discussion or meeting.  Also, it is best to keep receipts for expenditures over $75 for lodging or any other expense while traveling away from home. The new tax law eliminated the deduction for entertainment expenses, so business owners need to be careful when deducting entertainment expenses such as golf fees or sports tickets for a client outing.

    Cash-intensive businesses will get special scrutiny and now also those who freelance service through the sharing economy. Pass-through firms such as S-Corporations, partnerships and limited liability companies face less audit risk. When you depreciate a car, you have to list on Form 4562 the percentage of its use during the year that was for business. Claiming 100% business use of an automobile raises a flag on an individual’s because it is rare for someone to actually use a vehicle 100% of the time for business.  The best way to protect yourself from this audit risk is to have another vehicle available for your personal use.

    We all love our heavy SUVs and large trucks, and of course, use them for business. As these are eligible for more favorable depreciation and expensing write-offs, we love to buy them late in the year.  These are areas where we are seeing increased IRS inquiry, so be sure that you keep detailed mileage logs and precise calendar entries for the purpose of every road trip. Exceptional record-keeping is your best defense with these deductions.

    Many in the real estate industry are attracted to the exception for those who spend more than 50% of their working hours and over 750 hours each year materially participating in real estate as developers, brokers, landlords, or the like to circumvent the passive loss rules and take deductions for investments in real estate. Others like to fanaticize that they actively participate in the renting of their property, so that they can deduct up to $25,000 of loss against other income. WARNING: The IRS actively scrutinizes rental real estate losses, especially those written off by taxpayers claiming to be real estate pros. It will question those who claim that they are real estate professionals and whose W-2 forms or other non-real estate Schedule C businesses show lots of income. Without documentation of working the necessary hours, especially in cases of landlords whose day jobs are not in the real estate business, the Tax Examination will be painful.

    Most of this article is to clue you in on the high-risk areas but if you don’t want to hear from the IRS then be sure to report all of your taxable income.  Remember, the IRS gets copies of all the 1099s and W-2s that you receive, so at a minimum, be sure that you report all required income on your return.  Like sales slips we get at retail stores, these little slivers seem to not all find their way to us from our clients.  The IRS computers are pretty good at matching these up.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/tax-offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Benchmarking Your Property’s Performance

    benchmarking property's performance

    In the interest of education, we wanted to put together a list of benchmarks that you can apply to your property’s performance.  Many have requested that we share what we see within our work in order to allow Board members and unit owners the opportunity to compare themselves against others.  For those interested in best practices of the Board monitoring function of internal controls, this also serves as the chance to highlight an aspect of finances that might be out of whack, thus indicating areas for improvement and those with higher risk that theft or fraud might be occurring. Just a reminder, the Board should serve as more than the ultimate decision maker but also as monitor of operations.  We suggest all Board members establish a periodic comparison as an important internal control.

    Minimum cash/reserves per unit

    So we are wondering what you heard should be in the reserve fund?  Comments of three to six month carrying charges tend to be the reply.  Our premise is that you can’t truly know the appropriate amount unless you have a physical needs assessment accomplished.  With this, an independent engineer predicts which systems will need extensive renovation or replacement and estimates the expected costs. Only with that information can the Board truly understand the amount they need to maintain or should have.

    We understand that is an involved and costly process, so we took a look at what our clientele maintained. So, you have a reserve fund, but is it reasonable?  We determined that a per unit comparison level was the best metric and that there is a usual range. Does your property maintain a minimum reserve fund of $2,000 or $100,000? That appears to be what buyers and lenders are looking for as they shop for a unit to invest in.  In order to have a well-dressed annual Financial Statement your reserve fund needs to be at least these minimums.  That means that your Board cannot spend any of a reserve fund at that level or lose the minimum needed to meet prospective buyers’ requirements

    Annual monthly carrying charge increases

    Nobody likes to pay more, but costs do continue to rise in markets like New York.  If you didn’t get an increase this year, be thankful.  Our properties are seeing in general, increases of 1% to 3%.  If yours was higher, we suggest you learn the reason.  It may be appropriate but at least your Board should understand the issue, which lately in New York has been real estate taxes, when this metric is exceeded.

    Debt per unit

    The amount of debt per unit tends to translate into how high maintenance charges are compared to other properties.  Generally, you should look for debt per unit to be $40,000 to $60,000 in strong New York City markets, somewhat lower in the outer Boroughs. If a building’s debt per unit is out of the $40,000 to $60,000 range, it’s a sign that there might be an issue.  Further investigation on your part is needed to see how what you are paying compares to other properties.  It could be that the property can carry the additional debt and it’s not be an issue.  It could also indicate higher monthly carrying charges as that debt carries higher service costs than lower debt levels.  With rising interest rates there is substantial risk that when a loan obtained during the last decade comes up for refinancing that those costs will skyrocket due to a higher interest rate.

    Long term funding method

    Reserve funds are the wallets the property has available for future major repairs, so what’s being added to your wallet?   Let’s face it, properties need long term repairs.   Where do those funds come from?   Well, we are getting to the point that additional borrowing might not be practical.  So, your property needs a long-term funding vehicle. Consider a transfer fee or an allocation of monthly carrying charges.  A transfer fee can be imposed on departing owners. Such fees are now becoming expected in the market.  Another option is an annual allocation of monthly carrying charges to capital. Thereby, funds are set aside from what as unit owners pay each month. Either way it’s important that such a long-term program be in place.

    Unit owner receivables

    Life happens and sometimes people can’t always just pay right now. We want your Board to consider having an operating budget that reflects the potential of late payers, say 1% of revenue each year is set aside as potentially uncollectible.  But wait a minute, what’s with that, all my neighbors aren’t current in their payments?  Unfortunately, late payments do happen, what we don’t see happening is a cushion to absorb the tardy payments. Your property needs to be prepared for a potential shortfall for non-payers, and as we mentioned, 1% for annual charges usually suffices.   But if arrearages start to grow above that level, it’s best to spend the time to better understand the situation and what’s being done to collect what’s due. Make sure your Board collects everything its due.

    Minimum working capital levels

    Even if you timely collect expected revenue, figure that you need minimum working capital to run a business of about 1/2 month’s revenue.  So, if monthly revenue is on average $10,000 per month, you need as a minimum to keep 1/2 that amount or $5,000.  Let’s face it, business operation requires working capital.  Putting aside seasonality of a business, most can get by on 1/2 month’s average revenue.  So, if your business is doing $1.2 Million in annual revenue, you need at least $50,000 of working capital.  That doesn’t mean there won’t be calls for capital; it’s just a rough guideline for the bare minimum.  It is best to leave management in a place where they have available at least minimum resources to operate.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Build Fraud Resistance Into Your Business, Pt 2

    fraud-proof your business

    We all hear about fraud here and there.  We take solace that if our credit card is lost or stolen that we are not responsible for more than $50 and that the bank will resolve any issues we detect when reconciling our bank accounts. However, fraud in small business is so much more. The scary part is that it happens so much more than these basic personal risks.

    It gets complicated for business because it just plain happens. The familiar pattern is once it occurs and goes undetected or unconfronted it grows and can become huge.

    Let’s understand the philosophy of fraud, commonly referred to as the ‘fraud triangle’.  Certain conditions seem to create an atmosphere that promotes it and it’s important that the small business owner understand these conditions. It all starts with opportunity.  Let us face it, no matter how secure internal controls are, opportunity is constantly created or can be devised by those seeking to develop such opportunity.  There are a certain percentage of employees that will act solely on opportunity. For the purposes of this article, we will assume that the employee approval process, complete with background checks will minimize the risk of your business hiring these folks. You do perform background and credit checks on all prospective employees, right?  Well, if not, you run the risk of relying on interview policies and skills to do more than most businesses have learned to expect.  So then, please, commence the credit and background check process on all new hires to identify those who will likely steal solely when afforded the opportunity to do so.

    Another side of the triangle is pressure, generally financially related. The pressures can range from spending beyond means, to unexpected (like health of a loved one) bills, to compulsive behaviors.  Suffice it to say, that its pressure that greases the wheels for the normally honest employee to succumb to the temptation of opportunity.  Once the slide is greased, and should fraud theft not be detected or confronted, nor the principal’s culture be one that the employees believes that they will be caught, pressure will allow the temptation to grow. It grows like a cancer and there is nothing left to stop it once the last side of the triangle occurs.

    Rationalization is when the perpetrator develops a perception that they are entitled to commit fraud.  We see it in our current political environment, that the wealthy make too much, and the common folk are left to suffer. Other rationalizations include just rewards when passed over for a promotion.

    What matters is that the level of attention a business owner or principal devotes to fraud sends a powerful signal to employees about its importance and prevention.  So, is fraud prevention part of your company’s culture? We operate in an environment in which employment surveys note that up to 5% of job applicants have a fraud history. Now this damaging information won’t appear on their resumes as small businesses rarely prosecutes the fraud perpetrator. For you as small business principal, it all starts with observation of how much or well things are watched over.  Therefore, it’s all about management, and how well you or your structure manages and supervises is incredibly HUGE.

    Several business routines will minimize loss, improve employee performance and when you work to prevent fraud from inside your organization, you win. You see, 37% of fraud is initiated by internal sources.  You need to prepare for fraud strikes from inside your organization, it’s all about your management culture! Structuring work and carrying out day-to-day responsibilities with an eye toward fraud prevention can best work to stop fraud from happening.  Home-grown security, and your hard work to support a culture of control and accountability, will positively affect your overall business prosperity. Unfortunately, it is the simplest of fraud prevention actions that are the least likely to be taken by small business owners.

    Let’s start with the simplest precautions that you can use to save yourself from future fraud trouble.   Research who you hire because it has been determined that 5% of workforce has some level of dishonesty or has previously been involved in fraud.  With hiring levels reaching near capacity of the workforce, it is not unreasonable to expect that a greater percentage of present job applicants have previously dirty hands.  You see, small businesses does not have the resolve nor resources to prosecute guilty parties, but as small business owners we need to change that.

    It is vital to use due diligence with thorough interviews, to obtain valid independent references and make calls to past employer.   The excuse that we don’t have enough time for formal background checks just doesn’t cut it, so under no circumstances can they be skipped as they are required to build a trustworthy team. Don’t find out after a breach that the warning flag was waving and you looked away.

    As accountants, we are constantly asked about appropriate segregation of duties. Yes, we understand that they have a cost, but the risk adjusted cost of a loss is higher.  No more cost-effective strategy has been developed.  Building a company culture of honesty starts with Executives.  Think of employees as a family and realize that, like children, employees see and understand everything.  Don’t give any single employee too much authority.  Structuring appropriate separation of duties with financial checks and balances avoids the concentration of too much power in one person.

    Large companies expend huge resources to train employees and it just seems, due to limited resources, small business seems to not follow this lead.  But it is important to give you and your employees the confidence that business finances are being handled correctly.  Set up training sessions to teach employees how they can help prevent fraud with diligence.  Taking the time to annually remind employees of the values and expectation that fraud will not be tolerated is the only method to build a culture that can stand the test of time and excel at profitability. Build into the daily operations of your business that adherence to operational guidelines, roles and responsibilities is the ONLY option. Automation of financial transactions removes the human involvement and thus minimizes the risk of fraud.  Online banking services provide transaction, balance and utilization reporting for easier reconciliation. Realize though, that the reconciliation is quite important as online access to bank accounts is available without a check or authorized signature.  It is believed that only half of small business owners review bank statements, credit card charges and accounting books. Frequent reconciliation identifies financial red flags early.  Adjust your individual thought process to put on your fraud hat! You need to think like a thief, can you do that? Take improvement culture to a new level, by establishing an avenue for employees to annually report areas of improvement.  Make sure that you act on important suggestions, and, even if it is deemed to be too costly to protect against, consider buying insurance! Showcase and reward the employees that report and suggest!  Listen to them, they are in the trenches of your business warfare.

    Another option for reducing the risk of fraud and to better uncover weaknesses is internal audits and reviews. Utilize your CPA for more than meeting filing requirements and maybe saving taxes.  Coordinate on vulnerable areas and realize they are a tremendous resource of what is being accomplished at other small businesses when you encounter a specific threat. Regular fraud audits signal your commitment to reduce fraud and keep your business secure.

    Yes, this can all be quite costly. Yet, we haven’t yet found the alternative solution to this potentially business closing risk. As we mentioned earlier, the loss costs of fraud can be huge and those re not simply in the form of dollars, but also in reputation and lost revenue.  Please take away that you have no choice but to invest!   Please share with us your ideas so that we can all do it better!

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Important Cyber Security Tips – Part 5

    cyber security

    Essential Tips for Better Network Security, Part 2

    Train Employees

    It’s always a good idea to have clear and concise policies in place when it comes to the security of your computer networks. However, if you want to ensure that employees behave appropriately, it’s best to implement mandatory training so that they know exactly what the rules are, how to behave when using company resources, and what consequences they’ll face for breaking rules and putting the company at risk of a breach in the process.

    Often, breaches occur not because of inadequate protections, but because of employees visiting dangerous sites, clicking harmful links, or downloading files that contain malware. These actions allow hackers to walk right in the front door, so to speak. By providing every employee with training on how to spot and avoid such issues, you have a much better chance of staving off a breach.

    Double-check Downloads

    Even with proper antivirus/anti-spyware/anti-malware software in place, you can’t necessarily prevent employees from engaging in dangerous activities like clicking links and downloading harmful files. Often, they don’t even realize what they’re doing.

    You should set up a backup system that requires any downloads to be checked by another party (your IT support staff) before they are allowed into the system. This could improve your network security by accounting for potential employee error.

    Phishing 

    Business email compromise (BEC) scams, also known as phishing emails, continue to cause major losses; more than U.S. $5 billion dollars have been stolen domestically and internationally in the past three years. Approximately 7,700 organizations are hit by a BEC scam every month.

    Phishing occurs when a cybercriminal tries to trick an email recipient into opening a malicious attachment or clicking a link to a malware-laden website that could download ransomware. This method has remained popular over the years, which perhaps indicates that the person behind the computer keyboard can be the weak link in a company’s security.

    Drive-by downloads

    In the case of a drive-by download, a malicious website will attempt to install software on your computer without asking for permission first. This could happen if proper security systems are not in place or if the operating system is outdated.

    Unfortunately, none of this education and training will help secure your business unless you create a culture of cybersecurity awareness around the office. So how do you encourage your employees to protect your company’s information?

    • Compliance programs: Make changing passwords a regular task, like getting an oil change in your car. Ensure everyone is doing what they need to do to keep their passwords secure.
    • Rewards programs: Offer rewards for employees who find ways to improve cybersecurity around the office, such as by reporting phishing emails.

    Accountability programs: Encouraging your employees to gently hold one another accountable will help ensure compliance with best practices. You can also try appointing cybersecurity culture advocates to help keep employees trained and motivated.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Important Cyber Security Tips – Part 4

    cyber security

    3 Essential Tips for Better Network Security

    If you listen to people in the know, it’s not a matter of if your company will be the victim of a data breach, but when. Not only are most businesses (both large and small) woefully under-protected when it comes to system security, but hackers are finding more and more sophisticated ways to break in all the time.

    Of course, there are steps you can take to protect yourself from an attack, such as hiring a network administrator or computer security specialist to build appropriate security infrastructure and manage your system. You might also hire an IT firm to support and protect your technology environment.

    Even with the right equipment, software, and professional help in place, however, there are still a few things you can do to improve your network security over time. Here are some essential tips for any business interested in better network security.

    1. Update Regularly

    If you know anything about technology, you probably know that it’s constantly improving. Once a piece of hardware or software has been released, the company that created it continues to support it. This means problems are addressed with downloadable patches, or updates, that fix known issues.

    In some cases, you can simply opt in to receive automatic updates as they become available, or you can choose to be notified so that you can at least decide whether or not you want to download them. However, it’s not a bad idea to regularly check for software and firmware updates you may have missed. When your computer and network components are up-to-date, you have the best chance to secure your system.

    2. Upgrade as Needed

    How do you know when it’s time to upgrade to new and improved hardware and software? With technology advancing at an alarming rate, it seems like you’ve barely implemented new solutions when something better hits the market.

    Most businesses can’t afford to upgrade even annually. In truth, if you choose the right components, you needn’t upgrade often. Reputable consulting firms can assess your current system and give you options for upgrades that will serve you now and over the course of several years, most likely.

    Or you could turn to your technical support team to help you figure out when to start looking for something new. A good rule of thumb is when manufacturers no longer support hardware or software, you shouldn’t wait any longer. Many firms purchase hardware with extended warranties and automatically replace the hardware when that extended warranty expires.

    One vulnerability commonly seen in smaller enterprises is staying on an older version of software because the new version requires updated hardware. This approach can prove to be penny wise and pound foolish, as the older hardware and software significantly increase the exposure to security risks.

    3. Deal with Password Issues

    This is a big one. Hackers frequently use passwords as a way to break into networks. The best way to avoid this is with proper password protection.

    This begins with requiring employees to create strong passwords of 8-12 characters, containing upper and lowercase letters, numbers, and symbols. The passwords should not contain personal information (names, birth dates, etc.) and you should prompt employees to change passwords frequently.

    Don’t forget training. You need to have clear policies in place outlining rules about protecting passwords, even from coworkers.

    If you found this post to be helpful, and whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions. Thank you!

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    Bartering Handyman Work for Rent

    handyman-for-barter

    For some, this sounds a lot like the superintendent or resident manager who performs a number of roles and lives on premises. Last year, the Tax court once again determined that bartering the services of a handyman in exchange for rent was taxable. A handyman had traded work for the rent he owed his landlord and was required to pay tax on the value of the work performed that was applied to his rent.  So why would it be different for your superintendent or resident manager?

    This falls under the convenience-of-the-employer exclusion; thus, an employee may exclude from gross income the value of lodging provided free by an employer only if the employer does so for a substantial non-compensatory business reason.  It must occur on the business premises, which works well with the New York City requirements for an on-site person within close proximity to the property. The key is that the housing is for the employers, rather than for the employees’, convenience and the employer must require the employee to accept the housing as a condition of employment. Thus, in order to satisfy local and Federal Taxation laws, the employee must need to “live in the lodging to be able to perform the duties of this employment.”  This allows for your board to provide a wonderful quality of life to the owners.

    Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Important Cyber Security Tips – Part 3: The Big 3

    cyber security

    Three most important security topics

    Let’s face it, the information and the physical world are merging, threats exist to all cyber-physical systems such as cars, power plants, medical devices, even your IoT fridge. Similarly, the trends toward cloud computing, bring your own device (BYOD) policies in the workplace, and the burgeoning internet of things (IoT) create new challenges. Defending the enterprise’s systems has never been more important. We hope that your company is working to develop best practices for protection from cyber threats, so you need to be armed with what as a minimum should be established on a firm wide basis.  If you are not experiencing the role of student, then maybe you should become assertive and step into the role of teacher. If you are not seeing a solid cybersecurity plan being implemented, take the lead.  This is quite important stuff and no one can be left behind.

    Education and training are the take away from the business continuity and disaster recovery planning accomplished by the higher ups.  Guidance needs to move vertically within your organization and thus from your position you should be aware of your firm’s security plans, policies and procedures.  That being said here are the top three issue you should be paying attention to:

    1. Software updates 

    Hackers work outdated apps with known vulnerabilities in order to enter the company computer network. Training on how, the importance of, and how often to install software updates and patches for applications and operating systems.  We are all busy, it can be easier to postpone the downtime and yet these need to be accomplished as soon as they’re available. Given the advanced state of most modern software, automatic operating system updates should be enabled and performed each time they become available. The same is true for application software updates, including Microsoft Office. If your line of business systems are not updated regularly (at least annually), you should discuss this with your vendor and consider moving to better maintained platform.

    2. Passwords

    Is knowledge about password security something to be learned on the streets?  Secure password policy and enforcement is vital.  Teach your employees that the best password is a secure password. Is use of a reputable password management application policy?  These store passwords in one place, allowing people to generate strong, complex and random passwords that they don’t need to memorize. They only need to remember one password to unlock the app itself.  Alternatively, is use of passwords that contain at least 10 characters plus include numbers, symbols, and upper and lowercase letters mandatory? Use of written down passwords forbidden?  Are there policies to deal with the sharing of passwords, even with coworkers?

    3. Virtual Private Networks

    These are vital in order to secure information. They encrypt all traffic leaving and entering your devices. The product of a hacker’s hard work to intercept your information is gibberish.

    Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Important Cyber Security Tips – Part 2: Get Some Help

    cyber security

    So, you pay an IT professional and outsource some, if not all, of your IT support. Even with all of that technical support staff in place though, your employees can inadvertently cause breaches. Your staff should participate in your small business security plan. It is imperative to make sure that employees understand how to use company resources. In addition, consequences should be in place and communicated to employees for failing to follow security protocols; this is of the utmost importance.

    We suggest you work with an experienced IT consultant on your plan for data breach. Because such attacks are so prevalent, it’s best to prepare for the worst. What is your backup plan to get your business back up and running in the event of data loss? How will you handle the impact of exposing personal identifying information of employees, customers, and vendors?

    Consider hacking yourself to identify vulnerabilities by hiring appropriate consulting firms or IT specialists to audit your present system in search of weaknesses. Only then can you begin to make changes that will better protect your business, your network, and your clientele.

    As you develop best practices to protect your small business from cyber threats, do some research. The National Cybersecurity and Communications Integration Center’s (NCCIC) website can help you create a solid cyber security plan for your business. You may want to establish guidelines around the following three security topics as you teach your employees how to make digital safety a daily habit.

    Stay tuned for Part III in this series, where I talk about software updates, passwords, and VPNs, coming in about a week.

    Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Tax Credit Awareness

    tax-tips-and-credits

    The Internal Revenue Service (IRS) seems to be using new tools to audit interesting situations whereby a taxpayer achieves a substantial tax credit.

    A tax credit can be so much more valuable than a tax deduction, as a deduction reduces income and then a tax rate is applied. Therefore, the marginal savings a deduction provides is only a portion of the amount incurred. Where a tax credit can offer a benefit up to 100% of the value of the amount spent.  That benefit seems to have received focus by the IRS as we see a couple of recent tax court decisions seemingly to have discovered situations which were costing the Government money without providing the intended benefits to the economy.

    In TC Summ. Op. 2016-81 (Berry) the taxpayer claimed $5,800 of self-employment income from the one-time sale of tools and machinery, self-employment income is reserved for those in their own recurring business intended to make a profit.  By reporting this capital gain income as another type of income,  Berry, then, “conveniently” qualified for a nice earned income credit. The court moved the income to Line 21 of Form 1040 (capital gains), removed the self-employment tax (and earned income credit) rightly stating that a one-time sale of tools is not considered an activity entered into for profit “with continuity and regularity.”

    In the Federal Court of Claims case Foxx v. U.S., 2017 PTC 46 (Fed. Cl. 2017) a $2,500 preparer penalty was assessed because the preparer artificially reported additional income in order to claim a larger earned income credit for a client.

    Rightly, there are limits to what can be accomplished with tax planning.

    Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Tax Issues After a Trade-In

    sales tax

    Trading in property, such as a car, used to be more than about the savings of the sale tax.  When it came time to handle the income tax aspects, things were quite easy. The amount paid was used for the depreciation of the new equipment and no time was wasted dealing with the sale of the traded-in item. It was assumed to be sold for its un-depreciated remaining balance with no gain or loss.

    Those hopeful of tax simplification will find more to deal with in 2018, as these transactions are in essence more complicated. So now, when you trade in a piece of equipment for another piece of equipment, both used for business, let’s get on with the busy work.

    The new part is that the trade-in value given for the old equipment is now part of the sales price, therefore depreciation may need to be recaptured (income realized), should that amount be more than the remaining depreciated value.  Recording all this in the accounting system will take some thought and work as most systems simply post the amount paid.

    The full purchase price needs to be determined by “grossing up” or “adding back” the trade in value, that total amount, not what was paid will be used for depreciation of the new asset. The good news is that higher amount qualifies for bonus and Section 179 depreciation, both designed to stimulate the economy by providing Tax benefit upfront to businesses spending on equipment by giving the Tax benefit up-front to the business. All that benefit may or may not provide ultimate net benefit to the business, as Tax planning can be quite intricate.  Consult your tax advisor!

    Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Important Cyber Security Tips – Part 1

    cyber security

    Cyber Security. Let’s just jump to it, with some things to consider:

    Do you think your small business is at risk of being hacked? An overwhelming 87% of small business owners don’t think so. But, your business might be at risk more than you realize. About half of small businesses experience a cyber attack.

    Small businesses are appealing to hackers. Small businesses typically have a moderate amount of data with minimal security. Hackers can use the stolen information to steal from many others.

    Your business is at risk when you are unprepared for a cyber attack. Hackers can steal money, employee details, customer data, and vendor information. A data breach can damage your relationships with employees, customers, and vendors. And, approximately half of small businesses that have a cyber attack go out of business within six months.

    Building up your small business cybersecurity is imperative. By using cybersecurity basics, you can prepare your business for cyber attacks.

    Simple things matter – recent research shows too many of us still use easily hacked passwords, including ABCD, 1234, WXYZ, and the perennial favorite ‘password’.

    Don’t take comfort from headlines that often highlight major data breaches in large corporations and government agencies. The REAL truth is that the vast majority of businesses being hacked are smaller.  We are too busy running our businesses and providing services to our customers to allocate the time. While we can’t afford the same level of protection as a big company, adequate computer security is not beyond reach. Hopefully, your IT provider has you generally protected.  We still wanted to spend some time offering you a list of the basics that your business needs to address in order to survive.

    Start with developing a security plan for your business. By taking the time to develop a plan, you will be forced to consider all the aspects of security as they relate your devices, your network, and your data. The plan should designate who is responsible for security issues, plainly indicate compliance requirements with specific policies and procedures, and be made part of the required policies and procedures in accordance with the employee handbook (your company has one of those, right?).

    Your cybersecurity policy for your business should contain the cybersecurity best practices that you expect your employees to follow. It should also contain protocols that employees need to follow in case there is a data breach. Assure that you include procedures for keeping employee, vendor, and customer information safe. Finally, your security plan should include a policy and procedure to be updated annually and distributed to all employees, along with a security update briefing.

    Password protection of your computer network is pretty much a given at this point. As step 1, let’s just review this concept as it is important to observe stringent standards.  Strong passwords are a must, as is the use of prompts to update passwords regularly.  Are password management apps or stringent requirements for passwords that contain at least 10 characters and include numbers, symbols, and upper and lowercase letters mandatory? Use of written down passwords forbidden? Are there policies to deal with the sharing of passwords, even with coworkers?

    Layered security to limit access can help to keep the most sensitive data as safe as possible should your system suffer a breach. This means limiting access to certain types of information by role and responsibility while adding levels of protection with additional passwords and encryption.

    Do your employees use personal devices to access company data, sometimes known as Bring Your Own Device (BYOD)?  Let’s face it, as a small business, we doubt you have the capital available to provide devices like laptops, tablets, and smartphones for employees to use. That being the case, you need to create policies that allow your network administrator to install monitoring software, push automatic security updates, or call for regular password changes. You don’t necessarily need to encroach on personal privacy but you must protect your business and prevent employees from putting your network and data at risk while using their personal devices. There is a balance that must be struck between enhanced productivity, invasiveness of required software installs, and security.

    Whether you are a business, individual, or non-profit – feel free to reach out to us with any follow-up questions. With one call or email we will provide you with professional, complimentary advice – no obligation. Just contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    The Annual Budget Process – Ideas for Improvement

    annual budget process

    We see it all the time. The annual budget process becomes the rush budget process. It goes something like this:

    • Draft is prepared by the managing agent

    • Distributed before a meeting

    • Decision is expected at that meeting

    September starts this annual season whereby the Financial Analysts at property management firms are incredibly busy.  Beyond their usual responsibilities now comes the need to accomplish a complicated and potentially detailed project.  You may see it by a change in the swiftness with which they respond to your emails and other usual requests.  Many work overtime in order to meet the needs of their property load.  While we understand the pressures on the staff this time of year, as auditors, we work for your Board. We wish to express gratitude to those financial analysts whom we work with for their hard work and ask their forgiveness if our recommendations expand their work load through the Holiday season. That being said, this project is for your Boards! Our service is to you, so here are the recommendations.

    Our experience is that the ones who attach detailed calculations to back up the budgeted amounts tend to be the most accurate.  While a board may not hear during the year of their success in the budgeting process, they will see, hear and deal with shortcomings.  Potentially spinning their wheels when more imperative issues are facing the Board. We suggest you take a look at this process now and establish Board guidelines to make it better.  So, let’s look at how the process can be improved.

    1. More lead time before the meeting that the draft is presented

    “Just in time” is good for operating businesses to save on costs, but for budget distribution purposes, it tends to leave people who volunteer and also have too many other things in life to deal with the risk of insufficient time in order to prepare. The default position for many is silence and acceptance.  That is not where a true leader of your community should be.  Resist any temptation to taking this path. Stand and say we need to slow the process down, as necessary.

    1. Expectation that meetings more often than monthly might need to occur this time of year

    Sorry, but you would need the best financial analysts in the industry to accomplish this with the process that we seeing going on everywhere.  Slow down and discuss more, several meetings might be required.  That is OK, the goal is the correct product which benefits the board in many ways, including.  Time saved from focusing on why there is not enough money to pay bills and how to fix things later.  An A well prepared budget is an enhanced tool to utilize in monitoring the property finances all year long.

    1. Assurance that all properties professionals were used as resources

    You pay them all year long, each has an aspect to offer better information and savings than the perception of someone without their expertise.  Have the insurance broker provide information on the insurance renewal, fuel oil company on the trend of pricing and whether the premium for entering into a set price contract makes sense. (The later allows for less risk of deviance from budget for heating costs.)  The auditor for Corporation taxes and annual fees.

    1. Assurance each and every board member’s question or concern was properly vetted

    We tend to discuss someone else’s agenda at a Board meeting. We can lose our own perspective if we attempt to follow others thinking.  Silencing board member concerns can be costly, so let’s get conversation flowing.  If you wish endeavor on other value offering conversation, take the time to look into those contracts that seem to be renewed year to year.

    Document the renewal dates and establish a list of your properties’ vendors.  Periodic consideration of each vendors performance and cost tend to improve satisfaction and minimize cost.  Industry’s shift and there maybe another vendor who does a better job for a lower cost.  You won’t know unless you evaluate, and budget time is the best time to understand and review vendor services.  There is no rush to accomplish this all now, establishing the list and rationally moving through it over time is the goal.  But let’s start now while we are looking at all this detail.

    Some of us spend less time reviewing the budget than researching for our next vacation plans.  Assure that there is careful documentation of the changes and important aspects to each draft version so that everyone is on the same page.

    1. Appropriate communication is developed to inform the unit owners of the need for the increase

    Unit owner expectation is going to be what they want, unless they understand the reality.  With just some simple distributing of information on important aspects of the budget, unit owner concerns are  alleviated and questions diminished.  It can be as simple as an email or two to unit owners during the process.  This also sets the stage for the unit owners to see the hard work by board members.  Yes, they elect you, but as a volunteer you work for all unit owners.  The most frequent issue unit owners have with boards is lack of sufficient communication!

    If you are reading this early enough in the season, accept this as a call to action.  Evaluate the existing process and work toward improvement now, before the draft arrives just in time.  Prepare your fellow board members for an expanded process, use the guise that you want to limit any potential increase. We want you come out of this process as a budget champion, understanding more than you may have ever cared to before.  Not only have the research performed, but assure your questions are all answered and that you fully understand the reasons and needs for any monthly charge increase.

     

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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    Getting on Board with the Inevitable Budget Increase

    condo and co-op board meeting

    Getting on “Board” with the Inevitable Budget Increase

    The beginning of Fall – and corresponding beauty of the changing leaves – generally kicks off the budget process. Our observation is that usually a draft is presented before a Board meeting, at which time a Board decision is expected swiftly, impacting the financial situation of each and every unit owner for the next year. The budget seems to arrive a few days before this decision-making meeting, giving you little time to review it.  You find yourself sitting at the Board meeting with next year’s budget and an expectation of approval, and then you turn from informed leader to politician.

    Let’s face it, this is the most important unit owner project because it determines how much more people need to pay. Money is tight, aspects of the population that live within the building may or may not be better suited to deal with an increase, plus no one wishes to pay more. You took on the role of leader when you submitted your name for nomination, and we want to assist you in properly serving on the board.

    Let’s put aside any personal preferences and focus on reality here. As a Board member, you have a fiduciary duty to do what is right. If you need more time, you need more time. Try not to be driven by the process or making decisions without a full understanding of the costs, changes and expected revenues.  We understand that you are a volunteer, but your neighbors are counting on you and asked you to serve. The budget is a most important tool for you as a Board member for numerous financial matters. These include long term planning and monitoring; not only costs but also the financial records the managing agent maintains, and a platform to see how you did on costs as a board after the year is out. In a separate blog we offer insight into that aspect of Board performance.

    Come on, we all know that for unit owners, they are most interested each year in what that monthly charge increase is going to be.  And for many, it comes down to their (the unit owners’) evaluation, to their own expectation, without knowledge or appropriate information.  How can the uninformed make reasonable decisions?  So, which is more important to you as Board member, unit owner endorsement or reality?

    Thorough understanding of the budget and the changes from year to year are key to appropriate Board review.  Contrary to the standard, “the budget shows this” and then the answer is, “we can’t increase charges that much” response, along with a negotiated increase someplace between hopefulness and realty, do something different. Avoid making the decision on pre-conceived levels or expectations as we see so many people who tend to shoot from the hip on this one. Let’s face it, other than certain non-recurring changes in costs (i.e. loan refinancing or something like the recent global energy producer rebalance due to America becoming great again in energy production), this year’s costs should be higher than the last budget should always be expected.

    As much as we’d like to be more than we can be, inflation is outside the control of the Board and your property manager. By all means, watch each and every dollar you can, pay the best possible price for superior service and the best contractors, but don’t let yourself be swayed by political considerations within the building. Even when there is a large faction in your community who say “no” to paying more, your role is to explain reality and do the right thing.  Be sure that you thoroughly understand the changes from year to year and endeavor to have confidence in your final decision, regardless of the opinions of others.

    The reality in America is that over time, costs do rise. This has been a built-in plan by politicians and the Federal Reserve Board long before any of us evolved into leaders. We ask you to stand tall against the waves of politics, annual increases have been averaging 3-5% over time. Due to the global reposition of the energy marketplace with America becoming an exporter of resources, the last few years have ranged from 1-3%. We ask you to be reminded that your role is to set monthly charges at what is needed for this property, not anywhere else! In the interest of your community, it is vital that we all be adults and understand that there should be an expected increase each and every year.  Otherwise, the result of not making necessary increases tends to create the need for a future Board to increase monthly charges much more than they should or put through an assessment to clear up the inevitable drain on financial resources.

    Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.

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