Category Archives: Taxes

Money Management during dual crisis

How to Manage a Dual Crisis: Coronavirus and Market Meltdown

The CEO of Source Financial Advisors, Michelle Smith, has issued several suggestions for how the financial community can endure two conflating situations: the economic fallout of the coronavirus and market declines.

Be in Touch

Use technology to maintain contact with clients. Video platforms should be utilized as much as possible to offer a face-to-face personal interaction. While working remotely may mean that things are a bit more casual, it is important to keep things professional.

Be Authentic

The need to maintain decorum and professionalism notwithstanding, it is also important to be genuine with clients. They want to know that their money is in good hands, but they also want to have a sincere conversation about life. Start and end every conversation with a client by discussing their wellbeing. Ask how they are managing and feeling. Give them the assurance they need. Show them that you care about their physical, mental, and financial health.

Michelle Smith advises maintaining professionalism alongside authenticity during these trying times.

Be Pro-Active

When things are uncertain it is tempting to switch to preservation mode. We have a fiduciary responsibility to do our best for those who are already clients; we may not have the bandwidth to grow our business. But as we focus on the clients we have, we should also maintain business contacts and relationships that can help our business in the future. Look for opportunities in various sectors and actively pursue leads.

Be Thoughtful

Clients are worried about a lot of things right now. It is the job of financial planners and economic advisors to ensure that money is not an additional concern. The current health concerns coupled with economic uncertainties present people with two extremely basic fears: being alone and broke. Now is not the time to overwhelm clients with statistics and trends. Listen closely to what the clients are saying and what they feel most comfortable with at this time. This is unchartered territory for everyone. Every individual, business owner, team leader, and industry specialist is figuring out how to navigate these uncertain times. In the money management field, being attentive, genuine, forthcoming, and caring is the best business practice right now.

US Expats Now Must Deal with New Transition Tax

American citizens with businesses outside the country now have a new tax to think about. Known as the “transition tax,” it went to effect at the end of 2017, and will need to be considered for the 2018 fiscal year.

The tax requires businesses to pay 15.5% on foreign earnings held in cash and equivalents, and 8% on other earnings. It applies to shareholders of foreign corporations and includes American owners of small businesses which are based abroad.

The idea of the tax is to “repatriate” or bring back, money that these businesses maintain outside the US. The tax will apply to the company’s accumulated earnings and profits starting in 1986 until the end of 2017.

Although large corporations will have to pay the taxes on cash held in foreign countries, they will also be able to take advantage of the 100% dividends received deduction. This means that they can repatriate their dividends and will not have to pay any taxes.

Small businesses owned by US citizens will have a harder time of it. A small businesses cash flow is constrained by the transition tax. Also, they need to deal with the increase in complexity of the tax system in general.

“Getting clients to understand the law is the first battle, getting them to believe you is the second battle,” said Richard Tannenbaum, a CPA and leader of the global mobility practice at Mazars USA.