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Hiring for Potential

26/06/14 2:28 pm | Comments (0) | Posted By:

 

What’s more important: experience or potential? In an accounting firm, experience can sometimes be the focus of a hiring decision. However, potential really is a smart hire. High performing potentials…that’s a win.

In Claudio Fernandez-Araoz’s article 21st Century Talent Spotting in the June 2014 Harvard Business Review, he points out that employers must focus on potential versus experience.

Managers must learn to assess current and prospective employees on five key indicators:

  1. Motivation
  2. Curiosity
  3. Insight
  4. Engagement
  5. Determination
  • Motivation: a fierce commitment to excel in the pursuit of unselfish goals
  • Curiosity: a penchant for seeking out new experiences, knowledge, and candid feedback and an openness to learning and change
  • Insight: the ability to gather and make sense of information that suggests new possibilities
  • Engagement: a knack for using emotion and logic to communicate a persuasive vision and connect with people
  • Determination: the wherewithal to fight for difficult goals despite challenges and to bounce back from adversity

Who wouldn’t want to hire someone with these key attributes? They have the ability to form their own career path and design their future.

Our jobs as employers is to make sure they have opportunities that push them out of their comfort zone…stretch development. We should always be growing and learning at all levels of our organizations.

The CEO of Zoetis prepared for the top job.  He put together a development plan. The first step was identifying a mentor, an experienced CEO from outside of his organization. The next step was to find a communication expert to work with. The audience for an IPO road show is quite different and it requires the skill to communicate your company’s strategy to the outside world. Another step he took was to develop the skills to manage a board.

Learning…changing…developing…stretching…

It all starts with potential.

 

Foreign Financial Asset Reporting: An unintended consequence

18/06/14 2:15 pm | Comments (0) | Posted By:

 

The Foreign Account Tax Compliance Act (FATCA) became law in the United States in 2010. The provisions of the law focus on reporting for both U.S. taxpayers and foreign financial institutions to prevent tax evasion by U.S. citizens and residents through the use of offshore accounts. U.S. individuals must report information about certain foreign financial accounts and offshore assets on their income tax return if the total value exceeds certain reporting thresholds. The law also requires foreign banks and other financial institutions (like investment and insurance companies) to give information to the IRS about Americans’ accounts worth more than $50,000. If the foreign bank or financial institution fails to enter into an agreement with the IRS, all relevant U.S. sourced payments will be subject to a 30% withholding tax.

From a recent article published in the Financial Advisor, it appears that this law is having an unintended consequence: foreign banks are turning American clients away, even if they are U.S. expatriates living in and being paid in that foreign country by their U.S. employers. In the article, one such expatriate received a notice from Deutsche Bank that her account was being closed. Many of the account-closing complaints are coming from Americans living in Switzerland, which is most likely due to Swiss banks failing to meet the reporting requirements. UBS paid a $780 million fine to the IRS for failure to disclose information on American accounts and just this May Credit Suisse was fined $1.2 billion for similar charges. With American expats numbering between 5 and 6 million, this could become a potential nightmare for those individuals with limited options to open or maintain a foreign bank account.

 

 

 

Tax Scams: Beware of Fake Charities!

12/06/14 9:41 am | Comments (0) | Posted By:

 

At the beginning of the year, the IRS released its annual list of “Dirty Dozen” tax scams. The list covers a variety of scams, ranging from schemes perpetrated by taxpayers themselves (such as hiding income offshore or implementing abusive tax structures) to scams that are committed against taxpayers without their knowledge (such as phishing or stealing individuals’ identities to claim their tax refunds). While the IRS noted that there is an increase of these scams during tax season, taxpayers must be vigilant throughout the year, especially when it comes to fake charity schemes.

Impersonating charitable organizations has been around for quite some time and often occurs after major natural disasters. Scam artists will pose as legitimate charities to get money or private information from taxpayers by using various methods. One approach is to contact individuals via phone or email asking for donations or personal financial information. Another way is to create websites for fake charities where individuals can “donate.” Not only do these people lose their money, but they are also making themselves vulnerable to further theft by giving up their personal financial information. Other scam artists will contact victims of natural disasters directly and claim to help them file casualty loss claims and get tax refunds.

There are several things people can do to protect themselves against these types of scams.

  • Always donate to recognized charities. Many fake charities will use names that sound very similar to legitimate charities or will set up their websites to look just like those of well-established ones. To help people avoid this, the Better Business Bureau provides information about national charities at give.org. In addition, there is a search feature on the IRS website (Exempt Organizations Select Check), which helps people look for legitimate charities that are eligible to receive tax-deductible donations.
  • Do not give out personal financial information. Scam artists use information such as Social Security numbers, credit card numbers, and bank account numbers, to commit identity fraud and steal their victims’ money.
  • Use checks or credit cards to make donations. Not only does this provide documentation of the donation, but it is also more secure than to give or send cash.
  • Most importantly, be smart when it comes to donating. If it doesn’t seem right, it probably isn’t. Don’t let scam artists take advantage of your acts of kindness!

 

The importance of a budget

05/06/14 9:56 am | Comments (0) | Posted By:

 

Saving money and getting your finances on track is not always an easy thing to accomplish. One of the most helpful things to do to accomplish these goals is to create a budget. There are many different reasons why someone would want to create a budget including retiring early, paying off debt, stop living paycheck to paycheck, etc. Once you have decided to create a budget, a good place to start is by going over your spending during the past few months. By doing this it will help you assess how you are spending your money, and identify what areas of spending could be cut or reduced.

Separate your expenses into categories representing essential living expenses and discretionary expenses. The essential expenses include such items as rent, utilities, car payments, gas, insurance, and all other items that are necessary living expenses. The discretionary expenses include all other expenses that are not necessarily needed. To determine a limit for your discretionary expenses, take your monthly income, subtract all of your essential expenses, and the amount remaining is what would be available for the discretionary expenses.

To make your budget more effective allocate a portion of your income to savings. As a guideline, a good amount to save is between 10-20 percent of your monthly income. This will help for any future expenses, whether foreseen or unforeseen. It is important to set aside funds in case of an emergency. For example, you should have three to six months of living expenses set aside in an emergency fund.

Some things to consider that you may find helpful when you are trying to save money include cooking at home instead of eating out at restaurants, making coffee at home instead of the daily $5 latte, not waiting until your gas tank is running on empty so you have a choice at what gas station to stop at instead of the closest one to you, reducing the time you keep the air conditioner/heat on in your house, etc. There are many ways to cut your spending, even a small amount of savings here and there can add up.

It is important to create a budget that is both doable and realistic. If you are someone that has a discretionary expense that you are not willing to give up then make sure to factor it into your budget. If you don’t factor these expenses in your budget it will be impossible to stick to it, and will lead to overspending.

 

 

What Would Happen If Social Security Funds Run Out

15/05/14 9:30 am | Comments (0) | Posted By:

 

It’s a little scary to contemplate that Social Security trust funds are projected to be exhausted in the not-too-distant future. But that is the subject recently studied in a 2013 report from the Congressional Research Services (CRS).

If the trust funds cannot pay current expenses out of current income or accumulated assets, they are considered to be exhausted or insolvent, and that means the Social Security trusts funds cannot pay full current benefits on time. The report projects that without change, the trust funds will be insolvent by 2033. And that same year the program is projected to have enough income to pay only about 77% of scheduled benefits. The law provides that any individual who meets the eligibility requirement is entitled to benefits, which means the government is legally obligated to pay benefits to such individuals. If the government fails to pay the benefits provided by law, beneficiaries could take legal action. Insolvency does not relieve the government of its obligation to provide benefits.

The CRS study puts forth various scenarios that might take place in the future regarding Social Security benefit payments. If Congress has the will to act sooner rather than later, the less draconian the required changes necessary to maintain full benefit payments will be. The affect of earlier changes would be spread over a large number of workers and beneficiaries over a longer period of time. And prompt action would also allow Congress to more gradually phase in the necessary changes, rather than waiting until 2033 and abruptly cutting benefits and/or raising taxes. Early action would also make it easier for workers to plan for their retirements.

If Congress waits until 2033 the trust funds’ annual deficit could be eliminated with a cut in benefits of about 23%, rising to 27% by 2087. If Congress acts today, the necessary changes would be about half as large as those needed if Congress waits until the trust funds become insolvent.

Scary, yes. But we should hope for the changes to be made sooner than later.

 

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