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October 25, 2011

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer... 10/25/2011

International Monetary Systems (IMS Barter) Stock Hits Two-Year High

IMS (OCTBB:ITNM), a business-to-business barter service, saw it�s stock close on Friday, October 21, at a two-year-high price of $1.95. The Milwaukee Business Journal ranked IMS 5th on Wisconsin�s top-25 best-performing stocks for 2011.

Greco Sees Opportunity Given Today�s Economic Conditions

Thomas Greco Jr., well-known in the commercial barter industry due to his numerous speaking engagements at IRTA and elsewhere, sees encouragement with today�s unrest among American citizens as well as those worldwide. His speaking schedule is ambitious as he continues to tout the advantages of private currencies. To follow his comments on his web site click here.

Greco will next appear at the �International Conference On Sustainability, Transition and Culture Changes� near Traverse City (MI), November 10-14. For more info click here.

Small Businesses Update

Here�s an update on a recent National Federation of Independent Business (NFIB) survey, based on the responses of 729 small-business owners. Nine out of ten (90%) said the economy is on the wrong track, although, in contrast, 68% said their businesses are headed in the right direction.

Major challenges foreseen by respondents included: economic uncertainty, America�s debt and deficit, over-regulation and loss of revenue. Only nine percent (9%) expect improvement in the coming six months, and 38% expect deterioration.

Change Is Constant �

What could reinforce this �change is constant� statement more so than the recent announcement by Gap, the largest U.S. clothing chain? Gap plans to close 189 locations (21% of its U.S. stores by 2013) in the U.S. and at the same time triple the number of Gap stores in China, from 15 to 45, by the end of 2012.

House Prices Effect Americans� Spending

According to research by the Congressional Budget Office, Americans reduce spending by $20 to $70 a year for every $1,000 decline in the value of their home. This �wealth effect� is significantly larger for changes in home equity than in the value of other investments, such as stocks, because people regard changes in housing prices as more likely to endure.

Newspaper Advertising For Goods & Services

Newspaper advertisers in several Canadian cities can trade their products and services for ad space in various daily newspapers. The newspapers will then turn around and auction off the acquired goods and services.

For more information on this way of doing business click here.

All back issues of "From the Desk...� can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a �box� at the end of the newsletter for your convenience. See you next week. . .)


What Halloween Characters Do You Have At Work?

By Andy McCabe, Psy.D.

They�re all around us, all the time, but we don�t recognize them because they wear business suites, sport jackets, dresses, high heels, or maybe sneakers and dungarees. They�re the men and women we work with who are hiding their true identities in the workplace. Let�s see if we can figure out who they really are.

The Fairy Princess: She�s beautiful and knows it; because of her looks and beguiling smile, men bosses look the other way when she comes in late or doesn�t pull her fair share. If her boss is a woman, she may be in the deep end of the pool without her water wings; however, often she�s so good at manipulating that, if she can find a chink in the woman�s armor, she and the boss will become best buds.

The Frog: The Frog is usually a man, and as annoying as a pesky mosquito on a hot summer night. He just doesn�t go away! Questions, stories, and yes, like the frog � ribit, ribit � he repeats himself. You�re busy, have lots to do and you see the frog coming but there�s nowhere to hide. Ouch! You know it�s going to be painful so you head for the men�s or ladies room and pray he�ll be gone when you get back.

Richard Nixon: He talks, seemingly without taking a breath, in a monotone voice that would be perfect for hypnosis commercials. He thinks he knows everything and that you want to hear him blab on and on about himself and how brilliant he is. Double ouch! If you have the misfortune of sitting next to him at a wedding, within minutes you will want to kill yourself.

Lance Romance: If Lance and the Fairy Princess ever married, they�d never get to work on time because they�d spend too much time fighting over the mirror. He�s smooth, charming, good looking and like the Princess, he knows it and does not have to follow the rules meant for mortal men. In his mind, he�s a god and should be treated as such. No hair on his head would dare be out of place and he can climb mountains without getting wrinkled or sweating. If he�s single and the boss is his wingman, you might want to buy the large bottle of Advil or look for another job.

General George Patton: Usually a guy, but some women could also wear this costume. Neat, polished, no nonsense, he strongly believes smiling, or laughing, at work should be avoided and he lives in the past: the days of glory. When the ships were wooden and the men were iron. As opposed to today�s iron ships and wooden men. He likes to reminisce when you have a deadline and alligators chomping at your ankles. If he�s the boss, you smile, nod appropriately, and know you�re going to have to stay late because he�s enchanted by the sound of his own voice.

Calamity Jane: Nice person and a good heart; however, she�s an elephant in a china shop. When she enters the room, the anxiety level increases because you know something is going to go wrong, very wrong. The one time she uses the copier, it blows up and you have to evacuate the building. Once she flushed the toilet and it wouldn�t shut off. The entire third floor flooded. She�s always apologetic.

The Ghoul: He or she is the walking dead. They hate their job, life, their spouse, children, Mother�s Day, apple pie and anything funny! They don�t walk, they shuffle and never smile. Their skin is so white, they look like they were just released from an extended prison stay, and they usually wear the same clothes: they think nobody notices. The Ghoul has actually died on the job long ago and hasn�t had an original idea since sophomore year in high school.

So, do you recognize one or more of the Halloween characters hiding out where you work? If you do, make sure you give them a piece of candy and wish them � Happy Halloween!

Andy McCabe, Psy.D., graduated from the Rutgers School of Applied and Professional Psychology. He is a life coach and has presented programs on stress management to educational, health, law enforcement and corporate groups, as well as for the United States Navy. He is the author of The Gifted One: The Journey Begins, available at Amazon.com and other fine booksellers.

For more info click here.


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Tapping Your Creative Core

Loosen your creativity � and that of your staff � by examining your CORE:

  • Curiosity. Do you know all you need to know to get by?  List three things you're curious about and two ways you can discover more about them.

  • Openness. Do you welcome or seek new ideas? Read a book or magazine that contradicts your beliefs.

  • Risk tolerance. Do you turn away from risks? Interview people who take risks, and ask them how they handle the areas you fear.

  • Energy. Do you think of yourself as a high or low-energy performer? Identify one factor that lowers your energy level and eliminate it from your day.


Is Your Trade Exchange Missing Out On Valuable New Business?

If your barter company�s listing on BarterNews.com isn�t current, you are definitely missing out on new business. The web site BarterNews.com receives heavy traffic � with over 150,000 page-views every month. Entrepreneurs and corporate executives check the thousands of articles, the weekly �Tuesday Report,� and the �Contacts Section� of our site. They use the latter to find barter companies with which to do business.

Is your barter company�s listing up-to-date?

To keep your listing current is very easy. See the links below to (A) update any changes to your company�s listing, such as new location, phone number, web site or other information, and (B) if your company has not been listed.

Here�s how to get on board:

To make changes to your listing click here.

For new listings click here.


The Psychology Of Taxes On Entrepreneurs

By Greg Crabtree

As an accountant, I have a unique vantage point to observe how entrepreneurs change their decisions based on tax policy. My focus as a business advisor is making businesses more profitable first, then dealing with the tax implications of profit.

As much as I would like to focus on profit, I regularly have to �reprogram� the entrepreneur�s thinking on taxes. With new clients, I often have to overcome the advice given by their former CPA, who would inevitably advise them to buy more equipment at the end of each year to avoid paying taxes. Folks, this is just plain dumb unless your goal is to never build wealth from your business.

I would classify entrepreneurs into three groups when it comes to taxes:

No Taxes, No Way Nate � This guy will do anything possible, including cheating, to pay no taxes. From our experience with clients we turn down or terminate, this problem is likely bigger than even the IRS estimates.

Accidentally Profitable Alex � This fellow is so focused and passionate about his business, that he forgets to plan for success, and the resulting taxes often come as a surprise. Many times this is from a cash-out event rather than ongoing profit.

Eddie the Enduring Entrepreneur � This is my favorite type of entrepreneur to work with, because he is building a lasting business that will be a tremendous wealth-generating engine for himself and his family. This entrepreneur is often held back by bad advisors who encourage him to waste wealth to avoid taxes, but his instinct and common sense frequently help him overcome the faulty counsel.

The only type of tax that you can make No Taxes Nate pay, would be a sales tax or VAT (value added tax). But given Nate�s predisposition to not pay any taxes, he will find a way to skim or avoid the tax all together. Unfortunately for us honest entrepreneurs, we will endure audits because of Nate, since that is the only way the tax collector can find him.

Accidentally Profitable Alex does not make decisions based on taxes until his first major tax event occurs. Once that event happens, he may change his name to Nate if he perceives the tax impact is too great. Alex is likely to be a one-timer, which is the term used for someone who can be profitable once, but cannot repeat the success.

Eddie is the guy we should focus tax policy around because he is the guy that employs the bulk of the workers in the U.S. economy. Employment studies have shown that 70% of all employees are employed by privately held businesses, and 100% of all new job growth comes from private business.

Publicly held businesses kill as many jobs as they create and that is just the nature of the beast. Every time a publicly held business has purchased one of my clients, the public business has decreased employment of the company purchased, not increased. They are inherently geared toward buying the business that�s done by the private company, bolting it on to their infrastructure, and off-loading the private company�s management.

Since I started in public accounting in 1978, I have seen multiple tax ideas played out, and the varying business decisions resulting from each policy. I can honestly say that no policy proposed has ever caused the result the policy maker wanted, with the possible exception of the 1986 Tax Reform Act.

This is the tax act that eliminated tax shelters and lowered tax rates to 2 simple brackets, 15% and 28%. This was the first time I saw my clients get focused on making profits and just pay the taxes. Unfortunately, the 2 brackets eventually turned back into 6 brackets that topped out at 39.6%. In addition to federal taxes, states have continued to raise rates as well, and the average income tax rate runs around 6%.

What is the optimum rate? I can honestly tell you that it is somewhere between 25% and 30% (federal and state tax combined). That is the point where entrepreneurs will push forward to make more money rather than just put it on pause and take care of their own. It also helps to have fewer brackets and get to the top bracket relatively quickly. Simplicity has a tremendous power to move people to action and release them from the paralysis that lack of understanding brings.

Policy makers need to understand that entrepreneurs can always trim growth and just take care of themselves and their core employees when uncertainty abounds. When they are presented with a flat economy like the one we face now, they need long-term certainty to encourage them to take some risks. When they think their hard work will be eaten up in taxes, it takes all the incentive away.

In my interaction with entrepreneurs from around the world, through the Entrepreneurs� Organization, it struck me that U.S. entrepreneurs are significantly under-capitalized compared to their counterparts in Europe and Asia. Easy credit played a big part in this, but tax policy also plays a huge role. The typical U.S. entrepreneur rubs two dollar-bills together and tries to make a profit. They start without capital, with just and idea and a dream, and find a way to make it work.

The disconnect between cashflow and taxes that policy makers do not understand is that during the capital building phase of the business (typically the first 5 years in business) all of the after-tax profits are plowed back into the business. Politicians make comments about taxing the rich people, but the ones I deal with that have a business that shows $300,000 in profit are having to pay an average of $120,000 in taxes (40% federal and state) which only leaves $180,000 to put back into the business to repay debt (remember, you encouraged them to start a business and borrow to start it).

Until you have sat in the conference room going over the final year end numbers with a business owner, you have no concept of the disappointment they feel to learn that what appeared to be a success of $300,000 in profit is really only $180,000 (which they used to repay debt so their cash balance did not change). And if they are diligent and have no bumps in the market, they will be out of debt in 5 years.

Those are big �ifs.� We found that we have to monitor this quarterly with clients because they spend their profits and leave no cash for taxes. When they have no cash for taxes, this starts the death spiral of their business, because the IRS is now a creditor of last resort.

Taxes may never be simple, but folks, we can do better than this. Also, I would be a happy practitioner if I never had to help someone file another tax return. We do not need tax preparation to be a jobs program, all of those folks can easily be used to do other useful and more productive things.

Here are my ideas from the real world:

         Go back to 2 simple brackets, 15% and 25% . You need to keep the top bracket at 25% since we need room for inevitable increases in Social Security and Medicare tax rates or limits. All income would be treated the same (i.e. no capital gains).

         Simplify taxation of C-corporations by allowing a tax deduction for dividends paid. This will encourage public companies to pay out excess capital back into the marketplace, plus you can withhold taxes on the payment and increase tax cash flows to the Treasury. This would also help small privately held C-corporations eliminate double taxation and put them on a level playing field with the S-corporations and LLC�s.

         Withhold taxes on flow of funds. Since the tax brackets are lower, it is more reasonable to withhold taxes on payments made to owners. Any money taken out by an owner of an S-corporation, C-corporation or LLC, would have taxes withheld on the payment (no shareholder loans!)This would encourage owners to not fall into bad habits of taking money out of the business without considering tax implications until it is too late.

         Eliminate itemized deductions. It is time for us to realize we only pollute the thinking of the taxpayer when we make something deductible. You can adjust personal exemptions and a standard deduction to some reasonable level to protect the lower income levels, but after that make it simple and non-tax motivated.

(Greg Crabtree has worked in the financial industry for more than thirty years and founded Crabtree, Rowe & Berger, a CPA firm dedicated to helping entrepreneurs build the economic engine of their business. In addition to serving as the firm�s CEO, he is the author of Simple Numbers, Straight Talk, Big Profits!)

For more information click here.


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