Retiree Confidence In Ability To Afford Comfortable Retirement Increases

The 26th wave of the Retirement Confidence Survey (RCS), the longest-running survey of its kind in the nation, finds that American workers’ confidence in their ability to afford a comfortable retirement has maintained its increase after the record lows experienced between 2009 and 2013. However, retiree confidence in their ability to afford a comfortable retirement continued to increase in 2016. 1 While workers and/or their spouses who have a retirement plan have much larger savings and are also more likely to have taken steps to prepare for retirement, in the aggregate, only a minority of all workers appear to be taking basic steps needed to prepare for retirement.


Keep Family Businesses Going for Generations

fathersonAccording to, 80-90% of all firms across the globe and the top 500 largest family-owned firms generate a combined annual revenue of $6.5 trillion which totals an economy only smaller than the U.S. and China. These firms have effectively been able to pass down control of the company to the next generation.

Based on a survey done by EY’s Global Family Business Center of Excellence and Kennesaw State University’s Cox Enterprise Center, two-thirds of the world’s billionaires are self-made and plan to hand over their company to a family member. The most daunting task was said to be designating the person responsible for succession planning and implementation. Succession planning should be done sooner rather than later to ensure that all those involved presently and in the future have a clear understanding of the business and its values from a young age.

Carl Pohlad, a billionaire financier, Minnesota Twins owner and Forbes 400 member, cultivated good business judgement and discipline early on. He spent three decades including his three sons in business practices, mentoring them and including them in business decisions.

According to the survey, communication amongst the family is strongly emphasized to ensure smooth transition. Although family arguments and disagreements can surface amongst high-stakes business decisions, successful communication and proper grooming allow for families to work out disagreements and focus on the succession of the business.

If you are looking for family office assistance for your business, call 214-696-1922 and ask for Mark Patten.

McKinnon Patten is a Local Dallas CPA with expertise in succession planning. We can help ease the transition of passing down the business to the next generation.


If you think that social media is just for teenagers, think again. More than half of those logging on to social media sites are in their mid-thirties or older.Benefits Social Media

Traditional media outlets such as newspapers, radio and television have long served the purpose of delivering one-way messages, like your company’s advertising. Social media, by contrast, uses Web-based platforms to not only deliver your message, but to allow the recipient to participate.

You’ll find a number of technologies under the umbrella of social media, including email, instant messaging, blogs and social networking websites. In fact, sites like Facebook and Twitter have now surpassed traditional search engines when it comes to reaching some segments of the buying public.Traditional media outlets such as newspapers, radio and television have long served the purpose of delivering one-way messages, like your company’s advertising. Social media, by contrast, uses Web-based platforms to not only deliver your message, but to allow the recipient to participate.

The end result? Social media is not only changing the way your customers access news and information, but how they do business. If your company has not yet embraced the power of social media, it might be time to take another look.

Social Networking Websites

Separate from our professional lives, many of us have a profile on at least one social networking website. That’s why many businesses, large and small, are employing this innovative new marketing tool.

Adopting these technologies, however, involves more than creating a profile or fan page for your family business. To really be effective, it requires a shift to a culture of transparency. And, it is this window into your business that makes it more important than ever for your message to be consistent at every point of contact with current and prospective customers.

How Social Media Puts You Out Front

Establishing a presence on social networking sites can give your business a competitive edge in several ways, including:

  1. Brand Enhancement. Profiles, fan pages and participation in groups all serve to build awareness about your company’s brand. They also provide an opportunity to interact with current customers as well as begin the relationship-building process with prospects.
  2. Open Communication. Social media, including social networking, is based on the principle of two-way communication. Your company can benefit from both the positive experiences and negative feedback that customers voluntarily share. Not only can you address these customer concerns publicly, but you then have the chance to make any necessary improvements. You have the unique opportunity to make lemonade out of lemons.
  3. Target Marketing. Establishing a presence on social networking sites can help you identify, and subsequently target, potential customers. While the need for advertising through traditional media outlets may not be eliminated, the ability to target marketing communications reduces overall costs and provides a greater return on your marketing investment.

Tapping into social networking analysis tools may also assist with targeted marketing efforts. What if, for example, you knew that online discussions about one of your key products waned during the prior 12-month period, while conversations about a similar product that you have not promoted as strongly, showed an increase? Now there is some market intelligence to take under advisement when developing your marketing message. It is important, however, to remember that overt advertising on social networking sites can be received negatively, so your message should be developed with that in mind.

Social Networking Best Practices

Whether you are new to social networking, or a seasoned veteran, it’s important to:

Make a Commitment. Social networking, like most marketing tools, requires a commitment to time and possibly finances — perhaps even cultural change within your business — in exchange for successful results.

Be Visible. Make sure that your brand remains consistent between the various social networking sites. Develop a communications plan that keeps your business visible, but does not overwhelm your online following.

Listen First, Respond Second. Once your program is established, monitor the social buzz daily to keep a pulse on both current and potential customers. Much like a dinner party, you must listen before you respond. Then, once you have a clear picture of what is being said online, you can determine a course of action.

Keep it Local. Customers and prospective customers alike want to do business with companies that are within driving distance. Keep this in mind as you develop and refine your social networking plan.

Make it Easy. Remember to make it simple for people to find you. Add social networking information to business cards as well as your company’s website.

If your family business hasn’t yet gotten its feet wet in the world of social networking, it may be time to rethink your marketing strategy. Establishing a presence on social networking sites can be particularly effective when it comes to heightened brand awareness for your company and for identification and targeting of potential customers. In addition, finding ways to tie social networking initiatives into community efforts can create a win-win situation for everyone involved.


If you are looking for family office assistance for your business, call 214-696-1922 and ask for Mark Patten.

McKinnon Patten is a Dallas, Texas CPA firm with expertise in business consulting. We can help you identify opportunities to increase business efficiency and profitability.

Financial Benefits from Hiring Your Children

HireMeIt can be difficult in the current job market for young people and recent college graduates to find full time and summer jobs. Business owners with children in this situation may be able to provide them with valuable experience and income while generating tax and financial savings for themselves.

As a business owner, you may be able to turn high-taxed income into tax-free or low-taxed income, achieve Social Security tax savings (depending on how your business is organized) and even make retirement plan contributions for your child.

In addition, employing a child age 18 (or if a full-time student, age 19 to 23) may be a way to save taxes on the child’s unearned income.

Here are the key considerations.

Convert High-Taxed Income into Tax-Free or Low-Taxed Income

You can turn some of your high-taxed income into tax-free or low-taxed income by shifting some of your business earnings to a child as wages for services performed by him or her. In order for your business to deduct the wages as a business expense, the work done by the child must be legitimate and the child’s salary must be reasonable.

Example: A business owner operating as a sole proprietor is in the 39.6% tax bracket. He hires his 17-year-old daughter to help with office work full-time during the summer and part-time into the fall. She earns $6,100 during the year and doesn’t have any other earnings. The business owner saves $2,415.60 (39.6% of $6,100) in income taxes at no tax cost to his daughter, who can use her $6,300 standard deduction (for 2015) to completely shelter her earnings. The business owner could save an additional $2,178 in taxes if he could keep his daughter on the payroll longer and pay her an additional $5,500. She could shelter the additional income from tax by making a tax-deductible contribution to her own IRA.

Family taxes are cut even if the child’s earnings exceed his or her standard deduction and IRA deduction. That’s because the unsheltered earnings will be taxed to the child beginning at a rate of 10% instead of being taxed at the parent’s higher rate.

Keep in mind that bracket shifting works even for a child who is subject to the Kiddie Tax, which causes the child’s investment income in excess of $2,100 for 2015 to be taxed at the parent’s marginal rate. The Kiddie Tax has no impact on the child’s wages and other earned income. It only affects unearned income.

The Kiddie Tax doesn’t apply to a child who is age 18 or a full-time student age 19 through 23, if the child’s earned income for the year exceeds one-half of his or her support. Therefore, employing a child age 18 or a full-time student age 19 to 23 could also help to avoid the Kiddie Tax on his or her unearned income.

For children under age 18, there is no earned income escape hatch from the Kiddie Tax. But in all cases, earned income can be sheltered by the child’s standard and other deductions, and earnings exceeding allowable deductions will be taxed at the child’s low rates.

What about income tax withholding? Your business will probably have to withhold federal income taxes on your child’s wages. Usually, an employee can claim exempt status if he or she had no federal income tax liability for the preceding year and expects to have none for this year. However, exemption from withholding can’t be claimed if:

  1. The employee’s income for 2015 exceeds $1,050 and includes more than $350 of unearned income (such as dividends), and
  2. The employee can be claimed as a dependent on someone else’s return. Keep in mind that your child probably will get a refund for part or all of the withheld tax when he or she files a return for the year.

You Can Also Save Social Security Tax

If your business isn’t incorporated, you can also save some self-employment (Social Security) tax dollars by shifting some of your earnings to a child. That’s because services performed by a child under the age of 18 while employed by a parent isn’t considered employment for FICA tax purposes.

Example: A sole proprietor who usually takes $120,000 of earnings from the business pays $5,700 to her 17-year-old child. The business owner’s self-employment income would be reduced by $5,700, saving $165.30 (the 2.9% Medicare health insurance portion of self employment tax the owner would have paid on the $5,700 shifted to the daughter). This doesn’t take into account the sole proprietor’s income tax deduction for one-half of his or her own Social Security taxes.

A similar but more liberal exemption applies for the federal unemployment tax (FUTA), which exempts earnings paid to a child under age 21 while employed by his or her parent. The FICA and FUTA exemptions also apply if a child is employed by a partnership consisting solely of his or her parents.

Note that there is no FICA or FUTA exemption for employing a child if your business is incorporated or is a partnership that includes non-parent partners. However, there’s no extra cost to your business if you’re paying a child for work that you’d pay someone else to do anyway.

Retirement Benefits

Your business also may be able to provide your child with retirement benefits, depending on the type of plan it has and how it defines qualifying employees.

For example, if your business has a simplified employee pension (SEP), a contribution can be made for the child up to 25% of his or her earnings, but the contribution cannot exceed $53,000 for 2015. The child’s participation in the SEP won’t prevent the child from making tax-deductible IRA contributions as long as modified adjusted gross income (computed in a special way) is below the level at which deductions for IRA contributions begin to be disallowed. For 2015, that amount is $61,000 for a single individual.

If you have any questions about how these rules apply in your particular situation, contact your tax adviser. Also keep in mind that some of the rules (such as the maximum amount they can earn tax-free) change from year to year, and may require your income-shifting strategy to change, too.

If you are seeking advice on how to minimize taxes, call 214-696-1922 and ask for Mark Patten.

McKinnon Patten is a local DFW CPA firm that specializes in tax strategies. We understand that good tax planning is critical to minimizing your taxes and offer these services for individuals, trusts and estates and businesses.