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Become An Uber Achiever

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Happy New Year!  Please accept my sincere best wishes for a happy and successful 2014.  As is customary,  I begin the year with information I consider to be motivational,  since a new year  (along with Spring)  suggests a fresh start.  In my first posts of 2011,  2012 and 2013,  I presented lists of suggested New Year’s Resolutions for you to adopt.  This year,  I invite you to choose the goal of your dreams and I’m pleased to pass along suggestions on how to make it your own.

You may have noticed that many highly successful people do not have a clear sense of how they manage to grab the brass ring time and again.  Often,  uber achievers do not have an awareness of what allows them to succeed or prevents them from failing.  How do certain mere mortals repeatedly gain the favor of the gods?

It is true that we all have a repository of certain attributes,  advantages,  competencies and talents: the natural salesman,  the math whiz,  the influential family.  Some may encounter a wise and powerful mentor along the way,  who guides them onto the right path,  keeps them out of harm’s way or gives them the heads-up about opportunities on the horizon.

Motivational psychologist Heidi Grant Halvorson says in her book  Succeed: How We Can Reach Our Goals  (2011)  that research on achievement suggests that successful people reach their goals not only because of the cards they hold,  but also because of what they do.  Halvorson has spilled the beans on what other behaviors makes the rich different from you and me  (with apologies to those who do not equate success with wealth):

I.    BE SPECIFIC: When setting goals,  be as specific as possible.  Knowing precisely what you want to achieve keeps you motivated until you get there.  Furthermore,  identify and commit to specific actions that must be taken to reach your goal,  actions that leave no room for doubt about what must be done.

II.   CARPE DIEM: Achieving goals means recognizing and acting upon opportunities before they slip through your fingers.  Make sure that you don’t fail to ride a good wave because you didn’t bother to anticipate its possible arrival,  or because you were distracted by competing pursuits and dramas.  Open the door to success by planning to take real steps toward your goals.  Studies show that planning trains our brain to recognize and seize opportunities when they arise,  in that way increasing our chance of success by about 300%.  In other words,  plan to succeed.

III.  MONITOR AND MEASURE: Achieving goals requires regular monitoring of one’s progress.  Know your timeline and milestones and adjust your strategies and actions according to progress made.  Rewarding yourself for interim successes is a good idea.

IV.  REALISTIC OPTIMISM: Thinking positively about the likelihood of achieving your goal is enormously helpful in creating the conditions for success and sustaining motivation.  Nevertheless,  guard against underestimating how difficult it may be to get where you want to go.  Anything worth having is likely to require significant time,  planning,  sacrifice and persistence.  Daughter-in-law of the Prince of Wales,  mother of a future king of England,  Catherine Middleton used to be called “Waity Katy”.   Now she’s known as the Duchess of Cambridge!

V.   GETTING BETTER: Believing that you are able to reach your goal is imperative.  Equally important is believing that you can acquire  the ability to reach your goal.  In other words,  focus on acquiring whatever the building blocks of success may be,  whether that means learning new skills or developing relationships with those who can help move you forward.

I’ll be back next week with a few more building blocks for you to incorporate into your plan for success.  Have a great week.

Thanks for reading,

Kim

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Self -Discipline, the Secret of Your Success

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How do you build a successful life and business? Good fortune helps tremendously,  but it is possible to if not actually create your own good luck,  then create the drive needed to build the best life possible.  Business coach and strategy consultant Dan Kennedy advises that we develop self-discipline.  To help our understanding of the concept, he breaks self-discipline into four parts:

Will power

Will power is the core of self-discipline.  It’s like a muscle and if we want to develop that muscle and ascend to self-discipline,  then practice is required.  As with running or weight lifting,  start small and gradually build to more challenging work.   Making yourself vacuum and do laundry could be a good place to start,  if those tasks bring out avoidance behavior in you.   Speaking of exercise,  scheduling and completing a certain number of weekly workouts is another way to simultaneously build our will power and physical muscles.   Set up a rewards program when important milestones are achieved.  Massages and facials are nice relaxing gifts to yourself.

Awareness

Value and respect time and boundaries,  your own and that of others.  Cease immediately selfish and controlling behavior.  Appreciate that everyone has responsibilities that very likely must be completed within a certain time frame.  Calculate  in realistic terms how long it will take you to travel from point A to point B,  for example,  and give yourself the appropriate time to reach your destination at the appointed hour.  The pay-off to your reputation will be significant.

Decision

Kennedy notes that all achievement is fueled by decision-making.  If we acknowledge our priorities and then decide to make those priorities a reality,  then we will do what is necessary to ensure their creation and sustainability.   Self-discipline is integral to decision-making.  Refusing to exercise self-discipline has deleterious consequences.

Should we decide to not decide,  we table decision-making indefinitely and never become a responsible and productive adult.  If we are paralyzed by the process of decision-making,  we become trapped in a vortex and squander all opportunities to utilize or attract good fortune.  Such an individual becomes a wastrel.  Decision-making is goal setting and all self-disciplined individuals identify and pursue goals.

Action

Kennedy points to three kinds of action,  which I interpret as an arc: planning,  implementation and completion.  Once the decision is made,  a plan is then created,  to give yourself a road map and timetable to bring your goal into reality.  In business,  one would think strategy and action planning.  Next,   implement your plan and see it through to completion,  making any necessary adjustments along the way.

This is the point at which self-discipline becomes essential.   As we all know,   many initiatives are begun with great enthusiasm,  but not all are completed.  Give your self-discipline a fighting chance and set SMART goals for yourself:  specific,  measurable,  attainable,  relevant and timely and then create a strategy and action plans that make achievement of your goals a likely possibility.  If you anticipate obstacles,   build into your strategy a way to overcome them.

Self-discipline is the foundation of a successful life and it brings many rewards,  not the least of which is integrity and authenticity.  I would consider those attributes to be the most desirable personal brand.

Thanks for reading and Happy New Year,

Kim

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Eight Leadership Styles. Which One Is Yours?

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When assuming a leadership role,   one does what is required in that position at the time.   There is no road-map because leaders must respond to events as they occur,   as they simultaneously champion projects developed by members of their team,   push through selected personal initiatives and follow through with worthy projects that started before their regime.   Most of all a leader must be versatile,   possessed of good judgment and more than a little lucky.

Nevertheless,  we all have our strengths.   Some of us are super strategists,  or change agents.  Others are great with process and operations,  we intuitively know how to get things done efficiently.  Still others are master communicators: deal-makers,  negotiators or coaches.

How does one rise to leadership,  take the reins and succeed when certain key projects call for talents outside of the natural skill set? Good judgment will encourage the leader to recognize what is beyond his/her expertise and delegate such tasks to better qualified team members.   Further,  the leader is advised to acknowledge team members who step up,  because recognition builds loyalty and the productive can-do spirit of a high-functioning team.

Leadership development specialist Manfred F.R. Kets de Vries,   author of “The Hedgehog Effect: The Secrets of Building High Performance Teams” (2011),   has identified eight leadership competency archetypes for us to ponder.   Do you recognize yourself in one?

The BUILDER approaches leadership as an entrepreneurial activity.  This leader longs to create a tangible legacy.

The CHANGE AGENT loves to ride in on a white horse and clean up a mess.   Re-engineering is the preferred activity.

The COACH derives great personal satisfaction from talent development and knows how to recognize the strengths of team members and get the best out them.

The COMMUNICATOR,  like former presidents Bill Clinton and Ronald Reagan,  loves being on stage and knows how to influence people.

The INNOVATOR is able to sort through difficult problems and devise creative,  yet practical solutions.

The NEGOTIATOR is highly gifted at recognizing,  selling and bringing to the organization lucrative new business opportunities.

The PROCESSOR is an operations expert who will make the organization run like a well-oiled machine.  This leader will institute systems that support the organization’s objectives.

The STRATEGIST has the vision to recognize which goals and strategies the organization would be wise to pursue to ensure its future growth and sustainability.

Merry Christmas and thanks for reading,

Kim

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Scalable: Add A Wholesale Distributor to Your Product Sales Channels

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Are you a Freelance solopreneur who has a tangible product to sell,  one that you feel is ready to get into the hands of many more customers? You have an efficient and reliable means of production worked out:  you may manufacture it yourself,  or have a great team working for you,  or you have a reliable wholesale source who sells to you at a competitive price.  You fulfill requests for product on time and seldom back order.

The product is sold on your company website and is also available in a network of local stores.  Sales are brisk and there are lots of reorders.  You come to see that without wider distribution,  you are losing money.  You conclude that it is time to look for a third sales channel,  a wholesale distributor .

Congratulations! Selling your product through a wholesale distributor is a big step,  a real validation of your business acumen.  Be a real pro and take a minute to understand what will persuade a wholesale distributor to include your product in their mix.

A distributor is a middle man who makes money from products he sells to a wide range of retail outlets,  so he will take on only those products that he expects to sell quickly.   Show that you are a good risk by demonstrating healthy product sales both from your website and at retail outlets.  Be prepared to sell your product to the distributor for less money than you sell to retailers.  The distributor needs to see a certain profit margin before he takes you on.  Moreover,  the distributor must buy inventory and so must invest in much more product than a typical retail establishment.

The advantage for you is that your product will be much more widely available.  Another advantage for you is that many more retailers will stock your product when it is available through a wholesale distributor,  because they prefer to purchase a wide array of merchandise from a limited number of vendors.  It is too time-consuming to deal directly with many small vendors,  interacting with numerous salespeople and invoicing each separately.

Distributors also prefer business owners who have multiple products,  because it is favorable to their administrative costs.  It is easier to sell several products from one company,  so the more products you manufacture for sale,  the more attractive you are to a wholesale distributor.

When your sales are strong and the time you spend selling individually to retail outlets becomes unwieldy,  it is time to contact wholesale distributors to see if you are considered a good prospect for them.  Ask the retail establishments to whom you sell who you should contact and ask for a reference.

Thanks for reading,

Kim

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The Unwritten Rules of the Business Christmas Party

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It’s countdown to Christmas and you may have already been to two or three parties by the time this post is published.  I will have been to three and one was at a business association.  I had a nice time.  I met a few people,  found out a few things about what is on the horizon for the association and got to know the president a little better.

In other words,  the Christmas party went as planned.  When attending a business Christmas party,  plan is the operative word.  Whether the party is hosted by your company,  a client,  or a business or professional association,  relax and enjoy the event,  but remember that you are at work.  Focus less on revelry and more on building or renewing relationships.

Always remember that you are being watched and evaluated,  because Christmas parties have a long-standing reputation of providing a stage for outrageous behavior.  Assume that those in attendance are waiting for someone to obviously over-indulge on alcohol,  or maybe slip out of the door with someone other than her husband.  Walk in the door making a good impression by following the requested dress code.  When none is specified,  wear whatever business attire means in that organization.

Create an agenda for the business Christmas parties you attend and polish your elevator pitch.  Besides chatting with your contact at the organization  (or your boss,  if you are an employee),  make a list of two or three other presumptive party guests that you would like to speak with,  whether or not you’ve met them,  and questions you’d like to ask.  However,  do not try to consummate a deal at the party.  Aim to set up a time to follow-up at a later date.

Because alcohol is inevitably involved,  it’s best to implement your action plan while everyone is relatively sober.  Arrive early.  Get your introductions made and have important conversations as early as possible.  Have maximum one alcoholic beverage and then drink mineral water with a slice of lime or lemon,  so that it looks as if you are having a cocktail,  to prevent yourself from drinking too much.  Leave sort of early.

Along with your must-meet list,  extend yourself and meet others.  When you see someone standing alone,  walk up and introduce yourself.  Start a conversation by asking if they come to this party regularly.  Meeting and greeting are the essence of every party.

When Christmas party invitations arrive,  recognize them for their potential networking value.  Think of a business Christmas party like a conference that doesn’t have presentations,  where you can meet or maybe reconnect with colleagues,  meet a new strategic partner or clients.  Yet do not make the mistake of talking too much business at the party.  Career coach Kathleen Brady,  owner of Brady and Associates Career Planners,  advises that  at the party  “You’re trying to create on-ramps to build new relationships.”  Now go have a good time!

Thanks for reading,

Kim

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How to Delegate Successfully

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Christmas season notwithstanding,  I am busy this December and it feels so good! Catch my act on Wednesday December 4 when Dalya Massachi of  “Writing Wednesdays” and I talk about the benefits derived when nonprofit leaders write a business plan for their organization.  3:00 PM EST,  2:00 PM CST,  1:00 PM MST,  12:00 PM PST FREE! Register at http://writingtomakeadifference.com/writing-wednesdays

Readers in the Boston area may want to direct clients who are leaders at nonprofit organizations to get essential how-to information on business plan writing at my popular workshop “Become Your Own Boss: Effective Business Plan Writing”.  We’ll meet on three consecutive Wednesdays,  December 4, 11 & 18  5:30 PM – 7:30 PM at Boston Center for Adult Education 122 Arlington Street Boston MA 02116.  Register at http://bit.ly/1bP4uw9 or call 617.267.4430 class ID #10190.

Busy people must learn how to delegate if they intend to get things done.   Often,  there are not enough hours in the day to allow one person to do everything.  Productive people come to know that delegating is necessary if we are to move forward.  Productive people also know what can and should be delegated and how to accomplish that effectively.  What is outsourcing but delegating to a skilled professional tasks that we ourselves cannot complete,   from website design to public relations to cleaning our homes to preparing the food for a cocktail party?

It can be good for business profitability and healthy for organizational development to share the workload.  When time and energy are scarce,  or when we ourselves do not possess the required expertise,  it makes sense from both a time management and quality control standpoint to delegate that project and remove it from our plate and focus on items that only we can do.  If we hoard all the important responsibilities,  it can lead to real or perceived controlling behavior and that is counter-productive.  How to delegate successfully is an important skill and it begins with setting priorities.

Delegate responsibilities and not just tasks  Rather than merely assigning work to someone,  which limits the sense of ownership,  promote buy-in to the project at hand and loyalty to you and delegate the responsibility for leading an element of the project.  Allow that person to shine and display creativity,  analytical ability,  systems and operations talents,  trouble-shooting prowess and whatever else it takes to successfully manage that portion of the project.  You keep an eye on the big picture and do what is necessary to give that person the required resources and authority to do his/her part.

Accept that your way is not the only way   This could lead to some pleasant surprises and a better end result than you envisioned.  Everyone has a unique way of viewing and tackling a responsibility and you are advised to respect those different perspectives and approaches and trust the person to whom you’ve delegated.  Often, there is more than one road to the right solution.  Focus on achieving the desired outcome within the desired time frame.  Never micromanage.

Give clear instructions and sufficient information   Explain the big picture of the project and how the delegated element fits in.  Provide project specifications for what will be delegated and confirm that the person understands.  Make sure that the person has the authority to do what is necessary,  along with the budget, whatever staffing or other resources.  Be clear about milestones and the project due date.  Be available for help,  if necessary.

Teach yourself how to recognize when to delegate a project or elements thereof by first setting goals and objectives for your business,  backed by strategies and action plans that will ensure their realization.  Be candid about your strengths,  weaknesses and the time line.   Outsource/ delegate those responsibilities that you cannot do and focus on the end result.  Build a solid team that is ready to help you achieve your goals.

Thanks for reading,

Kim

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Leadership Starter Kit

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Christmas Season notwithstanding,  I am busy this December and it feels so good! Catch my act on Wednesday December 4,  when Dalya Massachi of  “Writing Wednesdays” and I talk about the benefits derived when nonprofit leaders write a business plan for their organization.  3:00 PM EST,  2:00 PM CST,  1:00 PM MST,  12:00 PST. FREE! Register at http://www.writingtomakeadifference.com/writing-wednesdays

Readers in the Boston area may want to direct clients who are leaders at nonprofit organizations to get essential how-to information on business plan writing at my popular workshop “Become Your Own Boss: Effective Business Plan Writing”.  We’ll meet on three consecutive Wednesdays,  December 4, 11 & 18  5:30 PM – 7:30 PM at Boston Center for Adult Education 122 Arlington Street Boston 02116. Register at  http://bit.ly/1bP4uw9  or call 617.267.4430 class ID# 10190.

Congratulations,  you have been named project leader of a prestigious assignment.  You are thrilled to the gills,  but also apprehensive.  You have practical experience,  creativity and enthusiasm,  but you are not quite accustomed to such a front-and-center role.

You’ve scheduled a meeting to bring everyone together for the project kick-off,  where roles and responsibilities will be discussed,  timelines established,  milestones identified and important success factors and potential stumbling blocks will be acknowledged.  You know this is where you establish your bona fides and stake out your claim as the leader.  You are in charge and ideally you will project good natured authority and not arrogance or insecurity.  You are 20 years younger than several project team members.  How do you get this right ?

Introduce yourself

Welcome the team and thank them for participating on the project.  Express that you are very happy to work with such a talented and experienced group of professionals.  Without bragging,  state your professional experience as it relates to the project,  to let the group know that you are qualified and that they have every reason to trust your judgment and expertise.

Team introductions

Invite team members to participate in the standard round robin of introductions.

Confirm the project deliverables and due dates

Establish the expectations and begin to assign roles and responsibilities,  milestones and timelines.  Encourage team members to have a say in this process,  as they know more than you about how departments interact,  unspoken protocols and overall how to get things done.  Be secure enough to accept their suggestions,  as it will promote your credibility and earn you respect.

Ask questions

Pose questions that allow team members to contribute to the decision-making process and telegraph that you value their expertise.  Let team members share their knowledge.  Avoid being a know-it-all.

Listen carefully

Make team members feel heard and you will earn their confidence,  respect and loyalty.

Be humble

Team members must believe that you are qualified to lead the project,  but take care to portray yourself as a team player and a leader who wants to make everyone involved look successful.

Be empowering

Champion good ideas that are presented by team members,  and not just your own perspectives,  and you will build the team’s enthusiasm for and commitment to the project.  Respect and value the perspectives and recommendations that deep experience and long tenure bring.  Some ideas may fall by the wayside when explored in detail and others may turn out to be brilliant. Your tenured team members have the ability to make the project successful. Whatever happens,  empowering team members builds respect and loyalty and makes you look like (and be) a good leader. Remember also to be publicly generous with compliments.

Thanks for reading and Happy Thanksgiving,

Kim

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Business Planning for Nonprofit Organizations

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A successful nonprofit organization requires not only a vision and mission that resonate,  but also a good business model and well thought out operational,  marketing and financial plans.  There must be a sufficient number of constituents in need of programs and services that the organization would provide.  Planning to ensure growth and sustainability into the future must be carried out.

Over the last 5 years or so,  foundations that make major grants to nonprofit organizations have begun to require that aspiring recipients submit a business plan in the application materials.  Apparently,  a proliferation of grant requests has prompted many deep-pocket foundations to demand evidence of viability and responsible leadership and management in nonprofits they agree to fund.

The goal of nonprofit organization leaders is to ensure that all programs and services offered by the organization reflect its mission and are expertly delivered.  The organization must attract a desirable number of constituents,  be fully staffed and operate at optimum capacity.  Good relationships with donors must exist and sources of reliable funding must be in place.  The leadership team should have reason to be optimistic about the organization’s ongoing viability and relevance within target constituent groups.  A business plan (and strategic plan) will see to it that nonprofits put those building blocks in place.

Business plans differ from strategic plans in that the focus is on finance.  A start-up nonprofit organization in search of initial funding,  or an existing nonprofit that has plans to expand or upgrade programs,  services,  capital equipment or office facilities will find that developing a business plan will better demonstrate the organization’s viability to potential major donors and strengthen the case for financial support.

When preparing to write the business plan,  the leadership team will take a big-picture 360-degree view of all aspects of the organization,   including the social and economic environment in which it operates,   target constituents groups,  the business model as it relates to the mission,  the financial health of the organization,  specifics of the proposed expansion or upgrades,  the funding request and details of how funds received will be utilized.  The business planning process will also encourage leaders to:

  • Connect the dots between the mission and programs and services delivered
  • Acknowledge operational efficiencies and strengths
  • Establish performance metrics for programs and services offered
  • Clarify the profile of the constituents and identify emerging needs for services and programs
  • Update and refine marketing and communication strategies and channels
  • Identify short and long-term funding needs and identify where funds will be designated

In small organizations,  the Board of Directors,  along with the Executive Director,  will write the business plan.  In larger organizations,  the Development Director,  Operations Director,  Finance Director and other senior staff share the responsibility.

The business plan for your nonprofit will compel the leadership team to acknowledge and address critical questions that face the organization and demonstrate to potential major donors that plans are underway to overcome challenges,  exploit opportunities,  improve constituent services and more fully express the organization’s vision and mission.

For more information on business plan writing tailored to nonprofit organizations,  please tune in to Writing Wednesdays on Wednesday December 4 at 3:00 PM EST  (2:00 PM Central, 1:00 PM Mountain, 12:00 PM Pacific)  http://www.writingtomakeadifference.com/archives/4007

Thanks for reading,

Kim

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The Price Is Right

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Pricing is an art and a science and pricing intangible services is especially challenging.  Setting the right price for a product or service is a critical step in building a profitable business.  Quite simply,  you must charge enough money to not only cover your production or procurement costs,  but also reflect the value of the product or service provided and the value of your brand,  i.e.,  what clients will pay for the confidence derived from doing business with you.

But pricing a service is tricky and unless you are for some reason privy to what others may charge for similar services,  you are in the dark.  You probably do not know what competitors are charging,  so benchmarking is impossible.  The price that clients will pay you hinges on what they feel the job is worth and what they feel that you are worth.  Your mission is to avoid being perceived as a commodity,  vulnerable to the cynical bargaining down of your price points.  There are guidelines to follow when creating a pricing strategy.

Step One is understanding how clients perceive the value of your services and of your brand (reputation).  A “cost-plus” pricing strategy,  which is tied to what it costs to produce or purchase at wholesale the product or service to be sold is inadvisable,  according to pricing experts.  If customers are willing to pay $100.00 for a product or service that costs $10.00 to provide,  then charge what the market allows.

Step Two is understanding how the client wants to purchase your service.  Much will depend upon the type of services you provide and whether this is a one-off project,  or an ongoing retainer arrangement.  Whenever possible,  avoid charging an hourly rate and instead  “bundle” products and services into a project fee.  Do not give clients who are so inclined the ammunition to nickel and dime you by scrutinizing duties that you invoice and arguing over how long it should have taken to perform them.

Step Three is establishing different levels of service available: basic,  upgraded and premium.  Jean-Manuel Izaret,  a partner at the management consulting firm Boston Consulting Group,  insists that it is always best to give clients a choice,  whenever possible.

Step Four is targeting clients who value your brand and your services and are willing to pay a premium to do business with you.  The size of your available market will shrink, but each client will be worth more money to you.  It will also be easier to make the sale,  because this group of prospective clients values you and what you can do.  Access this group through networking and self-promotional activities: those who have heard your webinar,  read your blog or newsletter,   have received a recommendation from a trusted referral source,  have read a favorable article about you in the press—here is where your PR and relationship building activities can pay off.  This group of clients will have faith in your expertise and will agree to pay premium (but fair) prices at contract signing time.

Step Five is knowing your competitors.  It may be impossible to learn what they charge,   but you can learn the value of their brand.  Are you swimming with powerful fish,  or those about your size and strength?  That could impact your pricing strategy,  but only if clients are familiar with what the big fish charges.  It is unwise to price your services low in the presence of a competitor with a strong and well-regarded reputation.

Step Six is to benchmark against competitors in different parts of the country by checking the MOBIS contract prices offered to the federal government.  This is a useful way to get a credible ballpark number for setting prices.  Further,  you will see what types of services are being offered and how they are bundled.  http://www.gsa.gov/portal/content/245439

Thanks for reading,

Kim

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Year End Tax Planning 2013

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Lo and behold it is the first week of November and time for you to begin your year-end tax planning.  If you have an accountant or bookkeeper,  pick up the phone and make an appointment.   If you perform these functions yourself,  then take action now,  before Thanksgiving and Christmas ambush you.  Your mission is to minimize the tax bill payable in April 2014.

Let’s start with your place of business.  Do you work from home?  Then consider taking the home office deduction.

Next,  take a look at revenue generated in 2013.  If this was a lucrative year,  you are advised to push income into 2014,  especially if you expect next year to be less flush.   Study the matter before you invoice late 4th quarter projects.  Call clients to confirm that it will be OK to invoice in January.  Many are not on a January – December fiscal year,  so deferring payment until January may not be a problem.

If you expect no substantive change in revenue generated from 2013 to 2014,  consider investing in your business and creating additional tax write-offs this year,  rather than next.  Remember also  to make a contribution to your Solo 401K,  IRA or Roth retirement account.  Freelancers who have already celebrated their 50th birthday are eligible to make a maximum $22,000 tax-deferred catch-up contribution to their Solo 401K each year,  on money generated from self-employment only.

Further,  those who’ve had a good year and hold a Solo 401K may deposit up to 25% of their income into the account.  The tax-deductible and tax-deferred income limit is $49,000 for those under 50 years and $54,500 for those aged 50 years and older.  See my post https://freelancetheconsultantsdiary.wordpress.com/2010/11/09/the-self-employed-401k-plan/  for more information.

The Affordable Healthcare Act must now be factored into your year-end tax strategy.  Freelance soloprenuers who qualify for a health insurance subsidy (approximate income maximums of $45,000 for a single person household and $94,000 for a family of four)  need not worry about the subsidy being treated as taxable income.  However,  if your insurer refunds to you a portion of premiums paid,  that refund will be taxable and a 1099 will be sent.

Healthcare Act subsidies function to limit out-of-pocket  monthly insurance premium costs for those who generate revenues below a certain threshold.  The subsidy may be requested as follows:

1. Premium assistance credits, to reduce the monthly cost of health insurance

2. Up-front lump-sum payment

3. Tax credit on Form 1040, to reduce any taxes owed and perhaps create a refund

A statement that documents any subsidy will be issued and there will be an annual reconciliation.  If you underestimated your 2014 income,  you will be required to pay back a portion of your subsidy.  If 2014 income was overestimated,  then a refund will be somehow issued.  Visit the website of either your state or federal health insurance exchange to obtain information about how to estimate your 2014 income.

YOU will be responsible for monitoring your annual income and ensuring that you receive the correct subsidy.  Ben Tallman of Tallman Tax Service in Atlanta recommends that Freelancers monitor revenues and expenses at least quarterly and contact their health exchange and get themselves re-certified in the event of a large increase in income generated,  to reduce the chance of facing a subsidy claw-back at tax time.

Thanks for reading,

Kim