Newsletter, March 2007

Please note that the SBBA list server and newsletter is for bookkeeping related content, and not for personal postings or advertisements of any kind. All submissions will be included at the discretion of the newsletter committee and the editors.

SECRETARY’S MINUTES

The January meeting of the Santa Barbara Bookkeepers’ Association was held at Mullligan’s Café on Tuesday, January 16, 2007.

President Karen Mora called the meeting to order, and then asked for any guests to introduce themselves.

The free lunch was won by Helene O’Connor.

The American Payroll Association meeting for January 25^th at Mulligan’s was announced; Phyllis Smith from the IRS was guest speaker.

Rosemary Chidester, SBBA Secretary

BOOKKEEPER CERTIFICATION

Sandra O’Meara, CPA will present information on “The Certified Bookkeeper Program” from the American Institute of Professional Bookkeepers. Requirements for sitting for the national exam and self- study materials available for the Certified Bookkeeper Program will be covered. Additionally – for fun - we will have a short quiz representing sample questions from the certification exam! This is an opportunity to learn how you can get recognition you deserve as a professional and enhance your knowledge and career!

Some Ideas for Financial Investments for the Future:

Its that time of year again! If you are considering financial investments for the future, you will likely want to consider them before April 15th of this year.

Of course that is the end of tax season! Most investments can be applied to either 2006 or 2007, but will have to be set up before the April 15 deadline if you are considering using these investments as a tax deduction for 2006.

Both stocks and bonds are great ways to help plan for your future, although each has their own reason for being a sound investment. Before jumping into purchasing stocks or bonds, consider the positives of both and then decide which is best for you and your family.

Stocks

If you are planning to invest in the stock market, you will want to have a company or companies in mind that you think will do exceptionally well over the next few years. Remember that this can be tricky because if a company does really well, you can really beat the market, but if a company does poorly or only remains even, your stock won't produce much results as far as investments and long-term savings go.

Keep in mind that stocks are extremely variable and typically volatile, so if you are looking for a steady, secure investment, stocks may not be for you! One good note about stocks, though, is that they can be traded in and reinvested in other avenues if you feel like your stock isn't getting the retirement investment you hoped for.

Bonds

Unlike stocks, bonds are issued for a given period of time by a financial institution and will receive a fixed rate on their investment. They vary significantly from stocks where a stockholder's share might increase 6 fold over a period of 6 months, a bond will only steadily increase in value, and may take up to 30 years to mature, or reach full value.

Of course this works out great if you don't plan on touching the bonds for years, but if there is a chance you might need to cash in your bonds, you might lose out. As well, if you forget about your bonds after the maturity period, they may cease to gain interest and therefore you are just holding onto money that isn't increasing in value!

Remember that there are different kinds of bonds available. You can purchase bonds through a financial institution. These are a bit riskier, as you are taking the risk that on the maturity date the institution will be able to pay in full for the bond. The safest type of bonds are government and corporate bonds, as they are backed by the government, although they are still not insured by the government.

Every investment carries a risk, but it is important to weigh your options before taking that risk!

Sincerely,

Mark Schneiderman
Mark Schneiderman Insurance
msinsurance@sbcglobal.net

CLEAR EXPLANATION OF TAX CUTS

Interesting point of view...worth the read........

David R. Kamerschen, PhD
Professor of Economics
University of Georgia

Sometimes politicians, journalists and others exclaim; "It's just a tax cut for the rich!" and it is just accepted to be fact, without questioning it. But what does that really mean? Just in case you are not completely clear on this issue, the following might help.

Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for beer and the bill for all ten comes to$100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1...
The sixth would pay $3...
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each
should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings). The seventh now
pay $5 instead of $7 (28%savings). The eighth now paid $9 instead of
$12 (25% savings). The ninth now paid $14 instead of $18 (22%
savings). The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man," but he got $10!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact,
they might start drinking overseas where the atmosphere is somewhat friendlier.