Guide to Reading Body Language

Body language communications over half of the meaning of in-person conversations. Many people don’t realize this, and even more of us don’t realize that we already instinctively know what people’s body language is telling us. When that little shade of doubt about a person starts to creep in, we call it a gut feeling, but it is more a case of correctly reading someone’s body language, but not being able to pinpoint where that knowledge is coming from.

We’ll discuss some of the most common and universal body language signs, but it’s important to note that the ability to consciously pick up on even one or two of these signs will put you way ahead of the curve when it comes to personal and business interactions. These skills can provide you and your team with vital information in negotiations, job interviews or other stressful, face to face interactions.

The Shrug

The shrug is an almost universal symbol of “I don’t know what’s going on.” The movement seems basic enough, but it has three distinct parts. The opened hands with the upward facing palms show that nothing is being hidden. The hunched back and shoulders are an evolutionary tactic to protect the jugular from an attack, while the raised eyebrows are a subconscious gesture of submission. Taken altogether a genuine shrug is hard to fake, and the meaning is clear; the person does not know the answer or does not understand what is being asked of them.

The Mirror Images

Body language that mirrors your own is an excellent sign. It means that the person is in tune with what you are saying and is involved and receptive. While this body language sign is often referenced for romantic situations, it has a place in business, too. These reactions are hardwired in us, and so a conversation that is going well, whether romantic or business in nature, will have many of the same body language signs.

The Fake Smile

A false smile can be very difficult to detect in the moment and takes a lot of practice to pick out in daily life. A smile often remains on the face for only a brief moment, so there’s not a lot of time to analyze. However, make a habit of looking at a person’s eyes when they smile at you. If the eyes don’t show crinkles at the edges, then the smile is fake.

A fake smile can sometimes appear almost like a grimace or a bearing of teeth, but it’s not always a completely negative sign. If a person is nervous in a job interview, that would be normal, and a fake smile would be merely polite, not nefarious.

Eye Contact

Eye contact is a vital component to a conversation, but it is so ingrained in us it can be difficult to interpret on the fly. Any eye contact indicates involvement in the topic or person at hand, but this can be interest of either a positive or a negative variety.

Lack of eye contact is a sign of submission, fear or deference. Too much eye contact can indicate an attempt to dominate others, or it can indicate that a person is trying to cover up for a lie by purposefully appearing honest.

The Point

A closed hand with a pointed finger, especially when they insist on waving it around in your face or pointing at a person, is a sign of attempted dominance. The reality of this particular gesture, though, is that it almost always backfires. There’s a reason we’re told it’s impolite to point as children, it’s because most people find it threatening and see that waving finger as a pseudo-weapon.

Those who point with a closed hand often use this as a last resort effort to gain control of the situation. Don’t be fooled by it, if someone is making this gesture it’s quite likely they’re already lost the upper hand, and know it!

The Cross

Crossed arms and legs show that a person is not receptive and open to your ideas. Again, this posture may be one that is adopted out of stress, and so it is not always a bad thing. However, during a negotiation, this is not a positive sign. It shows that the person is unwilling to even discuss new ideas or arrangements, and doesn’t bode well for the outcome.

The Raised Eyebrows

Raised eyebrows often indicate a sign of discomfort, stress or insecurity. This is an exaggerated sign of submission and a practically pathological openness. A person who raises their eyebrows constantly in conversation wants badly to be seen as open, willing, helpful and involved. Whether they are any one of those things, is for you to guess at!

The Power Pose

Most people can instantly tell the person in charge when they walk into a room. This is because someone who is truly in charge knows it, and makes an effort to look like it. A straight back, hand gestures that face palm down and a body position that takes up space are all signs of the person who is really in charge.

Finally, the most important part of interpreting body language is knowing your subject and your context. If you’re in a high-pressure job interview, it is perfectly natural for an interviewee to display signs of stress. A tense negotiation between two firms over a very expensive contract can cause people to behave in an artificially dominant manner. However, if you find yourself having a casual lunch with your business partner and all of a sudden he starts acting different, you might want to check your books or ask a few questions.

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Best Ted Talks on Leadership

Systems crumble when the source of our leadership is weak. Whereas most leaders are born, others acquire these abilities over time. For us to be called great leaders there are certain characteristics that we should portray. For instance, good leaders are always open to the second opinion of others. They have the ability to listen to others and then make rational decisions based on the different views that they might have come across. Also, great management requires us to be firm and steadfast in a particular decision. As leaders, it is our duty to make well-informed decisions and then have the courage to see to it that these choices are brought to fruition. Therefore, to be the best leaders, we ought to be bold.

There lies a lot of management potential, especially amongst the youth. However, the talent is left un-nurtured. Also, there is a particular group of people like us who are already representatives in the corporate world. However, we need to horn the skills we possess so as to be the best in the world. Ted talks come in handy to help corporate leaders like us develop the right competence and mindset; techniques that will help us improve the productivity of our reputable institutions.

How Great Leaders Inspire Action by Simon Sinek

The greatest leaders in the world have one thing in common. They all know what their purpose is as regards to a particular organization. The most successful companies in the world are the ones led by purpose-driven leaders. To inspire others, we ought to make them believe in us. Self-belief is the first step for you and me to become good managers of our reputable institutions. It is when we trust in our abilities that the people around us can follow suit. For us to experience greatness, we have to work hard on achieving our dreams and not the financial results that might come due to increased productivity. We can always achieve everything we desire provided we set our minds to it. As great leaders, it is our duty to make decisions. Most times our decisions may not be popular, but in the long run, they will help bear fruitful. Your belief is the key to your success. When we make other people believe in us, these individuals find themselves also believing in their abilities.

Learning From Leadership’s Missing Manual by Fields Wicker-Miurin

The greatest leaders always provides others with a sense of direction. Hence, it is our responsibility as leaders of today to think out of the box, do a lot of research and even go beyond our daily norm and forge partnerships with other like-minded peers, for the sake of our companies. To be excellent leaders, we are also required to offer our subjects equal opportunity of bettering their livelihoods. As a superb leader, it is your responsibility to ensure that people working under you go for refresher training courses once a while. By keeping up with modern innovations, they will be able to improve on corporate productivity. The greatest leaders are always selfless in character. In addition, to be great company representatives, we have to embrace change mainly because good things result when the corporate systems improve.

Lead Like The Great Conductors by Itay Talgam

Good corporate representation always takes the lead in a particular situation. For us to be the perfect leaders, we are expected to be steadfast in our decisions, possess self-belief so as to be able to command the respect of our juniors. It is our good character and morals that will, in the long run, convince people that they can trust us. Also, we have to let the people around us know how to read the different emotions that we might exhibit time and again. For instance, a simple nod might be a compliment for a job well done. However, a frown proves that there is an underlying problem that has to be sought out.

Everyday Leadership by Drew Dudley

Real corporate management entails taking credit for good work done. Many a time, we as leaders help our organizations achieve something incredible, but fail to let ourselves be praised for it even though we deserve it. By taking credit for great actions, we become better people. We feel motivated to work hard so that we might receive praise from our workmates time and again. Besides, being great leaders requires us to acknowledge and reward the efforts of those that work for us. In this way, we can inspire others to work harder thus boosting the overall performance of our institution.

What It Takes To Be A Great Leader by Roselinde Torres

Great leaders are good predictors of the future. They can see potential loopholes in business deals, something that prevents them from making poor decisions. Besides, they associate with people who offer them with productive advice. To become great leaders, it is our responsibility to align ourselves with people that matter. People that share the same ideals as we are the most recommended. However, we can also do better by surrounding ourselves with a team of people with diverse ideas. When these ideas are integrated, positive outcomes become possibilities. As the primary representatives of your company, it is your duty to take reasonable risks. Most successful leaders of the past and present times have been known to deviate from the norm, and adjust their way of carrying out business on a regular basis. Therefore, to be the perfect corporate representative, you ought to take many risks.

Trial, Error And The God Complex by Tim Harford

As leaders, we might not always know how to solve all the problems our institutions’ encounter. However, this does not mean that we run from our central duties. A good leader is one that can try different things out and acknowledge failure. By failing numerous times, we are in a better position of knowing what not to do so that we can achieve success in the long run. Also, companies function under a particular system governed by some rules and regulations. Some of these policies might happen to hinder the very success of that particular institution. Therefore, as leaders, we need to have the courage of deviating from these norms so that we can be able to explore other possibilities.

To become great leaders, we have to eliminate self-doubt. Being the presidents of companies, we are required to show courage in the delivering of duties so that our associates can be able to trust our every move. The best leaders in the world are ever humble, no matter their accomplishments in life. Despite us yielding immense powers in the corporate society, we have to refrain from all dictatorial tendencies, so as to pave the way for proper communication amongst our peers. Where there is good communication lies success.

Therefore, great leaders pay attention to what they do and are always ready to seek advice from others. Also, they carry out thorough research before making any decisions; a mechanism meant to make them deliver quality output at the end of the day. Besides, they do not align themselves to a particular method of doing things for a long time, even though such a procedure has been proven to be successful over and over again. For a great leader, success comes after making numerous mistakes. Thus, the best leaders dwell on trial and error. Finally, good leaders always acknowledge the successes of others and even go the extra mile of rewarding them. Thus perfect leaders are selfless.

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Steps to Establishing Business Credit

Every business aims to achieve financial stability and eventual business success. For a company to be financially stable, there has to be a flow of money which simply means a balance between income and expenditure. Many companies sometimes require financing for their projects. In the following article, I will give top tips that need to be taken by an entity to establish business credit.

  1. Create your business entity

It entails naming one’s business and stating the function of the firm. The business should always be a separate entity from the owner. Different countries have imposed rules regarding registration of companies. Therefore, it is always advisable to inquire with local authorities. The organization should also undergo the legal processes for creating a business. The legal process takes place in the presence of a lawyer and witnesses. In recent times online registration has also become a standard feature when establishing the business. One may opt to purchase a web domain for the particular business for the professionalism of the firm. Online registration also ensures no copying of the entity’s name.

  1. Obtain a federal employee identification number for the business

All companies are required to have a tax ID Number (also known as EIN).The number entails nine unique digits assigned to the particular business. It is used to open the business’s bank account and forms the basis of establishing a credit score for an individual entity. Every business owns a unique EIN that does not belong to any other business. To get the EIN one can apply online for free or physically visit the relevant bodies to perform this task. Apart from the EIN, the company will also need to obtain licenses for operation.

  1. Open a business bank account

It is advisable for a legally recognized entity to create a bank account that will reflect the cash flow of the firm. The company will be required by the bank to present their EIN and demographics to complete this process. The owner is free to choose the type of account to open for the particular business. For a company to apply for a loan, it needs to have a bank account that is at least two years old.

  1. Apply for business credit card and vendor accounts

For a company to establish a credit history, a credit card is required. The credit card is what the business owner uses to carry out business transactions. It is advisable to apply for a credit card as soon as you obtain a business account. Also, application for vendor’s accounts with vendors that you regularly use is fitting. The vendors will act as a reference point during reviewing of implementation by the lender.

  1. Evaluating and selecting lending sources and type of business financing for the purpose

Before seeking financial aid, the entrepreneur needs to identify the purpose or project for which one requires funds. It is thus important for the owner to take ample time to evaluate all available sources of financing after which, they will then pick the best lending source. It is important to note that selecting a reputable credit source can be an added advantage for the simple fact that these institutions offer a broad range of business loan programs thus giving the client freedom to choose the loan service that best suits them.

  1. Get listed with credit bureaus and obtain credit history

Credit bureaus are entities created for the sole purpose of determining a business’ credit worthiness and credit score. Through data provided by lenders, these companies can tell the credit scores and worthiness. Vendors that report an excellent payment history equals a good credit score. It is important for businesses to make payments on time to get good reviews from suppliers and high credit score. Most companies are listed by more than one credit bureau for comparison of credit scores given by the entities. Usually, a credit score of 650 and above will make the business eligible for a bank loan.

  1. Provide all relevant information

Filling of loan application forms is either physical or online. The entrepreneur is required to gather all the business financial reports inclusive of references and revenue reports. Providing all relevant accounting information will help the lender get a clear picture of the entity’s financial position and relevancy for the loan. Accounting information needed includes; profit and loss accounts, credit references and tax payments sheets. The information should also be up to date.

  1. Always keep your lending agent at bay

The loan agency is supposed to guide the client through the financing process. One is expected to explore all funding options for the type of business they own. With the guidance of a lending agent selection of a suitable loan program should be a walk in the park. Before selecting a loan agent, one should always be sure of their expertise to obtain the best loan deal.

  1. Maintain an excellent personal credit rating

As much as maintaining a good business credit is key to separating the business entity from private property, it is required of an entrepreneur always to have a good personal credit score. Some lending services may at times use personal credit rating as a reference to determine the credit worthiness of the business especially when evaluating the eligibility of small and start up businesses. To obtain a good personal credit score, one should always make timely payments of all debts. For a business to be on the safe side, the owner/owners should have a clean and brilliant credit rating.


To conclude, it is important always to remember that establishing a good credit score for a business takes some time. Smart entrepreneurs should always think about their credit ratings of the entity from the word go. The follow up will include regular and timely payments of debts, updating the business’ accounting information and occasional renewal of legal documents. Obtaining an impressive credit score might not be handy at the moment but might come in handy in the future. A company that is financially secure and credit worthy is a successful business.

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Impact of FASB Lease Accounting Changes

A lot of businesses lease the equipment they use or facilities they operate out of. Leasing is in many cases more preferable than purchasing as it frees a lot of the finances that would go towards buying an asset. Instead of spending cash on capital-intensive assets, a company pays a small fee to lease it and deploys the rest of the money in the business. Leasing has also been a cost-effective way for companies to keep up with the latest technology for their operations. Instead of regularly buying new equipment to upgrade, a lease simplifies upgrading and makes it cheaper.

The manner in which leasing is treated in accounting has been another benefit to companies. The current FASB standard, ASC 840, allows for reporting of leases in two ways in financial statements:
• Operating leases.
• Capital leases.

Capital leases are reported on the balance sheet while operating leases are reported “off balance sheet.” This means that they are disclosed as footnotes in the financial statements. The difference in treatment leads to a possibility of misrepresentation by bad actors in companies.

For example, operating leases don’t contribute to the Return on Assets ratio, which affects how an investor evaluates a company.A company’s management can report substantial leases off-balance sheet to influence their rations favorably.

Changes in Lease Accounting

Due to the loop hole created in how to report operating leases, investors have at times not had a clear view of a firm’s real debt position. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) therefore created a new global reporting standard. The approaches by the two bodies partially converge with the IASB introducing IFRS 16 to replace IAS 17. The FASB replaces the ASC 840 with ASC 842.

Impact of the Changes

The changes in the FASB lease accounting standards will affect businesses in several ways once it comes into effect.
1. Enlarged Balance Sheets
The new standards stipulate that operating leases lasting 12 months or more have to be recognized on the balance sheet. Whether the lessee plans to revert the assets leased back to the owner or not, they are to be recognized as both liabilitiesand assets on the balance sheet.Recognizing it as a liability accounts for the lease payments that have to be settled. Reporting it as an asset represents the value derived from the right of usage.The result is that companies will see their balance sheets balloon as the operating leases are factored in. For a business with heavy lease obligations, this will significantly affect their books. The IASB reports that listed companies have approximately $3.3 trillion in leasing commitments. 85% percent of these leases are currently reported as off-balance sheet.

2. Increased Data Focus
One change in the FASB lease accounting approach is how a lease is defined. Previously, service contracts and lease agreements did not differ in their treatment on the balance sheet. Under the new regime, however, a lease is recognized if there is a right to control the use of an identified asset. A service contract remains as an off-balance sheet item. The implication of this change is the need for data on all the leases that a company holds to begin classifying them correctly. Some service arrangements might become leases in nature once the changes take effect. A significant investment in collecting, analyzing and organizing all the data will become necessary.
Substantial investments will be instrumental in integrating processes that receive any future information on leases. The new standards will not be a one-and-done issue but rather an ongoing engagement. As such, infrastructure that continuously keeps collecting the required data for compliance is necessary.
Companies will need to hire more staff to handle the increased workload occasioned by the growth in data.

3. Changes in Day-to-Day Operations
Different departments in an organization will now have to collaborate more. The need to manage identified lease-related issues across various departments will increase significantly. For example, an accounting department will have to work more closely with a real estate department to detect and report leases better. Staff will need training on how to comply with the new models of recognizing revenue. The training will need to equip employees with the ability to define what constitutes a lease and assess compliance. If the staff understand the implications of classifying an item as a lease they can uncover any potential areas that open the firm up to non-compliance.

4. Better Disclosure
The core driver in instituting these changes was the need to create more transparency in how companies present their financials. The new standards call for companies to transfer the leases on their books, providing a better view of their actual positions.

Another effect of the change in standards will be in how companies measure their financial metrics. Operating leases that go on the balance sheet will influence various ratios. Firms will have to reevaluate how they interpret these ratios in assessing their performance. The metrics that companies promote to investors will also need reassessing.

5. Sale-Leaseback Changes
Sale-leaseback agreements are different under the new standard compared to the current standard. Under ASC 842, for a sale to be classified as having occurred it must meet the new requirements for recognizing revenue. The current standard lays the burden of accounting for a sale-leaseback on the seller-lessee. If a sale does not occur from the perspective of the seller-lessee, then the buyer-lessor doesn’t account for it. In a case of a “failed sale” both the seller-lessee and the buyer-lessor account for any payment on the asset as a financing. This alters how companies will approach sale-leasebacks going forward. Those that have been deploying it as a significant part of their strategy will face considerable changes.


The new FASB lease accounting changes bring greater transparency into business financial reporting. It will be harder for firms to account for their lease liabilities and exposure in an inappropriate manner. The changes will impact various elements of business from the investors to employees. More data on leases will be required to comply and maintainthe requirements moving forward.

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What’s the Difference Between Fair Market Value Leases and Capital Leases?

Leasing is often thought of as a simple rental agreement: A company makes payments on a piece of equipment and returns it when the agreement ends. While it’s true, that is one type of lease, it is not the only leasing option. Leasing agreements go by many names, but two of the most common types are fair market value (FMV) leases and capital leases. Which one is the best option depends on the type of equipment and the nature of the business leasing the equipment. Both have benefits for both the lessee and the lessor.

Fair Market Value Leases

Also known as operating leases, or “true leases,” these types of agreements involve essentially renting the equipment out for a set period of time, with an option after the agreement ends to purchase the equipment at fair market value — hence the name.

The equipment is never purchased during the length of the lease, and so it does not appear on a company’s books as either an asset or a liability. As far as accounting goes, the lessee treats the lease payments as a deductible operating expense.

In other words, an FMV lease doesn’t create more debt for the company. It’s written off as an operating expense, which doesn’t affect your return on assets or your debt ratio at all. It frees up a business’ credit lines to pursue other financing if necessary.

Fair market value leases are ideal for technology and other industries where the equipment outdates itself fairly quickly. FMV leases are often used in the Industrial market when a specific machine is needed for a short term or specific project and may have not utility in the shop after its initial use(s) They tend to be shorter term with lower monthly payments. When the lease is up, the lessee is under no obligation to purchase the equipment — though it can, if the purchase makes sense. Otherwise, the lessor will either resell or dispose of the equipment. It’s worth noting that the FMV purchase price isn’t determined until the end of the lease, which is the opposite of how a capital lease works.

Capital Leases

Capital leases are known by many names — Lease Purchase, finance leases, nominal leases, sometimes even “buck-out” or “dollar-buyout” leases. The reason why is pretty simple: Once the leasing agreement is up, the lessee purchases the equipment for a nominal price (sometimes as low as $1). This is not an optional purchase — it is planned from the beginning.

For all intents and purposes, a capital lease is a loan. There are fixed payments, and the lessee has ownership of the equipment during the lease, which allows it to depreciate the equipment and even take advantage of Section 179 incentives and Bonus Depreciation. Consequently, the lease terms tend to be longer, with higher payments — though this is not always the case. In some situations, an unwitting business owner may find their lease agreement includes a large balloon payment at the end of the agreement — effectively negating any savings found in a low interest rate on the lease agreement.

Capital leases are very defined — in fact, to be considered as such, they must meet at least one of the following four criteria as outlined in Statement 13 from the Financial Accounting Standards Board:

a. The lease transfers ownership of the property to the lessee by the end of the lease term.

b. The lease contains a bargain purchase option.

c. The lease term is equal to 75 percent or more of the estimated economic life of the leased property.

d. The present value at the beginning of the lease term of the minimum lease payments equals or exceeds 90 percent of the excess of the fair value of the leased property.

If the lease meets none of these criteria, it is treated as an operating or FMV lease.

Which is the Best Option, a Capital or FMV Lease?

Both types of leases have their benefits for both the company providing the equipment and the business leasing it. Ultimately, the nature of the equipment and the industry will have a major influence on which is the better option for both parties. Talk to your accounting department and reach out to EFG to learn more about leasing options and creating a financing partnership for your customers!

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Understanding the New Lease Accounting Rules

Businesses of all types keep accurate and efficient financial records, in part because the government requires them to. Most companies keep excellent receipts and records and are meticulous with what should and should not go on their balance sheets and their tax returns. Since most businesses hire the services of a professional accounting firm, knowing what documents to maintain is fairly straightforward. Keeping up with recent changes in the law, however, is sometimes a bit more challenging. Although corporations and other businesses usually have their own accountants and can keep up with these inevitable changes, it is still important that CEOs, COOs, and other managers are aware of them as well. Whether your accountants are in-house or outside professionals, keeping up with recent tax changes is a must for any business wishing to grow. Doing so not only affects your bottom line, but prevents possible loss of income in the future.

Basic Changes in 2016

When you are an accountant, you already know how to track certain expenses, including lease expenses, but recently there have been changes in how lease expenses are recorded which affect lessees specifically. Until 2016, most lease expenses were not considered operating expenses, which means they had to be included on the balance sheet of lessees in a footnote as a table of future payments. This was burdensome because many firms and corporations lease much of the equipment that they use. The new changes, which are scheduled to go into effect in late 2018 at the earliest, enable businesses to include lease expenses as operating expenses. Instead of being on a business’s balance sheet as a footnote, lease expenses will show up on the books as an operating expense, which means, among other things, that businesses can track their performance.

The process of calculating lease liabilities and amortization will change somewhat once these new laws go into effect. For the majority of leases involving real estate, lessees are going to have to report a straight-line lease expense when recording their income statement. Other leases, including vehicles or equipment, would require lessees to report the asset’s amortization separate from any interest on the lease liability. The trend of leasing equipment is still a popular one, so one of the many concerns of businesses and corporations is if their accounting software will be able to handle these new changes. However, there are likely to be updates to current accounting software, as well as new software coming out, that can handle the changes.

The Ins and Outs of These New Changes

Although there are numerous changes included in this new law, the main change centers on the way leases are entered on the balance sheets of corporations and other businesses. Lease expenses will be considered an asset or non-debt liability, as directed by the U.S. Financial Accounting Standards Board (FASB), which sets non-governmental entities’ accounting standards in the U.S.. For all public companies, these changes will take effect on December 15, 2018, but for private companies the date is one year later on December 15, 2019. The changes taking effect are the result of two things: (1) a Securities and Exchange

Commission (SEC) requirement that all liabilities and assets be included on a company’s balance sheet, and (2) a need to provide investors and other financial report users with decision-useful information.

There are numerous ways to find out additional information on these new lease laws, including going to websites such as, and researching them on numerous governmental websites as well.

Some Things in the New Law are the Same

Reviewing the new law shows that changes will occur, but many things will remain exactly as they were before the law was developed. These include: cash flow savings, tax benefits, asset management, capital needs, flexibility, and convenience.

The changes center mostly around the area of financial reporting benefits, i.e., operating leases. Before, lease expenses improved ROA, ROE and debt ratios, and required an off-balance sheet obligation and asset as well. The new changes will have little impact on financial measures and debt ratios, will require a non-debt liability listing on the balance sheet and an asset amount that is less than cost, and require the obligation on the balance sheet to be lower than debt or even cash due to residual-type investment.

Some Final Thoughts

Essentially, both the current law and the new law list two types of leases – operating leases and finance leases. Operating leases show single-level rental expenses in the P&L, as well as list its liability as a non-debt liability. Finance leases require costs that are front-loaded and a split in interest costs and amortization. Whether or not an organization will be required to recognize both types of leases on its balance sheet depends on whether they use the reporting standards of the International Financial Reporting Standards (IFRS) or the U.S. generally accepted accounting principles (US GAAP).

It is always important to keep up with new accounting and tax laws, regardless of the area they deal with. Since most companies have professional accounting firms that they trust, those firms usually inform the businesses they represent of at least the most important changes and how those changes may affect the way they do business. Since all of these changes will be retroactive, it is even more important to familiarize yourself with them. And, since credit analysts and lending institutions already recognize the operating lease obligation that is included in the footnotes, this new law should not affect a corporation’s credit rating.

More “do’s” and “don’ts” regarding the new lease accounting laws can be found through professional organizations designed for accountants and other financial professionals, various accounting websites, and, of course, through the government. There are also documents available that will educate you on the benefits of leasing versus financing your equipment, more details regarding the specifics of the new law, and the reasons the changes were made in the first place. As with many other areas of interest these days, finding out more information on the new laws is easier and faster if you start online.

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Take Advantage of Section 179 and Bonus Depreciation Tax Deductions for Equipment Purchases

Major equipment purchases are also a major investment for your business. While they are essential for your company to function, they can also be a drain on your capital and your yearly profits, especially for new businesses. However, the IRS offers businesses tax deductions that both small and large businesses alike can benefit from.

Both Section 179 and Bonus Deprecation allows business owner to accelerate the IRS asset deprecation expenses, decreasing taxable income resulting in a lower tax payment.

Under Section 179, instead of depreciating your new equipment over its useful life (which also gives you tax savings), you can elect to deduct the total cost of the equipment in the year (up to $500,000 in 2016) you purchase and put it into service. Bonus depreciation provides further incentives in the year you make a purchase.

Section 179 covers a wide variety of business purchases (from machinery to home office equipment), but it does have limitations. There is an overall spending cap of $2,000,000 in 2016, as well as business income limit. Your Section 179 deductions cannot exceed your taxable business income. However, any amount exceeding this limit can be rolled over into the next year. Likewise, bonus depreciation has certain conditions and limitations.

What Kinds of Purchases Qualify for Section 179 Deductions?

Section 179 address both tangible personal property and select types of real property. Some of the items eligible for these deductions include:

● Machinery and other equipment purchased for business use.
● Computers.
● Off-the-shelf computer software (that is, software available to the public that is not modified extensively, with no exclusive licenses).
● Office furniture and equipment.
● Select vehicles for business use (must exceed 6,000 lbs in weight).
Real property that qualifies under Section 179 falls into one of three categories according to the IRS:
● Qualified leasehold improvement property.
● Qualified retail improvement property.
● Qualified restaurant property.

Check the IRS guidelines for more details on real property.

It’s worth mentioning that Section 179 applies to both new and used equipment, and even financed purchases. Equipment that is shared between business and personal use (such as computers) is also eligible, so long as it is used at least 50% for business — but you can only deduct a portion of the costs equal to the percentage of business use.

However, if you find that your purchases exceed the stated limit for Section 179 deductions, you can also pursue another route to recoup some of your equipment costs: bonus depreciation.

What is Bonus Depreciation?

Bonus depreciation is another incentive for businesses making equipment purchases. You can qualify for Section 179 deductions and bonus depreciation. Typically, Section 179 is applied first, and any remaining purchases beyond the limit falling under bonus depreciation.

With standard depreciation, the cost of the purchase is depreciated evenly across its lifetime. For example, a $10,000 purchase with a 10-year life would allow for depreciation of $1,000 per year. Bonus depreciation allows a business to deduct a significant portion of the initial purchase the year it is purchased and put in service. The remainder of the purchase’s value depreciates at the normal rate.

Bonus depreciation has changed over the years. At the end of 2015, Congress renewed the incentive, allowing businesses to deduct 50% for 2015, 2016, and 2017. That number falls to 40% in 2018 and 2019.

Unlike Section 179, bonus depreciation only applies to new purchases — used items are not eligible. However, in some cases, depending on a business’ revenues, you might be able to carry the bonus depreciation forward into the following year.

section 179 calculator

2016 Limits and Overview

First Deduction:

2016 Sec 179 Deduction Limit = $500,000 First Time Write-off

This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2016, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2016.

2016 Sec 179 Spending Cap on equipment purchases = $2,000,000

This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true “small business tax incentive”.

Second Deduction:

Bonus Depreciation: 50% for 2016
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached and may be applied to the remainder.
Note: Bonus Depreciation is available for new equipment only.

Third Deduction

MACRS Deprecation
After the buyer exhaust the allowable Sec 179 depreciation benefit; a 50% bonus depreciation benefit; the remainder of the asset’s depreciable value is subject to the applicable MACRS depreciation schedule
Example of a $1,000,000 qualified purchase

2016 Section 179 & Bonus Depreciation

Equipment Purchase


First Year Write Off

($500,000 Maximum in 2016)

50% Bonus First Year Depreciation

Normal First Year Depreciation

(7 Year MACRS)

Total First Year Deduction


After Tax Cash Savings

(based upon 35% tax rate)

Annual Lease Payments

(60 month Capital Lease)

2017 Positive Cash Flow


Start Taking Advantage of These Tax Incentives

The decision to make a large equipment purchase requires thought and careful consideration. However, Section 179 and bonus depreciation give you a means to recoup some of the costs associated with them, allowing you to feed more capital back into your business. Remember that these incentives only apply to the year you make the purchase and put your new equipment in service — if you don’t take advantage of them that first year, you lose those benefits forever.

Note: Check with your accountant or another qualified tax expert about your eligibility and to maximize the effectiveness of these strategies.

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11 Must-Ask Questions for a Potential Financing Partner

Offering leasing agreements to your customers in house can be a boon to your business, and better all, it doesn’t require any substantial upfront investment from you. You can find many companies, such as EFG and others, who specialize in creating programs for vendors to offer leasing agreements to their customers. While establishing a financing program can be easy, finding a partner who can create it for you requires careful consideration. After all, the company you choose will reflect upon your own business.
Finding the right financing partner requires knowing the right questions to ask. We’ve put together a list to help guide you through the process:


Customer service is the lifeblood of any business. Your financing partner should be able to provide excellent support — that means fast response times and the ability to actually answer customer concerns. This is something where you should research the customer reviews — not just the partner vendors, but the actual lessees. See what their experiences are like as well, because your customers won’t come back to you if your financing partner is difficult to work with or completely non-responsive.


Offering a financing program is pointless if your customers cannot qualify for it. Be sure to ask your potential partner what their approval rates are like and whether they are willing to work with companies that might have less-than-stellar credit. A company that is more open to working with businesses of all types will allow you to expand your customer base.


If your business serves an international clientele, you need a financing partner who has similar experience and expertise. Make sure that the company you choose is adept at structuring international agreements so that you can make yourself even more attractive to prospective clients.


Being able to offer a leasing solution to your clients is great, but it is equally important to know how to market those options. A quality partner will provide you with tools and show you the best way to promote your leasing programs so that you can increase sales. This can include help creating printed materials or even creating an entirely new marketing strategy.


One of the primary benefits to leases is how flexible they are. Whereas a bank that issues a loan will expect a monthly payment regardless of circumstances, leases allow you to tailor payments to the lessee’s best interests, whether that is waiving the first three months of payments, allowing seasonal skips for companies that don’t operate year round, or another creative solution. Leasing options built around the client will differentiate you from the competition.denial


While leasing can make equipment accessible to those who might not have the cash upfront or who are otherwise unable to obtain financing, you will still come across some potential customers who aren’t eligible for any sort of financing. It is a good idea to make sure the financing company is willing to handle rejections, rather than expecting your staff to deliver the bad news and provide the reasoning for it. Likewise, your partner should be willing to explain why the rates offered aren’t as attractive as a client might have hoped.


The faster you can get financing approval for your customers, the more likely you are to make a sale. Make sure your partner is responsive and able to provide an offer in a reasonable time frame. You should also check how they alert customers to approvals or rejections.


Every business operates on its own terms, with its own preferred methods of communications. If your partner only allows over-the-phone applications, you may want to look elsewhere. Being able to apply for a leasing option online, over the phone, or via a paper application allows you to cater to your customers’ needs.

Likewise, a simple application, one that doesn’t require extensive information or documentation, will be less likely to drive away customers than a lengthy, involved process.


Some financing partners will present you with the entire value of the lease up front, while others will simply direct the monthly payments to you. Either may work for your business, but you should be aware of how the partnership will affect your own cash flow.
Likewise, it is important to ask who will handle collections if one of your customers falls behind on payments. Setting up an in-house department to manage all of this can be difficult, and so having a partner who is capable of managing collections will put less of a strain on your resources.


Be clear about what sort of fees your potential partner may assess — both to you and your customers. Customers will be unhappy if they feel they are being “nickle-and-dimed” with endless service fees and miscellaneous charges, and it will ultimately affect your business’ reputation. Likewise, you should make sure any fees your partner might charge you don’t negatively affect your own bottom line.


At the end of the day, your customers are your customers — and they should remain that way. If your financing company is reselling your customers’ information and they are being inundated with calls and email offers for services they have no interest in, they will blame you. You can avoid a massive headache later by asking about the issue up front.
Partnering with another company to extend flexible leasing options to your customers is a great way to grow your business. EFG has decades of experience in the field, including expertise in international financing, as well as a large network that allows the company to present flexible solutions based on individual customer needs. If you are ready to take your business to the next level and generate more sales, contact us today!

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What You Can Learn from Lean Manufacturing

All companies have their own business goals and aims, as well as their own jargon and terminology. For instance, manufacturers sometimes participate in lean manufacturing, which is essentially an organized method designed to eliminate waste within their systems. It is sometimes called lean production, or just plain lean, and involves several types of waste including that which is created through overburden and that which is created through uneven workloads. This is undertaken mostly so that the company can better please its customers, and is a basic management philosophy that can increase the company’s bottom line as well. In lean manufacturing, several tools are utilized that include rank order clustering, redesign of work cells, elimination of time-batching, control charts, and single-point scheduling, among others. Lean production uses a variety of tools designed to eliminate waste from the production process, which in turn reduces a company’s operating costs and allows them to make more money. Of course, this philosophy is also designed to increase customer satisfaction with the final product, so it is a multi-functional tool that benefits people on both sides of the equation.


When most people think of lean production, they think of the Toyota Production System, or TPS, as Toyota is acknowledged to be the first company to utilize this method. In lean manufacturing, there are five basic principles:

1. Specify the value
2. Identify the value stream
3. Make value flow
4. Let the customer pull
5. Seek perfection, meaning the continuous improvement of productivity and quality

There are also numerous areas that can be considered waste, which are not necessarily separate from one another. These include inventory, motion, waiting, defects or correction, overproduction, inappropriate processing, and transportation. Studying the TPS model, including its practical solutions to the problem of waste, is a great way to get started learning more about lean production.


Since Toyota is a Japanese-born company, many of the terms associated with lean manufacturing are Japanese terms. For instance, waste through overburden is called Muri, while waste due to uneven workloads is called Mura. Muri and Mura are Japanese terms that mean ”beyond one’s power or difficult”, and “lack of uniformity or irregularity”, respectively. Although these terms may sound irrelevant or even confusing, studying them becomes much simpler if you recognize the practical applications used by companies such as Toyota and others. Just how does the lean production philosophy affect your daily life? First, it can be used to save both time and money in our everyday lives. Practical applications include:

• When you open your mail, make sure you action it immediately: throw away what you do not want, mark some as “for future use,” and deal with the important ones immediately. This will mean less clutter in your “inbox” both at home or at work.
• Keep only a few garbage baskets in your home, because the more baskets you have the more you will use; keeping fewer garbage cans also allows you to take less time when sorting and disposing of the garbage.
• Organize your “to do” lists by utilizing online resources such as Trello, which allows you to incorporate all of your lists into one list and enables all of them to be more useful.
• Use bag ties from bread or bagel bags to label wires for your electronic equipment such as printers, fax machines, and computers; the wires will look much less cluttered and it will be much easier to see which wire goes with which piece of equipment.
• Install a tension rod in the cabinet underneath your kitchen or bathroom sink, then hang your spray bottles on the rod to enable the cabinet to hold more bottles.
• To store wrapping paper, place a piece of string across the top of a closet so that the rolls can be placed in back of the string and be in a vertical position; this method allows you to store many rolls of wrapping paper neatly without affecting the other items that are in the closet.


Lean manufacturing methods teach you how to make your work or personal space more effective and efficient with techniques that are proven to work. These techniques, sometimes called the 5 “S”s, include: Sorting your belongings by eliminating obstacles, preventing unnecessary items from cluttering up your space, and disposing of as much clutter as possible; Setting things in order by utilizing the first-in, first-out (FIFO) method as much as possible; making things Shine by keeping things clean, preventing the deterioration of equipment and machinery, and keeping your workplace safe and orderly at all times; Standardizing the best practices in your particular area, including putting everything in its place and keeping it there, and maintaining high standards regarding organization; and Sustaining things with steps that include regular audits and efficient discipline and training. These are further examples of the practical uses of lean manufacturing, which are as applicable today as they were fifty years ago.


There are many philosophies and methods that may initially appear impractical but are in fact very practical in our everyday lives and in our places of employment. The lean production philosophy is modeled after Toyota’s philosophy, which was extremely effective for the company and an inspiration to many others. As a final step, the philosophy also includes continuous improvement, which is known as kaizen in Japanese and involves constant implementation of the basic lean manufacturing techniques so your business will continue to grow and thrive. Of course, both individuals and companies can add other priorities to any of these philosophies, such as respect for humanity and care for the environment. In fact, many companies’ efforts have resulted in making them “greener” and more sustainable companies, an achievement which is by no means unimpressive or unimportant.

Lean Manufacturing – Don’t Leave Home Without It! is a good article to learn more about the lean production philosophy. To dig deeper into how to use lean manufacturing to improve your company a good resource is the Lean Production site – Lean has a very extensive collection of tools and concepts. Surveying the most important of these, understanding both what they are and how they can help is an excellent way to get started.

Already using Lean in your company share your results in the comments.

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4 Reasons Why Vendors Should Offer Financing to Their Customers

Leasing is an attractive funding option for businesses — especially new enterprises — because it requires less upfront capital and leasing options can create favorable terms for all kinds of companies. But as an equipment vendor, did you know that providing financing plans in-house can be advantageous to you as well? Here’s 4 reasons why you should consider adding an in-house financing option (or at least a financing partnership) for your clients.


Simply put, being able to offer your customers a financing solution — even through a partner — allows you to close more deals. It can cut down on the time to make a decision on a purchase because they know they can obtain a lease rather than having to invest the capital upfront. It also means that you can remain a contender with companies looking exclusively for a leasing option.
Not only that, but you won’t have to turn away buyers who need financing help. Depending on how you choose to implement your program, you may be able to offer more attractive terms than banks or other companies.


One of the benefits of offering leases is that when customers know they can get the equipment they need from you, on the terms that work best for their business, they will come back. An in-house leasing program is a great way to touch base with your customers at the end of their leasing term, allowing your team to advise your clients on the next steps, which could include upgrading equipment or purchasing their existing equipment. When your team is knowledgeable and acts with integrity, it resonates with customers and you are going to keep them coming back whenever they need your services.


Leases generally fall under two categories: capital leases, in which the lessee enjoys the benefits of ownership, and operating leases, in which the lessor claims them. Having your own leasing program ensures you have the options of selling the equipment to the lessee, or reselling or re-leasing it later. It all depends on what works best for you and your customers.


You don’t necessarily need to create a captive financing program and manage it yourself to extend flexible leasing options to your customers. Partnering with an experienced financing company, one that can give you expert advice on marketing, sales, and financial solutions for customers, allows you to start offering flexible leasing options quickly, without having to build your own internal infrastructure or hire on additional people.
Ready to start offering your own financing program for your customers? Contact EFG today and we’ll show you how easy it is to get started!

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