Category Archives: Successful Business

FIVE BASIC TAX TIPS FOR NEW BUSINESSES

business-owner-stockxpertcom_id17260461_jpg_9d244c0f32209ba041e058fccd912e101If you start a business, one key to success is to know about your Federal tax obligations. You may need to know not only about income taxes but also about payroll taxes. Here are five basic tax tips that can help get your business off to a good start.

1. Business Structure.  As you start out, you’ll need to choose the structure of your business. Some common types include sole proprietorship, partnership and corporation. You may also choose to be an S corporation or Limited Liability Company (LLC). You’ll report your business activity using the IRS forms which are right for your business type.

2. Business Taxes.  There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. The type of taxes your business pays usually depends on which type of business you choose to set up. You may need to pay your taxes by making estimated tax payments.

3. Employer Identification Number.  You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.

4. Accounting Method.  An accounting method is a set of rules that determine when to report income and expenses. Your business must use a consistent method. The two that are most common are the cash method and the accrual method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Under the accrual method, you generally report income in the year that you earn it and deduct expenses in the year that you incur them. This is true even if you receive the income or pay the expenses in a future year.

5. Employee Health Care.  The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. Beginning in 2014, the maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

For 2015 and after, employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility provision.

If you would like to start a new business or have questions about starting up a new business, please call our office today. We specialize in helping people just like you who want to enjoy the freedom and flexibility of owning their own businesses.

Source: IRS Summertime Tax Tip 2014-09

GOOGLE LAUNCHES NEW ‘GOOGLE MY BUSINESS’

googlemybusinessGoogle has launched a new portal, Google My Business, designed to simplify and demystify Google visibility for small businesses. Google My Business provides a central hub for small, local businesses to manage their presence on Google Search, Google Maps and Google+ from a single dashboard.

Getting on Google is Simpler than Ever

Before Google My Business, small-business owners and marketers had to update their business information on each of these services separately, a confusing process for business owners already crunched for time. “We see our customers struggle with this all the time,” says Kevin Gibson, Marketing Technologist at Utah printing and marketing agency AlphaGraphics Bountiful.

“Either they have multiple listings and can’t combine them, or they have a listing but can’t get access to change it, or they have no listing and go deer in the headlights as soon as you start talking about it,” Gibson explains. “Anytime Google can consolidate tools and make it easier for regular business owners to use, it is a good thing.”

Manage Multiple Google Services Simultaneously

With Google My Business, you can now update your business information, such as hours of operation and physical location information, across Google Search, Google Maps, and Google+ at the same time. You can also implement and manage an AdWords Express campaign (a simplified version of Google’s pay-per-click advertising program), monitor audience engagement with your content on Google+, track website analytics, respond to customer reviews, and even launch a Google+ Hangout.

Because it’s simpler to manage, Google hopes that more businesses will take advantage of features like Google+ to engage with potential customers, encourage customers to write reviews, and monitor performance with Google Analytics data and Insights for Google+ posts and pages. If you already use Google Places or Google+ Pages, Google will automatically upgrade you to Google My Business. There’s no charge to use Google My Business, although the typical pay-per-click (PPC) advertising costs apply to the AdWords Express program.

Experts Agree It’s a Good Thing

Digital marketing experts say the change is positive for Google, small businesses, and the SEO agencies that serve them. “When you understand the power of both SEO and PPC mixed together within the Google portal, you can dominate your niche that you’re in and blow away even the big guys that have huge ad agencies,” says Andrew Anderson of Strategic Web Blueprint. “In our opinion, it is actually a great equalizer for small businesses.”

Gibson also sees Google My Business as a win-win. “Consolidating the tools and making it easy for small-business owners to get involved will ultimately lead to more business for SEO providers, when [small businesses] get to some of the more technical parts of PPC campaigns they don’t understand,” he explains. The benefit for Google is, of course, more paid advertising business, while small businesses gain visibility and connect with more potential customers.

Using Google My Business

If you don’t already use Google+ Pages or Google Places, you can set up your own profile by visiting Google My Business and selecting “Get on Google.” Google will then walk you through the steps, ranging from locating or adding a local business address on Google Maps, to creating a Google+ page, and more.

Taking advantage of the tools Google My Business offers helps small businesses connect with their customers. That means your business is more likely to show up in the search results when Google users search for keywords related to your business. The more effort you put into nurturing your Google presence, the better your odds of raising your visibility with your target audience.

Written By: Angela Stringfellow
Read more: http://blog.intuit.com/local/google-launches-google-my-business-a-central-dashboard-for-small-business/#ixzz38CU9FWgM

TWO IMPORTANT LIQUIDITY RATIOS TO KNOW FOR YOUR BUSINESS

currentratioDo you know what the current ratio is for your business?  How about the quick ratio?  These two ratios are considered important liquidity ratios, or ratios that will give you an idea of how well you can meet your debt obligations. These two ratios are critical because if your business does not have liquidity, then it won’t be able to pay its liabilities. Also, the business may not be able to handle an unexpected expense.

The Current Ratio is the total of current assets that your business owns (ex.-cash and cash equivalents, accounts receivable, inventory, etc.) divided by current liabilities (ex.-accounts payable, taxes payroll, debt obligations due within the year, etc.). This ratio shows whether the assets that you own can be converted into cash within a year in order to pay off your liabilities that are due within a year. A ratio of less than one means that you could run short of cash within the year unless additional revenue is brought into the business.

The Quick Ratio is similar to the current ratio; however, inventory isn’t included in the calculation. The quick ratio is expressed as cash and cash equivalents plus accounts receivable divided by current liabilities. Inventory isn’t include because it may be difficult to turn over the inventory within a year.

Both of these ratios should be analyzed together to help you calculate how well your business can meet is debt obligations.

SHOULD YOU BUY A NEW TOP-LEVEL DOMAIN NAME FOR YOUR BUSINESS?

domainNow it’s easier than ever before to buy a branded URL for your business. With the Internet Corporation for Assigned Names and Numbers’ rollout of more than 1,400 themed domain extensions over the course of the year, you can now buy the website address of your choice with a .bike, .coffee, or .lawyer top-level domain, to name just a few of the options.

If the .com website address of your choice isn’t available, a themed domain extension may seem like an attractive option — but is it worth building your online brand around it? Consider the following points.

.Com Domains Still Dominate

There are more than 100 million registered .com domains, according to statistics from VeriSign, which far exceeds the use of any other domain extension. On a practical level, that means most people will default to including “.com” when typing in your URL unless you make a major branding effort to get customers to remember your custom domain.

What if You Can’t Find a .Com Domain That Suits Your Brand?

Domain names ending in .com are generally preferable, but what if your top choice — or even your tenth choice — isn’t available? That’s a common occurrence for small-business owners. In a study conducted by  Wakefield Research, 55 percent of respondents surveyed said they believe  they have lost business because of their domain names. If a suitable .com URL isn’t available, it may make sense to move to a themed top-level domain. For instance, if you own a business called Sunrise Coffee and can’t purchase sunrisecoffee.com or any suitable variants, consider purchasing sunrise.coffee instead.

You May Need to Buy More Than One Domain Name

Many businesses strive to protect their brand by purchasing numerous relevant domain names. But with the new business-themed domains, this can get quite expensive. If you own a chain of coffee shops, for instance, you may want to purchase a .com, a .biz, and now, even a .coffee domain name. ICANN has launched a trademark clearinghouse that allows brands to protect their trademarked names, with trademark registration available for between $95 and $150 per year. Keep in mind that this service sends a warning to those who purchase trademarked domain names, but it does not actually prevent anyone from buying them. To fully protect your brand, you’ll need to actually purchase the relevant domain names.

If you want to check on the costs and availability of brand-related domain names, a service like GoDaddy can help at no charge. If you haven’t even decided on a business name yet, try Panabee, which can help you come up with potential choices for a business name.

Written by Kathryn Hawkins, Intuit Small Business Blog, 7/17/2014

Read more: http://blog.intuit.com/marketing/should-you-buy-a-new-top-level-domain-name-for-your-business/#ixzz37jEVj1oR

QUICKBOOKS REPORTS THAT YOUR BUSINESS SHOULD RUN REGULARLY

qbgraphYou send invoices because you sold products and/or services. Purchase orders go out when you’re running low on inventory, and there are always bills to pay, it seems like. All of this activity is, of course, important in itself, but all of your conscientious bookkeeping culminates in what’s probably the most critical element of QuickBooks: your reports.

Reports can tell you how many navy blue sweatshirts you sold in March, what you paid for health insurance premiums in the first quarter, and how much you bought from your favorite vendor last month. They’re very good at drilling down to get the precise set of numbers you need.

But carefully customized and properly analyzed reports can do more than tell you how many golf clubs to order and when it’s time to switch phone services. They can help you make the business decisions that will help you take your growing company to the next level. There are several that you should be looking at regularly, some of which you can interpret easily and use in your daily workflow. We’ll help you with the interpretation of the more complex financial reports.

Who Owes Money?

That’s probably a question you ask yourself every day. You don’t necessarily have to run the A/R Aging Detail report every day, but you’ll want to run it frequently. It tells you who owes you money and whether they’ve missed the due date (and by how many days).


Figure 1: By running the A/R Aging Detail report, you can see whether you need to follow up with customers who have past due invoices. 

As with any report, you can modify it to include the columns, data set and date range you want by clicking the Customizebutton. When you create a report in a format that you think you might want to run again, click the Memorize button. Enter a name that you’ll remember, and assign it to a Memorized Report Group.

Getting There

There are two ways to find the reports you want to see. You can open the Reports menu and move your cursor down to the category you want, like Customers & Receivables, which will open a slide-out menu of options there.

Or you can open the Report Center, which lets you explore reports in more depth. Each is represented by a small graphic with four icons under it. You can:

  • Run the report with your own data in it
  • Open a small informational window
  • Designate it as a Favorite, and
  • View QuickBooks help.


Figure 2: If you access QuickBooks reports through the Report Center, you’ll have several related options. 

Other accounts receivable reports that you should consult periodically include Open Invoices and Average Days to Pay.

Tracking What You Owe

Reports can also keep you up-to-date on money that you owe to other people and companies. An important one is Unpaid Bills Detail, accessible through the Vendors & Payables menu item. Though you can modify its columns, this report basically tells you who is expecting money from you, the date the bill was issued and its due date, any number assigned to it, the balance due, and relevant aging information.

Vendor Balance Detail is critical, too. This report displays every transaction (invoices, payments, etc.) that contribute to the balance you have with each vendor.

Standard Financial Reports


Figure 3: We hope you’ll let us help you by running and interpreting these standard financial reports. 

QuickBooks report categories include one labeled Company & Financial. These are reports that you can run yourself, but they’re critical for understanding your company’s financial status. We can customize and analyze these for you on a regular basis so you’ll know where you stand. They include:

  • Balance Sheet. What is the value of your company? The balance sheet breaks out this information by account (under the umbrella of assets, liabilities and equity).
  • Income Statement. Often referred to as Profit & Loss, this shows you how much money your business made or lost over a specific time period.
  • Statement of Cash Flows. How much money came in and went out during a specified time range?

Reports can only generate information about what you’ve entered in QuickBooks and exactly where it’s been entered. So it’s crucial that you follow standard accounting practice as you proceed through your daily workflow. As a CPA and Advanced QuickBooks ProAdvisor, I’m available to answer questions that you have about entering your information in QuickBooks and getting the reports that you need to make wise financial decisions. The future success of your business depends upon it.

IRS MAKES IT EASIER TO FILE APPLICATION FOR A NON-PROFIT ORGANIZATION

nonprofitorganizationsOn Tuesday, July 1, 2014, the Internal Revenue Service introduced a new, shorter application form to help small charities apply for 501(c)(3) tax-exempt status more easily.

“This is a common-sense approach that will help reduce lengthy processing delays for small tax-exempt groups and ultimately larger organizations as well,” said IRS Commissioner John Koskinen. “The change cuts paperwork for these charitable groups and speeds application processing so they can focus on their important work.”

The new Form 1023-EZ, available on IRS.gov, is three pages long, compared with the standard 26-page Form 1023. Most small organizations, including as many as 70 percent of all applicants, qualify to use the new streamlined form. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible.

“Previously, all of these groups went through the same lengthy application process — regardless of size,” Koskinen said. “It didn’t matter if you were a small soccer or gardening club or a major research organization. This process created needlessly long delays for groups, which didn’t help the groups, the taxpaying public or the IRS.”

The change will allow the IRS to speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations while reducing the application backlog. Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for nine months.

Following feedback this spring from the tax community and those working with charitable groups, the IRS refined the 1023-EZ proposal for today’s announcement, including revising the $50,000 gross receipts threshold down from an earlier figure of $200,000.

“We believe that many small organizations will be able to complete this form without creating major compliance risks,” Koskinen said. “Rather than using large amounts of IRS resources up front reviewing complex applications during a lengthy process, we believe the streamlined form will allow us to devote more compliance activity on the back end to ensure groups are actually doing the charitable work they apply to do.”

The new EZ form must be filed online. The instructions include an eligibility checklist that organizations must complete before filing the form.

The Form 1023-EZ must be filed using pay.gov, and a $400 user fee is due at the time the form is submitted. Further details on the new Form 1023-EZ application process can be found in Revenue Procedure 2014-40, posted today on IRS.gov.

There are more than a million 501(c)(3) organizations recognized by the IRS.

CLOSING YOUR BOOKS ON THE FIRST HALF OF 2014: NOW WHAT?

closingthebooksJune 30 is the end of the second quarter in 2014 for most small businesses that operate on a calendar year; July 1 starts the third quarter. Now is the time to assess your results year to date, reassess your projections for the remainder of the year, and put your plans into action.

Assessing results
Has the first half of the year been profitable, or as profitable as you’d hoped? The only way to know is to review your revenue and expenses to date. Compare the results with your expectations from your business plan. What the results mean:

  • If you hit your target, congratulations! You’ve obviously got a good handle on your sales, and expenses haven’t exceeded your budget.
  • If you exceeded your target, determine the reason or reasons why. You must be doing something right and you need to identity this so you can capitalize on it going forward. Did new marketing efforts pay off? Did you implement new technology that significantly cut costs?
  • If you fell short of your target, determine the reason or reasons why. Was revenue too low? Were expenses too high? Did you experience an unusual event, such as a catastrophic storm?

Projecting revenues and expenses
Take the lessons you’ve learned from your assessment, couple that with expectations about customers and expenses, and devise new projections for the balance of the year (or longer).

  • Revenue side. What are you doing to retain customers? Find new customers? Are you seeing any changes in customer buying habits? Quantify your revenue projections based on what you know about your customers specifically and the market in general.
  • Expense side. Look at your expense budget to uncover potential cost increases. For example, if your current health plan is up for renewal, find out if possible what the new premiums will be. This will help you decide what to do about health coverage in light of the new cost and the rules under the Affordable Care Act.

Actions to take
Planning is not merely a cerebral activity. There are actions you can take now:

  • Update your business plan. If you don’t have a formal plan, consider creating one (even if it’s only one page). This will serve as a roadmap that you can follow in the coming months to try to meet your projections. It will also serve as a benchmark against which to assess your efforts at the end of the year. The business plan includes your budget (a discussion of which follows), your marketing efforts, strategic planning, and more.
  • Review your budget. As part of your business planning, you’ll need to check your pricing and see whether changes are warranted. If you’ve experienced price increases in your monthly expenses, you may want to pass on some or all of this to customers; your margin can handle only so much. Also look over your expenses to see where changes can be made. Take advantage of technology to trim expenses (e.g., use videoconferencing instead of traveling distances to customers and clients).
  • Meet with your tax advisor. Now is likely a slow time for CPAs and a great time to meet with yours to discuss tax issues for you and your business. Make sure you’re taking advantage of opportunities that can reduce your tax payments and implement best practices for your company.

Conclusion
You can’t run a business by crossing your fingers and hoping for the best. Realistic planning and follow-up will go a long way in helping you to grow your business, handle disruptions, and achieve your dream.

Written By: Barbara Weltman, Big Ideas For Small Business

Source: http://www.barbaraweltman.com/articles/financial/financial_article_details.asp?id=268

FIVE SOCIAL MEDIA MISTAKES TO AVOID

oopsNearly half of American adults are on at least one social networking site, according to the latest Pew Research Center data. But in spite of the vast potential audience — and the equally vast amount of advice out there — the social world isn’t necessarily a straightforward proposition for small businesses. Here are five mindsets that could lead to trouble.

1. I Have No Idea Why My Business Is on Facebook

If you can’t name at least one — and preferably several — good business reasons to spend time on social media, take a step back and think harder until you do. “Trying something new for my business” can be a wonderful goal, but it’s not everlasting. Build a clear-cut plan for what you hope to gain by spending your business’s time on social sites. Keep that plan flexible; it can (and should) adapt to the growing, changing world of social media.

2. I’m a Sales Machine: Must Always Be Closing

Coffee might be for closers, but social networking is for everyone. Sales are a great thing — good luck to the business that tries to go without them. But if selling is your only social goal, you’re likely to be disappointed. In fact, loyal users of sites like Twitter and Quora tend to frown upon the “ABC” approach espoused by Alec Baldwin’s character in Glengarry Glen Ross. Take a wider, longer view: Think of things like customer service, potential partnerships, or community service. Likewise, consider the possible internal applications — a private Facebook page, for example, could be a no-cost tool for employee communications.

3. I Believe that Any Publicity Is Good Publicity

Social media is proving that legendary PR sound bite wrong on a regular basis. There have been a number of big-time gaffes lately. Twitter seems particularly prone to these cautionary tales. The general public can use social sites to complain when their neighbor’s music is too loud or someone cuts them off in traffic — or to flat-out misbehave. You should think twice before doing the same with your business. There’s no such thing as an inner monologue online, no matter what your privacy settings are. If you post it, it’s public.

4. My Friends Tell Me I Should Have Been a Comedian

A sense of humor is a wonderful thing, but don’t assume everyone thinks you’re a hoot. (See also: Any Publicity Is Good Publicity.) There aren’t a wealth of successful business models based on offending as many people as possible. Creating controversy can generate a short-term buzz, but unless you’re going for just that — a fast, short-term wave of interest, likely followed by digital wrath — it’s often not worth it. Even the professional comedians run into trouble: Gilbert Gottfried recently lost a lucrative deal with Geico after several tweets referring to the recent disaster in Japan.

5. I Know this Is Going to be a Piece of Cake

The social universe involves your business giving up a certain amount of control over its image. People have a very easy, very public platform to pat you on the back when things go well, and to slam you when they don’t. There’s no flip of the switch — to see real results, you’ll have to put in some work. (Though that’s not likely to put off successful business owners.) Take your time, keep an open mind, and don’t lose sight of your core business. No matter how staggering the social media usage stats get, that will still be what matters most.

Read more: http://blog.intuit.com/marketing/5-social-media-mistakes-for-your-business-to-avoid/#ixzz35BNcqKn2

HOBBY OR BUSINESS? WHY IT MATTERS

hobbyMillions of Americans have hobbies such as sewing, woodworking, fishing, gardening, stamp and coin collecting, but when that hobby starts to turn a profit, it might just be considered a business by the IRS.

Definition of a Hobby vs. a Business

The IRS defines a hobby as an activity that is not pursued for profit. A business, on the other hand, is an activity that is carried out with the reasonable expectation of earning a profit.

The tax considerations are different for each activity so it’s important for taxpayers to determine whether an activity is engaged in for profit as a business or is just a hobby for personal enjoyment.

Of course, you must report and pay tax on income from almost all sources, including hobbies. But when it comes to deductions such as expenses and losses, the two activities differ in their tax implications.

Is Your Hobby Actually a Business?

If you’re not sure whether you’re running a business or simply enjoying a hobby, here are some of the factors you should consider:

  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Do you depend on income from the activity?
  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  • Have you changed methods of operation to improve profitability?
  • Do you have the knowledge needed to carry on the activity as a successful business?
  • Have you made a profit in similar activities in the past?
  • Does the activity make a profit in some years?
  • Do you expect to make a profit in the future from the appreciation of assets used in the activity?

An activity is presumed to be for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training, or racing horses).

The IRS says that it looks at all facts when determining whether a hobby is for pleasure or business, but the profit test is the primary one. If the activity earned income in three out of the last five years, it is for profit. If the activity does not meet the profit test, the IRS will take an individualized look at the facts of your activity using the list of questions above to determine whether it’s a business or a hobby. (It should be noted that this list is not all-inclusive.)

Business Activity: If the activity is determined to be a business, you can deduct ordinary and necessary expenses for the operation of the business on a Schedule C or C-EZ on your Form 1040 without considerations for percentage limitations. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is appropriate for your business.

Hobby: If an activity is a hobby, not for profit, losses from that activity may not be used to offset other income. You can only deduct expenses up to the amount of income earned from the hobby. These expenses, with other miscellaneous expenses, are itemized on Schedule A and must also meet the 2 percent limitation of your adjusted gross income in order to be deducted.

What Are Allowable Hobby Deductions?

If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity.

Note: Internal Revenue Code Section 183 (Activities Not Engaged in for Profit) limits deductions that can be claimed when an activity is not engaged in for profit. IRC 183 is sometimes referred to as the “hobby loss rule.”

Deductions for hobby activities are claimed as itemized deductions on Schedule A, Form 1040. These deductions must be taken in the following order and only to the extent stated in each of three categories:

  • Deductions that a taxpayer may claim for certain personal expenses, such as home mortgage interest and taxes, may be taken in full.
  • Deductions that don’t result in an adjustment to the basis of property, such as advertising, insurance premiums, and wages, may be taken next, to the extent gross income for the activity is more than the deductions from the first category.
  • Deductions that reduce the basis of property, such as depreciation and amortization, are taken last, but only to the extent gross income for the activity is more than the deductions taken in the first two categories.

If your hobby is regularly generating income, it could make tax sense for you to consider it a business because you might be able to lower your taxes and take certain deductions.

Still wondering whether your hobby is actually a business? Call us and we’ll help you figure it out.

HAVE A BUDGET FOR YOUR BUSINESS — AND USE IT

operatingbudgetAn annual operating budget captures your firm’s expected revenues and expenses over a 12-month annual period. You can use this year’s financial data as a starting point in putting together a budget for 2015. Then update those figures by getting numbers in advance for as many of your costs as possible and by forecasting your sales. Predicting how the numbers would play out under different assumptions — best case, worst case, and average — can help you to identify potential problems and give you the opportunity to adjust your planning if necessary. Although the word “budget” implies a lack of flexibility because you’re trying to control costs, a budget should be rigid and inflexible. As you monitor your actual results against your budget during the year, you may find that you have to adapt your plan to take advantage of new opportunities or changing economic conditions. If you need help in setting up a budget for your business, please give our office a call today.