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Good News for Home-Based Business: IRS Simplifies Home Office Deduction

January 31st, 2013 ::

By Karen Axelton

If you are a home-based business owner but have never claimed the home office tax deduction because you don’t want to deal with the complex reporting and calculation that’s required—or because you’re afraid making a mistake could trigger an IRS audit—you can breathe a little easier this April. That’s because the IRS has announced a simplified, optional method for claiming the home office deduction.

The new optional deduction allows taxpayers to claim $5 per square foot of home office space up to a maximum of 300 square feet, or $1,500 per year. Currently, small businesses and others claiming a home office deduction have to complete Form 8829, a 43-line form that includes complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers who want to claim the optional deduction instead will complete a much simpler form.

The IRS estimates the change will affect more than 3.4 million taxpayers (the number who claimed the home office deduction in tax year 2010, the most recent year for which the agency has data) and will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours per year.

Here are a few things to be aware of in deciding whether you want to claim the traditional home office deduction or the optional simplified verson:

  • Homeowners using the simplified option cannot depreciate the portion of their home used for business. However, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions do not have to be allocated between personal and business use, which the traditional method requires.
  • Since the optional deduction has a cap of $1,500, if your home office is significantly bigger than 300 square feet or if you have extremely high utility bills or other costs, you may want to stick with the traditional method of claiming deductions.
  • No matter which method you use, you still have to meet the current restrictions regarding the home office deduction. For example, the home office must still be used regularly and exclusively for business, not for personal use.

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. For more details on the new option, visit the IRS website to read Revenue Procedure 2013-13.

Image by Flickr user james.thompson (Creative Commons)

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Posted in Accounting and Taxes, Compliance, Small Business, small business | No Comments »

Where Will Businesses Spend on IT in 2013?

January 24th, 2013 ::

By Karen Axelton

What will businesses be spending their IT dollars on for 2013? Until now, global uncertainty about the economy has been affecting IT spending, TechCrunch reports. Research firm Gartner’s projects worldwide spending on devices, including PCs, tablets, mobile phones and printers, to hit $666 billion this year, a 6.3 percent increase compared to 2012. However, the rise is still a significant cutback from Gartner’s prior forecast that 2013 would see $706 billion in global device spending or 7.9 percent growth.

For small business owners, however, the decreased spending may actually be good news. That’s because much of the reason for the shrinkage is lower prices thanks to cheaper Android devices. Another factor? PC purchasing is dropping drastically as consumers and businesses switch to tablet computers, for which there are many inexpensive options available.

Meanwhile, Forrester’s newest IT spending projections forecast 5.4 percent growth in 2013, but predict that 2014 is when growth will really ramp up. The company predicts that pent-up demand for mobile devices, cloud computing and smart computing will boost IT spending by 6.4 percent in 2014.

Other trends worth noting:

  • Storage devices and peripherals are also seeing slowing growth, with that trend expected to continue as more consumers and businesses move storage to the cloud.
  • PC and server vendors were hard hit in 2012 as these technologies became less used, and the industries’ decline in sales is projected to continue.
  • Apple bucked the trend of decreasing desktop/PC sales. The company saw strong growth in sales of PCs and laptops, and that is projected to continue through 2013 and 2014.
  • Windows 8 devices will see 8 percent growth in 2014, but will still be far outpaced by the double-digit increase in sales of Linux, Android and Apple products.

Overall, Forrester and Gartner both see 2013 as a transitional year when many technologies are becoming obsolete as new, less expensive ones take hold. For small businesses on tight IT budgets, that could be very good news.

Image by Flickr user Andrew Turner (Creative Commons)

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Posted in Small Business, small business, Technology | No Comments »

Web.com Small Business Toolkit: Insightly (Mobile CRM App)

January 16th, 2013 ::

Insightly

Sales takes not only a great team but also a great support system. Insightly is a customer relationship management (CRM) system for your mobile device that has many great features such as linking, managing and sharing of contacts, notes, tasks and opportunities. Download the app and when you make a call, Insightly automatically adds the call to a call log so you can refer to the contact whenever you need to. With Insightly, it’s easy to search your customer data from anywhere. Insightly integrates with Google Apps, and there’s also a specific version for Apple devices, Windows phones and BlackBerrys.

Posted in Uncategorized | 1 Comment »

10 Menu Trends to Watch in 2013

January 15th, 2013 ::

By Karen Axelton

Do you own a quick-service restaurant? If so, you’ll want to know about the top 10 trends that QSR Magazine has identified for the coming year.

  1. Going local. While truly locally sourced ingredients may be tough for some quick-serve eateries to muster, you can substitute “fresh,” “made from scratch” or “healthy” for the word “local” and get the general idea.
  2. Healthy kids’ meals. No longer is this trend just driven by parents; kids are starting to embrace healthier menu items. The key is using things kids are familiar with: Asian dumplings, hummus, yogurt or sweet potato fries are all healthier options that don’t scare children away.
  3. Economic challenges. While the National Restaurant Association predicts slight growth, rising food costs and stagnating consumer incomes will create challenges for QSRs. You’ll need to be creative with your menu to avoid passing costs on to customers.
  4. Snacks as a meal. Continuing from 2012, this trend will keep growing as consumers demand to eat what they want, when they want it, while also looking for lower-priced items and smaller (healthier) portions.
  5. Vegetables. Moving beyond sweet potato fries and vegetables in sandwiches, steamed and roasted veggies are showing up on QSR menus. Avocado, artichoke hearts, beets, broccoli, cucumbers, edamame, jicama, mushrooms, red peppers, sprouts and zucchini are among the rising stars.
  6. Gluten-free. With nearly 30 percent of U.S. adults claiming they avoid gluten, adding gluten-free items to your menu can greatly increase your customer base.
  7. Trickle-up trends. QSR restaurants are no longer followers of high-end trends but are increasingly leading the way. Because QSR is one of the few growth areas in the restaurant industry, other eateries are looking to this niche for ideas. Fast-casual, one-concept eateries such as burger-only restaurants will continue to be hot in 2013, and there will also be more competition in the QSR niche.
  8. Ethnic food. Ethnic food is moving beyond the familiar staples. Quick-serve Asian food is expanding to include Thai and Vietnamese, while Mexican food lovers are discovering the cuisines of Brazil, Argentina and Peru.
  9. Beverage innovations. Think creative and healthy. Fresh fruit beverages, natural energy drinks, and local products such as house-made sodas and regional craft beer will be hot, as will vegetable-based drinks and smoothies.
  10. Health-care changes. More QSR chains are adding calorie counts and other nutritional information to the menu, whether legally required to do so or not. Customers seem to appreciate this information, so you might want to consider offering it.

How will you incorporate these trends in the coming year?

Image by Flickr user mhaller1979 (Creative Commons)

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Posted in Innovation, Marketing, Small Business, small business | No Comments »

How Email Can Drive Your Ecommerce Sales

January 8th, 2013 ::

By Karen Axelton

While social media may get all the buzz in the marketing world, when it comes to boosting ecommerce sales, statistics show that email is still more effective. Data from trade organization the Direct Marketing Association show that email outperforms social media advertising by three to one when measured in sales per advertising dollar spent. This year alone, during the key Black Friday-Cyber Monday weekend, the number of online shoppers who bought something after visiting an ecommerce site from a social networking site declined by 26 percent compared to 2011, IBM Digital Analytics Benchmark reported. On both Black Friday and Cyber Monday, “social sales” accounted for less than 0.5 percent of all online sales.

How can you make your email marketing messages more effective?

  • Target your messages. A generic email blast about a sale won’t be as effective as specific emails targeted to different consumer groups based on their behavior. You can target emails based on what consumers have done in the past (such as past purchases) or what they’ve browsed on your site recently.
  • Whet shoppers’ appetites. Limited-time offers still work well to drive shoppers from your email message to your website. “Today Only,” “Just 3 Hours Left” or other subject lines that convince customers they’d better act now are a good way to get shoppers to click through.
  • Use landing pages. Be sure when shoppers click through your emails they don’t just go to your home page. Create a landing page designed for that specific email that includes strong calls to action to persuade customers to act. For instance, an email touting a sale on children’s clothing should go directly to your children’s clothing sale page.
  • Don’t let shopping carts sit abandoned. Many customers put items in their shopping carts, then don’t check out. Set triggered emails to remind customers of their waiting items or update them when a price has changed on something in their cart.
  • Use cookies and online advertising. Use cookies to track customer activity on your site. Then when customers browse your site, you can serve up ads later on unrelated sites for the products they viewed on yours. This is a great tactic to keep your website and your products top-of-mind until customers are ready to buy.
  • Be aggressive about retaining your email list. Instead of a simple “unsubscribe” option, consider offering a range of choices on your unsubscribe page. For instance, some e-tailers ask customers if they’d like to see the emails less often, such as once a month instead of once a week. You can even set up your unsubscribe to ask customers if they want to take a break (such as three months off) from emails before receiving them again.

Image by Flickr user Jonathon Narvey (Creative Commons)

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Posted in Email Marketing, Marketing, sales process, Small Business, small business, Technology, Web Design | No Comments »

How to Be a Good Interviewer

January 3rd, 2013 ::

By Karen Axelton

Do your New Year’s plans for your business including hiring new employees? Then you’ll want to make sure you get the perfect person for the job. One of the most important parts of choosing a new employee is conducting a good job interview that gives you all the information you need to make a decision. But many small business owners aren’t sure how to do a thorough interview. Here are some tips to help you.

Be prepared. Before the interview, review the candidate’s resume and job application. Also create a list of questions that you ask all candidates. This not only helps ensure you don’t forget anything important, but also means you’re judging employees from a level playing field by asking everyone the same things.

Focus. Don’t check your email, answer your phone or look at your computer during the interview. Not only is it rude, but you’ll also get distracted. You only have a short time to talk to this person before deciding you want to make them part of your business; shouldn’t you be paying attention?

Ask open-ended questions. Instead of questions that can be answered with “yes” or “no,” ask questions that require an explanation or call on the candidate to elaborate. You’ll get a better sense of the person’s personality that way, as well as fuller descriptions of his or her experience.

Know what you can and can’t ask. To avoid getting in trouble for discriminatory hiring, in general, you should stay away from questions regarding an interviewee’s age, marital or parental status, religion, race, disability or legal immigrant status. (This Nolo.com article provides more information and resources on hiring questions.)

Make it a team effort. If you get nervous during interviews, to the point where you find it hard to focus, consider having a partner or key employee conduct the interview with you. You can take notes and observe the candidate, while your partner can do most of the talking. This tactic has the added benefit of giving you someone else’s perspective on the candidate.

Write it down. Take notes on the candidate’s answers to help you remember what was said, especially if you’re interviewing several people in a row. After each interview, spend 5 minutes or so jotting down the relevant information, including your first impression of the person.

Follow up. Let the candidate know when he or she can expect to hear from you regarding the job—and be sure to follow up when you say you will. There’s nothing worse for a candidate than waiting in limbo to hear about a job offer. What’s more, if you’re not professional about how you handle this, it could affect your business’s reputation on social media.

Image by Flickr user Marco Bellucci (Creative Commons)

 

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Posted in Business Law, Compliance, Small Business, small business, Workforce | 2 Comments »

Making a Reference List, Checking It Twice

December 25th, 2012 ::

By Karen Axelton

Santa Claus isn’t the only one who’s making a list and checking it twice this time of year. Smart small business owners will do the same when they’re interviewing job candidates. A new study from CareerBuilder highlights some of the risks you could take if you don’t bother to contact a job candidate’s references.

Nearly 30 percent of employers report having caught a fake reference on a candidate’s job application. And almost two-thirds (62 percent) say that when they contacted a reference listed on an application, the reference didn’t have good things to say about the candidate.

The overwhelming majority of employers (80 percent) say they regularly contact references when they’re considering potential employees. Nearly 70 percent of employers say they’ve changed their minds about a candidate after talking to a reference; of those, 47 percent say the discussion gave them a less favorable opinion of the candidate, and 23 percent say it improved their opinion. About one-third (31 percent say their opinion has never been swayed by a reference.

In an interesting trend, 16 percent say they contact references even before calling a candidate in for a job interview. Clearly, this could save you some time if all of the references you contact have a negative opinion, but it might make it harder to form your own unbiased opinion of a candidate first.

If you do check references, be sure to contact all of them. Seventy percent of workers say they always provide three or more references when applying for a job, and talking to a variety of former employers will give you more fully rounded insights into the person’s work habits.

Are you worried that references won’t be honest? Contacting multiple references is a good way to get around this concern. Another tactic: Asking a very open-ended question (“Can you tell me a little bit about so-and-so?”) and seeing how vocal the reference is. If he or she can’t stop saying good things, that’s a good sign. On the other hand, a lack of feedback or reluctance to talk could indicate the person’s performance was less than stellar.

Keep in mind, some HR people’s companies restrict them from giving out anything but the most bare-bones information about references as a matter of policy. This isn’t necessarily a negative reflection on the candidate. If you get one of these references, just check the factual information that you can, such as job title, dates of employment, salary and reason for leaving the company. You may uncover some discrepancies that could be important to know about.

Image by Flickr user Nguyen Vu Hung (vuhung) (Creative Commons)

 

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Posted in Small Business, small business, Workforce | No Comments »

Year-End Tax Planning for Your Small Business

December 18th, 2012 ::

By Karen Axelton

The end of the year is coming, and that doesn’t just mean holiday celebrations—it also means you only have a matter of weeks to take advantage of some last-minute tax strategies that can save you money.

Contribute to your retirement plan. If you haven’t already contributed the maximum this year and you want to lessen your tax bite, make an extra contribution to your plan before December 31. (Don’t have a retirement plan? There are many options available even for solo business owners, so start investigating and set up a plan for the New Year.)

Make charitable contributions. This is another way to reduce your taxes owed. Consider donating outdated equipment, vehicles or other business assets to a school or nonprofit organization that can use them, and your business can get a deduction.

Make major purchases now. For the past few years, small businesses have enjoyed an expanded Section 179 expensing deduction. For 2012 the annual limit is $139,000, meaning you can expense up to $139,000 in furniture and equipment your bought for your business in 2012. Currently, this limit is scheduled to shrink to just $25,000 for 2013, so if you’re considering a major purchase or buying new equipment, now might be the time to take the plunge.

Accelerate expenses and defer income. If your business operates on a cash basis, you can apply this strategy. Pay expenses before the end of the year (charging expenses on credit cards is considered payment) and give your clients a little extra time to pay you so you don’t have the payments in hand and don’t have to declare the income on your taxes.

Take advantage of the health care tax credit. If you have fewer than 25 employees and provide health insurance for them, you may be eligible for a tax credit going back to 2010. Eligibility depends on factors including your employees’ average wages and how much of the insurance premium you contribute. Visit the IRS website for details on the tax credit and how to claim it.

Get organized. You don’t want to be dumping a shoebox full of receipts on your accountant’s desk at tax time. Start now to pull together the records and paperwork you’ll need for your business’s tax return. This way, you can get any missing documents together in plenty of time. Getting better organized will help ensure you don’t miss out on any deductions that are rightfully yours—and that saves you money.

Consult your accountant. The right year-end tax moves for you will vary depending on your business, so check with your accountant now to determine what last-minute strategies you can use to cut your tax bill and maximize your income.

Image by Flickr user Images of Money (Creative Commons)

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Posted in Accounting and Taxes, Compliance, Small Business, small business | 1 Comment »

Time Is Running Out to Claim This Small Business Tax Credit

December 11th, 2012 ::

By Karen Axelton

It’s hard to believe, but many returning military veterans have a hard time finding civilian employment once they return from active duty or deployment. Your small business can help a veteran and enjoy tax credits at the same time thanks to recently expanded tax credits created by the VOW to Hire Heroes Act of 2011.

There’s one catch–your small business needs to act soon. Under the newly expanded Work Opportunity Tax Credit (WOTC), employers can receive thousands of dollars in tax credits, but only if the veteran hired started work on or after November 11, 2011, but before January 1, 2013.

The VOW to Hire Heroes Act added two new categories to the existing qualified veteran targeted group and expanded the WOTC to include certain tax-exempt employers. The credit may be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt employers.

In order to be considered a qualified veteran, the individual must:

  • Have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability, and
  • Not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date.

There are certain other qualifications that may apply, which you can find at the IRS’s FAQ page about the Work Opportunity Tax Credit.

The amount of the tax credit your small business or nonprofit organization is able to claim will depend on several factors, including how long the veteran was unemployed before being hired, the number of hours the veteran works and the salary or wages the veteran receives during the first year in your employment. If you hire a veteran with service-related disabilities, your business may be eligible for the maximum tax credit.

In order to claim the tax credit, employers will need to file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency within 28 days after the qualified veteran starts working at the business. To find your state workforce agency, visit the U.S. Department of Labor’s WOTC website. Visit the IRS website for additional details about qualification and paperwork required.

Image by Flickr user Sam0hSong (Creative Commons)

 

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Posted in Accounting and Taxes, Compliance, Small Business, small business, Workforce | No Comments »

Have You Thought About Your Succession Plan?

December 4th, 2012 ::

By Karen Axelton

Do you own a family business? Do you have a business partner (or more than one partner)? Do you hope to sell your business and retire on the proceeds one day so you can spend your time playing golf? If the answer to any of these questions is “Yes,” then you need to be thinking about a business succession plan.

A succession plan lays out how your business will run if you should leave the company, sell the company, die or be incapacitated. Much like writing a will, creating a succession plan is something many business owners put off because they don’t want to think about it. But much like failing to write a will, failing to draft a succession plan could destroy your business if unforeseen incidents occur.

Begin your successon planning by thinking about who you would like to have in charge if you’re no longer in the business. This might be your business partner/s, your spouse or a child who works in the business (or even one who doesn’t). If the person you’re considering is someone who might not expect to fill this role (like your spouse), talk to him or her about the issue and whether they have any interest in filling your shoes.

Put the right legal documents in place to ease the transition. Talk to your attorney and accountant. Your form of business will affect what documents are needed. For instance, how will your shares of the business transfer to your successor? Will a buy-sell agreement be needed in case existing shareholders don’t want to work with the successor and he or she needs to buy back their shares? Just like a will, you need documentation to ensure your wishes are carried out.

Another important step in succession planning is making sure the transition is properly financed. For example, a key man life insurance policy could provide the funds for your successor to buy out partners’ shares in the event you die. Your accountant can point out financial needs that may arise and how to fund them.

Part of the financial aspect includes planning for your retirement and how you will transfer ownership and assets in the business to your successor. Again, your accountant can guide you through options such as selling the entire business, selling your shares to the successor or partners, or even selling your business to your employees.

Last, but not least, think about what would happen if illness or accident left you unable to work for a while. This could actually be an opportunity to “test drive” your succession plan by having your successor work in the business. If he or she doesn’t currently work for the company, consider having the person do so at least part time to get up to speed, or otherwise familiarizing him or her with the issues of your role.

A good succession plan will ease your worries and your family’s worries about the future of your business. (If you have a family business, it can also smooth over concerns about who will take your place.) Don’t delay in setting one up.

Image by Flickr user chispita_666 (Creative Commons)

 

 

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Posted in Business Law, Compliance, Life Transition, Small Business, small business, Workforce | 1 Comment »

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