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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 »

Web.com Small Business Toolkit: DeskTime (Time/Project Tracking)

January 29th, 2013 ::

DeskTime

With so many readily available distractions threatening to zap your employees’ productivity, it might be a good idea to keep an eye on exactly what your staff is doing on their computers. Are more hours spent on Facebook during the workday than on getting those invoices out? What about punctuality? DeskTime is designed to find and eliminate wasteful habits. Plus, the reports system shows both the entire company’s work results as well as those of individuals. Don’t worry about invading your employees’ privacy: The system only records application names, website URLs, start times and end times, never anything sensitive such as keystrokes or form input. DeskTime is especially helpful for virtual companies.

 

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

Web.com Small Business Toolkit: PEX Card (Business Prepaid Card)

January 28th, 2013 ::

PEX Card

Is your company’s spending getting out of control? Are you finding it hard to keep track of employee expenses? PEX Card is a business prepaid card specifically designed to help companies take control of employee expense management. For a monthly per-card fee, businesses can distribute funds for employees to spend and then keep track of transactions as they occur. There are no transaction fees and no interest charges, and businesses gain more power over the company’s cash flow. You or your internal PEX Card administrator can easily add funds to your employee cards through the PEX website; that money is available to employees immediately.

 

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

Web.com Small Business Toolkit: Lemon Wallet (Digital Credit Card App)

January 25th, 2013 ::

Lemon Wallet

Ever forget to bring the right credit card when you’re out with a client? Or perhaps you’ve had your wallet lost or stolen and have had to spend hours on the phone canceling and replacing all your cards. Lemon Wallet allows you to scan and digitize all the information on your credit cards for easy retrieval on your phone. Merchants can then scan the image on your phone to download your card information for your purchases. Lemon Wallet also keeps your credit card balance handy and allows you to store your receipts digitally so you aren’t in danger of losing track of expense receipts. Lemon Wallet works on all mobile devices.

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

9 Employment Trends You Need to Know About for 2013

January 18th, 2013 ::

By Rieva Lesonsky

What does 2013 hold in store for your employees and your business? According to the 2013 Workforce/Workplace Forecast from The Herman Group, 2013 will look much like 2012, with most employers adopting a “wait-and-see” approach to hiring and U.S. unemployment remaining above 7 percent for the year.

Here are 9 other trends you need to know about:

  1. Recruiting will intensify in many industries. Both big and small companies, especially in the IT sector, will feel pressure to hire due to burned-out, overworked staff. The bad news for small employers is that with big companies (with bigger benefits) hiring too, competition will be fierce.
  2. Trained, experienced workers will be in short supply in many fields. Consider promoting from within and providing your entry-level employees with the training they need to move into higher positions. Also develop relationships with local schools, colleges and universities to give you a pipeline to educated workers.
  3. Communities will become more aware of the lack of skilled employees, and smart local leadership will invest money and effort into developing the local workforce for the careers of tomorrow.
  4. Gamification will be used in training, performance evaluations and as a bonding tool to make work more fun and build relationships. It’s an especially important tool for companies seeking to engage their Millennial employees.
  5. Companies will use social networking to recruit new employees and to train and develop those they have. Don’t forget the internal social networks that even small companies have: If you’re looking to hire, try looking for referrals from your existing team.
  6. Companies will keep trying to do more with less—cutting staff and hiring independent contractors to squeeze still more productivity and profit out of their teams. There’s a right way and wrong way to re-engineer, Herman Group notes. Try to do it without cutting staff.
  7. “Job churn” will grow as too many employers continue to ignore what’s needed to create a happy, engaged work force. “There is a tremendous pent-up energy for job-hopping, which many employees have been putting off for years,” Herman Group warns. Ignore it at your peril.
  8. A second Obama Administration will likely mean greater regulation. You’d be smart to have access to an attorney with HR expertise, just in case. Herman Group believes that the Affordable Care Act may spur small and midsized employers to move from providing health insurance to taking part in “insurance exchanges” and funding their employees’ purchase of coverage there.
  9. Last, but not least, your small business might see more competition in 2013: Herman Group believes more unemployed people will take advantage of the growth in independent contracting by starting their own businesses (or at least becoming freelancers) to supply the services that businesses need.

Image by Flickr user brian Dhawkins (Creative Commons)

 

 

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

6 Legal Tips to Start Your New Year Out Right

January 14th, 2013 ::

By Rieva Lesonsky

Want to make 2013 a year of unprecedented growth for your business? I asked the experts at online legal service RocketLawyer for their best tips.

1      Properly incorporate. The No. 1 legal mistake made by small businesses is the failure to incorporate. When you incorporate your business, you create a legal entity separate from yourself that conducts business, generates income, and assumes tax and legal liabilities. By creating a “corporate veil,” incorporation legally shields your personal assets in the event that your business faces a lawsuit. Online legal services offer free incorporations (you pay only the state fees!) and cost-effective monthly legal plans for small businesses. Plus, you can get legal advice from real attorneys and documents ranging from hiring agreements to contracts.

2      Start the New Year on the “write” foot. According to a recent Rocket Lawyer survey, one in four businesses have had trouble collecting payments from their customers; and of those businesses, 60 percent have written off bad debt. To ensure payment, always create a contract that clarifies what work will be done, for what pay, and the billing procedure before beginning the work. Creating a contract is essential to ensure on-time payment and puts you and your client on the same page.

3      Let it grow, let it grow, let it grow. Expand your presence online by monitoring information on business-focused websites such as Google +, Yelp and Manta.  If your online presence on such sites is not maintained internally, your company may be buzzing in places whether you’ve created a profile or not. Claim your company profile and help it attract more traffic by adding your logo, product and service offerings, social feeds and more.

4      Cultivate peace of mind.  Create a Buy-Sell Agreement, commonly referred to as a “Business Will.”  This document details what happens should one party leave the business, either through active means (alive) or circumstance (death).

5      Protect what’s earned and what’s given. Intellectual property is a legal fortress that protects your valuable assets and defends against your competitors.  Do yourself a favor and know the advantages of, and the differences between, trade secrets, trademarks, copyrights and patents.

  • Trade secrets are the most common form of intellectual property, offer a perpetual monopoly, will not expire like a patent and can be protected through simple non-compete and non-disclosure contracts with your employees.
  • Trademarks protect your logo, brand and business name from unfair use.
  • Copyrights protect other original content.
  • Patents, give you the rights to your invention: a useful and actual process, machine, manufacture, or composition of matter.

Since you’ve already done all the hard work, make it count!

6       Always keep good counsel. Good legal advice is a competitive advantage and can be the difference between success and failure, so it’s really important to have an attorney to keep you on the right path. There are a lot of things you can do yourself, but an attorney can help you strategize, plan for growth and answer the questions you didn’t even know to ask. In the event of an unfortunate or unforeseen incident, your attorney will be there to help protect you and your business.  Remember, it’s better to pay a little up front than a lot down the road.

Image by Flickr user Steve Snodgrass (Creative Commons)

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Posted in Business Law, Compliance, Small Business, small business | No Comments »

Web.com Small Business Toolkit: Lettuce (Order Management Tool)

January 10th, 2013 ::

Lettuce

Keeping track of orders is a necessary evil of small business management that becomes even harder if you don’t have a good system in place. Finding a good order management system for a small business, however, can also prove to be a challenge. The creators of Lettuce also had that issue, so they developed an app to track your order and automate the entire process. Since the app is mobile you can capture orders anywhere and focus less on paperwork and more on the sale. Then use the analytics tools Lettuce provides to gain valuable insight into your business’s bestselling (and worst-selling) products.

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Posted in Accounting and Taxes, Business Development, Compliance, Resources, Sales Process, sales process, Small Business, small business, Technology | No Comments »

10 Ways to Stay Competitive in 2013

January 9th, 2013 ::

By Rieva Lesonsky

Is your small business doing all it can be to stay competitive in 2013 and beyond? The latest Citibank Small Business Pulse survey spotlighted 10 actions the most successful small business owners take to keep their companies competitive. Are you doing them?

1: Do your research and get educated. Some 88 percent of small businesses surveyed say they regularly work to stay up to date and knowledgeable about their industry and changes in the market.

2: Work hard and do what needs to get done. Successful small business owners are dedicated—so much so that more than half (53 percent) say they didn’t take a vacation last summer.

3: Update or upgrade technology. Nearly 70 percent of respondents say they recently updated or upgraded their computer systems, and 51 percent have made a major change to their business technology.

4: Know your clients. More than two-thirds (67 percent) say they are spending more “face time” with customers to keep their businesses ahead of the pack. Such client relationships also help entrepreneurs stay on top of industry and market trends.

5: Keep a close eye on cash and budgets. Many small businesses say they are keeping cash in reserves and spending cautiously. No wonder: Some 58 percent admit that cash flow issues have been a major challenge in the past few years. However, 73 percent feel they are doing a good job of managing their cash effectively.

6: Be involved. Small business owners are taking part in their business and local communities: 51 percent have built a network of suppliers and partner companies, and 47 percent say they have become more active in the community and local organizations.

7. Be prepared. If another economic downturn occurred, 80 percent of survey respondents say they could handle it. They’ve learned from the recent recession, in which many of them took steps such as running leaner, cutting operating costs and renegotiating contracts.

8: Plan ahead. Some 27 percent of small business owners say they can predict their cash situation four to six months ahead, which enables them to plan for the future.

9: Stick with your aspirations. Despite the challenges of entrepreneurship, nearly two-thirds (63 percent) of business owners polled say they are living their dream; three-fourths say they would do it all over again.

10: Market, market, market. More than half (53 percent) of small business owners say they’ve upped social media and online advertising in the last year, while 54 percent improved their websites and search engine presence.

Image by Flickr user Generationbass (Creative Commons)

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Posted in Accounting and Taxes, Business Development, Compliance, Entrepreneurs, Marketing, Networking, sales process, Search Marketing, Small Business, small business, Social Media, social media, 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 »

Web.com Small Business Toolkit: Wave (Cloud-Based Business Finance Tools)

December 31st, 2012 ::

Wave

Microbusinesses (those with fewer than 10 employees) have specific accounting needs, and Wave Accounting wants to be the solution. Recently, Wave released a completely new product suite, a new website and new personal finance tools. Wave’s cloud-based products help small businesses with their customer transactions, invoicing, receipts management and personal finance. Plus, new mobile apps will be launched in January for payroll management and receipt scanning–everything the small business owner needs in one convenient online location. The tools are perfect for freelancers, consultants and contractors that need invoice customization, choice of currency and the ability to seamlessly convert estimates and quotes into invoices.

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

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