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Accounting and Taxes Articles

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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 »

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 »

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 »

Small Business Optimism Takes a Nosedive Post-Election

December 13th, 2012 ::

By Maria Valdez Haubrich

The recent presidential election seems to have put small business owners into a tailspin—at least, it has if the latest Wells Fargo/Gallup Small Business Index is any indication. In November (post-election), the Index dropped to -11, down from 17 in July. Entrepreneurs have not been this pessimistic about their businesses since July 2010.

The Index measures small business owners’ current feelings about their businesses, including financial status, ease of getting capital and credit, sales, cash flow, number of jobs. In the first two quarters of the year, small business owners were becoming increasingly optimistic, and the Index hit a high of 23 in May. (For comparison, before the Great Recession hit in 2008, the Index was almost always above 100.)

In November, small business owners’ future expectations for their financial situation, cash flow, capital spending and hiring during the next 12 months all worsened significantly, Gallup says. Specifically:

  • One in five small business owners (21 percent) believe the number of jobs at their company will decrease over the next 12 months. That’s the highest percentage Gallup has measured since the Index began in 2003.
  • One in three (34%) predict their company’s capital spending will decrease over the next 12 months — the highest percentage since July 2010.
  • Some 30 percent of small business owners expect “poor” cash flow during the next 12 months — the highest Gallup has measured to date.
  • Some 28 percent expect to be in a “poor” financial position 12 months from now — the highest Gallup has measured to date.

While future expectations were primarily responsible for the overall drop in the Index, the small business owners’ assessments of their current operating conditions also declined in November, falling 9 points to -10.

The results suggest small business owners, who were previously fairly neutral about current operating conditions, have become pessimistic not only about the future but the present as well.

“As entrepreneurs, small-business owners tend to be optimistic by nature, and relatively more optimistic about the future than the present,” Gallup’s results note. Will the small business owners’ outlook lead to a weakened economy going forward? If small business owners live up to their plans to cut capital spending and reduce the number of jobs at their companies, it could do so.

How do you feel about the results? Do they jibe with your outlook?

Image by Flickr user M Hildingh (Creative Commons)

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

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 »

Web.com Small Business Toolkit: Texthog (Expense Tool)

December 7th, 2012 ::

Texthog

If you’re trying to get your year-end expenses in order and seeing another tax season nightmare approaching, make it your New Year’s resolution to get better organized in 2013. Keeping track of personal and business expenses is much easier with an app like Texthog, which can easily store and organize your receipts, expense reports and mileage tracking via text message, Web, email, iPhone and Twitter. Simply take a picture of the receipt on your phone or tablet, quickly tag it for the right expense category and forget about it. It will all be ready for reference whenever you need it. You can even use Texthog as a bill reminder to avoid late payments.

 

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

Web.com Small Business Toolkit: K&A Health Care Credit (Health Care Credit Evaluator)

November 14th, 2012 ::

K&A Health Care Credit

Not sure if you qualify for the Health Care Tax Credit? Kellogg & Andelson want to help you figure it out. The Small Employer Health Insurance Tax Credit (IRS Code Sec. 45R) is part of the Patient Protection and Affordable Care Act (PPACA), President Obama’s signature health care law that was upheld by the Supreme Court earlier this year. You might be eligible to receive a tax credit of as much as $50,000 per year for 2010 and 2011. Up to 4 million employers may be eligible for the credit, yet fewer than 172,000 claimed it in 2012 because some were unaware and others found the calculations too complex. K&A will help you determine whether you qualify and then prepare your paperwork to help you get what’s owed you.

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

Web.com Small Business Toolkit: Piikki (Receipt Management)

November 13th, 2012 ::

Piikki

Developed for both the iPhone and iPad, Piikki is an easy way for you and your employees to keep track of business receipts by simply taking a picture of the receipt and automatically saving the information digitally. Once the image is saved, the information can be emailed to your accountant and the receipt tossed in the trash. Tools help you categorize your receipts–dining, gas, software, utilities—and you can add your own categories to suit your business’ specific needs. You can also browse your receipts by alphabet, category, timestamp and location. Receipts are always password protected in case your phone is lost or stolen.

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

How to Reduce Your Small Business’s Tax Bite

November 1st, 2012 ::

By Karen Axelton

Now that the presidential election is less than a week away, one of the big questions that’s been hanging over small business owners’ heads for the past year or so is about to be resolved: Will taxes rise or fall?

Three-fourths (77 percent) of small business owners surveyed in the new Hartford 2012 Small Business Success Study believe their taxes are likely to rise. If so, small business owners report they will offset the higher taxes by passing costs on to customers (66 percent), delaying expansion plans (58 percent), reducing personal investments in their business (55 percent) and putting on a hiring freeze (54 percent). However, only 28 percent say they would lay off existing staff.

Small business owners are already making many of these same moves in response to the uncertain economy. The most common steps entrepreneurs report taking to deal with slow economic growth are cutting costs (80 percent), strengthening existing client relationships (76 percent), prospecting for new clients (69 percent) and refining their business strategy (65 percent).

Asked for more specifics about what they’re doing to cut costs, 68 percent say they’re taking less money out of the business, 57 percent are investing less in expansion, 52 percent are reducing owner/partner compensation and half are hiring fewer employees.

The Hartford study found that taxes were the second-biggest issue concerning small business owners (slow economic growth was the biggest concern, cited by 67 percent of respondents). Despite this passion about taxes, the study also found that one-third of business owners surveyed aren’t taking advantage of tax incentives or deductions that are available to their businesses. That’s mostly because they don’t know what these incentives or deductions are (37 percent) or do not qualify (35 percent).

What can you do to pay the fewest taxes, no matter what the outcome of the election?

  • Keep accurate records and up-to-date financial statements so you can document any deductions you take in case of an audit.
  • Make sure you’re working with your accountant and tax advisor to take all the deductions and exemptions you and your small business are entitled to.  Trying to prepare your taxes on your own can cost you more than you save.
  • Keep up with industry newsletters, blogs and publications to stay on top of tax changes that apply to your type of business. Unless your accountant specializes in your industry, even he or she may sometimes miss new changes that could save you a lot on your tax return.

Image by Flickr user photosteve 101 (Creative Commons)

 

 

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What’s Stopping Your Small Business From Getting Paid?

October 9th, 2012 ::

By Karen Axelton

The nation’s small business owners are feeling increasingly optimistic, but are still struggling with cash flow concerns, according to the most recent Western Union Small Business Barometer. More than three-fourths (79 percent) of small business owners in the nationwide poll were optimistic that their annual revenue would either stay stable or increase in the next 12 months.

That’s good news, but concerns about cash flow and sustaining revenues top the list of worries that plague small businesses. Here’s some of what the survey found:

The smallest businesses are much more worried about their financial stability. Twenty-four percent of those with sales of $100K-$250K and 21 percent of those with sales under $100K cite “getting paid to ensure cash flow” as a top concern.

When it comes to money, small business owners are exhibiting a cautious rather than growth-oriented mind-set. Asked what they would do with extra cash reserves, 57 percent say they would pay outstanding bills and 47 percent would save the money. Just 22 percent would invest in sales and marketing, and only 16 percent would invest in IT, facilities or systems.

Asked what is the best part of owning a small business, the number-one answer was “control over income.” Yet small business owners in the survey are failing to take control of their income by performing some key steps that could help them get paid faster and more reliably, including:

Electronic invoicing. Over three-fourths of small businesses in the survey still use non-electronic invoicing. More than half print from a software program and hand-deliver or mail their invoices, but 25 percent still handwrite invoices.

Electronic invoicing is simple to do today, and many clients (particularly in business-to-business industries) prefer it. If you’re worried that electronic invoicing is too costly, consider this: The smallest businesses—those with sales under $100K—were most likely to use electronic invoicing. This could be because they’re younger (and have younger owners), or because they’re on tighter budgets and realize how cost-effective electronic invoicing can be.

Following up on late payments. Small business owners’ approach to late payers is less than effective. When faced with past-due payments, the vast majority (80 percent) send another invoice. About one-third send a past-due notice or an email. Just 38 percent make a phone call.

Thirty-one percent admitted the reason they send emails is to avoid a confrontation.  No one likes to confront a client, but if you’re concerned about getting paid, you need to bite the bullet and pick up the phone. Emails can easily go unanswered—phone calls less so. And often, a simple conversation is all it takes to clear the air, work out a payment plan and ease your worries about whether you’ll ever get the money you’re owed.

How do you handle these issues?

Image by Flickr user meddygarnet (Creative Commons)

 

 

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Posted in Accounting and Taxes, Compliance, Small Business, small business | 2 Comments »

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