Worried that your employees are stealing time playing around on Facebook or Twitter?

Worried that your employees are stealing time playing around on Facebook or Twitter?

With so much new web-based technology out there, it becomes easier-and-easier to "play" at work. While larger companies combat this by blocking certain websites or by monitoring employee keystrokes, it is difficult for the smaller businesses to avoid this lost time. Here's an interesting approach...

...certain things are bound to happen. Employees taking some "me time" during work is one of those things. If you have the right employee, I would empower them to create social networking profiles & groups for you and your business and encourage them to spend 30-45 minutes each day updating these sites. This may satisfy their social networking cravings while giving your small business a boost as well.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Tax Returns vs. Tax Refunds

Two of the most commonly mixed-up terms I come across when speaking with clients are the terms "tax return" and "tax refund." The most common mistake people make is using the term "tax return" when speaking about their "tax refund."

To clarify the difference between the two, here is an exerpt from the glossary of my upcoming book, Choosing the Right Structure for Your Business, due out in the fall of 2009. You can receive 40% off plus free shipping if you preorder this book at http://www.30minutebooks.com/choosing-structure.html:


Tax Refund: The amount of money that a business or individual receives as a result of overpaying their taxes throughout the year.

Tax Return: The actual document that is filed to report income/expenses of a business or individual.



----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Tax Liens vs. Tax Levies

Hopefully, you will never have firsthand experience with either tax liens or tax levies. However, if you do, here is a quick explanation so that you know the main differences between the two:

Tax Lien
A tax lien is a claim that is filed against your property. Typically, a tax lien is filed against your bank account. This instructs your bank to "freeze" your money so that you do not have access to it until the lien is cleared.

Tax Levy
A tax levy occurs when your property is actually taken from you. Again, this is typically done through your bank account whereby your funds are removed from your bank account to pay the taxing authority.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Quick Tips: Small Biz Tax Prep and Keeping Your Fees Low!

Reading Diana Ransom's article, Quick Tips: Small Biz Tax Prep on the SmartMoney Small Business site inspired me to take a few of her thoughts and expand upon them.

As a CPA, here are a few tips to help keep your accounting fees as low as possible:

1) Opt for QuickBooks over Quicken, Peachtree, any industry-specific accounting programs, or any lesser-known accounting programs. Today, just about every CPA out there is at least familiar, if not well-versed, with QuickBooks and we can simply import your data into our system. This eliminates the data-entry portion of our services and allows you to only pay us for our expertise...tax planning and tax preparation.

2) When filing your expense receipts, keep them in two separate envelopes:
Envelope #1 - Everything you paid for with cash, a personal check, a personal debit card, or a personal credit card

Envelope #2 - Everything you paid for with a business check, business debit card, or business credit card

This way, all you need to do is take Envelope #1 to your accountant at the end of the year (he will already see all expenses in Envelope #2 when reviewing your business credit card & bank statements.

3) If your business is inventory-intensive, do not rely on the QuickBooks inventory module. It is by far the weakest component of the QuickBooks program. Your best bet is to track inventory through separate software or use a program that interfaces with QuickBooks, such as Fishbowl.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Top 10 Bookkeeping Mistakes

I came across this article about the Top 10 Bookkeeping Mistakes on SmartMoney's Small Business Site and wanted to comment since it was such a good article.

As a CPA who specializes in helping small business owners, I love this article. #2, #4, and #5 really stand out in my mind as the three most critical and most common mistakes on the list.

#2-Doing it yourself. Many business owners have the ability to generate a set of books...they will provide it to a tax preparer (or worse, prepare their tax return themselves). As long as they are happy with the amount of their refund and they do not get audited, they will feel that they did a good job. However, "happy with your refund" and "didn't get audited" do not necessarily translate to "the best possible tax return." The two biggest problems with the DIY approach include a higher than usual audit risk and the loss of certain credits/deductions that you would have received if you had a pro do it for you.

#4-Not properly classifying employees. Too many small business owners classify their employees as "independent contractors" in an effort to avoid paying payroll taxes. However, if the IRS or your state decides to challange your classification (which is fairly common when your ratio of 1099s to W-2s issued for the year is too high), you will pay back all the taxes you saved plus steep penalties, fines, and interest charges.

#5-Lack of communication (especially the part about paying someone a bonus and not reporting it). This is very common at the end of the year with Christmas bonuses...business owners pay their employees every week through a payroll service and then all of a sudden at the end of the year, they think it's okay to just write their employee a check with no taxes taken out and without notifying their payroll service. A mistake that could be costly to both the employer and the employee!

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Scary News About Your Spending Habits and How They Affect Your Credit Score

Credit card companies have always tracked their cardholders' spending for three main reasons:

1) To be able to market goods/services to you that your profile indicates you may like

2) To detect fraud

3) To assist law enforcement agencies

However, credit card companies have now found a fourth, and very scary thing to do with this information...determine your creditworthiness...Here are some trends in your spending that could result in a lower credit score and the reduction/elimination of your credit card limits:

1) Shopping at discount stores/thrift stores and purchasing generic brands

2) Shopping at the same stores that other people who have defaulted on their credit card debt shop at

3) Using your credit cards for the vices...cigarettes, alcohol, massages, casino gambling, online gambling, bail bond services

Congress is now investigating credit card companies for utilizing these practices in determing to lower credit limits, cancel credit lines, and deny applicants for credit. During 2010 and 2011, we can expect to see some public hearings about this issue. In the meantime, it seems like "what's done is done" but that credit card companies will be more careful in using this sensitive information (at least until we hear the results of the congressional hearings).

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Effective Tax Planning for the MicroBusiness

On Monday, 6/1 my book about effective tax planning for the small business owner & self-employed individual was released (see below for more info). While the book is focused mostly on offering tax planning tips and tax savings strategies to those who currently participate in active tax planning, I started thinking more and more about how to educate people of the benefits of implementing a tax plan.

In my opinion, everyone who owns a business or who is self-employed (gets paid via a 1099, has a "DBA," etc.) should be consulting with a CPA in order to put together a tax plan around the middle of each year. The simple action of deciding to start implementing a tax plan is the most important part of the process...as great as my strategies are, they mean nothing to the businness owner who does not actually implement them through a tax plan.

Effective Tax Planning for the MicroBusiness is available in bookstores nationwide for $24.95 plus shipping & handling. However, if you click on the link below, you can purchase your copy for $19.95 plus FREE shipping & handling:

http://www.30minutebooks.com/effective-tax-planning.html


----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

New Thought About How Artificial Sweeteners Actually Make You Fat

Yes, I know this is a "tax & accounting" driven blog...so, why am I writing about artificial sweeteners?

1) I have a unique and interesting viewpoint on them that I would like to share with my readers

2) The best investment that anyone can make is an investment in their health. With the powers of compounding interest, adding just one year to your life could result in putting hundreds of thousands of additional dollars in your pockets before you die that you can pass on to your heirs.

With that being said, here is my take on artificial sweeteners...

Everyone I know who opts for an artificial sweetener over sugar does so for weight loss or weight control reasons...because unlike sugar, artifical sweeteners contain no calories and negligible amounts of carbohydrates. However, it is my non-medical opinion that artificial sweeteners such as those found in "diet" soda, other "diet" drinks, chewing gum, "low-fat" and "fat-free" items, etc. actually prevent weight loss and weight control.

Health experts have argued this citing two main reasons to avoid artificial sweeteners and I would like to bring forth a third reason, one that makes more sense to me and one that hit home about a year ago causing me to swear off artificial sweeteners for good.

The two main reasons why health experts say we should avoid artificial sweeteners:

1) They contain chemical compounds that "are not good for us." Between causing cancer and other damage to the kidney and liver, they are toxic and should not be ingested

2) They cause us to crave actual sugar. By tasting sweet, our brain is triggered to send signals to our body to "get ready to digest sugar." When that sugar never comes, our body is left with insulin and other hormones that did not get to do their job, so we begin to crave actual sugar, causing some of us to give in to those cravings and eat sugary foods.

While both of these arguments are valid, I don't think either one is strong enough to actually prevent people from giving up artificial sweeteners in favor of sugar.

However, here is the third argument, the one that resulted in me giving up Sweet'N Low and other artificial sweeteners:

Artifical sweeteners are not natural products and they have not been around long enough for humans to develop the ability to efficiently digest them. Therefore, when you ingest artificial sweeteners, your digestive system has to spend so much time and energy focusing on trying to break down these chemicals, that it does not get to spend enough time digesting fats and simple carbohydrates. The more fats and simple carbohydrates that go undigested, the fatter you will get.

Whether you eat artificial sweeteners or not and whether or not you choose to make any changes to your artifical sweeteners because of this argument, I do hope that you take the time to change at least one thing about your health. A step towards good health is certainly a terrific investment. And in an economy like this, we're all looking for the next great investment!

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Lessons Taught By Madoff's "Victims"

The Bernard Madoff scandal has clearly had a widespread impact across the globe. While the courts decide how to handle this particular situation and the government works on a solution for preventing similar situations in the future, it is important for us to analyze the simplest lesson to be learned from this scandal...

The #2 rule of investing is "Diversification" (the #1 rule as many of you have guessed is "Buy Low, Sell High)...anyone who invests money needs to be sure to spread that money across several different investment vehicles...the old, "don't put all your eggs in one basket" philosophy.

As an investor and an advisor (and hoping not to sound too cold-hearted) I feel two different levels of sympathy for those who I categorize into two different groups of investors in this situation:

1) Those investors who lost everything
2) Those investors who lost something

While most people sypathize more with those who lost everything, I find myself feeling the exact opposite emotions when thinking about these investors...

Those who lost some of their money clearly followed the rule of diversification and therefore I feel that they deserve more of my sympathy. They followed the rules of investing and got burned by a dishonest man...something that is hard to fault them for.

Those who "lost their life savings" or "lost everything" clearly deserve some sympathy since I feel that nobody should be cheated out of even $1, let alone millions. However, these people failed to follow the #2 rule of investing...diversification. While Madoff is clearly to blame for the losses they incurred in his investment scheme, he is not responsible for the fact that they lost everything. The only person they can blame for losing everything is themselves, for the simple fact that they chose to put their life savings into one investment vehicle. Had they taken a step back from greed or trust or whatever emotion it was that lead them to make this horrible decision and instead chose to invest 10, 20, 50, even 75% of their money with Madoff, they would still have some of their money left.

I write this in no way to show sympathy or support for Bernard Madoff, I write this in the hopes that my readers will take a valuable lesson from this scandal and NEVER put all of their eggs in one basket. If your primary investment vehicle is a 401(k) or other retirement plan that invests primarily in your company's stock, now is a time to diversify. If you have all of your money invested primarily in one stock, one sector of the market, or one mutual fund, now is the time to diversify. No matter how safe you feel in your current investments, take the time to look at them closely or take the time to meet with an experienced financial advisor to have them review your portfolio.


----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Stop Complaining About the Price of Gas

One of the worst things a businessperson can do is complain about the price of gas. I have lost track of the amount of businesspeople who have complained to me about "wasted gas" when they should have been complaining about wasted time. Just the other day, I had a financial advisor complain to me that he drove 30 minutes each way to meet with a potential client only to find out that the potential client was gone for the day. Rather than complaining about his wasted time, he chose to complain about the money spent on wasted gas.

When complaining about wasting 60 minutes worth of gas, you are reducing the value your time, both perceived and real. By placing the emphasis on the $14-16 worth of gas ($9-12 after taxes), you are essentially saying "my time is worth less than $14-16 per hour." If that is truly the case, then you should not be in business...you should go get a job where you can earn more than $14-16 per hour.

As a businessperson, your time is worth AT LEAST $50 per hour...depending on your profession, your time could be worth as much as $500 per hour. Stop complaining about gas and focus your energy on conserving your time...figure out how to become more efficient in day-to-day tasks, determine what items you can delegate to a staff member, or cut loose some of your unprofitable clients.

But whatever you do, do not devalue your worth by complaining about wasted gas when you should be complaining about wasted time!

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

The Upcoming Presidential Election and Taxes

As a business owner, I rarely discuss politics in most business situations.

However, the upcoming election and how it will impact the future of our tax code is one topic that requires a political discussion...

In the current state of the IRS Tax Code, there exists a unique situation that will provide a great deal of power to the sitting President in 2010. Currently, many areas of the code have built-in "Sunset Provisions" which mean that they are set to expire in 2010. Some areas that will be affected include:

Estate Tax
The "Marriage Penalty"
Retirement Plan Contributions
Tax Credits Relating to Children
College Tuition Credits/Deductions
Capital Gains Tax Rates
Various Other Items

With a democratic president in office come 2010, it is assumed that any current benefits set to expire in 2010 will either remain expired or be brought back on a smaller scale, providing less of a benefit. Similarly, any current taxes that are set to expire or reduce in 2010 will be reinstated and possibly even raised.

With a republican president in office come 2010, the opposite assumption holds true.

Whoever holds office in 2010 will have the unique opportunity to shape the future of the tax code. This is a very strong power that should be weighed heavily by voters when they decide who to pull the lever for in November.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Gross Profit vs. Net Profit: A Common Mistake

One of the most common mistakes that I see small business owners make when discussing profit is failing to accurately differentiate "gross profit" from "net profit."

Gross profit is equal to your revenue minus your cost of goods sold (or cost of sales).

Net profit is equal to your revenue minus ALL expenses.

Turn to Virgin founder and Chairman Richard Branson for a simple mnemonic to help you remember the difference, "Pretend you're fishing. Net is all the fish in your net at the end of the year. Gross is that plus everything that got away." This is the advice that was given to him by one of his Virgin boardmembers after he consistently made this mistake early on in his career...he considers it the best financial advice he ever received.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Don’t Let Your “On the Side” Accountant Get You Audited

Accounting is a field filled with many accountants who prepare tax returns “on the side” or have a “side business” in addition to their full-time job. While this presents many problems with communication, audit representation, availability, etc., perhaps the biggest problem is the additional audit risk that the clients who use these types of tax preparers face.

Since many of these accountants are looking to make some extra money without any overhead, they have a tendency to share software with other accountants or steal software from the company they work for. When this happens, you can pretty much count on the fact that the “Paid Preparer’s Information” section of your tax return will either be left blank altogether, have “Unpaid Preparer” checked off, or have “Self-Prepared” checked off.

When any of the above items appear in the Paid Preparer Information section of a tax return, the audit risk of that tax return skyrockets. This is looked at the same as if a CPA prepared a return and does not stand by it enough to feel comfortable signing it.

Although it could be a perfectly innocent case of your tax preparer trying to save a few bucks on tax preparation software, the IRS will not know this until you tell them during your audit!

Additionally, the IRS is currently working on a piece of detection software that will identify quarterly payroll tax returns that are not signed by the preparer. Once in place, this system will be used to identify preparers who have a tendency not to sign their clients’ payroll tax returns and subject these clients to higher-than-normal audit risks.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!