Building your business through the Holiday Season

How building your business during the Holidays could pay off creating    momentum for your business in 2013.

It is that time of the year, Thanksgiving is around the corner and Christmas soon follows.

People are taking vacation and visiting family. Everyone seems to be getting into the Holiday spirit.

Majority of the people are in a giving spirit during this time of the year.

Even the normally "grumpy" people are generally in a better mood and more likely to hold a conversation.

The holidays seem to do something for and to people. That “something” is what the successful businesses are counting on. This holiday is not just for the retail business. It is for ALL businesses.

Below are some reasons the holiday season is good for all businesses.

• People /Clients & Customers are easier to reach
• People/Clients &Customers are nicer and more willing to listen
• Your competition is on vacation as well.

Momentum is what a business should have going into the New Year and a method to ensure momentum is created is getting to work during the months of  November and December.

 The momentum will carry forward into the next year and that momentum will be needed to get past the January hangover. If the momentum is built correctly,  it can be used to have a business explosion(in a good way).

Most of your competition will be on vacation because everyone they know are on vacation(sort of like lazy business per pressure).

Should you decide to work while your competition is on vacation you will have at least a 3 month head start (or will be able to gain ground on your competition).

One key to building your business during the months of November and December is to schedule a meeting from a meeting. What do I mean by this?

Use the months of November to schedule appointments with potential clients, build relationships and follow up in December then schedule follow up meetings for January. (Of course this depends on your business model). The individuals that you contact who are not interested in your business or the service you provide, may remember your service and call you or refer your business.  

What could be a better way to end your 2012 business year than with 2013 momentum?

Taxes and Holiday Gift Giving

Better to give (gift) and receive (a tax break)

 There are an increasing number of small business owners increasing their donations. And that is a good idea because we have all heard that it is better to give then to receive: You have you heard this, haven't you?
The tax law supports and emphasizes this point. However there are guidelines (limitations).
Below are the top 8 tips for deducting charitable contributions from the www.irs.gov website.
Charitable contributions made to qualified organizations may help lower your tax bill. The IRS has put together the following eight tips to help ensure your contributions pay off on your tax return.
   1. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations and candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.

     2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.

     3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.

     4. Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.

     5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.

     6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.

     7. To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.

     8. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.
As always documentation beats conversation any day. And below are some tips that come from Sandy Botkin’s Blog from taxbot.com
* Always donate either property or a check. No longer will cash deposited in a salvation army pot or in the church box be deductible.
* if the donation of any type is at least $250, you will need to get an acknowledgement by the charity of the donation. This can be one with a letter or with a receipt.
* If the donation is for $5,000 or more of property, you will need to get and attach to your tax return a copy of a qualified appraisal.
Doing this correctly and using taxbot (or other deduction tracking system) to keep track of these donations can make your gifts much sweeter by garnering you a nice, whopping tax deductions.
Big tip: Consider making gifts using your credit card such as to a church or synagogue or mosque. You would get the deduction this year even though you make the payment on the card next year.

TAX Identity Theft

Why you should be concerned about your tax return.

In 2011 over 5 Billion dollars in refund checks were delivered. That’s a large sum of money considering all of it went to the Identity thieves.

Even though many of the fraudulent returns were filed using social security numbers of children, the deceased and individuals that would not normally file,There is very little to stop tax identity theft  from happening to us.  

An increasing number of taxpayers have filed their returns only to discover someone stole their identity and   filed a return without their knowledge. (I know of at least 3 people who had that experience). In addition to a feeling of violation and major annoyance, other issues that could arise are:

• Delayed Refund
• IRS having the wrong address on file
• Audit notice

A delayed refund check due to identity theft would cause many financial upsets. 

The IRS having an incorrect address might not be so bad for some but, an audit notice could cause a nervous breakdown for others.

Jokes aside, if you're a victim of Tax Identity theft, the first course of action should be to fill out a form 14039 with the IRS. (send it certified with return receipt). 

The next step is to call to confirm the IRS received your form 10439. Make sure you get the name, badge number and time you called the IRS representative to CYA (cover your assets).

 The next thing you should do is file a police report. Why you may ask?

Just in case you get audited you will have the police report as an affidavit. Let's face the facts, that the IRS is a large organization and many (if not most) of the departments in the IRS do not communicate with one another.

 Without a police report and proof of a filed form 14039, it could be well into the next year before the identity theft issue is resolved.

3 Ways to keep the IRS away.

IRS Proof your taxes with 3 simple actions.

 Don't commingle your funds – Make sure your business account and personal account are separate. This makes it easier to keep track of your expenses and income. And it will also allow you to keep track with how your business is doing.  And this will allow you to better evaluate your business productivity.

 Report all your 1099 income with your tax return. The IRS has computers that keep better track of the reported 1099s so it is very important that all of your 1099 income is reported. If not then you will be audited.

Keep good records: You might think this just helps in an audit. However, good record keeping can avoid IRS problems to begin with. Most audits are correspondence audits done by mail. Having good records may well avoid the more intensive in-person audits.

3 simple solutions can keep the IRS away.

Tax Debt reported to Credit Bureaus

Congress to consider allowing the IRS to report bad debt to credit bureaus

Congress is considering allowing the IRS to report tax debt to the three credit bureaus.

Equifax , Experian and TransUnion. The stated reason according to sources is because to promote earlier payment of debt.  I look at it from the standpoint of a bully having backup.

It has been proven that once the IRS audits you and wins (by tax payers giving into the pressure and not appealing the decision or just paying because they don’t want to deal with the hassle) This could possibly place many tax payers in a situation they cannot get out of. How would a tax payer borrow money to pay off the debt if they are not allowed to borrow money because the IRS reported owed debt to the credit bureaus.

 The IRS reporting debt to the Credit Bureaus may create or inflate the following.

• Larger financial burden for the tax payer
• Increase the amount of non filers.
• Increase the fear of the IRS

Allowing the IRS to report tax debt to the 3 major credit bureaus Is another attempt by congress to squeeze money out of the tax payer by intimidation and fear. You may be wondering why the government would allow the IRS to report tax debt, below are some logical (from my perspective) reasons for the government allowing this to happen.

• Lack of government fiscal responsibility
• Not many politicians want to attach their name to raising taxes on the middle class
• About $110 billion of the total debt was classified by IRS as uncollectable.

Possibly allowing the IRS to report tax debt is has no benefit to the tax payers but , it most definitely will help the IRS in their collection process. The question is at what cost?

Starting a Business?

Starting a Business?

 “Some nontraditional things to think about before you start your business”

With the economy in the tank and social security being more social than secure. People are turning to business start-ups. I am a big proponent of starting a business but there are some things one might want to consider before you start down the road of business ownership. What are some of the things to think about before you should start a business?

• How do you manage your personal finances?
• Is there a plan with how you handle the household?
• Are there many unfinished projects in your home?
•  Is your house hold operating with its optimal efficiency
• How do you handle your personal taxes?

You may be asking yourself why he is asking questions about the house hold when the topic is about business start up.

The answer is simple, most business start ups are ran in the same manner as the household is ran.

So what I’m I trying to say?

• If you have horrible money management skills on the personal side then you will have horrible money management skills on the Business start up side
•  
• If you do not have, a plan on how the household is ran than more than likely the business start up will have a less than stellar business plan.
•  
• If there are many unfinished projects around the home then the likely hood of a start up business having any longevity are slim.
•  
• If your household is not operating optimally then your start up business will not run optimally.
•  
• If you let a non professional prepare your personal taxes then you will do the same for your business. (and that’s not good).

This is an observation based on my experience as a tax prepare and business consultant.

There will always be exceptions but, for the most part it is very difficult to run a business start up if you cannot effectively run your home.  Ger your home situation fixed before you start your business.

Lets Talk Audits.

Tax Audits:

 What is an audit? As defined by the IRS.gov: An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.

In other words the audit is a just a review of what was placed on your tax return, it can also be viewed as method of verification.

OK that was the politically correct answer for and audit, my opinion of the reason for an audit are:

• $          Politicians are not going to raise taxes on working citizens
• $          The government needs the money
• $          During low economic times small businesses grow at the fastest rate and don’t keep good        records thus,  it is the easiest way for the government to get more tax dollars.
• $         Just the mentioning of audits elicits compliance from guilty and non guilty tax payers.

There are some things to remember about an audit notice:

• $         Open all mail from the IRS immediately, the response time to the IRS at the least is a month (30 days) from the date the notice was sent. Not meeting IRS response deadlines could cost you thousands of dollars in fees and penalties.
• $         Always assume you are right, do not allow the IRS notice or auditor to intimidate you.  You have rights. And you are protected.
• $         You are not alone; the audit process for many is not a process to take on alone. There are many experts that may assist you.
• $         You can appeal, as long as you respond in a timely manner from corresponding with the auditor, the manager the audit of appeals or even tax court you can appeal, that is your right,

The one thing I want you to remember if nothing else grabs your attention always, always ,always open your main (especially your IRS mail) on the day you receive it and pay special attention to the response time. I have had to perform damage control for my clients because they waited too long to respond to the IRS and they and the only thing that could be done for them was an offer in compromise request and an appeal for the penalties.  I welcome your thoughts comments and questions.