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3 Tips to Make Selecting Tax Software Not Taxing
Stephen Morris
Post date: 05/25/2011 - 16:39

By Dennis Byrne

If you keep a clearly marked supply of cigar boxes with all your receipts and expenses in them you’ll be sufficiently organized come tax time. Right?

Wrong! This is 2011 for crying out loud. Savvy businesses scan, store and organize essential information and tax laws and regulations, depending on the business, can be complex.

As a small business owner, tax software packages can help make filing and paying your taxes easier, but how do you know which one to choose? Here are three tips to consider when selecting your tax software.

Choose Software by Correct Business Entity Type

When buying software, many people debate between purchasing the most expensive package, thinking it will definitely have what they want, or the cheapest, thinking it will get them by. This is not a good model when buying your tax software. Different software packages are designed to help different types of business entities.

Sole proprietors, consultants, contractors and single-owned LLCs have different forms than S Corps, C Corps, partnerships, and multiple-owner LLCs. In order to keep the price down, many software developers split their small business packages by business entity. The more complicated your tax situation, the more expensive the software gets (but still usually no more than $150-$200.)

If you simply buy the most expensive package, it may overcomplicate your taxes and not have the correct forms preloaded into it. If you buy the cheapest software it likewise, may not contain the tools you need to file. Take some time and research what software version will best suit your business.

A Simple Check Will Make Sure it is Compatible Software

Another possible issue is compatibility. Computer compatibility is not as big of an issue, since most software will run on recent Windows or Mac operating systems. Most compatibility issues are due to other software. There are standards, so even if you used specific software last year, most of the data should be able to be imported, but that will vary from software to software. 

Another issue is compatibility. Is your tax software compatible with your accounting software? Some software packages work well together, so you do not have to take time to retype in data.

Is Technical Support Included?

When buying any type of software, you should consider what technical support is included in the price. Many will offer 24/7 technical support on installing and troubleshooting issues, however you may want to consider how much tax support you receive. Well-known tax preparation companies have collaborated with the tax software companies to provide tax support. If you have a specific question on a deduction you can take or any other specific tax question, you can call someone and ask him or her. This support is not always included, so take into account the cost per call or per minute if you do need to contact them. And remember, when it comes to taxes IRS gets the final word.

Tax software lets you do your taxes anytime and without needing extensive knowledge of taxes. However, if you feel that you have a special circumstance, it may be better for you to go and get your taxes done in person by a professional. Having the peace of mind can be worth the extra cost. For help, see Selecting a Small Business Accountant.

If you have additional questions about filing and paying your taxes, post them on the Filing and Paying Taxes discussion board.

Related Resources

Labor Laws for Employers: Hiring Refugees, Visa Holders, and Other Non-Citizens
Stephen Morris
Post date: 05/24/2011 - 17:57

By Ashley Cassels

Who Is Eligible to Work in the US?

The US Customs and Immigration Service (USCIS) website explains that before any person can be employed in the U.S., they must prove to an employer that they can legally work here.  In order to be legally employed, workers must be able to provide documentation that shows evidence of their ability to work in the United States.

  • U.S. citizens can meet this requirement by showing proof of their United States citizenship and a valid identity document.

  • Permanent Residents can meet this requirement by showing their permanent resident card.

  • Refugees can meet this requirement for initial employment by showing their Form I-94 and an identity document but will need to follow up with other documentation.

  • Asylees(persons granted asylum in the U.S.) can meet this requirement by presenting an unrestricted social security card and an identity document.

  • Certain nonimmigrant visa holders who are eligible to work based upon employment with a specific employer can show their Form I-94 Arrival and Departure record with their nonimmigrant visa, which will indicate the name of the employer with whom they are authorized to be employed.

What Steps Should Employers Take to Verify Work Status

The Immigration and Nationality Act (INA) prohibits employers from knowingly employing individuals who are not authorized to work in the United States. To comply, employers must verify the identity and employment eligibility of every employee hired after November 6, 1986 - including US citizens. 

Within three days of hire, employers must complete an Employment Eligibility Verification Form, commonly referred to as an I-9 form, examine acceptable forms of documentation supplied by the employee and confirm the employee's citizenship or eligibility to work in the United States.  Employers do not file the I-9 with the federal government. Rather, an employer is required to keep an I-9 form on file for three years after the date of hire or one year after the date the employee's employment is terminated, whichever is later. 

In addition to verifying employment eligibility, there are other steps employers must take when hiring employees including registering with your states’ new hire reporting program, obtaining insurance and registering for unemployment taxes.   For details on employment verification and other hiring responsibilities, read Ten Steps to Hiring New Employees.

Understanding Labor Laws and Avoiding Discriminatory Practices

When hiring new employees, you have a responsibility to verify work status and you will likely need additional background information to help you make a hiring decision. 

However, you do not have unlimited rights to dig into an applicant's background and personal life.  Employees have a right to privacy in certain areas; a right they can enforce by suing you. 

One type of discrimination, citizenship status discrimination, occurs when an employer treats individuals differently because of their citizenship or immigration status.  To help protect the rights of documented workers, the Justice Department enforces the INA’s unlawful discrimination laws by requiring violating employers to pay back wages and civil penalties and to hire or rehire workers. 

For details on the information employers may consult as part of a pre-employment check, and the laws governing their access and use in making hiring decisions, read Pre-Employment Basics and Background Checks.

Tax Benefits

There may be tax benefits for your business if you hire individuals who qualify for certain target groups.  The Work Opportunity Tax Credit is a federal tax program that offers incentives to employers who hire individuals from twelve target groups who have consistently faced significant barriers to employment. Refugees or asylees may be included in this group.  For more information, visit the Department of Labor’s guide to the Work Opportunity Tax Credit.

Related Resources

Protecting Employee Privacy: Health Information Rules for Businesses
Stephen Morris
Post date: 05/16/2011 - 18:54

By Cecelia Taylor

Does your employee health plan allow workers to maintain their medical information online?  Do you store information on employee healthcare plans? If so, then you should familiarize yourself with the American Recovery and Reinvestment Act of 2009 (ARRA), which includes provisions to strengthen privacy and security protections for web-based businesses practices.

As a result of ARRA, the Federal Trade Commission issued a rule requiring companies to contact customers in the event of a security breach. After receiving comments from the public, the FTC issued the Health Breach Notification Rule which requires businesses who have a security breach to:

  • Notify everyone whose information was breached;

  • In some cases, notify the media; and

  • Notify the FTC

The Health Breach Notification Rule applies if you are a:

  • Vendor of personal health records (PHRs);
  • PHR-related entity; or
  • Third-party service provider for a vendor of PHRs or a PHR-related entity.

 

The Rule requires you to provide notice when there has been an unauthorized acquisition of PHR-identifiable health information that is unsecured and in a personal health record.  In these cases, the FTC has designed a standard form for companies to use to report a breach.  

The Federal Trade Commission further defines these terms with the following:

  • Personal health record: A personal health record is an electronic health record that can be “drawn from multiple sources and that is managed, shared, and controlled by or primarily for the individual.” If your business experiences a breach involving only paper health records – not electronic records – the FTC’s Rule doesn’t require any notification. However, because many states have notification laws that might apply, it’s wise to consult your attorney.
  • Unauthorized acquisition: If health information that you maintain or use is acquired by someone else without the affected person’s approval, it’s an unauthorized acquisition under the Rule.
  • PHR-identifiable health information: The notification requirements apply only when you’ve experienced a breach of PHR-identifiable health information. This is health information that identifies someone or could reasonably be used to identify someone.
  • Unsecured information: The Rule applies only to unsecured health information, defined by the U.S. Department of Health and Human Services (HHS) to include any information that is not encrypted or destroyed. If your employee loses a laptop containing only encrypted personal health records, for example, you wouldn’t be required to provide notification.

Be sure to read the brochure “Complying with the FTC’s Health Breach Notification Rule”, which the FTC created to explain which businesses must comply with the Rule.  The brochure also offers guidance on what to do in case your business experiences a security breach.

The FTC’s Health Breach Notification Rule applies only to health information that is not secured through technologies specified by the Department of Health and Human Services.  Also, the FTC’s Rule does not apply to businesses or organizations covered by the Health Insurance Portability & Accountability Act (HIPAA).  In the event of a security breach, entities covered by HIPAA must comply with HHS’ breach notification rule.  FTC enforcement of the Rule began on February 22, 2010.

Additional Resources:

For more information on privacy practices and understanding the law, check out the following resources for small businesses:

5 Tips for Taking Control of Your Business without Being a Control Freak!
Stephen Morris
Post date: 05/12/2011 - 13:51

If you business is growing and you still find yourself trying to control every aspect of it then you may just be your own worst enemy and on the brink of a total burn out.

But letting go in business is hard. After all, your business is your baby. You gave it life, nurtured it and invested hours and money in making it a success. So how on earth do you let go of all that and learn to trust some of your business functions to others, while staying in command?

Here are some tips for stepping back from the fray and taking control of your business, without being a control freak!

Recognize the Signs of Burn Out

The first step towards changing your behavior is recognizing that it’s becoming a problem. Are you so involved with your business that you never switch off, take a vacation or feel that you just can’t get to the end of your to-do list?

How about others? Are you micro-managing your employees to the point that they are equally over-whelmed and stressed?
Read more about taking control of burn-out as you start to take control of you in this article: Suffering from Business Burn Out? Fight Back with these Six Tips.

Get Help in Small Doses

If you are running a business solo and simply can’t let go, consider hiring an assistant our outsourcing certain functions to a specialist.

If you need an assistant, start with part-time help and have that person help with the basics such as filing, handling phone calls, or preparing invoices.

If you need help with a particular business function that really isn’t your area of expertise, such as accounting or marketing, and just causes stress, consider hiring an independent contractor or specialist to help. Start small, maybe you can hand-off the upkeep of your website, blog or events management, or consider outsourcing your accounting and payroll functions.

Read “Staffing your Business – Four Flexible Options to Consider as you Start-up and Grow” for some options including help from family members, temps and independent contractors that you might wish to consider to support your short- and long-term needs.

Empower Your Employees to Make Decisions

Far from relinquishing control of your business, empowering those who are closest to the action to make decisions, can lead to the right result. Great teams work because the person closest to the action, is often the best one to make the decision, as long as they consider the impact on the rest of the business, the bottom line, and other employees. Try empowering your employees in your business decision making process.  Start small, maybe it’s  following through on a recommendation for a new wholesaler or making a customer service decision without consulting you.

Provide guidelines and be on-hand to help advise on the potential impact of any proposed decision – just don’t take the decision making authority out of the hands of your employees.

If it turns out not to be the right decision, review the process with the employee, evaluate alternatives, and revisit the process until your employees feel more and more confident about making decisions.  

Start to Delegate

Once you feel that you can let go and empower your employees a little more, consider delegation. Now this is a tough one because it involves stepping back in a way you’ve resisted in the past.

However, effective delegation can take an enormous strain off your shoulders; it also empowers employees to take a vested interest and role in your business success. Consider shedding some of your responsibilities to employees who have specific skills, are quick learners or who are showing leadership potential.

This article features tips on how to balance delegation with a “need to be there” as a business owner: “Growing your Business as a Team: 10 Team Building Tips from the Real World of Small Business”.

Take Charge Positively

So now that you’ve started to step back a little from control freak mode, how do you retain control of the different elements that make the whole of your business?

Being in control doesn’t mean you have to be there all the time, micro-managing and feeling over-emotionally invested in every decision that is made. Think about how you train a dog – most dog training classes concentrate on educating the pet owner to establish commands, nurture positive behaviors, and intervene when necessary. It’s not a whole lot different in business. Effective leaders set guidelines and operational parameters, mentor their employees, show flashes of authority, and use commanding postures and voices (though not all the time).

Taking charge, in a good way, is what most employees want from their boss. A rudderless organization quickly deteriorates into chaos, while an overly managed organization can feel confining and stagnant.

For more tips read “4 Tips for Effective and Inspiring Business Leadership in Uncertain Times”.

Additional Resources

Leading Your Company – SBA’s guide includes tips for effective leadership, decision making and employee management.
 

7 Ways to Cut Your Costs
Stephen Morris
Post date: 05/11/2011 - 13:33

By David Hall

With the economy still going up and down, this is a great time to dive into your books and see where you can cut your costs. Remember that it is easier to cut costs than find new business - and if you can manage, do both; your business will make more money.  

Renegotiate Your Lease / Mortgage

If you are renting a facility or have a mortgage, you may want to consider renegotiating to cut costs. Mortgage rates are currently very low and if your business is not in trouble, you could refinance to take advantage of lower rates.

If you have a lease, you have a few options. You may be able to ask the property owner to lower the cost if you can sign a longer lease. If you feel comfortable being in a certain location, locking in on a lower rate can save you a lot of money in the end.  You can also consider moving to a less expensive location. Moving involves many costs,  but it may end up being more economical in the end.

Cut Utilities (Energy Efficiencies)

Utilities prices seem as though they are always increasing. You may be able to cut your utility costs by applying some energy saving techniques:

  • Lighting

Lighting accounts for 38% of all electricity consumption for businesses. Are your rooms lit even when no one is in there?  Consider putting motion sensors on certain lights. If there is no activity in the room, the lights will be turned off automatically.

  • Temperature

Heating and cooling your office is essential during the day, but many offices are closed throughout the night. If you can install a programmable thermostat, changing the temperate by 10-15 degrees during the night can save you 10% on your bill. The ideal temperatures are 68 degrees in the winter and 78 degree in the summer. There are many state incentives for cutting your energy. Do a search on the Database for State Incentives for Renewables & Efficiency (DESIRE) to see if you qualify for any.

Vendor Agreements

After being in business for a few years, you may have vendors with whom you have been working since the beginning. Take some time to reassess their prices and services. Ask whether they can offer you a lower price, especially if you have been in business with them for a while. Do not feel that asking for a lower price will hurt your relationship. The worst that can happen is they will tell you they already are offering you the lowest price.  

Rebidding contracts, such as cleaning, uniforms, and copy/print services, may lower your price as well. With the tough economic conditions, you may find yourself bidding lower and cutting some margins; other businesses are doing the same and you can take advantage of it too.

Plan ahead

Take advantage of planning. Know when your vendors offer sales and discounts and take advantage of those. Many office suppliers offer deals on certain products, such as envelopes, paper and other office essentials, for up to 50% off throughout the year. If you see these sales, you need to take advantage and buy at that time.

Buying in bulk also will save you money. Speak with your vendors to see whether you can increase your order size. Depending on what you are buying, shipping can be expensive and the more you purchase, the cheaper the shipping per unit becomes.

When buying in bulk or taking advantage of sales, you do need to consider your storage space. If you double your order to get a discount, you will need to store that somewhere. There is always a risk with having excessive inventory. If your sales are dipping, run some numbers to see how long your bulk order will last.

Electronic Correspondence

In recent years, postage has continued to increase. Cutting out your mailed correspondences, such as invoices, notices, quotes and letters, can save you money. If you send an average of 250 pieces a month, you can save about $200 taking in paper, ink, envelopes, and postage.

Many large businesses offer savings for customers who opt for electronic correspondence. Looking at your own costs, you can calculate whether you can pass on any of your savings to your customers.

Telecom

Internet and phones are essential for an office, but look at your bill to see if there is a way to cut those costs. Voice over Internet Protocol (VoIP) phones are becoming more popular. These phones use your existing Internet service to make phone calls, eliminating your phone bill. The FTC has some useful frequently asked questions about VoIP, its advantages and disadvantages.

Look at your current bandwidth and resources. Many internet providers offer different tiers of service. Make sure that you are not paying for increased bandwidth or speed that you are not utilizing.

Partner with Others

Look in your community for partners, especially other small businesses, and trade with them. They may need your product or service and you need theirs. This is an interesting way to cut costs. It may take some convincing, but it can be a win-win situation.

Also, look to collaborate with local business on services you need. Individually, you may not have the volume for specific savings, but together you may. Advertising in newspapers or sponsoring events can be pricey, but if you can go in with another small business, you may be able to split the costs.

A good way to meet other small business owners in your area would be through your local Chamber of Commerce.

At least once a quarter, you should look at your expenses and see where you can make some cuts. If you can just cut a few hundred dollars here and there, it can add up in the end.

Related Resources

8 Tips to Save Big Money on Technology