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Helping to Support Our Troops When They Return Home

By bridgetwpollack, Guest Blogger
Published: November 27, 2012 Updated: November 28, 2012

On November 11, we took the time out of our day to thank those who serve and protect our nation.  However, our nation owes it to them to show them our gratitude every day, and provide them with the support they need after what they have given for us. The men and women of our military sacrifice so much for our freedom, and when they return after years of serving, it is a difficult transition for them and their families starting the next chapter in their lives.

The number of veterans early in their careers is on the rise: 74 percent of service-disabled veterans over the last 10 years is under 30 years old. They are equipped with unique skills as a result of their service, and their veteran status offers distinct business advantages. For those veterans and their family members with the entrepreneurial spirit, there are now several programs aimed at helping them leverage their skills and talents and start a business. With the help of these initiatives, veterans have a greater chance of achieving success and once again, providing critical support for our country as one of the many small businesses that are the backbone of our nation.

  • Joining Forces: Led by the First Lady Michelle Obama and Dr. Jill Biden, Joining Forces is a comprehensive national initiative to mobilize all sectors of society to give our service members and their families opportunities and support. The mission is to integrate existing services and offer new forms of business support, knitting them all together and making it work for each veteran’s individual needs.
  • Veteran Fast Launch: For over 48 years, SCORE has been a leader in providing mentoring and training to entrepreneurs through its network of more than 12,000 volunteer mentors and trainers. With the support of its partnership with the Wal-Mart Foundation, the Veteran Fast Launch initiative provides veterans and active duty military members – plus spouses and members of their immediately family — with:
    • FREE or significantly discounted resources for starting businesses, such as computer software and business services (provided by major corporate partners)
    • Training in how to start and how to grow a successful/profitable business
    • SCORE’s mentoring program where Fast Launch participants will be assigned a knowledgeable and highly experienced mentor to guide them every step of the way.
  • Operation Boots to Business: The U.S. Small Business Administration (SBA) recognizes the contributions that veterans make by owning and running businesses that employ millions of Americans.  According to the most recent U.S. Census Data, veteran-owned firms represent 9 percent of all U.S. firms. These 2.45 million veteran-owned businesses employed over 5.8 million individuals. Transitioning service members are natural entrepreneurs, possessing the training, experience, and leadership skills to start businesses and create jobs. SBA is dedicated to help even more veterans grow their businesses and create jobs.  Through the Boots to Business initiative, service members will learn the nuts and bolts of how to start and grow a business. They will also be introduced to the SBA’s nationwide Resource Partner network for support throughout the lifecycle of their new business.
  • Veterans Business Fund: The Veterans Business Fund (VBF) is a not-for profit organization,  established in response to the high unemployment rate among veterans, many of whom are well qualified through their military experience to become successful small business owners but lack sufficient equity capital to qualify for a small business loan.  The VBF assists veterans by providing them with the supplemental capital required to satisfy the equity requirements for a small business loan, providing capital to veterans in the form of a non interest bearing loan with favorable repayment terms.
  • Operation Endure and Grow: Aimed at National Guard and Reserve members, Operation Endure and Grow gives them, their families and business partners access to online training courses focused on the fundamentals of launching or growing a small business. This program offered by the Whitman School of Management, in cooperation with the SBA, offers service personnel courses on crafting a business or nonprofit plan. In addition, they'll receive ideas for presenting to investors, lenders or other financial backers.

About the Author:

bridgetwpollack
Bridget Weston Pollack

Guest Blogger

Bridget Weston Pollack is the Vice President of Marketing and Communications at the SCORE Association. She is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies to facilitate the growth of SCORE’s mentoring and trainings services. She collaborates with SCORE volunteers and develops SCORE’s online marketing strategy.

6 Business Tax Credits and Deductions to Take Advantage of Before New Year’s Day

By Caron_Beesley, Contributor
Published: November 26, 2012 Updated: September 16, 2016

The end of the year is fast approaching, but there’s still time to take advantage of a variety of business tax credits and deductions – some of which are new for 2012. 

Here are just a few to consider, plus some best practices for maximizing your claims.

Take Advantage of 2012 “Section 179” Deduction Limits

Under the American Recovery and Reinvestment Act, Section 179 of the tax code provides tax benefits for equipment purchases made before the end of the year. Typically when you purchase an item for your business, you can claim a tax deduction for it. But fixed assets are not counted in the year of purchase. Instead, they must be depreciated over a number of years. Section 179, however, allows you to fully deduct the cost of assets such as computers, furniture, certain business software, vehicles, manufacturing equipment and more in the year of purchase – up to a certain amount. 

Section 179 deduction limits change each year. Here’s what’s new for 2012:

  • For 2012, the limit for any individual piece of equipment is now $139,000, as long as total purchases in either year do not exceed $560,000. This means that if you buy or finance a piece of new or used equipment, you can deduct the full purchase price (up to $139,000) from your gross income.
  • For expenditures above $560,000, the amount you can deduct is reduced by a dollar for each dollar over.
  • A “Bonus Depreciation” provision allows you to deduct 50 percent of the cost of certain property after you’ve taken the Section 179 deduction and in addition to the standard depreciation deduction.

Review your inventory and equipment. If you find you need to replace obsolete or aging assets, this may be the time to do so. Be sure to talk to your tax advisor or accountant for more specifics on qualifying purchases and read more from the IRS about deducting business expenses.  To deploy this deduction, the equipment being purchased must be in place on or before December 31, 2012.

Get a Tax Credit for Hiring a Veteran before December 31, 2012

Late last year, President Obama signed into law specific tax credits for employers who hire unemployed veterans before December 31, 2012.

Under the Vow to Hire Heroes Act of 2011, employers who hire a veteran who has been unemployed for at least four weeks can claim a credit for 40 percent of the first $6,000 in wages (up to $2,400). If you hire a veteran who’s been unemployed for at least six months, the credit goes up to 40 percent of the first $14,000 of wages (up to $5,600).

If you plan to hire new employees before the end of the year, check out this employer-friendly plain English guide for more information on the skills veterans can bring to your company, and how to apply for the tax credit. 

Start a Business in 2012? Keep Good Records to Claim Start-Up Deductions

If you started a new business in 2012 you probably incurred costs before you even opened your doors. Unfortunately, non-operational businesses can’t deduct business expenses. Instead, you must wait until you are operational and generating income.  Only then can you deduct a portion of qualifying start-up costs – up to $5,000 in the year the business was launched. Any amount over and above that must be amortized over a period of 18 months.

If you started a business this year, or are planning to open your doors in 2013, make sure you keep good records of your start-up costs so you can leverage the deduction on your 2012 tax return. Read more about How to Write Off the Expense of Starting Your Business.

Log and Capture Business Travel Costs

There are numerous deductions you can claim over and above the current $0.55 per mile business mileage deduction. For example, the cost of laundering clothes on a business trip is also deductible! For tips on what constitutes a business travel or entertainment expense while on the road, read How to Deduct Business Travel Expenses.

Other expenses to record include advertising/marketing costs, educational expenses, banking fees and health insurance premiums.

Set Up or Grow your Retirement Plan

One of the best tax write-offs for the self-employed is to set up a retirement plan or, if you already have done so, contribute pre-tax money to reduce your 2012 taxable income. This year, self-employed individuals can contribute $17,000 as a 401(k) deferral, plus 25 percent of net income. Check with your plan administrator for limits and deadlines for different types of plans.

Contribute to Charity

With the holiday season upon us, now is a good time to consider making a business charitable contribution and benefit from the tax deduction. This blog explains more about what you can and can’t claim.

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

How to Market Your Products at Holiday Crafts Fairs and Flea Markets

By Rieva Lesonsky, Guest Blogger
Published: November 21, 2012

 

The holiday shopping season is here, and customers are poised to spend more than $586 billion on gifts this year—a 4.1 percent increase over last year. But not all of that action is taking place on Black Friday or Cyber Monday, or at the local mall. For smart small businesses whose products have wide appeal, holiday arts and crafts fairs and local flea markets or other outdoor shopping events are great ways to garner additional sales this time of year. To get started, follow these steps.

Check out what events your community and nearby communities host. Many cities have ongoing flea markets or outdoor “swap meets” that run all year long. Others have special holiday crafts or arts fairs spotlighting products from local companies or individual craftspeople. All of these options can be great ways to sell your wares to not only local customers, but also visitors from out of the area.

Determine where your products fit. Is your product locally sourced, artisanal or handmade? Then crafts fairs or arts events can be a better fit. Swap meets and flea markets are better for products that sell at an “impulse” price point, that lend themselves to demonstrations, or that are trendy (think “as seen on TV”-type items). If you sell food, you’re likely a fit at any outdoor event. Also consider the community where the fair or event is being held and the likely target audience. For example, an arts and crafts fair might attract upscale retirees, while a swap meet is more likely to bring out young families on a budget. If it’s an ongoing event, organizers should be able to give you an estimate of total numbers and even a breakdown of the likely audience.

Know what’s required. Get in touch with the organizers well ahead of time. Find out how much it costs to rent booth space, any special requirements in terms of signage, times to load-in and load-out of the event, restrictions on booth size or vehicle size, and what kind of access to electricity you’ll have (if needed to power demonstrations or point-of-sale systems). If you sell food, ask about any health department restrictions or licensing regulations that affect your booth.

Get feedback. If you’ve never sold at this particular event before, don’t commit until you talk to other business owners who’ve done it in the past. Find related, but noncompeting entrepreneurs and ask them if they got business from the event; if they thought it was worthwhile; and any tips, cautions or words of wisdom they can offer for selling at the event.

Plan ahead. Before the fair or event, make sure you have enough product on hand, an adequate display and bags or packaging. You’ll also want to bring marketing materials such as business cards or brochures for people who don’t buy today, but may want to shop later. Finally, make payment fast and easy by providing several ways shoppers can pay. It’s best to have a tablet or smartphone so you can accept payments via credit or debit card with Square, Intuit GoPayment, PayPal Here or other mobile payment reader. (See Caron Beesley’s article on mobile payments for more details on mobile options.)

Staff up. You won’t want to leave your booth unattended (or customers un-waited on) for a moment, so be sure you’ve got plenty of energetic salespeople on hand. Drumming up business is important at crowded events, so your team needs personality. They can’t be too shy to call out to customers or demonstrate what makes your product so great. Provide snacks and water to keep your team’s energy level high.

Approach them the right way, and crafts fairs or swap meets can be the gift that keeps on giving for your small business.

About the Author:

Rieva Lesonsky
Rieva Lesonsky

Guest Blogger

Rieva Lesonsky is CEO and President of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow Rieva at Twitter.com/Rieva and visit SmallBizDaily.com to sign up for her free TrendCast reports. She's been covering small business and entrepreneurial issues for more than 30 years, is the author of several books about entrepreneurship and was the editorial director of Entrepreneur magazine for over two decades

How to Price Your Small Business’ Products and Services

By Caron_Beesley, Contributor
Published: November 19, 2012 Updated: September 28, 2016

The goal of business is to make a profit. Many small businesses fail at this because they don’t know how to price their products or services, but pricing is the critical element to achieving a profit, a factor that all firms can control.

If you’re a startup or are revisiting your pricing strategy, here are some suggestions from industry experts and small business owners to help you get the price right. 

1) Understand service costs and their impact on pricing

Every service has different costs. Many small service firms fail to analyze their services' total cost and thus fail to price them profitably. By analyzing the cost of each service, prices can be set to maximize profits and eliminate unprofitable services.

The Iowa Small Business Development Center offers a useful course on How To Price Your Products and Services, which includes tips for analyzing your total costs. Components to understand and analyze are:

  • Material costs
  • Labor costs, including, but salaries plus benefits
  • Overhead costs. Any cost not readily identifiable with a particular product is overhead. Taxes, rent, insurance, marketing and transportation are all overhead. Part of the overhead costs must be allocated to each service performed or product produced and must be adjusted annually.

Tip: To help you calculate your gross margin and understand its impact on pricing.

2) What are your competitors charging?

Pricing isn’t just about making a profit and covering your operating expenses, it’s also about where you want to position yourself in the marketplace, explains Scott Gerber, host of Inc.com’s Ask Gerber.  Where do you want your brand to be in the grand scheme of things? Perhaps you want to be the high-end competitor to someone who’s at the low-end of the market, or the reverse. The key, as Gerber suggests, is figuring out what’s going to get you the best penetration in the market as fast as possible, and broadening your client base according to what your competitors are not doing with their pricing models.

Useful Tools: Check out SBA’s SizeUp tool to help you assess how your business stacks up against the competition.

Tip: Do not try to compete with a large store's prices. They buy in larger volumes and their cost per unit is less. Instead, highlight other factors, like customer service.

3) Take advantage of front-end, back-end and/or tiered pricing

This is a common tactic for structuring your pricing model. Gerber suggests thinking of a car dealership. A sales rep knows he has multiple options for generating revenue from every customer who walks onto the lot. So the rep has the advantage of not only locking the customer down on a price for a car (the front-end pricing), but can also be pretty sure that the customer is going to pay more on top of that price for financing options and other add-ons – whether they anticipated this or not. Consider this the back-end pricing option. Bundled together, they equate what is also known as tiered pricing.

Tip: Think of ways you can tier your small business’ pricing structure to sell people early on the notion of a price, and then add options that ultimately will help you increase your bottom line.

4) Understand your conversions and metrics

Make sure you know how much you’re actually making on a particular product or service so you can figure out if that’s the right fit for that product. As an example, Gerber explains, if you’re selling only one out of 10 customers on a certain product, maybe that’s a sign that you’re pricing it too high. Consider the merits of dropping it by maybe 10-20 percent; you could increase the conversion rate by three or four times. The money you make on aggregate sales would be more than you’re making now on that one product. The bottom line is never assume things are okay as they are and can’t be done differently and perhaps more profitably.

5) Price higher than you think you would

An owner of a local fencing and decking contractor recently surprised me by admitting: “I always unwittingly underprice my services.” This wasn’t sales speak; he was simply recognizing that although he’s the best at what he does and has plenty of business, he doesn’t make enough money on the jobs he quotes.

Not charging enough is a common problem for small businesses simply because they often don’t have the operational efficiencies of larger companies and frequently find that, whatever they sell, their costs are higher than they anticipated. Small businesses do have one advantage, though, and it’s one that justifies charging a higher price – service! Here are two blogs that offer tips for leveraging service as a value proposition and revenue generator:

  • How to Avoid Falling into a Price War by Focusing on Value

Tip: Other differentiators can help you justify higher prices or selling above your competition. including:

  • Satisfaction in handling customer complaints
  • Knowledge of product or service
  • Helpful and friendly employees
  • A convenient or exclusive location
  • Exclusive merchandise

6) Pricing below the competition

If you decide you want to adopt a low-end competitive pricing strategy, remember that your profit margin per sale is going to be less so you’ll need to focus on reducing your costs. The Iowa SBDC recommends several best practices for this approach:

Obtain the best prices possible for the merchandise

  • Locate the business in an inexpensive location
  • Closely control inventory
  • Limit product lines to fast-moving items
  • Design advertising to concentrate on "price specials"
  • Offer no or limited services

Tip: While some businesses can be successful with this strategy – think online retailers who can take advantage of cost-cutting like drop-shipping – it can be difficult to maintain this approach. Why? Because every cost component must be constantly monitored and adjusted. It also exposes a business to pricing wars. Competitors can match the lower price, leaving both sides out in the cold. 

What pricing strategies have worked for your small business? Leave a comment below or discuss them below.

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

How a Good Fico Score Impacts Business Fundability

By Marco Carbajo, Guest Blogger
Published: November 15, 2012 Updated: November 23, 2012

One of the benefits to building a creditworthy company is that lenders, creditors and suppliers will determine the level of credit risk based on the company’s creditworthiness rather than that of the owners.

However, there are instances where a lender will require a personal credit check as part of the overall risk assessment. In these cases, it is in the best interest of you, the business owner, to have a positive credit rating with the consumer credit agencies.

If credit scores currently fall below 680, then focus on taking positive steps to improving those numbers.

With good fico scores, you have a much greater selection of funding options to choose from. Even if a lender is allowed to check a credit rating, once approved, the creditor may only report the debt and payment history to the company’s credit files – not the files of the owners.

If you decide to apply for business credit with a lender who requires a personal credit check, you should know what the scores are beforehand.

FICO is the most widely used credit scoring system in the world. The majority of lenders will use this system to obtain scores to determine the credit risk of an individual. Each score is based on the information that each consumer credit agency keeps on record.

First, you should visit the MyFico website and determine his Transunion and Equifax credit scores. They will provide a detailed explanation on the positive and negative factors affecting the scores.

Secondly, order the credit score from Experian at the main website. Currently, Experian offers a credit report and credit score that includes a breakdown of factors that raise and lower scores.

Once you receive your scores and reports, you should look for any errors, inaccuracies or outdated information. If any questionable items are uncovered with any of the reports, then initiate a dispute n immediately with the agency containing the errors.

  • For Equifax – Go to Equifax.com and click on the “Dispute Errors on My Report” text link. You can initiate a dispute online, but you will need to supply a confirmation number that can be found on your Equifax credit report.
  • For Transunion - Go to Transunion.com and click on the “Credit Disputes, Alerts & Freezes” tab. You will need to create an account first, but once you log in you will be able to initiate a dispute, check your dispute status and trigger a credit freeze if needed.
  • For Experian – Go to Experian.com and click on the “Disputes” text link located at the bottom of the page. You will need a report number that can be found on your Experian credit report. On this site, you can start a new dispute, check the status of an existing dispute and view results of a completed dispute.

It is vital to monitor personal credit and ensure all information being reported is accurate and up to date. Just one mistake can impact credit scores and cost hundreds, if not thousands, of dollars in additional payments and interest that a business owner should not be paying.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

How to Use Social Media to Do a Better Job of Customer Service

By Caron_Beesley, Contributor
Published: November 15, 2012 Updated: November 15, 2012

Ever emailed or called a company’s customer service department and got no response or a poor response to your comments? Did you instead post a rant on Twitter or Facebook until you got a response? You’re not alone – more and more customers are expecting brands to step up and respond to these posts.

According to a recent report by Gartner, by 2014, organizations that refuse to communicate with customers by social media will face the same level of wrath as those that ignore today's basic demand that they respond to emails and phone calls. “The dissatisfaction stemming from failure to respond via social channels can lead to up to a 15 percent increase in churn rate for existing customers,” said Carol Rozwell, VP and analyst at Gartner.

The message is clear: You need to use social media not just as a marketing tool but as a systematic part of your customer service model.  Here’s how:

Align Social Media with All Levels of the Organization

For small businesses, customer service is so much more than one person or one team; it reaches across the entire business. From sales to marketing, billing to product development – these are all touch points for your customer, and it’s essential that each of these uses social media to ensure your business is customer-centric and taking care of online reputation management.

Try to involve whoever manages your social media presence in important weekly meetings so they are informed about all elements of the business while they serve as the voice of your social media followers.

Change Your Social Media Paradigm

Social media represents the human face, voice and ears of your business, but the fact is there are more brands that ignore comments on Facebook and Twitter than there are brands that respond. This is why using it as a customer service tool often requires a change in paradigm – and commitment. Here are some things to consider:

  • Recognize that your social media efforts are front and center to your efforts to retain and nurture prospects and customers.
  • Be strategic about social media and how you engage with fans. Don’t treat it as an aside to be taken advantage of when you need to promote your latest sale or event.
  • Monitor social media regularly throughout the day. Very few businesses actually do this.
  • Endeavor to respond to issues the same day, even if you simply thank your customer and inform them that you are looking into the issue. If you don’t, things can quickly snowball in full view of an audience of hundreds or thousands, including potential customers.

Set Rules that Define Your Response to Customer Service Issues

If you haven’t done so already, set some rules: who manages your social media voice and how should they should respond to negative comments?  Lay out a clear path for escalation and resolution.  This will ensure you or your social media leader is prepared to respond promptly when issues arise. This is especially true if you outsource this function or hire a junior level person to manage your social media.

Work out ahead of time a method for categorizing comments and develop a hierarchy for responding. For example, how will you handle a general comment or suggestion from a follower, versus how will you handle a genuine complaint? Does it require an immediate response? Escalation? And don’t forget to monitor some of the more serious posts further.

When to Respond

Being proactive about social media doesn’t mean you have to respond to everything. Just don’t overlook anything! Consider the following:

  • Not all comments are relevant or even solvable – For example, some folks who post public rants on your Facebook page may not actually want anything from you. They just need to get it off their chest. Such comments are often best ignored; you don’t want to add fuel to the fire.
  • Address legitimate complaints – If a customer has a specific and legitimate complaint (say, for example, the quality of a service or product didn’t live up to expectations), you need to address the issue publicly, promptly and in the same media it was made. Try to move the conversation offline, only after you’ve posted your initial response.
  • Look for positives in a negative comment – For example, if someone makes a complaint but also suggests ways you can do things better next time, acknowledge this, let them know you will share the suggestion internally – and follow through on this pledge.

For more tips on how to respond to criticism, including how to apologize, check out my earlier blog: 7 Tips for Dealing With Criticism of Your Business on Social Media.

Learn From Your Interactions

I’ve already mentioned the importance of bringing your social media lead to the business-wide conference table, but it’s also important to keep a record of customer service interactions. Again, this is part of the new paradigm. Think of it as the equivalent of monitoring a call and using it for training purposes. Share these conversations across the organization, and act on the critique and feedback.

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

If Your Employees Drive for Your Business, be Aware of Rules about Cell Phone Use

By Caron_Beesley, Contributor
Published: November 14, 2012 Updated: November 14, 2012

Do your employees drive commercial motor vehicles (CMVs) as part of your business operations? If they do, it’s important that you and they know about stringent regulations that went into effect nationwide in early 2012, restricting the use of handheld cellular phones while driving.

The U.S. Department of Transportation ruling restricts CMV drivers from the following:

  • Making a call while holding a cell phone
  • Dialing a cell phone using more than one button

It would have banned reaching for a cell phone in an unsafe manner, but after pushback from a variety of industry associations, the DOT amended the rule to permit drivers to reach for a compliant mobile telephone (i.e., a hands-free phone), provided the device is within the driver's reach while he or she is in the normal seated position, with the seat belt fastened. 

The rule also bans employers from requiring or allowing a CMV driver to use a handheld cell phone while operating a vehicle. CMV drivers must also be prepared and equipped with hands-free cell phone options before they drive a vehicle. The fine is steep – up to $2,750 for drivers and up to $11,000 for employers.

The ruling is based on research conducted by the DOT that put the odds of being involved in a safety-critical event are three times greater when the driver is reaching for an object than when the driver is not reaching for an object. If the driver is dialing a cell phone, the odds of being involved in a safety-critical event rise to six times greater than when the driver is not dialing a cell phone.

Other potential liabilities employers may face

Clearly, employers who have commercial motor vehicle drivers in their workforce need to be more aware than ever of potential liabilities they face for the actions of their employees behind the wheel. To boost awareness, the National Federation of Independent Business (NFIB) has put together a useful list of rules employers need to remember if they have employees who drive any vehicle for work:

  • Business owners are generally responsible for injuries to third parties that are caused by employees acting within the scope of their employment – whether the employee is driving a company-owned vehicle or a personal vehicle (i.e. if an employer authorized the employee to do it or it was deemed necessary in order for the employee to carry out the job).
  • Employers may be held liable for allowing unlicensed, incompetent or unqualified employees to drive a company car. Incompetency can include driving under the influence of alcohol or reckless driving.

The NFIB goes on to suggest that employers should be aware of federal laws that govern CMV safety and should encourage safe driving habits, including:

  • Ban all employees from texting or talking on the phone while driving for work.
  • Encourage employees to pull over before using a cell phone in a car.
  • Limit or altogether end any work-related driving by employees with poor driving records.
  • Update your company’s policy and any employee handbooks to reflect the most recent regulations in your area regarding distracted driving.

Related Resources

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

6 Things You Need to Know About Your Tax Responsibilities as an LLC

By Caron_Beesley, Contributor
Published: November 13, 2012 Updated: December 29, 2017

Do you operate a single “owner” or member limited liability company (LLC)? Thinking of forming a multi-member LLC? Either way, you’re likely to have questions about how your business is, or will be, taxed.

Here’s what you need to know.

The Basics of Tax Law for LLCs

First, it’s important to understand how an LLC is structured according to tax law. Unlike a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses "pass through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership. The business does not pay federal income taxes, although some states do apply an annual tax to LLCs.

Depending on the number of members in your LLC, the IRS will treat your business like a sole proprietorship or partnership. However, certain LLCs are automatically classified and taxed as corporations by federal tax law. LLCs not automatically classified as corporations can choose their business entity classification. To do so, an LLC must file Form 8832. Refer to this guide from the IRS for guidelines about how to classify an LLC.

Income Taxes for Single Member LLCs

If you operate single member LLC, then the IRS will treat your business as a sole proprietorship (unless you elect to be a corporation) – meaning that the LLC itself does not pay taxes. Instead, you report all profits and losses of the LLC on your personal income tax return on (Schedule C) and file it with your 1040 tax return.

Get forms and read more from the IRS about single member LLC tax responsibilities. This page also explains when you should file using your social security number and when you should use your Employer Identification Number (EIN).

Income Taxes for Multi-Member LLCs

If your business has multiple owners, the IRS will treat your business as a partnership, unless you elect to be taxed as a corporation. Again, the business doesn’t pay taxes, but each owner is taxed on their share of the profits via their personal tax returns (attaching Schedule E). How a multi-member LLC shares profits is defined in the LLC Operating Agreement. Although not required by law in most states, this agreement structures your LLCs financial decisions, including how profits and losses are distributed.

You’ll also need to file Form 1065 (as all partnerships do) with the IRS. This form helps the IRS determine that each member is reporting income correctly. The LLC also must give each partner a Schedule K-1, showing each member’s share of partnership income, credits and deductions. Each member then reports this on their individual Form 1040 and Schedule E. If the LLC is a corporation, it should file Form 1120.

Read more from the IRS about an LLC filing as a corporation or partnership.

If your LLC splits profits and losses in a manner that doesn’t match each member’s percentage interests, you’ll need to request a “special allocation” from the IRS – something you ought to consult about with an accountant or tax lawyer.

Paying Estimated Taxes

LLC owners and members are self-employed and therefore aren’t subject to tax withholding, so each member must pay estimated taxes and self-employment taxes (Medicare and Social Security) quarterly to the IRS and their state tax office. 

If you have a multi-member LLC with an owner not actively involved in the LLC (i.e. they invested in the business but don’t participate either through providing services or making management decisions), then that owner may be exempt from paying self-employment taxes. Your accountant or tax lawyer can tell you if your business meets the specific requirements of this exemption.

Sales Tax

Sales tax is a point-of-purchase tax imposed by state and local governments. The purchaser pays it and, as a small business owner, you assess it, collect it and pass it on to the appropriate authorities within the prescribed time. Rates and laws vary from state to state, which often leads to confusion, especially if you sell to customers in more than one state. 

State Taxes

If you operate an LLC, you’ll typically pay taxes to your state in the same way you do to the IRS – through your individual returns. Some states charge an LLC tax on income earned by that LLC, on top of the members’ income tax paid. Other states charge an annual LLC fee, unrelated to income, also known as a franchise tax, registration fee, or renewal fee. It’s a good idea to check the tax and business law in your state before you form an LLC.

Useful Resources

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

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Schedule C Profit or Loss from Business

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The 5 Biggest Myths About Social Media in Marketing

By smallbiztrends, Guest Blogger
Published: November 8, 2012

 

Social media, as with anything new, is sometimes misunderstood.  People either overinflate or underestimate the value and importance of it. And that’s not the only things they get wrong.  Often they misunderstand what it takes to incorporate social media into your marketing. Here are 5 of the biggest social media myths about using social media in marketing:

Myth #1 - Social Media is Not Real Marketing

If you’re still thinking that social media is a fad and will eventually fade away, I have news for you: I hope you aren’t holding your breath.

It’s true that social media sites come and go. At one time, MySpace was the hot darling, as was Friendster, Orkut and others whose names are slowly becoming mere memories or are struggling to try to reinvent themselves. The big social sites today for small businesses include LinkedIn, Facebook, Twitter and one day soon, Google+.

But even if the social media sites we are using today die, the behavior of using social media is not going away.

The 2012 Local Search Study found that the number of people using social media to look for local business information has increased 67 percent. There are now 15% using social media to find information about local businesses. That may not sound like a lot, but if there are 100,000 potential buyers within a 50-mile radius of your business, and 15% are turning to Twitter or Facebook, that’s 15,000. Not a meaningless number.

Myth #2 – Social Media Is Fine for Teenagers, but Not My Serious Business Customers

According to a February 2012 Pew Internet study, 66% of online adults are using social media sites. As of August:

  • 12% of online adults use Pinterest
  • 12% of online adults use Instagram
  • 66% use Facebook
  • 20% use LinkedIn
  • 16% use Twitter

Facebook now has one billion users.

So unless your customers are holed up in the backwoods somewhere without access to the Internet, chances are those percentages are reflected in your target market.

We have seen the consumerization of technology, and that includes how we use the Web. People increasingly start using technology (such as smartphones) and websites for their personal lives.  Then once it becomes a comfortable habit, it bleeds over into their work lives. Social media is just one more example of this.

Myth # 3: The Best Person to Run a Social Media Campaign is a Teenager or Young Person

The news is replete with stories of big brands that run into social media trouble because someone makes a post on social media using poor judgment – either unprofessional sounding, or insulting someone or some group. Or it can be a simple mistake, such as posting a tweet using a company Twitter handle instead of a personal handle, because of having both accounts in a central tweeting tool such as Hootsuite. It’s all too easy to make a mistake like that. 

Not only that, just because someone is “young” doesn’t mean he or she knows anything about marketing. And if you’re using social media as part of your marketing mix, wouldn’t you want someone who understands marketing at the helm of that effort? Wouldn’t you want them to have a grasp on marketing strategy, understand something about executing marketing campaigns, know how to use and interpret analytical data to measure the effectiveness of various efforts, know how to deal with customer complaints, and so on?

Always keep the end goal of your staffing in mind – and remember that if you’re using social media for marketing, putting your best marketing foot forward is what you want to have confidence your staff can do.

Myth #4:  People Will Say Negative Things About Us

You know what? If people are going to say bad things about your brand, or your products or services, then they have plenty of places to do that online. They don’t need your Facebook Page to do that – they have their own Facebook Profile with their own followers they can spout off to.

Now, I will say that if you have a Facebook Page or a Google+ Page for your business, there is a chance that disgruntled customers may come over and say something negative on it. But wouldn’t you rather know that immediately and have the opportunity to address it and turn things around? 

Rather than fearing social media and plunging your head into the sand, you’d be better off developing strategies to deal with complaints effectively. And train your employees.

According to the Harris Interactive/Right Now Customer Experience Impact Report, 50% of consumers give companies a week to respond before they decide to stop doing business with them. You have a chance to save an unhappy customer and show others that you are responsive.  Or you can sit back and let unhappy people keep blasting you on their own venues. It’s up to you.

Myth # 5: Nobody Cares What We Think or Write About

One of the big questions by companies is, “What in the world do we write about on Twitter or our Facebook page?” It does take some work to develop a winning strategy. But don’t let a little hard work stop you. 

Don’t think about social media as a place to just send off an endless stream of mini-advertisements for your products and services. Nobody wants to read ads all the time. They want information; they want to connect. And yes, perhaps they want special discounts – but not a steady stream of “buy it now” type of message.

In fact, people do care about what your business and you have to say.

My advice is to step back and ask: how do we add value to our customers? When we’ve provided information in the past, what has resonated with them? What do they ask for when sales and customer service reps talk with them? If you don’t know, ask your sales team and your customer support team, because they will know.

Those are the 5 big myths we hear about.  Hat tip to Lisa Barone, one of the writers on my site, who put together an article on social media myths that I drew inspiration from for this article.  What myths do you see, or what questions do you have?

About the Author:

smallbiztrends
Anita Campbell

Guest Blogger

My name is Anita Campbell. I run online communities and information websites reaching over 6 million small business owners, stakeholders and entrepreneurs annually, including Small Business Trends, a daily publication about small business issues, and BizSugar.com, a small business social media site.

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