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5 Tax and Financial Planning Actions for the New Year

By BarbaraWeltman, Guest Blogger
Published: December 19, 2013

With 2013 almost over, it’s time to focus on 2014 and get the year started off right. Here are some actions to take now or in early January that will help you optimize your tax and financial results for the coming year.

1.  Revisit your recordkeeping practices

Records are vital for both business and tax purposes. They help know whether or not you’re profitable and provide key information to help you take business actions, such as adjusting prices, cutting expenses, or raising money.

What’s more, in order to take all the deductions and credits to which your business is entitled in 2014, you’ll need good books and records. Often business owners fail to pay attention to this detail until it’s too late and the IRS is questioning write-offs claimed on a return.

Set up a recordkeeping system that satisfies tax law requirements, and make sure that employees know what to do. Check IRS Publication 583 for details on recordkeeping rules for tax purposes. Consider using apps that can help with recordkeeping, such as those for capturing receipts for travel and entertainment expenses. Some may be available for use with, or provided by, your current bookkeeping software or cloud solution.

2.  Note your odometer on January 1

If you use your personal vehicle for business, you can deduct the cost of business driving only if you have the records to back this up. This means noting your odometer at the start of the year and then tracking your business trips regularly.

Again, consider using an app for tracking mileage. Some are free; others entail a modest fee.

3.  Review your business plan

Your business plan should include projections for sales and expenses in the coming year. If you haven’t yet updated these for 2014, do so now, advises SBA blogger Tim Berry. The projections aren’t carved in stone, but they serve as a very useful benchmark against which to measure your results.

It’s a good idea to check projections monthly so you can make adjustments as needed in a timely manner. For example, if you’ve been expecting gasoline prices to remain low but they suddenly spike, you may need to reduce another expense, such as advertising, to keep your budget in check.

SBA tools can help you create a business plan.

4.  Fix your withholding/estimated taxes

If you work for your corporation, make sure that withholding for 2014 will cover your projected tax obligations. Be sure to take into account the 0.9% additional Medicare tax on taxable compensation over a threshold amount that depends on your filing status (e.g., $200,000 for singles; $250,000 for joint filers) as well as the 3.8% additional Medicare tax on net investment income.

If you’re self-employed, your estimated taxes will have to cover roughly what you expect to owe for the year. These taxes should include not only the additional Medicare taxes if you’re a high-income taxpayer, but also self-employment taxes (to cover your Social Security and basic Medicare tax obligations).

The IRS offers guidance on withholding and estimated taxes in Publication 505; the 2014 version should be available early in 2014.

5. Plan to work closely with your tax and financial advisors

Make it a New Year’s resolution to stay in touch regularly with these professionals. While there are fees for these services, likely they will save you money and trouble in the long run.

Conclusion

The economy and taxes are continually changing. Make it your top resolution to stay informed about new developments that can affect your business and impact your actions throughout the year.

About the Author:

BarbaraWeltman
Barbara Weltman

Guest Blogger

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BigIdeas4SB or at www.BigIdeasforSmallBusiness.com

Practices to Protect Your Small Business from Employee Lawsuits

By jdelung, Contributor
Published: December 18, 2013 Updated: December 18, 2013

Getting sued by current or former employees happens more often than you might think. In fact, the number of lawsuits filed regarding wage-and-hour laws alone in 2011 went up 32 percent from just three years prior. Don’t be too busy to check in and ensure you aren’t breaking laws or otherwise opening yourself up to a potential lawsuit — no small business owner has the time, or money, for that.

There’s a plethora of advice out there on the subject of protecting your business from lawsuits. Before you read on, remember, you should always consult your legal counsel to ensure you are complying with federal and state laws. Laws regarding certain practices, such as non-compete agreements, vary widely from state to state.

Information and resources on avoiding legal trouble

We’ve compiled a list of some of the most helpful tips from around the Web.

When in doubt, consult your legal counsel. However, by taking some preventative measures, you could avoid legal issues before they start.

About the Author:

Joshua DeLung

Contributor

I am an author for the the SBA.gov Community. I write about useful topics for your entrepreneurial endeavors and help point you in the right direction to find other resources for your small business needs. Our ongoing goal is to improve this site to meet your needs, so we're happy to receive your feedback and participation. Thanks for joining our online Community here at SBA.gov!

How Small Businesses Can Get Tax Deductions for Charitable Giving

By jdelung, Contributor
Published: December 16, 2013 Updated: March 8, 2016

Most small businesses make charitable donations. In fact, surveys have shown that about 75 percent of small business owners donate some portion of their profits — about 6 percent on average — to charitable organizations each year.

As we’re in the midst of the holiday season (and tax season looms), many small business owners are likely considering charitable contributions and wondering how such donations might impact the bottom line in terms of tax deductions. First, it’s important to choose the right charity and avoid certain pitfalls that could leave you in a bind.

Choosing the right charity

Only certain types of contributions qualify for a deduction (more on that later), so if getting the tax benefit is part of your goal, it’s important to properly research any organizations to which you plan to donate. However, you might also think about other potential benefits (aside from the great feeling you get from helping others) such as how the donation aligns with your public relations strategy for corporate social responsibility and how meaningful a volunteer project or fundraising initiative might be for employees.

Although tax deductions and the rewarding benefit of helping those in need are often goals in charitable giving, you should also consider that such acts also open up an opportunity to showcase the good work you’re doing in the community to potential employees and customers. 85 percent of consumers have a more positive image of companies who are philanthropic. Employees who have a favorable impression of their company’s philanthropic program are five times more likely to remain with their employer.

For more on aligning your charitable giving strategy with your business strategy, follow these five tips from Small Business Trends. You should also consult the FTC’s checklist for avoiding charity scams.

Getting the deduction

Again, not everything qualifies. But by following these general guidelines and consulting your accountant or tax attorney, your small business should be set to get credit.

  • Identify an eligible charity, usually a 501(c)(3), using this IRS search tool
  • Make an eligible donation: cash, volunteered services, sponsorship of a charity event or the donation of inventory or services
  • Understand that each category has its own limitations (for example, you can’t deduct the value of your volunteered service, but you can deduct expenses incurred such as supplies) — links to all the related forms and limitation information are available from the IRS (see also: IRS Publication 526)
  • Ensure the donation is paid in full by the end of the tax year and reported through Form 1040, Schedule A
  • Take your deduction, but remember that the IRS limits the amount of charitable donations that can be considered tax-deductible to 50 percent of your adjusted gross income
  • Keep records — you’ll want them in the event of an IRS audit. Generally, an organization should give you a written statement if it receives a contribution from you

Charitable giving boils down to determining your strategy, properly researching the organization to which you wish to donate and following the IRS’ guidelines for giving. Do those three things, and your small business will be well on its way to giving back.

About the Author:

Joshua DeLung

Contributor

I am an author for the the SBA.gov Community. I write about useful topics for your entrepreneurial endeavors and help point you in the right direction to find other resources for your small business needs. Our ongoing goal is to improve this site to meet your needs, so we're happy to receive your feedback and participation. Thanks for joining our online Community here at SBA.gov!

Responsive Website or App: Which do you Need for Your Mobile Strategy?

By smallbiztrends, Guest Blogger
Published: December 6, 2013
The fact that half of mobile phone users now use mobile as their primary source for Internet means that more small businesses need to up the ante. Not all websites render well on small mobile devices, so it may be worth the investment to get more mobile-friendly.
 
But the question is: should you have a responsive website or a mobile app?
 
Let’s look at your business needs to figure out the answer.

First, is Your Site Mobile Friendly?

Here’s an easy way to find out: use Google’s Multi-Screen Resources tool. Enter your URL and get a free report making suggestions for how your site could be optimized for mobile. Some of the suggestions might be simple enough to fix without investing more.
 
If you use Flash, that will probably be one of the pain points that comes up. Not all mobile devices — especially Apple — are equipped to display Flash graphics.

The Difference Between Responsive Websites and Mobile Apps

A responsive website — you guessed it — responds to the medium it is displayed on. For example, when your site is viewed on a desktop, it might display three columns and a sidebar. But if it’s viewed on a tablet or mobile phone, you might see a simplified version with fewer columns and easier navigation.
 
It can be difficult to navigate or click links on a static site when used on a mobile device. Sites can appear cluttered, which may send people away from your site.
 
Mobile apps, on the other hand, are downloaded with a specific purpose. They’re best for brands that have strong customer loyalty (people expect to access the information on the app enough to actually download it). The app might provide your store locations, special offers, or allow users to access their account information.

Next, What’s Your Goal?

If you simply want people to be able to visit your site and have it look user-friendly, a responsive website is the best way to go. If people don’t necessarily benefit from visiting your site while they’re out and about (you don’t have a physical location they need information about or coupons for), simply having a site optimized for mobile is your best and easiest option.
 
On the other hand, if you’re trying to drive users to a physical store or location, an app might do so. Given the fact that 80% of the time on mobile is spent using apps, hesitate before you assume you don’t need one. It really comes down to the value you offer in the application. A map to your nearest location might not be useful, since most users use a Map application, but an app that notifies users when they’re close to a store and offers a special coupon might be.
 
Also if you have a platform where your customers log in to make transactions or you sell products on your website, an app can provide a secure place to do so. Many mobile users may feel more safe entering their login information through an app than through a mobile website.

Why You Must Make a Change

Whichever option you select, it’s important that you take measures to improve the functionality of your website. Here’s why:
  • Slow loading times will cause mobile users to leave your site
  • A page that doesn’t render well won’t encourage people to sell
  • More, not fewer, people will use smartphones in the future
  • The more ways you have to connect with potential customers, the better your conversion
As a business owner, you’ve got to do everything you can to make the trail from your site to a sale as easy as possible. Responsive web design and mobile apps provide just one more way to bring leads into the funnel.

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.

How Dismissing Business Planning Can Hurt Your Business

By Tim Berry, Guest Blogger
Published: November 27, 2013

If you’re still thinking of a business plan as a formal, static document, then you’re sadly out of date and you’re missing out on real business planning, which is a management process that makes your business better.

That old-fashioned business plan document was not uncommon about a generation ago. It is now. Back in the 1980s, as the personal computer industry took off, the big business plan document was a common part of the typical high-tech startup’s efforts to raise capital as risk investment. Venture capitalists and angel investors expected it. But as the rise of online changed the business landscape, time frames and attention spans shortened, physical locations became more frequently virtual cyber locations, real business planning evolved.

Business planning today is not a document; it’s a process. It’s part of managing a business by steering, with a route and directions set, but course corrections to keep things moving towards goals as situations change. Business planning starts with a short, streamlined “just big enough” business plan that covers only what your specific business case needs to move ahead. Usually that’s some brief reminders of overall strategy, plus specific dates and deadlines for activities, plus projected business numbers aimed at managing cash flow. And it’s an efficient, economical effort because everybody understands that each version of the business plan is good for a few weeks at best and was built to change. A business plan is not ever finished and left alone, because business assumptions change quickly. To be useful requires regular plan review and course corrections.

So what’s the value of business planning?

I start with what is not the value of business planning. The value of planning is not guessing the future correctly. It is not having a static document you have to stick to. It is not having step-by-step instructions laid out a year in advance so you don’t have to think. And, except for those rare cases – one in thousands in which a business plan is used to inform outsiders – it is not describing your business. And it is not text or formatting.

What is the value of business planning? It drives business decisions, reduces uncertainty, manages change and optimizes management. Here are some of the ways it does that:

  1. The business planning explores the interdependencies between different business activities, such as sales, product development, marketing and administration. For example, business planning relates to spending on marketing to the expected sales that result from marketing. Business planning makes the difference between fixed costs and discretionary costs more visible. Business planning focuses on drivers of sales and traffic, and spending to generate sales and traffic.
  2. The business plan sets down dates and deadlines and budgets for activities, which becomes an extremely useful tool for managing execution. It’s the perfect format for watching performance compared to expectations.
  3. Business planning manages change. For example, if sales should suddenly increase, the business plan is an immediate link to related marketing expenses to help you invest more in what’s working. Regular monthly plan vs. actual analysis helps managers identify changing assumptions and develop changing plans to deal with changing assumptions.
  4. Business planning helps you manage to keep long-term objectives in mind while at the same time frequently refreshing short-term activities. It’s looking at the horizon while minding the details at your hands and feet.

The misunderstanding of what business planning has become – the stubborn myth of the formal static document ¬¬– stands between a lot of people in business getting the benefit of good business planning. It’s a process, not a document.

About the Author:

Tim Berry
Tim Berry

Guest Blogger

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .

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