Small Business Tax Time

Every small business must deal with the unpleasant task of preparing and filing their taxes each year. While the process is easier than for large corporations, it can still be more challenging than your personal taxes and confusing. If you’re new to this process or need a refresher, here are the basic steps to getting those taxes in.

The first thing you need to do is obtain an Employer Identification Number online from the IRS. While it is not required for every business to have one for tax filings, other companies may need it for doing business with you, anyway. Then you will need to gather all your sales receipts, invoices, cancelled checks, deposit slips, and other documents from the year. Hopefully, you have saved copies of these and kept accurate records, either electronically, on paper, or both. If the IRS asks you to explain anything on your tax return, these items will be valuable proof that you need.

T

hen you need to be sure there is a bookkeeping and accounting system in place that functions well to record all income and expenses. It does not have to be complex, but it will give you something to look back into if you are asked for further information. Finally, you may have already known this, but every new employee needs to complete and sign a Form W-4. This determines how much income to withhold for taxes before they start work. You may want to keep these tax withholdings in a separate account so you can use that to pay the necessary employment taxes.

To file your taxes, first gather and fill out all the forms you need. Schedule C or C-EZ of Form 1040 is probably what you need. This is called “sole proprietor income taxes”. Schedule SE of Form 1040 is for self-employment income. Finally, Form 1065 is for partnership income taxes.  The next step is using the IRS’ E-File system online, unless your company is required to file by mail. Filing online is faster and easier. The final step is to send every employee a W-2 form. You will also need to send copies to the Social Security Administration each year. Form 1099 goes to contractors.

In a nutshell, that’s about it. For specific tax write offs, deductions, and questions, you can explore the IRS website or consult with a tax professional. Since tax season begins in January, don’t put it off until the second week of April. Business taxes take considerably longer to process on your end and to get back from the IRS, so if you want your refund soon, get them done. There should be no need for tax extensions, although they are available for a fee. Take your time and be accurate to avoid an audit. Make it happen.

© 2013 eMarketing 4 Business LLC

Preparing Your Small Business for Tax Season

2012 is over and at the beginning of a new year, it’s almost that time again…tax time. Successful small businesses know what they need to do during this tedious but important process—here’s some tips to get you ready for filing taxes and hopefully save you some money.

Even though the focus is on making money from your day to day operations, you should have all your records in order ahead of time, which means up-keeping your system year round so you don’t have to pay an outside professional to do that for you. You should know what can be written off for your business, such as new equipment and supplies that you purchased throughout the year. You also need to take a close look at how you are calculating your estimated tax payments so you are not underpaying or overpaying. You may think that offering generous employee benefits will cost you too much money, but in reality, the loyalty and hard work you receive in return make it worth the effort. But besides that, it will save you money at tax time because you are not required to pay the employer’s share of payroll taxes on this form of pay.

If you run part of or all of your business out of your home, it’s important to have a designated space that is used as a home office. The reason is that you can receive deductions for this space on rent, utilities, and improvements. There are square footage requirements to qualify, so ask a tax official about these requirements and what can and can’t be deducted. Also, be sure you are filling out the correct forms for the type of small business you have. Speaking of these forms, know that there are different due dates for different forms so double check them on the IRS website so you don’t miss any deadlines and end up paying fees.

Finally, look into websites and apps that will make the tax filing process easier for you—Tax Answers by H&R Block, TurboTax, and EZ Tax Return are a few. Follow these steps and use your organization and experience so that this tax season is easy and stress free.  Make it happen!

© 2013 eMarketing 4 Business LLC

Ways to Save Money on Your Business Trip

Business trips are a great way to network with other businesses and if you have the privilege of traveling for your company, congratulations—you have made it. While these trips can be stressful and enjoyable at the same time, budgeting for travel and finding ways to spend less will make things easier for you in the long run.

Be sure to create a customized budget for each trip according to the destination. It’s going to be significantly more expensive to go to Los Angeles than Detroit. Don’t just come up with an arbitrary number; research the place you are going and plan accordingly. You may want to temporarily hire a travel expert to set up a lot of the accommodations for you. There are also business travel plans out there that are packaged in a way that is more affordable than booking everything separately. Use discount travel companies; often you can do everything online.

 Try to book air travel for the middle of the week when the rates are the lowest. Avoid luggage fees by only using a carry on (if possible) or flying with airlines that don’t charge a luggage fee. Save any unused tickets and apply them to future travel.

Consider using alternative transportation while you’re there such as subways and bus systems. If you do need a rental car, ask for one with a full tank of gas and fill it up before you return it—that way you are only paying for the gas you use. Waive the insurance if your personal auto insurance or credit card can cover it as these policies tend to be very expensive and the need to actually use the insurance policy is rare.

You can decide to have lunch with your clients instead of dinner. Lunch menus are generally less expensive than dinner menus and a restaurant that is outside your price range for dinner may be affordable for lunch.  Focus on and plan the leisure part of the trip. You don’t want to be bored to tears when your meetings are over and if you plan activities in advance, you will spend less money. Stay in a hotel with a kitchen and buy ingredients for some of your meals at the grocery store to make them yourself. You can also take advantage of free breakfasts at the hotel. Finally, you should plan business trips as part of your yearly budget so you don’t overlook these costs and wind up in debt. All these tips will make business trips easier to manage and more relaxing. Make it happen!

© 2012 eMarketing 4 Business LLC

Should I accept credit cards at my business?

It’s always a good idea to provide prospective and existing customers with as many ways to pay you as possible. Accepting credit cards is a good way to accomplish this. There are many instances where it would be more convenient for a customer to pay you by credit card rather than sending a check, meaning you get paid faster. Before you run off and start accepting credit cards you’ll need to make sure you have a couple percent of your revenue to pay for this convenience.

Credit card companies usually charge between 2 – 4 percent of the total amount charged on the card as a service fee to process the transaction and deposit the money into your account. It is not unusual to also have a per-transaction fee as well. In addition many processing companies have minimum fees if your calculated fees do not exceed a certain amount each month. There may also be equipment rental costs if you need a machine to swipe credit cards at your business location. Be sure all of fees and charges are laid out in writing before you sign on the dotted line with a credit card processing company.

Lastly, since people can dispute and potentially decline credit card charges, it is a good idea to make sure your credit card terms and conditions are clear and are available to your customers. Giving customers several ways to pay is a good idea for most businesses but that’s the great thing about having your own business…You get to decide!


© 2010 eMarketing 4 Business LLC

What are the top 3 financial questions you must be able to answer about your company?

1) Are you making money?

In many new businesses, the owner is putting so many of the companies expenses on credit cards that answering this question is more difficult than just looking at the business check book balance. They never spend the time to create a profit and loss statement to figure out if they are REALLY making money! Whether you are or not, the profit and loss statement should give ideas of where to focus your time. That may mean watching expenses or increasing sales of more profitable items.

2) How much does a new sale cost you?

I am always surprised at how many business owners can not answer this question. To get the answer, you need to add up all of your expenses associated with a sale. Many people want to just include the price of the lead, but don’t forget to include items such as: costs of leads that didn’t close, other advertising you do, salaries/commissions for sales staff, cost of item sold (product or service). It is best to know these costs per product/service line. This helps you know if the selling expenses associated with a particular product/service is eating up all your profit margins for that product/service.

3) What is the future value, in terms of revenue, of each of your customers?

This means how much business can you plan on getting from each of your new customers in the future? If you have consumable products, how often can you expect each customer to reorder? If you provide a service, when can you expect to do more work for each customer? Knowing the amount and frequency of repeat business allows you to better plan your company’s growth with each new customer won!

Having the answers to each of these questions will help keep you on top of the financial well being of your company.

© 2009 eMarketing 4 Business LLC

How much money should I spend on office supplies to set up my home office?

As little as possible! Too many people go crazy trying to set up their home office to be perfect, to have all the gadgets, new furniture, computers and all kinds of other things. Get what you need to function to start and AFTER you start making money you can think about getting more. Get focused on marketing your new business, tell everyone you know about your new company and try to get referrals. Get your business cards out to people and keep your website up to date.

Start making money with your new business before you start making additional investments in office equipment you don't need yet. Make it happen!

© 2008 eMarketing 4 Business LLC

Do my business taxes need to be filed by April 15th?

If you are on a calendar year-end reporting with your company, the answer is most likely yes. The only exception to that would be if you incorporated your business, in which case the company’s taxes are due March 15! You will at least have to pay any taxes you owe by that time. If you would like to file an extension for some reason you can do so, but the extension only gives you more time to file your taxes, not to pay your taxes. It’s always best to file by the original due date to get it out of the way. This way you can focus on building your business the rest of the year instead of having to be concerned about meeting your extension deadline.

Keep in mind that with your small business you will most likely have to complete your business taxes either before or at the same time you file your personal taxes. Since today is New Year’s Eve, it’s a good time to make your list of things to do in 2008 and completing your taxes on time is a great one to add to the list!

© 2009 eMarketing 4 Business LLC

Should I get a company credit card?

If you have good credit and you manage your finances well, you really don’t need a company credit card. All you need to do is keep your business expense separate and write the business reason on the back of the receipt. You’ll want to keep a running total of your business expenses for your taxes.

If you have a spouse or other people in your family using the same credit card, it is probably a good idea to get a credit card with your company’s name on it and only put your business expenses on that card. Typically you will be guaranteeing the credit card personally but the credit card company will put your business name on the card.

Here are a couple of good options for you if you are ready to get a company credit card. Click Here to view some credit card provider links.

See a related article titled: Should I add employees to my company credit card?

© 2009 eMarketing 4 Business LLC

My business needs money, should I get it from my home equity line if credit?

That is a tough question. First off, can you accelerate some of your accounts receivable accounts to get more cash flowing? If not, you can also try to send out your invoices faster and try reducing the timeframe for paying them to 15 days from 30.

Also, if you have some jobs pending out there you might tell the prospects you have an opening now and you may be able to reduce your bid to start a little sooner.

If all these suggestions still leave you tight on cash and you need a loan, taking it from your homes line of credit is certainly the easiest way to go but be careful…. If you’re planning on selling your house any time soon make sure the market hasn’t changed in your area and be sure you could sell the house with your current equity position, especially after you take the loan.

If you’re not sure on this one it might be a good idea to get a loan from your banker or a credit union. Credit unions usually have more less strict qualification guidelines and they may also have a lower interest rate than your bank.

If all else fails and you need the dough, your credit line may be the only alternative. Be careful and don’t take more than you need. Turn up your marketing efforts and try to get more business in the door!

© 2009 eMarketing 4 Business LLC

How do I know when its time to sell my company?

If you start spending a lot of time thinking about doing things other than running your business, if you’re oversleeping a lot and you dread the thought of having to keep going to work every day and if you’re day dreaming about what you would do if you didn’t go to work anymore….it might be getting time to sell.

Keep in mind there are lots of people who could never see themselves starting a new business but they can see themselves buying a business that’s already up and running and making money.

There are plenty of people that really enjoy the excitement and passion of starting a company and growing it but they get bored with the day to day of running of it. If you are the type of person who has built a successful business but you don’t enjoy managing and running a company on a day to day basis, it may be time for you to sell your company.

© 2008 eMarketing 4 Business LLC

Adding up other people’s money…

Everybody does it. You know what I’m talking about…..You’re sitting in a restaurant and you start adding up how much your bill will be and then you divide it by the number of people in your party and then you multiply by the number of people in the room. But you’re not done yet, now you figure out how many “turns” of the tables there will be that night, maybe 2 or 3 and then you’ve figured it all out, you know how much the owners made. There is some small talk and then everyone at your table thinks about how glamorous it would be to open your own restaurant and make all that money. Don’t take that thought too far!

You did figure out what the restaurant brought in (gross), but not what they made (net). There is a big difference between the two.

Look at your own small business, what percentage of your gross is going to pay your expenses? If you look at restaurants more than 50% of their cost is typically food and drink and put in another 40% or so for employees and when you add rent, utilities plus some other expenses you don’t have a whole lot left over.

The grass isn’t always as green as your quick calculations would have you think! It’s fun to play with numbers but make sure you focus on growing your revenues and keeping your expenses under control while calculating how much YOUR business makes. Make it happen!
© 2008 eMarketing 4 Business LLC

Will a slowing economy hurt my business?

Assume that it might. By assuming that it might hurt your business you’ll do things differently, spend differently and pay attention differently. Start out by looking at all your expenses.

• How many of them are absolutely necessary and bring you a return? Make sure the expense is something you need, something that helps you do more business.

• Can you reduce expenses in any area? Do you really need all those post-its or could you get by with stapling a note to something? Every little bit helps and as you start to look around for ways to save, you’ll find them!

• Can you put off buying any new equipment? If you’ve got an old printer that works fine, keep it. If your computer still works well, than there’s no reason to get a new one just because your current one is a couple years old. Save the money clean up the old computer, eliminate old programs and defrag if you haven’t done it in a long time.

• If your business has slowed down you may have to look at reducing staff. This is the one that nobody likes to think about but if your business is down and you can’t seem to raise it back up, something’s gotta give. Keeping a person too long when you can’t justify the expense can end up costing you more than your piece of mind and your pride, it might cost you your business.

By taking a closer look at your business “in case” it is affected by the economy, your proactiveness might minimize the effects of a business slow down. We know the economy goes through cycles and if you are prepared for a bit of slowdown, all the things you are doing now to reduce expenses and make your company more efficient will compound your success when the economy bounces back. Make it happen!

© 2008 eMarketing 4 Business LLC