Archive for November 2011
Maximize Small Business Tax Deductions and Tax Credits For 2009, 2010
Owning a small business can give you an edge at income tax time, if you are armed with as much information about business tax credits and deductions as you can.
Since small business owners are three times more likely to be audited by the IRS than a non-owner, it is very important to have accurate information, and to make sure you qualify for the credits and deductions you are claiming.
This article will touch on a few tax deductions available to business owners.
What deductions can you safely claim? You can claim business tax deductions on things that are reasonable and necessary to run your business. This could include your home office, office supplies, furniture and equipment, mileage necessary to operate your business, travel, dinner and entertainment expenses.
It can also include real estate tax, mortgage interest, depreciation costs, insurance, rent, security systems and utilities and services like phone, internet and garbage collection. Health insurance cost and liability insurance costs may be taken as deductions.
With this many items or more to think about, it is important that you have the most recent and accurate information about small tax credit and deductions.
It is also important to know about self-employment tax as your obligation for contributions to social security and any real or potential retirement contributions to a SEP/IRA. There is help for you.
Since I know that as a small business owner you are independent minded and like to do things on your own, you may find an on-line small business tax preparation program helpful. Such a program can walk you through all the deductions and credits, so that you will know when you file that you have taken advantage of all the credit breaks you deserve, and have met all the qualifications required by the IRS.
You want to feel that if you are one of the “three times more likely”, that you are in the best possible standings you can be for that audit.
Owning a small business can be rewarding and give you a break at tax time. Make sure you have as much accurate information about small business tax credits and deductions that you can. An on-line tax preparation program may be just what you are looking for to keep that edge.
Business Plans
One of the most important documents that every business will need to construct and produce is their business plan.
These plans have a variety of uses:
They can assist a company when raising investment or funding; and They can assist the management of a business with the direction of the business; and They can assist management by providing a tool to measure and monitor business performance.
The fundamental areas which every business plan should consist of are:
· Objectives
· Description of the current status
· How to achieve the objectives (strategy and tactics)
· Consideration of the risks
· Financial budget
A business plan should contain details of the organisation’s objectives, and these objectives should follow the SMART (Specific, Measurable, Actionable, Realistic, Timed) framework, to ensure that the company is capable of realistically achieving them. For some organisations their objectives may be very straightforward such as growing revenue and profitability by X%. For others it may contain a multitude of elements.
A description of the current status may be a volumous exercise. Generally this would include a description of the current business objectives, operation, key personnel, skills gap; customer base; key suppliers; historic financial performance. Of course every business is different so the focus on a specific function will differ from one plan to another.
In determining how to achieve the company objectives often the company will need to consider researching the market and understanding not only what is happening among their direct competition but further afield more generally within the economy.
The research and analysis conducted may follow certain well known models such as a PESTLE analysis (Political, Economical, Social, Technological, Legal and Ecological) and a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Other research and analysis may be less structured.
By understanding the market and the internal capabilities, the company is able to conceive realistic business objectives for the management and the team to achieve.
With any plan there are risks and these will need to be considered at length. Such considerations may simply be:
What happens if sales run at 75% of last year What happens if there is a delay with our ecommerce website What happens if a key member of staff leaves Or, something more complex.
The risk analysis will allow management to put in place contingency measures that are essential for both safe-guarding the prospects of the business and for the successful delivery of the business objectives.
By setting a financial budget the management team are able to determine and control what financial resource that is available will be utilised to achieve their objectives. In some cases the business may need to seek additional working capital to be able to forge ahead with its plans.
The process should not just be something that you feel you ought to do before the beginning of the financial year. It should be something that is reviewed and updated throughout the year. Companies that plan ahead, document their plans, communicate it to the team and constantly benchmark performance against the plan are most likely to succeed.
Do You Need A Business Plan? (For An Online Business)
Online Marketing appears to be attractive to a large segment of the population today. No doubt, the current economic climate is driving a lot of this interest.
Many folks currently employed and unemployed find the opportunity to work from home extremely attractive and would like to get rid of the 9 to 5 grind if possible. Besides, getting started does not require a large investment of capital.
However, as attractive as Online Marketing may be,there are many hurdles to clear just to get started. If not initiated properly success will be difficult to obtain. There are a host of people who have made the effort to establish themselves online just to fall by the wayside.
Why do so many fail? There are many reasons but probably the most outstanding would be the lack of a comprehensive Business Plan. Remember, an Online Business is no different than starting any other business.
I believe one of the major factors contributing to this fault is the lack of a need for large capital investment which makes it necessary to borrow money from a bank that will require a Business Plan. This is a requirement..
Since an Online Business doesn’t require a large investment no one is demanding a Business Plan resulting in a major oversight.
That being said I now assume anyone considering an Online Business will sit down and put together a good Business Plan that any Banker would approve.
Now, what do we need to put together a good plan? Following is a brief outline of what is expected to be included in any acceptable plan that will lead to success.
Remember, the Business Plan is not something you put together than put on the shelf to gether dust. No! the Business Plan will be an ever changing document keeping abreast of how your business needs are developing and changing. It will always in most cases require revisions.
Let us Begin:(Remember this is an outline)
1.The Industry/Niche…..Identify the Industry/Segment or Niche that you plan to fill and how your product will fit in or somehow be unique to the segment chosen.
2. Target Market..….Who is your Target Market? What are their needs? How can you meet those needs?
3. Competition..…..Who is your competition? What can you do different to be competitive? Is it pricing, service, product etc.
4.Marketing..…..How are you going to market your product? This includes pricing, advertising, promotion, service, etc
5. Management.…..Who’s in charge? Make sure this is definitive.
6.Financial..…..How much investment will it take? What is the source? How long can you support the effort? When do you expect to start generating income?
7. Operational.…..What equipment do you need. Are you selling a physical or digital product, will you need inventory, will you be drop shipping, how and who will make it work.
So there you go, this should give you a pretty good outline of what is needed to put together a good business plan. Remember, you can go into much more detail as you desire and this will be your plan to meet your established goals.
Good Luck with whatever Venture you choose.
P.S Yes! You Do Need A Business Plan