All posts by Gary Stockton

The IRS audits a small percentage of business tax returns each year. Tax audits take up time and resources, and most small business owners would prefer to spend their time making money. As a result of exhaustive research, we’ve identified these five tips to help you minimize the risk of a tax audit. 1. File Returns on Time It’s true that the IRS has rules governing what happens when you file a return late, and while the initial penalty might not seem that bad, late filing is a trigger. If you routinely file late returns, you’re going to increase the chance you’ll be audited. To avoid temptation, prepare accurate records in a timely manner. If you don’t have the time or skills background to do the accounting yourself, it’s worth hiring someone to do it for you. The best way to ensure that you file on time is to make preparing returns extremely quick and easy to do. 2. Be Cautious About Rounding It’s perfectly acceptable to round up to the nearest whole dollar, but that’s as far as you can go. If you paid yourself a salary of $60,005.32, make sure to report the number as $60,005. If you round to an even $60,000, the IRS may be knocking on your door. 3. Manage Independent Contractors Carefully The IRS is very clear and detailed in their definition of when a worker is considered to be an independent contractor. If you have independent contractors in relation to employees, that could trigger an audit. If you aren’t sure of a worker’s status, get advice from a tax attorney or CPA. You can also file a Form SS-8 with the IRS to get an official ruling. 4. Be Prepared When Claiming Vehicles for Business Use If you claim 100 percent business use of a vehicle, and you don’t have another vehicle for personal use, you’ll need very detailed records. Track the mileage and purpose for each trip that will document the business purpose of all the miles driven each year. 5. Don’t Pay Unreasonably High Salaries Some individuals have been known to pay shareholders who work in the business a very high salary specifically to reduce the company’s tax burden. Avoid any potential issues by ensuring that the salaries paid to shareholders are in line with industry standards. Even if you’re doing everything right, it’s always possible that you’ll be audited someday. Develop a mindset that anticipates the worst. Be rigorous in keeping detailed documentation as if you were going to be audited on an annual basis. You’ll be glad you did if the IRS does call. Sources https://www.americanexpress.com/us/small-business/openforum/articles/7-audit-red-flags-small-businesses-need-to-avoid/http://quickbooks.intuit.com/r/taxes/8-common-tax-audit-triggershttps://www.legalzoom.com/articles/how-to-avoid-a-tax-audit-7-tips-for-small-business-owners

What does it take for a new business to succeed? Contrary to popular belief, you need more than a great product and some funding to get your business off the ground. 1. A Mobile-Friendly Website The percentage of people who access websites from their phones and tablets is still on the rise. Depending on what type of business you’re in, you may have more viewers on mobile devices than on desktops. Therefore, it’s really important to make sure that your site looks good on any device, and still highlights the same essential information you want all of your customers to see. 2. Well-Written Content and Lots of It Businesses and consumers are constantly searching for information online not products or services. In fact, “business buyers do not contact suppliers directly until 57 percent of the purchase process is complete“. Your website should help your customers recognize you as an expert in your field by answering their questions and solving their pain points for them. 3. A Call to Action on Your Website Getting customers to come to your website is only the first step. Whether you want them to sign up for a newsletter, download a free booklet, call your company or purchase a product, you have to add CTA (call to action) buttons in the appropriate places on your website. You can experiment with different wording and try to create a sense of urgency in your customers. 4. A Great Marketing Plan (Hint: Paid Ads Are Not Enough) Many new companies fail because they can’t generate enough revenue. While you have to have a great product or service, you also need to have a detailed marketing plan outlining just how you’ll find (and keep) customers. When it comes to marketing, paying for advertisement is rarely enough. Here are a few suggestions on what else should be in your marketing plan: Strong social media presenceHosting local eventsSending out press releasesHosting trade shows or conferencesGiving out brochures or booksUse free video social networking platformslike Blab.im 5. A Genuine Desire to Help People Find Solutions to Their Problems If your business genuinely cares about its customers and can portray this accurately, new customers will find you.Most people don’t really want to sold to, they want to find solutions to their problems, and businesses to address their customer’s pain points are the ones who will come out on top. Starting a new business can be overwhelming because there are so many things that you have to think about. That’s why it’s important to become an entrepreneur for the right reasons and do something you love. Above all, remember to have fun! Sources: http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/ http://www.seo-e.com/online-marketing/develop-strong-call-to-action.htm https://www.sba.gov/blogs/does-your-business-have-marketing-plan https://www.thinkwithgoogle.com/articles/b2b-digital-evolution.html

All business owners should be curious of how much their enterprise is worth, and not just when they are getting ready to sell. Understanding the true value of a business is crucial for every day operations and can set a business up for success. Here are the top four reasons for placing an accurate value on your business: Financial PlanningA reliable and accurate valuation of a company can help a business owner better manage their business and personal funds. Wealth managers, accountants, investment advisors, estate planners and other finance-related professionals will then have a precise picture of the business’s financial outlook and can provide more knowledgeable counsel for a prosperous financial future. Insuring the Company A business’s valuation is also very important to securing proper business insurance coverage, e, which, interestingly, is integral to maintaining the value of the company. Without an accurate business valuation report, a business could wind up being over- or under-insured. This is not only bad for the bottom line, but it can skew financials and affect the value of the business when it is being prepared for sale. . For instance, a business owner may find that being over-insured has tied up money that could have otherwise been put toward paying down liabilities. Those funds could also have been reinvested into the business to promote growth, instead they are unavailable which inhibits the overall value of the company. Raising Capital Having an accurate valuation report makes it easier to raise funding. Potential investors love details, and a concrete value associated with a business can help demonstrate how far that business has come, and how new funding will help it grow. Selling the Business The value of the company is arguably the most important aspect of the sale of a business. It’s the basis of negotiations, and often serves as a representation of years of hard work and success. Knowing how much a business is worth before you put it up for sale can help a business owner ensure that they’re fully and fairly compensated. Which Values Do I Need to Know? So, now that the ground work has been laid on why business valuations are important for every business owner. It is important to understand the different definitions of value and what each of them means to the business. Enterprise Value The enterprise value is similar to a balance sheet. It is calculated by adding together the company’s debts and the total market capitalization, and then subtracting cash holdings. It’s used as a quick way to determine value. Equity Value The equity value describes how much the company is worth to shareholders. It’s calculated by adding the company’s cash holdings to the enterprise value, as well stock options, securities, and other potential-creating investments and assets. Examining the equity value of a company is good for getting an idea of both its current and future values. Asset Sale Value This value only takes into account the value of the company’s assets. This includes inventory, fixed assets such as paid-off real estate, equipment and vehicles, as well as intangible assets such as equity. The asset value does not include cash or liabilities. Liquidation Value This is how much a business owner would get if they sold off all of the company’s assets. While it does include cash and other liquid funds, it does not include intangible assets. The liquidation value is most often used for bankruptcy cases, or when the company is otherwise in trouble and looking for a quick sale. Key Performance Indicators While not entirely financial, this final type of valuation tells business owners how effective the company is at meeting its objectives. Business owners can use these benchmarks to compare their operations to other companies across their industry, allowing them to determine specific strategies for success. Key performance indicators directly correlate with the value of the company, as meeting the business owner’s specific goals is integral to growth and profit. By understanding the value of the business, business owners can position themselves for success in the near term and the future. Experian provides comprehensive reports that include multiple valuation methods and estimates you can rely on. See a sample report.

It has become painfully clear to consumers across the United States that personal identity theft is a major issue that should be safeguarded against. In fact, more than 15 million cases of stolen identities pop up every year. . . What might not be as obvious of an issue, however, is that business identity theft is a fast growing problem that business owners need to act on as well. There are many ways thieves can steal a business’ identity – one of which can occur when a business entity exists in a dormant state. Perhaps the owner is in the process of dissolving the business when the state revokes or dissolves the entity. If the owner doesn’t complete the process, criminals may use the business’ information for B2B fraud, such as opening business lines of credit and leveraging the business’ hard-earned reputation. While criminals seek out as many vulnerability points as possible when engaging in business identity theft, dormant business entities provide a particularly tempting target. Criminals assume, often rightfully so, that dormant businesses do not have the same scrutiny as active businesses do. The business owners no longer track potential credit accounts associated with a dormant entity, as they assume no activity is present. The criminals go through state filing systems and change critical business details to match information they use to open business credit cards and other accounts. In some cases, business owners have no idea what damage occurred because they weren't monitoring a dormant business entity. What happens if the business is dormant and it falls into criminal hands? One of business identity theft's biggest draws is the larger payoff for criminals. Instead of dealing with a credit card or line of credit with a few thousand dollars available, they get access to tens or hundreds of thousands. If the dormant business has a good credit history and existing relationships with creditors, it could take some time before the theft is discovered. By then, the damage is done and hundreds of thousands of dollars in credit fraud is committed. So how is this vulnerability eliminated? First, be sure to completely dissolve the business to eliminate the opportunity. If the business is completely eliminated instead of left dormant, the criminals have little to work with. Get approval, if necessary, from partners involved in the business in order to proceed with the process. Secondly, fill out and file the Certificates of Dissolution with the state, as well as any other necessary paperwork required for the region. Also, file all necessary tax forms with the IRS to indicate that the business is dissolved completely. Send out letters to the business’ creditors so they know the business is dissolved. If there are outstanding accounts with the creditors, settle these during the dissolution process. The last step in dissolving a business is giving partners a portion of the remaining business assets, if applicable. Once this process is completed, criminals can no longer target a dormant business entity through the state filing system. So what’s the bottom line? Be proactive in protecting against business identity theft. If a business closes, take the time to properly dissolve it, instead of allowing the business to sit dormant. It makes it much more difficult for criminals. Be sure to monitor your business credit report for any unusual activity. The problem of business identity theft is growing, so maintaining awareness and making sure the proper safeguarding measures are in place is essential for every consumer and business owner. Have you been a victim of business identity theft? We would like to hear from you, please send us a comment and tell us of your experience.