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Just What We Need: More Tax Forms to File
Dec 22nd
If it’s not already enough of a headache keeping up with business expenses come tax time, small businesses that accept credit cards (both online and in brick-and-mortar locations) now have another element to add to the tax equation. It’s called the 1099K form. Aimed at addressing the fact that the IRS sometimes has trouble tracking small business’ sales income, the 1099K form will be submitted by credit card processing companies and checked against the sales income we small businesses file.
If you didn’t do at least $20,000 in credit card sales and at least 200 transactions in 2011, don’t worry; you won’t be required to file a 1099K. That’s the threshold the IRS is looking for with this new regulation.
Third-party networks like eBay, Paypal and Etsy will also be filing the documents for their sellers.
What You Need to Do
For the most part, the burden lies on the credit card and payment processing companies to file the actual document. Early in 2012, you will receive a copy of the 1099K filed by any payment company you use. It is your responsibility, however, to ensure that your sales records match what your 1099K says you sold. It’s always been essential to keep solid accounting records, but it’s even more important now.
Scott Berger, CPA and tax principal at the accounting firm Kaufman, Rossin & Co., says:
“The biggest foreseeable problem is for those businesses that accept debit cards for payment and allow for cash back. They will need to accurately keep track of the cash back provided to their customers so that it can be subtracted from their gross receipts. This way the IRS will be able to reconcile their actual sales and revenue.”
It’s also a good idea to take a look at what your credit card company says you took in for the year to make sure there were no errors on their part.
One possible issue that comes to my mind is: what if I received a loan from my mother through PayPal? Will that be considered income for my business? What about PayPal fees? Will those be removed from the equation?
Also, it’s my understanding that this $20,000-plus in transactions is across the board. So if you used a physical credit card processing machine for $10,000 in sales, then sold $5,000 on eBay and $5,000 on Etsy, you are still required to have 1099Ks from each of these third parties, as long as you completed 200 or more transactions for the year.
Just What We Need: More Tax Forms to File
View full post on Small Business News, Tips, Advice – Small Business Trends
Do You Need to Close a Business in 2011?
Dec 15th
For one reason or another, it might be time to shut the doors on your business. Maybe you and a friend formed an LLC for an online venture a few years ago, but over the past year, you’ve both moved on. Maybe you launched a dog-walking business last year, then decided to get a full-time job instead.
Whatever the reason, you’ll need to formally close your LLC or corporation. Otherwise, you can still be charged fees associated with the business and still be required to submit tax returns to the IRS and submit an annual report to the state.
Closing your business isn’t complicated. If you’ve already stopped doing business and are 100 percent certain you’re retiring this business, it’s better to wrap things up before the start of the New Year. By dissolving your business in 2011, you’ll be free from any obligations in 2012 and have a clean slate to focus on whatever’s next.
Here’s how to formally close your business:
Dissolve your LLC or corporation
An LLC or corporation can be dissolved as easily as it’s created. If you’ve been doing business as a corporation, LLC or partnership, all business associates must vote to close the business and the final vote should be recorded in the meeting minutes. If shares have been issued in a corporation, two-thirds of the voting shares must agree to dissolve the company. If no shares were issued, your Board of Directors must approve the dissolution.
If you have an LLC, refer to the dissolution provisions in your state’s Limited Liability Company Act (known as LLCA). Every state statute has a different set of provisions; follow this statute to the letter to properly close the business and make sure all members of the LLC are not held liable for debts of the company after it’s been dissolved.
In essence, you’ll need to file an “Articles of Dissolution” or “Certificate of Termination” document with your state’s Secretary or State office.
Pay off any debts owed by the business
You’ll need to pay any outstanding debts of the company. Most states require the LLC or corporation to settle debts before any distributions are made to members. If your business does not have enough money to pay off all loans and debts, consult an attorney. In some cases, members can be personally liable for those debts after the business has been dissolved.
Distribute remaining assets to members
After debts have been paid, you should distribute the remaining assets and cash reserves to the owners/members in proportion to ownership interest.
Cancel permits, licenses, or fictitious business names (DBAs)
You should also cancel any kind of permit or licenses you hold with your state or county. There’s no reason to hold on to them, and you don’t want to be liable if someone else accidentally or intentionally uses your seller’s permit or other license. If you have been using a fictitious business name, you’ll need to file an abandonment form.
Notify the IRS
Notify the IRS that your business is no longer operating by shutting down the Employer Identification Number (EIN). You’ll also need to file your final federal and state tax returns (check the box indicating that this will be the final return). If applicable, your company’s payroll withholding taxes must be up-to-date (members can be held personally liable if payroll taxes aren’t paid).
Final words of advice
While closing a business is a fairly straightforward task, you should work with a legal document filing service or your attorney, since laws regarding corporate dissolution vary by state. These professionals can advise you on your state’s particular requirements and make sure your company is closed properly, and legally.
Remember to take closing your business just as seriously as you did opening it. Your credit and reputation are at stake. The longer you wait to formally dissolve a company, the more fees and paperwork will come your way. Don’t delay and good luck as you move on to bigger and better things!
Closed Photo via Shutterstock
Do You Need to Close a Business in 2011?
View full post on Small Business News, Tips, Advice – Small Business Trends
Everything You Really Need to Know About Workers’ Compensation
Nov 17th
If you have employees, then I don’t need to tell you that workers’ compensation can be a nightmare if not properly managed. If you don’t have employees, please trust me: If not properly managed, workers’ compensation can be a nightmare.
Maybe the term nightmare is a little strong, but certainly a headache, and maybe even a pain in the . . . you know where I’m going. The reason workers’ compensation can be such a difficult insurance coverage to manage is that the premiums can be very dynamic.
Workers’ compensation premiums are determined through an equation based on the amount of payroll per job function within your business. Each job function is assigned a class code rate per $100 of payroll. These rates are set by the state in most states (there are also statutory states where only state-run funds can write workers’ compensation policies).
Each insurance carrier will write workers’ comp insurance through several different underwriting companies. Each underwriting company is given a different multiplier, often ranging from 0.97 to 1.50. The underwriting company chosen is based on the industry of the business and the specific insurance carrier’s appetite for that particular industry. Finally, the insurance carrier will apply to each individual business a modification factor, or “mod factor,” based on that business’s unique loss history.
Got all that? Don’t sweat it if you’re confused. Here’s what you actually need to know:
Problem #1: Your premiums are based on estimated payroll that is audited on a regular basis by either your insurance carrier or your state workers’ compensation fund.
- It is of the utmost importance that your payroll figures are as accurate as possible, as this is the basis for your premium.
- If you short your payroll estimates at the beginning of a policy term, you will have to pay the premium shortfall at audit time. In most states, if you don’t pay the balance owed after an audit within 60 days your business gets a Stop Work order. Not good!
Solution: Contact your insurance professional for a “pay-as-you-go” solution run through a payroll service or the insurance carrier. This drastically reduces the chance of shorting your payroll, as figures are updated on a weekly or monthly basis.
Problem #2: Because carriers use different underwriting companies, rates can vary significantly from carrier to carrier even though your job class code rate is set by the state workers’ compensation fund.
- Every insurance carrier has a unique appetite for certain types of business. Find a carrier that is looking to write business in your industry and you will most likely find the most competitive rate.
Solution: Work with an insurance professional who specializes in or at least has experience in your particular industry of business. When it comes to workers’ comp ,an intimate knowledge of the available markets can mean dollars in your pocket.
Problem #3: Your loss experience can play a major role in the premiums you pay. Mod factors can range from 0.80 to 1.50 or more depending on how good or bad your loss experience has been.
- This means that you need to look at risk management as more than just a sexy job title. Take the time to implement procedures in your business that limit exposure to employee injury.
Solution: Encourage healthy living. In general, healthy, fit employees are less likely to get injured. Additionally, do not set yourself up for failure. Try to assign employees to tasks that they can physically handle. Always provide training and continually update employees on the latest safety procedures. A little bit of preparation can mean serious savings when it comes to your mod factor.
Get Professional Help
Are you feeling a little bit better about workers’ compensation now? No? Listen, accidents happen–that’s what workers’ compensation insurance is for. But there is hope for your budgetary concerns. Use the advice I suggested above and contact your insurance professional.
Trust me, if you tell your insurance professional you’re willing to implement risk management practices, he or she will bend over backward to help you.
Good luck and stay safe.
Everything You Really Need to Know About Workers’ Compensation
View full post on Small Business News, Tips, Advice – Small Business Trends
Millions Of Couples Need Secrets Of Infertility Relief!
Nov 16th
Infertility Is Confusing And Very Emotional For Millions. They Will Pay For Relief! This Book Spells It All Out With Concise, Encouraging Answers For Infertility Relief–often In Just Days. Very Generous Split To Affiliates. Highly Motivated Buyers!
Millions Of Couples Need Secrets Of Infertility Relief!
Must Have Book On Referral Marketing That All Businesses Need And Want
Nov 2nd
Nearly All Companies Get Most Of Their Businesses From Word Of Mouth. The Power Of Referral Marketing Book Is Packed With Powerful Referral Strategies That Will Double Any Companys Word Of Mouth Business, Making It A Highly Saleable And Desired Product
Must Have Book On Referral Marketing That All Businesses Need And Want
Why You No Longer Need a Blog
Oct 26th
This content from: Duct Tape Marketing
Despite the title of this post I happen to think that blogging as a business marketing tool is very much alive, but not in the same sense that kicked off what might be called the golden age of blogging. (Wonder if that period will make the history books?)
While great examples of well-read traditional blog publications will probably be with us for some time, the real growth in the future of blogging will come as content producers turn the content production and consumption behavior that blogs accelerated into the ultimate tool for sales conversion.
So, you no longer need to think in terms of a blog as some extension of your website, but more in terms of blogging behavior and technology as the fundamental component of your content strategy.
Websites owners are using blog software to turn their sites into highly engaging content management systems and that evolution will continue to pick up steam for every type of business in the near future.
Database driven sites
The next evolution of the small business website will include proven blog technology – database driven pages, RSS feeds, and auto created XML sitemaps. (While not perfect, my entire site, pages and all, has been WordPress driven for years.)
Permalink content structure
The traditional blog structure around dates and categories will go underground as content producers simply create keyword rich content that is evergreen and no longer consumed in chronological or journal fashion (Copyblogger has been doing this for some time.)
Jukebox delivery
One of the real innovations in the content management approach will come in the delivery of the content. As the site owners move to a content strategy they will ask designers and programmers to create new navigation, search and presentation formats that allow consumers to call up content very much like a jukebox and follow paths of content based on their interest rather than site structure.
Aducational writing
Now that the market has developed a mature taste for blog style content, marketers will begin to wrap more commerce in the content. Educational content will contain product and service offerings as a natural flow of the conversion process.
So, that’s my take on the future of blogging, but if you would like to get the thoughts of thousands of people highly immersed in the world of blogging, you should join me at this year’s BlogWorld Expo in Los Angeles – Nov 3-5.
This is an amazing event that will make your head explode in a good way and I have a few free tickets to give to my readers.
I have three freebies – 1 Full-Access Pass, 1 – 2-day Pass, and 1 Expo Pass.
If you would like a chance at one of these passes, just finish this statement in the comments – I think the future of blogging is . . .
I also have a 20% discount on BlogWorld tickets just by using the code – DTM20
Looking forward to your thoughts and hope to see you next week in LA.
View full post on Small Business Marketing Blog from Duct Tape Marketing
Need an Investment in Your Business? Locavesting Has More Than a Few Great Ideas
Sep 25th
What if I told you that business lending is expected to grow 66 percent by 2013?
Yes, yes, I’m aware of the economic slowdown; I’m writing this review after the U.S. debt crisis and a stock market week rocky enough to make me skip watching CNBC and Fox Business channels for a long time. And no, no, I do not have ocean-view property in the middle of the Moab to sell you.
The aforementioned growth is referenced in Locavesting: The Revolution in Local Investing and How to Profit From It by Amy Cortese, a renowned Brooklyn journalist. The book explains:
“Analysts at the Gartner Group project that P2P (Peer-to-Peer) lending will expand…to $5 billion in loans worldwide. The brisk growth…will be driven by investors seeking higher returns and borrowers shunning (or being shunned) by banks.”
Ready to learn more? Good, because this book is one of the most honest showcases of monetary hope to the small business community, online or off. Locavesting examines how communities and small businesses band together to establish alternative financing to reluctant banks. I asked the publisher for a copy after seeing it in a bookstore, and was emotionally well rewarded by its text, summed up in the conclusion’s first sentence: “What would the world be like if we invested 50 percent of our assets within 50 miles of where we live?”
Learn about financial resources that can develop your community
Cortese infuses historical connection into her examination of alternative funding, much like that in The Economics of Integrity by Anna Bernasek and The Mesh by Lisa Gansky. Starting with Blue Sky legislation launched in Kansas, Cortese shows how American culture has conducted and reacted to overinvestment that correlates with the national mood of the stock market.
The author’s tone towards traditional markets is never sullen, but she is definitely critical of standard investment considerations. “A-ha moments” abound that bring historic events into context with attitudes towards small business today. Here’s a quote that reflects that enlightenment:
“There is a strong perception that small companies and startups are extremely risky–that’s the reason, after all, the SEC created such high hurdles for those companies to raise money from ordinary investors…Larger companies may have the resources to better weather a downturn, but size no longer guarantees safety. Who would have thought that Lehman Brothers, a 150-year-old investment firm that had just logged its most profitable years, would vanish virtually overnight?…At least you can rest easier knowing that a local business probably isn’t dabbling in highly leveraged derivative trades…”
Cortese also informs us how alternative small business investment can beneficial, such as in the following quote on co-ops:
“In the United States, about one in every four people belongs to a co-op of some sort. The country’s 29,000 co-ops collectively generate $654 billion in revenue….Co-ops tend to fill a need that the marketplace is ignoring. And often they are at the forefront. Those crunchy-granola natural food co-ops were instrumental in establishing the organic and natural foods market — well before John Mackey opened his first Whole Foods store in 1980 or Walmart glommed onto the organic trend in 2006.”
The funds and programs explored in Locavesting run the gamut from long-established community banks to newcomers like Profounder. You will read about a Local Investment Opportunity Network (LION) in Port Townsend, Washington, or the support to Cops and Doughnuts, a bakery run by Clare, Michigan, police officers. Contributions from rural America are brought to light through the book’s opening view of Milk Thistle Farm, an upstate New York organic dairy farm well known in New York City, and Slow Money, a program that connects local investors to food enterprises.
You also read about the pitfalls that some experiments have encountered, such as Prosper.com’s dealing with SEC claims “despite compliance due diligence” prior to its operation. Cortese notes that the SEC “is acutely aware of many of the issues holding back small business capitalization.” Other challenges include conducting due diligence on small businesses and capitalization in some instances due to the recession.
Yet interviewee Alan Cantor, vice president of philanthropy at the New Hampshire Community Loan Fund, sums up why individuals poured $4.5 million into his fund, “double the amount last year:”
“People are tired of finding out about collaterized debt obligations and tranches and all this chicanery that was happening with their supposedly traditionally invested money.”
Locavesting ends each chapter with a pro-and-con review of each fund devised. Also, if you are inspired to create an alternative fund for your community, you will have contacts and websites for more information. Deciding to provide contact information is a brilliant and welcomed touch.
Putting small business in the spotlight
As someone who has been reviewing business books for nearly two years, I can say it’s been difficult finding books that provide financing suggestions tailored to small business. A lot has been written about Wall Street, and yet so much of Main Street has been overlooked in print. This wonderful read puts small business front and center and is great for background education or for learning about financial resources broader than Kiva and Kickstarter. Read it along with Wealth Creation for Small Business Owners to get the best ideas on how to manage your finances before seeking investments.
Locavesting is an ingenious finance book, but more importantly, a savvy beacon that can help small businesses and communities muster critical ports in a fierce economic storm.
Need an Investment in Your Business? Locavesting Has More Than a Few Great Ideas
View full post on Small Business News, Tips, Advice – Small Business Trends
Why You Need Honest Feedback and 3 Ways to Get It
Sep 7th
“It costs too much.”
I’ve heard many small business owners say that about marketing. But the truth is if you can’t afford to market (on some consistent level) then you can’t afford to be in business. There’s another cost that we sometimes avoid. That’s feedback.
Feedback costs us upfront in time and energy. It takes effort to find out and record what people think. It also costs us on the back end, especially if the feedback is painful, because the truth stings sometimes.
But the effort is worth the information.
Selling people what you know they want is more profitable than you guessing at what you think they want and being upset and confused when they don’t buy. Customer feedback is your chance to listen to what your audience has to say–and then do something about what you hear.
I see it like this: Feedback saves you money, wasted effort and unnecessary actions. Think about it:
- You can quit selling what your people (that is, your target customers) don’t want.
- You can stop spending money on marketing avenues that don’t work for you.
- You can avoid another poorly attended event.
Use feedback to find out what your people really like, and once you know, you can deliver it, consistently.
Feedback is a friend, but sometimes she stings.
Have you ever asked somebody what they thought, just to discover that you hated their answer? I have. And how did you respond when it happened to you? (You don’t have to tell me.)
The truth may hurt sometimes, but you still need to hear it. And it needs to be an ongoing part of your company if you intend to grow with your clients and remain in business.
Here are three ways to get that feedback:
- Use social media and listen in on the conversation. Find out what people really think.
- Use effective questionnaires (as this AllBusiness.com article suggests) for anonymous responses. Just don’t lock in on the one negative response when you have 150 positive ones. Instead, look for the trends.
- Use interviews for a more in-depth interaction, because feedback is the other side of the conversation.
Why You Need Honest Feedback and 3 Ways to Get It
View full post on Small Business News, Tips, Advice – Small Business Trends
Everything You Need To Start Your Own Digital Label
Aug 3rd
The number one book for starting and operating a digital record company – from licensing, distribution, promotion, marketing, webcasting, global podcasting – plus how to build international recording and music publishing catalogues and much much more!
Everything You Need To Start Your Own Digital Label
Are You Operating Your Business in Multiple States? What You Need to Know
Jul 21st
As a small business owner, it can sometimes feel like you’re expected to be an expert in tax and state law. One common area of confusion and misconception is conducting business in multiple states. By law, if your company plans to conduct business in any other states than your state of incorporation (or LLC formation), then you may need to register your business in those states. This process is called foreign qualification.
For example…
- You have a restaurant in Florida and decide to expand into Georgia and South Carolina. Once you have locations open in those states, you’re doing business there and will need to file a foreign qualification in both Georgia and South Carolina.
- You incorporated your business as a Delaware LLC, but are physically located in New York. You’ll need to file a foreign qualification to conduct business in New York. (For this reason, it’s often best for small companies with fewer than five shareholders to incorporate in their home state.)
- You live in Washington and your business partner lives in California. You incorporated your company in Washington, but recently your partner has been finding and meeting with the bulk of your clients near his home in California. You’ll need to file a foreign qualification in California.
- You’re a consultant who performs the majority of your work online, with clients in multiple states. In this case, you do not need to file a foreign qualification. Just because you’re making money from clients in other states doesn’t mean you’re transacting business there, according to the law.
What is meant by “doing business?”
In today’s mobile/virtual world, it can be difficult to know just what constitutes doing business in a state. If you’re uncertain whether your particular business needs to foreign qualify, you should check with your attorney or accountant. However, here are some general questions to answer:
- Does your LLC or corporation operate out of any physical presence in the state (i.e. office or retail store)?
- Are you frequently conducting in-person meeting with clients in the state (and not just conducting business via email/phone)?
- Does a significant portion of your company’s revenue come from the state?
- Do any of your employees work in the state? Do you pay state payroll taxes?
- Did you apply for a business license in the state?
If you answered yes to any of these, your business may need to file a foreign qualification in the appropriate state.
What is a foreign qualification?
To register your company in another state, you will need to submit a Certificate of Authority application (sometimes it’s called a Statement & Designation by a Foreign Corporation) with the particular state’s Secretary of State office. You can download the form from the Secretary of State’s website or have your incorporating company handle the filing and requirements for you. Some states will require you to have a certificate of good standing from the state where your LLC/corporation was formed (which means you’ll need to be up to date on your state taxes, fees, etc.).
Why is a foreign qualification important?
Foreign qualifying your company in states where you conduct business is your legal obligation. Failing to properly register your company could result in:
- Fines and interest for any time when you were not foreign qualified (in addition to paying the standard fees that should have been paid)
- Liability for back taxes for the time when you were not foreign qualified
- Inability to sue in a state where you are not registered
You’ll want to foreign qualify in as few of states as possible. After all, with each foreign qualification comes filing and/or annual fees, additional laws to learn, and added paperwork. However, you simply can’t overlook your business’s legal requirement to foreign qualify; it could end up costing you much more in the long run.
Are You Operating Your Business in Multiple States? What You Need to Know
View full post on Small Business News, Tips, Advice – Small Business Trends
