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Question: The year is coming to a close and my husband and I have been advised to visit with a professional tax preparer before the close of the year. We have been using a computer software program in past years but feel we may have not taken advantage that an expert offers. What would you suggest?
Answer: Computer software packages have made it easier to monitor cash flow, prepare tax returns, and handle other financial reporting tasks. Still, keeping up with these chores as your personal and business needs grow consumes an increasingly large chunk of precious time, and risks potentially costly mistakes. That's why many people look to outside financial specialists for help.
Choosing the right type of tax, accounting, bookkeeping or other financial help is an important decision. An outside accountant can be one of your most trusted advisors and a key to your success.
Accounting services differ from bookkeeping services, however. An accounting firm prepares financial statements and tax returns based on the numbers that you give them via your own in-house books. Bookkeeping services, if offered, will be extra. If you plan to hire your own bookkeeper, make sure the person you choose is qualified. One way is to use the "Bookkeepers Hiring Test" available free from the American Institute of Professional Bookkeepers at their Web site, www.aipb.org
Before selecting a certified public accountant (CPA) or other financial pro, list the services you think you need, such as tax preparation, financial reports, balance sheets, invoicing, payroll services, general bookkeeping or someone to set up your books. Some firms may handle it all, or you may need to split the tasks. CPA Directory is a huge online listing of CPAs nationwide and can help you find an accountant in your area. The Web site also offers helpful advice on hiring and working effectively with a CPA. Visit www.cpadirectory.com
Enrolled Agents (EAs), who are licensed by the Federal government to prepare tax returns should be considered. They have either worked for the IRS or have passed a rigorous IRS exam. EAs are savvy tax experts, but generally don't have the degrees of CPAs and tend to charge less. Visit the National Association of Enrolled Agents Web site at www.naea.org
Accountants' fees vary depending on location and the types of services you require. Some firms will offer to handle a specific range of services for a flat rate, and charge less for bookkeeping and other tasks that don't require CPA-level training. If you feel your business requires the assistance of a larger accounting firm, find out which staff members you will be working with to make sure their experience and personalities match your needs.
Two free seminars are are being offered before year-end. On December 6, 2008 a seminar will cover personal taxes and on December 13th, 2008 a seminar will cover business taxes. Both will be held at the Richmondtown Library, 200 Clarke Ave., Staten Island, NY from 10:00 AM to Noon. For reservations call the library - 718 668-0413.
SCORE volunteers will be glad to direct you to the best source of service and information you may require. SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call 1-718 727 1221 for the SCORE chapter on Staten Island nearest you, or find a counselor online at www.score476.org Other City and State offices can be located at www.score.org
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Question: I keep hearing about web 2. Is there anyway to make money from web2.0? I'm not sure how much of it is just hype and how much of it has any real value. For the most part its seems to be just people taking part in pointless self promotion, narcissism, and thousands and thousands of facebook and myspace pages of value only to their owners and links to promote friends pages. Does it hold any business opportunities that could be of value to me?
Answer: Up until the mid 90s most of our clients did not expect any real business results from their Website. In fact, having a Website at all was the result itself. Their competitors had something online and eventually, getting their own ".com" became an indication of professionalism and trustworthiness.
Delivering results meant focusing on traffic acquisition through initiatives like: email campaigns and search engine optimization Getting more leads and conversions are great, but then the world changed again. In order to succeed online you now have to form a new partnership… with your users. Instead of constant self-promotion about your company's products and services, you will ask users for their opinion, and encouraging an open discussion.
User-generated content, comprised of blogs, wikis and social networking sites, such as MySpace, Facebook, Linkedin and many others, let everyone have their say on anything and publish it to the world at large. As Web applications become more sophisticated, people can easily develop elaborate personal Web pages, create a blog, and upload their own opinions, audio and video.
Although millions of opinions and videos, are often very amateurish, a significant advantage exists for user-generated content that truly talented authors, artists, musicians, moviemakers and companies can gain an audience much more easily than they could in the past. Word-of-mouth via the Internet is worth a fortune in promotion. Web 2.0 is a leveling playing field in all arenas of business at very little or no cost. Small companies can now compete with larger firms in reaching their target audience.
For a full explanation how you can benefit from web 2, attend one of two free seminars SCORE - Staten Island is sponsoring. Each one is being held Saturday morning 10:am to 12 Noon, November 1 at the St. George Library and November 15th at the Richmondtown Historical Courthouse. Call 718-727-1221 for reservations and indicate which one you will attend. Bring a friend.
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Question: I have invented a very useful household product and I have had no success in connecting with the large retailers. How to I get to the right people in these organizations? Do they deal with small companies? I would appreciate any advice you can offer in this respect.
Answer: It can be frustrating for a small business trying to land its first sale to a public institution, government agency or major corporation. One of the most helpful steps—meeting personally with the right person—is often the most difficult to take. But a fast-growing program from the U.S. Small Business Administration (SBA) is offering hope to small business owners.
Donnie McDaniel was once frustrated trying to "break in." His Arlington, TX-based industrial products distribution business was looking to sell more to big customers. But the right doors weren't opening. So McDaniel attended an SBA-sponsored Business Matchmaking event.
Business Matchmaking, launched in 2003, is a series of regional events that bring corporate and government buyers face to face with small business owners. So far, business owners have landed over 20,000 one-on-one appointments with key government and corporate officials from hundreds of major corporations and agencies. Matchmaking was so successful that the program was expanded in 2005 to include more regional events.
For McDaniel, a single meeting led to a contract potentially worth $1 million in new sales. "To do business with any large buyer almost takes an act of Congress," says McDaniel. "These companies are busy focusing on their core businesses, but they take the time to attend these events to meet with potential vendors in person and that's a chance we won't pass up."
Business Matchmaking doesn't promise you'll snag a deal, but it does give you a chance to state your case directly to decision makers. If you've never sold to large corporations or government agencies, this is an excellent starting point. Business Matchmaking levels the field, allowing every small business an equal opportunity to learn about selling to big business, public institutions (like universities) and government entities at local, state and national levels.
If you aren't sure how to prepare your pitch, Small Business Procurement Workshops held a month in advance of each Business Matching event could help you:
1. Identify potential buyers of your product or services.
2. Write and submit successful proposals.
3. Plan your marketing and sales approach, and line up financing.
The workshops and matchmaking events are free. You can register, set up to three appointments and get all you need to participate online. Slots at Matchmaking events are limited so sign up early. The Matchmaking Web site at www.businessmatchmaking.com has a calendar of events and information on how to participate.
For more help identifying potential business opportunities, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. For locations on Staten Island Call 1-718/727-1221 or go online to www.score476.org
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Question: I have been running a small retail business for the past 10 years and for the first time I am truly worried about the future. Our sales have been dropping and we feel it is attributable to this weak economy, which seems to be getting worse. What advice do you offer?
Answer: Broad economic slowdowns greatly affect small businesses, including those in relatively stable industries or geographic locations. Individuals tend to cut back on discretionary spending while corporations curb routine activities, delay major purchases, and shelve new initiatives.
For many small businesses with limited resources, these and other factors often combine to pressure bottom lines past the breaking point, creating a domino effect of other dilemmas such as a credit crunch or layoffs.
A downturn doesn’t have to spell disaster for your small business, however. Good financial management practices will help you weather even the worst of economic times, and be ready to capitalize on new opportunities will inevitably come with good times return.
Begin with the basics. Even when times are terrific, no small business can survive without good recordkeeping, budgeting, cash flow monitoring, and credit management.
Consult your bank. Lenders can tap their vast experience in economic cycles to advise you on issues specific to your business and industry. Depending on your projected long-term expenses, consider arranging a line of credit in case a cash flow gap occurs.
Be on good terms with your creditors. Falling behind on payments is never the answer, even if it’s “just this once.” Creditors will be more amenable to renegotiating terms to small businesses they consider to be conscientious and reliable.
Watch your receivables. By the same token, you need to stay on top of any outstanding debts to your company, particularly problem accounts. Be firm, but also willing to negotiate where appropriate.
Scrutinize your spending. Rather than arbitrarily slashing your budget, strive to spend only on those things that have a justifiable positive effect on your business. That will make it easier to redirect money to areas that enhance business performance.
Step up your review of financials. Assessing your reports weekly or biweekly rather than monthly will put you in a better position to make informed decisions. Similarly, a monthly or quarterly review your business plan enables you to adjust your strategy and direction to changing market conditions.
Keep marketing in the mix. Look for cost-effective ways to keep your company visible to current customers and potential new markets. They may be ready to restart their spending long before the headlines proclaim an end to the economic crisis.
For more help in coping with an uncertain economy, contact SCORE “Counselors to America's Small Business.” SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call 1-800/634-0245 for the SCORE chapter nearest you, or find a counselor online at www.score.org.
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Question: My wife and I intend to open an ethnic mini super market on Staten Island, NY. We have a limited advertising budget but will have a blog and website where we will promote our unique food products. We were told that a Press Release would be an inexpensive way of publicizing our new business. We would appreciate any advice you can offer in this regard.
Answer: Even in the age of blogs and RSS feeds, the Press Release remains the simplest, yet most effective tool for generating publicity about your small business. Even better, the resulting coverage costs nothing compared to the costs of paid advertising.
If you don't have to be a PR expert or writing whiz to create an effective release, a potentially newsworthy item may be overlooked if the release is poorly organized or doesn't seem newsworthy.
First, you need to have news that's worth sharing. Things that may seem important to you may not be relevant to your intended audience. Imagine you're a reader with little or no familiarity with your business, and think about what might appeal to you. Some things are easy, such as adding a new product or service, opening a new location, or reaching a milestone anniversary.
Also consider offering readers helpful hints related to your product or service. If you're an accountant, for example, a list of tips for getting organized at Income Tax time may be perfect for time-crunched taxpayers. Gift shop owners can prepare a list of innovative ideas for specific holidays, or acceptable items to send service personnel overseas. Your unique food products would certainly be of interest to the reader.
Aside from the news item itself, the most important parts of a Press Release are the headline and first paragraph. Because editors sift through dozens of Press Releases a day, they rarely read anything that doesn't immediately grab their attention. Get to the point by organizing the first paragraph around what your news is, whom it's about, and why it's important. Then, use brief supporting paragraphs to add detail.
Your company's logo and contact information should be at the top of your Press Release. It's also helpful to include a name, address, and phone number or email in the text.
A good Press Release should be no more than one 8x11" page of paper when printed. A second page can be used if it includes relevant photos of the cited event or primary individual(s) related to the story. Your Press Release should be sent out twice if possible - once no more than a week prior to the cited event and again the day before.
Once your release is ready, contact the publications or media outlets to identify the right editor, and whether they prefer to receive releases by regular mail or electronically. Make sure you spell the editor's name and title correctly. Releases with errors or addressed to long-departed predecessors often go into the trash unread.
Whenever possible, follow up on all sent PRs by contacting the media source by telephone and asking to speak with the reporter or columnist to whom the PR was assigned.
You can get more help about generating publicity for your small business at SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. To find a location on Staten Island Call 718 727 1221 or online at www.score476.org
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Question: We have a small wholesale clothing business and have been selling to stores on credit. Lately we are experiencing a problem collecting from some of our customers due to the current state of the economy. What is the best way of dealing with these customers?
Answer: As a small business owner, you do your best to meet your obligations to your customers. So it's only natural to expect them to pay their bills on time, right? Unfortunately, the answer is, not always.
Most customers are conscientious about making timely payments, but others may require some extra effort. Though frustrating and time-consuming, collecting from delinquent accounts is not something you should put off or simply hope will work itself out. Every dollar of revenue counts toward keeping your small business afloat.
Obviously, prevention is the best way to avoid having to deal with collections in the first place. Establish a standard payment policy and make your customers aware it before starting work. Your invoices should also clearly state when the total amount is due and the fee for late payments.
And once those deadlines pass, you need to take action. Get the facts. Don't assume the customer is entirely wrong. Contact them by phone or mail and ask politely for an explanation. It may well be that the invoice has been lost or is awaiting approval. A customer with cash flow problems may also request extra time. How you proceed depends on the situation and your experience with that account. You may feel confident enough to allow extra time or arrange installment payments. Make sure the customer clearly understands any compromise. Be flexible, but firm; and don't hesitate to follow up.
Take stronger action. If your initial collection attempts fail, it may be time to turn to an attorney or collections firm. Terms for these services vary from a flat fee and/or percentage of the invoice amount to a retainer. The Commercial Collection Agency Association at www.ccaacollect.com and Collection Agency Research at www.collectionagencyreserach.com offer guidance on fees and guidance for choosing a collections agent for your needs. Or let it go. You may decide the amount of the overdue account does not justify the cost and effort to collect. If so, write it off as a bad debt and move on.
Don't make the same mistake twice. Should customers with poor payment histories approach you about working for them or restoring credit, don't immediately refuse unless you are absolutely certain they remain bad risks. Ask them to explain how their situation has changed and decide whether it makes sense to restore the relationship. As a precaution, insist on stricter terms such as advance payment or cash-only.
For more assistance with collections and credit policies, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. In Staten Island call (718) 727-1551 for a local SCORE location nearest you, or to find a counselor online www.score476.org
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Question:
My wife and I are starting a new business and we are in the process of forming a Corporation, listing ourselves as the sole officers and directors. We are preparing a business plan in order to obtain a loan from our bank. We would like to add to our Board of Directors some prominent members of our community. We have experienced some resistance due to their fear of personal liability. We have been told we should form a board of advisors and that would solve the problem. What do you advise?
Answer:
We agree that an impressive advisory panel would enhance your business plan. Notice we avoided using the term directors. It is important to structure the board in a way that it is clear that it has an "advisory role" only. All decision-making authority, power and legal responsibility still rests with the owners of the business and the formal Board of Directors elected by the shareholders, not the advisory board members. Larger companies provide insurance to protect their Board of Directors from liability. This cost for your small startup company would be unwarranted.
The makeup of your advisory board should have functional relevance to your company’s objectives. Experience in your industry, marketing capability and financial expertise are some of the skills the advisors could provide. This would not only benefit your business but would enhance the business plan being presented to your bank.
Your advisory board should have scheduled meeting dates and at these meetings the
Company’s progress and plans should be presented and discussed. These meetings should have an agenda with prepared information. The objective is to get your advisors feedback. Many advisory board members become directly involved in specific tasks, such as helping to sell a particular customer, evaluating marketing strategy and fund raising. Minutes should be taken and then presented to your formal Board of Directors for consideration. This will further substantiate the advisory group separation from the board.
You should pay a visit to a local SCORE office near you. We are sponsored by the US Small Business Administration. For locations on Staten Island go to www.score476.org We can address this matter in greater detail and also cover any other business question your may have. Our services are free and confidential and our volunteers have extensive experience in a variety of business ventures.
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Question: We are starting a new business that will entail extensive use of computers and we are confused with all the choices being offered. What advice do you offer in this regard?
Answer: Operating a successful small business today means keeping up with a great many technology-related tasks. You need basic computers and perhaps laptops, as well as a bunch of different business software, depending on what your business does. Then there are networks, Internet access, email and Web sites to contend with. Even selecting the right technology is not easy. It’s hard to know what works best for a small business.
Common missteps include buying only bargain-shelf hardware, using pirated software or buying it piecemeal rather than in discount bundles and setting up e-mail accounts without controls or Web sites that don’t work.
Helping small businesses avoid such technology blunders has become big business itself. There’s now a nationwide network of computer or IT consultants who specialize in setting up tech systems and solving problems for small companies.
The future success of your business hinges on systems that work properly, so seeking professional help makes sense. An outside tech expert can become a vital extension of your business, almost like a trusted attorney or accountant. But not just anyone with a little PC smarts will do. You’ll want someone who does this full-time for you and other clients rather than a person who merely dabbles in computers on the side.
To find the right fit, develop a detailed list of your needs and how you want the person to work including part-time, on-call or a project basis. Look for someone who understands your type of business. They should also be able to explain the work in plain English so you or someone else in your business can learn how it all works.
Experience with businesses of your size is also important. Someone who works only with big companies may not be familiar with the best solutions for you. You should tap your independent tech guru for advice before making hardware or software purchases. A few minutes on the phone can prevent costly mistakes.
For help finding a tech consultant, contact the Independent Computer Consultants Association at www.icaa.org a national nonprofit membership group based in St. Louis. Their Web site has a free feature that lets you search for consultants by area or special skills.
To learn more about technology issues facing your small business, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. To reach the Staten Island Chapter of SCORE call 718-727-1221. Also visit their web at www.score476.org for valuable business resources.
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Question: I have a small business on Staten Island and have created a Web site to sell dolls and bears and have been fairly successful. I operate from home and conduct my business without any employees. As I am getting busier I find there are not enough hours in the day to do all the needed tasks. I have heard that I can engage a fulfillment company to handle my inventory shipping needs. Would this be a good choice for me to consider? Would they handle a small business such as my own?
Answer: For small businesses such as yours that sell products online, by phone, fax, e-mail or mail order, success often brings with it a new problem: an order fulfillment backlog. Packing, shipping and tracking orders can quickly become daunting. And if you are constantly lugging packages to the Post Office or UPS Store, you have less time to spend on building other facets of your business.
This may be a good time to consider using an outside order fulfillment service to take the burden off of your shoulders. Handling order fulfillment properly can be critical to your success. Poorly packaged items and slow service will annoy customers.
Outsourcing fulfillment can save you time. Your products, labels and other unique packaging can be stored in the fulfillment company’s facilities. When orders are placed, the fulfillment firm packs and ships the items and perhaps handles customer service and returns as well. Orders can come through you via your usual methods, or can go direct to the service.
There are many different ways to approach shipping and fulfillment solutions based on the type, weight, size and destination of the items you ship, along with your customers’ needs and expectations. Outside fulfillment involves a cost, but you should also consider the costs you are avoiding such as storage space, payroll and your own time. If you charge customers for shipping and handling, you may be able to recover all or a portion of it.
When selecting an order fulfillment firm, be sure to align your needs with the services they offer. Ask about minimum and maximum order quantities, error rates and restrictions on the types of products they will ship. Some, for example, only ship via UPS and the Postal Service and don’t handle oversize items. If you have special packaging, ask if they will use it.
For Web savvy business owners, fulfillment services can work especially well. Orders from your Web site can be routed directly to the center. Plus you can easily track and manage your orders, inventory and other details online. The Mailing and Fulfillment Service Association, a professional organization for mailing and fulfillment companies, offers a search feature on its Web site that can help you locate a fulfillment house that’s right for you. Visit www.mfsanet.org or call (800) 333-6272.
To learn more about shipping and fulfillment at your small business, contact SCORE "Counselors to America's Small Business." SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners. Call (718) 727-1221 for the Staten Island SCORE chapter nearest you, or find a counselor online at www.score476.org.
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Question: I started my business in April of this year and I intend to have my taxes prepared by an accountant sometime after the end of this year. I was told that I should have some tax planning strategies done before the end of this year so that I may reduce my income tax burden. How can I do this if I do not know what profit I will have until after I close my books at the end of the year?
Answer: The Staten Island Chapter of the CPA Society is planning two free seminars in early December of this year, open to the public, covering this very subject. At the end of this article look for the locations and time they will be held. This should prove to be of great value to both Individual and Business taxpayers.
You should understand that too many taxpayers and business owners overlook the opportunity to take certain steps before year-end, which can have a major impact on your final tax liability. Tax planning is concerned with the timing and method of reporting income and deductions. The basic philosophy is to defer the payment of tax by accelerating deductions and postponing recognition of income items that typically accomplish this. This article can only cover a few of these strategies so make sure to consult with your tax professional regarding all the tax saving opportunities available to you.
It should not be difficult for your accountant before the end of the year to project your potential tax liability. With that information available here are some of the tactics that may be taken to legally reduce your tax burden.
For cash-basis method businesses, you could send out invoices late in December so that collections will not be made until January.
Upgrade your equipment -- from office computers and phone systems to furniture and machinery -- and write off the cost this year. If profitable, you can opt to expense up to $125,000 of equipment placed in service by the end of the year, instead of depreciating the cost over several years. The deduction is allowed whether you pay cash or finance the purchase. This amount is $160,000 for qualified enterprise zone and qualified community property.
Purchase supplies that you'll use in the coming year to deduct their cost now. You'll also save on money through better buying (e.g., bulk purchases).
You can establish a retirement plan before the end of the year. The deduction is allowed on the current-year return even if funded just before you file the return next year. Only a SEP plan can be established and funded after the end of the year and can be funded all the way to the last extension date in October.
Establish a medical insurance plan or convert to or establish a high-deductible health plan.
Employ your minor children (under 18) to perform administrative tasks and avoid Social Security taxes on the wages – this shifts income to a lower bracket. (The children may establish Roth IRAs to gain significant benefits for the future.) This is only available to sole proprietorships as well as husband and wife partnerships. Federal Unemployment tax is also avoided but not workmen’s compensation insurance.
Once considered a tax on the wealthy, by virtue of its construction, the AMT (Alternative Minimum Tax) is catching more and more individuals. Those who happen to have significant deductions – those living in a state with a relatively high personal income tax rate and high real estate taxes – are vulnerable. The AMT makes year-end planning essential.
You should consider the status of any final estimated tax payment requirements. A penalty for underpayment of taxes can be costly.
These are just a few of many strategies that will be covered at the forthcoming free seminars being sponsored by the Staten Island Chapter of the CPA Society.
Saturday - December 1st – 10 am to Noon – St. George Library – 5 Central Avenue – Staten Island, NY – Guest Speaker Doreen Inserra CPA
For Reservations call 718-979-5163 or the Library at 718-442-8560
Saturday – December 8th – 10 am to Noon – Historic Richmond Town Court House – 441 Clarke Avenue – Staten Island, NY – Guest Speaker John J. Vento, CPA, MBA CFP®
For Reservations call 718-980-9000 or SCORE at 718-727-1221
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