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April, 2012

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Going Into Business With Your Spouse: How To Make It Work

Starting and running a business is rarely a safe or simple process, and doing so with one’s spouse creates an additional layer of complexity. Whether that complexity will have a positive or negative effect depends on several factors. Here are some of the questions you need to discuss before going into business with your spouse.

How well do you work together at home?  If you cooperate and collaborate for domestic chores, you’ll probably carry that pattern into your workplace. If you bicker constantly over how to do the laundry or maintain the yard, working together in business might be a risky option.

Even if you work well together, some disagreements are inevitable. How do you handle differences of opinion? The answer is particularly relevant if you’ll have employees or customers on the premises. At a minimum, noisy flare-ups will ruin your business ambience.

Do you and your spouse have similar goals and values?  For example, one partner’s fixation on maximizing income may not be compatible with the other’s goal of job satisfaction or adhering to strong ethical principles. If the two of you have such differences, it’s important to recognize them and either arrive at an acceptable compromise or reconsider your proposed venture.

Will your business be adequately capitalized?  You won’t have an outside salary to fall back on during hard times.

Will there be other partners or employees?  Each spouse’s role and responsibilities with respect to coworkers and subordinates should be clearly defined. Spouses with drastically different management styles can make life miserable for employees and each other.

Will one of you be supervising the other and/or reviewing the other’s work?  You’ll need to concentrate on treating one another with respect, especially when giving or taking constructive criticism. Conversely, continually overlooking your spouse’s mistakes or failings may drag down employee morale or otherwise harm your business.

Are your strengths complementary or redundant?  For example, if you’re a pair of engineers starting an engineering firm, you might leave functions such as marketing and accounting to employees or outside services so you can work together within your area of expertise. If you find your professional decisions tend to clash, consider splitting up your clients or processes and working separately within two divisions. Of course, if you’re lucky enough to have complementary strengths and weaknesses, the division of labor should be simple.

When spouses work well together, a family business can be enormously satisfying. We can help you address the relevant issues and devise a business plan based on your capabilities, personalities, and desires. Call us for an appointment to explore the possibilities.

How To Go Green, Small Business Style

Irrespective of your thoughts on green issues there can be some real benefits of incorporating a green theme into your business culture.

Although there is little evidence that, in general, green-focused businesses are chosen on that differentiator alone, it can prove to be the tipping point when competitors are fairly even in other areas.

There is added incentive when you consider that “going green” can also result in an improvement in business efficiency and security.

Some studies have shown that as much as 60% of your stationery budget could be reallocated to other income producing areas if some simple changes were made in the way many businesses carry out traditional administrative functions.

The “paperless” office scenario was seen as a potential advantage to businesses back in the 1980’s when computers became a commercially viable tool. However a lack of trust in the technology coupled with an inability to share information resulted in paper trails on a level not seen before.

Today technology has moved on and there is a great opportunity for businesses to do the same.

“Cloud” applications have made many of those paper trails redundant.

“For a small investment the savings can amount to thousands over just a few years.”

Cloud based invoicing programs allow the client to be emailed invoices which they are free to process and file online. They can often settle the invoice in the cloud by credit card, PayPal and other means; the system can send them off acknowledgement of payment and update your accounts receivable system instantaneously.

The days of having to tolerate the “check is in the mail” story are gone. Reminders to delinquent clients can also be sent automatically.

From a management perspective, cloud-based information is available to you anywhere in the world – providing you have internet access.

And utilizing cloud solutions developed by reputable providers also means your data is being regularly, reliably and securely backed up, perhaps on different continents.

Often an investment in a 2nd computer screen can significantly reduce the need to print documentation to look at while processing work.

This can also reduce the workload, and therefore the required specifications of the printers themselves.

Don’t Fall Victim To Bogus Prize Promotions

As a consumer, it’s a sure bet you’ve been the target of phone solicitations, mass mailings, and promotions inviting you to participate in big money sweepstakes. Studies show that a majority of American adults have entered a sweepstakes at one time or another, and over 90 percent of American adults have received at least one mailing informing them that they have won “free prizes.”

Many such solicitations, though perhaps annoying, are perfectly legitimate. They’re sponsored by reputable marketers and nonprofit organizations who are seeking your business or support. Some prize promoters, however, are con artists who want to make a quick buck without providing legitimate goods or services. You don’t get “the big prize”; you get bilked.

How can you tell the difference between a legitimate contest and a sweepstakes scam? What steps can you take to protect yourself from bogus promotions? Here are a few pointers.

If you’re required to pay, don’t play. Legitimate sweepstakes and promotions don’t require you to spend money or otherwise buy something to enter, increase your chances of winning, or claim your prize. Also beware of companies asking you to pay taxes, shipping charges, or other fees.

How was the notification mailed? A few lucky people have won millions of dollars and valuable goods by participating in sweepstakes. Those winners weren’t contacted via bulk mailings. Check the postmark on the envelope or postcard. Are you just one of millions who received the same “big prize” notification?

Read the fine print. Are you required to attend a sales meeting to get your prize? What are your realistic chances of winning? If it’s a skill contest, how many rounds must you successfully complete to win the grand prize? What’s the time frame for naming the winner?

Who’s sponsoring the sweepstakes? Legitimate contest sponsors identify themselves clearly and prominently. Fraudsters are more likely to hide their identities. Some even use a variant of a recognized company name to trick consumers. Also be aware that it’s illegal for a company to promote a sweepstakes by claiming affiliation with or endorsement by a government agency.

If you think you’ve been the victim of a fraudulent sweepstakes promotion, your local Better Business Bureau or state consumer protection office can help. Not sure if a promotion is legitimate? Give us a call.

Tax Tip Tuesday! WOTC: This Acronym Could Save You Taxes

WOTC. Those four letters may look like Internet shorthand, but they’re actually an acronym for a federal income tax break. The work opportunity tax credit can reduce your business income tax when you hire workers from specified groups that typically experience high unemployment, such as veterans.

You may have heard that the WOTC tax benefits for other categories of workers expired on December 31, 2011. However, thanks to a law passed in November, you can still claim the WOTC — up to a maximum of $9,600 — for eligible veterans you put on the payroll during 2012.

The law added two new categories of veterans who qualify and made the credit for those workers also available to nonprofit employers.

What you need to do. As under the prior rules, you’ll need to complete Form 8850 for each eligible worker and submit it to your state employment security agency. One change: You have until June 19, 2012, to complete Form 8850 for qualifying veterans you hire between November 22, 2011, and May 22, 2012. For workers hired after that, the usual 28-day filing requirement applies.

Remember, you’ll claim the tax benefit on your year-end federal income tax return for your business, as a dollar-for-dollar reduction in the amount you owe. Your quarterly payroll tax returns and your payroll tax deposits are not affected.

Want to learn how the WOTC can help your business save tax dollars? Give us a call. We’ll be happy to explain the rules and help you complete the required paperwork.

What’s New: IRS Expands “Fresh Start” Program For Those Who Owe Taxes

Taxpayers who are struggling to pay their taxes may get some relief from the IRS’s expansion of its “Fresh Start” initiative, a program started back in 2008. The new Fresh Start provisions provide penalty relief to the unemployed and make installment agreements for paying taxes available to more people.

Normally, a failure-to-pay penalty of one-half of one percent per month, up to a 25% maximum, is charged for overdue taxes. The “Fresh Start Penalty Relief” initiative gives eligible taxpayers a six-month extension to fully pay 2011 taxes - that is until October 15, 2012, before the penalty begins to apply. Interest of 3% will still be assessed starting from April 17, 2012.

The penalty relief is available to workers who have been unemployed at least 30 consecutive days during 2011 or 2012 and to self-employed individuals who experienced a 25% or larger reduction in business income in 2011 due to the economy. Income limits apply: the relief is not available to singles with adjusted gross income over $100,000 or to couples with income over $200,000. Also, taxes due cannot exceed $50,000.

The Fresh Start program also changes the eligibility threshold for streamlined installment agreements from $25,000 to $50,000 and increases the maximum term for these agreements from five to six years.

For details or tax assistance, contact our office.

Introducing Sales Targets

If a business isn’t growing then, chances are, it is in decline. So properly set sales targets can be a defining factor in setting your business on the journey to success.

Too many business owners don’t treat the budgeting process with the respect it deserves.

“If you achieve enough you will make money, achieve a lot more and you will be successful.“

Unfortunately many business owners consider the budgeting aspect as being separate from, rather than an integral part of, what is required to achieve desired results.

Their view is that they can’t “make” someone buy, so a sales target is only useful until the day after it is set and they aren’t met. And the targets become less significant as time goes on.

The fact is that sales are the difference between your success and failure. Fall short and your business might be doomed.

Therefore to not apply targets to the most significant aspect of a business can make it more difficult to achieve success.

Sales are the linchpin between marketing and profit. So your sales targets should reflect that. They should be the catalyst for your marketing plan, rather than the other way around.

It is imperative that you know your conversion rates. That is, how many advertisements, how many click-through, how many client enquiries, how many telemarketing calls does it take to make a sale.

You also need to know your average sales value. With the knowledge of how many transactions you need, you will be able to calculate the necessary marketing investment and identify the most effective channels to spend that investment.

Monitoring can then be focused on the marketing and selling conversion rates and the average sale value. Corrective action can then be taken to ensure those sales targets are achieved.

When Michael Gerber coined the notion of working ‘ON’ the business rather than ‘IN’ it, he would most certainly have considered the budgeting aspect as an integral part of ‘ON’.

New Business: Employment Numbers From The Bureau Of Labor Statistics

Some recent employment trends from the Bureau of Labor Statistics:

In August 2011, 14.5 million people were self-employed, a decline of 2.1 million from the number of self-employed reported in December 2006.

In October 2009, women held 49.99% of U.S. jobs. The current percentage of women in the job force is 49.4%.

As the employment numbers improve, it’s noteworthy that the majority of new jobs are being filled by men rather than women. An estimated 1.28 million men found jobs in 2011 compared with 600,000 women.

What’s New: Student Loan Debt To Reach $1 Trillion This Year

Last year, the total amount of student loans taken out exceeded $100 billion. The estimate for 2012 is that student loan debt will exceed $1 trillion. Even after adjusting for inflation, students today are borrowing twice what they did ten years ago.

These numbers mean that student loan debt is higher than the amount Americans owe on credit cards.

The amount of student loan debt is especially troubling when one considers the rather gloomy employment outlook for young people today. In July 2011 just 60% of Americans in the 16 to 24 age group were employed, compared with 78% in July 1989.

Work Habits That Will Help You Succeed

Developing a successful business has as much to do with the way we approach things as anything else.  So it’s always useful to heed the work habits of successful business owners.

Here are some of the good work habits that they have shared with us.

1. Think of difficult jobs and assignments as challenges rather than obstacles.  Don’t over think a job and don’t over-criticize yourself. Perfection is seldom achieved and never rewarded.

2. Look for better ways. Think outside the box; involve your team, family, your business advisor.  Discover new and better ways to do things.  Ideas can be found anywhere.

3. Organize your desk, your files, and your life. Use technology so that you can locate everything you need when you need it. You haven’t the time to spend an hour looking for something that’s hidden somewhere.

4. Technology is essential to every business. Keep up with trends. Someone has already provided a solution for your biggest problem.

5. The only constant thing in this world is change. Be flexible to whatever changes might occur at work and try to adapt quickly.

“In business, work habits play major roles in company success and reputation.”

6. Don’t be late for appointments. The working world is not the world of university. At university, the worst that can happen when you show up late in class is that the professor won’t let you in. 

7. When talking on the phone employ good phone etiquette.  Don’t talk loudly and distract others nearby. When making business phone calls, always be polite and have a pen and paper at the ready.

8. Personal and business emails are different. Use standard formats for business emails to stay professional and always re-read what you have written.

9. Value and manage your time well. Missing deadlines is a reflection of your brand.

Is Home Equity An Investment?

When determining the mix of stocks and bonds in your financial portfolio, should you include the equity in your home? It’s an important question. If you add the value of your home (minus the outstanding mortgage) to your portfolio, you may find that the mix of stocks and bonds needs to be adjusted.

A general rule that some follow states that the stock portion of your portfolio (including stock mutual funds) should equal 100 minus your age. Using this rule, a fifty-year-old man should invest 50% of his portfolio in stocks and the rest in bonds or other generally conservative investments. Real estate fits into this “other” category. Say you have a financial portfolio that’s worth $500,000, evenly allocated between stock and bond mutual funds. Let’s further hypothesize that you have $100,000 in home equity. Adding that equity to your financial portfolio will change the mix of stocks and other investments from 50/50 ($250,000 in stocks; $250,000 in bonds) to 42/58 ($250,000 in stocks; $350,000 in bonds/other). Because your portfolio is now less heavily weighted toward stocks, you may decide to increase the stock portion. That will mean, other things being equal, accepting greater volatility and risk.

How does home equity compare with more traditional investments? For one thing, a primary residence is a “consumable.” You have to live somewhere, and when you sell one home, you’ll likely use the proceeds to purchase another. Your home may not be easy to sell, especially in today’s housing market. Most mutual funds, on the other hand, can be easily sold and converted to cash. And determining the market value of your home may be difficult. Until you sign a contract with a willing buyer, you won’t know the final price. Want to know the value of your mutual fund? Open today’s newspaper.

A home is also expensive relative to mutual funds. Each year, the cost of maintenance, property taxes, and homeowners insurance might equal 3% or 3.5% of your home’s value. When you want to sell, moving costs, lawyer’s fees, and commissions can easily eat up 5% or more of your home’s selling price. Holding and selling shares in a mutual fund will generally cost less.

Is a home an investment or simply a place to live? It may be both. But think twice before treating home equity as part of your investment portfolio.

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