Thursday, November 10, 2016

Federal Income Tax Return: Tax Credits

TAX CREDITS

Tax credits are usually worth more than a deduction. While deductions reduce the amount of income that can be taxed, tax credits reduce the tax itself, even to the point of not owing a tax or receiving a tax refund.

There are two types of tax credits, non-refundable and refundable. Non-refundable tax credits can reduce the amount to zero, but any excess is forfeited by the taxpayer. Refundable tax credits are credits that when the tax liability is reduced to more than zero, the excess amount is refunded to the taxpayer or credited to the following year's taxes. 

Non-refundable tax credits result from:
  • Taxes paid on income earned in a foreign country that is taxable in the U.S thereby preventing double taxation. A foreign tax credit can also be taken as a deduction.
  • Payments made for child and dependent care.
  • Payments made for educational purposes.
  • Contributions made to a retirement savings account.
  • Qualified children living in your household as defined by the IRS in Publication 972.
  • Improvements made to the taxpayer's primary residence that increases the energy efficiency used by the property.
Refundable tax credits include:
  • The Earned Income Tax Credit, which is a tax credit for low income workers who meet a certain income threshold and satisfy certain age and residency requirements.
  • The Additional Child Tax Credit, which is a tax credit related to the previously mentioned non-refundable Child Tax Credit and can be claimed if the credit exceeds the tax liability and the taxpayer can claim the full Child Tax Credit. 
  • The American Opportunity Tax Credit, which is a tax credit for eligible expenses paid for eligible students in their first four years of post-high school study. It can reduce the tax liability to zero and if in excess of the tax liability, the taxpayer can claim a refund of up to $1,000.

Wednesday, October 26, 2016

Federal Income Tax Return: Different Exemptions and the Standard Deduction


Different Exemptions and the Standard Deduction

There are two kinds of exemptions, personal exemptions and dependency exemptions.

If a person cannot be claimed as a dependent of another, then that person can claim a personal exemption on their tax return. Also, for a married couple filing jointly, if neither spouse can be claimed as a dependent of another taxpayer, then the couple can claim two exemptions on their tax return.

If a married couple is filing separately, then one spouse may claim an exemption for the other spouse if no one else can claim that spouse, the spouse had no income for the year, and is not filing a tax return.

For 2015, exemptions reduce the income that can be taxed by $4,000 per instance of exemption. Spouses as never consider a dependent of each other.

Dependent exemptions are for qualifying children or qualifying relatives and are subject to tests to determine qualification. These tests include the Dependent Taxpayer test, Joint Return test, Citizenship test, Relationship test, Age test, Residency test, and Support test.

STANDARD DEDUCTION

Taxpayers can either choose to take an itemized deduction, adjusting taxable income by deducting the amounts of certain expenses paid during the tax year, or a Standard Deduction. The Standard Deduction is determined from a taxpayer's filing status, age, dependency status, and whether the taxpayer is blind or not.

If the taxpayer or spouse is age 65 or older and blind, the Standard Deduction will increase. Being a dependent of another taxpayer will cause the Standard Deduction to be reduced.

ITEMIZED DEDUCTIONS

Taxpayers can opt to use the itemized deduction for their federal tax returns in lieu of the Standard Deduction if the total allowable deductions are greater than the Standard Deduction. Schedule A of Form 1040 is where the taxpayer will calculate the itemized deduction according to the allowable expenses listed.

The allowable expenses that can be included in the itemized deduction are as follows:

  • Medical and dental expenses that have not been reimbursed and are not covered by another form of tax benefit arrangement. See IRS Publication 502 to determine which medical and dental expenses are deductible.
  • Some taxes, like property taxes, state and local income taxes, or taxes paid to another country.
  • Interest paid on a mortgage for a taxpayer's first or second home.
  • Charitable contributions of cash or property made to a qualified organizations as defined by the IRS. Search here to see if an organization qualifies.
  • Losses stemming from either casualty or theft.
  • Unreimbursed employee expenses as defined by the IRS in Publication 529.
  • Certain miscellaneous expenses as defined by the IRS in Publication 529.

Monday, August 29, 2016

How to Build a Good Relationship with Your Suppliers


How to Build a Good Relationship with Your Suppliers

No small business is an island.

Every small business will need help in running the day-to-day operations, especially in times of growth. This is why building a relationship with those suppliers that provide your small business with the tools necessary to keep your business running smoothly is important. Here are some tips on how to build a good relationship with the suppliers of your business.

Pay your Bills Early

As a small business owner, I am sure you would appreciate it if a customer decided to pay your invoice well before the due date. Imagine how your suppliers will feel if you do that for them.



Regularly paying your suppliers invoices early goes a long way towards building goodwill. They will appreciate it. That is one less invoice to worry about collecting. This is especially true if your supplier also happens to be a small business.

Many accounting software programs, like Xero, can assist with this by allowing you to set-up automatic bill payments directly from your small business's bank account. For more information on billing in Xero, click here.

Give them Referrals

One thing all businesses have in common is that they all would love more customers. If you come across someone in need of something that one of your suppliers can help with, refer them to your supplier.

This helps your business by building a relationship with your supplier, but it also provides your small business with a potential referral source. By sending customers to your suppliers, they may return the favor by sending customers your way. Referrals can be a source of exponential returns for both businesses.

Do Unto Others...

There may come a time when your supplier may become your customer. When this happens, provide your supplier with even better service than they have provided you. Do more than simply fulfilling their needs.

If your supplier gives you some concessions because your small business has been a loyal customer, be sure to return the favor. They will appreciate the efforts of your work along with reciprocity and may be willing to do even more for you in the future.

Being a small business owner is about building relationships and having a good relationship with your suppliers plays a huge part in your business’s long-term success. Show your suppliers how much they mean to you and your small business by becoming their most prized customer.

Sunday, August 14, 2016

How to Present a Business Plan to Investors


How to Present a Business Plan to Investors


With your business plan in hand, you confidently walk into the potential investor's office seemingly ready to show him the next big business idea. You have diagrams and charts. You have crunched the numbers and determined that your business will see 120% returns within two years.

Your plan: to take an hour or two presenting all the facts and figures to the potential investors and walking out with a huge vote of confidence and a large check. Five minutes into your presentation and one of your audience members stops you to ask, "How do you know people want what you have to offer?" Your response is a blank stare and deafening silence.

The truth: potential investors want to hear about the next great product or service. They want the first opportunity to reap the gains from a business venture, earning from them in year one, year two, year three, and so on. What potential investors look for in a business plan presentation is evidence of such long-term viability. They want proof that a demand for the business exists. Potential investors also want to see that you have the right entrepreneurial spirit and business acumen to handle that demand.

When preparing your business plan presentation, remember, brevity is paramount. Nix the idea of taking up two hours of the potential investor's time. Cut off the fat and show them how your proposed business will be profitable. Give them facts.

Show them how the business worked on a smaller scale. Provide evidence of the demand for your product or service and demonstrate how your business will grow by attracting more of its target market. Also, show the potential investors that you have the right background to handle the task. For any areas that you lack experience, introduce them to members of the management team that can compensate. The key is to sell the business plan and the leadership’s qualifications to the potential investors.

Finally, show them the numbers. Potential investors are not looking to hand out any amount of funding you request. Sure, they expect you to have a figure in mind, but they also expect you to show how you determined that amount and how you will put their investment to work.

It is up to you to give them realistic financial projections. Present yourself as thrifty with regard to your business' finances. Every start-up company would love to have the biggest and brightest, but realistically, they may have to start without.

Have confidence when preparing to give your presentation. Make sure you know all the important facts of your business plan thoroughly so that you can explain them clearly to the potential investors. Let your enthusiasm for the venture shine through as you share your plan with them. When your presentation is complete, give them ample time to ask questions about the plan. Thank them for their time. In the end, you just might get the funding you need to get your business plan in motion.

Saturday, August 6, 2016

How to Develop a Marketing Strategy for your Small Business


How to Develop a Marketing Strategy for your Small Business

Starting a business means little unless you let the world know you exist. You must seek out your target customers in the least expensive, most effective ways possible. By developing a marketing strategy targeting whom you believe will be your small business’s best customers, you give your business the best chance for achieving success.

Finding your Target Market

Finding customers requires you to research your target demographic. Will your business be for millennials or Gen-Xers? For the bachelor or the family man? For the casual sports fan or the tailgating, jersey-wearing fanatic?

Trying to market to everyone is a challenge and will prove costly when accounting for a return on your investment, or how many customers your marketing strategy brings in. By narrowing down your marketing efforts to a select few, you increase the likelihood that your potential customers will see your business and purchase your wares. This means your strategy is more efficient on a per customer basis.

Learning the Competition

When starting a small business, it helps to know your competition. You need to know what type of market strategy they are using because you want to get their customers. Learning their methods can provide you with tips on what to use in your strategy and ways to counter their strategy.

Any competitor, large or small, has shortcomings in regards to serving the market. Use the weaknesses of your competition to your advantage. Maybe your competitors are not targeting the same potential customers your business will. Maybe their current customers are not pleased with your competitor’s customer support for their product or service. Make your competition’s weakness your strength and grab some of their market share.

Determine the Price

Getting into a pricing war with a larger competitor, especially as a small business, could spell the demise of your business. In your research of your competitors, you will find valuable pricing information so that your small business can be competitive.

Remember, increasing prices and reducing costs are the best ways to increase your profits. Set a price for your products or services to give your small business the best chance to make a profit while at the same time covering your costs. Find other ways to differentiate your business to gain customers beyond price, such as having a strong customer service or support team.

Find the Location

Now that you have a determined a good price to sell your product or service, you must find a place to house your small business. Should it be online only or a traditional brick and mortar location? Whichever location you choose, be certain that your target customers can find it. Choosing the wrong distribution channel can eat away at your profits and turn away your customers.

Advertise

Finally, you must advertise your business. Once you have your target market in mind, you want to develop a promotional strategy that will get your ideal customer's attention. Try various forms of advertising to determine which works best for your small business. Would television ads bring in the most customers or would using billboards work better? Alternatively, would ads on Facebook be better? Once you find the best form of advertising to use, maximize it. Also, combine advertising channels to get your small business in front of as many eyes as possible.

Conclusion

Success for your small business depends on how effectively you use your marketing strategy. Determine how you can gain market share and grow in the midst of your competition. Keep your business flexible and ready to adapt when needed. The success of your small business depends on it.

Use this marketing strategy template to help get you going.

Top 5 Reasons Why Small Businesses Should Pick Xero



Blog Post by Tim Howell reposted with permission from Xero.

Top 5 Reasons Why Small Businesses Should Pick Xero

A few years ago, who would have thought you could be watching your kids play sports while keeping on top of your business’s finances? All from a phone in the palm of your hand? Or that you could be travelling – across town or across the world – and be able to login to your accounting software and see where your business stands at that precise moment in time?
As we reach the end of National Small Business week, it’s important to reflect on how technology plays a pivotal role in most small businesses and, for businesses using Xero, how you can take advantage of its capabilities to achieve your business goals.
If you’re a small business owner, here are five reasons you should use Xero to help you run your business.

1. Work where and when you want to

Whether you want to use your smartphone or tablet, or your PC or Mac, Xero lets you keep on top of your business finances wherever you are. Xero also works hard to ensure you – and anyone else who needs to access your finances – are working off the same data, wherever you are, whenever you want.

2. Improve cash flow and get paid faster

Every business needs to get paid, and Xero equips small businesses with tools you can use to get paid faster.
Go beyond “traditional” printed invoices and start using online invoices. Rather than send your customers a PDF file – or, worse, a printed document – you can send them an online invoice. The advantages? Not only is it faster, you can also see whether they’ve opened it, and they have the ability to pay you online through your invoice. The faster the process, the faster you get paid.

3. Let Xero do the heavy lifting while you sleep

Smart software should be easy to use and also work behind the scenes to help you save time. Let Xero perform those tedious, repetitive tasks that take you away from doing the things that can add more value to your business.
If you use invoicing, then Xero’s automated Invoice Reminders can do the chasing for you. If your customers take a while to pay you, or you are spending hours chasing overdue invoices, then Invoice Reminders is a must-have. It will automatically send an email to your customers if an invoice is overdue (or about to become due).
And if you’re an advisor, then Find & Recode could save you hours. It’s easier than ever to find your way through a client’s records and then update those records en masse. Hundreds of records to update? Find & Recode will save you hundreds of minutes.

4. Collaborate with your advisors

We call it the Single Ledger, but think of it as the single set of data that both you and your advisor can work from. This means you’re both seeing the same set of data at the same time.
This saves you from having to export data and send it to your advisor – as soon as you sent it, it’s likely out of date. And as an advisor it saves you the trouble of importing the data into another solution, which not only means you may not be working off the latest information but, because it’s often unwieldy to do, then any problems in a client’s business may not be discovered for months.
What’s more, you’re free to invite your advisors into your file at no additional cost – we make it easier than ever to collaborate with those who matter.

5. Xero grows with you

Whether you’re just setting up your business, or you already use multiple systems, Xero’s ecosystem can help you. Xero works with more than 500 products so you can craft a solution that meets your needs.
Whether it’s integrating with your email (Xero integrates with Gmail and Office 365) or you want to use specialized systems – such as customer relationship management, inventory or industry-specific solutions (such as Vend or Shopify), then Xero’s add-on marketplace gives you the flexibility to create a mix that meets your business’s specific needs.
If you’ve yet to try Xero, you can easily sign up for a free 30 day trial. And if you’re a current Xero user, why not take the time to reflect on how you use Xero and explore our range of videos andcourses to get the most out of it!

Monday, July 25, 2016

5 Features in Xero that will Boost your Productivity



Blog post by Paul Bulpitt reposted with permission from Xero.

5 features in Xero that will boost your productivity

At The Wow Company, we’re always looking for ways to do things better, faster more efficiently and ever since jumped on the Xero bandwagon and hooked up bank feeds, we’ve never looked back. However, Xero is more than just beautiful accounting software with bank feeds, and some people have yet to take advantage of the most powerful features.

Here are my top five that saves us hours of processing time each month:

1. Uncoded Statement Lines

Uncoded Statement Lines is a recent innovation that makes it easier than ever to get feedback from clients or colleagues on unreconciled bank items. Simply click a button to download an editable PDF that you can share. Your client or colleague simply types in the PDF and sends it back to you. Providing a simple and effective feedback mechanism, saving time and increasing efficiency.

2. Cash Coding

Cash Coding put simply is the ability to code large numbers of transactions, fast. You sort the list of transactions, then code in bulk. Saving hours of processing time, this feature is especially useful for businesses with cash transactions or for working on accounts that haven’t been touched for a few months. Protip: if you use cash coding, make sure to learn the keyboard shortcuts.

3. Xero Mobile

The Xero mobile app enables businesses to raise invoices, record transactions and code bank transactions on the go. This makes it easy for businesses to raise sales invoices, record purchases (including taking photos of receipts) and doing the bank transaction coding, means that the accounts are updated much more frequently (mainly because it’s so much easier) and reducing the need for ‘binge’ bookkeeping, where you have to process months of transactions at once to catch-up.

4. Files

Xero Files lets you store contracts or other documents either in a general library or attached to a transaction. You can either upload documents or email in. For example, this may be your terms and conditions you want to attach to an online invoice or quote you are sending — or attaching a photo of a particular item to a transaction. Time spent hunting for documents or chasing for copies is eliminated as there is now a central repository for all of your important files.

5. Find & Recode

Find & Recode is a feature first announced at Xerocon 2015 to a standing ovation. Find & Recode enables you to change the coding of many transactions in a couple of clicks. When you consider the time saved correcting errors and reallocating transactions, you can see why this feature has been received so warmly.

What are your favorite features in Xero? How do you use Xero to boost your productivity?

Saturday, July 23, 2016

Take Control of your Business Without Losing Sight of Yourself



Blog post by Larissa Macleman reposted with permission from Xero.

Take control of your business without losing sight of yourself

When you own a business, it’s easy to get caught up in the day-to-day: from ensuring jobs get done, to checking employees and customers are happy. That’s before we even factor in our families, let alone ourselves.

But when we don’t take care of ourselves too, it can take a toll on the quality we operate at, affecting business productivity and ultimately profitability.

Here are some tips to take care of yourself and your business:

Give yourself a tech break

Technology addiction is impacting our productivity, our bodies and our well being. How often do you pick up your smartphone to have a quick look and find yourself mid-scroll half an hour later, having achieved nothing in the meantime? We’ve all been there.

Start by switching off your tech at night and make your bedroom a tech-free zone for a better night’s sleep. Schedule time for work without any distractions as well as time for ‘distractions’ like social engagement.

Home-Happiness-Hacks

If you’re a business owner and a parent, you’ll know these can be two of life’s most satisfying challenges. But doing both at the same time can leave you clinging to your sanity.

Technology can help by automating some of your business and home life activities. Invest in tools that are available to sync and organize your calendar and to-do lists. The prep time will be worth the hours it saves in the long-run.

Think about bringing in some extra help at home. I consider outsourcing an investment in my sanity and my marriage. This could mean employing a cleaner or paying a student to do your gardening, ironing, laundry or even picking up the kids.

Take time to reconnect with your vision

When productivity drops it’s usually when you’ve lost sight of your vision. Sometime we need to give ourselves some space and time to get back to our big-picture objectives and purpose. Is that the opposite of what you feel like you need to be doing? Then it’s probably exactly what you need to do. Take a break outside of your business to create some space and reconnect with your vision and where you’re heading.

Focus on what you love

Work doesn’t feel like work when you truly enjoy what you do. Delegate or outsource those things you procrastinate or know are not in your zone of genius — there’s no shame in not doing everything yourself. Spend your time doing what you love and do best. Some planning or reorganizing of your company roles can do wonders for productivity.

Building a customer-focused business takes hard work and personal investment. There will always be an abundance of tasks to keep your business running, and continual pressure, from yourself and from others. But the payoff for a business owner can be absolutely worth all those pressures if you make sure to take care of yourself along the way.

Find out more about how you can take control of your time and business with an integration between Timely and Xero here.

Sunday, July 17, 2016

Property Management Bookkeeping: How to Easily Set Up Property Owners in QuickBooks Online



How to Easily Set Up Property Owners in QuickBooks Online

As a property management company, your main customer is the property owner. Your company provides the property owner with management services so that they can relax knowing that their properties are safe.

The property owner is also your main vendor. Once you have accounted for the income and expenses for a property, you send the net income to the property owner (if there is net income and after taking out your management fees, of course).

Here, we will look at how to set up the property owner in QuickBooks Online as both a Customer and a Vendor. We will also look at how to categorize the property owner in QuickBooks Online as a Class to make recording of income and expenses easier.

Property Owner as a Customer in QuickBooks Online

In QuickBooks Online, click Customers on the left hand toolbar. Click the New Customer button in the top right corner of the Customers page and enter in the property owner information. Notice how you can select the Print Check As radio button to select the property owner’s name on any printed checks or you can change it as you see fit.  Save the new customer information.

Property Owner as a Vendor in QuickBooks Online

Click the Vendors tab on the left hand toolbar and then the New Vendor button in the top right corner of the new page. Enter the property owner’s contact information. Remember, QuickBooks Online will not let a Customer and a Vendor have the same name. Add something to distinguish the two, like “John Doe – Owner.” Click Save.

Property Owner as a Class in QuickBooks Online

To create a Class for the property owner, you first have to set QuickBooks Online to track classes. Click the Gear icon next to your company name in the top right corner of the page. Select Accounts and Settings under the Your Company heading. When the new page opens, select the Advanced tab on the left hand tool bar. Click on the Categories row and check the Track Classes box. You are now ready to create new classes.

Return to the Gear icon and select All Lists under the Lists heading. On the new page, select Classes (this will not appear if you did not set QuickBooks Online to track classes). Click New button and enter the property owner’s name. Click Save.

Conclusion

Now that you have set up the property owner as a Customer, Vendor, and Class, you are ready to do business. You will be able to set expenses to the owner’s property and charge the owner as a Customer. As a Vendor, you can issue payments to the property owner once you have covered the expenses with rental income. Finally, you can track the income and expenses of each property using the property owner’s Class designation. This will make reporting for each owner and property very easy to understand.

Want some help with your property management bookkeeping using QuickBooks, contact Equitable Bookkeeping today for a free quote.

Monday, July 11, 2016

How to Find Funding for Your Small Business


How to Find Funding for your Small Business

Having a good business idea does not guarantee entrepreneurial success. Knowing the expenses involved with starting a business lays the foundation for opening its doors. Finding ways to gain financing to assist you with covering those expenses gives your new business a fighting chance for survival. Here are some of the best places to find financing for your new business.

Family and Friends

The easiest form of lending to acquire comes from those closest to you. Presenting your new business idea to your family and friends has proven a great starting point for many aspiring entrepreneurs. With family and friends, having them as investors in your business can be tricky.

Due to their close relationship with you, they may feel the need to impart any advice they deem worthy. It is up to you to inform them of the investor relationship you expect from them if they provide you with financing for your new business. Establishing this early on will help alleviate any future questions concerning how active they should be as owners.


Angel Investors and Venture Capitalists

Angel investors and venture capitalists provide excellent funding opportunities for a viable start-up business. Angel investors and venture capitalists expect you to understand your business and show them how your business will make a profit. These investors may not have specific experience pertaining to your business, but they know how to value an investment.

They also want to maximize the return they receive on their investment. In their attempt to do this, they may require a large controlling interest in your new business in exchange for funding. Negotiate this point to ensure you keep control of your venture.


Banks and Credit Unions

Loans and lines of credit from a bank can help to get your business up and running. Banks also provide credit cards that can assist you with your new business start-up. When acquiring debt funding, be aware of the cost of the debt, or its interest rate. Your interest rate will be determined from your creditworthiness. 

Remember, debt secured with collateral will be less expensive than unsecured debt. Keep that in mind when deciding whether debt financing is right for your new business.


Conclusion

Funding is available to help you start and run your new business. Be prepared by knowing the competitive environment in which you will do business and showing the profitability of your venture gives you the best chance to receive financing.

No matter whether you are approaching a friend, a bank, or a professional investor, you want to put your best foot forward when presenting your case for your new business. Show them that the opportunity is viable and that it will provide them with a strong return on their investment.

Monday, June 13, 2016

How to Create a Personal Mission Statement




How to Create a Personal Mission Statement

Companies use mission statements to define for themselves, their employees, and their customers what they want to accomplish in their existence. This helps them to establish achievable goals leading them on the path towards what they strive to become.

We as individuals can utilize this same concept to help us better focus our paths in life. By creating a personal mission statement, you can start on the road to success and accomplishment, achieving your personal goals, and discovering your purpose.
Set Goals for Every Aspect of Life
Writing a personal mission statement starts by determining where you want to be three to five years from now. Ask yourself what would you like to accomplish in your lifetime?

Don't just limit yourself to professional aspirations. Life encompasses more than just working day to day. Think of where you want to be physically, mentally, socially, and spiritually. Being aware of your goals in each of these aspects of life will help you to grow as a person. Also, each of these aspects will work hand in hand with each other, as accomplishments in each can help bring peace of mind. 
Determine Where you Stand Today 
After you have determined what direction you want your life to head in, assess where you currently are in your life. At present, what have you accomplished? What skills have you obtained? What talents do you possess? By taking a close look at who you are presently, you will discover what have and what you lack. 
Post your Motivation 
When you have written your personal mission statement, keep it somewhere you can view it regularly. Seeing your personal vision statement on a daily or weekly basis will keep you focused and on track. Every action you take from the day you complete your personal vision statement should take you one step closer to who you want to become. 
Modify when Needed 
If your focus changes, fret not. People change their life's goals for themselves on a regular basis. Feel free to adapt your personal mission statement to your current mindset. Your statement is yours and yours alone. Make it fit you.

However, be cautious. There is no need to change your personal mission statement daily, weekly, or even annually. Still, two years into using your statement, you may find you need it to be more detailed or even completely revamped.

Conclusion
If you are looking to improve yourself and your livelihood, get started on your personal mission statement today. Think critically about the direction you want to take and put it down on paper. It will take time to mold and sculpt your statement into something you completely are satisfied with, but remember that it is always a work in progress. Make it readily accessible so you can read it anytime, anywhere. Read it aloud to yourself as well. That way, you not only write, but also speak, your future into existence.

Monday, May 16, 2016

How to Collect from your Clients


How to Collect from your Clients

As a small business owner, you expect to get paid for the products and services you provide. That expectation doesn't keep clients from delaying payment for weeks or months at a time.

When you get paid has a direct effect on your business's cash flow and can be the difference between staying in business or closing your doors.

Donna Reade, accountant, bookkeeper, and avid blogger, has several tips on how small business owners should go about collecting payments to reduce your accounts receivable in her article titled, "Are you Working for Free?"

In this article, Ms. Reade provides tried and true methods for giving your business the best chance to collect payment from your clients while maintaining a good working relationship. It's important to remember that although you want to be paid for your services, you still want to encourage continued business from your clients.

Your business's cash flow is it's lifeblood and maintaining control over your accounts receivable gives your business the best chance for survival. Add the tips suggested by Ms. Reade to your entrepreneurial repertoire and decrease your accounts receivable today.

Tuesday, April 26, 2016

How to Improve your Small Business Negotiation Skills


How to Improve your Small Business Negotiation Skills

For the small business owner, negotiation is a part of doing business. Small businesses need products or services from other companies to maintain daily operations. The small business owner must seek to keep costs low, thereby giving the small business the best chance for profitability.

Small business owners can accomplish this through negotiating with your suppliers. While negotiation may seem like a daunting task, it is done for the sake of the business. Here are some suggestions that will help you prepare and build confidence for negotiation.

Know Thyself and Thy Opposition

Before sitting at the negotiation table, know what your business needs. Keep in mind that your small business has an optimal solution that will meet all needs. While the goal of negotiation is to obtain that optimal solution, this rarely occurs. The small business owner must have alternative solutions prior to entering into negotiation.

After understanding your business, get to know the opposing party of the negotiation. Determine the strengths, weaknesses, and what the opposing party wishes to gain through the negotiation. Remember, they also have an optimal solution as well as alternative solutions. Gaining knowledge about the opposing party helps you to see where possible trade-offs can occur.

Expect to Compromise

Both parties of a negotiation have an optimal solution they wish to gain through negotiation. As stated earlier, obtaining the optimal solution rarely occurs. Expect to compromise. Understand when and where to make sacrifices.

It is good to enter into a negotiation knowing where to stand firm and where to be flexible. All scenarios must lead to accomplishing the overall goals of your business. Also, show a willingness to compromise. It is easier to gain the trust of the opposing party if they feel you want to reach a "fair" deal.

Watch and Listen

During negotiations, pay close attention to the reactions of the opposing party. Certain suggestions and requests elicit emotional responses from the opposition. By being attentive, you avoid any misinterpretations that may hurt your chances of reaching an agreement. In addition, the opposing party will be watching you closely, using any signs of weakness to their advantage.

The Optimal Solution Goes First

Prioritize the needs of your small business before the negotiation. Enter the negotiation with the expectation to fill some of those needs. Ask for everything you feel your business needs up front. Even if you expect sacrifices, initially asking for less than the optimal solution defeats the purpose of negotiation. Make your offer and then wait for the counteroffer. After the counteroffer is when you can make your adjustments.

Conclusion

Improving your negotiation skills helps your small business to grow. Although you may begin shakily, with time and experience, you will get a better idea of how to approach a negotiation. With this improvement, more business needs will be satisfied and you will build a rapport with the suppliers. This rapport will lead to more negotiations leaning in the favor of your small business. This increases the likelihood of your small business being profitable

Monday, March 21, 2016

How to Correct a Mistake on a Federal Tax Return



Filing a federal tax return can be a formidable task when considering the pressures of accounting for income, dependents, exemptions, credits, etc. With all that goes into preparing the proper forms, mistakes can happen quite easily. When this occurs, the Internal Revenue Service has provided a means of correcting such mistakes.

Form 1040X, Amended U.S. Individual Income Tax Return, will need to be filed to correct any mistakes made on an already filed federal tax return. This form can be used to amend any federal tax return for any previous tax year. A new Form 1040 will also need to accompany Form 1040X with the new information being accounted for on the form. A Form 1040 must be filed regardless of whether you originally filed a 1040, 1040A, or 1040EZ form. Also, an amended federal tax return cannot be submitted to the IRS electronically. Paper forms must be prepared and mailed to the same processing center where you sent the original tax return forms.

Filing an amended federal tax return should not be done if you only need to correct mathematical errors. Tax returns sent to the IRS are reviewed and any mathematical errors will be found and corrected. Amended returns should only be filed when changes need to be made to originally reported income, the addition or removal of claimed dependents or tax credits, or to your originally reported filing status. You can also file an amended return to report any additional exemptions or additional withholding.

Preparing a Form 1040X will allow you to show the differences between the previously filed federal tax return and the new Form 1040. Also reported on the 1040X form are the reasons behind the need for the changes made to the previously filed tax return. These reasons should be comprehensible and concise, providing enough documentation to support your claims so the IRS will accept your submission. If the IRS feels the reasons for the amended return are insufficient, they will return the forms to you.

Making mistakes on a filed tax return is no laughing matter, but it’s no reason to panic either. Gathering all the necessary information used to file the original return along with any additional information gained will prepare you for submitting the amended return. Be sure to be careful when preparing the amended return to avoid any additional errors and the possibility of having to repeat this process.

Monday, February 15, 2016

How Do You Handle Your Company's Bookkeeping?

With all of the responsibilities a small business owner has, caring for the books can sometimes seem like a necessary evil. Fortunately, well-organized bookkeeping plays a large role in a small business's chance for success.

Knowing that as a small business owner you have to wear many hats, I have a question for you. How do you handle your bookkeeping?

Do you take care of it yourself?

Have you hired an employee that regularly handles your business's bookkeeping?

Do you outsource your bookkeeping to your accountant or a bookkeeping firm?

If you're currently handling your bookkeeping by any of the above means, have you looked into switching to a different method?

Feel free to share your experiences.

Monday, February 1, 2016

How to Find Motivation through Goal Setting

How to Find Motivation through Goal Setting

People need motivation to accomplish and achieve in life. Motivation can be easy to find, but difficult to maintain. Knowing what you want out of life is one thing. However, doing what is necessary requires much more than desire. In pursuance of your victory, you must determine what it takes to get to the finish line. Once you know, you must be motivated to reach it. Setting goals helps you to gain that needed motivation.

Make Goals Specific

Throughout life, you will have several major goals you will want to accomplish such as graduating from college, starting a business, or purchasing a house. These goals initially begin as generic goals that simply come to mind at some point in your life. When you become serious about embarking on the path towards achieving one of your goals, you must consider your method of approach. Your generic goals need to become more specific.

Break Down the Specifics

A specific goal consists of the quantitative and qualitative aspects of that goal. For example, if your goal is to buy a house, then you will consider various factors that would impact your decision-making process. These factors may include price, location, and size along with many other attributes you may deem important. For your specific goal, you will also want to determine a feasible time frame for accomplishing your goal.

Write your Goals Down

Writing down your goals provides you with the means to see your progression. Make a list of your goals and keep it somewhere you can review it regularly. Let this be a constant reminder of the path that you are following. The majority of goals are made up of smaller goals, or milestones. These milestones play a large part in helping you sustain the motivation needed to reach the major goal. Completion of a milestone indicates progress. Make certain to cross if off of your list. Now you have visual of proof of what you can achieve once you set your mind to it. What better form of motivation is there than seeing your hard work and effort become reality?

Conclusion

Setting goals for yourself provides you with a means of staying motivated. Sometimes, you will need that extra push to keep you on track. By looking at your list of goals, you see where you want to go. This is a reminder of the light at the end of the tunnel you are trying to reach. Focus on your goals, note and celebrate your progress and you will achieve greatness.

Monday, January 4, 2016

Property Management Bookkeeping: How to Earn Income in Property Management


How to Earn Income in Property Management

As a property management company, you have several ways to earn income. If you are managing your own property, then this income is realized when a tenant pays rent for the month. If you are managing properties for other owners, then your company’s income will be derived from several sources.

Application Fees

For vacant units, you will need a way to review potential tenants for the possibility of filling the unit. Using an application provides the best means to screen candidates to find the best possible tenant. Most property management companies typically charge an application fee to offset the cost of purchasing a background check on the prospective tenant. That application fee usually includes a small mark-up which becomes income for the property management company.

Management Fees

If your property management company will be managing properties owned by a third party, then you will want to charge a management fee for providing your services. This fee should be negotiated prior to entering into a management agreement with the new owner.

As the property management company, you have two options for how you would like to receive this form of income when starting a new management agreement. You can require the new owner to pay in advance for several months. This works especially well if the new owner’s property is empty when the management agreement is signed. It offsets the cost of preparing the property for a new tenant along with the cost of finding a new tenant.

At the beginning of a new management agreement, you could also defer the cost of management fees until you find a new tenant to move into the unit. While this may appear to benefit the property owner initially, this approach may prove detrimental to both the owner and the property management company. If the unit is vacant, then the property management company fronts the cost for both preparing the unit and finding a new tenant. This means that the property owner starts off owing the property management company. If the property owner is unable to pay, the property management company will not only be out of the money spent, but may need to pay more to try and recoup the funds from the owner. Finding a tenant quickly is imperative if this approach is taken.

Each month that rent is collected, the management fee is deducted from the rental income along with other expenses.

Example: the property management company collects rent of $500 for the month of January. The negotiated management fee is 10%. The property management company receives 10%, or $50.00, from the rent collected.

Late Fees

Another potential income stream for the property management company is late fees. This is another negotiable item that can either be kept by the property management company or funneled to the owner. When negotiating, recommend to the property owner that your company keep the late fees since your company is the one putting forth the effort of actually collecting the rent. Most times, property owners won’t give this a second thought especially if the rent still gets paid and they receive their profits.

Mark-ups

The best way to describe the “mark-ups” is to say that for every check written on behalf of the property, the property owner pays your company. For example, if you pay for the labor and materials involved with replacing a broken window, the property owner reimburses the property management company for the repairs plus a mark-up. This is another income stream for your company and these mark-ups may be negotiable as well.

Example: the property management company pays the electric bill of $50.00 for a vacant unit. The mark-up is 5%. The property owner owes the property management company $50.00 plus the 5% mark-up, or $52.50.

Administration Fees

The cost for the property management company can also be passed on to the third party property owners. These costs presumably cover the wages of employees to perform tasks, such as filing, mailing, travelling to and from properties or court proceedings, and other overhead expenses. 

Administration fees are usually nominal amounts that do not typically make up a large portion of the fees charged to property owners.

Conclusion

This list is not exhaustive. However, these income sources are the foundation upon which your property management business will be built. Use them to maximize your company's profits and grow your property management business. 

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