Successful Blog

What might trigger a Tax Audit for your Small Business and How to Steer Clear

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Payroll, shipping, invoicing, client communications – with so much going on a small business often starts to feel like a three-ring circus, and as the owner or manager of a small business, you might feel like the overworked ringleader. One aspect of owning a small business that can strike fear into an owner’s heart is being pinged by the IRS for an audit.

As a small business owner, the chances of your taxes being audited by the IRS are relatively low. According to the IRS, only about 1 percent of personal taxpayers are audited, but small business owners have a slightly higher chance of facing an audit i.e. about 2.5 percent. There are various ways small business owners can trigger an audit, from simple mathematical mistakes to fudging your numbers to posting losses in multiple years. Here are some of the biggest mistakes small businesses owners can make on their taxes that may trigger a tax audit and how you can steer clear of these mistakes.

Exorbitant Claims

Many business owners like to regularlymeet clients face-to-face, and this might include the occasional dinner or cup of coffee. The IRS is very strict on claiming this type of deduction, so before you add it to your return, read up carefully on the guidelines. As a rule of thumb, you can deduct 50 percent of your business-related meal and entertainment expenses, including the cost of food, beverages, taxes and tips. Also allowed are any activities considered to provide entertainment, including nightclubs, sporting clubs, theaters, sporting events or vacations.

You are unable to deduct club dues or membership fees, fees for use of entertainment facilities (including any you own and for which you pay maintenance fees) and out-of-pocket expenses. Additionally, some gifts are deductible, but no more than $25 for business gifts per person during a tax year.

Steer Clear Tip: Keep your receipts with detailed notes on each entertainment event or meal you deduct. Make sure you note the business purpose, a description of the event and the business relationship. If you have your notes in order, you can easily present them and avoid an audit for your small business.

Home Office Claims

Many small businesses owners, especially those who work the majority of their hours from their home or work virtually, think they can deduct their home office.  Others may be tempted to stretch their definition of a home office. While the IRS encourages you to consider the Home Office Deduction, they are rather strict on the definition of a home office.

According to the IRS, your home can be considered a home office if part or your home is used exclusively or regularly as your principal place of business, as a place to meet clients or customers or any area not attached to your home (i.e. a separate structure on your property) that is used for business.  Special rules apply for day-care facilities and home offices used to store business inventory or product. The amount you can deduct depends on what percentage of your home is used.

The terms “exclusively” and “regularly” are the key. An extra room or study with a desk, bookshelves, and other office “equipment” used specifically for work – and rarely if ever for personal use – qualifies.  A desk in your living room where you set up shop a few days a week does not.

Steer Clear Tip: Read the IRS rules very, very carefully before considering the Home Office Deduction. If you’re not sure, contact a tax expert or don’t take the deduction.

Reporting More Losses Than Profits

Self-employed small business owners likely must fill out the Profit or Loss from Business (Sole Proprietorship) form, otherwise known as the Schedule C. This form reports what you made or lost in your business in the tax year.   Any type of business can be reported on the Schedule C except for farming and rental activities, and is calculated by taking the income from all sources and subtracting business expenses for a net profit or loss for the business.

You never expect a loss for your business, but in this economy, it happens. However, if you report losses three out of five years, it’s a red flag for an IRS audit, and they may determine your business is a hobby and your Schedule C loss will be disallowed.

Steer Clear Tip: Make sure you keep documents, receipts and detailed notes for your business and conduct it in a business-like manner. The burden of proof is on you to prove your business is legitimately a business and not just a hobby. If you’re losing money year after year, talk with a tax professional.

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Rahil writes on topics related to small business and marketing. If you are looking to start a small business, you might be interested in Sales tax training, if that’s the case you can visit this website and Take sales classes online. The website offers all kinds of sales and tax classes.

Should a Business Owner Seek a Prenuptial from Soon-to-be Spouse?

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Nothing says love like having your soon-to-be spouse sign off on a prenuptial agreement prior to walking down the aisle, yes?

While it may sound rather crude to ask for such a concession with the one you’re looking to share your life with, it does make business sense for many people that have worked for years to see their business plan template come to fruition.

Still, there is oftentimes apprehension on the part of the man or woman running a business to ask their loved one to essentially sign off on the fact that you are not 100 percent sure this is a union made for life.

The bottom line is a prenuptial deal protects the business owner from gold diggers, those individuals that see a walk down the aisle as the way to make some good cash, albeit while pretending to be in love with the person they said “I Do” to.

Precise numbers for the divorce rate in the U.S. differ, given that not all states gather marital data, and along with the fact the numbers can vary quite dramatically due to the methods and sources in place to gather them.

That being said, if a wedding is in your offing, there are some things to consider as you review the pros and cons of a prenuptial deal with your significant other:

  • A prenuptial is not hard to put together – The prenuptial arrangement can be written out by an attorney for a nominal fee. Keep in mind that a number of pre-nuptials will permit the spouse to get a portion of assets earning during the period of marriage, others will make it so that all of the business assets are strictly for the business owner and not regarded as community property;
  • A prenuptial can involve business partners – In the event you are partners with one or more people, a prenuptial is possible in order to provide your partner/s with control over decision making for the business in the event you become divorced or die;
  • Perhaps you prefer a post-nuptial deal – In the event you and/or your soon-to-be spouse are hesitating on a prenuptial, a post-nuptial deal is also an option. The post-nuptial is simply an agreement that two people enter into and sign after the marriage. Keep in mind, however, that a post-nuptial stands a better chance of being challenged in the courts than a prenuptial;
  • Spouses working for the business can lead to payments – If your new spouse begins working for your business and you two part company down the road, you could find them entitled to a substantial portion of the business when you divorce. There are ways to pay off the spouse if it comes to a divorce, including via shares of cash, stocks and retirement funds to name a few. There is also the option of a property settlement note, a long-term payout (including interest) that involves the figure you owe your former spouse for the value of their share of the company;
  • Sell the business and split the profits – Some couples end up going this route since they could not agree to a prenuptial deal. If your former spouse essentially had no involvement in forming and running your business during your time together, this can be a financially difficult way to say goodbye to them.

So, still interested in considering asking your future husband or bride to put their John Hancock on such paperwork?

Yes, it can be a very tense discussion to have prior to a wedding, but it could also be one that you will look back on and appreciate in the event Mr. or Mrs. Right turns out to be wrong.

Photo credit: novylaw.com

Dave Thomas, who discusses subjects such as business incorporation services, writes extensively for San Diego-based Business.com.

How to Attract and Influence Real Fans, Friends, and Followers

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Buddy Hodges

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Friendship and Influence

The inestimable value of friendship and influence is taken as a given here. This post assumes that you already know the “why.” It addresses the “how” in terms of timeless psychological principles which are fundamental to building personal relationships. Of course, commerce and business alliances are also based on personal relationships. We are talking about how to get people to know, like and trust you.

You may have heard these principles in some form before, but they are so important, in my opinion as a social psychologist, that they are worth repeating until we remember to act on them.

Attract Others Like You

Meeting the people you want to connect with involves exposure. If you want to be in the right place at the right time, be in a lot of places. However, it is wise to choose which places are most likely to put you in front of the kind of people you want to know. “Stack the deck” to improve the odds that synchronicity and serendipity will work in your favor. In addition to finding the “right” people, you will be seen in the right context. The mere fact that you belong to a group or a specific social network causes you to be perceived as “one of us.”

Friendship begins with being seen and being noticed. Psychologists know that the old myth, “familiarity breeds contempt,” is false. In fact just the opposite is true. Why do you think politicians invest so much on yard signs? On the internet your personal brand is enhanced by repeated exposure. Post, comment, tweet, like, link, etc. Get your name out there for starters.

Attract and Influence by Investing Attention

To win friends it is more effective to be interested than to be interesting. The best way to motivate people is to find out what they already want and give it to them. Among the things people want most (and don’t already have) is attention. They crave recognition and respect. I suggest that you consider paying, or rather investing, attention.

In a free market economy good listeners are in big demand and short supply. Listening is a technique that is more easily said than done, because we also want to be heard. On social media we “listen” by reading with comprehension and commenting appropriately to show our understanding and interest. We invest attention by re-tweeting and linking.

Recommending or endorsing people (or their content) makes them like you. Sincere compliments are always appreciated, and your recommendation is valuable to them as well. Be authentic. Sincerity is one of the most likeable traits.

Influence Starts with Trust in Them and in You

Trust
BigStock: Trust

Stephen M.R. Covey wrote a book called, The Speed of Trust: The One Thing that Changes Everything in which he calls trust the very basis of the new global economy and the essential ingredient for any high–performance, successful organization.

Greg Ferenstein wrote a post on the Mashable.com blog called, The Science of Building Trust with Social Media. Ferenstein quotes Professor Judith Olson of U.C. Irvine, who conducted research on internet trust. Professor Olson notes that “lacking traditional markers of trust, such as voice intonation and body language, when only text is available, participants judge trustworthiness based on how quickly others respond.”

Consider how you feel when someone fails to reply to your email or return your phone call after you leave a voicemail message. You build trust when you reply quickly to comments on your Facebook posts or on your blog. Commentators get frustrated when their comment is “awaiting moderation” for too long. It is risky to leave a “Drive-by” comment on another blog without waiting for a reply to engage in conversation. Although it is essential to be authentic, showing respect for another’s point of view in an online dialog helps create trust.

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Author’s Bio:
Buddy Hodges writes about Social Media Relationships and Social Media for Business at RelatingOnline.com and SocialMediaForBusiness.US Buddy’s Social Media Management business website is at: ProActionTeam You can find him on Twitter as @internetworker

Thank you, Buddy! Great insights on how fuels attraction and influence.

— ME “Liz” Strauss

What Google Penguin and Panda Updates Mean for Blogs

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Jen Thames

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Google Penguin and Panda Updates and Blog Search Engine Results

In the blogging world Search Engine Optimization (SEO) and placement in Google Organic Search isn’t usually at the top of the priority list. Bloggers blog to add value to the lives of other people. Google seems to have finally recognized this with their newest algorithmic update (still in progress) called Google Penguin.

Google has released two major updates recently in an effort to combat spam. They are called Google Panda and Google Penguin. It’s over simplification but basically:

Google Panda attacks the misuse of keywords
Google Penguin attacks the misuse of links

Great articles about Penguin’s affects on SEO in general can be found on the websites SEOMOZ and Search Engine Land . This article looks at what Google’s Penguin update means specifically for bloggers.

Bloggers Were Helped by the Google Penguin Update

Bloggers who are just out there producing great content may find their numbers skyrocketing after Google Penguin (most recent May 25th/May26th and June 7th/8th). Why? Well, the update looks to take away credit from linking strategies that have created unnatural organic placement for websites in the past.

Google uses more than 200 separate ranking factors for organic search. One of the results of Penguin’s update is that more “professional” sites are now trumped by smaller blogs especially for targeted keyword searches. As the larger websites fall the smaller blogs rise.

For example, researching a Lean Management book entitled Toyota Kata returned several small blogs in the top search positions. The author’s University of Michigan personal page for the book actually ranked below the blog reviews when searching for the words Toyota Kata Reviews.

Generally, longer blog posts seem to be doing well post Penguin update. Widely shared posts are doing really well.

Post Google Penguin: Things Bloggers Should Know

Despite the positive sides of Penguin for many bloggers the new updates can also cause a blog’s placement in organic search to decline. Here are some of the reasons your blog rankings may have declined post Penguin.

Penguin has hit many directories hard. Google has decided that many of the directories and bloggers rolls were just too spammy. They have lowered the ranking of many directories and this in turn can lower the ranking of your own blog.

Comments that have links to spammy sites and bad incoming links can negatively affect your ranking. Google is supposedly developing a disavow tool as we speak to give websites the power to remove unwanted incoming links when they occur. The ETA on this new disavow tool is 6 months.

Specific Blogs will do better post Penguin. Your blog may be too general and this can hurt your organic rankings. Here is why. Google places a higher value on incoming links that come from websites that are similar to your own. If your blog topic is too general the likelihood of other sites linking to you from unrelated sites is higher. For example, lets say you have a home improvement blog and somewhere along the line you wrote a large series on building doghouses. Through that series a group of pet supply stores started to link to your blog to show their customers how to build doghouses. Google’s computer bots might not get the connection between pet supplies and DIY.

Paid affiliate links can hurt if the ratio is too high. Provided the ratio of paid links to unpaid links is not too high the blog should be ok. However, this is something to watch.

Things Bloggers Can Do to Boost Traffic and Take Advantage of Panda/Penguin

Update! Update! Update! Do what you do and do it well. Google is completely on board right now with blogging. The more you update the better you will do in organic search.

Produce amazingly useful content that is widely shared. Here are three examples from blogs in different industries.

Accept posts and ask for guest posts from bloggers within your own industry. The links that connect guest posts are organic, useful for readers and OK by Google!

Do sign up for good blog rolls and directories. The safe list on SEOMOZ is a great place to start.

Learn Google’s rules and use their tools. Google tools are useful and they can quickly keep you up to date on all the new things happening at Google.

Don’t put all of your marketing eggs in one basket. Google is not the only search engine out there, and organic search is not the only way people will find your blog! There are a variety of other ways to market your blog that may be just as good at driving traffic as Google organic rankings. Alternative marketing strategies include:

  • Mobile marketing (for phones and tablets)
  • Local marketing (Google Places, Bing Business and Yahoo! Local)
  • Promotional product marketing (using real promotional products like green shopping bags)
  • Social Media Marketing
  • PPC marketing

Have a mixed basket and no matter what Google does in the future viewers will find you and the blog will grow!

Author’s Bio:
Jen Thames writes about marketing and business at SixSigmaOnline. You can find her on Twitter as @SixSigmaAveta

Thank you, Jen! Great information on the update. Love having it all one in place.

–ME “Liz” Strauss

Is an HP Folio13 Ultrabook as Business Friendly as They Say?

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Would the Ultrabook Fit into My Business Life?

Working Plans logo

As I headed down to a final check on the room for SOBCon this year, I also picked up a package delivered to site by HP to me. It was a new HP Folio 13 – offered without strings if I’d take it for a test drive. The poor light-weight little machine was going be “baptized under fire.” I opened it in a hotel room while preparing the last details of the biggest event of my year. And from that event and that hotel, I’d be moving north to CMSExpo

Now I’ve had the Ultrabook with me for about 6 weeks. It’s time to report on whether the HP Folio 13 actually was as business friendly as they said.

5 Business-Friendly Features and How I Experienced Them

When the folks asked me to try the Folio13, I was leery about taking on another gadget in my life. If for no other reason than we’re running out of power strips, I didn’t want something else that needed plugging in.

But I got no pitch. What heard was a personal invitation to see whether I agreed that this UltrabookTM would make small business life easier, faster, and lighter.

Specifically I heard about 5 business-friendly features HP had built in to serve the small business niche. Here’s all 5 features, what HP says about them, and my experience with each.

  1. All-Day Battery Life
    What HP says: With more than nine hours of battery life, mobile business professionals don’t need to worry about jumping through hoops to keep their notebook’s battery from dying halfway through the work day anymore. The Folio’s battery life will last through the entire work day on one single charge.

    My experience: I turned the machine on, did what I needed for up to 2 hours and sometimes only five minutes. The machine was fast, agile, and sleek. The backlit keyboard is intuitive with great feedback. While I was at my event, I let a few people play with it. I’m not sure how long they had the battery working, but I know that I forgot to turn it for four days and still had battery left. Since then, I’ve used it up to 6+ hours (I’ll never learn to watch a clock) and love that I can fly coast to coast without having to worry about battery life.

  2. TPM Embedded Security Chip
    What HP says: Business users who go to great lengths to keep their notebooks secure will love the Folio’s Trusted Platform Module (TPM) chip. It acts as an extra layer of security for all of your personal information, including documents on your hard drive and even email.
    My experience: Sounds nice, but from what I can tell. This is slightly better than a bank saying your money is safe. Lots of vendors use TPM and TPms may not be deployed some countries including China, Russia, Belarus, and Kazakhstan, where the government might think your data access should be open to them.
  3. HP CoolSense Technology
    What HP says: Whether you find yourself working from a desk or on the road, HP CoolSense technology keeps the Folio’s surface temperature at the perfect level. This technology uses advanced hardware and intelligent software to keep the Ultrabook noticeably cooler.
    My experience: They’re right on this one. It’s not only cool, but it’s quiet. As someone who works in a variety of locations that don’t include desks, a laptop with a cool temperature that isn’t always making noise is a pleasure.
  4. Intel Rapid Start Technology
    What HP says: The Folio’s Solid State Drive (SSD) not only increases speed and reliability, but it also enables Intel’s Rapid Start Technology, allowing on-the-go users to boot up and log on in a snap! The SSD means the Folio13 will be ready to go to work when you are, wherever you take it.
    My experience: I open the lid and within 8 seconds I can type my password and be in — right on the line of the email where I left off! Very different from my experience this week with a friend waiting long minutes for his laptop to start up so that we could discuss a document.
  5. Ultra-slim and ultra-light
    What HP says: The Folio13 makes mobile computing ultra-easy. It’s less than 18 millimeters thin, making it the perfect travel companion for short commutes or long flights. The Folio13 can go anywhere you need it to go, and the nine-hour battery life means you won’t have to lug around extra batteries or charging cords, making it even more travel-friendly.
    My experience: How light is that? Let’s just say I no longer worry out whether to bring my laptop or my iPad. It’s so light I can bring them both! The power pack doesn’t add a huge load.

By the way, unpacking and starting it up for the first time was a breeze, even in a hotel room with hotel wifi to contend with.

I did get caught up short when I was ready to present and realized that the Ultra in Ultrabook meant that I didn’t have the appropriate port to connect to a projector which left me borrowing a laptop to run my presentation. I’ll be finding out whether to get an HDMI cable or an adaptor for that.

In the end, the HP Folio 13 Ultrabook is indeed a business-friendly small business friend. AND I haven’t even mentioned yet, that HP is letting me give one away to someone who buys a ticket to SOBCon NW!! Thank you, HP, for the opportunity times two! (more about that soon.)

Oh, yeah, I hardly ever have to plug it in. I love stories that have a happy ending.

Be irresistible.
–ME “Liz” Strauss

Buy the ebook. Learn the art of online conversation.

Kick in Peak Productivity Immediately to Win

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Great Weeks Reek of Productivity

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Ten days ago I offered a Productivity Checklist for the best way to end a Friday. Key to the process was setting up things at the end of day — ordering tasks by priority, putting things where you most often use them, and planning the first thing you’ll accomplish on Monday.

Did you try it? I thought perhaps not, but even if you set a plan that ended your Friday neatly and optimized Monday for productivity, take care that you don’t walk in to your workspace and undo all that you’ve set ready to start this week in a great way

Start with Peak Productivity

Being able to kick in peak productivity on a Monday or any other day is function of focus and few steps found in this checklist.

    1. Start your “real work” a hour later on Monday. Most folks don’t want to interact with you first thing Monday. Invest in yourself and your own productivity. Make a commitment reward yourself as soon as you accomplish the simple steps of this checklist. When possible, avoid setting up meetings before 10a.m.

    2. Allow yourself 10 minutes for an office check. Organize everything on your desk. Put things away. Lay out things that still need attending to. Are the things you use most closest to where you use them? If not, move them, so that they will be. Are the files you access most on your computer only one click away? If not, as you work, move them so that they will be.

    3. Allow 10 minutes more to scan your incoming email. Look long enough to know whether a dire emergency is waiting your response. Schedule a time in your calendar to answer the rest.

    4. Make a realistic plan for the week. Plan no more than 3 important tasks per day. Schedule no more than 5 hours of independent work. Leave 1 hour for your social networking investment. You’ll have the other two hours for the inevitable interruptions, phone calls, emails, and meetings that steal time during your day. If you find extra time at the end of the day, you can use it get ahead on tomorrow.

    5. Order tasks what you can get done fastest first. Two reasons support this: It starts you with a quick sense of accomplishment and you’re able to pass on what you’ve finished –which means that someone else can be starting on what was your task one as you move to your task two.

    6. If your habit is to get in early to stop by the water cooler or spend some time on Twitter, keep your investment working for you. Put fences around the time you’ll be spending getting inspired by socializing or you might find that it undoes your performance energy.

The biggest part of kicking in productivity is knowing what we want to do and when we want to get it done. Taking time in the morning to plan a productive day immediately can put us in the mindset to our world flying high for the win!

Whether your workspace is in another building or in your kitchen, you’ll find that peak productivity will kick once you’ve outlined the tasks you want to accomplish in a realistic fashion that fits that time you have to do them. Once you get into the habit, you might find that a 30-Minute Strike Force Strategy may be enough to keep you going.

What’s your best tip to kick in peak productivity immediately?

Be irresistible.
–ME “Liz” Strauss

Work with Liz on your business!!