Look over all your expenses with a fresh eye.
Consider buying supplies or merchandise in greater quantities.
Consider joining forces with another business to buy in quantity.
Ask all new customers where they heard about you, so you can minimize your advertising costs to only those that are effective.
Use jumbo postcards or 6 x 9 envelopes for direct marketing efforts.
Carefully plan trips and errands to minimize travel costs.
Consider charging fuel surcharges or past due interest charges.
Use an interest bearing business savings account to deposit checks from customers.
Tighten up your credit and collection policies.
Don't pay unnecessary interest or finance charges.
Use your accounting records to indicate the best time to incur certain expenses.
Evaluate what expenditures are better spent on outside services or contractors.
Never compromise on quality.
Revised from Alyssa Lebovic - Money Tips
1. Send Your Employees Home
2. Share Your Staff
3. Get Customers to Put Away their Credit Cards
4. Cut Back on Travel
5. Try Do-It-Yourself Marketing
Money Magazine, October 2008
How to Win Friends and Influence People, Dale Carnegie
The Time Trap, Alec Mackenzie
Man's Search for Meaning, Viktor Frankl
The Meditations of Marcus Aurelius
The Golden Sayings of Epictetus
A Whack on the Side of the Head: How You Can Be More Creative, Roger von Oech
The Alchemist, Paulo Coelho
The Bible
Undaunted Courage, Stephen E. Ambrose
The Strangest Secret, Earl Nightingale
Toward a Psychology of Being, Abraham Maslow
The Science of Getting Rich, Wallace D. Wattles
Phule's Company, Robert Asprin
The Measure of Our Success, Marian Wright Edleman
-Money Magazine, October 2008
Email us the title and author of your favorite inspirational book.
Beginning on January 1, 2009, the standard mileage rates for the use of a car, van, pickup or panel truck will be 55 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.
Rules for entrepreneurs to live by:
1. Numbers run a business. If you don't know how to read them, you are flying blind.
2. A sale isn't a sale until you collect.
3. When your short-term liabilities exceed your short-term assets, you are bankrupt.
4. Forget about shortcuts. Run a business as if it's forever.
5. Cash is hard to get and easy to spend. Make it before you spend it.
6. You have no friends in business, only associates.
7. Don't focus on the top line. Gross margin is the most important number on
the Income statement.
-Norm Brodsky, Inc. Magazine, October 2008
To determine an appropriate salary, call local employment associations or industry groups or go to Glassdoor.com and PayScale.com
-Money, September 2008
If more than half of your kid's school and living costs are paid from assets held in his name-and you're too rich for an education credit-you might bypass an exemption for him on your taxes. The exemption, $3,500 in 2008, begins to phase out once a couple earns $239,950 anyway. Junior can then claim a credit to offset his tax bill if its hefty. (He'll owe you one.)
-Money, September 2008
Bankrate.com will clue you in to how healthy your bank is.
Visit fdic.gov for an interactive worksheet to determine if any of your deposits are uninsured.
-Money, September 2008
An IRS auditor who bred greyhounds was denied a loss deduction because he did not engage in the greyhound breeding activity for profit. Whitecavage v. Commissioner, T.C. Memo. 2008-203 (8/27/08).
CASH. The proposed regulations implement the requirement that no deduction is allowed for any contribution by cash, check, or other monetary gift unless the donor maintains a bank record or written communication from the donee. The bank record or written communication must show the name of the donee, the date of the contribution, and the amount of the contribution. There is no de minimis exception.
NONCASH. For contributions of less than $250 donors are required to obtain a receipt from the donee or keep reliable records. For contributions of $250 to $500 the donor needs a contemporaneous written acknowledgement. For total contributions of more than $500 but less than $5,000 the donor must also file Form 8283 with the return claiming the deduction. For contributions of more than $5,000 the donor must also have a qualified appraisal. The proposed regulations disallow any contributions of clothing or household items unless they are in good used or better condition.
Previously, there was some confusion as to whether a health insurance policy purchased by a sole proprietor was required to be issued in the name of the sole proprietor's business. The Chief Counsel's Office clarified that the policy may be in the individual's name.
-Kleinrock's Federal Tax Bulletin, Volume 8, Issue 14
Mountain View, Cal. (Aug. 11, 2008)
By WebCPA staff
Intuit has introduced a light-hearted online rock-and-roll jingle generator for small businesses, featuring an Austin Powers look-alike named Tommy Silk.
The company's jingle generator site (www.thejinglegenerator.com) is aimed at users of its QuickBooks accounting package, but is open to anyone who wants to create a fun little rock jingle. At the site, a purportedly "legendary" '80's record producer and music mogul sits behind a recording control console offering encouragement in a faux English accent to small business owners who want to create a catchy tune to promote their companies.
Users select a type of business and fill in the company name and contact information. The site then shows a rock band performing the jingle in Silk's recording studio, singing lyrics for accounting firms such as, "I just wanna crunch your numbers today" (to the tune of the Outfield's "I don't want to lose your love tonight").
Users can download the jingle to use on their own Web sites, or as a mobile phone ring tone or a voice mail greeting for their business. As a bonus, the site also offers a free starter version of the QuickBooks software.
Cleveland (Aug. 11, 2008)
By WebCPA staff
The Internal Revenue Service placed a $228,806 tax lien on former Cleveland Browns quarterback Bernie Kosar, which he said he has now paid.
The IRS filed the lien in June for Kosar's 2006 taxes. Kosar told the Cleveland Plain-Dealer that he paid the back taxes a few weeks ago, and the reason why he hadn't paid them was that he was going through a messy divorce at the time.
"Divorce is difficult enough as it is, especially for someone who wasn't really looking to do that," he told the paper. "So who owes what and all of that becomes hard, but whatever I owe, obviously I would pay."
Kosar retired as a player in 1996 and is now one of the owners of both the Florida Panthers hockey team and the Cleveland Gladiators arena football team.
The Internal Revenue Service issued an alert about a new wave of e-mail scams that use the IRS name to commit to identity theft.
In May and June, taxpayers reported nearly 700 phishing incidents to the lure the recipients into divulging their personal financial information. So far this year, taxpayers have reported about 1,600 phishing incidents to the IRS. The most common scams involve economic stimulus payments and tax refunds.
In one scam, the e-mail claims the recipient is eligible for a tax refund and instructs the victim to click on a link to access a refund claim form. The claim form requests personal information the scammer can then use to access the victim's bank account or credit card.
Another scam e-mail purports to be a message from the IRS asking fro the victim's bank account information so an economic stimulus payment can be directly deposited there. Yet another scam e-mail offers a link to an IRS report on the company where the recipient works. When the recipient clicks on the link, the Web site may put software on the victim's computer that might allow a hacker to take over and probe for personal information. In a similar scam, an e-mail contains a link to a supposed petition from the Tax Court about a case involving the IRS and the recipient.
Scammers are also using faxes to coax information from taxpayers. One fax claiming to be from the IRS asks the recipient to update their information for the IRS files and promises a special tax refund. The fax asks for not only financial information, but also a copy of the recipient's passport and driver's license, and his or her mother's maiden name.
The IRS increased the optional standard mileage rates for the last six months of 2008. The rate increased to 58.5 cents a mile for all business miles driven from July 1, 2008 through December 31, 2008. The new six-month rate for computing deductible medical or moving expenses will also increase to 27 cents a mile. Announcement 2008-63, 2008-28 I.R.B.
A married couple's claimed theft loss deduction was drastically reduced when they failed to substantiate either their basis in the stolen items or the items' fair market value immediately before the theft. Adel v. Commissioner, T.C. Summary 2008-65 (6/10/08).
An Individual's claim seeking removal and cancellation of various notices of federal tax lien was dismissed and the IRS could garnish the individual's social security benefits. Acevedo v. United States, No. 4:08CV248 CDP (E.D. Mo. 5/16/08).
The IRS plans to issue guidance for businesses on how the special 50-percent deprecation allowance that was included in the Economic Stimulus Act of 2008 can be used to make capital investments in 2008. IR-2008-58
This special bonus depreciation allowance is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in 2008.
Code Section 2036 is one of the weapons in the IRS’s arsenal used to protect the integrity of the estate tax regime. It is designed to drag back into an estate assets that have been superficially transferred by a taxpayer but which the taxpayer still continues to enjoy during his or her lifetime. That’s what the IRS said occurred when Anna Mirowski transferred substantial assets to a limited liability company and then made gifts of interests in the company to trusts that she had established for her daughters. According to the IRS, the transferred assets really belonged in Anna’s estate, with the result being an additional estate tax of $14.2 million. But in Estate of Mirowski v. Commissioner, the Tax Court denied the IRS’s claim, saying that Anna’s transfers were valid and that she, and thus her estate, did not retain any ownership of the transferred assets.
The IRS released its annual list of the twelve most egregious tax schemes and scams affecting American taxpayers.
According to the IRS, the twelve most egregious tax schemes and scams affecting American taxpayers include:
An individual who received $160,000 from her employer one month after she became president of the company was required to include the amount in taxable income as a bonus. Larsen v. Commissioner.
A taxpayer received cancellation of indebtedness income when he settled with a bank for less than the amount owed on his credit card. Payne v. Commissioner.
The new safe harbor provides that an amount deducted for the tax year will be deemed not to distort income if that amount, added to the amounts deducted in the tax year as materials and supplies for units of property costing $100 or less, is less than or equal to the lesser of: (1) .1 percent of the taxpayer’s gross receipts for the tax year; or (2) 2 percent of the taxpayer’s total depreciation and amortization for the tax year.
The proposed rules define materials and supplies as tangible property that: (1) is not a unit of property; (2) is a unit of property with an economic useful life of twelve months or less; or (3) is a unit of property that costs $100 or less.
The proposed regulations identify a number of specific examples of capital expenditures. These include amounts paid:
The proposed regulations provide that the following transaction costs be capitalized:
Routine maintenance activities that can be currently expensed include recurring activities that a taxpayer expects to perform more than once over the class life of the property as a result of the taxpayer’s use of property to keep the property in its ordinary efficient operating condition.
The general rule focuses on betterments to the condition of the property, the costs of which should be capitalized as an improvement if the betterment is material, regardless of whether the betterment increases the fair market value.
An amount paid results in a betterment if it: (1) ameliorates a material condition or material defect that previously existed; (2) results in a material addition to the property (including a physical enlargement, expansion, or extension); or (3) results in a material increase in the capacity, productivity, efficiency, strength, or quality of the property or its output.
CEO is $224,000
CFO is $135,000
COO is $163,000
CTO is $147,000
CIO is $162,000
A couple was entitled to deduct part of a loss on the sale of their residence because it included a workshop they had added for use in their woodworking business. Mallin v Commissioner.
RESULT: An individual did not engage in his direct marketing activity for profit and could only deduct expenses to the extent of his income from the activity. Eder v. Commissioner
STORY: Robert Eder was employed on a full time basis as an engineer at Abbott Laboratories, receiving an annual salary of $85,000. While employed at Abbott, Robert became an independent distributor for Reliv International, a network marketing company that sells health care products.
Until preparing for trial, Robert had never prepared a business plan for his Reliv activity, nor had he calculated a break-even point showing how much future profit he would need to recoup of his past losses. He maintained no organized record-keeping system. On his Schedules C for the tax years 1997 through 2005, Robert reported net losses from his Reliv activity ranging from $2,700 to $12,000. The IRS issued a notice of deficiency with respect to Robert’s 2002 tax year, determining that he was not engaged in the Reliv activity for profit that he was entitled to claim deductions for operating expenses only to the extent of his gross income from the activity.
The Tax Court held that Robert did not engage in the sale of Reliv products with a good faith expectation of profit and could only deduct his expenses to the extent of gross income from the activity. The court concluded that the manner in which Robert carried on his Reliv activity strongly suggested that he was not primarily concerned with realizing a profit.
The court noted that Robert only spent several hours each week on is Reliv activity while earning substantial income from his full-time employment. Further, he was a long-time user of Reliv products and the court felt that the ability to buy the products at a discount was a significant motivating factor for Robert’s business. From this record, the court concluded that Robert did not engage in his Reliv activity for profit.
WARNING: A corporation’s purchase of realty was subject to a federal tax lien because, although the corporation bought the property before the IRS perfected its tax lien, it did not record the deed until after the IRS perfected its lien. Moco Investments, LLC v. IRS
The new law almost doubles the amount of deductible Code Sec. 179 expensing for 2008 to $250,000.
If a taxpayer claims the expensing election and subsequently sells the property or strops using it more than 50 percent for business, the taxpayer may have to recapture part of the tax benefit that was previously claimed.
The new law provides qualifying taxpayers 50 percent first-year bonus depreciation of the adjusted basis of the purchased qualifying property.
The new lay also raises the limitations on “luxury” auto depreciation. Ordinarily, the first-year limit on depreciation for passenger automobiles cannot exceed $3060 (inflation adjusted). However, this limit was increased when bonus depreciation was previously available to $4,600.
The new law raises the cap once again, this time to $8,000 if bonus depreciation is claimed for a qualifying vehicle (for a maximum first-year depreciation of no more that $11,060; $11,260 for vans or trucks). If the vehicle is not predominantly used for business in a subsequent year, then bonus depreciation must be recaptured.
DM Snyder, CPA, PC is uniquely qualified and experienced to help you with taxes, business planning, and business development. In addition to income tax returns and financial statements we offer Strategic Business Planning, Income Tax Planning, Profit Maximization, Expense Reduction, and Business Acquisition and Divestiture Services. We conduct workshops focusing on the following small business topics: 1) Accounting Basics, 2) Buying and Selling Small Businesses, 3) Expense Reduction, 4) Financial Management, 5) Profit Maximization, 6) QuickBooks, and 7) Strategic Planning.
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