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Posts Tagged ‘accounting and taxes’

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Small Business Optimism Slips

April 9th, 2013 ::

By Karen Axelton

Beginning to see the glass as half empty, small business owners are more worried about a recession than they were a few years ago, the 2013 Small Business Economic Forecast from Pepperdine University’s Graziadio School of Business and Management reports. Conducted in partnership with Dun & Bradstreet Credibility Corp., the annual study of more than 2,700 small business owners found that more than one-third (36.2 percent) of small business owners fear a recession this year. That’s substantially up from the 28.4 percent who were worried about a recession in 2011.

In addition, small business owners are less optimistic about growth prospects than last year. In early 2012, 54 percent said they were more or somewhat more confident than they were in 2011. By contrast, in early 2013, just 45 percent reported feeling more or somewhat more confident about their business’s growth prospects for the coming year.

“Small business owners, who are optimistic by nature, are still taking a highly cautious view of the economy and their personal business prospects,” said associate professor of finance Dr. John Paglia, founding director of the Pepperdine Private Capital Markets Project. “The ‘foxhole mentality’ among small business owners to dig in and stay low has the potential to slow the still fragile recovery.”

What’s holding small business owners back from growth? Four in 10 say government regulations–specifically, taxes and healthcare–are the biggest impediment to overall growth in the GDP, compared to 32 percent who said so in 2012. Four in ten (42 percent) of respondents also believe the Affordable Care Act will make their companies’ healthcare costs rise; as a result, 33 percent plan to make changes to their coverage that will negatively affect employees.

Probably because they’re feeling cautious, fewer small business owners are planning to give their staff raises (39 percent) than were planning to do so in early 2012 (41 percent). This is despite the fact that employees’ take-home salaries have been hurt by the end of the payroll tax cut in early 2013. Of course, it could also be because small business owners themselves aren’t seeing any increase in pay—61 percent say they are not making more than the year before.

Two bright spots on the horizon are the housing market, with small business owners overall feeling that housing prices will rise 3 percent this year, and unemployment, with small business owners predicting that the national unemployment rate will decline to 8 percent.

You can view the full 2013 Small Business Economic Forecast at http://bschool.pepperdine.edu/accesscapital.

Image by Flickr user Cali4Beach (Creative Commons)

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Posted in Accounting and Taxes, Business Law, Compliance, Small Business, small business | No Comments »

Web.com Small Business Toolkit: Kashoo (Cloud Accounting Service)

March 13th, 2013 ::

Kashoo

As tax season approaches, you’re probably wondering why you never got around to using a cloud accounting system to keep track of your business finances. Even if you use an accountant, your business will benefit from cloud accounting. Connect your online bank accounts, business credit cards and stay on top of your cash flow with a simple dashboard. Since it’s cloud-based, you can access your books from anywhere. Each entry goes to your profit and loss statement and balance sheets automatically, and everything can then be shared with your business accountant online.

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Posted in Accounting and Taxes, Compliance, Resources, Small Business, small business | No Comments »

What Are Small Businesses Spending On, and How Does Your Spending Measure Up?

March 12th, 2013 ::

By Maria Valdez Haubrich

How do your small business’s spending habits stack up against those of other entrepreneurs nationwide? PEX Card’s first SMB (Small and Midsized Businesses) Benchmark Expense Survey, conducted in December, has some good and bad news about small business expenses.

First, the bad news: PEX Card found that more than 60 percent of businesses expect their spending to increase in 2013. Among businesses with 25 to 49 employees, that figure was even higher (70 percent). Now, the good news: For more than one-third of businesses, spending is going up because of expenses associated with business growth.

Overall, PEX found, the average SMB spends nearly $800K annually in the categories that were itemized in the survey.  Expenses vary widely, though, depending on the size of the company. For those companies with fewer than 10 employees, average expenses were $378K; for companies with over 25 employees, the average was $1.7M.

What’s taking the biggest bite out of small business budgets?

Staffing expenses (which include sales staff compensation and incentives, healthcare coverage and the cost of workers’ compensation insurance) accounted for 50 percent of itemized expenses overall. Those companies with 10 to 24 employees spent the biggest proportion of their expenses on staffing (57 percent).

Where were the biggest cost increases?

More than 50 percent of respondents said that fuel, taxes and licenses increased the most year-over-year.

What are the costs attributed to growth?

The more businesses grew, the more they spent on fuel and insurance. However, the more businesses grew, the less they spent on taxes and licenses, sales and marketing, and office supplies and equipment.

How much is spent on marketing and sales?

This was a fairly large portion of expenses, representing 30 percent of expenses overall. Companies with fewer than 10 employees spent proportionally more on this category (34 percent), while the largest companies (those with 25 or more employees) spent the least (26 percent).  However, those companies spent 50 percent of their sales and marketing budget on advertising, significantly higher than the average of 34 percent.

Equipment and office supply expense accounted for 15 percent of expenses overall, but for the smallest companies, it accounted for 20 percent of expenses. Insurance accounted for 14 percent of total expenses; in this case, the largest companies were likely to pay proportionally more for insurance.

See the full survey results to compare how your business stacks up with others like you.

Image by Flickr user Tax Credits (Creative Commons)

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Posted in Accounting and Taxes, Compliance, Small Business, small business | No Comments »

Web.com Small Business Toolkit: TripIt for Teams (Travel and Expense Management)

February 12th, 2013 ::

TripIt for Teams

If you and multiple employees of your company all travel for business, you need an organized management system to keep track of all travel plans and expenses for the company. TripIt for Teams was developed to allow small and midsized businesses to centrally manage employee travel, keep everyone connected on the road, and provide insight into the company’s travel spending. Travel planners know who’s travelling when, where they’re staying, and how much the trip will cost. The TripIt for Teams travel calendar makes it easy for the whole team to see when and where their colleagues are traveling and have access to confirmation numbers, maps, directions and other trip details anywhere at any time.

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Good News for Home-Based Business: IRS Simplifies Home Office Deduction

January 31st, 2013 ::

By Karen Axelton

If you are a home-based business owner but have never claimed the home office tax deduction because you don’t want to deal with the complex reporting and calculation that’s required—or because you’re afraid making a mistake could trigger an IRS audit—you can breathe a little easier this April. That’s because the IRS has announced a simplified, optional method for claiming the home office deduction.

The new optional deduction allows taxpayers to claim $5 per square foot of home office space up to a maximum of 300 square feet, or $1,500 per year. Currently, small businesses and others claiming a home office deduction have to complete Form 8829, a 43-line form that includes complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers who want to claim the optional deduction instead will complete a much simpler form.

The IRS estimates the change will affect more than 3.4 million taxpayers (the number who claimed the home office deduction in tax year 2010, the most recent year for which the agency has data) and will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours per year.

Here are a few things to be aware of in deciding whether you want to claim the traditional home office deduction or the optional simplified verson:

  • Homeowners using the simplified option cannot depreciate the portion of their home used for business. However, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions do not have to be allocated between personal and business use, which the traditional method requires.
  • Since the optional deduction has a cap of $1,500, if your home office is significantly bigger than 300 square feet or if you have extremely high utility bills or other costs, you may want to stick with the traditional method of claiming deductions.
  • No matter which method you use, you still have to meet the current restrictions regarding the home office deduction. For example, the home office must still be used regularly and exclusively for business, not for personal use.

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. For more details on the new option, visit the IRS website to read Revenue Procedure 2013-13.

Image by Flickr user james.thompson (Creative Commons)

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Web.com Small Business Toolkit: DeskTime (Time/Project Tracking)

January 29th, 2013 ::

DeskTime

With so many readily available distractions threatening to zap your employees’ productivity, it might be a good idea to keep an eye on exactly what your staff is doing on their computers. Are more hours spent on Facebook during the workday than on getting those invoices out? What about punctuality? DeskTime is designed to find and eliminate wasteful habits. Plus, the reports system shows both the entire company’s work results as well as those of individuals. Don’t worry about invading your employees’ privacy: The system only records application names, website URLs, start times and end times, never anything sensitive such as keystrokes or form input. DeskTime is especially helpful for virtual companies.

 

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Posted in Accounting and Taxes, Compliance, Resources, Small Business, small business, Workforce | No Comments »

Web.com Small Business Toolkit: PEX Card (Business Prepaid Card)

January 28th, 2013 ::

PEX Card

Is your company’s spending getting out of control? Are you finding it hard to keep track of employee expenses? PEX Card is a business prepaid card specifically designed to help companies take control of employee expense management. For a monthly per-card fee, businesses can distribute funds for employees to spend and then keep track of transactions as they occur. There are no transaction fees and no interest charges, and businesses gain more power over the company’s cash flow. You or your internal PEX Card administrator can easily add funds to your employee cards through the PEX website; that money is available to employees immediately.

 

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Posted in Accounting and Taxes, Compliance, Resources, Small Business, small business | No Comments »

Web.com Small Business Toolkit: Lemon Wallet (Digital Credit Card App)

January 25th, 2013 ::

Lemon Wallet

Ever forget to bring the right credit card when you’re out with a client? Or perhaps you’ve had your wallet lost or stolen and have had to spend hours on the phone canceling and replacing all your cards. Lemon Wallet allows you to scan and digitize all the information on your credit cards for easy retrieval on your phone. Merchants can then scan the image on your phone to download your card information for your purchases. Lemon Wallet also keeps your credit card balance handy and allows you to store your receipts digitally so you aren’t in danger of losing track of expense receipts. Lemon Wallet works on all mobile devices.

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Posted in Accounting and Taxes, Compliance, Resources, Small Business, small business, Technology | No Comments »

Web.com Small Business Toolkit: Wave (Cloud-Based Business Finance Tools)

December 31st, 2012 ::

Wave

Microbusinesses (those with fewer than 10 employees) have specific accounting needs, and Wave Accounting wants to be the solution. Recently, Wave released a completely new product suite, a new website and new personal finance tools. Wave’s cloud-based products help small businesses with their customer transactions, invoicing, receipts management and personal finance. Plus, new mobile apps will be launched in January for payroll management and receipt scanning–everything the small business owner needs in one convenient online location. The tools are perfect for freelancers, consultants and contractors that need invoice customization, choice of currency and the ability to seamlessly convert estimates and quotes into invoices.

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Year-End Tax Planning for Your Small Business

December 18th, 2012 ::

By Karen Axelton

The end of the year is coming, and that doesn’t just mean holiday celebrations—it also means you only have a matter of weeks to take advantage of some last-minute tax strategies that can save you money.

Contribute to your retirement plan. If you haven’t already contributed the maximum this year and you want to lessen your tax bite, make an extra contribution to your plan before December 31. (Don’t have a retirement plan? There are many options available even for solo business owners, so start investigating and set up a plan for the New Year.)

Make charitable contributions. This is another way to reduce your taxes owed. Consider donating outdated equipment, vehicles or other business assets to a school or nonprofit organization that can use them, and your business can get a deduction.

Make major purchases now. For the past few years, small businesses have enjoyed an expanded Section 179 expensing deduction. For 2012 the annual limit is $139,000, meaning you can expense up to $139,000 in furniture and equipment your bought for your business in 2012. Currently, this limit is scheduled to shrink to just $25,000 for 2013, so if you’re considering a major purchase or buying new equipment, now might be the time to take the plunge.

Accelerate expenses and defer income. If your business operates on a cash basis, you can apply this strategy. Pay expenses before the end of the year (charging expenses on credit cards is considered payment) and give your clients a little extra time to pay you so you don’t have the payments in hand and don’t have to declare the income on your taxes.

Take advantage of the health care tax credit. If you have fewer than 25 employees and provide health insurance for them, you may be eligible for a tax credit going back to 2010. Eligibility depends on factors including your employees’ average wages and how much of the insurance premium you contribute. Visit the IRS website for details on the tax credit and how to claim it.

Get organized. You don’t want to be dumping a shoebox full of receipts on your accountant’s desk at tax time. Start now to pull together the records and paperwork you’ll need for your business’s tax return. This way, you can get any missing documents together in plenty of time. Getting better organized will help ensure you don’t miss out on any deductions that are rightfully yours—and that saves you money.

Consult your accountant. The right year-end tax moves for you will vary depending on your business, so check with your accountant now to determine what last-minute strategies you can use to cut your tax bill and maximize your income.

Image by Flickr user Images of Money (Creative Commons)

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Posted in Accounting and Taxes, Compliance, Small Business, small business | 1 Comment »

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