STARTING A BUSINESS? WHAT NEW (AND EXISTING) BUSINESS OWNERS SHOULD KNOWWritten by Dianne Goodman, CPA
Starting a business can be overwhelming enough trying to get up and running but when you think about all tax requirements, your cup may runneth over. Here is what you must know in order to start your own business on right foot and avoid paying penalties and interest which can cost more than paying an accountant to do things right first time.WHAT FORM OF BUSINESS SHOULD YOU SET UP WHEN STARTING YOUR BUSINESS? There are several different options including a sole proprietorship, partnership, corporation, S corporation or limited liability company. In general a sole proprietorship works fine if you are very small, not too profitable and aren’t concerned about legal liability issues. A partnership is like being married to other partners. If you aren’t that cozy with them, you may want to set up another type of entity. Corporations are best suited for business owners who want personal legal protection and have profit available beyond what they will need for their personal use. See http://www.dgoodmancpa.com/smallbusinessretirementplan.htm for an example of what you can do with that available profit tax deferred until retirement. S Corporations are best when you are operating at a loss and want business owner legal protection. Limited liability companies will protect business owner from personal legal liability and, if structured properly, can be a partnership, corporation or owner for federal income tax purposes. DO YOU NEED AN EMPLOYER IDENTIFICATION NUMBER (EIN) WHEN YOU START YOUR OWN BUSINESS? You need an employer identification number if you have employees, have a qualified retirement plan, operate as a corporation or a partnership, or need to file employment or excise tax returns. You do not need an employer identification number if you are a sole proprietor and don’t meet any of requirements above. WHAT METHOD CAN YOU USE TO ACCOUNT FOR YOUR INCOME AND EXPENSES WHEN YOU START YOUR SMALL BUSINESS? The two most common methods are cash and accrual. The cash method in general allows you to report income and expenses in tax year you receive it. The accrual method in general allows you to report income and expenses in tax year you earn or incur it even if you haven’t received payment or paid it yet. WHAT KINDS OF FEDERAL TAXES WILL YOU OWE WHEN STARTING A BUSINESS? All businesses must file a return. The form used depends on what form of business you set up when starting your business. The federal income tax is a pay-as-you-go tax. In general you must pay tax as you earn or receive income during year to avoid penalties and interest if your tax liability for year exceeds $1,000 including self employment tax for sole proprietors, partners and S corporation shareholders. Corporations should make estimated quarterly payments if they expect to owe $500 for year. Estimated tax payments are due quarterly. Penalties and interest can be hefty so you should make sure you comply in order to avoid wasting money on IRS penalties.
| | 10 Powerful Networking Tips Using Business CardsWritten by C. E. Reid
Whether you are looking for a job or running a business, giving out business cards is crucial to marketing your skills or services. Even as a job seeker, develop mindset of running business of YOU, Inc. Business cards speak volumes about who you are, what you offer and how serious you are marketing YOU, Inc. as a business. Oh! So, you have a resume and don’t need business cards. Can you carry 10 resumes in your wallet? Do you or can you carry your resume everywhere you go? A church bell ringing lets people know they are open for business. Your business card is your bell. Here are some proven tips using business cards to increase your chances of landing a job or creating a business opportunity. 1. Never leave home without them. Before leaving home, your checklist should be expanded to include business cards, as part of "do I have my wallet/money, house keys, driver’s license?" Any “per chance” meeting is an opportunity to give out a business card. A morning run or a quick trip to local store could be an opportunity to network. My wife and I always ask each other “do you have business cards”, before leaving house. Make it a habit to carry business cards. 2. Insert a business card when mailing bill payments. Bills contain advertisements. Why can’t you advertise your skills or services same way? Insert a business card with your payment. You may not think a person in South Dakota who opens your credit card bill payment can help you. Never underestimate power of networking. A movie, entitled “6 Degrees of Separation” points out we are 6 people away from knowing someone of influence. You could be 6 people away from knowing President of United Sates, your favorite movie star or someone who is in a position to hire your skills or services. Each of us knows someone, who knows someone, who knows someone etc. Developing this powerful networking attitude will be a fundamental source of continued success. 3. Use proper business card etiquette. Whenever you give a business card, ask for a business card. When given a business card, don’t just take it and place it in your pocket. Make person feel important by looking at their card for a few seconds. You might see something that could be a topic of discussion. Write comments on card such as date, location and common points of interest. These comments will prove valuable when following up with that person. This also demonstrates a sincere interest in other person. Then place it in your wallet. This lets them know they reside in a special place with you. "Skill with People" by Les Giblin is a book that expands on this approach. Make people feel important, in order to make yourself important to them. 4. Be generous. Give business cards out to everyone, including family and friends. Don’t let vanity stop you from giving out your last business card or giving 2 at a time to each person. I have met many people who have totally missed purpose of a business card. I once asked a person for a second business card, so I could refer his services. His response was "I only have a few cards left and I need them", as he looked again at his name on card. Hoarding your business cards only makes your wallet feel full, not your bank account. 5. Ask for referrals. When giving a business card, people feel more comfortable when you ask; “I would appreciate a referral, if you know anyone that could use my services”. Don’t make people feel like they are on spot. This approach disarms people much better than asking them, “is your company hiring?” People naturally like to do favors for people. Saying “could you do me a favor by referring my services to someone”. This always places you in a better position with them. They will feel better about helping you. Give them 2 cards. 6. Maximize every "per chance" meeting. You never know when you might meet someone who can help you. Family or friends social events could produce unexpected encounters with people. Don’t discount those events. So you’re going to a birthday party for your friend’s kid. You never know who you might meet. At a family holiday gathering last year, I met someone that has been instrumental in developing our business this year. Who would have thought this could happen by giving him a simple business card.
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