4 Tips on avoiding an audit

Are you paying enough in taxes? Most small business owners would say they already pay plenty.  But the IRS disagrees.  The agency calculates the “tax gap”—that is, what it expects to collect and what taxpayers actually fork over—at more than15 percent of total taxes due.

Personal income from business activities—rather than wages or investments—is the single greatest source of this discrepancy, according to the IRS, accounting for between $83 billion and $99 billion of missing tax dollars.  That’s why the agency directs the  greatest share of its enforcement budget—41 percent in 2006—toward small businesses, almost as much as it devotes to corporations, high-income individuals, and criminal activity combined.

Since the IRS already sees the bulk of small business owners—those with businesses structured as sole proprietorships,  LLCs,  partnerships, and S-Corps—as a greater risk of misreported income compared with individuals or large corporations,  you need to be careful to avoid cutting any corners that could trip you up during an audit.

The comments above and these 4 tips are from a list of 25 Tips, provided in a Business Week article.

1. Classify workers properly

Are your workers employees or independent contractors?  If you classify workers as  independent contractors and don’t contribute the employer’s share of their payroll taxes, make sure they truly meet the IRS’s definition.

It has less to do with how many hours they work and more to do with how much control you exercise over them.

2. File and pay on time

It sounds obvious, but if you don’t pay your taxes or file for an extension by Apr. 15, the IRS can file a substitute return for you, collect the money from your bank accounts, or get a tax lien against your property.

3. Pay estimated taxes

Since taxes aren’t withheld from your business income as they are from W-2 wages, you have to pay the IRS estimated taxes four times a year.  While some business owners may not owe estimated taxes—sole proprietors who expect to owe less than $1,000 for the year, for example—failing to pay them could leave you on the hook for a penalty come April.

4.  Keep careful records

Don’t stuff all your receipts and invoices in a desk drawer.  Make sure you have records to back up your sources of income and expenses. The burden is on the taxpayer to prove a deduction is a legitimate business expense, so you should have receipts to show an auditor that your write-offs are above board.

Information on Accounting, Taxes and Risk Management is available in a SCORE Chicago workshop on July 17th.  Registration information is at: http://bit.ly/AccountingRisk

Special thanks to Irv Williamson, who will be presenting this workshop.

Have a Question for Our Experts?

July Video Programming

Our video programming  starts with a live call in TV show on CANTV.  In addition to live questions, we use selected questions that have been given to us before the show.

July 7th. Brian Fons from Corporate Creations will be discussing legal aspects of using names, pictures, and content in your business. We are going to explore in some detail the trade offs when it comes to business risk in trademarks, copyright etc.

Below is a one of our videos with Brian from the Winter Season

July 14th Jacob Cynamon will be talking about opportunities to improve your website. We are going to look in detail at blogs, Twitter, YouTube, Facebook.  What area they?  What does it take to get started?  How can a small business use them effectively?  What is an integrated content strategy?

Below is one of our videos with Jacob from the Winter Season.

July 21st. Bernadette Shanahan-Hass, President/CEO of the Tinley Park Chamber of Commerce will be discussing the role of the chamber in the community.  How does the chamber help business development?  How can businesses take advantage of their chamber?

Below is an interview with Bernadette from an Economic Roundtable in April.

If you would like to submit a question, please post it in the comments section of this posting.


Highlights from Twitter

I was looking over the Twitter postings that have been done at our scorechicago Twitter site over the last couple of months. Here are a some highlights.

Great Video. How to get you emails opened by pro from Constant Contact http://tinyurl.com/cysgws1:07 PM Apr 16th from web

@gaeblerdotcom For small business, a web site is like a yellow pages listing. To start, the company name should route to the domain9:13 AM Apr 25th from web in reply to gaeblerdotcom

Here’s a thought. It used to be a small business needed a brochure. Now with all of the new media, a business needs a content strategy7:49 PM May 5th from web

@StartupPro When it comes to VC funding. Timing is very important. Need to show you have something, and money will rocket you to success7:04 AM May 7th from web in reply to StartupPro

@jeffdurso Most of the time you learn more from “NO” than you learn from “They loved it” Especially if you probe the “NO”8:35 AM May 8th from web in reply to jeffdurso

Have you checked out SBTV. An great source of small business information. www.sbtv.com10:42 AM May 11th from web

Ever thought about thanking the president for using your product? The National Restaurant Assoc. did: http://tinyurl.com/okssj93:16 PM May 11th from web

@blfarris True, but maybe we, as a community, need to do a better job of explaining how all of Web 2.0 works together.9:54 AM May 12th from web in reply to blfarris

@MarketingYP there is personal social media and business social media. When representing a business, users should behave appropriately.2:00 PM May 14th from web in reply to MarketingYP

SBA rolls out new program. 100% guarantee on up to $35,000. Check out video excerpt on YouTube. http://tinyurl.com/pgljuy7:11 AM May 15th from web

@smallbiztrends Telling a story is good, but think about crafting your content as a series of interactive episodes11:58 AM May 15th from web in reply to smallbiztrends

@SurePayroll There is a role for a VC. Not at start up, but when it is time to take to scale. VC folks can supply $$, knowledge & contacts4:44 PM May 15th from web in reply to SurePayroll

@StartupPro Check out our short video on Legal Help when starting a business. http://tinyurl.com/quomu49:56 AM May 16th from web in reply to StartupPro

Need to remember, when it comes to Web 2.0, it’s not what we do (lots of tips on that) but it’s the content.. and how we manage the dialogue9:24 AM May 18th from web

It used to be that we lacked the software tools to get our work done. Now we work to fullly utilize the software tools that are available6:55 PM May 18th from web

@ChiOfficeLinks Often start up people are encouraged to write a business plan. For many, the best thing to do is to “plan their business”.2:41 PM May 19th from web in reply to ChiOfficeLinks

Ever wonder what a Chamber of Commerce does. Check out this series of interviews on our YouTube site. http://tinyurl.com/q3ptwl2:51 PM May 19th from web

@RoseWollfBiz Is it winning or losing… or how you play the game??12:12 PM May 20th from web in reply to RoseWollfBiz

@ChrisKnight Long Tail original content is good. But content strategy needs to be continual and reusable across various media4:30 PM May 21st from web in reply to ChrisKnight

We have embedded YouTube segments on our website. Check out this page on Business Plans. http://tinyurl.com/ofh5rw6:12 AM May 23rd from web

@ChicagoDesign Re: Ebay. The challenge of growth is to keep your eye on where you are going, not where you are. Easier said than done2:50 PM May 23rd from web in reply to ChicagoDesign

@danschawbel Social Media vs website. The key is developing a content strategy that makes leverages both and adds to it email marketing4:57 PM May 25th from web in reply to danschawbel

@danschawbel The original golden rule of “Do unto others as you would have others do unto you.” holds true in social media2:12 PM May 26th from web in reply to danschawbel

@SCOREMentors A short video from a director at the SBA about how to take advantage of the stimulus plan. http://tinyurl.com/dko5aj7:47 AM May 27th from web

@keaadvertising The challenge today is being available when the buyer is ready to buy. Making your content available when the wallet opens8:23 PM Jun 1st from web in reply to keaadvertising

@ChrisKnight Re: landing page review. Good point. PPC can be ineffective if the buyer does not know what to do when he gets there8:01 AM Jun 4th from web in reply to ChrisKnight

@SCOREMentors A short video on working with your community in today’s economic situation. http://bit.ly/DrJtN4:18 PM Jun 4th from web in reply to SCOREMentors

@danschawbel Twitter is what people make of it. Better 10% of the people engaged, then a mad dash for numbers2:11 PM Jun 5th from web in reply to danschawbel

@danschawbel With People, you need to ask the same question as we do w/SMB. What is the problem, how do you solve it, value of solving it?7:02 AM Jun 8th from web in reply to danschawbel

@SocialNetworkTV To hit your social media goals you need to think about a content strategy, that is ultimately tied to your business goals7:36 AM Jun 8th from web in reply to SocialNetworkTV

@weedygiraffe A view of what’s needed in a business plan from the perspective a banker from Harris Bank http://tinyurl.com/r7wudn12:08 PM Jun 8th from web in reply to weedygiraffe

@SocialNetworkTV Re:corporate Twitter. Think about your conversation, as an #e-conversation. Content must have value either in person or “e”9:27 AM Jun 9th from web in reply to SocialNetworkTV

Time Mag 5/25: Failure is not so much a physical state as a state of mind; success is falling down-and getting up one more time -without end about 22 hours ago from web

@thescottbishop Twitter corporate strategy . Be genuine, people are with you. If not, people see through it. No place to hide on Twitter about 17 hours ago from web

Business Basics Hotline on Chicago’s CAN TV

cantv

SCORE Chicago provides experienced business counselors to assist new and existing businesses in starting, maintaining and growing their businesses.  Now Chicago residents can see them live on TV.  They can call in questions to counselor Mark Goodman and his guests on HOTLINE ON CAN TV21 every Friday at 6:00.

Here’s the schedule:

January 9th      Hank Rodkin, Growing Your Business
January 16th    Earl Shraiberg, Starting Your Business
January 23rd   Carlos P. Bastidas, Managing Your Business
January 30th   Frantz Osse, Financing Your Business
February 6th    Jacob Cynamon, Technology for Your Business
February 13th  Alfred Belluomini, SBA, Financing your Business
February 20th  Brian Fons,  Starting Your Business (legal)
February 27th  Larry Pelka. Financing Your Business
March 6th         Hank Rodkin and Stephen Beal, International Business
March 13th       SCORE Success Stories
March 20th      Meghan Kearns, Harris Bank, What every banker wants
March 27th      Questions from First Quarter

Mark Goodman spent many years working for Motorola. He was one of the first business people in the cell phone group, rising to positions in distribution, marketing, and business management. Mark also developed and implemented internet strategies. Then he went on to manage service, parts and major account business opportunities. Subsequent to his experience at Motorola, Mark worked in sales management for a Silicon Valley company.

On January 23rd, Carlos Bastidas is going to be taking on the topic Managing Your Business’. Carlos will be taking a look at the challenges of business management from the perspective of an immigrant. What are the unique challenges presented by some one who is new to the U.S.

Carlos held several positions with British Petroleum, including several senior executive positions. At McDonough Associate s: he was Vice President Manager of the Structural Department, Quality Assurance and Quality Control. With Ericsson Wireless, \he served as director of project management and at Qualcomm he was Total Project manager, site development and deployment of cellular networks and was Country Manager Responsibilities for the office in Chile.

On January 30th, Frantz Osse and Mark will be discussing the topic ‘Financing Your Business’. Frantz is going to discuss why banks and other investors expect a business owner to put some of his own money into a business. We’ll highlight why in most situations, ‘Skin in the Game’ is the rule, rather than the exception.

Before retiring in early 2008, Osse headed Wells’ Private Mortgage Banking operation in northern Los Angeles County – one of the largest and most profitable segments in the company. Osse also hosted a radio talk show on KACE-FM in Los Angeles geared to helping entrepreneurs strategically grow financially stable and profitable enterprises. He began his professional career at Manufacturer’s Hanover Bank in New York City and later worked at First Interstate Bank in Southern California for eleven years.

CAN TV programming

Manage and Track Your Time for Success

Time can be a small business owner’s best friend, or worst enemy. It all depends on how you use it. There just never seem to be enough hours in the day to get things done. As a business operator, time is extremely valuable to business owners-especially if you bill for time. Wasting time can be extremely harmful to your bottom line.

To operate efficiently, your business may need systems for managing time and keeping track of who’s working on what and for how long.  Most successful small business owners are also successful time managers. And they tend to share certain strategies.

One of the most basic time management devices ever invented is the simple “To-Do” list. Each day, jot down all of the things that need to get done, all on one sheet of paper.

You can also number or check the ones that are highest priority “must-do” items. As tasks are completed, cross them off. This can help you focus on getting them done one at a time, and also gives you a sense of accomplishment.

Delegating more work can also help ease your time crunch. Many business owners accustomed to “doing it all” find this exceedingly difficult. But even if you are a sole operator, you can pass off tasks to others, via outsourcing, for example, to free up time for yourself.

Periodically analyze how time is spent at your business-and not just your time, but everyone’s. Divide the day into small time blocks and record what you, or others, were doing in each block. Now compare this real use of time to your goals, expectations and mission priorities. If they do not align, you’ll need to take action. One step might be to set clearer time-management goals for yourself and your employees.

Banish procrastination from your place of business. Growing, successful businesses don’t put things off. Even a simple “no” response to something on your to-do list can extinguish that item and let you move on.

A variety of technology solutions are also helping small businesses track and manage time. For example, Workarea.com is an Internet-based time tracking system that can provide billing information to the second. The system includes a time clock, time sheet, expense tracking, address book and the ability to access it all via cell phone or PDA.  If you use Microsoft Outlook for email, you can also tap its time management capabilities.

The TimeClock Plus Small Business Edition, lets you turn any PC into a time clock. Employees can sign in or out with the keyboard or mouse, and easily allocate hours and costs to specific jobs. And TimeTiger.com is a computer-based to-do list that shows all the items you could be working on.

To learn more about time management issues facing your small business, contact SCORE “Counselors to America’s Small Business.”  SCORE Chicago is a nonprofit organization of more than 100 volunteer business counselors who provide free, confidential business counseling and training workshops to entrepreneurs and small business owners. You can set up an appointment at one of our 15 locations by clicking this link. Check our website www.scorechicago.org for details on our workshops or resources on topics of interest.  Call 312-353-7724 for further information.  Not from Chicago?  Visit SCORE.org.

Related Posts:

6 Questions to Organize The My Week, with Peggy Duncan Looking Over My Shoulder

SuiteMinute: Computer Tips, Tricks and Strategies to Make Work Easier

10 Tips on Time Management

Know the Value of An Hour

Tips from Professional Organizer Karen Ussery

Working from Home Challenges:  Manage Your Schedule Wisely


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Don’t Let Office Clutter Clog Up Your Efficiency

For many small business owners, a cluttered desk or office is a sign of success. Things are good, so there’s more that has to be done. But it doesn’t take much for office clutter to go from a source of pride to a serious, potentially overwhelming problem.

According to professional organizer Chris Perrow, most business owners are on information overload, working long hours without thinking much about simple productivity issues of how and why things get done. “When they stop to analyze the situation, they often find much could be delegated, eliminated or done at a more efficient time,” she says.

The key to eliminating clutter is to have a system in place to keep that helps you get and stay organized. Organizing Coach Carol Halsey suggests a five-step approach to dealing with office paperwork that she calls DRAFT, for Discard, Refer, Act, File and Table.

1) Discard-If it’s something you’ll never retrieve again, trash it, don’t file it. Your files should be a “resource holding tank,” not a dead storage place.

2) Refer-If someone else needs the information or can handle it for you, pass it along.

3) Act-If it requires action by you, do it now. It’s inefficient to delay and handle the paper a second or third time.

4) File-If it’s important and you will truly need it later, file it in a proper filing system that allows you to find things quickly.

5) Table-If it’s something you’ll need in the near future (but not today), place it in a simple follow-up system for easy, quick access.

Because organizing is such a pervasive challenge, there are a number of resources available to help you improve both daily habits and overall efficiency. Some helpful and inexpensive books include Organize Your Office by Ronni Eisenberg, File…Don’t Pile by Pat Dorff and the Office Clutter Cure by Don Aslett. You can also find specialized one-on-one assistance from the National Association of Professional Organizers’ automated referral service. You can search for a professional organizer by location or specialty (e.g., home, type of business, special skills, etc.).  For organizing tips and further resources, see also the website of time management and efficiency expert Peggy Duncan.

To learn more about operating your small business more efficiently, contact SCORE “Counselors to America’s Small Business and its local branch in Chicago. SCORE Chicago is a nonprofit organization of more than 100 volunteer business counselors who provide free, confidential business counseling and training workshops to entrepreneurs and small business owners. You can set up an appointment at one of our 15 locations by clicking this link.  Check our website www.scorechicago.org for details on our workshops or resources on topics of interest.  Call 312-353-7724 for further information.

Train Yourself On and Off Line for Small Business Success

There are many things to know about building a successful small business-from marketing and tax issues, to technology, finance, human resources management and more. Most entrepreneurs don’t have expertise in all of those areas. That’s why individuals interested in starting or expanding a business have been tapping into training programs at a record pace.

For many business owners, learning opportunities and training programs are becoming vital steps to planning, launching and growing a business. During one recent 12-month period, a record 2.5 million people sought help from one of many U.S. Small Business Administration (SBA) training and assistance programs.

Seeking help is simply smart. No business owner can be adept at every aspect of operating successfully. Plus, conditions change, so keeping yourself informed is vital to long-term success.

SBA Training

The single most popular program in America is probably the SBA Small Business Training Network/E-Business Institute, which registers nearly a million users at its Web site each year. The Small Business Training Network is a Web-based conglomerate that can link you to online courses, workshops, publications, learning tools, information resources and access to electronic counseling and other types of technical help.

Free online courses are offered on about 75 topics in areas such as business startup, growing your business, home-based business and re-engineering your skills. Sample titles include: Growth Strategies; Analyzing Profitability; Building Your Brand; and, Understanding Business Insurance.

Local SBA-sponsored training events are offered nationwide. These range from breakfast talks on local economic conditions, to brown-bag networking lunches, loan seminars, startup workshops and free business assessments.  Click your state on the Web site map for a calendar listing dates and event details in your area. In addition, dozens of top colleges and universities offer business training courses you can take online. Most of these require a fee.

SCORE Training

SCORE Chicago also offers inexpensive workshops to help you start or grow your business.  We have a basic certificate series and special workshops on topics like global trade, internet marketing and franchising.   Check our website www.scorechicago.org for details on our workshops or resources on topics of interest.

SCORE also offers online training, and courses are groups in three areas:

Starting Your Business

Developing a Business Plan
Conducting a Marketing Analysis
Analyze your Competition
Targeting Your Market
Maintaining an Agile Company
Creating a Competitive Advantage
Creating a Strategic Plan
Determining Your Business Legal Structure
Protecting Your Business with Patents, Copyrights, and Trademarks

Managing Your Finances

Preparing a Cash Budget
Preparing a Balance Sheet
Managing Your Cash Flow
Running a Profitable Company
Creating a Profit and Loss Statement
Analyzing Your Financial Ratios
Protecting Your Business with Contracts
Assessing Your Company’s Financial Needs
Partners and Investors
Valuing a Business

Foundations of Marketing

Pricing Products and Services
Building Your Brand
Promoting Your Business
Advertising Your Business
Building a Web Site
Personalization Strategies to Attract and Retain Customers
Identifying Your Sales Strategy

SBDC Training Program

The Arkansas Small Business and Technical Development Center offers online training classes for small business for $30 each.

Professional and Trade Association Training, and Corporate Webinars

Many coporations, trade associations and even the IRS also offer online courses and webinars.  The IRS has even done a series of training videos. Companies are using webinars to educate potential clients and generate leads.  For example here are one firm’s series of webinars on search engine optimization of a website. YouTube has many training videos, too.  Click this link for list of 100 webmaster videos on web-related subjects.

To learn more about training opportunities for your small business, contact SCORE.  SCORE Chicago is a nonprofit organization of more than 100 volunteer business counselors who provide free, confidential business counseling and training workshops to entrepreneurs and small business owners. You can set up an appointment at one of our 15 locations by clicking this link. Call 312-353-7724 for further information.

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