What to keep and for how long?

It’s that time of year again. Tax time. A time to reflect on how successful you have been, or not. Some years are more painful or fun than others.

January is the month that most of the important papers start to arrive. W-2’s, 1009’s, annual investment statements are just a few. Once you have these together and have met with your accountant, which ones should you keep and for how long.

Like most people you have a lot of paper to look at. This doesn’t mean you should keep all of it. Check with your CPA to determine what to save and for how long. As a general rile, you will want to keep records of your income and expenses. These are the items the IRS will ask for, if you are chosen for an audit.

Using the general rule mentioned above, here are the items you’ll want to keep.

Earned income (W-2 forms)
Investment and Interest Income (1099’s)
Medical expenses
Taxes paid
Charitable contributions
Childcare expenses
Business expenses
Professional and Union dues
Education expenses
Travel costs (if they are deductible)

You will also want to keep your old tax returns. You can review them when filing in the future. They can remind you of deductions from the past that you may overlook.

Now that we have determined what to save, how long do we keep these records around? It is a good idea to keep these papers around until the chance of an audit passes. This is usually three years. The IRS can audit you up to 6 years after filing if they think that you have underreported your income by 25%. It may make sense for you to keep these papers for that period of time.

The records for the purchase and sale of your home are important to keep. A portion of the proceeds from the sale of your home, are free of capital gains tax. The limits are $500,000 for a married couple and $250,000 for single filers. You will need to hold on to the settlement papers from your purchase and sale. You will also want to keep receipts for any capital improvements you have made. These papers will enable you to prove the cost basis of your home and prove the amount of deduction you qualify for.

Once you have your system in place, where should you store these documents? A filing cabinet is a good start. You can also store this information electronically. Make sure you have a backup system in place if you do this. Some CPA’s offer storage of these documents and there are online services as well. Make sure the system you choose is safe and reliable. The IRS won’t want to hear that someone “lost your homework”.

Let me know if you have any questions. Contact Robert Centrello a CPA in Fishkill for more tips on tax matters. Click on his name and you will be able to email him your question.

2008 Year End Tax Tips from Robert Centrello

I was recently introduced to Robert Centrello, a CPA with offices in Fishkill, New York. In our meeting we discussed the many challenges faced by local business given what is happening in the economy and the ever changing tax landscape. I asked him to put some year-end tax tips that small business owners could take advantage of to reduce their tax liability.

 

The follow tips are from Robert. Please feel free to call him at (845)-896-6202 or email him at rcentrello@optonline.net.

 

It is after Christmas; however, the following tips can save you on your 2008 taxes.

  

Planning is the key to reducing your taxes. Deferring income and accelerating deductions will reduce your liability. Understanding the following tax basics, will help you develop the optimum plan.

 

The Basics (The answers to the following are found on your 2007 tax returns)

 

·        What was your 2007 income tax liability?

·        What is your Federal and State marginal tax rate?

·        Do you itemize or take a standard deduction?

·        Is the alternative minimum tax (AMT) an issue?

·        Do you receive a deduction for personal exemptions?

·        Do you have income from various States?

 

Acceleration of Deductions

 

Discretionary deductions should be made in December not January.  Examples are:

 

·        Prepayment of real estate taxes

·        Prepayment of state and local income taxes

·        Pay outstanding medical bills

·        Fill drug prescriptions

·        Charitable contributions

·        Medical and long-term care insurance.

 

If you are in AMT, do not prepay taxes.  If you have significant medical bills, bunching expenses may increase your deductions.

 

Consultants and Businesses

 

Most consultants and emerging businesses account for their income and expenses on a cash basis.  This means income is recognized when the cash is received, expenses recognized when paid.

 

Make the following expenses in December.  Some examples are:

 

·        Pay accounting and legal invoices

·        Purchase postage

·        Purchase office supplies

·        Purchase office equipment and furniture.  These items need to be at your place of business prior to 12-31.

·        Rent

·        Insurance

 

Pension Plans

 

Self employed consultants and businesses can establish a pension plan prior to year end.   The plan can be funded in 2009, and receive 2008 tax deduction.  There are many options that can be tailored to the specific business needs.  IRA’s, both traditional and Roth, should be reviewed by both employees and businesses as another retirement funding vehicle.

 

Teachers

 

If not already done, teachers can purchase supplies and deduct up to $250 from adjusted gross income.  Congress extended this benefit through 2009.

 

How Do We Pay For These Expenses 

 

Generally, you need to pay for an expense to take a tax deduction.  However, a beneficial exception to this rule is an expense can be deducted in 2008, if placed on a major credit card, not a store card, in 2008.  The 2009 payment does not impact the 2008 deduction.  This technique can be used for any expenditure including charitable contributions.

 

Planning is a year long activity.  Consult your tax and financial advisor if you have questions.

 

Please feel free to contact Robert with any questions. He can be reached at his office at 845-896-6202 or via email at rcentrello@optonline.net. Make sure you tell him you read his post on the Business Banking Blog.

SBA Programs for American Veterans

The Small Business Administration (SBA) has a variety of services available to American veterans who are looking to transition from the military to small business owner in the private sector. Each SBA office has a designated Veterans Business Development Officer. Their role is to help veterans prepare and plan for their new business venture. The Veterans Business Outreach Program provides business development training, counseling and mentoring to eligible veterans. Small Business Development Centers (SBDC) and SCORE (Service Corps of Retired Executives) provide management experience to veterans whoa re current or prospective business owners.

 

The Patriot Express Loan program is one of steps the SBA has taken to increase their ability to help veteran owned businesses. The following groups are eligible for the Patriot Express Program:

·        Veterans;

·        Service-disabled veterans;

·        Active-duty service members who are participating in the military’s Transition Assistance Program;

·        Members of the Nation Guard and Reserve;

·        Current spouse of any veteran, (except if dishonorably discharged)

 

The Patriot Express Loan can be used for most business purposes.  These include start-up expenses, equipment purchase, working capital and inventory. In some cases real estate purchases related to the business may also qualify. Follow this link to find out more. http://www.sba.gov/patriotexpress

 

The SBA also offers special assistance for Reservists and National Guard soldiers who are called to active duty. Reservists and National Guard members who have an SBA loan for their business my request rate reductions and loan payment deferrals from their lender after they receive activation orders.

 

The Military Reservist Economic Injury Disaster Loan Program provides low interest rate loans to eligible small businesses to cover their operating costs as a result of the loss of a key employee who is called to active duty. The SBA has set up a special web page to provide more information about this program. Click on the following link to learn more. http://www.sba.gov/aboutsba/sbaprograms/reservists/index.html

 

The SBA has also established the Office of Veterans Business Development (OVBD). The OVBD develops and distributes materials such as the Veterans Business Resource Guide, VET Gazette and Getting Veterans Back to work. These resources can be accessed on line at http://www.sba.gov/VETS

 

Hopefully these resources are helpful for your new business or are able to provide assistance for your existing business. Please cal or email me with any questions. Like you, I am a Veteran and would like to help you navigate your way to the right program for you.

Empire State Development’s Linked Deposit Program Helps Businesses

Empire State Development offers a program to New York State businesses called the “Linked Deposit” Program. The program is designed to help New York State businesses compete in our changing economy. The program is designed to encourage eligible businesses to make investments and undertake projects that will contribute to and improve their competitiveness within their markets.

 

The Linked Deposit program provides affordable capital based on interest rates that are subsidized by state deposits. The business owner needs to decide on the project, apply for financing through their commercial bank and apply for the Linked Deposit program. If the project qualifies, they close the loan with the bank at the full rate. A rider is added to the loan documents, which reduces the rate based on the qualification (up to 3% is certain cases). Once the loan is closed, Empire State Development opens a CD for the loan term with the commercial bank. The bank pays reduced interest to Empire State Development and uses the rest of the interest to offset the loan payments. The Business Owner and the Bank win.

 

The rate reduction is not automatic and some thought has to go into the process and the application.  The business owner must demonstrate the following:

 

            The project must improve competitiveness and profitability

           

The importance of the reduced cost of the borrowing to the ability of the business to take on the project.

 

The number of jobs that will be created or retained in New York State by the project.

 

 

The reduced interest rate is available up to 4 years. The business owner may take a loan with a 5 or 7-year term, but they will only get the reduced rate for up to 4 years. Most businesses will qualify for a 2% rate reduction if they meet the criteria mentioned above.

 

Some business may qualify for up to a 3% rate reduction. Business that are:

 

            Located in NYS Empire Zones with less than 100 employees.

           

Projects that will create full-time permanent jobs within the Empire Zone.

           

Businesses in Highly Distressed areas

           

Certified Minority or Women Owned Businesses (must meet certain criteria)

 

Defense industry manufacturers looking to reduce their dependence on DOD or other military contracts.

 

Many business owners have or are considering stopping expansion or waiting to put on equipment for new processes for fear of economic conditions or because they feel the cost of borrowing is too high. This program enables these businesses to reexamine these plans and move them forward if they qualify.

 

If you business is considering an expansion, a new equipment purchase, or would like to know more about this program, please email me at JKlassen@ MTB com. You can also call your local Empire State Development office. This information is on the web at www.nylovesbiz.com.

 

Don’t quit yet. You may be able to launch your project ahead of the next boom.

Keeping your Account Receivables rolling in

With the condition of the economy everyone is feeling the pinch. Businesses that never had problems collecting from their “good clients” are waiting longer and longer to get paid. Yet your vendors still want to be paid on time.

I took the time this week to ask a couple of my clients how they were handling this and they were happy to share their ideas.

Richard Pencak of Pencak and Company, a Custom’s House Broker started to see this in his business. He has his staff proactively call clients after a couple of days. Sometimes this works, obviously sometimes it does not. When it goes beyond 5 to 7 days he calls the company principal and has a business owner to business owner chat. This has yielded him the best results. The staff still works the process, they just get him involved sooner. This also helps him to keep a sharper eye on the activity of the business.

Michael Martin of the Martin Law Group PC has added a credit card payment option. This makes it easier for his clients to pay  a retainer upfront. It is also easier than writing a check. This has helped him to increase the amount of the retainer he asks for and ensures he gets paid for his work. This is becoming a very popular option for Attorney’s and Accountants.  Mike says, ”It eliminates the uncomfortable conversation when the work is complete and the client doesn’t want to pay the full amount owed.”

Early payment discounts are used by some businesses to reward clients for early payments. Make sure you don’t over reward folks. They should pay on time anyway.

Factoring is yet another option. A factor evaulates your receivables and purchases them from you at a discount. Once they purchase your receivables, your clients pay the factor. Some companies use a factor when they are unable to obtain traditional lines of credit to finance their receivables. You should consult with your Attorney and CPA prior to considering this option.

There are certainly other options to consider if you are not being paid. Collection companies can help once things have gone too far.  Staying involved makes it easier to catch potential problems early and creating and easier system to receive payment can help you avoid problems.

Holding Effective Meetings

The ability to host a concise business meeting and keep it on track is essential to productivity.

Begin by establishing objectives. List what they are and then distribute them in advance. This will prepare attendees for what to expect and enhance their ability to offer thoughtful insight.

Be an effective leader. As the moderator, encourage broad participation, but keep any one individual from dominating a discussion.

Ask others what they think. Make all attendees realize that their input is valued, and ensure that all viewpoints are heard.

Stay on topic. Meetings have a tendency to go off course — your job is to keep them on track! If important issues arise that are not on the agenda, make a note and inform the group that they will be addressed at a later time.

Avoid leaving a meeting to make copies or phone calls. This is disruptive and shows a lack of organization.

If possible, have juice, water or coffee and perhaps a light snack available for participants, especially if the meeting is over one hour or at the beginning or end of the workday.

Start and end your meetings on time, and distribute minutes or a summary with action items and deadlines to all participants as soon as possible following adjournment. This will keep the contents fresh in the minds of all involved and help your meeting make more of an impact.

Take Advantage of Networking Opportunities

Networking is a way of creating value for yourself by seeking out and cultivating relationships with other business professionals. To be effective, you not only need to take advantage of an opportunity when it’s presented to you, but also actively create value for your networking partners. This is how you make yourself attractive — by adding value and helping others achieve their goals. As Zig Ziglar said, “You can get anything in life you want if you will just help enough other people get what they want.”

For networking venues, consider joining private clubs, business organizations or a structured networking group. An excellent example is Business Networking International. Chapters are located throughout the country and you have the option to start your own. Each chapter consists of 20 to 40 people who gather weekly to build relationships, share referrals and increase business. To limit competition, no two members of the same chapter can belong to the same profession. A membership committee checks the references of each candidate to ensure they’re reputable.

Networking can also be done online. The largest business network online is called LinkedIn www.linkedin.com. It has 20 million members from around the world, representing 150 industries. Linked In is free to join. Paid accounts are available that offer more tools for finding and reaching people.

Another consideration is industry-specific online business networks. The largest is ActiveRain www.activerain.com. It has approximately 90,000 members and is a cross between a business network for real estate professionals and a blogging platform. Another is called Zolve www.zolve.com. Both are free and provide a place where you can network, set up a blog and share local market expertise.

Strategically Grow Your Company in 2009

The media has focused on the challenges of today’s economy and the lack of credit in the marketplace. Politicians have used this fear as fuel for their campaigns. It is tough out there.This makes it imperative that business owners begin to take control of their own destiny.

To help business owners and CEOs of small to medium sized business do just that a webcast is scheduled for Monday, October 6th at 2pm Eastern time called, “How to Strategically Build Your Business Using the Business Growth Calculator.”

Participants will be exposed to a powerful worksheet that will allow them to look strategically into the financial aspects of their business vital for growth and success.  All participants will also be offered the opportunity to download their own worksheet they can use to apply the process specifically to their own business and plot a strategy for success in 2009.     

To register for this poweful webcast click this link:
www.WeismanSuccessResources.com/webcasts

Jeanie Beers of the Newburgh BNI Chapter

Jeanier Beers is a member of the Newburgh BNI Chapter. She has forwarded me the following informaton to post. She recently attended the Shaklee National Sales Convention in New Orleans. Sounds like it was a great time. Best of luck Jeanie.

NEW ORLEANS, Louisiana. August 10, 2008– Jeanie Beers of Montgomery, NY recently joined thousands of social marketing entrepreneurs from the U.S. and around the world at the Shaklee Global Conference in New Orleans, Louisiana, August 6-10. Shaklee, the number one natural nutrition company in the U.S., holds its Global Conference annually to recognize and congratulate members of the Shaklee family for their successes and achievements.

 

This year, developed after years of research, Shaklee unveiled Vivix Cellular Anti-aging Tonic, a revolutionary breakthrough dietary supplement in the fight against cellular aging. In laboratory studies, Vivix ingredients have been shown to impact the four key mechanisms of cellular aging: DNA damage, genetic regulators, declining cellular energy production and the formation of Advanced Glycation Endproducts (AGE) proteins. Vivix ingredients help protect and repair cellular DNA and positively impact genetic regulators which help turn down cellular aging. The ingredients in Vivix also promote mitochondrial biogenesis, helping to increase mitochondrial efficiency in our cells to create energy, and are ten times more powerful than resveratrol alone at slowing AGE protein formation which can cause cellular damage that can compromise cell integrity and longevity.*

 

“We are proud to introduce the world’s best anti-aging supplement,” said Dr. Jamie McManus M.D., Chairman of Medical Affairs, Health Sciences and Education, Shaklee Corporation. A 30-day supply of Vivix delivers the equivalent amount of resveratrol found in 3,000 glasses of red wine, and Vivix ingredients have been shown in laboratory studies to be 10 times more powerful in slowing a key mechanism of aging than resveratrol alone.”*

 

Exclusive to Shaklee, Vivix is all-natural and formulated with clinically tested key ingredients. Shaklee has worked for years to isolate a unique profile of polyphenols that have been shown in laboratory studies to fight cellular aging, and has filed for multiple patents to protect this innovation.* Just one of the ingredients in Vivix has been referenced in more than 2,000 research publications. Vivix ingredients also support heart health, brain health and cardiovascular function, enhanced immunity, and joint health.*

 

“Shaklee is committed to creating the best all-natural nutrition products available based on extensive research,” said Beers, “I know that my clients and I can trust that Shaklee products are not only safe, but provide the best supplemental nutrition on the market.”

 

Beers started her natural health business eight years ago, and has found that helping others spread the word about health, opportunity and a better world has led to a successful home-based business.  For more information, contact Jeanie Beers at 845-457-9330 or visit www.OfficialHealthCounselor.com or www.shaklee.net/Products_4_Health

 

 

 

About Shaklee Corporation

For 50 years, Shaklee has been a leading provider of premium quality, natural nutrition, and personal care products, environmentally-friendly household products, and state-of-the-art air and water treatment systems.  In 2000, Shaklee became the first company in the world to be Climate Neutral™ certified to totally offset its CO2 emissions, resulting in a net zero impact on the environment. With a robust product portfolio, including more than 50 patents and patents pending worldwide, Shaklee has more than 750,000 Members and Distributors worldwide and operates in the U.S., Mexico, Canada, Japan, Malaysia, Taiwan, and soon, in China.  For more information about Shaklee, visit Shaklee.net/Beers.

Marshal Law in Business

This is the first in what I hope is a series of posts provided by my friend and colleague Marshall Mermel. Marshall is the President and CEO of Marketing Works, a marketing and advertising company headquartered in Cold Spring and in his brilliant mind. I have known Marshall for the past 5 years and am still desperate to keep up with his many thoughts, ideas and their implementation.  A number of weeks ago I asked Marshall to provide me some posts that I could provide as Marshall Law, these are Marshall’s thoughts and ideas on marketing, sales and strategic business development. Thank you Marshall for what I am sure will be some great postings.

Recurring Temptation

Probably the most recurring temptation for small business owners and managers is to buy into the enticing belief that good products and services sell themselves. After all, customers are sensible and recognize value of new ideas, better mousetraps, and the “best” service! Well, maybe they do and maybe they don’t. Scores of companies are launched with the fervent hope that a new technology, a product breakthrough, or an intriguing service idea will suffice to produce untold wealth. And scores of disappointed business owners and managers find out too late that the product didn’t quite fit, that the buyers were boorishly uninterested, that the channels were already preempted, that the competition was more imaginative than presumed. 

Marketing may not automatically solve al of these problems, bit without it the chances of business success are severely limited. The marketing issues are typically the “make or break” decisions for new enterprises, and for emerging growing businesses. It makes sense therefore to list perhaps my top ten reasons why businesses fail and in my next installment, provide some thoughts on how to avoid these pitfalls.

Avoid these top ten reasons why businesses fail:

1. Under capitalization
2. Under capitalization
3. Under capitalization
4. Under capitalization
5. Under capitalization due to poor planning
6. Reliance on a single individual or event
7. Using ad-hoc marketing processes
8. Marketing is viewed by management as an expense rather than as an investment
9. The prices you charge are based on costs and “lower prices drive sales”
10. Marketing is defined as sales

Please think of these reasons and look at your approach to promoting and marketing your business. Make sure you stay tuned to the next installment of “Marshall Law” to make sure you have the tools to avoid these pitfalls.

You can learn more about Marshall Mermel and about marketing by going to his web site at www.MarketingWorksNow.com