Businesses

6 Ways to Save on Small Business Taxes

One of the biggest challenges entrepreneurs face when starting a small business is paying taxes. When you run your own business — as opposed to working for an employer — you’ll be responsible for calculating and paying your own taxes. While there’s no way to avoid taxes, there are ways to lower the financial burden of Uncle Sam.

#1) Incorporate Your Small Business

There are several different ways you can structure your small business, including the use of a sole proprietorship, limited liability company (LLC) or a corporation. Of those options, a corporation typically offers the greatest tax-savings benefits.

#2) Start a 401(k) Retirement Plan

Another way to save money on small business taxes is to start a 401(k) retirement plan. When running your own business, you won’t receive the same “match” that you would with a retirement plan offered by an employer. Nonetheless, you can still start an individual 401(k) retirement plan to lower your overall tax burden.

#3) Claim the Home Office Deduction

If you regularly work from home, don’t forget to claim the home office tax deduction when filing your taxes. You can learn more about the home office deduction by visiting the IRS’s website. Basically, though, you use either the simplified or regular method, the former of which is easiest. With the simplified method, you’ll receive a deduction of $5 per square foot of business space in your home, with a maximum deduction of 300 square feet.

#4) Purchase Goods and Services With a Credit or Debit Card

What’s wrong with using cash to purchase goods and services for your small business? Well, if you pay with cash, you won’t have a digital trail of your expenses. Instead, you’ll have to keep track of paper receipts, which are bound to get lost at some point or another.

#5) Consider Tossing Old Equipment

When a piece of equipment has reached the end of its usable life, consider tossing it in the trash instead of selling it. If you sell old equipment, you’ll incur a capital loss. If you toss it, on the other hand, you’ll incur an ordinary loss, which you can deduct from your taxes.

#6) Use Quickbooks for Accounting

The right accounting software can help you save money on your taxes. By using Quickbooks, you’ll have the tools and resources needed to maximize your tax deductions. Available in both cloud-based and on-premise versions, Quickbooks is the leading accounting software used by small businesses.

Have any other tax tips that you’d like to share? Let us know in the comments section below!

How to Prepare Your Small Business for the Holidays

With the holiday shopping season right around the corner, you should use this opportunity to prepare your small business. Although there are exceptions, most small businesses — particularly those that operate in a business-to-consumer (B2C) industry like retail — generate more sales during the months of November and December as opposed to other times of the year. By planning ahead, you can maximize your small business’s sales during the holidays.

Stock Up on Inventory

As a small business owner, you probably know the importance of keeping products in stock. If you run out of a product, you may have to turn away shoppers in search of that product. During the holidays, out-of-stock products can cost your small business big bucks. Therefore, it’s a good idea to order a surplus of products in anticipation of the increased holiday sales.

Hire Additional Employees

Of course, you may need to hire additional employees during the holidays. While some small business owners are reluctant to hire employees, there’s only so much work you can do yourself. And with the holidays being the busiest time of year for most small businesses, hiring additional employees can prove to be a smart investment. Just remember to choose highly motivated employees who are willing to put forth the necessary effort to help your small business succeed.

Offer Discounts

Consider offering discounts that are only available during the holidays. Prior to visiting your small business during the holidays, prospective customers may search for coupons or promo codes online. If they don’t find any discounts when scouring the internet, they may take their money elsewhere, such as a competitor’s small business.

Change Your Hours

Finally, evaluate your small business’s hours of operation to determine whether they need changing. If your small business typically closes at 6:00 p.m., for example, you may want to extend its hours of operation to 7:00 p.m. or 8:00 p.m. during the holidays. By extending your small business’s hours of operation, you’ll attract more customers during this critically important time of year.

Decorate

The Small Business Administration (SBA) recommends that business owners decorate their establishment during the holidays. Adding just a few seasonally relevant decorations will make your small business stand out. At the same time, it will encourage more shoppers to visit your small business, resulting in higher sales revenue during the holidays.

Have any other tips that you’d like to share with our readers? Let us know in the comments section below!

6 Marketing Tips to Bolster Your Small Business

Statistics show over half of all small businesses will fail within their first five years. To prevent this from happening to your small business, you need a strong marketing strategy. By following these six marketing tips, you can bolster your small business’s presence to achieve greater success.

#1) Create Social Media Profiles

Even if you have a personal profile on all the leading social media networks, you should still create profiles under your small business’s name. Prospective customers will often search for small businesses on Facebook, Twitter and other social media networks. By maintaining active social media profiles, these users will be able to find your small business more easily.

#2) Sponsor Local Activities and Events

Don’t underestimate the value of local sponsorships. By sponsoring activities and events in your city, you’ll reach more prospective customers, some of whom may choose your small business the next time they need a product or service you sell. Sponsorships typically aren’t free, but they are well worth the investment when marketing a small business.

#3) Hand Out Business Cards

Even in today’s digitally connected landscape, business cards are still a useful marketing tool for small businesses. When you encounter a prospective customer, you can provide him or her with a business card. Considering that business cards typically cost just pennies to produce, it’s a small price to pay to spread the word about your small business.

#4) Launch a Website

Of course, you can use a website to market and promote your small business. Not all prospective customers will use social media to search for your business. Some may use a search engine like Google or Bing. Assuming your small business has a website, these prospective customers can find your small business more easily.

#5) Create an Email Newsletter

Email has become of the most commonly used communication channels in the world. As a result, it shouldn’t come as a surprise to learn that an email newsletter can improve your small business’s marketing strategy. With an email newsletter, you can collect the email addresses of prospective customers. Once collected, you can then send them emails containing advertisements for your small business’s products or services.

#6) Network

Finally, networking offers a simple yet effective way to market your small business. Regardless of where your small business operates, there are probably networking events available. During these events, you can meet other business owners, as well as prospective customers, to further grow your small business.

Have any other small business marketing tips that you’d like to share? Let us know in the comments section below!

5 Big Benefits of Equity Financing

There’s an old saying that it takes money to make money. As a business owner, you’re probably well aware of the truth within this adage. You must spend money to purchase inventory and services in order to sell your business’s own products and services. While you can always finance your business using a traditional bank loan, however, you should consider equity financing for the five following reasons.

#1) You Don’t Have to Repay It

Bank loans are a form of a debt financing, meaning you’ll have to repay them — usually with added interest. With equity financing, on the other hand, you keep the acquired money. Equity financing simply involves selling ownership stake in your business. As a result, you aren’t required to repay it. Whether you obtain $10,000 or $1 million through equity financing, it’s yours to keep.

#2) No Credit, No Problem

When initially starting your business, you may struggle to obtain debt financing because your business has little or no credit. The good news is equity financing is a viable alternative. Equity investment companies don’t look at your business’s credit. Rather, they focus on your business’s current and future prospective revenue. As long as your business is poised for a successful future, you should be able to obtain equity financing.

#3) Fast Cash

Equity financing is typically faster to obtain than debt financing. Banks can take months to approve an application for a loan. Even then, a bank may encounter problems that pushes back its approval date. Equity investors, however, are eager to finance the right businesses. As a result, you can obtain equity financing in as a little as a few days.

#4) Expert Help

You might be surprised to learn that equity financing can bring expert help to your business. Equity investors want the businesses in which they invest to succeed. If an investor purchases some of your business’s shares — defined as equity financing — he or she will benefit from your business’s future success.

#5) Simple and Easy

Finally, equity financing is simple and easy to obtain. To get the ball rolling, you’ll need to contact an equity investment firm to inquire about financing. The firm will likely review your business plan, as well as other documents, followed by providing you with a quote for partial ownership. Although it sounds like a complex process, equity financing is simple and easy.

What are your thoughts on equity financing? Let us know in the comments section below!

5 Tips on Hiring Your First Employee

A small business owner, there’s only so much work you can do yourself. As your small business grows, you may need to hire employees to sustain its growth rate. Of course, hiring your first employee is a major milestone that shouldn’t be taken lightly. If you use the wrong approach, the employee may offer little or no benefit to your small business. Therefore, you should follow these five tips when hiring your first employee.

#1) Purchase Workers’ Compensation Insurance

When hiring employees, you’ll need to have workers’ compensation insurance for your small business. Although there are a few exceptions, nearly all businesses that operate in the United States with at least one employee are required to have workers’ compensation insurance.

#2) Register With Labor Department

In addition to obtaining workers’ compensation insurance, you must also register your small business with your state’s labor department. In the United States, employers are required to pay unemployment taxes for each of their employees. You won’t make these payments to your small business’s employees, however. You’ll make the payments to your state’s labor department, which is why it’s important to register your small business with the labor department.

#3) Advertise Job Listing

After getting your ducks in order, you can now advertise your job listing in an effort to attract candidates. Some small businesses simply place a “We’re Hiring” sign in front of their establishment. Given the superior reach of the internet, though, it’s recommended that you advertise your job listing online. You can publish the listing on your small business’s social media profiles as well as job recruitment websites.

#4) Assess Candidates’ Skills and Credentials

Perhaps the most important step to hiring your small business’s first employee is assessing the sills and credentials of candidates. Assuming your job listing generates a decent amount of exposure, you should have some applications coming in. You’ll then need to review each application while choosing the best-qualified candidate for the position.

#5) Set Up Payroll

Of course, you’ll also need to set up payroll when hiring your small business’s first employee. Don’t wait until you’ve already hired the employee to set up payroll. Because this is your first employee, you may encounter problems with managing his or her paycheck. As a result, you should set up payroll before hiring your first employee.

Have any other tips that you’d like to share? Let us know in the comments section below!

5 Super Simple Ways to Scale Your Small Business

Are you struggling to scale your small business? The ability to grow and scale is a defining characteristic of all successful businesses. By scaling your small business’s operations, you’ll naturally reach more customers and generate more sales. While scaling sound may difficult, though, it doesn’t have to be. Below are five super simple ways to scale your small business.

#1) Create a Referral Program

A referral program is a highly effective tool for small businesses. Statistics show that referrals are 30% more likely to make a purchase and have a 16% higher lifetime value than traditional leads. How to do you create a referral program exactly? Basically, a referral program is any type of incentivized program in which customers are rewarded for driving new customers, also known as referrals, to your small business.

#2) Launch a Website

If you haven’t done so already, consider launching a website for your small business. Even if you don’t intend to sell products or services online, you can still use a website to promote your small business, as well as its locally sold products or services. When a prospective customer performs an online search for your small business’s name, he or she may stumble upon its website.

#3) Target New Locations

Of course, targeting new locations can help to scale your small business. Some small businesses focus strictly on their surrounding city or region, neglecting to sell their products or services in other areas. If you’re willing to target new locations, though, you’ll discover it’s a highly effective way to scale your small business.

#4) Invest in Automation

Automation is perhaps one of the most effective ways to scale a small business. Granted, you can’t automate all of your small business’s day-to-day operations, but there are certain tasks that can and should be automated. Sending invoices or receipts, for example, can be automated using accounting software. Rather than manually creating each and every invoice or receipt, accounting software can take this burden off your shoulders through automation. Along with the other tips listed here, this will help to scale your small business.

#5) Sell to Existing Customers

You shouldn’t focus your marketing efforts strictly on new customers. Selling to existing customers can actually prove more worthwhile because they are easier to convert. According to Harvard Business Review, it costs up to 25 times more money for a small business to sell to a new customer than an existing customer.

Have anything else that you’d like to add? Let us know in the comments section below!

Top 5 Accounting Myths You Shouldn’t Believe

As a business owner, you shouldn’t believe everything you hear or read about accounting. While there’s plenty of information out there on the topic of accounting, not all of it is accurate. Unfortunately, this often leads business owners down the wrong path, resulting in a poor accounting strategy. To keep your business’s financial records in order, you shouldn’t believe the five following accounting myths.

#1) Accounting Requires Excellent Math Skills

While knowledge of math can certainly help, it isn’t a prerequisite for accounting. Most accounting software, for example, will perform math calculations automatically. You enter your business’s transactions, after which the accounting software will add them up. By eliminating the need for manual math calculations, accounting software reduces the risk of errors to promote cleaner financial records.

#2) Accounting Consists Strictly of Taxes

While calculating and preparing tax returns is an important step, accounting consists of more than just taxes. In the most basic sense, accounting is the act of recording all financial transaction. Whether it’s a credit or debit, all financial transactions processed by your business should be recorded. With that said, the creation of these financial records can certainly make tax preparation easier. But that doesn’t mean accounting is only related to your business’s taxes.

#3) You Must Hire a Professional Accountant

Contrary to popular belief, you don’t always need to hire a professional accountant to handle your business’s financial accounting needs. Assuming you run a small business that handles a low volume of sales, you can probably do it yourself.

#4) Accounting Isn’t Important

This statement couldn’t be further from the truth. According to the U.S. Small Business Administration (SBA), roughly half of all small businesses fail in their first five years. While small businesses can fail for any number of reasons, poor accounting consistently ranks at the top of the list. If you don’t invest enough time or resources into accounting, your small business may struggle to keep up with its competitors.

#5) All Accounting Software Is the Same

Don’t assume that all accounting software is made equal. There are dozens of types of accounting software, some of which are installed and accessed locally on a computer or device, whereas others are accessed over the internet via a Product-as-a-Service (PaaS) model. Quickbooks Desktop, for instance, is installed locally on a computer, whereas Quickbooks Online is available as cloud-based PaaS software.

Have anything else that you’d like to add? Let us know in the comments section below!

Common Tax Deductions for Rideshare Drivers

Ridesharing has become increasingly popular in recent years. According to to the Pew Research Center, roughly one in three Americans have used a ridesharing service — a number that’s expected to increase in the following years. If you’re thinking about becoming a rideshare driver, though, you’ll need to take advantage of all available tax deductions. Like with all businesses, you can deduct the cost of certain expenses from your income taxes.

Mileage

Not surprisingly, you can deduct the cost of mileage from your income taxes. The Internal Revenue Service (IRS) supports two different methods for calculating mileage deductions: standard or actual car expense. Standard mileage involves multiplying the number of miles you drove in the given year by the IRS’s standard rate for that year. In comparison, the actual car expenses method involves keeping track of all-driving related expenses, such as insurance, gas, maintenance, repairs and even automotive depreciation.

Smartphone

You can also deduct the cost of a smartphone from your income taxes, assuming you use your smartphone for ridesharing purposes. Whether you drive for Uber, Lyft or any other ride-sharing service, you’ll probably use your smartphone to find customers to pick up. You may even be required to call or text these customers prior to picking them up. Regardless, the IRS allows ride-sharing drivers to deduct the cost of their smartphone from their income taxes.

Dash Cam

If you recently purchased a dash cam to use in your vehicle, you can deduct it from your income taxes as well. It’s not uncommon for ride-sharing drivers to install a dash cam in their vehicles. With a dash cam present, ride-sharing drivers can rest assured knowing that their trips are recorded. At the same time, many insurance companies offer premium discounts for ride-sharing drivers who install a dash cam in their vehicle.

Free Items

Do you offer free bottled water, mints, gum, snacks or items to passengers? If so, you should keep track of the receipts for tax purposes. Any complementary items such as these can be deducted from your income taxes. And while you probably won’t spend hundreds or thousands of dollars on complementary items, claiming this deduction can still lower your tax liabilities as a ride-sharing driver.

Accounting Software or Services

You can deduct the cost of accounting software or services from your income taxes. Whether you use Quickbooks Online, Quickbooks Desktop or any other type of accounting software or service, you claim it as a deduction.

Have anything else that you’d like to add? Let us know in the comments section below!

5 Tips on How to Craft a Business Plan

Are you looking to start a new business in the near future? If so, you’ll need to create a business plan. Whether your business operates locally or online (or both), it will benefit from a well-prepared business plan. The U.S. Small Business Administration (SBA) even says that business plans are the “foundation” of a business’s success. To create an effective business plan to fosters success, follow these five simple tips.

#1) Start With an Executive Summary

Although there are numerous ways to structure a business plan, you should typically begin with an executive summary. The executive summary is an opportunity to describe the general focus of your business and what it does. It doesn’t have to be particularly long. On the contrary, most executive summaries consume just a single page of a business plan.

#2) Detail Your Business in the Company Overview

While you can describe your business in the executive summary, you should go into deeper detail about your business in the company overview section. The company overview section covers all the small details about your business, including its location, history, market and even structure (e.g. LLC vs S-Corp or C-Corp).

#3) Highlight Products and Services

Of course, you should also highlight your business’s products or services in your business plan. According to the SBA, an effective business plan should explain how customers or clients will benefit from purchasing the business’s products or services. In other words, you should create an “elevator pitch” that promotes your business’s products or services.

#4) Reveal Current and Future Projected Finances

Financial information is an important element of an effective business plan. Most businesses require capital to get up and running. In your business plan, information about your business’s current and future projected finances. When you apply for a loan — or other forms of lending-based funding — you can give the lender a copy of your business plan. Assuming it contains your business’s financial information, it will likely have a positive impact on your ability to secure startup capital.

#5) Include a Market Analysis

Don’t forget to include a market analysis in your business plan. What is a market analysis exactly? This component of a business plan delves into your business’s target market. In other words, it reveals your business’s ideal, target audience of customers as well as their respective location.

Have any other tips on creating a business plan that you’d like to share? Let us know in the comments section below!

5 Ways to Increase Your Business’s Customer Retention Rate

What’s your business’s customer retention rate? If most customers only make a single purchase, you’ll struggle to grow and expand your business. Statistics show that an average of 80% of a business’s sales come from just 20% of its customers. Therefore, you should consider the following tips to increase your business’s customer retention rate.

#1) Offer Exceptional Customer Service

The single most important thing you can do to increase your business’s customer retention rate is to offer exceptional customer service. By going above the expectations of customers, you’ll set your business apart from its competitors — all while encouraging customers to stay with your business and make additional purchases in the future.

#2) Create a Loyalty Rewards Program

Another way to retain more of your business’s customers is to create a loyalty rewards program. In the most basic sense, a loyalty rewards program is any program that rewards customers for making additional purchases. You can use a basic points-based system, for example, in which customers are rewarded with points for making purchases. Customers can then redeem these points for discounts, free products or services or other items.

#3) Reach Out to Existing Customers

Something as simple as reaching out to your business’s existing customers — whether by phone, email, social media or elsewhere — can help you achieve a higher customer retention rate. If a customer forgets your business, it’s unlikely he or she will return to make additional purchases in the future. Therefore, you should proactively reach out to existing customers with relevant marketing messages.

#4) Offer Limited-Time Promotions

Of course, offering limited-time promotions can entice your business’s existing customers to make a purchase and, therefore, increase your business’s customer retention rate. Regardless of what products or services you sell, consider creating promotions that are only good for a limited period of time. When customers see these deals, they’ll feel more inclined to take action so that they don’t miss the opportunity to save money.

#5) Encourage Referrals

You can even use referrals to increase your business’s customer retention rate. If a customer is happy with your business, ask him or her for referrals. Any new customers referred to your business may stay with your business for a long period of time after receiving a recommendation from a friend or family member. These are just a few ways to increase your business’s customer retention rate.

Have any other customer retention tips that you’d like to share? Let us know in the comments section below!

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