Archive for the ‘General’ Category

It is that time of week again already. This is the Publicity Post, and it is all about you! Take a moment to tell us a little about your business or a business that you love. Be sure to include links.

A great idea is to post news or exciting information. Have fun with it. It may take a while for this idea to take off here, but why not be among the first to get your toes wet? A little publicity never hurt anyone.

Plus, each week I will try to highlight one post from last week. Since there were no posts last week, I will take this week to tell you about Melinda Emerson’s new book, Become Your Own Boss in 12 Months. I recently interviewed Melinda for a podcast episode (upcoming) and she has a lot of good advice for small businesses. This book would be a good read for anyone just starting their business or currently struggling because they didn’t start right. Be sure to check it out. Also check out her blog at http://succeedasyourownboss.com/.

Okay, now its your turn. Leave a comment about your business or one you love below.

With tax season upon us, a cause for concern with many small business owners is whether they will get an audit. I talked to tax professional Alan Olsen, of GROCO.com to learn more about tax audits an other issues. This is a lengthy interview, but it is loaded with great information.

Should a small business be more worried about a tax audit this year?

Absolutely. Federal and state government agencies are hungry for tax dollars. An IRS audit is a useful tool for the government to raise money from business owners. In fact, the budget to enforce tax compliance doubled in 2009.

How is the government using tax audits as a “secret tax?”

When a new tax is proposed, individuals generally are not pleased. However, when the government extracts more revenue from existing tax law, it is far less noticeable. Let me explain how it will likely work.

1. Expect more auditors and audits. Reports differ from hundreds to thousands of new IRS enforcement employees being hired. In February, 2010 the IRS announce a new National Research Program (NRP) compliance study of 6,000 taxpayers; this program alone will account for 6,000 new audits.

2. Technology. As more people submit returns through Electronic Filing, it is reasonable to assume that the IRS efficiency at processing returns is also improving (as is their ability to glean more data into their system to identify tax returns with non-compliance issues). The IRS will use new found technology for audit selection which will support their efforts to close the nation’s tax gap. The tax gap is the difference between what the taxpayers should have paid and what they actually paid on a timely basis. The most recently released numbers on the tax gap are for 2001, when the estimate was a $290 billion short fall to the IRS.

3. Expanding their search area. The IRS has begun looking outside the borders of this country for unreported income. They have stiffened their compliance penalties for all international transactions, including penalties for unreported foreign bank accounts.

4. High Net-Worth Audits. The IRS is using more sophisticated techniques to mine their data bases.  They can compare the lifestyle of individuals with what is reported on their tax return. They are doing this in hopes of generating higher net-worth audits. The focus on high net-worth audits is increasing the need for individuals to make sure that all of their income is reported properly. It is important that individuals understand the boundaries of the tax law so that they report all of their income and deductions properly on their tax return. High net-worth individuals should expect the government to request an increasing amount of tax documentation, and more audits.

What are some ways to avoid an audit?

There is no way to completely avoid being selected for an IRS audit; however, there are tips that you can follow to minimize the likelihood of being audited.

1. Be honest-If you live by the simple rule of honesty, it will save you a lot of stress.  It is wise to see that all of your expenses and deductions are true when recorded on your tax return. Mistakes happen, but avoid intentional ones.

2. Be organized-It is important to keep good records. Properly record any expenses that you are deducting on your tax return. Business expenses such as travel, meals, mileage etc. can be deducted, as long as they have been recorded. If the expense is minimal, a simple note written in a notebook or on a spreadsheet will work, but if the expense is large, keep the receipt. A receipt will help to prove an accurate deduction.

3. Report all interest- Reconcile your 1099 information to your tax return.  Collect all appropriate tax documents when your tax return is prepared. If your bank or other investment companies have failed to send you 1099s for interest on accounts, contact them. The IRS has record of these documents, so take the extra step to record them on your tax return.

4. Be prepared if you are self-employed-The IRS realizes that self-employment also increases the likelihood of unreported income. You must have proof of your income and business expenses if you are self-employed. You should also be familiar with the rules of what qualifies as a business deduction.

5. Watch your deductions-If you take deductions that are unreasonable for your income bracket, this may raise a red flag to the IRS. The process that the IRS uses to select returns to audit starts with the IRS computer. The IRS computer gives each tax return a Discriminate Function Score (DIF score).During this process, the deductions taken on your tax return are compared to other scores within your income bracket. High scores result from unrealistic deductions within certain tax brackets. If a return receives a high score, it will be passed on to an IRS agent for review to see if any additional tax can be collected. If your deductions seem a bit unrealistic, you should have proof to back them up.

6. Use a tax professional-A tax return that is prepared by a CPA or other accounting professional is less likely to be selected for an IRS audit than a self-prepared return. A professional knows the laws and can help you to make sure that all proper deductions are taken and that all income is properly reported.

Taking these steps in preparing your return can help you to avoid possible red flags that could lead to an IRS audit. For more information, please see “Prevent an IRS Audit, 10 Strategies” at http://www.groco.com/readingroom/irs_preventingaudit.aspx.

What should a small business owner do if they receive a notice of audit?

It is important to properly prepare if you are chosen to be audited. The first step that an individual should take, if selected for an audit, is to seek help from a professional. Certified Public Accountants or Tax Attorneys can assist you with handling an audit properly.

As a former IRS auditor, numerous CPAs and tax attorneys have asked for my advice. Here are nine suggestions that every tax professional should heed when one of their clients is the subject of an IRS audit:

1. Set the ground rules. Make sure to inform the client of the procedures that come along with an IRS audit.

2. Establish the location where the IRS auditor will work. When there is no business location the audit may take place at the IRS office. If the audit is for a business with a location, the IRS agent will most likely want to conduct it at the business; however, the tax preparer’s office is the best location.  To better control information provided to the auditor.

3. Determine who will speak for the taxpayer. IRS agents may turn any casual conversation against the taxpayer, so it is important that the taxpayer and auditor are not in direct communication with each other. In this way the tax professional controls the information communicated between client and agent.

4. Ensure that all document requests will be in writing. Make sure that the IRS agent understands that any document requests should be made in writing, to ensure enough time to gather the information needed to support deduction claims.

5. Questions and discussion of adjustments should not be negotiated until the final conference. When one defers questions until the last meeting, it builds a better position from wich to negotiate, as there will be a clearer understanding of the audit, and what information is needed. It may create the possibility of an auditor conceding certain issues if pressed for time.

6. Agree to an extension. When an individual has not gathered all of the information necessary for the audit, but has access to it, agree to an extension. There are two types of extensions that one can request:

1. Form 872- IRS limits the extension to issues only addressed on the form

2. Form 872-a The IRS can keep all issues open

7. Refuse to agree to an extension. This could be a useful strategy if all of the issues have not been properly addressed by the IRS and the client wants to close the case.

8. Negotiate. Make a settlement agreement that fairly resolves the case, as some areas in tax laws are subjective. In some multi-issue cases one may want to present a bottom line offer, take heed, it could change later depending on new issues that arise.

9. Consider filing an amended return or making a cash bond. The best way to avoid IRS audits, is to simply work with your client to make sure that the tax return has no reason to be audited. It is not often that IRS audits take place. In 2006, only 1,293, 681 audits were conducted for individual returns, but the number does continue to rise. Remember that preparation is one of the best defenses against an IRS audit.

For additional information, see Alan’s blog article, “Ten Strategies when Handling an IRS Audit“at http://www.grocotaxninja.com/?p=17)

Are past tax years safe from audit?

Absolutely not. Under the statute of limitations, the IRS has three years to give a refund, three years to audit a tax return, and ten years to collect any tax due.

Where can small business owners learn more about preparing taxes, audits, and other tax information?

Alan Olsen’s blog www.grocotaxninja.com is a good reference to find articles on how to battle problems with the IRS. Also, his firm website, GROCO.com is also a good resource as it has many articles on a variety of tax matters.

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Hello, I’m Bradford Shimp. My goal with this blog is to provide useful advice to small business owners. If you have a small business question, ask it anonymously here or via email to me here.

I had a great conversation with Andy Hayes about creating a business niche. Andy runs a business called Travel Online Partners. His niche is to provide advice and services to travel agencies, mostly dealing with web sites and online marketing.

Most of what Andy offers to his niche of travel industry clients would also be useful for any type of business. He knows this, but he isn’t about to change his business model. That’s because he knows that the more focused the business niche, the better.

This is something that he learned from experience. When he was just getting started he was inclined to create a general services company. After all, he could easy help any kind of business with his skills. But then he got some advice from Naomi Dunford, who said he should only focus on one type of customer, ie. niche.

Andy told me that he was nervous to follow the advice, but he did it anyway. He didn’t know if he would be able to find enough customers if he just focused on the travel niche. Today he is glad that he took the advice.

He says that he doesn’t think there is a niche too small to focus on, and he encourages small business to narrow down their focus as much as possible while defining their niche.

There are a lot of benefits that come from having a narrow niche. Here are some them:

• Loyal and passionate customer base
• You really get to know your customers
• You can modify your product to be a custom fit for customer needs
• You can provide good content and quickly discover people interested in your niche
• You can focus on building and interacting with a community around your niche

Those are just a few of the benefits of focusing on a narrow niche. I would challenge you to look at your own business. Do you have too broad a focus? Can you identify a niche to go after from amongst your current customer base? I know I plan to work on better defining my own niche. I hope that you will as well.

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Hi there, I am Bradford Shimp, publisher and writer of this fine blog. My goal is to help small businesses succeed. I do that by providing advice at this blog and by providing web design services targeted toward small business at my company, Broad River Creative.

Have a small business question? Email it me so I can answer it on the blog.

photo credit: MagdaMontemor

I have spent most of my life failing, or so it seems. When I think of failure, I can see a list of things half-done, not accomplished, or downright failed. Thankfully, I have been blessed with a healthy dose of optimism, so I can keep going and keep trying. In fact, I don’t spend a lot of time looking at past failures, and you shouldn’t either. But from time to time, it is a good idea to reflect on failure. If you can figure out what went wrong, if you can identify a negative pattern, you can learn from it.

That is what Jason Markow had in mind when he started #FAILweek. He wanted businesses to look at their failures not for the failure, but for what can be learned from it. And in encouraging people to share failures, the hope is that others who come behind can more easily learn fr0m our mistakes.

The Potential

The failure I am going to share here is only a half failure. It is the story of what could have been, and maybe a little about the potential that is still there.

I little over a year ago, I was just getting going with my blog and was getting more and more active on Twitter. I still didn’t really know anybody on Twitter. That all changed when I sent out a tweet something to the effect of “I feel like an idea wrangler.” This tweet was read by Neal Rohrbach, a truly amazing and creative guy. Something about what I said hit home with him. We had “met” prior to this on a Twitter chat called #sbbuzz and had gotten along. So Neal, being the go-getter that he is, got inspired and registered a domain name. IdeaWranglers.com wasn’t available, so he registered IdeaAnglers.com instead. The rest, as they say, is history.

When Neal let me know what he did on a whim, I was surprised and excited. At the time, I was also buying up all kinds of domains and dreaming of the businesses that I was going to start with them. In Neal,  I found someone with similar passions, and most importantly, the same heart to help others, especially entrepreneurs. So when I found out what he did, I naturally said, okay, lets see where this takes us.

Where it took us was a partnership. We wanted to develop Idea Anglers to be a site that helped small business owners. We wanted to make money at the same time. A membership site seemed to be the natural fit. So Neal created a site and a great logo (he is a graphic designer, among other things). I brainstormed concepts. We pre-launched and immediately got some good traction. Everyone liked the idea, or more accurately, the story of two strangers meeting on Twitter and launching a business.

The Failure

The idea was the problem. We never really nailed down exactly what we wanted to do. I take the blame for this, since that was primarily my department. I tend to have too many ideas. Turns out, I needed the kind of help that Idea Anglers would eventually offer. Unfortunately, I needed it before Idea Anglers was there to help.

What we ended up with was two very creative people trying to build a broad-based solution for entrepreneurs. We never found the kind of focus we needed, I now realize. Secondly, we both had full time jobs plus side projects we were already working on. We were very busy, so we didn’t have the kind of time we needed to get things launched. So very little time plus not knowing what to focus on when we did find the time meant we couldn’t push it forward fast enough. The fact that we pushed it as far as we did is a testament to what can be accomplished when you work together on something with shared passion.

There were lots of good things. Neal and I got along really well, and still do. I found out that you can really establish meaningful friendships with people that you meet online. Also, it is possible to meet business partners online. Knowing that, what we should have done was narrowed down a focus really fast and then sought to bring more people in to help run things, people who had more time and more focused expertise.

The Education

Idea Anglers is not dead. It is just on vacation. Neal has a great new job that keeps him even busier than before. I am trying to build a business of my own, plus grow this blog. Idea Anglers still fits into my vision of helping small businesses, but it will play a very specific role when I am ready for it.

The lessons I learned are many.

First of all, there is nothing wrong with trying. I got a great friendship out of this. I also saw how opportunities can open up if you just go after them.

Second, it is possible to build meaningful relationships online. My goal this year is to increase those friendships and build on the ones that I have started.

Third, collaboration is better than working at something alone. Idea Anglers would have never gone anywhere if it was just an idea in my head. By bouncing things back and forth with another party, you can move things forward. The key is to have a focus and goals.

Going from here, I have plans. Perhaps too many plans, still. I appreciate more the importance of focus, so I am focusing on fewer things. I want to help small businesses in a lot of ways, perhaps eventually having a full-service coaching/consulting agency. But for now, I am just focusing on one area where I can be of service, helping small businesses with web sites and online marketing. Of course, I am also focusing on this blog and making it better and more dynamic.

I am also going to explore collaboration more and get better at reaching out. I value things like Twitter so much more when I am having meaningful interactions there. I want to build on that. I still want to build some things with other people. This time, however, I am going to go in with a plan and spend time up front building a focus and specific goals.

And maybe there is one more lesson. Neal and I are both very creative. We thrive on the ideas. If we wanted to build a membership site, what we should have done was bring in an expert in that. A good expert can really help you focus your ideas and broad thoughts, no matter what they are. When you are having trouble moving forward, but you know you have good ideas, I really suggest getting some expert help.

So that is my story of failure. It wouldn’t be a good story if there wasn’t something to learn from it. How have you used failure as a learning tool for success? Because that is all failure is, another tool that you can use to build your dreams. Its nothing to be afraid of, really.

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Bradford Shimp helps small businesses build web sites and online presence. Follow him on Twitter @bradfordshimp.

I recently asked this question to a group of small business owners and experts. I was curious what people thought would be important for small business success moving forward into this new year and decade.

What I got back were a ton of great answers. Not surprisingly, no two were exactly alike. However, each one has merit and the potential to be the “one” thing your business needs for more success this year.

Overall, I came away with one general theme. Despite the fact that platforms and technologies are changing, the basics for business success aren’t. The number one thing experts point out is the importance of marketing. This is still an area where many small businesses do not put enough focus. The good news for this decade is that marketing platforms are becoming cheaper and easier to use.

Other important areas of focus are having strong leadership, caring for customers and employees, and actually having a plan.

Over the next few weeks, I will be digging through the results and suggestions from various experts. We’ll look into what it takes to be more successful today in small business. Success is an important term for business owners. It encompasses the goal of business. Success encompasses everything from profits to customer satisfaction to changing the world.

Only you know what success is for your business. But advice and tips from others who are in the battle can be very helpful. To that end, I would like you to do two things.

First of all, continue to read this blog through the next few weeks. Each post we will be discussing success, ideas on how to be more successful, and actionable advice for moving things forward in your business. If you don’t want to miss a beat, consider subscribing via RSS or email. You can do that at the top of the the right hand column.

The second thing you can do for your success is to sign up for the free report I put together for the new year. This report is a collection of advice from over 100 business owners and experts on what you can do to be more successful with your small business this year.

Get the free report, The Number One Thing You Can do to Make Your Small Business More Successful in 2010, by filling out the form below. You will receive the report as a PDF via email.

Here’s to your success in 2010! Enjoy the free report and join me as we discuss success for small business over the next few weeks.




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