Tag: Business Plan

You Can Deduct Up To 55.5 Cents a Mile in 2012

Sanjiv Gupta CPA - 9 years ago
Now you can deduct up to 55.5 cents a mile for business driving expense.   You can use this rate for all kinds of vehicles including cars, vans, pick up and panel trucks.  The rate increase was recently announced by the IRS for the year of 2012.You can deduct the actual cost of vehicle operation by keeping track of expenses.  However, Standard Mileage deduction can be used by those who do not keep track of the actual costs.  The standard mileage rate is determined by authorities using the annual study of the fixed and variable cost of automobile operation.In addition to the mileage rate, you can claim a separate deduction for expenses like parking fees or tolls.  You can also deduct interest and state and local taxes relating to the purchase of the automobile.Please note when the standard business mileage rate is used, automobile depreciation will be considered to have been allowed at a rate of 23 cents a mile. This depreciation will reduce your cost basis in the vehicle.Where you cannot use the standard deduction?For the most part, standard deductions are a great place to start if you do not document each expense.  However, in some cases, the standard deduction is not your friend. For example, you cannot use standard mileage deduction for automobiles used for hire like taxicabs.  You cannot use the standard deduction of the vehicle that was previously depreciated by other than the straight-line method.We recommend you consult with your Tax Professional to ensure your deduction is calculated accurately.

Business Tax Strategy That Will Save You Money

Sanjiv Gupta CPA - 9 years ago
The wise follow the simple path. If your wisdom has failed to save on your tax-cuts then here is what you must do. If you are a “cash basis” taxpayer then you have to pay considerable attention to “time” your income and your deductions.  Clear? Well, it simply means that you don’t have to pay taxes on incomes that you have not received. Also in the same manner if you make any expense on a tax-deductible commodity/product, then you can apply for a tax deduction and thereby cut down upon your taxable income.Common people are not all-knowledgeable about taxation policies. The obvious escapes them and in the stance to do something extra-ordinary they confuse things more often. Now, this is a bad and expensive habit.  You can save a considerable amount of tax by simply timing your purchases.For example, Taxpayers who fall into the same tax- cohort for two consecutive years can shrink their taxable income by postponing income to the following year while calculating all deductions into the current year.For those who fear to jump into the larger tax-slab is required to do the opposite. It’s risky to negate future possibilities.Tax- riddle: suppose you have fallen under a 28% tax-slab category this year and the next year your ranking will go as low as 15%, your company needs a business computer. How will you time your purchase?Yes perfect! The current tax-year. That’s right. The best way of taking full advantage of the tax-slabs is to generate income and delay or deter expenses.A cautionary word: if you are a “cash basis” taxpayer then make sure you know what constructive receipt means. For example, your mail inbox has a pending check invoiced on December 31, 2011, but cant deposit it before 1 Jan 2012 then how are you to time your income? Simple calculate it under the 2011 tax-year.If you know how to time your income then your tax-slabs will come down automatically. Keep the deductible expenses for the year when you fall into the higher tax bracket. This plan actually works.Still confused, don’t worry – the staff at our office can help you time your purchases.   Simply give us a call or send us an email.

Why Your Small Business Need A Website ?

Sanjiv Gupta CPA - 8 years ago
This is a very simple question that I often ask my clients and end with various answers.  This one simple question allows me to open conversations with my clients and find out the real purpose of their site.  Clients often know what they really want but have a hard time nailing down the reason why do they actually want a website.  Here are some of the most common answers:Provide information about our companyProvide our contact informationMake it easy for customers to find usWell – my competition has oneWant to improve my sales.Want to capture sales leadsWant a web presenceAll of these are great reasons but before you can answer this question you need to define three things. Who are you?Who are you?Who are your customers?Who you want to be?Let’s say you are a Business Attorney and your customers are small businesses who seek advice on small business legal issues and you want to become a leader in your local community when it comes down to small business legal issues.  You want to be known as a “go-to’ person for all small business legal issues.Now all of you small business owners have a pool of referrals you get from your past clients.   This pool is often mistaken for market leadership.  Market leadership means that when average Joe thinks about a small business legal issues, he thinks of you.Truth – this is the key reason why you need a website.  Your website will tell your potential clients who are you and who you want to be.   Moreover, your site will relate directly to your audience and also tell them who they are.Little confused? Let me explain.Small Business Attorney website should clearly explain what is it that he or she does.  Most small business owners get this section right but this is only 20% of the puzzle.    The next piece of pie is to explain who your customers are.  This can be done using a “vertical” section on your website.  For example, Attorney should identify 5 or 6 major industries he or she serves.   An attorney may include Real Estate, Medical, Finance, Manufacturing as verticals on the website.  Each vertical should include a direct reference to common problems attorney solves on a regular basis.  This will help potential customers relate to this site.   The use of descriptive images, titles, and other materials can be very helpful.Now comes the hard part.  Most small businesses totally ignore the fact that you also need to clearly explain your vision on your website.  Moreover, the website should also show how this business is moving towards achieving this goal.Does this attorney go to local business events?Does this attorney know about the local business problems?Do other people talk about this attorney's involvement in the community ?Website can use tools likes video, blog, audio, PowerPoint, press release, and newsletter to inform visitors about your engagement with the community.   Your customers are your business lifeline and they deserve to know how you are moving towards your vision.Now you know the theory behind the existence of your website.   But if you would like some help planning, implementing your online and print marketing than you can contact me directly at 510-709-4030.   My name is Deepak Sharma and I am in charge of help small business grow their business.  I work with Fixtro as IT Manager and available to consult for any IT and Marketing projects.  You can also visit us online at http://www.fixtro.com

Turning Over Your Business? 5 Steps To Know

- 1 year ago
Whenever we start a business we hope to make it big, earn profits and expand a lot. But doing these is not easy. While we all expect the maximum return from our businesses turning over your business requires the implementation of some essential steps. So if you, like many are trying to know and understand the steps that will help you to turn over your business, this article will surely be of much help.Increasing your turn overIncreasing your turn over is what all businessmen try to do but to actually be successful in doing this requires some steps. Here are a few of them:Lowering costs: Lowering costs of the company will inevitably result in a higher turnover. You can lower the expenditure of the company by getting your products at a lower cost from the supplier and by evaluating the business processes and systems to reduce any wastage. Reducing these costs will ensure an increased turn over. You can also try to reduce overheads and introduce a functional method that will help your employees to properly utilize time. The less time they spend on unnecessary activities the more time they will spend on productive works thereby increasing your turnover. Asses your employees: Assessing your employees’ performance can also help you increase your turn over.  Motivate your employees to work better to increase profitability, appoint the seniors to hand over easy tasks to the juniors so that they can have more time to work on important projects and reward employees when they have done something good. Creating a proper work schedule and keeping yourself updated with how the work is being carried out, who is responsible for a certain project and the end result will bring out better quality work and increase your turn over.Plan well: Proper planning and execution help a lot with increasing your turn over. Having a proper plan will ensure that the work will get done quickly and you will also be able to adapt to changes. You should set a short time, well-thought plans and see if you can implement them properly. You can also modify your plans as they are implemented to suit your needs. Developing a customer base: Increased customer base will automatically mean an increased turn over. You can increase your customer base by developing your service and product quality. You should have a market survey to understand the recent trends and offer your products or services according to those trends. Pricing your commodities perfectly so they give good value for money is a great way to expand your client base. Providing after-sale services such as training and installations creates a good feeling about your company to the customer and this can help attract more customers. You should also develop your customer care services so that they can solve their problems quickly. The number of satisfied customers the more turnover you will have.Check your profit margins: Periodical checking of the profit margins of the company will help you identify the pattern of sales and profit from which you can take proper steps to either maintain or to bring the necessary changes to increase turnover. If you find high sales with high profits you should definitely continue implementing the action plan and reward those employees who have made your product successful. However, if you find that your profit margins are low but sales are high you can increase your pricing of the product. Many times there is a considerable profit but the sales are low. In such a scenario you can think of plans that will help you increase sales and bring more profit to the company. But if you are faced with low sales and low profits you then need to stop the present action plan and incorporate something new that will help you to hike up the sales and in turn more profits. Hopefully, these steps have helped you understand how you can increase your business turn over. It is very important that you remain updated about the strategies being used to generate more sales for a product or service. Since a large customer base can expedite your company turnover you must design your products and services to suit their demand. Since employees are also a big part of the company you should motivate them and have a reward program to encourage them to increases the profit margin of the company.

Defending the “hobby loss” Rule with a Business Plan

Sanjiv Gupta CPA - 8 years ago
A business plan is very important where a business is concerned. As long as you have a business idea, you need to draft a business plan so that you can know how to set up the business. When a business is recurring losses, the IRS audits them. Also, the IRS reduces the inference or deductions claimed when a business is not set up to gain profit. The Internal Revenue Service has for many years defended ‘hobby loss” rule with a business plan. Listed below are some of the factors to consider like;Does the taxpayer rely on making an income from the current business?Has the taxpayer made some income from this business in previous years? If the answer is yes, how often has the business made this income and also how huge was the income?Has the taxpayer out aside reasonable time and also dedication to the business to show that he or she has plans of making some income from it?Has it been proven that the taxpayer has a tax plan of losing cash in the business to lessen its taxes from their main source of profit?Is this business used to employ family relations who are in lower tax groups?If the business in itself does not bring any income, does the taxpayer logically foresee generating income from the appreciation of equipment used in the business?Does the income reason for the business overshadow the fun parts of the business?If the business is generating losses, are these losses as a result of conditions out of the taxpayer’s power? Or, are those losses going at the start-up stage of the activity or business?Has the taxpayer made income from a comparable business in years gone?Does the taxpayer have the needed trade or activity understanding to go on with business success and also make the needed income? Or has the taxpayer seen or talked with other people who can provide the right routes and education to run the business very well?If the business is making any losses, has the taxpayer tried to modify its process to make better and enhance income?The secure harbor where the taxpayer is considered is if the business has generated some income in at least 3 years out of the last 5 years of its operation. When a business is not making profits like it should, there is a need for the IRS to come in and check if the reasons are beyond the control of the business. This helps to ensure that, the taxpayer is relieved of paying taxes.For every business, the survey will differ. This is because; every business will have a different issue from the other. So, not all the investigations come with the same results. Due to the fact that there are different companies and also businesses, there is a strategy for every trade or business type to get the best results. If you need a business plan, you may contact me at 510-709-4030.

Essential Elements For All Business Partnership Agreements

Sanjiv Gupta CPA - 6 years ago
After you have chosen the perfect business partner, it is essential that you cover all your bases when you set up your partnership agreement. If you can afford an attorney, it is a good idea to have one draft of the agreement. At the very least, you should hire an attorney to review the partnership agreement before you sign it to ensure your interest is covered.What Is The Purpose Of A Partnership Agreement?This agreement has many purposes but the two most important purposes are dispute resolution and the business structure. Even the best relationship has disagreements especially when there are a lot of decisions that need to be made. When your partnership agreement is crafted carefully, it will outline exactly how disputes will be handled before they happen, instead of in the heat of the moment.In addition to providing dispute resolution, the partnership agreement forces the partners to think about how the business is going to run and be structured. This can minimize potential misunderstandings and get everyone on the same page from the beginning.Critical Elements That All Business Partnership Agreements Must HaveBusiness Name: The name that the company will be operating under.Purpose: A broad statement of the business’s purpose. Leaving the purpose broad will provide flexibility for the company to adapt over time.Workload Structure: The partnership agreement should include how the workload will be shared. The following questions will help you determine what should be included regarding the partners’ workload:Will the partners be expected to have set work hours?Will all of the partners be working the same amount of time? Or will one partner work less or more than the others?How much vacation time will be given to each partner, each year?Will each partner’s role be full-time or can the partner conduct another type of business outside the company?If yes, what another type of business that is allowed to be conducted?Partner Contributions: Determine exactly what each partner will be contributing to the business such as cash, physical property (office space, equipment, etc.), and intellectual or other property types (client lists, software codes, etc.). After you have all contributions listed, discuss with the other partners what restrictions there will be on those contributions, if any. The following are some examples of the types of things that should be discussed:Client Lists: Does all of the revenue from the clients that a partner brought to the business flow to the business? Or does a percentage of the revenue, from those clients, flow to the partner directly?Personal Property: If a partner brings the property into the business (such as a copy machine, computer or lawnmower) does the property become the business’ property?Intellectual Property: If a partner brings the intellectual property into the business (such as a software code), does the business own it? Are the other partners allowed to modify it?Partners’ Compensation: All partnership agreements should list the terms of each partner’s compensation. The following questions should be discussed to determine what should be included regarding compensation:Will each partner receive a salary? If yes, how much will they receive and when will it be disbursed?If a partner receives less salary, will the difference be made up for in the future?Will the profits be reinvested in the business?If yes, when will profits be taken out?How will profits be divided up between the partners?How will business losses be handled?Ownership: Now that you have determined the contributions, workload, responsibilities, and compensation, you need to agree on how exactly the ownership should be split. This is a difficult calculation and can cause problems between partners before you even finalize the partnership agreement. Things to consider:Money raisedRevenue generatedContributionsOriginal conceptFull-time commitmentReputationBusiness Authority: The partnership agreement should state the authority that each partner has. The following questions need to be answered:Does each of the partners have the authority to enter into contracts (sign) on the business’ behalfWill the business have a line of credit? Depending on the structure of the business that is chosen, all partners may be held personally liable for the business’ creditCan each partner make purchases for the business without first consulting the remaining partners? In general, there is a monetary limit set. The partners must first get the other partners’ permission if the purchase is above the set limit.Death Or Disability: The partnership agreement should state what happens to the partnership if one of the partners dies or if they become disabled and are unable to participate at the same level. To prevent heirs of the deceased partner inheriting a portion of the partnership, partnership agreements normally include a buy/sell agreement.Partner’s Exit: The agreement should state the terms of a voluntary and involuntary exit. The following questions need to be addressed:What will happen if a partner would like to leave the business to pursue other interests?What circumstances would a partner be able to be forced out of the partnership?Dispute Resolution: Even in the perfect partnership, there will be times where the partners are unable to agree about a topic. The partnership agreement should state how disagreements will be handled. That way, when an issue arises, you will know exactly what the determining factor will be. There are many ways disputes can be handled including:One of the partners has the final say on a portion of the business.The vote is based on the percentage of ownershipPartners use an external advisory board to resolve any disputesPartners use a mediator to resolve any disputesPartners agree to arbitration, mediation or litigation in extreme cases New Partners: The partnership agreement should include the process of bringing a new partner in. How will it be decided? Majority vote?Selling The Business: What are the exact circumstances that the business can be sold? This will probably be included in the Buy/Sell Agreement.
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