How to Build Your Business Credit

Whether your firm has been operating for years, or you decided over last night’s coffee to start a new venture, you’re sure to face the need for business credit. Entrepreneurs often ask friends and family to invest in their start-up businesses, and many draw on personal funds to launch new firms. But to address ongoing business needs – such as requirements for inventory, equipment, and real estate – most firms seek additional help from credit card companies and banks.

Unfortunately, today financial institutions are more wary than they used to be about extending credit to small companies. And with many business revenues faltering because of market pressures, even well-established companies have found it difficult to obtain loans.

As a result, establishing good business credit has become more important than ever. To convince a lender that your company represents a good risk, you should first prepare a well-written business plan. It need not be as long as a Tolstoy novel, but should lay out in some detail your products, pricing, estimates, competition, and basis for cash flow projections. A clearly defined business plan will convince potential lenders that you’ve addressed the greatest obstacles to your firm’s success. Before approaching lenders, consider your business structure as well. For example, a limited liability company or corporation may be seen as less risky than a sole proprietorship. The goal is to present a professional image to convince the lender that your company will prosper in good times and bad.

To establish good business credit, you’ll also want to make sure all required licenses are current and your firm is registered with the major business credit reporting bureaus such as Experian and Equifax. Work with vendors who report to these bureaus so that your on-time payments are tracked.

Of course, the key to building good business credit is making all your payments on time. As with personal credit, your business credit score will climb as managers prove their skill at monitoring the firm’s cash flow and their commitment to honoring the firm’s obligations.

Also consider having our office review your financial statements before you send them to the bank. If you need assistance with this or other business concerns, give us a call.

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Building Customer Loyalty – A Few Basics

Studies have shown that businesses often spend five to six times more to attract a new customer than to keep an existing one. Over the long term, those dollars add up. In fact, a company’s ability to care for its customers often determines its survivability in the marketplace. Make customers happy and they’ll stick with you; disappoint them and they’ll tell their friends.
Building customer loyalty is a matter of focusing on the basics. Does your company need to refocus on any of them?

Hire friendly people. You have probably visited a business where you encountered a grumpy salesperson or a bashful receptionist. Unlikeable staff will not generate repeat business. The staff you employ should enjoy interacting with people. If your employees regularly hide out in the back room instead of greeting clients, it’s time to take a hard look at your hiring practices.

Request customer feedback. This can be as simple as spending a few minutes with a customer to inquire about his or her experience with your company. Be specific. Instead of asking “How was our customer service today?”, ask a more specific question like, “Did our salesperson answer all your questions about XYZ product?” You might also establish a focus group of customers to solicit ideas for improving your products and services.

Follow up. If customers spend valuable time providing their opinions via surveys, suggestion boxes, or focus groups, don’t ignore what they have to say. Let them know that you take their ideas seriously and are looking for ways to implement at least some of their suggestions.

Never stop training. Often employees treat customers rudely or disrespectfully because they simply lack training in proper etiquette. Show them the proper way to answer phone calls, how to make eye contact and smile, how to help without being pushy. With a little focused training, most people can learn good customer service skills. Take time upfront to develop these skills in your employees and you’ll reap dividends in customer loyalty.

Model proper behavior. Simply put, the boss should exemplify top-notch customer service. If your employees see you treating clients poorly, don’t be surprised if they assume that such behavior is acceptable.
Remember: it’s easier to keep an existing client than to beat the bushes for a new one. It’s cheaper, too.

More Info: Business Accounting Systems, PC 

A Tax Refund for You or an Interest-Free Loan for the IRS?

 

Millions of taxpayers receive refunds each year. Will you be among them? Most of us will happily accept our tax refund checks, because we can usually use the money. However, it’s important to understand that refunds actually cost you money.

Here’s why:

* The government pays no interest on refunds. Kept in your hands, those dollars could have been productive. For example, you could have invested the money or used it to pay off your debt during the year. If the money had been added to a 401(k) plan, tax could have been deferred on both the investment and its earnings. Even better, your employer might have matched all or part of your investment, adding to your retirement savings.

* Refunded cash is not available for use until actually received. Even though most taxpayers get their refund checks promptly, circumstances or errors can delay (or stop) a refund.

To manage potential tax refunds, consider reducing your withholding or estimated tax payments. For most taxpayers, withholding must equal either the prior-year’s tax or 90% of the current year’s liability. If your annual income changes little, it’s relatively easy to avoid overwithholding. You should consider filing a revised Form W-4 withholding statement with your employer if you’re having too much withheld.

For taxpayers with fluctuating income or multiple sources of income, the problem is more complex. The IRS provides a worksheet with Form W-4, but many people find the form complicated. If you’d like assistance adjusting your withholding, contact our office.

More Info:   Business Accounting Systems, PC

Tax Tips for Newlyweds

It’s the start of wedding season! If you are approaching your wedding date (congratulations!), the tax implications of marriage are probably not the first thing on your mind. But paying a little attention to it now can save time and even money later.

Here are a few tips to help those who are about to embark on a new life together.

Tip 1: Notify the Social Security Administration with any name change(s). The IRS has a name match program with the SSA and will potentially reject deductions and joint filing if the name change is not made timely. Do this by filing Form SS-5 with the SSA.

Tip 2: Use Form 8822 to update your address with the IRS if either of you is moving.

Tip 3: Change your name and addresses with your employer and the Postal Service to ensure your W-2s are correctly stated and delivered to the proper address.

Tip 4: If selling one or two residences, make sure you review how capital gains tax laws apply to your situation. This is especially important if one of you has been in your home for only a short time or if either home has appreciated in value.

Tip 5: Review legal documents to ensure legal titles are as you wish them to be. This includes bank accounts, titles on property, credit cards, insurance policies, and living wills.

Tip 6: Recalculate your payroll withholdings and file a new W-4. If both newlyweds work, your combined income could put you into a higher tax bracket. This phenomenon is referred to as “the marriage penalty.” By changing withholdings now, you can avoid a big surprise at tax time.

Tip 7: Review your employee benefits and make necessary changes in health care, insurance, retirement account beneficiaries, and tax-preferred spending accounts. Marriage is a qualified event to make mid-year changes by most employees.

If you or someone close to you has questions about marriage and taxes, give us a call. We’d love to help.

More Info: Business Accounting Systems, PC 

How to Prevent Identity Theft From Affecting You

   
The IRS has made great strides in protecting taxpayers from identity thieves, but you must still be diligent to protect your information.
Identity thieves can steal a taxpayer’s personal information and use it to file a tax return claiming a refund under the taxpayer’s name. Then when the taxpayer actually files a return, the IRS won’t accept it and notifies the taxpayer that a return under his or her name and ID number has already been filed.
The IRS recommends that taxpayers should do the following in order to avoid becoming an identity theft victim:

• Guard your personal information. Identity thieves can get your information by stealing your wallet or purse, going through your trash, or posing as someone who needs your information for a legitimate reason.
• Watch out for IRS impersonators. Don’t fall for phone calls, faxes, e-mails, or other contacts made by people claiming to be from the IRS. Do not respond to the message, open any attachments in an e-mail or click on any links.
• The IRS recommends that you enter “phishing” in the search box at the top of its website (www.irs.gov) to get more information on avoiding tax scams. E-mail suspected scams to phishing@irs.gov.
• Protect information on your computer. Protect your tax information with a password, and once you’re finished with your tax data, take it off your hard drive.

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Why you should consider using HRAs to help employees with medical costs

A health reimbursement arrangement, or HRA, is a benefit plan you can offer to your employees to reimburse them for medical expenses that are not covered by an insurance plan. HRAs offer tax benefits, including the deductibility of contributions you make to your employees’ accounts. Since the Affordable Care Act (ACA) took effect, if you employed 50 or fewer workers, your ability to provide HRAs to your employees may have been limited. However, a law passed in December 2016 created a new type of HRA that you can offer if you do not provide group health insurance.

The 21st Century Cures Act allows “stand-alone” HRAs if the accounts meet funding and other requirements. These new HRAs allow you to help your employees pay for medical costs, such as the reimbursement of premiums for policies purchased on the healthcare exchange. In addition, the Act extends relief from the $100 per day penalty for prior arrangements that did not meet Affordable Care Act rules.

Please contact us for more information about this new employee benefit option. This discussion could be crucial given the uncertainty of future ACA rules.

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You don’t have to itemize to claim these deductions on your 2016 return

Can’t itemize? You can still claim some expenses on your 2016 federal income tax return. Here’s how you can benefit.

* IRA and HSA contributions

If you made a contribution to your traditional IRA for 2016, or if you plan to make a 2016 contribution by April 18, 2017, you may qualify to deduct up to the maximum contribution amount of $5,500 ($6,500 if you’re age 50 or older). Income limitations apply in some cases, and you can’t deduct contributions to Roth IRAs.

Health Savings Accounts (HSAs) are IRA-like accounts set up in conjunction with a high-deductible health insurance policy. The annual contributions you make to your HSA are deductible. Contributions are invested and grow on a tax-deferred basis, and you’re allowed to withdraw money in the account tax-free to pay for your unreimbursed medical expenses. For 2016, you can deduct up to the contribution limit of $3,350 if you’re filing single and $6,750 when you’re married filing jointly. You may also be able to deduct an additional $1,000 if you were age 55 or older and made a catch-up contribution to your HSA.

* Student loan interest and tuition fees
Deduct up to $2,500 of interest on student loans for yourself, your spouse, and your dependents on your 2016 return. For 2016 returns, you can also deduct up to $4,000 of tuition and fees for qualified higher education courses. Income limitations apply, and you must coordinate these deductions with other education tax breaks.

* Self-employment deductions

If you’re self-employed, you can generally deduct the cost of health insurance premiums, retirement plan contributions, and one-half of self-employment taxes.

* Other deductions

Alimony you pay, certain moving expenses, and early savings withdrawal penalties are also deductible on your 2016 return, even if you don’t itemize. Teachers can deduct up to $250 for classroom supplies purchased out-of-pocket in 2016.

Contact our office for more information on these and other costs you may be able to deduct on your 2016 tax return.