Being in business is a
lot like being a dinosaur.If you don’t
evolve, you’re doomed to become extinct.If you believe Fortune Magazine, they stated that 9 out of 10 startup businesses
are doomed to fail.While that statistic
is shocking, what’s even worse is that the top three reasons startups fail is
because there is either little or no demand for their product, they run out of
funds, or they don’t have the right team.It isn’t until numbers four, five and six that Fortune points out that
some businesses fail because they are outgunned, overpriced or they ignore
their customer’s needs.
When it comes to owning
a business, most owners and managers are looking to find one thing above all
else: More customers.More customers
mean more revenue. That’s got to be good if you hope to build your business, right?Not necessarily so, as you’ll find out
shortly.Just as with many things in
life, quantity doesn’t always trump quality.In fact, too many clients can be a death knell for a business if you
aren’t careful.Don’t believe it?Read on and learn.
One of the reasons to
own a business is to eventually sell it.Whether the motivation to sell is to retire or simply to start another
business is immaterial.The most salient
thing you need to consider if you hope to consummate a sale is to make the sale
appealing to the buyer.To accomplish
that, you need to understand the process involved, the mistakes to be avoided
and the time it takes to create a sellable business.
I have good news for
contractors concerning long term construction contracts.The 2017 Tax Act can save you money and
reduce your accounting hassles. As long as your business does less than $25
million in gross receipts and the contract duration is over a year in length,
you will be able to use cash accounting as opposed to the percentage of
completion method you are currently forced to embrace.In the past, long term construction contracts
had to be reported using the percentage of completion method.This method was very cumbersome to employ,
since it required the contractor to even out the reporting of income over the
life of the contract, regardless of the income collected. To use this method, all
contractors were required to keep detailed accounting records of each period
during the contract.
Ben Franklin said it best when he coined the phrase, "In this world nothing can said to be certain, except death and taxes." But as all business owners know, while death calls but once, there are many different kinds of taxes they are expected to pay at different times of the year. While income taxes are paid but once a year, business owners are required to frequently pay sales tax on many of the things they sell, as well as a number of things
they buy.The second kind of sales tax
is referred to as Use Tax.
In my previous blog, Do the Right Thing & Save
20%, I covered the new tax laws in effect that allow many businesses to
capitalize on deductions that apply to overflow income (business income minus
your salary). The only rub is this deduction specifically excludes
professionals. That’s the bad news. The good news is in today’s blog I will
reveal how realtors, accountants, doctors, dentists, CPAs, engineers and any
other business owners that provide a service may still have an opportunity to
capitalize on this 20% deduction.
For all active business entities in the US that are
not rental properties or hobbies, there is a new 20% business deduction that
applies to your overflow income. (This is your income minus your salary) Salary,
in this case, is important since the only
way you can take the 20% deduction is if you take a salary, or in the case of a
partnership, a guaranteed payment. The
term the IRS uses to describe this is Qualified Business Income.