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May 22nd, 2008Many small business owners figure they'll save a buck and do their own accounting, bookkeeping, and tax preparation. A new blog post at cpa-pro.org looks at why this may not be such a good idea.
Among the reasons to hire a professional for small business tax preparation are:
- They can offer advice to help you reduce your tax bill throughout the year so you can take proactive steps rather than getting caught in the crunch.
- You can avoid certain legal issues if you take this step to ensure your books are completely accurate.
- You should be dedicating your time for business functions where you can make a greater impact on revenue and growth.
Read the article and find out the number one point to consider when hiring a tax professional and/or bookkeeper.April 9th, 2008Government contracts can be fertile ground for a small business to grow but earning their business takes a little education and legwork. The first and most important step to obtaining government contracts is to do your homework.
Different government entities have varied processes and rules for bidding. For federal contracts, the Small Business Administration provides a solid overview of their policies and procedures. The National Center for Small Business Information offers courses to entrepreneurs on government work at all levels.
In order to even bid on federal government contracts, a small business must register with the Central Contractor Registry, which is an electronic system that provides automatic payment transfer when a contract is awarded. The registry requires a business to submit a brief profile summarizing capabilities, etc. so it is important this is the best it can be.
Preparation is also key to winning government contracts since the bidding period can vary. Sometimes, the open bid period is less than a month. Not streamlining your paperwork can result in you losing money if you have to "reinvent the wheel" advises Greg Brooks of West Third Group, a Plattsburg, Missouri consulting firm.
Brooks also advises that procurement and contracting officials do not necessarily accept the lowest bid and in fact, is pretty low on their list of considerations. It is more important to demonstrate experience since past performance is scrutinized much more so than price.
Networking is also a big component of not only winning government contracts but good business period. Gary Beckert of the NCBSI says that most small business get their start in government contracting by teaming with someone else. He advises, "A small business isn't going to succeed without a network of peers, economic development organizations and other contacts."
And don't expect a major windfall from government contract work. Many contracts set a 15% profit limit and some are as low as 10%, which is nothing to dismiss but not the golden egg some might expect.
Government contract work can be very beneficial for your small business if you know the basics and are prepared.
February 14th, 2008The multifaceted business insurance industry can be difficult for any small business owner to understand. A small business can be harmed by not knowing what is involved in ensuring adequate insurance coverage exists for any number of situations. Proper assessment of risk is tantamount to avoid having too much coverage or not enough for various aspects of your business.
Three different types of insurance exist, which include property, liability, and people. Basic property insurance covers against most unforeseen events such as vandalism, fire, lighting, etc. If location warrants such an investment, optional insurance policies are also available for earthquakes and floods.
Property insurance can be divided into two groups. They are distinguishable in that one policy identifies exactly what is covered (name-peril policy) while the other identifies what is not covered (all-risk policy), thus it is very important to pay attention to these details. After deciding on the type of protection needed, you will need to think of the items that need coverage, such as buildings, inventory, office equipment, machinery, records, and trademarks to name a few.
Any business must have some sort of liability insurance. This is to protect against lawsuits for something your business did or didnt do that resulted in personal injury or property damage. Liability insurance covers the cost of any jury awards and your legal defense. It is best to compare yourself to other similar businesses to determine the proper level of coverage. Some insurance providers combine personal and liability coverage but sometimes that may not be adequate. A restaurant for instance may need higher liability coverage since customer traffic is much higher than say a consulting firm.
If you haven't incorporated your business yet, you may want to consider the limited liability benefits of forming a corporation or LLC. MaxFilings lets business owners incorporate or form an LLC easily online.
The final leg of the business insurance triad is people. This includes health/dental coverage, which is optional, and workers compensation insurance, which is state-mandated. Workers compensation insurance pays for job-related illness and injury, including medical, disability income, rehabilitation, and even death benefits. Each state has different rules regarding who is considered an employeeso it is vital to verify what your state requires before purchasing a policy.
Inevitably, it will be necessary to consult with an insurance agent or broker. The difference between the two is that an agent represents a specific company such as Allstate while a broker represents many insurance companies and has more freedomto suggest the right policy. When choosing an agent or broker, do not simply refer to your local phone book. Obtain referrals from other business owners, especially those with similar insurance needs.
The Insurance Information Institute is a helpful resource to learn more. Of course, you should always consult with a professional to ensure you are properly covered. Not understanding insurance properly can be harmful to your business so be prepared and informed when choosing policies and coverages.February 7th, 2008You've made that important step of deciding to incorporate your business. Now, how do you know which state you should incorporate in?
It's not always an obvious answer. Some states have excellent business climates, few regulations, low taxes and incorporation fees.
But this is not the only thing to think about - incorporating in a business-friendly state may indeed end up costing you more in the end.
If the corporation is small and mainly doing business in one state, it's advisable that you incorporate in that state since you will have to qualify as a foreign corporation otherwise. While the fees, regulations, and taxes may be much better in another state, you will still be subject to taxes in both the state of incorporation and your home state. If the corporation is larger and will operate in multiple states, then the question becomes more complex. You should always consult with a tax professional before making any final decisions.
For more information on deciding where to incorporate your small business, check out Which State should I incorporate in? in addition to other information resources on this subject contained in the MaxFilings Online Incorporation Knowledge Center.
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