Tax Tips for Home Business Entrepreneurs

It’s start of the year, and it’s time to prepare your taxes for the past year. Bernard B. Kamoroff, C.P.A., author of the book “422 Tax Deductions for Businesses and Self Employed Individuals” (8th edition) offers a number of tips to help you save on your taxes:

Tax Tip 1. Your business expenses are deductible even if you paid them from your non-business bank account, personal credit card, or cash. Take a few minutes and go through all of your expenses for the year. If the expenses were for your business, deduct them. (Does not apply to corporations).

Tax Tip #2. Be careful when labeling expenses “entertainment.” Business expenses such as advertising and promotion are 100% deductible, but entertainment is only 50% deductible. Don’t call an expense “entertainment” unless it really is.

Tax Tip #3. Hire your kids and save a bundle in taxes. You can pay your children under the age of 18 as much as $5,700 a year, write off the wages as a 100% tax deductible payroll expense, and the children owe no federal income or Social Security tax on the income earned.

Tax Tip #4. You cannot deduct charitable donations as a business deduction (unless you are a corporation). If, however, you purchase an advertisement in a charitable organization’s directory or event program, the cost of the ad is fully deductible.

Tax Tip #5. Manufacturers, and some construction, engineering, and architecture firms, software developers, and video producers, are eligible for a 6% “manufacturer’s deduction” for income earned from domestic production. This “bonus” deduction is in addition to the deductions already allowed for manufacturing expenses.

Tax Tip #6. You can go back to school, to take courses that further your education in your current business or that help you operate your business, such as bookkeeping and computer skills, and get a business tax deduction for the cost of tuition, books, fees, and even travel.

Tax Tip #7. Clothing you wear to work is not usually deductible unless the clothing is a uniform or otherwise not suitable for street wear. But if you buy shirts, jackets, hats or other clothing with you business name or logo, the cost is fully deductible.

Tax Tip #8. In most cases, the cost of your inventory (goods for sale) cannot be written off until sold. But if you have damaged inventory, inventory that is out of date or out of fashion or otherwise unsalable, you can write off the cost of that inventory immediately.
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New Year’s Resolutions for Home Business Entrepreneur
Hope everyone is having a great holiday season, even if the economy is sagging and business owners like you and me are feeling the pinch.

It’s almost end of the year, and it’s time again to draw up our New Year’s resolutions for our businesses. Preparing resolutions for the next year is my sort of strategic planning session where I go through the exercise of thinking what happened this year, and what needs to be improved or tried differently next year.

George Rodriguez wrote a good list of tips for a better New Year in the article “8 Tips for a Successful New Year:”

• Assess the past year
• Look at everything with a fresh new perspective.
• Set your goals.
• Create your calendar of activities.
• Do the work!
• Pump up your networking.
• Try to learn something new this year.
• Keep your momentum going.

In addition to George’s list, my main goal for next year is to work doubly hard to market our websites and increase traffic. It is important during times of recession to pump up your marketing efforts. Also this year, I will engage more in social marketing and understand how to use the best social networking sites to reach our target audience.

For more inspiration on how to plan your business for 2009, read the article “Top New Year Resolutions You can Make for Your Business” by Jan B. King that New York Times mentioned in a piece today.

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Christmas Shopping
I’ve just started on my Christmas shopping and now hoping that the gifts I bought online would arrive by December 24. It’s a nail biting experience, with all the shipping unknowns (package got lost!)

Since I’ve got 3 kids, I buy mostly toys and learning tools. One thing that surprised me is the wide discrepancy of prices of the same item from one online store to the next, that it would be downright foolish not do any price comparison shopping.

For example, Vtech’s Kidi Art Studio costs $59.99 at ToysrUs.com , $59.96 at Walmart.com , but only $47.99 at Amazon.com . But Amazon is not always the cheapest, especially if a third party seller is offering the item. Amazon sells the Tonka Bounce Back Racer for $59.99 but ToysRUs in their Biggest Toy Book Ever lists the item as costing only $24.99. That’s more than half!!!

I’m just amazed at how significant the price difference of the same items on the Web. Unless you are looking for something unique offered only by 1 or 2 online sellers, it is imperative to do some sort of price comparison.

Like anything about running a business, price can be an important factor for customers — unless you differentiate yourself from the others where the customer will still buy from you even if you cost twice as much as the other seller.
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Business Ideas for Tough Economic Times
Given that we are in the middle of a recession, if you were to start a business, what would it be? Where do see the opportunity?

That’s a very interesting question to ponder, especially for entrepreneurs willing to capitalize on opportunities available.

I’ve seen a number of responses, blog posts, opinions on the types of businesses that could work in difficult times. Some of these include:

• Provision of Financial advice. In times of confusion and fear — shrinking retirement funds, increasing debt, downhill investments, etc — there’s a huge number of people who need guidance on the steps they need to take. Small business owners are looking for advice on how to deal with unexpected financial constraints. Families and individuals may be looking for advice on how to manage their finances given their new budget reality. Investors, particularly retirees, need help in protecting their nest eggs and finding any opportunities in a down market.
• Eldercare. One reality we all face is that whether the economy is going up or down, we are all going to go old. Services such as adult daycare facilities are still going to be needed. However, if you are targeting the baby boomers market, most of which relies only their retirement funds (that may be shrinking) as their main source of income, this may be the group that will be tightening their belts even more. So niche travel for the active boomers may be hard hit during tough economic times.
• Auto Repair and Maintenance. People tend to forego buying new cars when money becomes hard to come by and cheap credit is not as easy to get. Instead, they’re more likely to keep their cars, which entails maintenance. As such, there is a big opportunity for this business when the market goes down.

Let me know if you have any other ideas of the types of businesses that could work during a recession. Love to hear your thoughts!
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8 Factors to Get Customers to Recommend Your Store
The loyalty marketing consultant and magazine publisher Colloquy has created a Retail Loyalty Index to answer a key question: To which retailers do consumers profess their deepest loyalty, and why. The Index is based on a survey of 3,000 U.S. consumers in six demographic segments: Affluent household heads, Young Adults, Seniors, Women, Hispanics and a General Population control group.

One of the findings of the survey is that “Intent to Recommend” is the behavior retail shoppers associate most with brand loyalty. The survey dug deeper as to what a retail store can do to ensure that its shoppers recommend them to family and friends, and the top 8 factors are:

1. Store environment
2. Quality product
3. Value for money
4. Knowledgeable staff
5. Store layout
6. Product selection
7. Frequest sales/Deals
8. Convenient location

Interesting to see that while location is considered an important factor in the success of a retail store, it is the quality of the store environment that will make customers actually want to recommend a store.

So for store owners out there, I suppose now is the time to start scrubbing those floors!

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Home Business Weekend Ideas During a Recession
Someone asked for advice on what part-time home business can he do now when the economy is in a recession. He is looking for a business that he can do from home on weekends. He has already tried getting a stall in the market, and offering DJ services — which both failed miserably.

When the economy gets tough, most people cut back on spending, especially for non-essentials and luxury items. So with the market stall business, the success of his weekend business depended on what he was trying to sell. Market stalls are not necessarily a bad idea as there will be plenty who are on the lookout for inexpensive gifts. But if he selling items that are priced way more than customers are willing to pay, or participate in flea markets with limited customer-base, then his venture may indeed be less than successful.

As for the DJ business, when the money is tight, partying is one luxury good that people stop doing. Even companies are cutting back on Christmas parties — and that means less demand for DJ services.

If you are thinking of starting a business during an economic downturn, ask yourself the following questions:

• What do you like to do?
• What can you do?
• How much money can you spend for this business?
• Are you willing to learn?

Do some research as to what people still buy and use during times of recession. Food, for example, is definitely one — no matter how much the economy is tanking, people will still eat and people will still buy food (they may not buy that Chanel shades or that Hermes scarf, but they will still have to buy bread or rice)

Are there opportunities you can take advantage of at this time? For example, as money gets tighter and cheap credit becomes tougher to get, people will have to spend money on maintaining/fixing the cars they already own rather than buying new ones. An auto repair business. while not part-time, may have some potential. You can opt to go with an automobile franchise, or find a troubled shop with potential to buy at a bargain price.

Make a list of what you can do and what you want to do. If food, can you bake? Can you cook something that you can sell during weekends? Can you write? Then create a blog where you earn via advertising, or sell your writings services. There are a lot of choices. It all depends on what you want to do
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New Service to Monetize Your Website
If you’re thinking of earning from your expertise — whether presenting yourself as a consultant or as an expert in your field — there’s a new web tool that will allow you to earn money from your blog or website.

SpeaktoMe Expert Services http://www.speak-tome.com/ offers a widget that makes giving expert paid advice to clients easier. The widget, which you put into your blog or website, allows you to be connected to your client over a regular phone line while paying you by the minute. Your clients can sign in, add funds and click on the “speak to me” link. The service is free to you, but SpeakToMe takes a total of 20% of the revenues you generate from your clients (you get 80%).

I have not personally tried the widget, nor have I signed up for the program (I prefer email than phone consulting). I was contacted by the company founder to let me know of this new tool. If you are intrigued as I am, check out the program and maybe try it and see how much earnings it can give you.
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Starting a Laundromat Business

If you are thinking of starting a laudromat business, here are important factors to consider:

1. Location = Location is key to the success of a laundry mat business. Location is all about proximity to the target demographic market and placement in an area that is convenient, with lots of parking, and affordable rent (you don’t want to price yourself out of the market because your lease is too high). Most users of Laundromats will not drive 10 miles to go wash their clothes. The ideal location is typically in a nice small shopping center of a poor to lower-middle class neighborhood. Choose one with nearby apartment complexes.

2. Presence of Target Market. You want to be very near, if not really close, to your target market — poor to lower-middle class who are more likely to not have washers/driers installed in their homes.

Do a research of the area, including median incomes, facilities/utilities offered by apartment complexes in the area, and whether the population is growing or shrinking. Check also the upward mobility of the area – e.g. a low-income area being rehabilitated may turn into a high-end area full of upscale condominiums and townhouses in the next 5 years, which will not need a Laundromat and thus spell the end for your business.

It may be helpful to talk to your target market and ask them about their usage and preferences for laundry mat services.

• How often do they have to wash load-wise per visit?
• What do they look for in such a service?
• How often do they use a laundry mat?
• Are they satisfied with their current laundry mats, and why?

3. Presence of Competitors. If possible, try to find a place where yours is the sole laundromat in this neighborhood and surrounded by residences, that there is no potential for a competitor.

4. Setting Your Laundromat Ahead of Competitors. It is important to set your Laundromat apart from other competitors in the neighborhood. One way is to offer wider variety of services and focusing on convenience. Those services include folding and potentially pick-up/delivery service, as well as online reservation and membership for pick-up and delivery.

5. Environment: Your Laundromat should be squeaky clean and orderly, with space for customers to help manage their loads. It is important to provide an environment conducive to giving clean, friendly, and professional service.

6. Reputation: A reputation resulting from friendly, professional service, clean environment and reliable machines will encourage customers to return. The best method of advertising a Laundromat business is through word-of-mouth, with neighbors telling other neighbors of their favorite laundry places. You may want to boost your word of mouth strength with an incentive program for referrals. Those customers who refer someone else to the store will be rewarded with two free washes, and the referee will receive an introductory gift of a free wash.

In a previous post I did - “Starting a Coin Laundry Business” — I have included some geat resources for starting a Laundromat business. Also check out The Laundry Capitalist blog which is about starting and owning a laundry mat business.

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Explore More Payment Options for Your Buyers
Much ado has been made about the comeback of layaway programs. KMart is even advertising heavily their layaway program, which allows customers to pay the item over an 8-week period

During these tough economic times, take the cue from big retailers and explore more payment (even credit) alternatives for your customers. The goal is to entice customers to spend — and spend more — from your store or website, and the key is to make it easy for them to pay for the items.

Some payment options to consider include

• credit card payments from leading brand Visa, MasterCard, American Express and Discover
• Paypal
• Google Checkout
• Online banking options such as eBillMe
• Deferred billing such as Bill Me Later
• private label gift cards
• easy monthly payment options such as the payment scheme offered by Ice.com

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Top Ten Ways to Bring Holiday Joy to Your Small Business
According to the recent news item from Intuit that we posted in our Small Business News section, with the current state of the economy, many small businesses are struggling to get paid for the products and services they provide. In fact, on average small business owners lose close to $1,500 in overdue or no payments a month, as found by the recent Intuit Billing Manager “Get Paid” Survey.

In response to the survey, Mike McDerment, CEO of the online invoicing service FreshBooks , identified 10 tips to help small businesses address their receivables problem and allow small businesses to enjoy the holidays.

1. Bill Clients Early: This will make sure you are paid in time for the holidays, and also that your clients will be satisfied with the great services they are receiving.
2. Make Billing So Simple That an Elf Could Do it: If you make bill paying difficult, you are guaranteed to lose money. Try to provide debtors with easy, convenient options to submit payment.
3. Add a Holiday Greeting Message: Get your customers into the holiday spirit with a joyful greeting message during the holiday season – it will put a smile on their face and make them appreciate your service more.
4. Take Advantage of the Moment: During the planning stages of a project, most people are excited and tend to be more flexible. Use this opportunity to request a partial payment.
5. Use Online Recurring Invoices: Spending hours on tedious paperwork takes time away from enjoying the holidays with friends and family. Don’t turn into the Grinch; use online recurring invoicing services and invest your time elsewhere.
6. Automatic Late Payment Reminders: Alleviate holiday stress by establishing a system that will inform you and your clients of late accounts. Remember: the sooner that you are aware of a delinquency; the sooner you will receive payment.
7. Keep Employee Morale Up: Everyone enjoys being happy around the holidays. Keeping employees happy will also keep them efficient, and efficient employees will bring in greater revenue for a business. By keeping your employees worry-free, they will become a valuable asset. Schedule activities, company outings, anything that keeps the “job family” performing.
8. Your Customers are Your Best Friends: What is the holiday season without close friends to share the joy. Treat customers as you would treat your best friends. For example, small gestures such as sending holiday packages during the year let your customers know that you care for them, and are truly grateful for their business. More importantly, the kind gestures prove that you can be trusted upon independent of economic trends.
9. Make a Good Impression: Embrace the holiday joy and make sure you demonstrate a positive and lasting first impression. Whether you provide a product or a service, caring for your customers with proper support is crucial. Providing good customer service demonstrates that you are a professional and you will take care of business and customers respectfully.
10. Review Company Year-End Spending: Keep funds in order. Keep only what you need but guarantee that bills like the office lease, employee salary, & other overhead costs are met first. This should be done every 6 months to maximize growth. Furthermore, keeping up with current marketing trends will help your business better evaluate what needs to be spent on and what would be a waste of funds.

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