Running a small biz is tough, but good and free advice is available!

Excellent info about employment practices for small businesses. The very best medicine is preventive medicine!

Take a look at this blog article by Attorney Alan Bush about overtime perils and pitfalls.

Click Here

Another example of why Buy Sell Agreements are so important

This may be an extreme example but the fundamentals are in many business problems we see on a regular basis.

Just because your business partner is your spouse it doesn't mean business judgement should be suspended.

Read about the Los Angeles Dodgers bankruptcy soap opera here.

What Does Patricia Kluge Bankruptcy teach us about business ownership?

A messy business failure can always be learned from. The Patricia Kluge bankruptcy has lessons for small business owners with partners, both known partners and unknown partners.

I once heard a wise man say, "Pick your business partners twice as carefully as you pick a spouse..because a spouse can only take half of what you have."

If you are going into a partnership in a small business make sure you set up the proper buy/sell agreements so that you don't wind up with a partner you don't want. How could that happen?

You and you partner are 50/50 with no buy/sell agreements in place. You've known your partner since high school and trust him completely but..... after you two are in business he goes thru a divorce and his wife winds up being your 50/50 partner. Now what? But wait it could get worse...she remarries and now you have another partner, kind of. You get the picture.

Get your buy/sell agreements in order before you go into business with a partner. A good business attorney can help you avoid a terrible situation, one which we see way to often out in the real world. You'll even find businesses for sale solely because of partnership issues that weren't planned for at the beginning and now selling the business is the only way out.

Here's a good video post regarding buy/sell agreements.

Where can I find information about buying a business in a specific industry?

As we all know the web has a lot of information but often it is hard to sort through the mass to get to the finer topics.

Every Friday, on internet radio, there is a 1 hour broadcast that deals with buying a business in a specific industry. This week's show (1pm cst, noon eastern) is about trucking companies. These shows feature industry specialists who can provide true insights into the good and bad to look for in a business.

Also, on the Entrepreneurial Insights website there is a menu of many previous shows and the industries they cover. You can replay those shows at your leisure.

Take a look.......and listen to Entrepreneurial Insights , you can visit and replay the broadcast anytime but the live broadcasts are Fridays at 1pm central.

Ever wonder what an Accredited Investor is? And why it matters......

Under the Securities Act of 1933, any company that sells securities must register with the SEC or file for an exemption if they so qualify.  The Act provides companies with a number of exemptions from federal registration requirements.  One of these exemptions is that the company may sell its securities to Accredited Investors.   Selling securities to Accredited Investors is deemed to be an exemption because the assumption is that Accredited Investors have the skill and knowledge to evaluate and determine the risk of the investment.

The term Accredited Investor is defined by the Securities and Exchange Commission (SEC) and is used to describe investors who have achieved a level of financial sophistication that eliminates or diminishes the need for protection that some government filings may provide. 

An Accredited Investor is:

M&A Due Diligence from Seller Perspective

Here's an article that shows how M&A Due Diligence preparation can dramatically improve a seller's position.

Uh Oh... 13 million people have a surprise tax bill coming.....

Here's an article about confusion and mis-calculation for another overly complicated Federal Tax process of the governments re-distribution of income. Might want to keep this article to show to your employees when they blame you, the employer, for the problem!  CLICK HERE

New Tax Law is ready to go but.......................

The new tax law extending current tax rates and spending a couple of hundred $$Billion$$ more is headed for the president's desk.


However, FYI - the bill does not rescind the obligation for businesses issuing 1099s that was passed in the Obama care bill. Soooo............. unless something changes look for small businesses being burdened with many 1000s of 1099s to be issued. I saw an IRS estimate that they would get over 1 BILLION more 1099s under the new law!  By example, for my business I'll need to go from about 15 issued 1099s now to about 300 required under the new law. Geeeezzz..............................

Small business owners and risks related to employees work claims

This morning at a meeting I was talking to an employment attorney I know and the topic got around to small business employment practices and the risks that small business owners might not realize they are taking.

Among many items we discussed 3 stood out. Many small business owners we meet with are unaware of the consequences that could result from their lack of attention to human resource (HR) legal issues. Here's my list and my take on each one of the topics the attorney reviewed. Obviously seek competent legal advice before taking any actions:

1. Getting Confidentiality Agreements from employees - I rarely see businesses that have taken this step but I have seen many, many cases of businesses who were damaged and could not go after the offender. The more important the employee the more important this could be.
2. Documenting overtime practices, payments and procedures - failure to properly pay employees for overtime can have expensive and painful consequences. Those painful consequences could, in some cases, go to the business owner personally, without the corporate shield so many depend on.
3. Making sure that employees who are not paid by the hour are classified, managed and have responsibilities that are appropriate for the hourly exemption requirements in employment laws. According to the attorney, just because a business owner and an employee agree to weekly pay, instead of hourly, it doesn't necessarily mean the business owner is not obligated for other expenses and claims which may include back pay for overtime and the significant penalties that could be assessed.

This is a good time of year to start reviewing your employment practices and get good advice from an HR professional or attorney. Also, this is not just an issue for big companies. If you have employees you have risks, generally it's wise to spend a little money now to avoid a bigger problem later.

New 1099 Rules effect on Small Business

    This post provided by Paul Ikard, CPA

March 17, 2012  - Some of the below rules may have been modified, check with your CPA before taking any action.

Businesses and not-for-profit organizations are accustomed to IRS rules that require them to report certain payments on annual Form 1099 information returns. However, the recently enacted healthcare law imposes surprising new Form 1099 reporting requirements. Complying with them may add significantly to your organization's paperwork burden. While the new rules don't apply to payments made before 2012, it's not too early to start gearing up to deal with them.

Current Rules in a Nutshell


Background: For many years, businesses have been required to report various payments on different versions of Form 1099. For instance, when a business pays $600 or more during a calendar year to an independent contractor for services, the business must issue the contractor a Form 1099-MISC that reports the amount paid that year. The business must also furnish a copy of the Form 1099-MISC to the IRS. This reporting procedure helps contractors remember to include the payments on their tax returns, and it helps the IRS ensure that income is reported. Under rules now in effect, other types of payments that businesses must report on Forms 1099
include:
1. Commissions, fees, and other compensation paid to a single recipient when the total
amount paid in a calendar year is $600 or more.
2. Interest, rents, royalties, annuities, and income items paid to a single recipient when
the total amount paid in a calendar year is $600 or more.
When a Form 1099 is required, it must show:
The total amount for the calendar year;
The name and address of the payee;
The tax ID number (TIN) of the payee (For privacy reasons, it's okay to show a truncated
TIN on a 1099 issued to an individual);

Contact information for the payer; and

The payer's TIN.

If your business doesn't have a payee's TIN, you may be required to institute backup federal income tax withholding at a 28 percent rate on payments under Internal Revenue Code Section 3406. In most cases, the rules summarized above apply to payments made by not-for-profit organizations since they are generally considered to be businesses for Form 1099 reporting purposes. If a payer inadvertently fails to issue a proper Form 1099, the IRS can assess a $50 penalty. The penalty for each intentional failure can be $100 or more.

Ready to Buy a Business - Your 401(k) could be your best friend!

If you are considering buying a business don't overlook the value of your 401(k) as a good source of financing. According to CPAs who specialize in this investment vehicle the IRS code currently allows you to access your 401(k) without triggering income tax or early withdrawal penalties when used to purchase a business.

Your 401(k) and an SBA Loan from the Small Business Administration could help you buy a business and build the wealth that is often created when you own and operate a successful small business.

Could there be a better investment than investing in yourself?  For free information and complete details click here.

What is an "S" Corporation?

An S Corporation is a form of business classified for federal income tax purposes as a corporation that has elected to be taxed as a pass-through entity, in a manner similar to a partnership or sole proprietor.  Unlike a regular corporation, or a C corporation, an S corporation (both names derive from sections of the Internal Revenue Code) generally is not subject to federal income tax.  Instead its income is reported on the tax returns of its shareholders, and they have the responsibility for paying the tax.  If there are losses suffered by the corporation, they also pass through and are reported on the shareholders’ income tax returns.

               Because only the shareholders, not the corporation, are taxed, S corporations avoid the problem of double taxation associated with C corporations.  This is the biggest draw for creating an S corporation, particularly for closely held corporations.

               Shareholders in an S corporation, like shareholders in a C corporation, generally have limited liability arising from corporate matters, even though they pay taxes as if they were partners or sole proprietors.  In addition, when the corporation is eventually sold, there can be reduced taxable gains, as compared with the sale of a business operating as a C corporation.

               On the downside, the limitation on classes of stock in an S corporation provides less control over the company and the value of its stock.  Potential outside investors likely will not be attracted by the pass-through tax characteristics of an S corporation, nor by the limit on the number of shareholders.  Although corporate taxes are avoided, there is still a requirement for filing an informational tax return every year for a corporation with more than one owner.  Finally, if avoiding formalities is an important consideration, it should be noted that, like any other corporation, an S corporation must follow the requirements for having regular meetings and keeping company minutes. 

               The balancing of the advantages and drawbacks of S corporation status in any given case is sufficiently complex that it is advisable to seek professional advice before making this important choice.  

Note: This article provided by Craig Welscher a Houston, TX based attorney. You can contact Craig through www.welscherlaw.com

Small Biz alert ..We're from the Government and we're here to help you!!

Employers should be aware that the Department of Labor is increasing its Wage and Hour Division's enforcement efforts. The Department of Labor has stated that protection of workers' rights is a "top priority" for the DOL. As evidence of that, DOL has added 250 additional wage-and-hour investigators. The intent is to pay prompt attention to complaints about wage-and-hour violations. According to the Secretary of Labor, in the past three months alone, the DOL has collected more than $2 million in back wages owed to more than 500 workers.

Areas of concern to employers include:

• federal minimum wage, overtime, and record keeping requirements;

• how to determine which work-related activities are considered "hours worked" and consequently hours for which employees must be paid overtime pay;

• whether a particular employee is exempt from the Fair Labor Standard Act's minimum wage and overtime pay requirements; and

• contract labor or employee status.

This post written by Attorney Tom Solomon - Houston, TX

Good Article on Corporation vs S Corporation in Sale of Business

Tax Issues, Benefits and Risks.

 

Click Here for Source Article.

All Small Business Owners will Leave Their Business - I Guarantee it!

The question is, will you leave your small business the smart way or leave it the dumb way?

Having an exit plan for your business is smart. A formal plan will look at your options, devise efficient tax strategies and create an estate plan that eliminates any disputes that might result if you suddenly passed away.

Here's a good article on what to consider when looking at your Exit Plan . Take a few minutes to consider how a plan can help you, your family and your business.

And I repeat.....you will leave your business one day...100% Guaranteed. If you gotta go, at least go out on your terms.

Small Business owners need to build and preserve wealth

Here's a good book to help you understand what it takes and an option for protecting the value of your business once you've created value from your business. It's worth the time if you're serious about your business. Click here