Casual Articles - How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share

How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share

By Darren Oliver

With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS. Do not count on the IRS to tell you if you have overpaid because they are not required to but you can file an amended return for up to three years.

Chances are, you either prepare your business taxes yourself or have your tax preparer or CPA does them. There a number of issues surrounding either tax preparation method, which can result in your tax liability being calculated as higher than it actually is including missed deductions, numerous changes in tax laws or being given incorrect advice.

As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses.

Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business.

Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.

Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1^st and April 15^th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.

This problem does not extend to just tax preparers or CPA’s. In the IRS’s 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.

Your One-Day, Ten-Step Strategic Plan
You don’t have to kill a tree or shut down the office for a week to create a successful strategic plan. In fact, you can create a successful plan for your business in just one day. It doesn’t have to be an overwhelming or a monumental task. It doesn’t have to be perfect or fancy. Just grab a few key people in your organization, turn off the phones and let’s get started.Step One – Be the best. The result of a well-developed and executed strategic plan is to develop a competitive advantage. Just what is a competitive advantage? Business lingo aside, it is simply the answer to: What can your company potentially do better than any other company?Understanding your competitive advantage is critical. It is the reason you are in business. It is what you do best that draws customers to buy your product/service instead of your competitor’s. Extremely successful companies deliberately make choices to be unique and different in activities that they are really, really good at and they focus all of their energy in these areas. You may decide to incorporate your competitive advantage into your mission and/or vision statements.Step Two – State your purpose. A mission statement is a statement of the company’s purpose. It is useful for putting the spotlight on what business a company is presently in and the customer needs it is presently endeavoring to serve. It also serves as a guide for day-to-day operations and as the foundation for future decision-making. To write a mission statement, answer the questions: What is our business? What are we trying to accomplish for our customers? What is our company’s reason for existing?Step Three – Visualize the future. dyText style="MARGIN: 0in 0in 0pt">Chances are, you either prepare your business taxes yourself or have your tax preparer or CPA does them. There a number of issues surrounding either tax preparation method, which can result in your tax liability being calculated as higher than it actually is including missed deductions, numerous changes in tax laws or being given incorrect advice.

As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses.

Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business.

Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.

Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1^st and April 15^th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.

This problem does not extend to just tax preparers or CPA’s. In the IRS’s 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.

Outsource for the Right Reasons
Although outsourcing is all the rage in business today, it can also be a dangerous strategy if done for the wrong reasons. Following are some bad reasons for and associated dangers of shifting responsibility for some business processes or products to outside firms.Wrong Reason #1 – You just aren’t interested in doing it yourself.Potential Danger – If you’re not interested in it there’s a good chance you won’t adequately think it through and communicate your needs to your supplier, greatly increasing the chances of them failing at it.Wrong Reason #2 – You’ve struggled with it for some time, usually unsatisfactorily, and want some else to deal with the difficulties in the future.Potential Danger – The problems may very well be due to other interfacing or related processes in your organization, and separating them physically will only make response times for problems more difficult.Wrong Reason #3 – Your business is growing quickly and you need to reduce the workload on some of your key people.Potential Danger – You may take away some of the activities that people most enjoy, are really good at, or are key activities that support other business processes.So what are some of the right reasons to outsource?• You have identified your organization’s core competencies and want to find business partners who can supplement them with their own competitive strengths, making both firms stronger.• Someone has demonstrated the capability of doing some of what you do much more quickly, effectively, and/or at lower cost, and if you outsource these activities you will be able to better focus on other higher-value adding activities.• You need to add capacity but do nostyle="mso-spacerun: yes"> For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses.

Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business.

Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.

Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1^st and April 15^th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.

This problem does not extend to just tax preparers or CPA’s. In the IRS’s 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.

Choosing Bankruptcy Lawyer - Tips to Select the Best Service
Bankruptcy refers to a condition where one cannot meet one’s debt obligations. Filing for bankruptcy is a legal process that requires a bankruptcy lawyer. A bankruptcy lawyer will not only help you deal with the overwhelming process of filing for bankruptcy, but will help you financially secure your future.It is true that a bankruptcy lawyer will cost you money and when you are already in financial trouble you might find it hard to get the extra funds. However, it is also important to remember that in the long run a bankruptcy lawyer will more likely end up saving you money, plus give you peace of mind.Before you choose a bankruptcy lawyer it is best to keep in mind the following tips:1. Do not go looking for a lawyer at the last minute. You might end up making a bad choice and your lawyer might not get adequate time to prepare fully.2. It is advisable to spend a day in a bankruptcy court to get an idea of how things work and what you should be looking out for in a lawyer. You can also talk to debtors about their experiences with their respective lawyers.3. Do not go for a lawyer simply because he/she is the cheapest. It is essential to have an experienced attorney.4.Know how much it will cost you. Find out what is included in the lawyer’s fees and what is not.5.Check out the law firm before you hire a bankruptcy lawyer. This will give you essential clues regarding how the lawyer will handle your case.When you are choosing a bankruptcy lawyer, it is essential that you interview several of them before you make your decision. Go for certified and experienced lawyers. Choose a lawyer that you are comfortable with. If you have any question or doubt, make sure you clar-size: 12.0pt">

Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1^st and April 15^th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.

This problem does not extend to just tax preparers or CPA’s. In the IRS’s 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.

The Biggest Mistake In Selling!
Some trainers and sales managers teach that there are prospects that just need a little more time in the decision-making process. They explain that a decision-maker’s stall is not always a put off and they just need to think a bit more about their decision, or that they have to sell the idea to someone else. Therefore, many sales and service industry professionals accept the stall, “I’ve got to think about it.” at face value, believing that a buyer truly has an interest in what they are selling and just needs more time to think about the benefits of the offer. However, in their hearts many sales professionals know better, but hope usually wins out in the end and they accept the stalling tactic of a prospect as truth and continue to work with them for many weeks or months in the delusion that something positive will come from their persistence.As many seasoned sales professionals know, 90 to 95 percent of the time when you hear a decision-maker say, ‘’I’ve got to think it over,” it’s not a stalling tactic at all, but simply a polite way of telling you “no.” To reduce the number of polite “turn downs,” as you close your presentations; from this point forward, make certain that you give the decision-maker permission to tell you “no.” This technique will reduce tension in the transaction and encourage candor as you search to find the reason a buyer initially decided to meet with you. (Logic suggests that if you are able to discuss your product or service at any length, there is a good possibility that your prospect has a need.) To give permission to a decision-maker to tell you “no,” just say something like this:“John, if what I propose today will not work for you or your company (firm), please tell me, so thONT-FAMILY: Arial; mso-bidi-font-size: 12.0pt">This problem does not extend to just tax preparers or CPA’s. In the IRS’s 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.

If you have not yet filed your taxes, it is a good idea to get a second opinion from an independent source. The extra money and time spent in doing this could save you thousands. Look for someone or a company who:

· Has sufficient years preparing home-based business tax returns

· Prepares less than the average number of returns between January and April so that your return gets sufficient time and attention.

· Have had clients get a second opinion. In addition, talk to those clients to get there first hand insight.

· Is willing to pay for a second review of your tax returns to ensure accuracy.

· Is willing to take MSN’s online Tax IQ Test at http://moneycentral.msn.com/investor/calcs/n_taxq/main.asp. Although designed for consumers, this test contains basic tax information that even junior level tax preparers should know.

Just as you trust a surgeon with your life, you trust this individual or company with your money and confidential information. Be highly selective and do not be afraid to put them through a rigorous qualification. If they are not willing to participate in your qualification then either they do not know their stuff or, your business is not that important to them.

If you already filed your taxes or think you might have missed out on deductions, have been given bad advice or failed to take advantage of a tax law change which could reduce your liability for previous tax years, what can you do? The good news is that by law, the IRS is required, for up to three years, to review your returns and records as many times as needed to find errors. You have the same three years to get a second opinion and file an amended return. In fact, in 2002, 3.3 million taxpayers filed an amended return.

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