Seven Simple Ideas to Help Your Small Business

If you are like millions of taxpayers trying to make a living running a small business, you know it is tough out there. Here are seven ideas to help your business survive and thrive.

Icon Understand your cash flow. One of the biggest causes of business failure is lack of understanding cash flow. At the end of the day, you need enough cash to pay your vendors and your employees. If you run a seasonal business you understand this challenge. The high season sales harvest needs to be ample enough to support you during the slow non-seasonal periods.

Recommendation: Create a 12-month rolling forecast of revenue and expenses to help understand your cash needs.
Icon Know your pressure points. When looking at your business, there are a few big items that drive your business success. Do you know the top four drivers of your financial success or failure? By staying focused on the key drivers of your business success will be easier to come by.

Recommendation: Look at last year’s tax return and identify the key financial drivers of your business. Do the same thing with your day-to-day operations and staffing.
Icon Inventory matters. If your business sells physical product, you need a good inventory management system. This “system” does not have to be complex, it just needs to help you keep control of your inventory. Cash turned into inventory that becomes stuck as inventory can create a major cash flow problem.

Recommendation: Develop an inventory system with periodic counts to ensure you do not have shrink (theft) issues and that can help identify when you need to take action to liquidate old inventory.
Icon Know your customers. Who are your current customers? Are there enough of them? Where can you get more of them? How loyal are they? Are they happy? A few, large customers can drive a business or create tremendous risk should they go to a competitor.

Recommendation: Know who your target audience is and then cater your business toward them and what they are looking for in your offerings.
Icon What is your point of difference? Once you know who your customer is (your target audience), understand why they buy your product or service. What makes you different from others selling a similar item?

Recommendation: If you don’t know what makes your business better than others, ask your key customers. They will tell you. Then take advantage of this information to generate new customers.
Icon Happy with your support team? Successful small business owners know they cannot do it all themselves. Do you have a good group of support professionals helping you? You will need accounting, tax, legal, insurance, and employment help along with your traditional suppliers.

Recommendation: Conduct an annual review of your resources, be prepared to review your suppliers and make improvements where necessary.

While libraries are filled with small business advisory books, sometimes focusing on a few basic ideas can help improve your business’ outlook. Please call if you wish to discuss your situation.

Plenty to Gain with Tax Planning

Consider conducting a tax planning exercise now to see if you can take actions to minimize your taxes. Here are some ideas to get you started.

Assess your income. Begin by determining how your income this year will compare to last year’s income. Then apply any tax implications this income change may cause. If your income is rising, you may be moving into the next higher tax bracket. Your income could also trigger a phase-out that will prevent you from taking advantage of a deduction or tax credit formerly available to you.

Tax Planning

Changes in deductions. Examine if there will be changes in your itemized deductions this year. Typically this happens when there is a change in your life. Here are some examples;

Arrow Purchasing or selling a new home
Arrow Taking out a new mortgage
Arrow Getting married or divorced
Arrow Incurring large medical expenses
Arrow Changing jobs
Arrow Having a new baby

What tax changes impact you. Over the past few years a number of items in the tax code keep expiring, only to be extended once again late in the year. Review your past income tax return to ensure some of the expired provisions will not surprise you this year. While there is still time for Congress to make changes, you will want to plan accordingly.

Manage your retirement. One of the best ways to reduce your taxable income is to use tax beneficial retirement programs. Now is a good time to review your retirement account funding. Are you taking advantage of your employer’s retirement plans? Are you saving money to invest in your future through the various retirement savings options?

Look into credits. There are a variety of tax credits available to most taxpayers. Spend some time reviewing the most common to ensure your tax plan takes advantage of them. Here are some worth reviewing;

Arrow Child Tax Credit
Arrow Earned Income Tax Credit
Arrow Premium Health Credit
Arrow Adoption Credit
Arrow Elderly and Disabled Credit
Arrow Educational Credits (Lifetime Learning and American Opportunity Credit)

No surprises please. Conducting a tax planning review now allows you time to take advantage of tax code provisions to reduce your tax obligation. Remember some tax saving ideas may require funding on your part. It is best to identify them now so you can save cash to take advantage of them prior to the end of the year.

ACA Strikes Again

Are you prepared?

The Affordable Care Act (ACA) continues to evolve as the IRS begins to address challenges faced during the past tax season. A recent IRS announcement warns taxpayers who use the Premium Tax Credit to file their 2014 tax return immediately. Failing to do so may cause the IRS to deny using the Premium Care credit during 2016. Here is what you need to know.

Who? Anyone who uses the Marketplace to purchase their health insurance and receives the Premium Tax Credit. The IRS announcement applies to;

Affordable Care Act Premium Tax Credit

Advanced Premium Tax Credit Users

This IRS warning impacts anyone who has their Premium Tax Credit paid directly to their health insurance provider to help lower their monthly health insurance premium payments. And…

No 2014 Tax Return on File

notice specifically impacts those who use the tax credit and have not filed a 2014 tax return.

What happens. If you are impacted by this announcement you will no longer be eligible to receive pre-payment of the Premium Tax Credit in 2016. You will need to come up with the money to pay for your entire health insurance premium each month.

Action to take. If you do not want this to impact you, file your 2014 tax return as soon as possible. File now even if you filed a tax extension giving you until October 15, 2015 to file your tax return.

To learn more please review IRS Health Care Announcement: IRS 2015-40