5 IRS Audit Red Flags Business Owners Need to Know For 2012
Like most governmental agencies the IRS is looking for money and it appears that the amount of audits will be up again this year.
As you can imagine the service uses computer algorithms to search returns for items that may be out of the ordinary.
In this post we will examine some of the most common red flags that can cause a business owner to be picked for an audit.
1. Not Reporting Income: This is obvious, but needs to be addressed. At times business owners forget the IRS receives copies of all 1099s and W-2s you receive. So, not only do you want to report all income earned, make sure to correct any incorrect 1099’s that you may receive.
2. A Large Change in Income: The service keeps records of all of your previous tax data. This means a red flag will occur when there’s a big change from the previous year. This is usually a problem when a business has shown a large loss when in previous years it had large profits.
3. Higher Than Average Deductions: The algorithms compare your returns against other tax payers in your area and the type of business. It does look for large meal and entertainment deductions that are out of the ordinary. Make sure that you can back up your deductions with good documentation such as: the amount, the place, the people attending, the business purpose and the nature of the discussion or meeting.
4. Home Office Deductions: The deduction is legitimate as long as you follow the rules closely. When done correctly you are able to deduct a percentage of your rent/mortgage, property taxes, utilities, phone bills, insurance, and others. You can find information on how to properly take this deduction by going to http://www.irs.gov/newsroom/article/0,,id=163079,00.html
5. Large Charitable Contributions: This is one area where having receipts or letters from the charitable organization can save you a lot of pain. Make sure to file form 8283 for donations over $500.00
These are just some of the red flags to keep an eye out. Of course, you should always consult with a tax professional about these items and any other tax related information as your circumstance may be different.
When you consider growing your business, look to Bay Area Mastermind for strategies and techniques. Take a Test Drive and see what a professionally facilitated mastermind meeting is like. Call Bay Area Mastermind at 888-485-8122 for more information.
How To Price Your Services and Products in A Weak Economy
Last week J.C. Penny announced it would be changing the way that it will price its merchandise. No longer will the company be offering sale prices. Instead the retailer will be slashing all prices by 40% and keeping them there.
Previously, the company would hold hundreds of sales every year, and their customers began to wait for the sales before buying. The sagging numbers suggested that perhaps customers were not coming back at all.
The Challenge
In this weak economy consumers have shown they are willing to spend, but only if they find value. So, now J.C. Penny will have to get their customers to believe the prices offered everyday do provide good value without the sale tag.
What Does Behavioral Economics Have To Say About This Idea?
In this blog we have often looked at the work of Dan Ariely, behavioral economists and author of Predictably Irrational to gain some insights into these situations.
People Have trouble judging value
Behavioral economists have demonstrated that people have trouble judging the value of any given item. Therefore, consumers use “framing” as a reference point in determining if something has value or not.
We have all witnessed this behavior ourselves. When we see a washer that was $800 marked down to $400, it appears to be a great deal. However, if that same washer was priced at $400 initially, we would be less compelled to buy it.
To test this theory out, Dan Ariely and fellow behavioral economists asked MBA students to write down the last two digits of their social security numbers. Then the students were asked to bid on a number of items, including a bottle of wine. Students with the highest numbers bid 200 to 350 percent more than students with the lowest numbers.
The Lesson for Your Business
Our customers have difficulty establishing value on their own. They need a reference point in order to determine value. Without a reference point customers may be waiting for a “sale” to help them open their wallets and purses.
Many businesses have difficulty with pricing their services and products. There are a host of things that go into determining the best price. In the case of J.C. Penny they are combining this price reduction along with the introduction of new merchandise, new logo, and a new celebrity spokesperson (Ellen DeGeneres).
In their case management is combining various variables at the same time. This may make it difficult to fully understand which treatment had the biggest effect. However, given the sagging numbers this may be the only approach they can take.
Pricing issues are just one of the many items members of Bay Area Mastermind have the opportunity to discuss and develop at our meetings. Every member is provided with the latest research and strategies to grow the profit in their business in any economy. Why not take a test drive and see for yourself how your business can thrive from a professionally facilitated Mastermind Group.
Moving forward in Tough Times
By Robert Estupinian
The last couple of weeks has been full of a lot of disheartening news. At the top of the list has been economic worries and strife around the world.
It is easy to lose sight of what we are all trying to accomplish in our lives whether it be financial, family, health, or spiritual.
Yet, despite it all there is a strength inside all of us that can never be extinguished unless we allow it.
Here is a quick video that demonstrates true courage:
Finally, let me leave you with a wonderful perspective:
In dwelling, live close to the ground. In thinking, keep to the simple. In conflict, be fair and generous. In governing, don’t try to control. In work, do what you enjoy. In family life, be completely present.”
–Lao Tzu,
Chinese philosopher
Now more than ever it is important for every business owner to surround themselves with like minded positive people. A mastermind is the best way for most business owners to get the support and inspiration to build their business and stay on track. If you are not a part of a mastermind consider taking a look at Bay Area Mastermind and take you and your business to that next level.
A Quick View of What Is New With Facebook
By Robert Estupinian
In our last post we began to talk about the importance of social media for the business owner. According to some reports, Facebook currently has more than 750 million users. 
Half of these users are on Facebook at least several times a day. This is one reason that 75% of advertisers are planning to increase their media buying on this platform this year.
Given these trends business owners should consider looking into harnessing the power of Facebook for their business. So, as fast as Facebook is growing they are also making many changes to their platform. Here is a quick look at what is going on with the recent changes to Facebook.
In the previous months Facebook has:
- Removed the Tabs from Pages
- Pages have been redesigned to be cleaner and less cluttered
- Users now have more control over their news feeds
- You can now get an email when anyone comments on your pages
- The static FBML has now been phased out and Ifrrame apps are in
- Businesses can now offer deal to people checking in on a Mobil devise
- You can now make Skype calls from Facebook
Although all this exciting , not all that Facebook is doing is going to be a benefit your business. For example, now users can Masquerade as a page. What this means is, if a user can masquerade as a page, one of your competitors can leave a comment on your pages promoting their page to your users. So now business owners will need to keep an eye out for this possible trespassing.
From what we have covered here it is easy to see Facebook is doing everything it can to become a one stop resource for everyone’s communication needs.
So, this means small business owners who have a Facebook presence may want to review their strategies and layout to maximize the new power of Facebook.
At Bay Area Mastermind we are committed to keeping our members up to speed with any changes that occur in order to help them maximize their profits and avoid any pitfalls. Bay Area Mastermind not only informs their members, we show them how to make the necessary changes.
Check back here often as we will share new insights from both online and offline sources to give you the edge in business.
Social Media for Small Businesses: 6 Effective Strategies
By Robert Estupinian
Social Media has quickly become a very opportunistic way to market a business. Facebook has exploded into the second most popular website in the world with over 750 million users and half of
them log on to the site every single day. Twitter is also in the top 15 on most days along with Linked In.
Here are six effective strategies to employ to make sure that you are using the social media for small business effectively.
- Be Active.
- Connect with Customers.
- Aggregate.
- Provide Compelling Content.
- Link.
- Don’t be all Sales.
To begin with you must be active in social media. This means signing your company up for an account with Facebook, Twitter, Linked In and any other sites that you can think of. It costs your company absolutely nothing to establish a presence on the web.
Once you have established your presence, the way to use social media for small business is to connect with customers. Compile your email list and send all of your customers an invitation to start following your company on Facebook and Twitter. Include the links to your social media sites in the email and let them know that when they add you to their friends list they will qualify for online offers that will only be available there.
You may think it will be too time consuming to post each day on all of the different social media sites and that is why our third effective way to use social media for small business is to aggregate. The easiest way to do this is to get a software program or phone app that allows you to post the same message to all of the different sites at once.
The most important thing to remember when using social media to promote your small business is to provide compelling content. It is absolutely essential that your Facebook posts and Tweets are about something that is of interest to your customers. For example, if you are a heating and air conditioning company, provide tips on how to keep your home cool when the forecast calls for a really hot day.
Another way to provide interesting material to your customers, is to link to material that is of interest to you. It doesn’t necessarily have to be business related but be careful to stay away from controversial items like politics because you do not want to offend potential customers. One excellent way to link is through association websites related to your field of business.
Be sure to check back here often as we will be featuring specific social media techniques and strategies you can use for your business.
Remember too, as you use social media for small business don’t be all sales. Include some personal information as well, like something your child accomplished at school or the latest on the little league team you sponsor. Show your are part of the community and try to establish a relationship with your customers that goes beyond business. Long term relationships will lead to repeat customers which will mean increased sales.
At Bay Area Mastermind we make sure that our members are aware of all the changes happening in and around the world of social media. We want our members to know what works and what is a waste of time. This information allows them to maximize their resources and time letting them focus on growing their business. If you would like more information on all the benefits available to our members, check out a test drive today or call or office at 888-425-8122.