13th March
• Don’t set impossible quotas. Many managers automatically in- crease individual sales quotas ev- ery year so that salespeople have to book more business before they can earn incentive income. This is a common approach to keep- ing costs down, but it can have an adverse effect on sales because salespeople become discouraged by quotas which are impossible to reach and may leave the company for greener pastures. If selling costs are a real problem, it’s usually a bet- ter strategy to keep sales quotas re- alistic and offer lower commissions instead.
• Don’t limit income potential. Putting a ceiling on total sales commissions and bonuses tells salespeople that once they’ve reached the limit, there’s no reason for them to continue to work for additional sales.
• Don’t waste sales ability. Good salespeople need new challenges. Selling the same customers over an extended period may …
13th March
The IRS is always on the lookout for misclassification of workers as independent contractors rather than employees. If the workers are independent contractors, the company avoids paying employment taxes. But you must treat workers as employees rather than independent contractors if you exercise control over how, when, and where they perform their duties. Important: Treat all workers doing the same job in the same manner, as either employees or independent contractors. If you treat some as employees and others as independent contractors, the IRS can say they’re all employees and assess employment taxes.
13th March
When payroll cuts become necessary, many companies face a drop in employee morale that can seriously damage operations. Key employees frequently become less productive and are more receptive to other job opportunities.
Here are some proven strategies that can help you make overhead cuts with- out damaging employee moral.
• Tell your employees how the cuts will actually strengthen the business. For example, explain that the money saved will be invested in new equipment and more advertising to make the company stronger. Never announce that people must be terminated because expenses are too high.
• Make your cutbacks equitable. Don’t create unnecessary resentment by keeping excessive top management perks.
• Use incentives to encourage voluntary resignations. Consider options such as early retirement packages. Or help employees set up their own businesses with you as their first customer. Custodial workers, graphic designers, and others can often …
13th March
You can deduct actual mileage costs when you use your car for business purposes. as a general rule, you must keep a diary that includes the beginning and ending odometer readings foreach trip, as well as the trip’s purpose. Loophole: The diary entry is sufficient to prove your deduction if you are taking the IRS standard mileage rate for driving costs. You don’t need to collect receipts for gasoline, repairs, insurance and other automobile expenses unless you’re deducting your actual driving expenses rather than the IRS rate.
28th December
Inherited Property
If you sell inherited property at a loss, you can deduct the loss on your tax return.
Example: Your parents leave you a house with an original purchase price of $100,000, and a market value of $300,000. You inherit the house estate tax free, receive a “stepped-up” basis of $300,000, and hold it as an investment (you do not live in it). When you sell the house for, say, $260,000, you can deduct $40,000, subject to annual loss deduction limits. (As mentioned earlier capital losses are deductible dollar for dollar against capital gains and can offset up to $3,000 of ordinary income each year. Excess losses are carried forward to subsequent tax years.)
Added benefit: The loss is deductible even if it is created by brokerage commission payments.
28th December
Let your customers tell you what quality is.
Make sure that efforts to improve quality are driven by customer needs. You don’t improve quality unless you improve a product in a way that customers welcome and appreciate. Before you undertake a quality improvement effort, always ask yourself whether your customers will see it as a benefit to them.
Improve collections with a well-designed invoice.
A few key tips: Keep the invoice clean and simple and test it on someone who’s not familiar with the business. Make sure the form is titled with the word “invoice.” Use a special typeface for critical information such as the outstanding balance and the item purchased. Use action words such as “please pay” instead of “amount due.” The invoice should have an area where the customer’s purchase order number can be indicated. Including a self-addressed return envelope will …
28th December
It’s not unusual for closely-held corporations to operate through more than one division and for key employees to be on the payroll of both. If an employee’s combined salary from each corporation totals more than $110,100 excess Social Security taxes might be incurred.
There’s a way, however, to avoid this problem. Instead of each corporation issuing its own payroll check, designate one company in the group as a common paymaster, which can issue one check to the employee on behalf of all the companies involved. To do this, you must meet one of these three criteria:
The corporations involved must have at least 50% common ownership.
Half or more of the officers of one corporation must also be officers of another.
The corporations must share at least 30% of their employees.
The result? Let’s say an employee is drawing a $100,000 annual salary from each …
28th December
One of the biggest expenses most people will face during their lifetime is the cost of education, both for their children and for themselves. However, with a little creative planning, you can lower those education expenses with some help from the IRS.
Your children’s education
Buy a second home for your child to live in at college. Instead of paying housing expenses to a college or paying rent to a landlord, your child can live in your second home. If it is your only second residence, you can take several deductions.
You can deduct the interest on the mortgage for your second home as long as the total of the mortgages on your primary residence and your second residence is not more than $1,000,000. You must use the mortgage proceeds to buy, build, or improve the home.
You can deduct the interest on a home …
28th December
I t’s widely acknowledged that bank credit standards vary among banks and that, even with one bank, its credit policy will vary depending upon changing economic conditions. Coupled with the cost of borrowing, tougher credit standards mean you should make every effort to keep your borrowing requirements down. But when you do have to borrow, here are four tips to help you keep the cost of borrowing to a minimum.
1. Negotiate interest rates.
Not all banks will immediately quote their lowest rate. If you can’t get a somewhat better rate by asking a few questions, it might pay you to shop around – preferably with your bank’s biggest competitor.
2. Don’t borrow more than you need.
In most cases, the best strategy is to establish a line of credit for a given period of time. However, be sure to keep a close watch on …