Online Business Resources
The U.S. Small Business Administration (SBA) provides programs for businesses in the areas of technical assistance, training and counseling, financial as-sistance, assistance with government contracting, disas-ter assistance recovery, advocacy laws and regulations, civ-il rights compliance, and special interests, such as women, veterans, Native Americans, and young entrepreneurs. The website provides links to numerous information resources. View website.
The Service Corps of Retired Executives (SCORE) is dedicated to helping small businesses get off the ground, grow and achieve their goals. SCORE pro-vides volunteer mentors, free confidential business coun-seling, free business tools, and inexpensive or free business workshops. View website.
Websites
-
Internet Archive Wayback MachineInternet Archive Wayback Machine
-
Business/Industry StatisticsBusiness/Industry Statistics
-
U.S. Bureau of Labor StatisticsU.S. Bureau of Labor Statistics
-
International Franchise AssociationInternational Franchise Association
-
Small Business ResourcesSmall Business Resources
Business Plans
A business plan is a written document created to detail all aspects of a business on a comprehensive level. The process of writing a business plan requires significant research into each of the topics discussed. In some cases, the process of researching and writing a business plan will reveal poten-tial problems or lead the individual to choose not to go into business.
A business plan helps to define short- and long-term goals for the business and the methods for measuring the level of success in reaching them. Many banks and investors re-quire a written business plan before lending to or investing in a business. Also, by carefully examining each aspect of a business at its beginning, a business can be structured to create the maximum level of tax advantage for the owners.
Explore the website www.score.org for assistance with writing a business plan.
Start-Up Costs and Capitalization
Start-up costs
Start-up costs are incurred before the start of operations. Typical expenses include the costs of organi-zation, professional consulting, capital equipment acquisi-tion, and leasing a space.
Capital
Cash from the owners or investors is the most com-mon source of capital when beginning a new entity. Busi-ness loans are also common and can be secured through private banks or the Small Business Administration (SBA).
SBA loans
The SBA is a federal agency which guarantees certain loans and lines of credit made by banks to small businesses. Loans and lines are available for working capi-tal, asset purchase, and debt refinancing needs.
Use of Budgets
Annual budget
Development of an annual budget gener-ally takes place late in the year prior to the year of the bud-get and is broken down by month. Financial statements from recently completed periods are used to develop es-timates for the budget. Using the budget, costs can be re-duced, resources properly allocated, and new goals for the year can be set.
Internal Control
Control procedures
Internal control procedures are de-signed to safeguard the assets of a business. Without them, dishonest employees or owners can misappropriate assets in the form of cash, property, or supplies with little effort.
Separation of duties
Duties which, if conducted by the same individual, would allow for simple concealment of theft should be kept separate. The following are examples of duties that should be performed by different people.
-
Receiving, recording, and depositing customer payments.
-
Sourcing, approving, ordering, and receiving supplies or merchandise.
-
Inputting, approving for payment, and paying vendor bills and payroll.
-
Balancing and inputting transactions into bank accounts.
-
Counting cash and merchandise on hand at the beginning and end of the day.
Small businesses generally lack sufficient staff to properly separate all duties which should be separated. In this case, increased involvement of owners and management in daily operations of a business can assist in detecting misappro-priation of assets.
Mandatory vacations
Many schemes to steal from a busi-ness require constant, manual intervention by the person perpetrating the scheme. By having and enforcing a man-datory vacation policy, the time a perpetrator spends away from work may allow a scheme to be uncovered in the course of daily operations. Mandatory vacations should be a minimum of two weeks, during which time the vacation-ing person has no access to a business or its records.
Environment of detection
If an employee or owner be-lieves embezzlement will be discovered in the normal course of business, it is much less likely one would choose to embezzle. Creating an environment of detection is the process of alerting all employees and owners that systems are in place to detect embezzlement and theft, and that such acts will be prosecuted if perpetrated. This can be ac-complished through training, one-on-one conversations, and the establishment of a hotline employees and owners can use to report suspected theft.
Background checks
Background checks during the hiring process allow a business to determine whether a prospec-tive employee has any criminal history. Many background checks also include credit histories to uncover any finan-cial conditions which may make an employee more likely to steal from a business.
Reasons Businesses Fail
Failure rates
Data from the SBA indicates two in 10 new businesses fail within the first year, and only five in 10 busi-nesses survive five or more years.
Reasons for failure
The 10 most common reasons for fail-ure are listed below.
Lack of experience
This can apply to a lack of experience in a specific business or in running a business in general.
Insufficient capital
Sufficient capital must be in place to support a business until cash flow from operations is adequate.
Poor location
Location can be one of the most import-ant factors for business success or failure.
Poor inventory management
Keeping too much inven-tory uses too much capital unnecessarily, while having too little inventory can lead to shortages and customer dissatisfaction.
Over-investment in fixed assets
Investing too much too quickly in long-lived assets also uses much needed capi-tal in an unnecessary way.
Poor credit arrangements
Lacking access to sufficient, reasonably priced credit.
Personal use of business funds
Business funds should not be used for personal purposes.
Low sales
Poor knowledge of the market can result in lower-than-expected sales.
Competition
Not properly assessing competition can potentially leave a business in a position of needing to compete in a market where it cannot do so and survive.
Unexpected growth
Growth without planning for the consequences can lead a thriving business to failure.
Contact Us
There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves sum-marizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following:
-
Pension or IRA distributions.
-
Significant change in income or deductions.
-
Job change.
-
Marriage.
-
Attainment of age 59½ or 73.
-
Sale or purchase of a business.
-
Sale or purchase of a residence or other real estate.
-
Retirement.
-
Notice from IRS or other revenue department.
-
Divorce or separation.
-
Self-employment.
-
Charitable contributions of property in excess of $5,000.
*This post contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information.