Cutting Costs

How many times have you heard a business owner comment about having to cut back on expenses because of the current state of the economy?  I hear this all too often not only from business owners, but from everyone.  When you need to start cutting, where do you begin?

Take a look at your expenses over the last 90 days, last 6 months and the last year.  Before you can start cutting your expenses you have to know where you spend your money!  Most likely, you will find that you have already cut in the most obvious places, your discretionary spending.  If you are like most, you have started eating out less, or at minimum you hit the less expensive drive thru as opposed to a more expensive dine in restaurant.  You have probably started looking at sales ads in the Sunday paper, maybe even started clipping coupons. 

Take a look at some not so obvious areas.  My husband and I have been searching for the best wireless phone plan.  Our plan contains 5 cells phones.  We have used the optimized plan tool to ensure our plan is meeting our needs.  The contracts are up on 2 lines in December, 1 in January and the other 2 in June and July of next year.  We are estimating the cost of breaking the contract with our current provider vs. savings with a new provider.  Use the 6 month rule of thumb.  If you will begin realize a savings within 6 months, it is worth switching.  You can apply this to your home phone, satellite company, cable company and anyone that you contract with for services. 

My husband researched an alternative phone company and we found we could add a dedicated fax line and a separate business line with this new company for $10.00 per month LESS that what we pay for just our home line.  Now we have 3 lines at our house.  No more picking up and hearing an incoming fax.  No more listening to the annoying fax tone when no one answers the home line.  And, who doesn't want an extra $120.00 per year in their pocket? 

Corporate Options, Inc. provides budget set up tools, profit and loss review and other related services.  Schedule a free one hour consultation today.

Questions for Your Accountant

What?  Tax time already?  Yup!  This is the pre-tax season which is almost more important for busines owners than tax season (I did say almost!).  Tax Season is the Accountants as Christmas is to Santa.  Accountants have the time to spend with their clients NOW, not January - April. 

So, do you have your appointment?  Do you have your "list"?  What list, you ask?  Here's some suggestions to help make your "Questions for my Accountant" list.

1) What are my projected taxes for this year?  For the next 2 years?
2) What strategies are other companies taking to reduce their tax liability and/or expenses? (ie: Health Care, Insurance, HSA, Asset Purchase)  Are there any industry specific strategies (ie: manufacturing, retail, etc.)?
3) I'm overstocked due to slow sales.  Can I deduct excess inventory?
4) I purchased computers and other equipment this year.  If I am projected to report a loss, do I have to deduct the depreciation this year?
5) Should I put my children on the payroll?  Do I have to pay taxes on them?
6) Do I have to pay myself on a payroll?  How much should I pay myself?
7) I loaned my company money this year.  How do I record the loan and repayment?
8) A vendor has offered a discount for early payment.  Is this always adventageous?
9) My payment terms are net 30.  Some customers are taking over 60 days to pay.  Can I charge late fees or interest? 
10) What are your fees for tax preparation this year?

Make your list.  Check it twice. 

If your company has questions, we have answers. 

Corporate Options, Inc.
http://www.corporateoptionsinc.com/
(847)344-2262

Subcontractor or Employee

Subcontractor or Employee, that is the question.  Do you have to take on a payroll and tax liabilities or can you just issue a check and a 1099-Misc. form at the end of the year?  Does filling out a W-9 make someone a subcontractor? 

There are consequences for misclassifying an employee as a subcontractor. You may be held liable for employment taxes for the employee as well as late fees, penalties and interest.  Subcontractor status has become a large audit trigger by tax agencies.

So, what's the answer? 

The IRS has this to say:
Determine the degree of control and independence of the employer/ employee relationship.  1) Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?  2) Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)  3) Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

The key is to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.


What special circumstances does your company have?  Are you an employee that is being misclassified?  We want to hear from you.  For help in determining your company's specific situation, call Corporate Options at (847)344-2262.

The Highs and Lows of Owning Your Own Business

Congratulations on your new business!  No more boss telling you what to do, when to do it, how to do it... Oh, and no more bi-weekly paycheck waiting for you on Friday morning with last week's 40 hour vacation time.  Did someone forget to mention that?  Did they also forget to mention that when you are self employed your 40 hour work week turns into a continuous non-stop work week?  Kind of overwhelming, isn't it?  How do you balance work and personal?  Do you go to your son's baseball game or do you go to the Tuesday night Network Meeting?  Do you go to dinner with your spouse on your date night or do you stay late in your office invoicing so you have cash flow next week? 

The first step to finding balance is knowing what you can and can not do.  The second step is knowing your limits (how much can you take on?).  Finding a part time assistant is not always economically possible.  The reverse is also true; you can't always afford NOT to take on a part time assistant.  There is a constant feeling of crisis when your overwhelming business obligations pile up and demand more time than there are hours in a day.  How will you create a personal life while pursuing a business life?

Explore the benefits of outsource your bookkeeping and payroll to Corporate Options, Inc.