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Bob Meyer

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November 29, 2011

Written by Bob Meyer, Editor of BarterNews

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The Holiday Season Is Here ... Already!

Another year has quickly passed. During the coming holidays your use of trade dollars will be especially helpful. That�s because using your exchange�s services can be a major cash saver at this time of year.

Here are a few suggestions:

         Looking to put together a company party this year? Call your trade exchange broker ASAP.

         Then your next call may be to one of their member printers to get your holiday invitations done.

         Maybe you�ll want special banners for the office party.

         Remember to ask about available entertainment � musicians or a disk jockey that make every event a little more fun.

         Your catering needs, as well as balloons, flowers, a photographer and a limo for the VIPs you invite, are usually obtainable.

         If you are looking to provide personal gifts ask about jewelry, a week-end getaway, a bed and breakfast, or health club membership for next year.

         And don�t forget gift certificates that cover the gamut from restaurants to selected merchandise.

         What about your own special needs around this hectic time of the year? Set some time aside to get a tan, or make a trip to a beauty salon for a hair style and manicure.

         Check with your trade broker before you make a single cash purchase this holiday season, as inventories at your trade exchange are continually being increased.

It�s time to organize your spending list and incorporate barter purchases at every opportunity.

Is Your Trade Exchange Missing Out On Valuable New Business?

If your barter company�s listing on isn�t current, you are definitely missing out on new business. The web site receives heavy traffic � with over 150,000 page-views every month. Entrepreneurs and corporate executives check the thousands of articles, the weekly �Tuesday Report,� and the �Contacts Section� of our site. They use the latter to find barter companies with which to do business.

Is your barter company�s listing up-to-date?

To keep your listing current is very easy. See the links below to (A) update any changes to your company�s listing, such as new location, phone number, web site or other information, and (B) if your company has not been listed.

Here�s how to get on board:

To make changes to your listing click here.

For new listings click here.

The Winning Game Plan For Your Home-Based Business

By Greg Crabtree, CPA

Whether your home-based business is by choice or necessity, you need to focus on three keys to have a winning game plan:

         Define what success looks like

         Choose simplicity for organization structure

         Count the cost by paying vendors and taxes before you take money out of the business

As the owner, you get to make the initial decisions on how things will work. However, you have to understand the IRS defines tax implications and �business physics� will define your economic outcome so choose your course wisely!

Passion over profit � This is the entrepreneur that loves the idea of a product or service they have personally experienced, and want to share it with all the people they know. It is great to have passion, but you will need profits to make the business sustainable unless you like working for free and have other sources of funds to keep plowing into the business.

The IRS may have something to say about whether losses will be deductible if you fail to meet the general rule of profitability (two-out-of-five years). It is expensive to argue your point with the IRS if you do not meet the guidelines, so your argument had better be valid and worth it!

Profit to support family � With current unemployment rates, there are record numbers of home businesses being formed. While it does provide a great opportunity to be your own boss, you still need to treat it like any business startup and follow sound business principles. The early stage will be to make a profit to replace your wages.

The profits you hope to live on will sometimes be in conflict with other expenses that the business needs to pay. This will add to the complexity of managing cash flows as you and the business compete for use of the same dollar. As you gain stability and success, you can make your market wage plus make a profit on top of that.

Tax write-off business � This is the business I recommend staying away from. You probably heard someone on the radio telling you how you could deduct these expenses to not pay taxes. Repeat after me, �to spend a dollar to save 15- to 35-cents in tax is dumb!� Deduct the legitimate business expenses you spend to produce your income, but you will never build wealth (without cheating) unless you have taxable income AND spend less than your after tax income to live on. I know this is not what you want to hear, but this is how my wealthy clients did it and they can sleep well at night not fearing an audit.

The following are some guidelines for home-based businesses to use when you are consulting with your tax advisor. There are many other issues to consider in choosing your entity, but these are usually at the top of our list.

Sole proprietorship � This is by far the simplest form of doing business. The activity is reported on your personal tax return and does not require a separate tax return to be filed. Since �you� are the business, it does not afford you legal liability protection that a corporation or limited liability company (LLC) does, but many of those liability fears can either be insured against or are so remote that it�s not worth the additional cost.

Limited liability company � Should you need some liability protection or you have more than one owner, this should be your next option to consider. Most home businesses do not have employees or may use contractors for spot help. An LLC taxes you just like a sole proprietorship by having you pay income tax and self-employment tax on your profits from the business (whether you take the money out or not).

As long as your profits are less than a market-based wage for you, it helps you not have to deal with the cost of payroll tax returns. The downside is many LLC owners and sole proprietors build up taxes-due before they realize it. Since nothing is being withheld from draws they take out to live on, they often have a bad surprise come tax day. The legal documents for an LLC are simple if you have one owner, but they get much more complex once you add an owner that is not a spouse.

S-corporation � The main complexity with an S-corporation is the requirement by the IRS for the owners who work in the business to make a market based wage. The IRS does not make you take a wage if there are no profits, but they do not want you to avoid payroll taxes by taking low to no wages and take your profits out as distributions.

The data the IRS needs to find if you are doing this is all in the S-corporation tax return, the only reason they have not found you yet is their resources are limited to how many companies they can crack down on each year. Rest assured, they are adding resources and more will be paying back taxes and penalties for doing this wrong (including the tax preparers who told you to do it!).

Most home-based business owners hate accounting, but this is especially the kind of business wherein you need to keep your hand on the cash. The smaller you are, the less likely you have any room in your costs to pay an outside bookkeeper. QuickBooks has made many entrepreneurs functional (i.e. �good enough�) in accounting. Take a class in QuickBooks and take charge of your numbers to avoid surprises. As you get bigger, then you can transition the role to a part-time outside bookkeeper when it makes financial sense.

You need to know the 4-forces of cash flow to stay out of trouble managing your cash. If you are not profitable, cash flow is just a calculation of days until death. Fix profitability first, then deal with the 4-forces:

Taxes � Set aside your tax liability as you go. If you are taking draws as a sole proprietor or an LLC partner, you are setting aside self-employment taxes each time you take a draw. Once a quarter, you are setting aside income taxes and paying in based on IRS rules.

Get out of debt � If you borrowed money to start your business, pay it off as soon as you can.

Core capital target � You need to have at least two-months of operating expenses in cash with nothing in debt to be a fully capitalized business.

Profit distribution � Once you have paid my taxes, paid off debt and built your core capital target, you can now take a profit distribution as the reward of your business success.

These principles apply to all businesses, big or small and they will help you run a successful business!

Greg Crabtree has worked in the financial industry for more than 30 years and founded Crabtree, Rowe & Berger, a CPA firm dedicated to helping entrepreneurs build the economic engine of their business. He is an author and leads the business consulting team, helping clients align their financial goals with their profit model and their core business values.

For more information click here.  


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IRS Zeros-In With New Approach

Did you know that for the past decade the Internal Revenue Service has been sorting business tax returns by industry group instead of by type of return? That means that instead of putting all �sole proprietorships� into one pile � be they deli owners or chiropractors or writers � just because they all file a Schedule C with their returns, the agency now separates by line of work.

Enforcement agents then tackle each category differently, armed with new, detailed enforcement guidelines specific to each industry. The agency now defines more than 100 business categories, with guidelines for each one. This approach, the Market Segment Specialization Program, is part of agency efforts to raise taxpayer compliance to a higher percentage.

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