Tuesday, December 18, 2012

Managing your web presence: "About Us"

Except for your home page, About Us is probably the most popular page on your website. Potential customers will come here to find out if they want to do business with you. With that in mind, it is important to put your best efforts into writing this section. Sound obvious? If you think so, look at some of your competitors’ efforts. Most likely, their websites will feature a mix of industry jargon, clichés and claims of superiority – hardly compelling invitations to prospective clients. If you want to do outshine your competition, here are a few tips:

Here's what to DO:
  • Address the four Ws – who, what, where and why. Tell them:
    • who the business owner and key team members are;
    • what your business is about and what services/products you offer;
    • where the business is located and all contact information;
    • why the visitor to your website needs your services/products.
  • Keep it short, to the point and relevant. You can provide links to detailed sales/product information, company bios and press releases, but the About Us section has to be an easy, fast read.
  • Focus on customers’ needs, and how your business addresses those needs rather than proclaiming your own prowess. Let your readers know upfront what you can do for them. It might help to consider what questions you get from prospective customers and write your text with this in mind.
  • Go easy on the superlatives – excellent, cutting edge, well-respected, etc. This type of praise is best bestowed by a third party, perhaps in a testimonial or in an article linked to the webpage.
  • Be honest about who you are. If you’re a start-up, say so. Explain why this brings advantages to your customers (e.g. more personal attention from more experienced staffers, lower overheads, etc.)
  • Let visitors know who is behind the business. Let people know the story behind the company’s launch, and don’t be afraid to allow some personality to shine through. Use real photos of real people. Stock photos are easily identified and serve no purpose. Real shots of people working are much more effective. If these photos – with brief bios – are too unwieldy for the About Us page, provide a link to a biographies page.
And here's the the DONT'S:
  • Use jargon and clichés. Simple, plain language always wins the day. Be selective about including industry awards and business honors and certifications. If the accolade means something only within your particular business or industry, a prospective client won’t understand its significance.
  • Overwhelm readers with too much text. Have someone outside your business give you an honest assessment of your draft copy – its length, relevance and readability.
  • Let your About Us page get stale. Make someone responsible for keeping it current. If you add new expertise or product lines, open new locations or change contact information, make changes to the About Us page immediately.
Since this is the place where you win over or turn off prospective clients, make sure your About Us page showcases the strengths and character of your company.

Thursday, December 13, 2012

ObamaCare: A short and simple summary

Now that President Obama has been re-elected, the debate over repealing his Obamacare legislation has ended and plans are under way to meet the law’s mandates by their respective dates. The following is a recap of the Patient Protection and Affordable Care Act of 2010 as it pertains to general mandates and employer coverage, cost and credits.

Coverage Mandates

Health care plans may no longer deny coverage due to pre-existing conditions or impose annual or lifetime limits on coverage. In addition, plans must cover basic preventive screenings such as checkups, mammograms and colonoscopies; coverage may not be cancelled after a member gets sick; and adult children may remain on their parent’s plan until age 26 (even if married or living away from home). Starting in 2014, the new rules require that all Americans purchase health insurance or pay a penalty tax.
Employer Coverage

Also starting in 2014, small businesses with less than 100 employees (96 percent of U.S. firms) will be able to take advantage of volume buying via insurance exchanges. According to data on healthcare.gov, small businesses currently pay an average of 18 percent more than large business for the same plan. But by creating a pool of individuals and small business employees, these exchanges will be able to offer more competitive pricing for plans that meet certain benefits and cost standards. In fact, members of Congress will receive their health care insurance through exchanges.
Employers with more than 50 full-time employees (averaging 30 hours per week) will be required to pay a shared responsibility fee ($2,000 each for all but 30 employees) if they do not provide affordable coverage relative to an employee’s household income.

Health insurers will be allowed to adjust rates based only on family members, age, tobacco use and employer location, which should help eliminate high premium increases from year to year.

A recent study by the Urban Institute asserts that had the Affordable Care Act requirements been in effect in 2012, overall they would have had a negligible impact on total employer-sponsored coverage and costs. In summary:
  • Small businesses (less than 50 workers) would be exempt from penalties yet eligible for premium tax credits. Likewise, employers with 100 or fewer workers would also be eligible for credits. If these employer groups had offered coverage, the average cost per insured would have been reduced by 7.3 percent and spending by 1.4 percent due to tax credits and competitive insurance exchanges.
  • Mid-size businesses (101 to 1,000 employees) would experience the highest cost, since many of these companies do not currently offer coverage. Including penalties for an estimated 5 percent of companies that would continue not to offer health insurance, new enrollment for coverage would increase spending by about 9.5 percent.
  • The cost for large employers (1,000 or more employees) would be impacted only by higher employee enrollment rates, which would increase total spending by about 4.3 percent.

Through 2013, business owners that provide health insurance for up to 25 employees who earn an average annual wage of less than $50,000 may qualify for a small business tax credit of up to 35 percent (up to 25 percent for nonprofits) to offset the cost of providing that insurance. The credit will increase to 50 percent and 35 percent respectively, effective January 1, 2014. Employers must contribute at least 50 percent of premiums in order to be eligible for the credit, which will also apply to dental and vision coverage. The maximum credit will be available to employers with 10 or fewer full-time equivalent employees with average annual wages of less than $25,000.

Clearly, the new health care laws are complex. The benefits or disadvantages will vary on a case-by-case basis for individuals and especially small to medium-sized businesses. Ultimately the goal is to provide health insurance for all. In turn, this coverage will hopefully eliminate the rising costs of providing medical care to the 50 million Americans (nearly one in six people) who are uninsured today.

Tuesday, December 11, 2012

Entrepreneurs get entrepreneurial with funding sources

The traditional path to fund a small business startup is to use personal savings and so-called sweat equity, followed by seed money from personal contacts, bank and Small Business Administration loans, and ultimately angel investors and venture capitalists. But with today’s credit crunch, the traditional path for financing is becoming more and more difficult to follow. Perhaps in response to these difficulties, other funding methods have become increasingly available to entrepreneurs, including microlending, crowdfunding and alternative lending companies. These unconventional financing vehicles do have risks, but some of their impressive success stories indicate that they can be a worthwhile avenue to explore.

Microlenders are organizations that make small loans at higher interest rates than banks to entrepreneurs who are unable to obtain financing from traditional lenders. They tend to take on greater risk, lending to people who lack collateral or have little prior experience. Most microlending takes place in developing nations, but many nonprofit microlending networks have now established themselves in the United States. In addition to financing, many microlenders such as the Accion U.S. Network promote mentoring relationships that help their clients connect with experts in the field and with other like-minded business professionals. Microlenders are especially valuable for minority and women-owned businesses that are unable to obtain traditional financing.

Crowdfunding refers to Internet-based businesses that provide online funding platforms to connect entrepreneurs with potential lenders. The entrepreneur puts his or her idea on the website and sets funding goals and deadlines. Visitors to the website can evaluate the idea and make a contribution if they like it. In exchange for the promotion, the websites keep a percentage of the funds raised. The goal for the entrepreneur is to get small contributions from a large number of individuals. Because banks typically do not provide loans for unproven projects, crowdfunding sites such as Kickstarter have proven to be especially valuable at identifying underserved markets. However, the public nature of the funding platform can end up putting excessive pressure on the entrepreneurs to meet their goals. Although some online forums can be very supportive, anonymous website comments can be vicious. Entrepreneurs also take a risk by sharing their ideas and products with the public before they have taken hold in the market. It is vital that would-be entrepreneurs perform a thorough risk assessment before trying crowdfunding; and if they receive funding, they must carefully manage the expectations of their investors.

Finally, alternative lending companies such as On Deck have proliferated on the Internet in recent years. These organizations offer alternatives to bank loans by looking beyond the owners’ personal credit record to the business’ cash flow and the ability to make timely bill payments. They offer extremely fast decisions on whether to fund the enterprise and equally rapid access to the capital once a loan is approved. Alternative lending companies typically lend relatively small amounts for short time periods, often no more than 18 months, but can have competitive lending rates. Repayment of the loan is usually not a typical monthly payment, however. Some alternative lending companies make daily withdrawals from the business’ bank account or the client sells a portion of future credit card receivables to the lending company to pay back the loan. For this reason, only businesses with strong cash flows are encouraged to explore this lending avenue.

When starting or continuing a business, everything comes down to risk assessment, both for the business itself and for its financing partners. If the typical funding options are not available or are exhausted, there are alternatives. Seasoned professionals are also available to help small business owners assess their risks and weigh the pros and cons of various finding avenues.

Thursday, December 6, 2012

Frivolous Tax Arguments

Ever heard any of the following?
  • Only employees of the federal government are subject to income tax.
  • Wages and tips as compensation for services are not taxable.
  • The filing of a tax return is voluntary.
  • Only foreign-source income is taxable.
  • Federal Reserve Notes are not income.
These are some of the many arguments used by tax protesters to justify their failure to file or pay federal income taxes. The theories are varied and often creative, but the results are not: the failure to properly file and pay federal income tax will result in civil penalties, criminal convictions and jail time.

Actor Wesley Snipes did not file a tax return from 1999 to 2001 despite earning more than $38 million in those years, according to prosecutors. He tried to rely on the so-called “861 argument” from the tax denier movement, which holds that wages are not listed as taxable in section 861 of the Internal Revenue Code. However, the argument has never succeeded in the courts. He was convicted of three misdemeanor willful failure to file charges in 2010 and celebrated his 50th birthday in prison in Pennsylvania last summer.

Snipes is one of many who have fallen victim to the claims of promoters of such schemes. The IRS can bring criminal charges against promoters who encourage people to adopt frivolous tax positions, including tax lawyers, accountants and organizers of tax protests, but taxpayers who adopt these frivolous tax positions often face harsher penalties than those who promote them. In Snipes’ case, however, the mastermind behind the scheme was sentenced to 10 years.

Snipes allegedly relied on several of the tax denier arguments. Prosecutors claimed that he filed claims for tax refunds of more than $11 million for 1996 and 1997 and sent three worthless “bills of exchange” in the amount $14 million as tax payments. After being indicted, Snipes sent a letter in which he claimed he was a non-resident alien of the United States and therefore not subject to its tax laws.

With the proliferation of the Internet and YouTube, more and more people are exposed to tax deniers’ claims and many fall under their tantalizing spell. But relying on the advice of others is not a defense, as Snipes learned the hard way.

The penalties the IRS has at its disposal are numerous. On the civil side, they start with an accuracy-related penalty (20 percent of an underpayment) and become progressively more serious. The civil fraud penalty is 75 percent of an underpayment. There is an erroneous claim for refund penalty of 20 percent of the excessive amount. Late-filed returns with frivolous positions are subject to the fraudulent failure to file a timely return penalty (triple the amount of the standard failure to file) and there is a $5,000 penalty for other frivolous submissions to the IRS. In addition, the Tax Court can impose a $25,000 penalty if a taxpayer institutes a proceeding primarily as a delay tactic.

The IRS can also instigate criminal proceedings. It is a felony to attempt to evade a tax or to willfully sign a return or other document that the taxpayer does not believe to be correct. Penalties include six-figure fines and three to five years imprisonment.

Nobody likes to pay their income tax, but there are plenty of quality tax professionals who can legally help to minimize your tax burden. Don’t end up like Wesley Snipes. If you are presented with a tax position that sounds too good to be true, it probably is. 

Tuesday, December 4, 2012

Yes, it is December: Year-end Tax Tips

With so many tax laws up in the air, year-end tax planning is more challenging than ever this year. Changes to the tax code are on the horizon, and almost all taxpayers will be affected if the Bush-era tax deductions and credits are allowed to expire. But let’s not forget that many of the tax changes proposed by President Obama will benefit the majority of taxpayers.
Amid the uncertainty, we can be sure of a couple of things:
  • The fiscal cliff, the national debt ceiling and tax issues are all intertwined. Watching developments in the news will help you and your tax advisor develop a tax strategy for the next few months.
  • Changes are coming. It is essential that taxpayers sit down with their professional tax advisors to determine what anticipatory planning and actions to take before this year ends. Getting ready now means you will be prepared when tax policy changes are announced. Furthermore, you will be in a position to take full advantage of new policies.
  • Nothing is certain (at the time this is being written). Some Bush-era tax breaks might be extended; however, estate and gift tax rates are expected to be higher, and an additional 27 million taxpayers could get caught up in the Alternative Minimum Tax loophole if the patch is not extended. Other credits considered to be endangered include deductions for state and local sales taxes, mortgage insurance premiums, college tuition and fees, as well as changes to the student loan interest deduction and the expiration of the American Opportunity Credit for Students.
Here are some actions to ponder before year’s end. All these ideas should be discussed with your professional tax advisor before you take action.
  • Consider transferring a business or cashing out certain investment holdings to record as much future income as possible on this year’s balance sheet. Wealthy investors are planning payouts timed to take advantage of current dividend rates and selling stock and businesses.
  • Consider making year-end charitable donations of appreciated stock (rather than cash). This allows a taxpayer to avoid paying tax on the appreciation value but to still deduct the full value of the charitable gift on the 2012 return. 
  • List all the major life changes that occurred in 2012 that might affect your tax return. This list might include a spouse retiring, job hunting, volunteer work, buying/selling a home, etc. Gather all your tax documents, charity receipts and a copy of last year’s return.
  • Gather all your charitable contribution documentation.  If you can’t support the charitable donations you claim, you might lose them. If they are under $250, make sure you have a bank record that supports the donation (e.g. a canceled check) or a written statement from the charity that meets the tax law requirements. If the donation exceeds $250, you’ll need a statement from the charitable organization showing the amount donated plus a statement that indicates that no goods or services were provided in return for the donation.
  • Leverage the 15 percent capital gains rate before it’s gone. With capital gains tax rates expected to increase to 20 percent from 15 percent, and with an additional 3.8 percent Medicare contribution tax on net investment income possible for some high income taxpayers in 2013, it makes sense for some taxpayers to sell assets (stocks or vacation homes) owned for more than one year before year’s end.
Perhaps no tax season in recent memory has been fraught with so many uncertainties – expiring tax laws, tax policy changes and possible last-minute legislative action. With this in mind, get a handle on as much as you can right now. Gather information and sit down as soon as possible with your tax planner. It’s going to take extra care to make sure you leave no money on the table for Uncle Sam in 2013.