Small Business Profit Maximizer!

A Small Business Tax Checklist For The End Of The Year

As a small business owner or an entrepreneur you should be talking to your accountant at least once or twice a year, and ideally more often, to make sure that you are taking full advantage of any tax deductions or opportunities that you may have.

The Small Business Advantage

Often small businesses have significant tax opportunities that are missed simply because the small business owner didn’t realize the deduction or tax credit was even possible.

Some of the most commonly missed money-saving ideas that accountants can help small businesses with include:

• Capital expenses and equipment – there is an annual allowance under the Section 179 deduction that business can take for specific types of equipment and supplies but the total allowable is based on several different factors.
• Fully fund retirement plans – often small business owners forget that by funding their own retirement plan, or getting one started, that you can use to offset your income for the tax year.
• Hiring – you may be surprised that there are programs that you can take advantage of if you hire a disabled person or a veteran. This is a great opportunity to help out a person that has served the country while also earning a tax credit with each eligible employee.
• Get your equipment repaired – if you have an eligible property such as a vehicle or an office or building, you may be able to spread out the deduction for the repair over a period of time. In some cases and for some businesses the repair, especially if it improves energy efficiency, may also be a credit.
• Charitable donations – a business can also make charitable donations to recognized charities. These can be made any time of the year but if you have additional income in December it can be a good way to use the deductions in this year rather than waiting until the next year.

Talking to your accountant well before the end of the year is always a good strategy. You can learn about your options and then make the best choices to help to lower your taxable income while maximizing your ability to take advantage of services and purchases that you may need.

Tips For Choosing A Top Accountant

It seems that many people think that having an accountant is something that is only necessary if you have your own business, a large investment portfolio or if you are one of the very wealthy. In fact, having an accountant that does your taxes on a yearly basis is actually a great way to take advantage of incentives, deductions and even long-term investment opportunities that can save you thousands of dollars over your life.

Choosing the right accountant is important as you want a top professional that is knowledgeable, experienced and very ethical in their handling of your financial matters. To choose an accountant, consider the following:

• Qualifications – it is a good option to work with a professional that is a CPA or a Certified Public Accountant. This means that the individual has completed all required training and also passed the very comprehensive Uniform Certified Public Accountant Examination and meets all state-mandated membership requirements.
• Experience – if your taxes and financial issues are straightforward, experience is not as critical. However, if you have a small business, a larger investment portfolio or any special financial issues, including a home business, look for an accountant with experience in that area.
• Good communication skills – you want an accountant that you can talk to about your issues and get an explanation that is meaningful and relevant. If your accountant can’t communicate effectively then you will have difficulty in making informed decisions based on his or her advice.
• Price – while you may have to pay more for an experienced, top accountant than a new professional, the slight increase in price for service may actually save you money over the long run.

It is a good idea to ask around for referrals from your friends, family members, and even coworkers to find out if they have an accountant that they recommend. Often this is the best way to ensure that you find someone that is a great professional to work with. 

So How Do I Know If My Employees Are Making a Good First Impression?

Awhile back I wrote a blog article about the importance of making a good first impression on your prospects (http://bit.ly/sblW7W). But how do you know if your employees are losing possible customers by making a bad first impression? One of the best ways is to “mystery shop” your own business or practice.

You should do this with your employees’ full knowledge. Being open with them about it will:

1. Let them know it will happen. They will not know how or exactly when, so they will automatically treat prospects better.
2. Let them know that the results will be part of their reward, bonuses, pay raises, etc.

You can hire someone yourself or can check out www.mysteryshop.org and www.shopreports.com to hire from businesses that specialize in mystery shopping (Disclaimer: I have not researched the quality or level of service they offer. You should still do your normal due diligence.)

Making sure your customers are receiving the best service possible is always your responsibility. Testing your staff isn’t dishonest; it’s good business practice.

Thank you for your continued support and let's make this year our most profitable year ever!

Risk, Return And Retirement

Throughout life, the way that you save, the returns that you can expect and the value of that investment at your retirement age will change. Many people fail to take this into consideration when planning for their own retirement, which is why an ongoing discussion with your financial planner throughout your life is always a good idea.

Generally the younger you are the more risk that you may be willing to take on in your investments. The greater the risk, of course, the greater the return, which is why high-risk investments are so appealing to so many. With greater return comes the opportunity for retiring earlier, but only if you invest wisely and modify your strategy as you age.

• Risk – high-risk investments can be long or short term, but the longer you hold on to a high-risk investment the less of a risk it should be, at least theoretically. A start-up company with a new concept is a risk at first, but once it finds a target audience and becomes a mainstream item the risk diminishes.
• Return – the amount you can expect to return on the investment is going to depend on a variety of different factors. Most financial planners recommend that people diversify so that there is a good chance that if there is a decrease in return in one area there will be a chance of a corresponding increase in another.
• Retirement – knowing when you want to retire and how much you have to have banked to live comfortably is an important calculation. Everyone’s retirement needs will be different depending on what they want to do once they aren’t working.
• Getting Started – by talking to a financial planner you can get a complete picture of what you need to do with regards to investments, risk, and your retirement.

It is never too late to start planning for your retirement and your future. If you are young then you have more options for investment while as you age your strategy will turn to solid, dependable options that you can trust.

Small Business Owner? Outsource Your Bookkeeping

If you’re like many entrepreneurs and small business owners you probably try to manage most tasks yourself. Sure, maybe you outsource the big jobs like copywriting or graphic design, but you handle all of the “management” tasks. In many cases, that’s just fine. However, unless you’re an accountant yourself, consider that task one of the “big jobs” and find yourself a good accountant. Here’s why.

1. Compliance: An accountant knows your deadlines, dates, and the tax rules and regulations inside and out. If you miss a deadline you could owe your government big bucks. Penalties, late fees and non-compliance fees are costly. An accountant not only knows when everything is due, they’ll take care of it for you.

2. Tax Reporting: Let’s face it, most small business owners are probably not doing their taxes 100% correctly. They’re either missing deductions that they could take or they’re taking deductions that they shouldn’t. Much of that is due to the fact that taxes are confusing, and unless you’re an accountant you’re just not going to know everything there is to know. Instead of losing money or taking a risk of being audited, hire an accountant to manage the work.

3. Time Suck: Bookkeeping is a time suck. It consumes your valuable time when you could, and probably should, be doing something else. For example, while you’re spending that day calculating your profit and loss statement or paying bills, you could be writing content, forging partnerships or working with clients. You could be making money. Hire a specialist to focus on your bookkeeping and go make more money for them to count.

4. Information: Once again we come back to the fact that you’re not an accountant. You’re not up on the latest technology or accounting practices. Your accountant likely is. They can set you up with the best money-saving technology. They can offer business advice and they can help you grow and succeed.

Hiring an accountant is one of the first steps a business owner should make when they’re getting started. If you don’t have an accountant and are doing it yourself, consider finding someone you trust to manage the task. You’ll find that not only will you have less stress, you’ll also be able to spend more time and attention on growing your business.

So how do you find that good accountant you can trust? Ask around. Interview potential candidates and find a provider who understands you and your business. You’ll be glad you took this step.

Cheaper is Not Always Better

Let me share a story...

I work for a large insurance firm in the northwest, in an office with over 500 other employees.  Management recently decided to replace our existing phone system as the old system was no longer meeting our needs.  I and my co-workers were under the impression that they were going to update the system, as in "make an improvement", and that we would have late model phones with technological advancements galore.  Boy, were we in for a surprise. 

One day a few weeks ago, we all came in to find new phones on our desks.  These were not the state-of-the-art communication devices we had in mind.  Instead of the sleek, sophisticated, caller IDing, multi-line handling, LCD displaying wonders of the modern age we all dreamed of, there was a simple phone with a keypad on the receiver...not unlike what you might have had at home 15 years ago.  In addition to the new phone, there was a sheet which explained in graphically painful detail exactly which series of buttons one would have to push in order to make this thing function properly.  We had to now enter a digit to put someone on hold, enter a three digit code to transfer someone (one digit, dial tone, two digits) and enter a ridiculously long series of numbers to access our voicemail. 

Needless to say, we were in shock.  I knew it wouldn't take long before the roars of complaining would drown out the usual office din.  Sure enough, by lunchtime, our office manager came in to tell everyone that we were simply going to "try it out for a while" and that the company had saved thousands by choosing this option.  I and the other employees were fairly certain that we had already lost thousands in reduced productivity that morning alone.  Oh, well...it's their company; we just bring in the money for them.

For the next few days, we tried to get used to saying "hold, please, while I transfer you", removing the receiver from our faces and trying not to curse as we made a lame-duck attempt at pressing keys, listening and pressing more keys.  It was a nightmare.  We were getting pretty fed up with it but just assumed that this was what we would have to deal with.  Then, out of the blue, we came in one day to find real phones with real features at our desks.  No more looking at the receiver while we frantically tried to key in numbers fast enough not to drop the call.  No more ten digit voicemail "pins".  No more of having no idea who was calling or where the call came from.  Ahhhh, relief at last. 

Later the same day, we heard a rumor circulating around the office that the VP of operations had returned from a two week trip to New York.  His words, upon seeing one of the phones management had originally purchased on his desk were, "get rid of them".  All it took were those four words from a higher-up to set things right. Unbelievable.

Saving Money Isn’t as Impossible As it Seems

Who hasn’t had more month left at the end of the money? It’s no wonder really: groceries on Monday, bills on Tuesday, gas for the cars on Wednesday and by the end of the week your paycheck is gone. However, if you establish a savings plan, you’ll “find” money in places you’ve never thought to look!

If you’re like most American families, you wait for “extra” cash to save. As crazy as it seems – this is a backward way of thinking. Financial experts will tell you – always pay yourself first!  That means making sure you are contributing to a savings plan first – whether it’s your 401k Retirement account through your employment or your own personal savings account – make sure something is going in there.

Every little bit that you save is a step in the right direction, so starting a savings plan is definitely more about quality than quantity. In other words, getting into a regular routine of saving is more important than how much. It’s perfectly fine to start small and increase as you’re able.

Here are few other tips to help further avoid having too much month left at the end of the money:

• Know the difference between your wants and your needs: “Needs” are the items necessary for your existence: shelter, food, clothing, and transportation. Anything extra are considered “wants” and need to be eliminated or at the very list severely limited.

• Set realistic savings goals. Most experts suggest you place 10% of your income into savings. This is a good place to start, but if even 10% is too much, start smaller. It’s perfectly ok to start small and build as you can.

• Set up Direct Deposit into a separate savings account: You know the saying “out of sight, out of mind.” By setting up a set amount to be directly deposited into a savings account, you are removing the temptation of saying “oh I’ll put some in next week.” The time to start saving is NOW.

What Does Your Organizational Culture Say About Your Business?

Despite its importance in terms of attracting or repelling customers and clients, potential investors, and the hottest new talent, all too often organizations think little about their culture and what it says about their business.  In many cases, organizational culture is something that just develops naturally, but as it speaks of the human aspects of the way that a company does business, it is not something that should be left to chance. 

Organizational culture is something which in many ways is hard to define, but essentially it describes the common values, standards and behavior exemplified by a business and the way that the company’s leadership and employees interact with one another and the outside world.  It refers not just to rules and procedures, but with a business’ core beliefs.  

To a great extent, an organization’s culture is determined by its leaders, although not always consciously.  Everything from the way that leadership treats its employees to the mission, vision and values to which it aspires permeates the business and affects the mindset behind all its interactions.  It might be based on power or around people, on innovation, or around rituals and routines.  Whatever the case, an organization’s culture has immense potential to affect its brand image.  What does your company culture say about your business?

De-Clutter Your Life and Keep Things Simple

Time is one of the most precious commodities in our lives, if not the most precious of all, and it is one of the few things that we can never get back.  Today’s lifestyles, however, are so filled with responsibilities and with clutter that we are just left chasing our tails as valuable seconds, minutes and hours slip by.  Both at home and at work we try to fit more and more into our already full lives, not just in terms of activities, but also in terms of possessions. 

Some of the happiest and most contented people in the world today are those whose lives are simple.  They work hard during the day, but their evenings are reserved for the simple pleasures instead of being packed with yet more tasks and responsibilities.    

One of the reasons that people in other cultures are able to achieve a healthier work/life balance comes down to possessions or, rather, the lack of them.  The more we own, the more we have to take care of and the more there is to go wrong.  Why not de-clutter your home and get rid of all those things that you rarely use but that take precious time to clean and maintain and juggle around to make more space?  A little less “stuff” is a small price to pay when compared to enjoying quality time with our families and friends and taking a few moments to watch a beautiful sunset.

Forming A Partnership With Your Accountant

Forming a working relationship with your accountant, either as a business owner or as an individual who wants to take control of your financial future, is perhaps one of the most important partnerships you can build.

Unfortunately, a lot of people fail to do this and only spend a few minutes talking with their accountant at tax season. If this is the only time you talk to your accountant, here are just a few of the many important aspects of your finances you may be missing out on:

• Planning for your retirement with the most comprehensive approach to short and long investment strategies with risk levels you are comfortable with.
• Determining options for creating tax savings for years to come. This could include strategic use of allowable gifts, donations to charities or even the option to develop different types of trusts and funds.
• Providing a complete financial overview of your personal finances or helping to develop a financial analysis of your comprehensive business plan.
• Helping you with important information on what to consider, what to track and record, and how to make the most out of tax credits and deductions you may be eligible for throughout the year.
• Helping you to develop an effective and accurate budget to allow you to save, pay for a home, buy vehicles or even to plan for kids to go to college.
• Assist you in making any large investments, sales of financial decisions to ensure all aspects of the transaction are in your best interests. This is true for both a business acquisition or sale or for major financial issues in your personal life as well.

In addition, an accountant is a great person to consult when you are thinking about starting a business, growing an existing business or perhaps in buying a new home or making a large purchase. Having a professional to go to for specific information, and a big picture look at all options, is a great asset for anyone to consider.

Helpful Ideas For Your Income Tax Return

Every year a large percentage of people get tax returns. Some get a lot and some just get a little, but what you choose to do with your return may have a big impact over time. Different individuals have different plans for the return, including going on a shopping spree or buying something luxurious or even necessary for themselves or their family.

There are a few things to consider that will add to the value of your tax return. First, and perhaps most important, is to consider adjusting your tax withholding through your employer. You can add to your retirement or make an investment which will provide you with interest on the money throughout the year, something the IRS doesn’t provide.

In addition, you can use your tax money wisely by:

• Use all or part of your refund to pay off the balance on high-interest rate credit cards, and then avoid using the cards because they now have spending ability. You will literally be saving yourself the interest rate on the card times the balance and the time you would need to pay it off.
• Make a tax-deferred IRA contribution if you are not already contributing. This can be as much as $5,500 per person or $6,500 if you are over 50.
• Carefully review your insurance coverage based on your age and possible risk factors. You may also want to make any repairs on your home which may negatively impact your insurance coverage if you have to make a claim.
• Pre-pay for special events such as weddings, vacations or set aside cash for travel. This avoids having to carry a balance on your credit card, saving that interest amount.
• Make a charitable contribution which will be tax deductible if you are itemizing your expenses. You can also gift money to a family member for tax savings, just talk to your accountant.

You can also choose to start an investment or add to your current portfolio. Just be sure to understand which options actually end up saving you in taxes for your next tax year.

5 Expenses Most Home Businesses Fail To Claim

If you have a home business or a home office, it can be difficult to know just what you can claim as a business expense and what you can’t. There are some common expenses that self-employed people working from home often miss claiming because they aren’t aware of the option.

To maximize your home business deductions make sure you are claiming the following:

• Books and publications – If you have specific books, trade journals, or trade specific publications you receive on a monthly, quarterly or annual basis, you can deduct the cost of these materials. They do have to be specific to your business and can’t be general publications.
• Professional memberships – Like publications, if you belong to professional organizations, you can deduct your membership fees and dues provided they qualify. This includes union fees as well as any licenses you may be required to hold to do your work.
• Education – If your course is directly related to your present job and will enhance or expand your skills in the same industry, your educational expenses are deductible. This is not true if you are taking something new to add to your business or to offer a different service.
• Uniforms or protective clothing – If your business includes the use of uniforms or specialized type of clothing such as safety clothing, you can deduct the cost of any items purchased. You can also deduct the cost of cleaning for uniforms. You cannot claim cleaning charges if you wear day-to-day clothes, only if it is a specific uniform.
• Business insurance – If you carry any type of business insurance, you can claim the cost of the insurance as a deduction.

If you have any questions about what you can or cannot claim, contact your accountant before you make the purchase or the decision. You should also keep accurate records of all purchases of supplies and materials you need including printer supplies and software purchases for your business. 

 

Learn more about job candidates with a tour of your workplace

You may learn about a job candidate during an interview, but you’ll get a lot more insight by getting out of your office and taking finalists on a tour of your workplace. The candidate will see what your culture is like, and you’ll have a chance to observe how he or she responds to your environment. Here’s what to look for:

• Interactions with employees. Is the candidate interested in talking only to upper-level people? How did the person’s attitude change when meeting people at different levels? Observe how much attention the person pays to what others say—is he or she really listening, or bored?

• Optimism or pessimism. Pay attention to how the candidate answers basic questions like, “How are you today?” A reply like, “Not too bad” may be a sign of a downbeat attitude. Similarly, listen to how the person talks about the people he or she meets: “She certainly seems to work hard,” suggests a positive personality; a comment like, “Why does she have to work so hard?” may indicate a negative outlook on work.

• Clarifying questions. Your organization will have new or different technologies, processes, and work practices. Does the candidate ask questions to clarify his or her understanding of the surrounding workplace? Listen for questions or comments that show how quickly the person grasps new ideas and how well he or she asks questions to solve problems.

• Unprompted actions. If there’s a piece of paper on the floor, does the candidate pick it up and throw it away? Does he or she hold the door for another employee whose arms are full? These kinds of actions can tell you whether or not the person is a team player.

• Supporting statements. Listen for any statements that support what you know about the candidate from his or her résumé and interview. Does anything seem to contradict what you’ve been told?

Why You Need to Invest in Employee Development

We hear a lot about employee development and yet still there are only a small percentage of employers that take the time to invest in employee development. Perhaps this is because it is greatly misunderstood. Let’s look at this issue a little deeper.

Many employers mistakenly see employee development as an expense they don’t need, but actually employee development helps your company and it benefits the employee, which makes for a happier employee.

To have successful employee development managers’ need to clearly define what it is they see employees as needing to grow and advance. This needs to occur at an individual level, not a ‘blanket policy,’ unless of course the training is basic. For example, those in the food industry might all require ‘food safe.’

The job of the HR department and manager is to know what an employee needs to know in order to do their job in a highly functional manner. That requires honesty and clarity. We often think we are being clear when we actually are not. For example, you might see your employee as aggressive and one person might see that as confident. If you are defining areas where you think employee development could be beneficial, you need to be very clear so that there are no misunderstandings in the direction that development takes.

One of the best ways to do this is by describing an employee’s behavior. In that way, you and others can easily see and define what type of employee development would best suit the employee. If the employee is actually aggressive you might describe that behavior in detail. For example, an employee acts out with other employees and is quick to anger when things don’t go his way. The employee will bully his way to ensure he gets the sale. In this manner, you can clearly see that the employee’s aggression isn’t about being highly focused, it’s about aggression!

Employee development can play a key role in having a workforce that is highly tuned and runs like a ‘well oiled machine,’ with less downtime and fewer incidences that cause lost production. Don’t see it as an expense, but rather an investment in your company’s future.

Is Your Company Newsletter of Any Value?

There are many companies and organizations that provide employees with a monthly or quarterly newsletter. The idea is that this is a great way for the employer to stay connected with the employees and keep them in the loop about what’s going on within the organization.

The trouble is so many company newsletters are little more than a token offer and as a result, for the most part, they land up in the trash before an employee even opens them. If you are going to present your employees with a newsletter then it needs to be packed with useful news and it must be enjoyable to read.

Try sharing a bigger picture about your organization. What are its goals - was it profitable last year, what was the role of the employees in its success, what can happen to improve things. You should also make sure that there is some news in the newsletter that is related to the employee. Are there changes to benefits, will there be evaluations and when, are there changes in policy that relate to employees.

Your newsletter can also include reminders. Perhaps you can remind employees that if they are booking holidays their requests must be in by a specific date. You might also remind employees of upcoming stat holidays and how that will affect them. If your company has a shut down period you could talk about that.

Finally, if there are issues going on within your company, the newsletter is a great place to address. Most companies have some ‘sticklers’ happening – disgruntled employee is a common problem – it could be over a denial for time off, a task they disagree with, pay, or a host of other things. Address the issue in the newsletter. It will stop the ‘gossip wheel,’ and let people know exactly what’s going on and the policy relating to it. You don’t have to name names.

Your newsletter is a great way to connect with your employees, make sure that’s what it’s doing.

12 New Tips for Effective Meetings

1) Ask everyone to arrive five to ten minutes early. This gives everyone time to socialize, obtain coffee, or organize materials before the meeting. It also ensures that everyone is present at the scheduled starting time. Make this part of the agenda.

2) Discuss sensitive issues with the key participants before the meeting. Use this as an opportunity to listen and gather information on the issues. From this you will understand the different views, needs, and histories. This information can help you prepare the agenda and conduct the meeting. In addition, you may be able to facilitate solutions or strategies for solutions before the meeting. In either case, the result will be a more efficient meeting.

3) Plan small meetings that focus on a single issue. People work more effectively over short periods of time (such as 45 minutes). This also allows you to match experts with issues for more productive meetings.

4) Only invite those who can contribute to at least 50% of the items on the agenda. For meetings lasting more than 30 minutes, invite special participants only to the part of the meeting that deals with their contribution.

5) Send copies of the minutes to everyone who could have been invited for informational purposes. They can read the minutes in a small fraction of the time that they would have been spent in the meeting.

6) When invited to a meeting with a vague (or missing) agenda, ask: what role will I have? Why do you need me? If your impact is minor, refuse to attend and use the time for other work. Meeting planners often attempt to add importance to a meeting by inviting prominent members of the organization.

7) If the chairperson seems to have allowed the meeting’s intent to drift, ask: “What do you want to achieve?” or “How can we help you?” or “How will we know when we are done working on this?” These questions can help focus the meeting on a goal.

8) If a meeting seems out of control, suggest adjourning and reconvening at a later time. This will allow you to clarify goals, prepare strategies, and better understand the issues.

9) Reflect the content of key points. This ensures that everyone has the same understanding of the key point. Although this is one of the chairperson’s responsibilities, it can be filled by anyone else in the meeting.

10) Prepare a list of questions, ideas, suggestions before the meeting. Then you can focus your attention on the discussion in the meeting.

11) Watch the listeners instead of the speaker. Their faces and body language will tell you whether they agree or disagree, which can help guide you participation in the discussion.

12) Work with a sense of appropriate urgency. Life is finite, and the discussions in meetings should be the same. Plan a time budget and then use it to guide your meeting. Spend extra time only when an issue warrants it.

Increase Sales by Creating New Products

The fastest way to increase sales is to sell more to your current customers.  These are the folks who already know you, like you, and trust you.  They should be the customers you know best.

One of the best ways to do this is to develop a new service or product to sell to them.  But deciding what to sell often stops the business owner right in their tracks.

The key to developing a new product is to discover a “pain point” your current customers have that is not being addressed by anyone right now.  Start by asking your current customers, “What problems are you having that people in my industry are not helping you solve?”  Follow up with, “If I had a solution for that, would you be interested?”  Finally ask, “How much would you spend to eliminate this problem?”

I have been asking my business clients these questions for the last few years, and I have discovered small business owners consistently have the same answers.  They want to pay less tax (who doesn’t?), they wish they had better information to manage with, they need to make more sales, and they wish they could expand and grow without killing themselves doing it.

Armed with this knowledge, I have slowly been developing and introducing products as solutions to the problems my clients said they would be willing to pay to solve.  Seems obvious, doesn’t it?  Ask your customers what they would be willing to pay for, and then give it to them!

I have a fill-in-the-blanks outline that I use as a guide when I am developing new products.  It helps me communicate to my customers and my staff why the product is useful.  Here are some of the things the outline helps me keep in mind as I’m working:

• What should I call this product?
• How can I describe it in one sentence?
• What is included in the product?
• Who is the product’s ideal customer?  (Who is it designed for?)
• Why should the customer buy this product?  (What pain are we solving?)
• What benefits will the customer receive when they buy this product?
• What advantages does this product provide that our competitors’ products don’t?
• What three things should we always tell a customer about this product? (What should be in every marketing message for this product?)

The Correct Way to Ask For Referral

Referrals are an important way to grow your business.  Yet many business owners either don’t ask for referrals, or ask in a way that makes them look desperate.

If you ask me for names of people who might use your services or goods, I’m probably not going to make a referral.  You are putting all the responsibility on me, and I may not want to take the time to think about it.  So don’t ask, “Do you know someone that can use my services?”

I personally like using a method that comes from a position of strength while making it easy for customer to refer.  This means doing my homework and phrasing the request in a confident way.

One way is to set up a referral prospects file and keep notes on your top customers’ contacts.  You can do this by doing Google searches or social media to determine who their friends are, who they do business with, and what community groups they belong to.  Then go up to them and say, “I didn’t know you knew this person, I’d love to meet them.”

Make sure that your customers don’t feel that you need their help growing your business.  You must have confidence in the value of your product or service.

Frame the discussion as if there is very limited room for new customers, and the only people you are accepting are friends and colleagues of your current customers.

The portrait studio owner that I discussed in the article “Increase Sales With a Customer Call-Back Department” didn’t just ask for referrals when he called his customers after the sale.  He instead asked a series of questions that helped his customers think of people who could use his services.  “Do you know anyone who I can call that is getting married?  Do you know anyone who is graduating from high school or college?  Do you know anyone who having a special wedding anniversary?”  He would ask about 10 of these questions to help the customer think about special occasions where people might want portraits.

 

Finally, don’t forget to thank your customer for every referral.  Even better—reward them with a small gift or a discount on their next purchase.

How You Can Begin to Repair Your Credit

The heartbeat of our financial life is our credit score. When that number falters, we experience financial cardiac arrest. When your credit score is bad it can impact your ability to borrow money. Your credit rating drops if you have unpaid bills or if you pay your bills late. Here are some ways you can begin to repair your credit so that it becomes easier for you to borrow in the future. 

#1 Consider Buying a Home

If your credit score is poor, you won’t qualify for a standard mortgage but you may qualify for an FHA loan as these are guaranteed by the federal government. This is one way that helps you to rebuild your credit. 

#2 Adhere to a Commitment

This is the first step in rebuilding your credit score. This will require you to make some major changes and then you are going to have to stick to them. From here on in you’ll only be buying things you absolutely need. 

#3 Make Your Mortgage Payments

If you have a mortgage, even if the rest of your credit is not looking healthy, continue to make these payments on time and it will help to slowly restore your credit score. 

#4 Work With Your Creditors

You should make sure to work with your creditors so that you do not get further into debt and damage your credit even more. Begin to work towards paying off your debt by asking the credit card company to reduce your interest rate or through debt negotiation. 

#5 Bankruptcy

While this should be a last resort, there are times where it should be considered because otherwise you will never repair your credit. A bankruptcy will affect your credit report for ten years, so before choosing this option weigh all the pros and cons. 

#6 Don’t Use Credit Cards

Avoid using credit cards at all. Get rid of them and begin to start making payments that are at least double the required payment, because unless you do you’ll never make a dent on the actual amount owed and will continue to simply pay the interest.

 

Tax Tip of the Week: If I barter my products or services do I have taxable income?

The fair market value of property or services received in barter is taxable. But, it may not result in an increase in taxable income based on how what you received is used.

As an example, we trade accounting and tax services with an office supply company. We must include in income the fair market value of the office supplies received. But, we also get to deduct these costs as office supplies expense since they are used in our business.

But, when we trade accounting and tax services for a family photo we still have taxable income but we cannot deduct personal expenses. This results in an increase in taxable income in the amount of fair market value of the family photo.

Like all tax law there is an exception to the general rule. An informal exchange of similar services on a non-business basis is generally non-taxable. An example of this is carpooling.

Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.