IRS Has Options to Help Small Business Owners

This blog post was originally published through the IRS Tax Tips service. More information on all of these topics can be found at the Small Business and Self-Employed Tax Center. Small business owners often have a running list of things to do. These include deadlines, sales calls, employee issues, banking, advertising – and taxes. The IRS… Read more »

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This blog post was originally published through the IRS Tax Tips service. More information on all of these topics can be found at the Small Business and Self-Employed Tax Center.

Small business owners often have a running list of things to do. These include deadlines, sales calls, employee issues, banking, advertising – and taxes. The IRS can help with the last one.

Here are seven resources to help small businesses owners with common topics:Tax Tipso avoid

  • Looking at the Big Picture: The Small Business and Self-Employed Tax Center brings information on IRS.gov to one common place.
  • Organizing Tasks: The IRS Tax Calendar for Businesses and Self-Employed helps owners stay organized. It includes tax due dates and actions for each month. Users can subscribe to calendar reminders or import the calendar to their desktop or calendar on their mobile device.
  • Searching for Topics: The A-to-Z Index for Business helps people easily find small business topics on IRS.gov.
  • Getting Information by Email: Small business owners can sign up for e-News for Small Businesses. The free, electronic service gives subscribers information on deadlines, emerging issues, tips, news and more.
  • Watching Videos: The IRS Video Portal offers learning events and informational videos on many business topics.
  • Finding Forms: The Small Business Forms and Publications page helps business owners find the documents they need for the type of business they own. It lists tax forms, instructions, desk guides and more.
  • Meeting in Person or Online: Small business workshops, seminars and meetings are held throughout the country. They’re sponsored by IRS partners that specialize in federal tax topics. Topics vary from overviews to more specific topics such as retirement plans and recordkeeping.

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Business Finance 101

This post is written by Bill Reagan, Executive Director of the SBDC and first appeared in the Alexandria Times on March 17, 2017. For many of us, understanding financial matters is a challenge, and options for financing the startup or expansion of a business may be difficult to grasp. This is a perfect example of a… Read more »

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This post is written by Bill Reagan, Executive Director of the SBDC and first appeared in the Alexandria Times on March 17, 2017.

For many of us, understanding financial matters is a challenge, and options for financing the startup or expansion of a business may be difficult to grasp. This is a perfect example of a great time to contact the Alexandria Small Business Development Center for help. Financial guidance is among the free services offered by the Center.

Astute business owners know that having a financial expert routinely review their financial statements with them makes them better managers. They know that it makes sense to do an annual fiscal check-up. They know that, at the first indication that they need working capital, an expansion loan, or even a startup loan, the most efficient approach they can take is to work through their business plan and loan request with an expert. Some have equated this process with getting coached for an interview.

Alexandria Small Business Development Center Business Analyst, Jack Parker, has been an independent contractor with the Center for 19 years. In that time, he has worked with owners to help them better manage the financial aspects of their business. Over the years, he has helped more than 265 business owners and start-up entrepreneurs obtain loans or investments totaling over $71 million.

As a retired banker, Jack knows what loan officers expect to see in a loan request. He knows that they want those requests to clearly show how that loan will be repaid, and they expect the applicant to provide sound financial projections supported by written assumptions. Some bankers indicate they have greater confidence in the requests that come through working with the Center. Their experience is that Center-assisted applicants are typically much better prepared and are therefore much better credit risks.

Thanks to the Center’s strong partnerships with local banks, bankers often refer prospective borrowers to the Center to obtain guidance. Nine Alexandria banks are currently financial supporters of the Center, and many of their lenders work closely with Jack to connect business owners with the right services. This could include helping business owners develop strong banking relationships, establish lines of credit or seek financing.

Being unprepared for a loan application can have far-reaching effects. Many prospective borrowers might not realize that, anytime your loan application is turned down, it can affect your credit rating. At the Center, Alexandria business owners have access to a free resource who can work with them to fine-tune their loan or line of credit application so that it answers almost every question that a loan officer will ask.  That way, when they approach a lender, they will have confidence in the plan they’re presenting, and have a much greater chance of it being approved.

Whether or not a business owner needs financing, it behooves them to have a strong and confidential relationship with their bank. The Center is glad to have a resource to help Alexandria business owners develop such relationships and better manage the financials of their business. We welcome your contacting the Center for such guidance.

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Tax Forms Due by End of January – Don’t Wait to Order!

As we begin 2016, many small business owners start gathering the necessary documents for filing their 2015 taxes. Small businesses who have employees or independent contractors are required to distribute tax forms (W-2 for employees, 1099 for contractors) by the end of January.  If in the past you have been getting your blank forms from… Read more »

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Tax Forms Due by the End of January - Don't Wait to OrderAs we begin 2016, many small business owners start gathering the necessary documents for filing their 2015 taxes. Small businesses who have employees or independent contractors are required to distribute tax forms (W-2 for employees, 1099 for contractors) by the end of January.  If in the past you have been getting your blank forms from a Taxpayer Assistance Center, please note that this is no longer an option.

The Internal Revenue Service has announced that forms used by small businesses will no longer be available at taxpayer assistance centers, and must be ordered online.

The demand for paper tax products is declining because of an increase in e-filing and the availability of products online. Due to the decreased demand and printing and shipping costs, the IRS will no longer stock Forms W-2, W-3 and 1099 in Taxpayer Assistance Centers. The forms, which are used by small business owners, can be ordered online or by telephone and mailed directly to the taxpayer’s home or business address. Don’t wait until the last minute to get blank Forms W-2, W-3 or 1099.

To order online, go to the IRS’ Online Ordering for Information Returns and Employer Returns.

To order by phone, call the IRS at: 1-800-829-3676.

The Social Security Administration also offers an online option to create and file electronic Forms W-2. File Forms W-2/W-2c and W-3/W-3c electronically by visiting the Social Security Administration’s Employer Reporting Instructions and Information website to create and file electronic fill-in versions of Forms W-2 and W-3.

If you’re interested in an overview of any other changes related to Social Security for Tax Year 2015, view the Social Security Administration’s guide to the most recent updates. You can also visit the IRS’s webpage for Self Employed and Small Businesses if you have additional questions about filing and paying your business taxes.

Lastly, don’t forget to check out the section of our Resource Library that covers taxes. Happy filing!

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Taking Advantage of the City’s Small Business Facilitators

Over the years, we have recommended resources that Alexandria small business owners can access to become more productive, make contacts or solve problems. We believe it is important to focus on one of those resources this month — the Small Business and Residential Facilitation Office of the City’s Permit Center. Alexandria city government recognizes that obtaining… Read more »

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Small Business FacilitatorsOver the years, we have recommended resources that Alexandria small business owners can access to become more productive, make contacts or solve problems. We believe it is important to focus on one of those resources this month — the Small Business and Residential Facilitation Office of the City’s Permit Center.

Alexandria city government recognizes that obtaining permits — many of them mandated by state law and regulations — can be time consuming and confusing to business owners. Alexandria is one of the few jurisdictions that provides individual facilitation through these processes.

Facilitators play many roles. They explain the process, from board hearings, building permits and inspections, to receiving your certificate of occupancy and business license. They explain the steps required for your business and help you along the way.

They also provide realistic timelines for your project based on the type of business and the extent of work proposed. These timelines, along with understanding the steps in the process, help businesses budget and plan appropriately.

Facilitators also identify and explain potential code requirements. Whether you are moving into a new space or renovating your existing property, they can review floor plans and identify critical issues. Some examples include requirements for additional bathrooms, additional ventilation, new or relocation of exit doors or a sprinkler system.

Permit center facilitators can also determine if a registered design professional is required. Virginia law provides guidance for drawings that must have the sign and seal of a registered design professional. Based on your use, the building height and the size of your space, they can explain this requirement to entrepreneurs. The Alexandria Small Business Development Center strongly encourages businesses to work with experienced designers and contractors who are familiar with state rules and the City of Alexandria and can make referrals to these professionals as needed.

Facilitators also act as your link to other city departments. Before you start your project or if revisions are requested, they can reach out to any departments to answer specific questions and help you understand how the requirements of each agency impact each other. This clarifies expectations for plans prior to the development of design documents and can assist in the response to revision requests from the city.

Most importantly, permit center facilitators are available to help with any questions or problems. They can assist business owners if they have any concerns throughout the process or are unaware of the next steps to take to keep the project moving forward. The facilitators are Allison Cook and Maryia Lackansingh. They can be reached by emailing them or by visiting the permit center at City Hall in Suite 4200.

The City is dedicated to supporting small businesses, and staff is glad to help your small business every step of the way. We are fortunate to do business in a city that is there to engage with you to solve problems, overcome obstacles and guide you along the way.

This article first appeared in the Alexandria Times on October 24, 2015.

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Solopreneurs – Could You Really Be Considered an Employee?

This post is a continuation of last week’s topic and was written by Patricia Frame of Strategies for Human Resources, our guest author for our solopreneur blog series. Recently, the US Department of Labor (DOL) issued new guidance on when a person is an independent contractor and when they are an employee. Even if you… Read more »

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This post is a continuation of last week’s topic and was written by Patricia Frame of Strategies for Human Resources, our guest author for our solopreneur blog series.

Solopreneur - Could You Really Be Considered an EmployeeRecently, the US Department of Labor (DOL) issued new guidance on when a person is an independent contractor and when they are an employee. Even if you have your own company, if you are a solopreneur you need to understand the new rules to protect yourself. Under these rules, many legal reviews indicate that many independent contractors now will be considered employees instead.

Under the new guidelines issued July 15, 2015 for classifying such workers the DOL looks closely at what the ‘economic realities’ are to decide whether a worker is economically dependent on the employer or are actually in business themselves.

There are six factors which the DOL typically will assess in total and none are considered alone. These include:

  •  The extent to which the work performed is an integral part of the employer’s business
  •  The worker’s opportunity to manage for his/her profit and loss (not including ability to work more hours)
  •  The relative investments of the employer and the worker
  •  Whether special skills (business skills, not technical ones), judgement, and initiative are required to perform the work
  •  Permanency of the relationship
  •  Degree of control retained or exercised by the employer, not including flexible work options.

Certainly those solopreneurs who once were employees and then moved out to become consultants or contract workers AND who still work primarily for their old employer are at risk.

But you may be at risk also if:

  • You have only 1-2 clients
  • You work in a role where you are on-site at a client full-time or part-time regularly or serve as an interim executive
  • You have not yet set your business up fully
  • You are at risk under the factors mentioned above.

Whether you are obviously at risk or not, you should take precautions to ensure you can maintain your independent status, if you wish to remain independent.  This could include:

  • Documenting all your client engagements regularly with any agreements you sign, their business information, and the scope of your work for each client.  Many of us sign non-disclosure or confidentiality or other agreements with our clients. Be sure you have copies of these as well as any agreements or contracts you have your clients sign.
  • Establishing your business visibly within your community and field. This could include having a website or business profile on social media, the advertising you do, your business cards and other marketing materials, and so on.
  • Maintaining required business licenses
  • Having separate business banking accounts and other business relationships

Note that the DOL has stated that having a business incorporated is not in itself enough to prove you are a real business and not an employee.

All this advice seems simple and obvious, but often we know what we should do but we do not actually do it all. This is especially true if you started your solopreneur work as something to do until you could find a new job.

If you are re-classified as an employee, you lose the business deductions on your taxes although you may gain benefits from regular employment. The choice should be made by your decision and actions, not inadvertently.

If you need assistance and advice to ensure you are building a successful business, the Alexandria SBDC offers a range of services. Check our website for those which will help you succeed!

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Census Business Builder: Data for Small Businesses

We know how important good data is for small businesses as they develop their business plans or look to grow their businesses. In the past, it has been challenging to get the information needed from a single source. Now, there’s a new tool available to help small businesses with their research needs. Earlier this month,… Read more »

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Census Business BuilderWe know how important good data is for small businesses as they develop their business plans or look to grow their businesses. In the past, it has been challenging to get the information needed from a single source. Now, there’s a new tool available to help small businesses with their research needs.

Earlier this month, the U.S. Census Bureau released a tool to help small business owners explore data on demographics and economic information. The tool is called the Census Business Builder: Small Business Edition and provides information that is useful to new small businesses and to those looking to expand. The video below, from the U.S. Census Bureau website, provides an overview of the tool:

The tool was designed to be easy to use and allows each small business owner to select their type of business and anticipated business location. Because the tool is map-based, it is easy for business owners to look at surrounding areas to compare different jurisdictions to their neighboring areas.

The tool also allows users to download and print maps, data, and reports that can then be used in developing business plans or for other research purposes. The tool includes data from the American Community Survey 5-year Estimates, the County Business Patterns, Nonemployer Statistics, the Economic Census, and ESRI data on consumer spending.

Currently, the tool provides information on 49 business types in six categories: construction, food services, health care, personal services, professional services, and retail. The U.S. Census Bureau plans to continue adding business types in future iterations of the tool. Quarterly updates are planned and will include additional content and functionality.

In order to make the site user friendly, the U.S. Census Bureau has developed several video tutorials to walk users through the tool. These answer common questions about how to use the tool and demonstrate several of the features that business owners will find useful.

We are excited for this new tool and the potential it represents for our clients. If you have any questions about this tool or would like more information, please feel free to reach out to us. Happy researching!

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Credit Card Liability Changes – The Time to Act is Now

Do you accept credit cards as payment for the goods and services that you provide to your customers? These days, most small businesses answer “yes” to that question. For those who currently swipe the magnetic stripe on credit cards, including most restaurant and retail establishments, there are major changes coming soon that may have serious… Read more »

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Credit Card Changes EMV ChipDo you accept credit cards as payment for the goods and services that you provide to your customers? These days, most small businesses answer “yes” to that question. For those who currently swipe the magnetic stripe on credit cards, including most restaurant and retail establishments, there are major changes coming soon that may have serious implications for your business.

The major credit/debit card issuers have begun to distribute new cards that contain an embedded chip on the front which should make fraudulent card use more difficult. The fraud reduction benefits of the new cards will not be realized if merchants do not have the technology to accept the new cards. It is important for all merchants who accept these cards to upgrade to the new technology because on October 1, 2015 there will be a shift in the fraud liability. This means that, after that date, merchants who swipe chip cards will be liable for any fraudulent transactions, not the bank.

What should you do?

  1. First, if you have not already been contacted by your merchant services provider, payment processor, or financial institution, you should contact them. The solution for each merchant will depend on how they have set up their payment processing, how it interfaces with their POS (Point of Sale) system, etc. At the very least, you will need to acquire new devices that will be able to process the new cards in place of the swipe machines currently in use. There are varying charges and steps necessary, depending on the system that you use. Again, your best source of information should be your current processor.
  2. If you find that the new technology changes will not work with your current POS system, and you want to continue with that system, you may need a change in processing companies. This is why all merchants who swipe cards should be taking action now – October will be here sooner than you think.
  3. There is a great deal of information in the press and on the Internet about these changes. One of the most complete and unbiased resources is emv-connection.com. This site has listings of videos, Frequently Asked Questions, and other information to help you. Educate yourself now, talk with your providers, and begin to determine the best solution for your particular circumstances.

At 9:00 am on September 23rd, the Alexandria SBDC will be presenting a one-hour workshop on this issue to clear up and clarify any remaining questions. The presenters will be Chris Harrison and Scott Johnston of WorldPay. We encourage everyone who accepts credit card transactions to attend this free one-hour session. Register for the event here.

Small Business Owners – Don’t put this off!!!  Now is the time to act.

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Let’s Pop the Bubble on Startups, Ideas, and Investments

This blog was written by Tim Berry and was originally posted on the SBA website on July 28, 2015. Maybe it’s because business schools teach it that way. Maybe it’s because it’s easier to write about. Maybe it’s because of the dream and the glamor involved. Whatever the reason, there is widespread misunderstanding about the… Read more »

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This blog was written by Tim Berry and was originally posted on the SBA website on July 28, 2015.

Let's Pop the Bubble on Startups Ideas and InvestmentsMaybe it’s because business schools teach it that way. Maybe it’s because it’s easier to write about. Maybe it’s because of the dream and the glamor involved. Whatever the reason, there is widespread misunderstanding about the reality of business ideas, startups, and investors.

This misunderstanding results in a stream of questions on social media, blogs, and entrepreneurship sites. They come with different wording around these core concepts:

  • I have a great new business idea, but no money. Where do I find investors?
  • I want to start a business but I have no money and no contacts. Where do I get investors?
  • I have a great idea for an existing company. I don’t have the resources. How do I sell it to them?
  • I have a great business idea but I don’t have experience or resources to execute. How do I sell my idea?

Let’s look at reality in this area. Consider this a reality check.

Very few startups get outside investors.

Only two or three of every 100 real startups get outside investment from angel investors, and about one per 1,000 get venture capital in the beginning. That’s a hard number to track down because statistics vary and they depend on definitions. The SBA reports about half a million startups with employees per year, but there are about five times more businesses without employees than those with, so I figure anywhere from half a million to two million startups per year in the U.S. alone. The Angel Capital Association says there are only about 75,000 angel investments and 5,000 venture capital investments per year, and many of those are duplications, second and third rounds, or new investments in already-existing companies.

Those numbers make sense to me. After all, outside investment is a special case in startups, related to the best of the best, normally only startups with a lot of potential growth, experienced teams, and product-market fit. Investors need companies that aren’t just likely to succeed, but likely to succeed and sell out within five years or so.

What doesn’t make sense is how many people think the natural, normal process of starting a business involved getting somebody else’s money. That’s the exception. The rule is elbow grease and shoe leather, struggling to get the first customers, focusing on a subset of the larger vision, starting with what you have, not what would be ideal. This is the realm of the normal, in which entrepreneurs turn to friends and family for help, they borrow from house equity, and they work their startup in their spare time. And sometimes, when they have a business plan and some minimal startup resources, they go to their local banks and get an SBA-guaranteed loan through the bank.

For those who complain that they can’t get startup investment, as if that were a natural right, I say welcome to entrepreneurship. Nobody is entitled to startup investment. Build a startup that’s a good investment, and you’ll get investment. Do the work.

Nobody invests in business ideas.

No offense, but your idea, no matter how good, has no value. What gives it value is the work involved in getting started. You develop the idea, gather a team, do a product prototype or minimum viable product, and prove the concept with actual users, subscribers, customers, distributors, or whatever consists of traction in that business.

You don’t even own that idea. If it’s an invention, you have to design and describe and win a patent to own it. And patents don’t always protect against imitations. You can own a creative work with copyright, which covers books, software, pictures, and art. You can own commercial words, images, sounds, and such with trademark. But you don’t own a business idea.

Companies don’t buy ideas. They don’t even listen to idea-holders wanting to pitch ideas.

You have to do the work.

A business idea doesn’t make you an entrepreneur. It doesn’t entitle you to investment. It puts you in the same boat as the rest of us, facing the journey of execution that turns an idea into a business of value. You aren’t entitled to financing; your business has to earn that with milestones met and progress made.

Does that sound daunting? Here’s the good news: If you’re there, at the start of the journey, you’re in good company. Millions of entrepreneurs have done that already, the vast majority of them without somebody else’s money to help. Solve a problem, give value, make the world better for your potential customers, and you can do it. Do the work.

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