What are your expenses really worth?

By Randall Orser | Personal Income Tax

Expense word cloud, business conceptTax season is here and for some of you, it might be the first time reporting your online income. Yes, Canada Revenue Agency (CRA) does expect you to pay taxes on your online earnings. However, its not all doom and gloom, just as you pay taxes on income earned, you also get tax relief on business expenses. Knowing your expenses can reduce a tax bill and may even increase a tax refund.

The first thing you should do is find yourself a good tax preparer, not some national, franchise tax service. Those places with a gorilla outside, tossing an arrow sign, cannot advise you, they only record what you tell them. A good tax preparer will sit down with you, talk with you about your business and be able to advise you on what deductions are appropriate for your situation. There are accountants, and bookkeepers, who are able to prepare and file your taxes for you.

Here is a list of some of the things you might be able to claim as business expenses for your online marketing.

  1. The best deduction is your tax preparers fees. Not only will you get great advice but you can claim the cost of that advice too.
  2. The Home Office is always a popular deduction; however, you need to be careful about claiming this. The CRA has very set ideas on what they consider qualifies as a home office. Basically it has to be an area of your home that is exclusively used for your business. So the kitchen table does not count but a desk in the basement could. If you do qualify then you can also claim part of your rent or mortgage, and utilities as business expenses.
  3. Online charges relating to your income. PayPal fees, Fiverrr fees, basically any fees that you had to pay to receive your income could be considered as deductions.
  4. Stationery. Not just the usual printer ink and paper but also business cards, the fliers that you left all over town advertising a CPA offer, envelopes and stamps for those direct mail offers you sent to generate leads for offline clients.
  5. All those WSO’s, Clickbank e-books and online webinars that you paid for can be considered expenses too.
  6. Website costs. Don’t forget hosting, domain name charges, graphics and plugins.
  7. SEO Services. Unlike Google, CRA does not care what services you used to rank your sites, only how much it cost and that it is related to generating income.
  8. Advertising costs: Facebook fees, AdSense fees, paying to have your link on popular YouTube videos, solo ads to build your mailing list, bought traffic via PPV should all be considered.
  9. Website Content: Yes, even those one dollar, 300 word, spun to death articles, have value as an expense.
  10. Online subscriptions for information i.e. SeoMoz, rank checking, backlink analysis and competitor information should be noted down.

This is just a few ideas to get you started thinking about possible online marketing expenses, that you can present to your tax preparer. A good tax preparer is worth their weight in gold. This is their expertise so use it. They can advise you best on which expenses are currently allowed (CRA does like to change the rules) and also what percentage of the expense can be justified as business related. Your cell phone is a legitimate expense but you might only be able to really justify 25% is business use.

Marketing Gurus often talk about “leaving money on the table”, referring to missed income opportunities. However, missed expenses can be just as big a lost opportunity.

Demand Excellence, Expect Excellence

By Randall Orser | Small Business

EXCELLENCE word cloud, business conceptIs demanding excellence from a company’s employees easy? Is it a simple declaration, or is there more involved? Well, if a company wants excellence, it must expect excellence, not only from itself, but also from how it conducts business, and that requires a higher level of accountability for both its managers, and employees alike. There is no middle ground. There is no hierarchy. It is only the company, and its employees, continually raising the bar of excellence. It’s not just a moniker, but involves putting the right people in the right positions. Sure, this isn’t easy, and companies are always complaining about the lack of quality employees. However, are companies really trying to get the best, or simply going for the next best option?

Solutions to problems should come from employees and management

These days, it seems like there are answers for every possible business problem. One can buy a book, hire a consultant or search online for the answers to the most pressing questions businesses face every day. However, should a company have to look those answers up, or should it have the right people, with the right knowledge, capable of answering those questions and solving the problems on their own? While there are still times when a little research is needed, it must be considered a last resort. The answers to those difficult questions, and the solutions to those problems, must come from inside the company. Only those inside the company understand the true nature of the problem, and how best to solve it. There are no quick fixes. The best employees take the time to think through issues, and have the follow through capabilities to see their solutions mature. So, the question remains, how can a company go about demanding excellence? Well, here are a couple of steps that can help raise the bar of performance.

  1. Incentivize performance and excellence

There is no effort without reward, and for companies that demand excellence and increased performance, there must be some kind of compensation for a job well done. Otherwise, these declarations are meaningless. Goals and objectives must have meanings beyond just being able to accomplish them. Employees must be invested in the outcome of the company, and buoyed by results. When a company comes up with an objective for growth, it must first explain the benefits to the company, and its workforce. Once that objective is achieved, it must reward its employees. There is nothing more damaging to the success of a company, than to have an indifferent workforce who sees their employment at the company as simply a job, and not a career.

  1. Recognize accomplishments and promote from within

Imagine a situation where a company sets goals and objective, reaches those objectives, but doesn’t recognize the efforts of its employees. In fact, the company acts as if the extra efforts of its employees were expected. How would you feel as an employee? What if that company continually hired outside the company for key positions? How would you feel then? While companies must be able to hire from outside its doors, it must first take the time to look inside to fill those key positions. Compensation for a job well done is one part of the equation, but the recognition of a promotion is something else entirely. In addition, promotions don’t necessarily have to be hierarchal. They can be promoting someone to be in charge of a cross-functional project team to alleviate a problem.

  1. Demand excellence from everyone, and make no excuses

When a company decides to upgrade its performance, is it acceptable to have some employees who go the extra mile, while others don’t? Of course it isn’t. However, in a number of cases, companies often make excuses for those employees who are either unwilling, or unable, to increase their performance. Perhaps these individuals have been at the company since the beginning, or perhaps work in positions that are seen as less impactful. Whatever the reason, there is simply no excuse for raising the bar for some, and not for others. Therefore, companies must make sure to address any deficiencies, and must work towards improving the skill level of all employees.

  1. Measure results and learn from failure

Central to the theme of demanding excellence is the understanding that with every success comes a little failure. The best people learn from their mistakes, and welcome them as learning experiences. Excellence comes not from always being successful, but from understanding failure and taking the time to review what went wrong and why. Welcome failures as learning experiences and provide positive feedback for increased effort. Mistakes will be made, but the worst mistake is to not take the time to learn from them.

When companies decide to raise the level of their performance, they must learn to lead by example. It requires hiring the right people, and holding every employee, including management, accountable to each other, to the company and to its goals and objectives. Incentivize employees to produce results, and recognize accomplishments by promoting from within. Finally, demand excellence from everyone, and make no excuses for lack of effort. The best organizations are pillars of performance, and lead by example.

Is Your Employer Withholding Enough?

By Randall Orser | Personal Income Tax

payroll summary 2015-12-30As a taxpayer, it is your responsibility to make sure your employer is withholding enough taxes from your paycheck. If you fail to check this out, you could be left with a big tax bill when you file your return. If the difference between what your employer withheld and your tax liability is too large, you could even be facing taxes and interest on the amount you should have paid.

Fortunately, it is relatively easy to avoid these problems. Simply starting a dummy return and running the numbers is the best way to make sure your employer is withholding enough from each of your paychecks. If you find that the company should be withholding more, you can simply contact your human resources representative and request a new withholding form. Reducing the number of exemptions you claim on that form will increase the amount of taxes withheld from each paycheck and reduce or eliminate any further tax liability.

Setting Your Withholdings

When you started your job, one of the forms you filled out was a TD1 (federal and provincial). This form is where you list the number of exemptions you wish to claim. The number of exemptions determines who much your employer withholds in taxes each pay period. The more exemptions you claim, the less taxes are withheld from your paycheck.

You are entitled to claim yourself as an exemption, and if you are married you can claim your spouse as well. If you have children, you can claim an exemption for each one. The tricky part is determining whether or not you should claim all the exemptions to which you are entitled.

If your spouse works as well, it is probably best to not claim that spouse as an exemption. If your spouse claims an exemption at his or her job and you claim an exemption as well, the amount of your withholding may not be enough to cover your tax liability. The same is true if you hold a second job. Claiming yourself as an exemption at both jobs can reduce your withholding too much and leave you owing additional taxes.

Additional Income

You may also wan to decrease the number of exemptions you claim if you have additional sources of income besides your job. If you have a large amount of income from interest, dividends or capital gains, the amount withheld from your paycheck may not cover your total liability.

Reducing the number of exemptions you claim on your W-4 can even things out and reduce any additional taxes at the end of the year. If your other sources of income are substantial, it is a good idea to run the numbers on a dummy tax return and use those figures as your guide.

Ideally, you want to strike a balance between getting a big tax refund and owing additional money to the CRA. If you get a big refund, that simply means you have been loaning money to the government – interest free – all year. The key is to reduce the amount of your refund and keep more money in your pocket, without triggering an additional tax to the CRA.

Merry Christmas and Happy New Year!

By Randall Orser | Small Business

Chrisrmas_postcard_1907--Tidbits 2015-12-23Christmas or Christmas Day (Old English: Crīstesmæsse, meaning “Christ’s Mass”) is an annual festival commemorating the birth of Jesus Christ, observed most commonly on December 25 as a religious and cultural celebration among billions of people around the world. A feast central to the Christian liturgical year, it is prepared for by the season of Advent or the Nativity Fast and initiates the season of Christmastide, which historically in the West lasts twelve days and culminates on Twelfth Night; in some traditions, Christmastide includes an Octave. Christmas Day is a public holiday in many of the world’s nations, is celebrated culturally by a large number of non-Christian people, and is an integral part of the holiday season.

The Christian ecclesiastical calendar contains many remnants of pre-Christian festivals. Christmas includes elements of the Roman feast of the Saturnalia and the birthday of Mithra.The Chronography of 354 AD contains early evidence of the celebration on December 25 of a Christian liturgical feast of the birth of Jesus. This was in Rome, while in Eastern Christianity the birth of Jesus was already celebrated in connection with the Epiphany on January 6.

The December 25 celebration was imported into the East later: in Antioch by John Chrysostom towards the end of the 4th century, probably in 388, and in Alexandria only in the following century. Even in the West, the January 6 celebration of the nativity of Jesus seems to have continued until after 380. In 245, Origen of Alexandria, writing about Leviticus 12:1–8, commented that Scripture mentions only sinners as celebrating their birthdays, namely Pharaoh, who then had his chief baker hanged (Genesis 40:20–22), and Herod, who then had John the Baptist beheaded (Mark 6:21–27), and mentions saints as cursing the day of their birth, namely Jeremiah (Jeremiah 20:14–15) and Job (Job 3:1–16).

In 303, Arnobius ridiculed the idea of celebrating the birthdays of gods, a passage cited as evidence that Arnobius was unaware of any nativity celebration. Since Christmas does not celebrate Christ’s birth “as God” but “as man”, this is not evidence against Christmas being a feast at this time. The fact the Donatists of North Africa celebrated Christmas may indicate that the feast was established by the time that church was created in 311.

Many popular customs associated with Christmas developed independently of the commemoration of Jesus’ birth, with certain elements having origins in pre-Christian festivals that were celebrated around the winter solstice by pagan populations who were later converted to Christianity.

These elements, including the Yule log from Yule and gift giving from Saturnalia, became syncretized into Christmas over the centuries. The prevailing atmosphere of Christmas has also continually evolved since the holiday’s inception, ranging from a sometimes raucous, drunken, carnival-like state in the Middle Ages, to a tamer family-oriented and children-centered theme introduced in a 19th-century transformation. Additionally, the celebration of Christmas was banned on more than one occasion within certain Protestant groups, such as the Puritans, due to concerns that it was too pagan or unbiblical.

One theory to explain the choice of December 25 for the celebration of the birth of Jesus is that the purpose was to Christianize the pagan festival in Rome of the Dies Natalis Solis Invicti, meaning “the birthday of the Unconquered Sun”, a festival inaugurated by the Roman emperor Aurelian (270–275) to celebrate the sun god and celebrated at the winter solstice, December 25.

According to this theory, during the reign of the emperor Constantine, Christian writers assimilated this feast as the birthday of Jesus, associating him with the “sun of righteousness” mentioned in Malachi 4:2 (Sol Iustitiae).

An explicit expression of this theory appears in an annotation of uncertain date added to a manuscript of a work by 12th-century Syrian bishop Jacob Bar-Salibi. The scribe who added it wrote: “It was a custom of the Pagans to celebrate on the same 25 December the birthday of the Sun, at which they kindled lights in token of festivity. In these solemnities and revelries the Christians also took part. Accordingly when the doctors of the Church perceived that the Christians had a leaning to this festival, they took counsel and resolved that the true Nativity should be solemnised on that day. This idea became popular especially in the 18th and 19th centuries.

Up to the 1950s, in the UK, many Christmas customs were restricted to the upper classes and better-off families. The mass of the population had not adopted many of the Christmas rituals that later became general. The Christmas tree was rare. Christmas dinner might be beef — certainly not turkey. In their stockings children might get an apple, orange and sweets. Full celebration of a family Christmas with all the trimmings only became widespread with increased prosperity from the 1950s. National papers were published on Christmas Day until 1912. Post was still delivered on Christmas Day until 1961. League football matches continued in Scotland until the 1970s while in England they ceased at the end of the 1950s.

Under the state atheism of the Soviet Union, after its foundation in 1917, Christmas celebrations—along with other Christian holidays—were prohibited.[137] The League of Militant Atheists encouraged school pupils to campaign against Christmas traditions, such as the Christmas tree, as well as other Christian holidays, including Easter; the League established an antireligious holiday to be the 31st of each month as a replacement. Furthermore, on Christmas Day, children in Moscow were encouraged to spit on crucifixes as protest against this holiday. It was not until the dissolution of the Soviet Union in 1991 that the persecution ended and Orthodox Christmas was celebrated for the first time in Russia after seven decades.

Christmas is basically an amalgamation of the different pagan, and other rituals, celebrated before Jesus Christ, and probably some that came afterwards.

Are You a Freelancer? You Do Plan to File Taxes for Your Business, Don’t You?

By Randall Orser | Personal Income Tax

Woman working on her laptop at sidewalk care TNTo work independently is more popular now than ever before. There are millions of Canadians and Americans who work full time as consultants, freelancers and as owners of tiny one-man businesses. While working this way can be greatly empowering, there are certain compromises that one needs to accept. A slightly difficult tax filing process is one of the areas that present a challenge.
When you just work a regular job at a company, you only need to fill out a tax return and you’re done. When you work for yourself, though, there’s far more to filing a tax return than this. The upside of the deal is that independent workers get many more deductibles than people who work for others. Any business travel or money spent on office equipment and supplies, for instance, is a possible deductible.
If this is your first year filing taxes as an independent worker, this is what you need to know.

Reporting what you’ve made to the CRA

If you are the sole proprietor of your business you need to file a regular tax return including a Schedule T2125 Statement of Business Activities to report whether your business has been profitable. The Gross receipts or sales field on the first line of the Schedule T2125 form asks for information on the income made through the previous tax year. Your annual revenue, as evident in your clients’ invoicing, needs to appear here. The CRA expects you to keep track of it all – cash, checks or anything else (including barter transactions).

Reporting what you’ve spent

Independent workers are only expected to pay taxes on their net profits. If you can keep track of every business-related expense you make over the year, the Schedule T2125 is a very generous tax form. It gives you many ways to reduce your taxable income with deductible expenses. Here are a few examples of the kind of business expenses you get to deduct.
Travel expenses – When you need to travel to another city for business, the plane tickets, airport parking, hotel rooms and restaurant meals are fully deductible.
There are fixed allowance limits for travel expenses of different kinds. If you often drive on business, for instance, you are allowed a deduction based on the percentage of business kilometers compared to total kilometers driven in the calendar year (this is all you get for everything you spend on the car – for gas, wear and tear, insurance and so on).
Office expenses – Guide T4002 details what you get to deduct of your office-related expenses. In general, anything that you spend on office equipment, furniture and consumables is acceptable. With large purchases that last years, the convention is to amortize the cost of each purchase over its life.
Miscellaneous deductions – There are many other areas that offer potential deductions to the independent sole proprietor. If you buy individual health insurance for yourself or your family, the premiums paid are completely deductible. Gifts to other businesses and contributions to a tax-deferred retirement plan are possible deductions, too.

What you do next

If this is your first filing, you could get overenthusiastic about putting in every claim you can think of. It is generally considered a good idea to be conservative about the deductions you claim, though. If you have a question about whether something is deductible, you need to find a good tax preparer familiar with freelancers and small business to help navigate these complex laws. Poorly thought out deductions could invite a CRA audit.

The Importance of Disaster Recovery Plans for Small Businesses

By Randall Orser | Small Business

capsized-piggy-2015-12-09Disasters can strike any time or anywhere, and they can impact businesses of all sizes. Small business owners who think they don’t need disaster recovery plans are likely to find themselves struggling to recover in the event of a natural, economic, or other type of disaster.

The purpose of a disaster recovery plan is to spell out the actions that should be taken to protect the interests of the business, its employees, and its customers in the event that a serious problem impacting the company’s operations arises. Business owners who fail to plan for disaster recovery are at a loss regarding how to proceed when things go wrong.

Once a disaster strikes, it’s too late to stop and go through the planning process. To be effective, a disaster recovery plan must be in place before a problem arises. While it may not be possible to plan in advance for every possible situation that can harm a business, some problems are more likely to occur than others. By coming up with contingency plans for the most likely disasters, the negative effects of such events can often be mitigated.

The first step in creating a disaster recovery plan is to create a list of the events that are most likely to interfere with the company’s operations. For example, businesses located along the Gulf of Mexico need to have plans in place for handling a hurricane strike. Companies in parts of California need to have contingency plans in place for dealing with earthquakes and wildfires. All business that depends on access to data and information technology need to prepare for how to continue operations in the event of a server failure.

An effective recovery plan will list each possible type of problem and specify the steps that should be taken in the event that disaster strikes. Details about who is responsible for carrying out each step of the recovery plan should be specified very clearly, so there is no confusion regarding who is accountable for each task. When recovery plans can be implemented immediately, the process of returning to normal operations can be expedited.

Communicating the disaster recovery plan to everyone involved is very important. The plan itself isn’t what will help your business bounce back as quickly as possible from a disaster. It is the implementation of the plan that will help the company recover. When your disaster plan is written, it’s important to make sure that each employee knows his or her responsibilities and is prepared to act quickly and decisively toward the end purpose of helping the company return to business as normal.

What Determines Tax Withholding Amounts?

By Randall Orser | Personal Income Tax

taxpie TNThe Canadian Parliament and Provincial Legislatures establish federal and provincial tax-withholding rates. Procedures for determining your withholding amounts vary by tax. Sometimes withholding amounts depend on the type of wages being deducted.

TD1 Form

Your TD1 form form helps your employer to determine the amount of federal income tax to subtract from your wages. For this reason, your employer must give you the form to complete when you’re hired. Your withholding amount depends on the number of credits and filing status you claim on the form. Each credit gives you a sum that reduces your wages subject to taxation. The more allowances you claim, the less tax you pay; the fewer allowances you claim, the more tax you pay.

Note there are a Federal and a Provincial TD1, and you, the employee, must fill out both.

Taxable Wages

Federal income tax withholding is also based on your taxable wages. The more you earn, the more tax you pay; the less you earn, the less tax you pay. To arrive at your taxable wages, determine your gross pay, which is your entire pay before deductions. Then subtract nontaxable wages, such as qualified business expense reimbursements, and pretax deductions, such as qualified health insurance, from your gross pay.

CRA Guide T4032 Payroll Deductions Tables

Once taxable wages have been determined, withholding depends on CRA Guide T4032 Payroll Deductions Tables. Apply the withholding table that goes with your filing status, taxable wages, pay period and number of allowances. The table gives the exact amount that should come out of your paychecks. The CRA updates its tax tables periodically, typically semi-annually, so use the tax rate that applies to the tax year in question.

Flat Percentage Rates

Canada Pension Plan (CPP) and Employment Insurance (EI) are federal payroll taxes that are withheld at flat percentages of your wages. These rates are subject to change, usually annually. As of 2015, Canada Pension Plan tax is withheld at 4.95 percent of your taxable wages, up to the annual wage maximum of $53,600. Employment Insurance is withheld at 1.88 percent of taxable wages to a maximum of $49,500.

Supplemental Wages

Supplemental wages are payments you receive from your employer that are not regular wages. They may include overtime pay, bonuses, commissions, severance pay, sick pay, awards, prizes and retroactive pay increases. For federal income tax purposes, if supplemental wages are paid in addition to regular wages, they’re taxed as though the total were a single payment for the regular payroll. If supplemental wages are paid separately from regular wages, federal income tax may be subtracted at a flat 25 percent. If supplemental wages exceed $1 million for the calendar year, the excess amount is taxed at 35 percent.

Provincial Taxes

Every province has an income tax rate and the amounts differ from Province to Province. If you are using CRA’s tax tables then both the federal and provincial amounts will show and are added together. Some Provinces do have additional taxes, such as Ontario’s health tax. Quebec has different rates for CPP and EI.

Some People Just Don’t Have a Work Ethic

By Randall Orser | Small Business

staffmoraleOften a manager will come across an employee who doesn’t seem to make as much of an effort as others. Perhaps he will even show up late, have a poor attendance record or seem to take his job less seriously than everyone else. Maybe the manager will even talk to the employee regarding his less than stellar job performance. Unfortunately, some people just don’t have a work ethic.

A manager might talk to the subordinate a number of times about coming in late or goofing off or whatever his problems may be. Yet the subordinate doesn’t modify his behavior. He just doesn’t seem to “get it.” Perhaps he may not get it any time soon. The fact is that he may just never get it.

A good work ethic is often viewed as someone caring about the quality of his work and making an honest effort to do his job to the best of his abilities. That employee will show up on time and will maintain a good attendance record. Obviously this is the total opposite approach of the person who seems to lack a good work ethic. But why is this? A person with a good work ethic feels guilty when he falls short on his job performance whereas the one without might not feel bad at all.

Quite often, a work ethic is something that is developed prior to adulthood. It is a frame of thought and a way of thinking. Somehow, the individual either acquired a good work ethic in his youth or didn’t. A boss can’t instill a work ethic into his employees. That quite often is the job of the worker’s parents during his childhood or the end result of the employee’s upbringing.

Perhaps the employee’s parents never required him to do anything around the house when he was growing up. Yet they gave him everything he wanted. This may have led him to believe that his whole life would be like that. That he would never really have to work in order to receive anything. Then he reaches adulthood. Now, all of a sudden, he is actually expected to do something before he receives rewards or compensation. Imagine the nerve of his boss! Actually expecting him to work for his salary! What nerve!

Now someone like that may eventually develop a decent work ethic but it usually takes a while for that occur. It usually takes the loss of a job or two. Then they may go through a period of self analyses. They may eventually come to the conclusion that maybe it’s not the rest of the world that is wrong. Maybe there is something wrong with them. A termination or two actually serves as a wakeup call.

If that individual doesn’t change after you, as a concerned manager, inform him of his shortcomings. You just might have one of those individuals who has not yet gone through that period of self analyses. Perhaps the loss of his current job may serve as the catalyst for him to want to modify his approach to work. At any rate, you probably aren’t going to instill a work ethic into this person as he continues to work for you.

The telltale sign would be a lack of repentance. If they aren’t going to take you serious after a few reprimands for the same offenses, chances are they never will. After a while, if the employee is often warned of consequences that never seem to happen, he just won’t take any of the warnings serious at all. You may then have no other choice at that point other than terminating the employee.

The consequences of not terminating an individual who doesn’t take his job serious are many. Those working around him may think that there is no point in working hard themselves if he is allowed to get away with his sloppy work ethic. If you are expecting everyone else to pick up the slack, then you are, in fact, being unfair to those of whom you are requiring to work harder.

You tried to correct the problem. It didn’t work. It’s time to cut this person loose. It’s not your fault. It’s just that some people don’t have a work ethic.

Tax Deductions for Consultants

By Randall Orser | Personal Income Tax

How to Find Tax Breaks - Magnifying Glass TNIf you are a self-employed consultant, you can claim most business-related expenses against your revenues from clients. There are several allowable deductions that can help you save on your income taxes at the end of the year. If they create a net loss, you may even be able to claim the loss against other sources of income.

Home Office Expenses

If you operate your consulting practice from your home, you may be able to claim some of your house expenses, such as mortgage interest, property taxes, insurance and utilities. You can claim home office expenses if your home office is your only one or if you regularly meet with clients there. The portion you can claim is based either on how many rooms the practice takes out of all the rooms of the house or how much square footage is used versus the entire livable square footage of the house. For example, if you used one room (100 square feet) out of 8 in total (1,200 square feet) for your home office, you could either claim 1/8th of your eligible house expenses based on number of rooms or 100/1,200, or 8.3 percent, based on square footage. You can use the calculation that provides you the largest benefit so, in the above example, you would use the number of rooms formula. If your home office expenses would create or increase a net loss, you can carry them forward to use in future years.

Vehicle Expenses

If you use your personal vehicle partly for your consulting business, you can claim a portion of its usage as a business expense. If you are incorporated, you can track all of your business mileage by date and purpose and allows you to claim a cents-per-mile rate for all of that mileage. The detailed method requires that you total up all of your vehicle’s expenses, such as financing interest, repairs, gas and insurance, and allows a deduction for the portion of those expenses related to the business versus total mileage in the year. For example, if you drove 20,000 miles in total in a year and 4,500 of them were for business purposes, you could claim 22.5 percent of your total vehicle expenses.

Research Materials and Subscriptions

This is an often-missed consultant tax deduction. If you buy books, CDs or DVDs, downloads, and other research materials that are business-related, you can deduct them in full as a business expense. This is also true for magazine and other subscriptions. For example, if you subscribe to a trade magazine that helps you keep up with news and current trends in the industry, you can deduct the total subscription amount paid in the year. Keep all receipts and credit card statements to be able to back up your claim. You can also claim educational courses, conferences and other continuing education programs that are directly related to your consulting practice.

Meals and Entertainment

Many consultants buy meals for and entertain clients, potential clients, referral sources and business advisers. The IRS allows a deduction for these expenses at 50 percent of the actual cost, including taxes and tips. The reason for the partial deduction is that the IRS assumes that you would have had to eat anyway, so part of the expense is deemed personal. The meal or entertainment must be connected to business purposes or occur directly before or after a business event. These are often-audited expenses, so keep all receipts filed and mark on the back who was there and how it related to your business.

Other Deductions

Consultants, like other business owners, can deduct all directly business-related expenses from their revenues. This includes travel expenses, the business portion of phone expenses, office supplies and advertising expenses.

Gearing Up for the Busy Season

By Randall Orser | Small Business

Business concepts TNWhether you are in an industry that gets busier in some seasons or experiences fluctuations year round, there are some times when you will be busier than others. There are things that you as a manager can do to gear up for those busy times and perhaps find better ways of operating during the busy days. The best time to devise a strategy to deal with this is during the slow times.

When things get hectic, all of the problems seem to be magnified. What was a slight problem in the slow times became a huge nightmare when things got busy. What you and your subordinates need to do at that time is to keep track of all of those problems. Chances are they will show themselves once again the next time things get busy. That is, if no changes are made to prevent it from happening again.

When things get slow, inform all your subordinates that you would like them to think of everything that went wrong and every problem they encountered when things got busy. Tell them to compile a list. Also to write down everything they can think of that can be done to resolve the issue or to at least improve the situation. Then arrange a meeting where everyone will have an opportunity to present the information they have to offer.

During the meeting, go around to each person and give them the opportunity to present their information to the group. The group should then discuss the issues presented by that person and then move on to the next person in the group. Do this until you are finished.

You will probably notice that more than one person may have encountered each issue and each person may have something to offer as a suggestion for the resolution of the problem. Perhaps some changes can be made that may require some sort of authorization from upper management or certain details have to be researched. You may need another meeting later after those things are addressed.

After the various problems are addressed and there are different procedures or changes in the methods of operation, you may have to have some form of formal training sessions where everyone can learn of the details regarding the changes. Again, this all takes place during the slow periods.

Now when things pick up again, see how the new changes in operation work out for you. Things will probably improve but you may now notice other problems or bottlenecks that weren’t as noticeable because of the more noticeable ones that were worse, the last time around. You may even have new bottlenecks now because the old ones were resolved. Keep track of those problems. The important thing is to work out all of the kinks in your day to day operations and to streamline whatever processes you can.

After this busy period is over, repeat the process. Do this over and over again on a continual basis. This will help you to develop better operating procedures and operate more efficiently. You may even be able to address safety issues or other concerns. Hiring issues may come into play. Perhaps you should hire people with a different skill set than you’ve already been hiring. Perhaps skills that would enable future employees to perform the various job duties better or more efficiently.

The point is to constantly strive to improve upon the methods and procedures you use in your day to day operations. Once these improved procedures are developed, each member of your team can be trained in them. After that, every new hire should be taught how to use the new and improved methods. However, that should not be the end of it. New hires come with different backgrounds and experiences, and may themselves have unique ideas for improvements to offer. It’s all a little something for everyone to do, to gear up for the busy season.

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