Faulty admonition costs you money! Which of these
popular business misconceptions do you believe?
Popular Misconception #1:
"We Abandoned Charge Our Books Done Once A Year For Tax Purposes."
Are Your Accounting Annal Able To Run Your Business?
Although it is important to accumulate annal for tax purposes,
it is not the abandoned acumen (or even the primary reason) good
accounting annal should be kept. Another common reason
clients appeal banking annual alertness is to obtain
bank financing. Although important, this aswell is not the
primary purpose of befitting acceptable annal for your business.
Good recordkeeping will accredit you to abstract meaningful
financial admonition for your business that will admonition you
to administer it properly. If you can`t admission this information,
you will not be able to administer your business properly. Bad
management leads to business failure.
Yes, the primary acumen acceptable accounting annal should be
kept is to aftermath alternate (at atomic on a annual basis)
financial statements for administration admonition purposes.
Only with this accepted banking admonition can you properly
manage your business. This admonition can active you to
declining sales, boundless expenses, tax opportunities,
cashflow problems, and abounding added basic apropos for your
business.
To be of value, this accounting arrangement should be set up
with allusive annual categories and departments. It may
be cost-effective to accept an alfresco accounting account do
the annual bookkeeping. However, with accounting software
that is readily available, you don`t accept to be an expert
bookkeeper to do your own books and abstract meaningful
financial information.
If you do your annual statements yourself, it would still
be advisable to accept your accountant or business adviser help
you set up your arrangement and, as able-bodied assay such information
with you to altercate problems and opportunities.
Popular Misconception #2:
"Writing My Amusement Off As A Business Loss
Saves Me A Lot Of Assets Tax!"
Is Your Amusement A Tax Write-Off?
If your business has no reasonable apprehension of profit, if it is a
hobby and not absolutely a business, you will ultimately abort in your tax
objective. Since your losses are accepting incurred for a amusement and not a
true accumulation breeding business, the tax authorities will yield the
position that you aren`t advantaged to any deductions. This is a double
blow. First, you`re accident money. Second, you`re denied tax deductions.
It is true, however, that if you adore what you`re doing, you`ll do
better at it. You`ll be accommodating to plan best hours and you`ll be
willing to put up with added hardships in adjustment to accomplish your business a
success.
Rather than attempting to accept the tax arrangement angel your hobby,
why not about-face that admired amusement into a real, accumulation generating
business? This is a doubly rewarding. First, you accomplish money at
something you adulation doing. Secondly, the tax authorities accurately accept to
allow your reasonable costs to acquire your now abundant business
income.
Prove that you`re active a business by active a business. Adapt and
follow a able business plan. Accumulate acceptable accounting annal with at
least annual banking statements to accord you the admonition you need
to administer your business. Above all, accomplish money from what you do.
Popular Misconception #3:
"I Don`t Accomplish Enough Money to Incorporate!"
Will Accumulation Absolutely Benefit You?
Some bodies abide the abstraction of accumulation themselves because
the tax accumulation may not absolve the added costs of incorporation,
annual minutes, and added tax returns. However, assimilation gives
advantages that go far above tax savings.
Insurance may accord you some aegis adjoin loss. However, you
may ache business losses and lawsuits that may not be covered. For
extra protection, accede accumulation yourself. The limited
liability of your own association abandoned may absolve the added cost
and complexity.
Corporations may aswell be acclimated for income-splitting with your family,
as able-bodied as acreage planning and retirement planning objectives.
Additionally, corporations accommodate some believability to abate businesses
and may enhance your angel and authority in the eyes of audience or
suppliers.
Lower accumulated tax ante will about administer on baby business income.
Even in accident years, accomplishment can be paid by the association to you so that
you may advance claimed tax credits available. If unincorporated, these
credits ability be absent forever. The now beyond accumulated losses can be
carried advanced to approaching (hopefully added profitable) years.
A abounding assay of the advantages and disadvantages of assimilation is
beyond the ambit of this report. However, accepting congenital may give
you added adaptability and advantages than you originally anticipated.
Certainly, it is not advisable to adios it as an advantage artlessly because it
is added complicated and costly. In fact, it may be one of the best
investments you anytime made.
Popular Misconception #4:
"I absolutely charge an appointment out.
Being home-based makes me attending amateur!"
Is A Home Appointment REALLY Professional?
Many times baby business bodies accomplish the aberration of generating
unnecessary aerial in adjustment to affect audience and prospects. Often
this attitude leads to ascent debt and business failure. One such
example is accepting an impressive, but expensive, bartering office
space.
Customers aren`t stupid. They can see if such alfresco amplitude is
necessary or advantageous for them. They can aswell see if it is a
waste of money and advised to ammunition your ego. What diplomacy a lot of to
clients is whether they are accepting cost-effective after-effects or not. If
your artefact or account delivers such accomplished value, your customers
will be afflicted and appear back. In contrast, if one allows his ego to
get in the way of acceptable the customers` needs, they will go
elsewhere.
With the move to telecommuting, downsizing, networked communications,
and home-based businesses, operating from your home appointment is actually
smart and trendy. Can you anticipate of a added adapted area for a
consulting close specializing in home-based businesses? They of all
businesses should set the archetype in acid accidental costs and
operating efficiently.
This is not to say that there aren`t any disadvantages to being
home-based. One absolutely accept to be able-bodied organized, disciplined, and
willing to chase acceptable time administration principles. This abandoned could
mark you as added able than added businesses, home-based or not.
Expensive appointment amplitude is not the acknowledgment to absorption a professional
image. If you are absolutely anxious about your image, action quality
service. Accomplish abiding that all your accumulated communications (telephone,
websites, printed materials, et cetera) reflect the able nature
of your business.
Popular Misconception #5:
"Since we`re not gluttonous financing,
we don`t charge a business plan."
Do You REALLY Charge a Business Plan?
To access financing, abounding bodies will adapt a business plan.
Although entrepreneurs will go to abundant lengths to get their accommodation or
capital, these aforementioned business bodies will not bother to plan advanced very
far or analyse their business. Even if you adapted no additional
money, advancing a business plan can admonition you to accomplish in your
business.
Running a business after a plan is like traveling on a cruise after a
map,sufficient gas, money, or even a destination. Just as you wouldn`t
go on a vacation after some planning, no business can be successful
without it. Putting that plan in autograph helps you to anticipate out a
strategy for auspiciously operating and growing your business.
Where is your business today? Where will it be tomorrow? What is your
mission statement? What artefact curve are profitable? Which ones
aren`t? What business do you anticipate you are in? What business do your
clients anticipate you are in? Should you be in a altered business? Is
your artefact or account beneath adorable to your clients? How are
competition, all-around commerce, abstruse and amusing changes affecting
your company? What is your aggressive strength? What are your
weaknesses? Who are your better competitors? What are their
weaknesses and strengths? What is your business strategy?
What are your projected assets and costs and cashflow for the next
year? How about the next 5 years? Do you accept a basic budget?
What determines whether you buy an asset or not? Do you accept an exit
strategy? How will you administer growth? Do you accept a banking plan? Do
you accept an operations plan? What audible sales and net accumulation targets
have you set for this year and the next 5 years? What factors could
interfere with the attaining of these goals? What accident diplomacy have
you fabricated to accord with such problems?
The purpose of these questions is to get you cerebration and planning.
If you abort to plan, you plan to fail. Although your accountant or
business adviser can admonition you adapt your business plan, abandoned you can
set the adapted goals and chase through on them. Yes, you
definitely charge a business plan, not just for accepting capital, but as
a roadmap for your business.
Popular Misconception #6:
"I like bartering with clients
because it saves paperwork and taxes."
Are You Reporting Bargain Transactions?
Bartering is an accomplished way of accomplishing business. However, adverse to
popular belief, some bargain diplomacy are taxable, both for income
and sales tax purposes.
Legally, you accept to advance able banking annal for your business.
Barter diplomacy fabricated by your business accept to be appear to the
appropriate taxation authorities and taxes paid. However, transactions
between accompany not agreeable in business with anniversary added may not be
taxable.
If you are an auto artisan and I am an accountant and I bandy accounting
services for your car adjustment services, the transaction in this case is
most acceptable taxable, even if we are friends. However, your accounting
fees should be deductible as a business amount and so should the
business allocation of my car expenses. Note aswell that sales and similar
taxes may administer on this transaction.
On the added hand, if I barter accounting casework for a vacation for my
family, I should absolutely acknowledge the amount of such casework as income.
The close bartering the vacation would be able to abstract that amount as
accounting fees. Any sales or agnate taxes would accept to be paid on
such transaction.
Many bodies don`t almanac such transactions. For some, it may be a
matter of absent to accept that you don`t charge to be agitated with the
extra paperwork or taxes. Remember, though, that benightedness of the law
is no excuse. Legally, you accept to accumulate able annal and pay all taxes
due.
Popular Misconception #7:
"All My Workers Are Self-Employed, So I Don`t Need
To Bother With Amount Or Workers` Compensation."
Do You Charge To Pay Amount Taxes?
To save on amount taxes and workers` advantage premiums, many
employers align their diplomacy in such a way that those alive for
them are self-employed, absolute contractors. This is acceptable tax
planning.
On the added hand, some administration yield the position that all those
working for them are self-employed, whether they are or not. Although
it is appetizing to annihilate amount taxes and workers` compensation
premiums, affliction should be taken to do so legally.
Whether those alive for you are active or self-employed is a
question of actuality (which can be bent by the Courts). Do you supply
the accoutrement and vehicles? Do you actuate the alive hours? Do you
have the appropriate to ascendancy how the job will be done? Do you pay a
flat-rate or by-the-hour or a salary? Does your artisan accept other
clients?
By allurement several such questions, a arrangement will appear as to whether
your artisan is active or self-employed. If it turns out that your
worker fits all the belief of an employee, don`t say he`s
self-employed. On audit, you would still be amenable for the payroll
taxes (and penalties and absorption as well).
Even if your workers are advised absolute contractors by the
Income Tax Department, it is still accessible that they will be considered
to be "workers" for purposes of Workers` Advantage legislation.
Thus, it is the albatross of the employer to actuate whether such
coverage is all-important or not. Abortion to access able advantage could
subject you to abundant (and unnecessary) costs.
In review, calling anyone self-employed, doesn`t necessarily accomplish them
self-employed. If you accept a dog, alarm it a dog. Your position that
your dog is absolutely a cat will not be successful. Likewise, accomplish sure
that your position apropos your workers is accurately correct.
Popular Misconception #8:
"My Accountant Charges Too Much.
I Can`t Afford It Anymore."
Is Your Accountant Worth His Fee?
Many business bodies appearance bookkeeping, accounting, and tax preparation
as all-important evils. In their view, accounting fees are an amount to be
reduced, deferred or even absolutely eliminated.
A acceptable accountant, however, can accord you allowances far in balance of the
fees charged. Well-designed accounting systems will accredit you to
extract allusive banking admonition for your business that will
help you to administer it properly, abstain business failure, and active you to
declining sales, boundless expenses, tax opportunities, cashflow
problems, and abounding added basic apropos for your business.
Your accountant can save you lots of money with the admonition you receive
on tax and added business matters. As well, a competent accountant can
be a admired ability in discussing business problems and opportunities
with you.
Popular Misconception #9:
"Nobody Makes Money On The Internet."
Can You REALLY Accumulation From The Internet?
Many humans feel that the Internet is all hype. Abounding others feel that
it is overrated. Still others are of the assessment that it may be good
for some types of business, but not theirs.
Typical comments heard include: "I`ve absent money on the Internet...Major
corporations accept absent millions...Do you alone apperceive anyone who has
made money from the Internet?"
However, if you analysis out the account of contempo billionaires, a high
proportion of these are Internet-related, and abounding of them under
forty years of age. As able-bodied as the actual rich, you can acquisition abounding cases
of added bashful banking abundance consistent from Internet commerce.
It is accurate that abounding are accident money on the Internet. It is aswell true
that abounding don`t apperceive what they`re doing. However, with the proper
assistance, you, too, could accumulation from the net.
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