1. Whatever you call it, small business coaching, executive coaching or just plain old business mentoring, it has become a necessity for small business. You’re working too many hours and pretty sure that if you left for a holiday, things wouldn’t work anywhere near as well as they do now. Or put another way, you’re ready to work a whole lot less. Having a business coach is a far more profitable and affordable way for you as a business owner to get the help and growth in your business.2. If you’re not making anywhere near enough money to justify the effort, risk and investment you’re making in the business then a good coach can help you turn that around. A good business coach will be able to help you with your sales, marketing, advertising, profit growth, business growth, business systems, time management and team building to literally bump up your revenues in a matter of months.3. To build a team of people that can grow the business whether you’re there or not requires of lot of resources. A good business coach can guide you through the recruiting, training and help you keep the best people.4. You need to fall in love with your business again, it’s gotten boring and at times you even feel sick of it all. Now is the time for a re-injection of that vision and passion you had when you first started. Business motivation is at the core of everything a good Business Coach should take you through. Building either a simple business plan or marketing plan will give you the clarity on not only what needs doing but how to do it.5. You know that to grow you need to be learning more, but you don’t even have time to keep up with your industry changes let alone the changes in global business and how to improve it all. Business education has moved into a new realm, with business mentoring and business coaching taking over from traditional books and seminars so you get the right information at the right time. Think of it as an entrepreneurial degree using your business as a case study.6. A good Business Coach, a mentor, will hold you accountable. A good mentor will demand a profit and results. Someone to push you, cajole you and hopefully more often than the rest, congratulate you on a job well done. Being a business owner can be a lonely job. Having a sounding board, a mentor and coach, a friend to talk with you and provide expert coaching, helping you to solve your business problems and turn them into business opportunities can sometimes make all the difference. Creating opportunities is just a small part of what a coach should do, but often it can be the most valuable.7. A Business Coach can help you see the forest for the trees, as they aren’t blinded by the industry and by too many years in your business. Running your own business is like any part of life, often you need a mentor to see the simplest of things. Often you need someone to ask the tough questions to keep you on track.
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Deducting Your Employer Business Expenses
If you are an employee, you may be able to deduct your un-reimbursed work-related expenses as an itemized deduction on Schedule A. Employee business expenses are subject to the 2% of AGI limitation (see below). You can deduct un-reimbursed employee business expenses incurred in the normal course of carrying out your responsibilities as an employee.You can deduct un-reimbursed travel expenses that you incur as an employee if you temporarily travel away from your tax home for your job. These expenses include transportation, car expenses, lodging and meals (meals are only allowed if you are traveling overnight). You can also deduct your job-related education expenses. You claim your employee business expenses on line 21 of Schedule A.Travel expenses
Although commuting costs (travel between home and work) are not deductible, some local transportation expenses are. Deductible local transportation expenses include the ordinary and necessary expenses of going from one workplace to another. If you have an office in your home that you use as your principal place of business for your employer, you may deduct the cost of traveling between your home office and work places associated with your employment.You may deduct the cost of traveling between your residence and a temporary work location outside of the metropolitan area where you live and normally work. If you have one or more regular work locations away from your residence, you may also deduct the cost of going between your residence and a temporary work location within your metropolitan area.Where is your tax home?
In determining the deductibility of travel expenses when you travel outside your general work area, the location of your tax home must first be established. Your tax home is your main place of business or work, regardless of where you maintain your family home. The following factors are used to determine your main place of business or work:
The total time ordinarily spent working in each area.
The level of business activity in each area.
Whether the income from each place is significant or insignificant.You are considered away from your tax home if you are required to be away from the general area of your tax home for longer than an ordinary workday, and you need to get sleep or rest.What expenses are deductible?
If you are on a temporary assignment or job away from your tax home, your job expenses may or may not be deductible. A temporary assignment is one that is expected to last for one year or less, and does in fact last for one year or less. The following factors are used to determine if traveling expenses to that temporary assignment or job are deductible or not:
If the assignment has a fixed ending date (one year or less), the expenses are deductible.
If the assignment or job lasts or is expected to last indefinitely, the expenses are not deductible.Your employee business (job) expenses can be deductible as long as they were:
Paid or incurred during the tax year.
Incurred for carrying out your job as an employee.
Ordinary and necessary business expenses.To figure your meal expenses when traveling away from your tax home, you can use either the actual expenses incurred, or a standard rate of $46 per day. The standard rate can be higher in some cities, and you can find this information on the IRS website. Whichever method you use, tax law allows you to deduct ONLY 50% of your un-reimbursed meal expenses.You can deduct expenses of up to $2,000 per year for attending conventions, seminars, or similar meeting held on cruise ships.Meal and entertainment expenses
If your job requires you to entertain customers, you can deduct ordinary and necessary meals and entertainment expenses, but only if they are directly related and associated with your business.The directly related test is met if:
The meal or entertainment takes place in a clear business setting.
The main purpose of the meal and entertainment is for the conduct of business.
You did in fact engage in business.
You had more than a general expectation of getting income or some other business benefit.The associated test is met if:
The meal or entertainment is associated with the active conduct or your trade or business.
The meal or entertainment directly precedes or follows a substantial business discussion.In general, you can deduct only 50% of business related meal and entertainment expenses. Therefore if you receive one bill, which includes the costs of meals, lodging, transportation, etc., you must allocate the expenses between the cost of meals and entertainment, and the cost of the other services.If you gave away tickets to an entertainment event, you can deduct only the face value of the tickets. If you gave a customer tickets and did not accompany the customer to the event, you can treat the cost of the tickets as either an entertainment or a gift expense, whichever is to your advantage.Business gift expenses
If the nature of your job requires you to give gifts to customers, the cost of gifts given directly or indirectly to a customer is deductible up to a maximum limit. The following rules apply to gifts:
You cannot deduct a gift of more than $25 per person (incidental costs, such as engraving on jewelry, or packaging and mailing, are not included in determining the cost of the gift).
A gift to a customer’s family member is considered an indirect gift to that customer.
If both spouses give gifts, they are treated as one taxpayer with one $25 limit per customer.
Items costing less than $4, and used for promotional purposes, such as pens, key chains, mugs, etc., with the business name clearly imprinted, are not included in the $25 limit.An item that could be categorized as either a gift or an entertainment expense is generally considered to be an entertainment expense, and hence subject to the 50% deduction rule.Local transportation
You can deduct the ordinary and necessary costs of business-related transportation expenses incurred within the area of your tax home. Transportation expenses include the cost of transportation by air, rail, bus, taxi, etc., and the cost of driving and maintaining your car. This following transportation costs are deductible:
Traveling from one workplace to another.
Traveling to a business meeting away from your workplace.
Traveling from home to a temporary workplace, if you have more than one regular workplace.Commuting expenses are never deductible, and include the following:
Traveling between your home and your regular place of business.
Parking fees incurred at your regular place of business.
Traveling from a union hall where you get your assignment, to your place of work.Car expenses
If you use your own car, van, pickup, or panel truck, for the purposes of performing your duties on your job, you can claim a deduction for the use of your vehicle. You can claim EITHER the standard mileage rate OR the actual expenses for operating your vehicle on the job.The standard mileage rate is a rate allowed per mile for every business mile traveled. You can claim mileage at a standard rate of 51 cents per mile for each business mile traveled for the period 1/1/2011 to 6/30/2011, and 55.5 cents per mile for the period 7/1/2011 to 12/31/2011.You cannot claim the standard rate if:
You used the car for hire (for example, as a taxi).
You operate five or more cars at the same time.
You claimed depreciation, or claimed a Section 179 deduction (see chapter 12) in an earlier year.
You are a rural mail carrier who received a qualified reimbursement.Your actual expenses that can be deductible include the following:
The cost of lease payments.
Tires, gas, oil.
Insurance, registration fees, and licenses.If you opt to claim your actual expenses, you must first of all ascertain your total expenses, and then divide your total expenses between business use and personal use, based on the number of miles driven for each purpose.You can claim your business related parking fees and tolls as an additional deduction, whichever method you use.If you are an employee, you cannot deduct any interest paid on a car loan. This applies even if the car is used 100% for business. However, if you are self-employed you can deduct the part of the interest expense that represents the business use of the car.The cost of traveling between home and regular job is considered commuting expenses and is not deductible. If you have two workplaces, you can deduct the cost of traveling from one workplace to the other.Business use of your home deduction
You can claim a deduction for the business use of your home if you use part of your home for your employer’s business. There are some tests that you must meet to be eligible for this deduction:
To deduct expenses for business use of the home, part of your home must be used regularly and exclusively for your employer’s business.
You cannot deduct business expenses for any part of your home that you use for both personal and business purposes.
The use of your home must be for your employer’s convenience.
You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.Deductible expenses for business use of your home include the business portion of real estate taxes, deductible mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs. Generally, the amount of your deduction for whole-house related expenses, like utilities, is limited to the square footage of the area you’re using for business purposes. You may not deduct expenses for lawn care in general, or for painting a room not used for business.You must use the worksheet in Publication 587,Business Use of Your Home, to figure your deduction. You claim this deduction on line 21 of Schedule A.(Off-the-shelf tax software will effectively bring up and complete theBusiness Use of Your Home worksheet for you)Job-related education expenses
You may be able to deduct job-related education expenses paid during the year, as an itemized deduction on Schedule A. These expenses are also subject to the 2% of AGI limitation (see below).To be deductible, your expenses must be job-related, and must be for education that is:
Required by your employer or by law, to keep your present salary, status, or job.
Required to maintain or improve the skills needed in your present work.Although the above requirements may be met, no deduction will be allowed on Schedule A, if the education is:
Needed to meet the minimum education requirements for your current job or trade.
Part of a program of study that can qualify you for a new job or trade, even if you have no plans to enter that job or trade.If you are not allowed to deduct your job-related education expenses on Schedule A, you may however, be able to deduct them of Form 1040, as a tuition and fees adjustment, or as a lifetime learning credit.Deductible job-related education expenses include the following costs:
Tuition, books, lab fees, supplies and similar items.
Certain transportation and travel costs, including driving from work to school.
Transportation from home to school if you are regularly employed and go to school on a temporary basis.
Other educational expenses, such as costs of research and typing a paper.
Travel, meals, and lodging for overnight travel, to obtain qualified education.You must keep proper records to prove your education expenses; otherwise the IRS will disallow them in the case of an audit.Employer reimbursement plans
If your employer does not reimburse you for your work-related expenses, any allowable expense in excess of 2% of your adjusted gross income is fully deductible on Schedule A.If your employer does reimburse you, the deductibility of the expense depends on the type of reimbursement plan you have. There are two types of employer reimbursement plans – an accountable plan and a non-accountable plan.An accountable plan
Under an accountable plan, your employer’s reimbursement or allowance arrangement must require you to: (a) adequately account your expenses to your employer, and (b) return any excess reimbursement or allowance.The rules under an accountable are as follows:
Your employer reimburses you for all the work-related expenses that you incurred, upon you accounting to your employer for all your expenditure.
Reimbursements are not taxable, and your employer should not include them in wages on your Form W-2.
You cannot claim a deduction for any amount for which you have been reimbursed.A non-accountable plan
Under a non-accountable plan:
You do not account to your employer for the work-related expenses that you incurred.
The entire reimbursement is included as wages in box 1 of your Form W-2, and is treated as taxable income.
You figure your eligible work-related expenses on Form 2106, Employee Business Expenses, and deduct them on Schedule A.Completing Form 2106
You must complete Form 2106 to figure your deductible work-related expenses, which include:
All your travel, car, and other local transportation expenses incurred under a non-accountable plan, whether or not you are reimbursed for them.
All other expenses for which you are reimbursed under a non-accountable plan.
Any expenses for which you are not reimbursed under an accountable plan.Your expenses from Form 2106 are claimed on line 21 of Schedule A. However, you can only deduct the amount that exceeds 2% of your adjusted gross income. For expenses for items such as safety equipment, uniforms, protective clothing and dues, for which you have not received reimbursement, these can be entered directly on line 21 of Schedule A (you do not have to use Form 2106).Record keeping
It is imperative that you keep proper records to support all your employee business expenses, especially if you plan to deduct travel, entertainment, gift, local transportation, and car expenses. The records should be in written format, and you should retain your bills, receipts, and cancelled checks. If you are audited and cannot provide the records to support your deductions, it is quite likely that the IRS will disallow the deductions.Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense. For example, a hotel receipt is enough to support expenses for business travel if it has all the following information: (a) the name and location of the hotel, (b) the dates you stayed there, (c) separate amounts for charges such as lodging, meals, and telephone calls. A restaurant receipt is enough to prove the expenses for a business meal if it has all of the following information: (a) the name of the restaurant, (b) the number of people served, and (c) the date and amount of the expense.
Tips for Planning Your Business Startup
Starting a business can be a very daunting adventure if a proper plan is not put in place. Most entrepreneurs start up their businesses without putting adequate plans in place to succeed. No wonder one out of every five businesses crumbles within 5 years! If one thing should be taken very seriously, it should be your business plan. This is your “blueprint for success.”Every business begins from a thought. A thought or idea can only become reality when expected actions are taken. When an idea is conceived, the logical corollary is that such ideas need to be written out, in black and white and on paper; or else the idea will fade off when the enthusiasm that the thought initially brought subsides. Hence, having a written business plan is pertinent if your business is to stand the test of time.Now, what is a Business Plan?One definition, according to entrepreneur.com, is that a business plan is a “written description of the future of your business; a document that indicates what you intend to do and how you intend to do it.” If you notice a paragraph on the back of an envelope describing your business strategy, you have already started a written plan, or at least the first draft of a plan. The business plan itself consists of a narrative and several financial worksheets.The very act of planning helps you to think things through in a systematic and thorough way. Study and research your market niche if you are not sure of the facts, and look at your ideas critically. It may take some time now, but helps to avert costly and disastrous mistakes in future.In this article, I want to provide a very brief look at the steps involved in planning a business:1. Identify Your Passion: Knowing what you love doing, even without making money, is the stepping stone in starting any business. Most people enter into a business they know nothing about, and stop after only few months. Some get tired of their businesses simply because they are not happy with the activities involved in running the business anymore. According to Sabrina Parsons, (CEO of Palo Alto Software) “Know yourself, and work in a job that caters to your strengths. This knowledge will make you happier.” The reason why many businesses fail in their first five years is because the entrepreneurs do not find fulfillment in running their business anymore. Hence, they tend to move on in search for happiness.You must look within by evaluating yourself and identify what you are good with. If what you are good at gives you happiness, think of how you can monetize it and make it a business. You do this by sharing your passion with others. However, passion alone is not enough in starting a business. You need to plan, set goals and above all, know yourself.2. Conduct Intense Market Research: As stated above, passion alone is not enough in determining the type of business endeavor you should get involved in. You need to be sure if there are people who are really interested in paying for what you have to offer. Apart from that, you need to identity the category of people who can afford the prices of your products or services, and in what quantity.You also need to determine how to attract your prospective customers. How do you intend to reach your targeted customers? How do you intend to distribute your products to your targeted customers? How do you know the actual price that potential customers are willing to pay for your products? These and many other things are what you should know before investing your money in starting any business.3. Write a Business Plan: A business plan is a written document that describes your business idea. Your business plan will give you a sense of direction towards achieving your business goals and objectives. It describes what you want to do, when to do it, where to do it, and how to do it. A written business plan can also be used as a guide running your successful business.Writing down your plans helps you to anticipate the future of your business. Anticipating your business helps you to identify and possibly avoid any challenge that may bedevil your business in the future.4. Register Your Business: After you have written down your business plan, you must register your business so that clients will take you serious. Apart from that, registering your business makes your business have a life of its own. It separates you from your business. Any serious minded entrepreneur must have his business registered.The most common type of business is that of a Sole Proprietor. You run your business yourself and keep accurate books (for tax purposes). You deduct your expenses and pay taxes on the gains. This is the simplest type of business to open. It is also the most vulnerable to having your assets taken away by an angry customer who would file a law suit against you for whatever reason. This is one of many reasons that business owners opt for one of the other types of business set ups.A Partnership is a type of business where two or more people enter into a business arrangement. Two friends, etc. decide to open a business. If you decide to enter into a partnership, you need a document that details how the business will be divided if the partnership is broken up. It may sound crude to plan this before opening the doors, but it will save a lot of heartache and expenses in the end. Besides, if you never dissolve the partnership – the document is never needed. This is one of those “it is better to have it if it’s needed rather than need it and not have it” moments.Corporations: There are several types of ways to incorporate. I am not going to get involved with a detailed discussion here. My recommendation is if you are planning on incorporating your business – hire an attorney with expertise in this area. There as several types of corporations and your attorney can evaluate the facts surrounding your business and guide you to the most appropriate type of corporation for you to use.5. Get The Necessary Capital: This is the most difficult aspect of starting a business. Getting the capital to finance a business is the major factor that discourages most entrepreneurs from moving ahead with their plans.There is no doubt that most businesses start through self-financing. The reason for this is clear – Nobody believes in your dream until there is a physical manifestation. As a potential business person, you must learn to save aggressively in order to meet the financial requirements of operating your business while taking care of your family at the same time. You can also opt for loans from friends, family or corporate bodies (banks, saving and loans, etc.).A general rule of business states that, in addition to your start-up costs you should also have at least six to twelve months’ worth of your family’s budget in the bank. In order to finance your company, you will need to match the company’s needs to the appropriate financing option. You should seek the assistance of a good accountant in this area. The accountant will be able to advise you what is best in your situation and also offer assistance in tax planning.6. Taking Risks: Once the financial aspect of starting a business is settled, what risks you should take should be the next line of action. You should keep on testing different things to be able to ascertain what works well for you and your business plan. By accurately listing the acceptable risks you are willing to take before hand (in your business plan) and in what situations these risks would be taken, will give you valuable guidance when obstacles occur (and they will occur).By having your plan of action already in place, it will be very easy for you to refer back to your well thought out plan and decide on the course of action to take concerning a pre-identified obstacle to your business success.It is important to know from the beginning that you may fail in this business. You may not want to acknowledge this fact. I mean, who wants to “plan” on failing, right? But, by acknowledging this now will help to keep you going when you experience any setback in the future. What matters most in business is your level of discipline, persistence and belief.Whenever, you experience any failure, go back to your business plan and pinpoint where you missed it so that you can implement the appropriate corrections. If the trouble you are experiencing was not identified in your original business plan, now is the time to add it to your plan.Take the time to go through all of the steps in identifying and mitigating risks, just as you did when you wrote the original plan. By doing this, you accomplish two things:1) You are methodically thinking through the problem and determining a solution, and2) You are now adding this unforeseen problem to your plan! If it ever manifests again, you will be able to quickly determining what you did and if it was effective (saving time and stress later).The steps above, if followed, will help you in building a top level business that will could be your opportunity to change the world! Ensure you do not go into a business without prior planning.All ways remember the 5Ps – Proper Planning Prevents Poor Performance!