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Plan Ahead-IRS Tax Tips for 2007
Is an employer ID number the same as a tax ID number?
Yes, an employer identification number, or EIN, is also know as a taxpayer identification number, or TIN. A sole proprietorship that has no employees and files no excise or pension tax returns and a LLC with a single owner (where the owner will file employment tax returns) are the only businesses that do not need an employer identification number. In these instances, the sole proprietor uses his or her social security number as the taxpayer identification number.
Qualified Transportation Fringe Benefit
For taxable years beginning in 2007, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $110. The monthly limitations regarding the fringe benefit exclusion amount for qualified parking is $215.
Self -Employment
The self-employment tax rate on net earnings remains the same for 2007. This rate 15.3%, is a total of 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
The maximum amount subject to the social security part for tax years beginning in 2007 has increased to $97,500 from $94,200 in 2006. All net earnings of at least $400 are subject to the Medicare part.
Business Training
Can I deduct the cost of classes I need for work? In some cases, you may be able to deduct the cost of classes you need for work. This deduction, however, would be subject to the 2 percent for AGI limitation, along with most other miscellaneous itemized deductions you list on From 1040, Schedule A (PDF), Itemized Deductions.
To be deductible, your expenses must be for education that.
Maintains or improves skills required in your present job, or
Serves a business purpose and is required by your employer, or by law, to keep your present salary, status, or job.
However, these same expenses are not deductible if:
The education is required to meet the minimum educational requirements of your job, or
The education is part of a program that will lead to qualifying you in a new trade or business.
Educational expenses, related to your present work, that are incurred during periods of temporary absence from your job may also be deductible provided you return to the same job or same type of work. Generally, absence from work for one year or less is considered temporary.
For more information, visit the Internal Revenues web site at http://www.irs.gov.
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Make the Marketplace a Better Place
To help your business to focus on efforts that will lead to long-term success and get off to a good start in 2007, the Better Business Bureau offers the following tips:
Treat customers, employees, suppliers and competitors with respect and fairness at all times.
Assume full responsibility for the quality and performance of your product.
Prominently post all refund, exchange and credit policies to avoid any misunderstandings with your customers.
Advertise proudly, but truthfully. The BBB Code of Advertising, posted at www.bbb.org/membership/codeofad.asp, offers guiding principles to make certain your advertising is accurate and honest.
Train your salespeople to assist potential customers in making an informed buying decision. They should be encouraged to offer helpful information about your business, its products or service, and any other details pertinent to the sale.
Establish a customer service program and educate your employees accordingly. The program should cover basic expectations on everything from telephone courtesy to handling dissatisfied customers.
Try to resolve legitimate complaints in a professional and prompt fashion. Every complaint provides the opportunity to clear up a misunderstanding or to identify a very real problem within your organization. If your best efforts are not providing satisfactory resolution to the problem, contact your BBB. Most BBB's offer mediation and arbitration services.
Promote good will in the marketplace. Support efforts to advance the health and welfare of the communities in which you do business.
Abide by local, state and federal laws governing your business and industry.
Make certain your employees understand your business philosophy and that you will support efforts to do things the "right way."
If your business markets online, adhere to ethical online business practices. Review the BBB Code of Online Business Practice and visit the BBBOnLine Web site at www.bbbonline.org for helpful information.
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Small Businesses are Urged to Protect their Data
Small businesses typically are not as focused on data security as are larger corporations. Some small business owners believe that locking up their storefront is sufficient protection against theft of important data. Others assume they are better protected than they really are, because they lack in-house experts to advise them otherwise. Still others may suspect they should be doing more, but do not know where to access the information needed to secure their data.
The Better Business Bureaus has launched a new national education initiative to help small business owners improve their security and privacy readiness in a climate of data exposure risks. Small businesses are a strong part of the economy, so their vulnerabilities can have wide-ranging implications. Business owners of all sizes need to be vigilant in protecting their customers, their employees and themselves.
Entitled Security & Privacy - Made Simpler™, the BBB's initiative offers small businesses a non-technical roadmap for securing their data. The national program includes free, easy-to-read security and privacy toolkits that are accessible online at: www.bbb.org/securityandprivacy. A customer data protection toolkit is available now, and the employee data toolkit will be released in the fall.
Small business owners may also visit the site to view a downloadable 'webinar' featuring key topic experts, and receive ongoing updates about new security and privacy developments that affect small businesses.
The Security & Privacy - Made Simpler™ initiative is specifically designed for small business owners. Complex and cumbersome concepts have been converted into manageable action steps. Included are:
Illustrations of low-tech and high-tech data theft, from dumpster diving and employee theft to phishing and hacking…and steps for prevention;
Checklists for everyday security practices, such as restricting access to sensitive records, keeping e-mails free of personal information, and training employees on privacy and security policies;
Common sense advice, such as "if you don't absolutely need a piece of customer information, the best policy is, don't collect it," and "if you possess customer data you no longer need, discard it - securely;" and
Practical guidance on whom to notify in the event of a data breach, from law enforcement to potentially-exposed customers.
The initiative was developed in partnership with national privacy and security experts and is supported by IBM, Visa U.S.A., Equifax, Verizon Wireless, The Wall Street Journal, eBay and PayPal.
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Controlling Credit Card Processing Costs
Credit card processing costs can be a challenge to small businesses that operate on a thin profit margin. As more and more consumers use credit cards for routine purchases, the volume of credit cad processing transactions continues to grow, impacting the cost of doing business.
If you own a small business, there are ways to manage your merchant processing costs. The Better Business Bureau offers the following tips:
Talk to your merchant processor. They should be willing to work with you to ensure you have the best deal possible.
Install the latest software in your terminal or point-of-sale system.
Properly train your employees to use the correct procedure and enter the required information when accepting cards. For instance, to avoid higher rates when accepting corporate, business or purchasing cards, they should always enter a customer code and tax amount when prompted by the terminal.
Make sure your account is set up under the correct type of business.
Batch each night to ensure that you qualify transactions at the best possible rate. Rates rise to a higher rate if the terminal is not closed out within 24 hours and rise even more if closed out after 48 hours. Set up auto-close if you or your employees are forgetful about batching.
If you believe it would be advantageous to switch merchant processors, do some research first. Whatever processor you select will have access to your personal and business information, so you want to choose with care.
Check the processor's track record with the BBB.
Assess the helpfulness of their staff. Do they answer your questions promptly? What do other customers say about the business?
Three important issues to consider are the length of the contractual commitment; how long it takes for funds to be transferred; and how charge-backs and fraud are handled.
Fees tend to vary between providers and may be negotiable. Ask about set-up, cancellation, monthly minimum and any other fees. Once you understand the various fees, you can approximate what your total cost would likely be in a good month.
Read and understand the entire contract before committing your business. Understand the terms of the agreement, the minimum charges and the termination clauses. If you have doubts, or the merchant pressures you for an immediate decision, trust your instincts and walk away.
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Advertising Online - Know the Ground Rules
Online advertising presents opportunities no business can afford to miss. Even the smallest hometown retailer can use the Internet to attract potential customers, whether they live across town, in another state or outside the country. If a business wants to keep that customer's loyalty, however, it is going to need to inspire their confidence.
The Better Business Bureau believes that truthful and accurate advertising is the key to building consumer trust in both the traditional and online marketplace. The following tips can assist businesses looking to establish credibility on the Internet.
Help the consumer to make an informed buying decision. Your advertisement should provide consumers with access to relevant information about your company and its goods or services available for purchase online.
Tell the truth. The Federal Trade Commission prohibits unfair or deceptive advertising on the Internet and elsewhere. A claim can be misleading if relevant information is left out or if the claim implies something that is not true.
Disclaimers must be clear and conspicuous. That means a consumer must be able to notice, read or hear, and understand the information.
Live up to your promises. If you advertise "100% satisfaction or your money back," then fulfill that commitment. If you advertise a speedy shipping delivery date, you must meet that obligation.
Be able to substantiate your advertising claims, especially when they concern health, safety or performance. Your advertising claims must be supported by facts. Do not omit pertinent information or use deception to lure consumers into believing your product delivers more than it does.
Use accurate comparisons. When comparing your product to a competitor's, compare similar attributes that contribute strongly to the product's worth or usefulness. Avoid "apples and oranges" comparisons.
Advertising to children warrants special care. The BBB's Children's
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