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Small business owners have three options if they are looking to simplify and enhance their payroll process: acquire payroll software, outsource payroll via professional payroll services, or sign up for online payroll. Choosing the right payroll processing system for your small business can be confusing- especially since they all seem to be offering similar services. The truth is, however, that each one is targeting a different market. Some software solutions are industry specific and offer more than just payroll. Pioneer Interactive for example offers payroll functions as an additional feature to their HVAC dispatching software suite. These types of “vertical” software solutions have become the new trend for small businesses. Although many are available it is important that you determine that payroll function within these software packages meet your companies requirements.

The following is a brief description of each type of payroll service:

Payroll Software

Payroll software can either stand alone or come as part of an accounting software package. Use of payroll software, means that all aspects of the payroll process, including generating checks or sending a direct deposit, withholding taxes, filing tax returns, and making payroll tax payments, are done on-premises by the small business itself. While the software is designed to ease the burden of intricate and cumbersome calculations, the business is responsible for upgrading the software and acquiring any tax table and tax rate changes.

The Benefits:

• You have complete control over your payroll process.
• You can generate reports to aid payroll management and planning.
• It automatically calculates employee earnings and deductions and deducts federal, state, and local payroll taxes.
• You can prepare and print related tax forms.
• It is moderately expensive.

The Drawbacks:

• You need someone who is familiar with accounting to process payroll information.
• There is less customer support and more reliance on your own inner resources.
• Not all software packages allow for direct deposit.

Payroll Services

When using a payroll service, your company outsources its payroll duties entirely. The payroll service will generate and deliver checks or make direct deposits. It is also responsible for withholding taxes, making tax payments, filing tax returns, and calculating, distributing, and filing year-end tax forms. Human resource (HR) services are also sometimes available.

Your contact with the payroll service revolves around telling the service how many hours each employee worked, informing the service of new or terminated employees, or asking questions.

The Benefits:

• Good customer support.
• Easy set-up.
• The payroll service provider eliminates all payroll tax management burdens.
• The payroll service will calculate, file and pay federal, state and local payroll taxes.

The Drawbacks:

• This service is very expensive.
• The business has no control and little involvement in the payroll process.

Online Payroll

Online payroll is a form of payroll services that is provided by an online company. Also known as Internet payroll, it is a mixture of the two previous options. Generally, the kind of services offered will vary depending on the needs of the small business. Those businesses seeking some control over the payroll process can request fewer services or more access to and control over payroll information. Whereas, those who would like to hand over their payroll can get a “full-service” package. Even something between these two options is generally possible.

Benefits:

• A lot of flexibility.
• Generally good customer service.
• The cheapest option.

The Drawbacks:

• Since all information is stored and transmitted online, there is the risk that information can be lost or hacked into.

As your small business begins to grow and your payroll increases, you may consider using direct deposit to pay your employees. Though using direct deposit can improve your business’ efficiency and even reduce costs, it is not for every business. The following is a brief guide to setting up a direct deposit, including its benefits and drawbacks.

How does a direct deposit work?

When it comes to setting up your direct deposit, you have several options. You can set up a direct deposit through your payroll service provider. There are also many banks that provide an option for direct deposit as part of their payroll services. Thus, you could set up direct deposit directly through the bank where you have your business bank account. Alternatively, you can choose one of many popular and easy-to-use accounting or payroll software programs, such as QuickBooks, Peachtree, or ZPay.

Once you have decided which system to use, your employees will fill out a form with their bank account information authorizing you to deposit funds directly into their accounts. After a trial run to verify that all the account routing information is correct, funds can then transferred from your business to your employees’ accounts.

Instead of receiving a paycheck, employees will receive a receipt of payment that specifies how much money was deposited into their accounts and when the transaction was completed. This receipt can be either in paper form or can be sent via email.

What are the benefits?

Depending on how big your company is and which direct deposit option you choose, you can save a significant amount of money on payroll processing costs, including the costs of labor and paper. Moreover, direct deposit is good for your employees who no longer will have to wait for their checks to clear, and who will receive their paychecks automatically whether they are on vacation, sick leave or away on a business trip.

What are the drawbacks?

But despite all of the benefits, direct deposit services may not be for all small businesses. Direct deposits come with processing fees. These fees are usually relatively small compared to the costs of payroll with regular paper checks. If, however, you only have a few employees, then direct deposit may not be cost effective for your business.

You should also do your research before deciding on which financial institution to use. Each institution has its own fee structure that may or may not be favorable to your small business. One bank or institution, for example, may charge a flat monthly fee for unlimited direct deposit transactions, while another might charge a fee for each transfer made.

Small business growth often necessitates hiring additional employees, and with these employees comes the issue of how to pay them. The are three common methods of employee compensation: commission, hourly rate, and salary. Each method has its benefits and limitations, so finding the best way to compensate your workers will really depend on the nature of your business.

Let’s take a look at these three methods and how they would work for small businesses:

Commission

Commission is payment to an employee based on the completion of some quantitative task or the selling of a specific amount of goods or services. Thus, a worker can be paid for each item that is assembled, and a salesman can earn a percentage of completed sales.

By law, an employer does not have to pay minimum wage since earnings are based on the performance of the employee: the more an employee sells or completes, the greater are his earnings. On the other hand, an employer can choose to offer commission on top of an hourly wage or set salary

Paying on a commission will give employees an incentive to be as productive as they can. The business benefits further by only paying for completed work.

The downside is that not all businesses or positions are suited for this method of compensation. It also can discourage workers who may feel that they are not earning enough money, especially if production or sales are slow.

Hourly Rate

The most popular method of paying employees is with an hourly rate. Here, an employee’s income is based on a set amount of money per hour up to 40 yours a week. After 40 hours, and employee paid on an hourly basis in most cases will get time and a half, or overtime pay. This means that a person who earns $7 an hour and works 50 hours in a given week will earn $385 [($7 x 40hrs) + (10.5 x 10hrs)].

Employees who earn money by the hour are entitled to receive an amount equal to or above the federal minimum wage. Currently, the minimum wage is holding at $5.85 per hour.

If you will be paying your employees by the hour then make sure to check with your state’s employment laws. Some states may require a minimum wage that is higher than the federal amount, and some states have further regulations. Vacation, sick leave, holiday and severance pay are not required by federal law. But again, you should check your state’s employment laws to see if there are any differences.

Though an hourly rate is not as motivating to employees as working on commission, it still encourages workers to work for longer. The business also does not have to worry about providing vacation, sick leave, holiday and severance pay.

Employees enjoy the simplicity of earning wages by the hour and being rewarded for the amount of time worked.

Salary

A salary is a pre-determined amount paid to the employee on a regular basis throughout the year. The amount paid generally does not vary from one payment period to the other, irregardless of actual hours worked. Often the salary already includes any bonuses or overtime that the employee is likely to work.

Many of these positions also come with a benefits package that includes some form of vacation, sick leave, holiday and severance pay.

Employers like this approach for its simplicity. Among employees, however, this method is not so popular. Wages are completely disconnected from both the amount of time that an employee works as well as the employee’s productivity. A worker who needs to work overtime, for example, may feel a little cheated when the same standard pay is later received.

According to statistics, women entrepreneurs are starting businesses at a rate two times that of men. Though more businesses are being started by women, they generally have a harder time growing their businesses and accessing the financing they need.

Recently, in response to the current economic downturn, banks and other lending institutions have begun to increase the restrictions and requirements needed to secure a business loan. This means that getting a business loan has become harder these days. For those women who are not inclined to woo angel investors or venture capitalists, securing the capital necessary to grow their businesses can be a challenge.

What many women may not know is that financing goes beyond traditional bank loans, angel investors, or venture capitalists.

If you are a woman small business owner, and you are looking for capital to expand your business, here are a few financing alternatives to consider:

Grants for women entrepreneurs. There are many grants available through the local and federal government as well as women’s organizations that are set up specifically for women entrepreneurs. Since grants do not have to be repaid, they are a more attractive option to a loan. This money is given to entrepreneurs who fit certain criteria in order to help them achieve their financial goals

Business line of credit. Business credit can come in the form of an overdraft at the bank or a business credit card. Though both options can lead to a quick source of capital, they should be used with caution. Both methods of finance come with high interest rates, and debts can easily spiral out of control, leaving you with a bad credit history.

Tap into personal assets. Home equity lines of credit or the value of your life insurance policy can be used to secure financing for your business. Though these are popular financing methods, you should also use thse with caution since you stand to lose tremendously if your business is not profitable.

Ask family or friends. Use your connections. If you personally know people who have the funds to help your business, then ask them. But, you should be careful who you ask and only request loans for the short-term. In genral, money tends to put a strain on relationships.

Equipment leasing. This is an attractive option for women business owners who do not have enough capital to pay for the expenses of operating and expanding their company. By leasing their equipment, instead of purchasing it, women business owners can free up their working capital and thereby take advantage of opportunities to expand or improve operations.

Taking on a partner. You can alternatively acquire funds by having someone invest in your company and become a partner. The investor can be either an active parter or a “silent” one who is not involved in the business’ daily operations.

Invoice factoring. If you are looking for a way to free up capital that is tied to customer invoices, then invoice factoring is a viable option. In this case, a business sells its accounts receivable at a discount to another company. This company then provides instant payment.

Merchant or business cash advances. A cash advance is a good finance option for those businesses that process credit card sales. The cash advance company purchases your future credit card sales at a discount and provides your business with an instant cash advance. Repayment is then based on sales volume. This means, when sales are slow, a smaller payment is made during that period.

Women seeking to work from home often choose to start their own home-based businesses. Though the benefits of running a home business are numerous, many women soon realize that finding a balance between work and family can be difficult. Solving this dilemma depends to a large extent on the physical space in which the business operates.

A woman who wants to run a successful home-based business should try designate a specific space in her house that is solely for business purposes. Not only will this help her to be organized and professional, but it will also help to create a vital balance between her personal and professional life.

If you are a work-at-home mother who owns a new or growing home-based business, and you are looking to create a home office, then it is important to clarify your needs and resources before you start designing your space. The following are a few things to consider:

Where will the office be? Ideally, you will want a space that is either completely separate from your general living area, like a detached garage, or at the very least a room with a door that can be closed.

Obviously, a lot is going to depend on the nature of your business and your available space.

If only a common area is available for your business, a den, then at least try to design a set up that allows you to “lock up” the space once you have finished working.

If you are renovating a space, then choose a design that provides for adequate lighting, ventilation, heat and air conditioning. Make sure to also include phone jacks and electrical outlets.

What equipment and furniture do you need? Another important aspect of getting the right space for your home-office is acquiring the right equipment and furniture. Equipment includes a computer system as well as standard office equipment, such as a printer, scanner, or fax. Furnishing includes any tables, chairs, and file cabinets as well as lighting fixtures.

Who will use the space? If other people will be coming to your office, such as employees, customers, or vendors, then having a space that is separate, functional, and ascetically pleasing is extremely important.

When other people are involved with your business to the extent that you need to physically meet with them in your office, then the need for privacy is that much greater. Imagine trying to have a meeting while your four year old puts on a “performance” for the “interesting guest”.

What is your budget? If you need to acquire any equipment or furniture, or if you are planning renovations, then you will need a significant amount of capital. Make sure that you have the necessary funds to cover any costs associated with your home office.

If you are having difficulty securing traditional financing, then know that there are several alternative financing options available, such as equipment leasing, invoice factoring, and a business cash advance based on future credit card sales. Each one can help you to create the office you need to run your home business successfully.

Mothers looking to work from home have never before had so many options. Credit this to a growing demand for freelance workers. Freelance opportunities for working mothers are at an all time high, and all indications suggest that it will only get higher in the coming years.

Many small and mid-sized businesses across several industries have been seeking ways to cut costs, maximize efficiency, and remain competitive in markets where big businesses have the advantage. One popular tactic has been to outsource some of its functions.

Enter a wide assortment of professional mothers who are seeking flexible jobs that they can do from home. According to the US Census Bureau, over 5.4 million mothers put their careers on hold to stay home with their children.

It seems like a match made in heaven.

It is a win-win situation for the mothers seeking work and the businesses looking for temporary help. Mothers benefit because they are able to earn money, usually by tapping into their own professional skills, experience, and training, and they are still able to be at-home mothers. Businesses benefit from hiring experienced, professional workers.

There are a growing number of freelance websites online, such as the popular Elance and Guru, where employers looking for the completion specific projects and potential hirees meet up. There is even a freelance site dedicated to working mothers.

Freelance jobs can vary exceedingly. Some examples of typical freelance positions include: virtual office assistance, sales, transcription, writing and editing, web and graphic design, and consulting.

Many jobs require that you have a computer with a high speed Internet connection as well as an available phone line.

One of the biggest issues facing mothers working from home is how to balance work-life with family-life. There are plenty of women who succeed in their businesses, yet struggle when it comes to their families. And there are plenty of women who watch their businesses flounder, but they receive gold stars in the mommy department. Few women can do the two together and be successful in both.

This balance is all the more challenging for mothers working from home as opposed to an out-of-the-house job. At home, a mother’s two worlds are inextricably connected, and it is easy to be pulled in both directions- often at the same time.

Being successful as a mother and as a business owner does not mean that you have to belong to an elite group of super mommies. The following tips will help to give you some clarity on how to achieve a successful, healthy balance between work and family:

Get in touch with yourself. The first step towards a healthy balance between work and family is to get in touch with your personal goals and how you currently feel next to them.

Why did you start your business? Were you primarily looking to earn an extra income? Do you enjoy what you are doing? Ideally, how many hours a week do you want to work? Staying in touch with your personal goals will keep you focused on what you really want.

You should also periodically check-in with yourself. Are you happy with the amount of time and attention you are giving to your family and to your business? Are you giving enough to yourself?

Establish priorities The next thing that you need to do is to clearly spell out what is important to you. For example, “it is a priority to be available to put my kids to bed or to be there for meal times”… “I need to be working at least 30 hours a week.”

Like the above, this will help you to stay focused, even though there will be times when circumstances dictate that your priorities temporarily shift.

Know your limits… and stick to them! In an recent survey by American Express, which polled more than 1,100 women entrepreneurs who are trying to grow their companies to the multi-million dollar level, 1 in 3 women said that they started their own businesses to achieve a better work-life balance. Yet, over half of these same women said they were currently working over 40 hours a week!

Though there will be times when you may have to put an unusual amount of time into your business (or conversely into your family), if it is prolonged then something will have to give. Therefore, it is a good idea to initially set limits on the amount of hours you work per week versus the time you spend doing things for your family. You also need to make sure that you budget time for yourself.

Delegate and outsource. When time and responsibilities are getting too much, then try to delegate and outsource anything which you do not have to specifically do. Anyone can wash your dishes or clean your floor. When it comes to your business, you can outsource tasks, such as billing, accounting, or setting appointments.

Plan out your week. Over the weekend sit down and think about what needs to be completed the following week. Make a list, and then decide when and how you want each thing to get accomplished. Do not forget to include on your list cooking, cleaning, shopping, and any family related events.

Obviously, life can be unpredictable causing havoc to the most well thought out plans. But it will give you piece of mind to know clearly what you need to accomplish.

Get childcare. Do not make the mistake of not sending your little ones to someone else so you can focus on your work. The more productive you will feel without the distractions, the happier you will be. This will also effect you as a mother, since you will be able to give of yourself more freely.

Create a separate space. Make sure that your work area is somehow separate from the rest of the house. Even if you must work in a common area within your home, you need to be able to close off the area somehow when you are not working. It will send you (and your family) a strong message: “I work when I am at work, and when I am home I am here for my family.”

If you are running a new home-based business, or have begun telecommuting for an established company, then you can consider claiming home office tax deductions on your next tax return. There are many benefits to be enjoyed by those who can qualify for these tax deductions. But you should first make sure to determine if home based tax deductions appropriate for your situation

What do you stand to gain?

If you meet the requirements for a home office deduction as defined by the IRS, then you may be able to deduct a percentage of the following:

• The real estate property taxes on your home
• Interest on your mortgage
• Depreciation on your home (if you own)
• Your rent payments if you are not a home owner
• Utilities
• Painting, and repairs
• Insurance for homeowners or renters

If your home office qualifies as your principal place of business, then you can also deduct business related commuting expenses, such as traveling to and from clients or vendors.

All of your home office deductions are calculated using the IRS Form 8829. Terms and conditions may vary, so make sure to do your research. The IRS has several publications on issues involving home office deductions. Alternatively, you could ask a tax consultant.

Some considerations before making your claim...

There are a few things you should keep in mind, however, when claiming any home office deductions:

• Make sure that you are familiar with and meet the specific requirements needed to claim deductions.

• Some people believe that by claiming home office deductions you will increase your chances of receiving an audit. Whether or not this is true, it is in your best interest to keep good records including photos of your work area, as well as any documentation, such as a bill for a separate phone-line, that can prove the existence and usage of your home office.

• Some of the deductions have limitations. If, for example, your gross business income is less than your total business expenses, you cannot claim a home office deduction. Again, you should make sure that you are clear with what you can claim.

In short, while the home office deduction offers many benefits to those who work from home, it does require that you be well informed and that your operations are well documented.

Ahhh… The smell of tax season is in the air!

For those of you who have recently started a home business, or are telecommuting for an established company, you may be looking forward to claiming home office tax deductions on your next return. But there is a good chance that you do not even qualify for these deductions.

The following is a brief outline of the requirements and restrictions that must be fulfilled to receive home office tax deductions.  For more information, you should consult “Publication 587: Business Use of Your Home,” put out by the IRS, as well as your tax consultant.

In order to know if you qualify for home office tax deductions, you need to consider the following questions:

1. How do you use the space in your home where you conduct business?

In order to qualify for a home office tax deduction, the part of your home that you work in must be regularly and exclusively used for business purposes. This space must fulfill at least one of the following three options:

1. It is your principal place of business. A factor that defines your home office as the principle place of business (even if you operate from other locations), is that it is the space where you exclusively perform managerial or administrative activities, such as billing, ordering supplies, or making appointments.

2. It is the location where you generally receive clients or customers.

3. It is a separate structure, such as a detached garage.

There are two exceptions to the requirement that your home office is used solely for business purposes:

1. You operate a licensed day care center in your home.

2. You store inventory or products for sale in your business.

Here personal use and business use may be mixed. If you are storing inventory, then keep in mind that you can only have mixed use of the area you use for storage if you do not have any other business location besides your home.

2. Are you a telecommuter?

If you are currently employed by and another company, but are working from home, then there are two additional requirements that you must fulfill to claim a home office tax deduction:

1. You must work at home for your employer’s convenience. This means that your employer does not provide office space, as can be the case with a telemarketer or call center operator.

2. You also can not be renting any part of your home to your employer and then using this space for service of your employer.

What is the Definition of Regular and Exclusive Use?

In order to qualify for the home office tax deduction, you need to be sure that you are fulfilling the requirement of regular and exclusive use of your home work space. To fulfill the “regular” requirement, the space must be used continuously, not just on occasion.

To fulfill the “exclusive” requirement, aside from the two exceptions mentioned above, you need to be sure that there is absolutely no mix of personal and business use. So, for example, the phone in your home office cannot be used for personal calls, nor the computer for personal emails. A consultant who meets clients and performs administrative activities in his dinning room, or in any room that has other uses, will also not qualify for a home office tax deduction.

One of the major ways to capitalize on small business tax deductions is by coordinating the purchase and sale of equipment and furniture. Maximizing the tax deductions associated with equipment and furniture requires proper foresight, but promises significant financial rewards.

In general, small business owners should seek to purchase office equipment and furniture towards the end of the fiscal year and sell old assets after the current fiscal year has ended. By purchasing new equipment before the year ends, a portion of the purchase price can be immediately claimed as a write off. Alternatively, you can begin to write off the cost slowly over several years. Any old or outdated equipment that was not yet completely written off will still provide your business with a deductible depreciation expense. Therefore, it is wise to hold off selling it until the year comes to an end.

Immediate Write Off Versus Depreciation

In section 179 of the tax code, it states that a small business has the option to entirely write off most of its new equipment and furniture in the year that it is put into service rather than depreciating it over a few years. This is an attractive option for many small businesses seeking to quickly increase their cash flow.

A business is not required to pay the whole cost of the equipment to claim this deduction. This means that equipment and furniture that was purchased on credit, yet put into use before the end of the year is still eligible for the deduction.

There is a limit, however, to how much equipment you can purchase and claim. Check with your tax consultant to get the current figures for your small business. Moreover, in order for a small business to get the deduction, it has to be profitable. Small businesses without profits can not deduct the first year depreciation deduction, although they have the option to carry it forward to later profitable years.

A new small business, therefore, could opt for the depreciation method that is spread out over a few years. That way, most of the deductions will be available when the business has income and is in a higher tax bracket.

It should be noted, that if you have a C-corporation, an LLC, an S-corporation or a partnership, you may be able to utilize a Section-179 deduction in both your business’ taxes and your personal income taxes. Many states also allow smaller deductions, so be sure to consult with your tax consultant.

depreciation equipment furniture Small business tax deductions tax bracket tax code 179 write off

Many small business owners do not start thinking about their income tax deductions until December 31st draws near. Then, with the end of the year around the corner, there is a sudden flurry of activity as they scramble to increase their deductible expenses.

Small businesses, which often deal with tight cash flows and small profit margins, stand to benefit a lot from a full reduction in their tax payments. But to do so requires planning and foresight that really extends throughout the year.

Here are several tips on what you can do at the end of the year and throughout it, to maximize your small business’ tax deductions. Since the conditions may vary depending on the unique circumstances of your business, you should consult with an accountant or professional tax consultant before making any decisions.

1. Efficient financial accounting. Before we can talk about how to maximize your small business tax deductions, you need to have an accurate picture of your company’s financial situation. Your books should be clear and up to date. You should also have a system for collecting and filing any receipts for business expenses. Finally, you need to be on top of your cash flow, namely accounts payable, accounts receivable, and inventory.

2. Hire a tax consultant. Hiring an accountant or a tax consultant, is good business practice- especially if you are unfamiliar with basic business accounting. Hiring such a professional is also a tax-deductible business expense, and the tax advice you will receive should help pay for the cost.

3. Increase your expenses. By increasing your expenses before the year ends you can maximize deductions for this year. Obviously, you will be limited by your available cash flow. If there is money available then you could do the following:

• Purchase items your business will require in the immediate future, such as office supplies
• Pay any outstanding bills, such as rent or utilities, early
• Take care of any repairs or maintenance that you have been putting off
• Make any business trips to existing or potential customers

4. Make year-end equipment purchases. If plan on buying buying new office equipment or furniture, then consider purchasing it at the end of the year. You will then have to decide whether you want an immediate write off or a depreciation that is spread out over the next few years. Keep in mind that to claim the deduction, your equipment needs to be set up and in use by year-end.

5. Delay or defer income. Any income that is expected in December, but can be deferred to January, will lower your yearly business income. If your income is smaller, then the taxes you will have to pay will be accordingly reduced.

6. Contribute to a retirement plan. Making payments to a retirement plan is another good way to reduce your tax obligation. If you do not currently have a retirement plan then consider setting one up before the end of the year. In the US there are several plans to choose from, each with their own terms and conditions, so make sure to check these out beforehand.

Small business owners looking to take advantage of income tax deductions should be familiar with the expenses they are entitled to claim. The following checklist can help you become aware of what constitutes a tax deductible expense.

It should be noted, however, that the complete list of deductible expenses is actually quite extensive and may vary depending on the unique circumstances of your business. Therefore, before making any decisions, you should consult with your accountant or professional tax consultant.

• Advertising and Promotional Expenses
• Banking Fees Including:check charges, monthly charges, bank wire fees or overdraft fees.
• Business Gifts
• Business-Related Education, such as seminars, classes, and educational tapes or video
• Charitable Contributions
• Conference and Convention fees
• Equipment and Furniture This includes the cost of the equipment, furniture, or vehicle purchased, as well as depreciation on old equipment, and lease payments
• Health-Insurance Premiums
• Insurance (for buildings, machinery or equipment)
• Interest and Fees (on money borrowed for the business)
• Losses Losses from theft, fraud, damage from natural disasters
• Meals and Entertainment
• Membership Dues
• Moving Expenses
• Office Rent Expenses
• Office Supplies
• Postage and Shipping Expenses
• Professional Fees Including: legal help, accounting and bookkeeping, architectural, business consulting and marketing consulting)
• Property Taxes
• Repair and Maintenance On the building, grounds, and equipment
• Retirement Accounts for self and employees
• Salaries of Employees
• Software Costs
• Taxes This includes: sales tax on items purchased for business usage, real estate tax on business property, employer’s share of employment taxes, excise taxes and, in some instances, state income tax
• Telephone and Telecommunications Expenses Including, Internet, television and other communication usage for business purposes
• Trade-show exhibition and/or attendance Including travel, meals, admission fees and costs of booths or exhibitions.
• Travel This includes: automobile expenses pertaining to business usage, using either actual costs of repair and gas or the standard mileage deduction, hotels, airfare, meals, laundry and business entertainment while on the road. You can also claim the costs of passports for self and employees when traveling for business purposes
• Utilities

Running a successful seasonal business can be challenging. Though most small businesses are effected by seasonal changes, a seasonal business depends on them. Being profitable in the face of uneven cash flow, unpredictable sales, and a high employee turnover, requires a great deal of planning and ingenuity.

The following are a few tips on how to run your seasonal business to the maximum.

Smooth Out Your Cash Flow

One of the biggest difficulties with running a seasonal business is that when operations stop, so does the flow of cash into the business. Covering continuing overhead expenses, such as maintenance, payroll, and rent then becomes a challenge.

The challenge is even greater if the business is looking to expand operations, or to cover expenses in case of an unusually slow operating season.

Many seasonal businesses seek additional financing to improve their cash flow, such as short-term seasonal business loans and business lines of credit. But most seasonal businesses are unable to receive this financing because lenders have strict requirements in sales and credit history.

In the alternative financing market, a seasonal business owner could factor outstanding invoices or receive a merchant cash advance based on future credit card sales. Both these methods of finance are quick and come with few requirements.

Without seeking financing, certain seasonal businesses can improve their cash flow by setting up early registration or encouraging customers to make early deposits.

Seek an Alternative Income

Some seasonal businesses have the potential to earn an alternative income during the off-season. A seasonal business can make use of idle assets. Unused real estate, for example, can be rented out or subletted.

There may also be the option of running a second business that will operate in the off-season. Numerous business owners change from one seasonal business to another. A landscaper goes into holiday decorating, and a home builder becomes a home re-modeler in the off-season.

The advantage to this approach is that it creates the potential for a steady income. A possible difficulty, however, is trying to balance the two businesses so that adequate attention and resources are still directed to the more profitable venture.

Hold on to Your Workers

Aside from cash flow, the second biggest struggle for a seasonal business is in the area of employment. Constantly having to recruit, hire, and train a new workers can put an added strain on tight resources.

Many seasonal business owners are seeing that it pays to hold on to their workers. Even if the business cannot employ its workforce throughout the year, business owners can make the work experience enjoyable so that the workers will want to come back the following season.

Some ideas for employee retention include: organizing company events or outings, encouraging employee feedback, and offering financial incentives to good work performance.

Success is in the Off-Season

A seasonal business has to some extent an advantage over a year round business. When operations stop, there is a quiet time to regroup and refocus. Unburdened from having to run their businesses, many seasonal business owners use their off- season to plan out the operational and fiscal goals for the following year. Others use it to update systems or material or for the maintenance and repair of equipment. Off-season is also a time to begin preliminary sales and marketing activity.

In short, running a successful seasonal business means thinking ahead and having a lot of flexibility. Though it may be a challenge the rewards are great.

Whether you are in New York, Kentucky or San Diego, when you decide to create your small business selling virtually any product, your key to growth and success is smart marketing.

Many small business owners are unaware of the options that are available to them to promote their business. Some are under the false impression that they need to hire some costly third party marketing “think tank” to come up with an idea that will suit their needs, in order to have a great marketing plan.

With today’s changing technologies and channels for promotion and exposure, the world has become highly accessible to the small business owner, especially through the realm of marketing their business.

The internet is an extremely powerful marketing tool for the small business owner, and it is not so difficult to access.

Some small businesses consider themselves too small or regional to completely take advantage of what the web has to offer. However, this is not keeping up with current trends as the internet has a powerful effect on the local and global market, no matter where you are in the world.

There are more and more consumers looking online to discover services in their own areas. Therefore, it would be in your best interest to create an online presence for your business.

Creating a website isn’t enough as the web is an infinitely large marketplace with many service providers. One way of ensuring that your site rises to the top of Internet searches is to employ SEO marketing techniques or Search Engine Optimization.

What is SEO and how can it help my business?

SEO marketing is the process of using certain keywords in your advertising that consumers typically type into search engines. SEO marketing can take the form of blogs, articles, or optimizing each of your pages on a site for a particular group of keywords.

It’s important that you don’t over-use the keyword, as the search engine will identify this and mark your advertising as spam.

The power of ‘word of mouth’

Another type of Internet marketing, known as viral marketing, is becoming one of the most cost-effective online advertising tools.

Viral marketing is where you create an attractive ad or piece of marketing through an email. You then send this out to a number of addresses. If the recipient finds your message important or relevant, they will pass it on to their friends with similar interests and their friends will, in turn, pass it on, and so on. Pretty soon, your local venture has a global audience, and you are using the draw of word of mouth at no cost.

Of course just sending an email doesn’t cut it as much as it used to, especially due to the large volume of spam mail, and junk-mail filters that can block out your marketing. So try attaching something that you know you customer may appreciate. For example, if you manufacture dolls, you could attach an e-book that tells how to create original doll clothing. This would be of interest to your customer, and they would appreciate the additional educational information. Hopefully, this will increase the chances that they will forward the information to their friends.

Creating an e-book can cost very little or in fact nothing at all, but if you want something that will really grab the attention of your customer, you may wish to try something a bit more costly. For example, offering customers free site memberships or gift certificates may potentially help you connect with a loyal client base.

If your cash flow is tight, costly methods may not be an option. Fortunately, there is a way to get around that problem. Many small business owners have taken advantage of a business cash advance, which allows them to access funds quickly in order to invest in marketing for their business.

Getting your business up and running is an important and necessary process if you intend to fulfill your goal of financial independence. However, once the initial steps have been taken, you need to expand your venture so that it continues to thrive in the marketplace. You can accomplish this by providing new goods and services or increasing your capacity for inventory.

While these methods can be effective ways of increasing your business profitability, eventually you will need to find other ideas to maintain growth. Many small business owners opt to expand operations and their customer-base with additional locations.

Financing business expansion

The classical way of getting the capital necessary to accomplish business expansion is by applying for a small business loan. These loans can be accessed through lending institutions such as banks and other private lending bodies. However, be aware that loans can have a detrimental and debilitating effect on your operations.

[Example] market research suggests that there is an untapped market in the west side of town. These customers have the ability to purchase your products, but they are not willing to cross town to enter your store. So you put together your financial records, prepare your profit and loss statements and obtain business references. You also take your business plan, profit projections and summary of costs to your local bank and apply for a business loan.

After some consideration and an almost unbearable week of waiting, you are informed that your business loan has been approved. You quickly take your capital and begin the process of opening your second outlet.

Three months after the grand opening, you are enjoying the fruits of your labor. Your research paid off and customers are purchasing your products at the expected levels. This prosperity goes on for another few months and then you learn to your dismay that a larger chain clothing-outlet has decided to open a store not far from your second location.

Being an experienced business owner, you know that customer loyalty only goes so far, and if the larger competitor begins to offer similar merchandise at competitive prices, you may see your profitability plunge.

Nevertheless, you are also aware the terms of bank loans and the loan repayments do not adjust to your rate of business. Your bank still expects the same payment every month, with interest, even though you have less and less capital with which to run your business.

This situation is going to set you up with potential cash flow problems, because not only do you have commitments to your bank, but you are also committed to your employees and suppliers.

How to survive when the cash-flow is tight?

Being the experienced business owner, you go through your expenses and determine what can be carved away in order to survive this financial bottleneck. Unfortunately, after searching your books and trimming the fat, you aren’t able to make ends meet without closing your second outlet.

The irony is that if you didn’t have the loan repayments to meet, you could “weather the storm” and continue without having a significant impact on your overall profitability and running expenses.

You consider equity investment as an option, but you spent too much time and energy on building your business and you have no interest of letting someone else delve into your profits.

So what can you do to extricate yourself from this situation? Business cash advances have been the choice of many small business owners who wish to get themselves out from under the thumb of a bank loan. Business cash advances do not require repayment, leaving you in control and without having to surrender the independence that got you into business in the first place. Now you can keep your second store open and build on your dream of financial independence.

So you’ve opened your online software venture with a shareware program offering, aimed at attracting parents worldwide who are interested in assisting their children expand their vocabulary. Sales have been adding up quickly, but after the third quarter, you discover that your profits have flattened out and are showing signs of potentially decreasing.

You launch another marketing campaign but the fourth quarter doesn’t show significant improvement. After some thought, you devise a plan to add to your product catalog to generate new sales, but unfortunately your expertise lies in marketing and not R&D. What do you do?

Steps to success – How to get the competitive edge with your product

There are many variations on what NDP or new product development actually means, so you should be aware of what options are available to you.

• Product augmentation. By adding a new language to your existing vocabulary program to extend your market reach.
   
• Core product revision. You may consider having your software interface redesigned for a new look and new options.

• Creating new product lines. There is also the option of creating a vocabulary program based on your original source code that caters to the scientific community.

• Repositioning. You may also consider changing your market strategy by offering deals to schools for classroom use.

• New Product Development. You may decide it’s time to create a program that assists children in learning math.

Guidelines for new product development

The act of new product development runs on some universal guidelines, no matter what you may be selling.

Idea generation. This is where you poll such entities such as existing customers, employees, competitors and focus groups to determine a the need that your business can cater to.

Market viability. Screen your idea by asking such questions as to who will be your intended target demographic, and who will appreciate and benefit from the creation of this new product?

Production viability. Will you be able to handle the creation of this product both physically and financially?

Profit viability. Will the product, once manufactured, still garner the desired profit when sold for the target price?

Once you’ve determined the results of your research, you can begin beta testing. Beta testing is achieved through building a prototype of your new product to test your manufacturing, packaging and delivering procedures. It is also at this point, through customer feedback and in-house testing, you can determine flaws in your product and its presentation, and makes changes accordingly. Be aware that this stage can take an extended period if you need to re-test more than once.

Taking your new product to the marketing stage

Now that you’ve had a successful beta run, it’s time to kick into gear and begin the marketing and sale of your new product. If you’ve managed to complete the previous steps carefully, your new product launch has more chance for success and can ultimately carry you to the next level of operations.

New product development does take a lot of hard work and a little R&D can go a long way if you research and plan effectively.

Getting the capital you need for R &D for your business can be achieved simply and quickly through business cash advances. This isn’t a loan and doesn’t leave the small business owner in debt. With a small business cash advance, you can move forward, capture new markets and achieve business success without incurring long-term repayments that have to be paid back with interest.

There are many companies out there that will offer you a business loan even if you or you company has bad credit. Simply do a websearch for “bad credit” and “business loans” and dozens of companies will show up, each one promising to give you the best loan against your bad credit. Welcome to the subprime market.

Many of these lenders are honest corporations with reputable business practices. They follow a set of strict guidelines set out by the government in order to maintain their operating license. However, there is a growing tide of lenders who thrive on those who desperate and uninformed. How do you tell the difference?

What is the subprime market?

The subprime market is made to cater to those with poor credit history. It also is a place for those that have no credit history, like the young, elderly or immigrant demographic.

While a majority of these operations are legitimate, there is an undercurrent in the subprime market that is not only unethical, but downright illegal. These devious operators count on their customers to be desperate and lacking any knowledge of their rights in a lending situation.

So if you in need of a loan, but do not yet have the history that will allow you to access it from a formal lending institution, you need to be aware of a few things so that these sharks will not make you such easy prey.

The warning signs of predatory lending

There are several warning signs to look out for if you suspect that you are dealing with a predatory lender.

• First, in order to get a loan, you should not have to pay a lot. Normally there is a small administration fee when setting up a business loan application, but if the amount if exorbitant, you should find another lender.

• Another thing to examine is the interest rate offered. Regular loans in both the prime and subprime markets can vary, but if you are being asked to shell out over six percent, you should go elsewhere. Please note that some predatory lenders hide their true interest rate with compounding it, so make sure to do your math before you sign anything for your business loan.

• Some predatory lenders will try to sell you a larger loan than what you were initially asking for. Most of the time they will press you to use your home as collateral. You would be doing yourself a disservice to accept more debt than you actually need, never mind putting your home on the line.

• Every lender, both in the prime and subprime market has administration fees associated with their loans. Predatory lenders will have concealed fees that will escape you until you do the math. So, make sure to add up your final debt load and ask about anything that does not make sense. If your fees make up more than two points of your total loan, it is time to break upon the books and possibly walk out the door.

Getting a business loan is a risky business, especially if you are shopping on the subprime market. Many small business owners have avoided this risk altogether by accessing their capital through a business cash advance. This method has a successful, proven track record with businesses as it is based solely on the purchase of future credit card transactions and therefore bears no interest and has no obligation of repayment.

How should you prepare yourself when making a business loan proposal? The more prepared you are, the more likely your business loan proposal will be approved.

Preparation is everything when it comes to applying for a business loan. It will not only speed up the review process, but it will also increase your chances of receiving money.

Bring the Proper Documentation

Before you even visit the lending institution, you must make sure that all of your business documentation is in order.

Bring a well thought-out business plan. Each lending institution will focus on different factors in an application. Therefore, be sure to include precise information regarding your your products or services, your customer base, and marketing strategies, as well as the future goals and profit projections you hope to achieve should you receive the loan.

Make sure to also bring documents, such as a balance sheet and income statements, that clearly describe your past and current cash flow.

Finally, take the time to research what information is required by the specific lender when making a business loan proposal. You can do this by phone, by visiting the institution itself, or by researching lender’s website.

What You Should Know About the Interview

When all of your documentation is in order, you will then be ready for the interview. Here again preparation can make a big difference. Phone ahead and arrange an appointment with a loan officer to ensure that he or she will be able to give enough time and attention to your proposal.

In this initial conversation, you should avoid going into detail regarding your business loan proposal. Give a brief description of your intentions and the time necessary for the meeting. Usually, an hour provides ample opportunity to make a loan request and answer any questions the loan officer may have regarding the application.

Be aware that there are optimum times to schedule such a meeting. On the first and fifteenth of every month, the financial traffic at a bank increases. This increased traffic may cause your meeting to be interrupted or cut short. Also try to avoid Mondays and Fridays for the same reason. The best time for an appointment is in the middle of the week during the bank’s morning hours, and the earlier the better.

There are several things to consider and prepare for when making your business loan proposal. Many small business owners have avoided this process by accessing funds using a business cash advance. They have found this method to be most successful as it is based solely on the purchase of future credit card transactions and therefore does not have interest charges or obligations of repayment.

Related: Small Business Loans

As your home business begins to expand, you may end up out-growing your home office. Since moving a home-based business out of the house requires a substantial investment that will be a big draw on your cash flow, you need to first be aware of the signs that your current space is no longer doing the job.

The Warning Signs

1. You feel cramped With growth usually comes more workers, more equipment, and more papers. If you find yourself competing for space with any of these things, then it means you need a bigger physical set up. The more cramped you are, the more it will drive down your productivity.

2. Inadequate or unavailable facilities. As your business grows, you may find yourself needing space that does not exist at home, such as a conference room, or a reception area for customers. Certain equipment may also require special renovations that you cannot do in your house.

3. Strict Zoning Laws. If you live in a city with strict zoning laws, then you may be limited in terms of how many people you can hire or how often customers can meet with you at home since the increase in noise and decrease in parking may bother your neighbors. If this is putting a strain on your business, then it is another sign that it’s time to move elsewhere.

4. Location, location! Your location may be inconvenient for customers, (after all it is located in a residential area and not commercial one) and thus it may be hurting your sales.

5. Boundaries. If you start to see that boundaries are getting crossed between your work life and your home life, then this is also an important consideration. If family members seem to always “get in the way”, if customers or workers are seeing a bit too much of your house, if you seem agitated because being at home is a constant reminder of work, then take note. All of these are possible signs that it is time to move your home business out of the house.

As your home business begins to grow, the added work and responsibility may cause you to seek extra help. Once you have made the decision to no longer go on your own, you will have to decide whether to hire workers or outsource certain tasks. Knowing which option is right for you and your business will really depend on your specific circumstances.

Hiring Workers

Your fist instinct may have been to hire. So let’s take a look at some of the pluses and negatives.

Why to hire

• It’s personal. Bringing a hired worker into your home business means that you will have a personal relationship with this person. The worker may also be more enthusiastic about his or her job then an independent contractor.

• It’s an investment. You can also take comfort in knowing that he or she may be able to handle things not specifically connected to job, such as manning the office in case you suddenly get pulled away. A hired worker can multi task as part of the job description, or be trained to take on more responsibility in the future.

• It’s reassuring. Finally, by bringing hired workers into your home business, you will have more direct control and contact over your business operations.

Why not to hire

• You can’t afford it. One of the biggest reasons not to hire is the costs associated with it. If you are considering only part-time or temporary help, then these costs are not your concern. But if you are looking for full-time employees, then you will be responsible for several employer-paid taxes, in addition to any benefits, such as health insurance, paid time off, or sick leave.

• It’s a hassle. You have to go through a thorough hiring and recruiting process (See my article, “Home Business 101: Hiring Employees“)

• It may be against the law. If you live in a city with strict zoning laws, then it may not be so easy to hire on-site help. In some residential zones, all types of commerce are prohibited; others allow small non-polluting businesses that do not effect the neighbors (for example, through an increase of noise, or a decrease in parking spaces). Check with your local government to see how strict the zoning laws are in your area.

• It’s too crowded. Hiring workers means you must have adequate physical space to put them. If space is limited, then hiring may not be your best option.

Outsourcing

Now let’s take a look at outsourcing.

Why Outsource

• It’s cheap. When you hire an independent contractor, you avoid the added cost of taxes and benefits. This is particularly important if your cash flow is tight.

• No hassle. Unlike the lengthy recruiting and screening process needed to hire a worker for your home business, hiring an independent contractor is relatively easy. There are several options- online and off, where business owners can find the right independent contractor for the job. Moreover, there are many aspects of your business that can be outsourced, from bookkeeping to web design, even specific, short-term projects.

• No worries. With an independent contractor, there is no need to worry about zoning laws or the size of your home office.

The two major downsides of outsourcing are that you give up some control over these aspects of your business, and you miss out on investing in a workforce that could help you grow in the future.

In short, for home-based businesses with limited resources, outsourcing could be a better option. But if your business is growing rapidly, and you are looking for a something more personal, then hiring may be the right choice.