Small Business Tips

April 2017 Archive
MasterCard Global Small Business Survey 2006

Mastercard Corporation has posted an interesting global survey of small business owners and their outlook for the future.

A total of 4000 small business owners from around the world who manage businesses with 1 — 99 employees were polled. A total of 500 respondents were surveyed from eight countries, including the United States, United Kingdom, Mexico, France, Brazil, China, Hong Kong and Australia.

Small business owners around the world have differing views on the current business climate but feel more optimistic (28%) than not (21%) about the upcoming year. They work a little more than 50 hours a week but spend 18 of those hours on administrative tasks. While competition was seen as the top challenge they will face next year, half of small business owners around the world feel that globalization will help their business, rather than hurt it.

The section that stuck out the most to me was the question of what motivates small business owners to run their businesses:

Globally, small business owners say that making enough money to cover living expenses (70%) and having more control over the future (64%) are important motivations for running their own business. Small business owners in Brazil are the most likely out of all those surveyed to say that providing employment (71%) and contributing to society or the community (64%) are important motivations, while small business owners in China are the most likely to say that building something that can be passed on to their family (59%) is an important motivation. Those in the United States are the most likely to say that being their own boss (67%) is an important motivation.

MasterCard Global Small Business Survey 2006


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By Chris Brunner
Tuesday, April 25th, 2017 @ 12:00 AM CDT

Ownership |

Preparing for an IRS Audit

Unfortunately, no matter how hard you try, sometimes you might make a mistake on your tax returns and the IRS will audit your business. Most audits are prompted by large losses in your business over a number of years, which would lead the IRS to wonder how you’re producing an income.

Typically, IRS audits are face-to-face, but about one-third of them are letters from the IRS asking for an explanation regarding a specific item on your tax return. Audits can be regarding your entire return or just a portion that the IRS has questions about.

If you receive a letter requesting an explanation, first consult whoever prepared your return. If it was prepared by someone who is not a professional accountant, you should consult one to find out the best way to handle it. Respond in writing, on your company’s letterhead, and provide copies of all related documentation. Always send any correspondence with the IRS by certified mail, so that you can confirm the package was received.

If you have to face the IRS in a personal meeting, make sure that you obtain representation by either a lawyer or CPA (Certified Public Accountant). Don’t try and take care of the situation by yourself, as there are probably many laws and regulations you aren’t fully aware of. You can also have the meeting video taped, but you must give the IRS ten days written notice if you choose to do so.

Logically organize all of your records regarding the issue(s) in question, categorically and chronologically. Neatness and organization will build your credibility with the auditor. Also, be sure that you only bring documentation related to the items that the IRS wants information about. Extra documentation is burdensome and unnecessary, and you don’t want to volunteer information about your taxes if they don’t ask about it.

At minimum, you will need to provide the following documentation:
• bank statements and cancelled checks
• receipts
• print-outs and disk copies of electronic records and logs
• appointment books, calendars and/or journals
• worksheets showing your calculations for each item
• an extra copy of all documentation

It’s important that you keep your cool and don’t get overly defensive, as that might make you seem guilty to the IRS auditor. You may even want to prepare some notes for yourself to remember events and explanations. When you’re in the meeting and under that kind of pressure, you can often simply go blank or stumble over words. Having notes on what you want to convey to the auditor will help you to keep things straight in your head.

After the meeting is over, the auditor will provide a written report regarding his conclusions and what additional taxes, if any, you owe. Keep in mind that, if the meeting and result are unsatisfactory, there is an appeals process available. This is where having a video tape of the meeting will come in handy, especially if the auditor was not willing to hear you out. There is also an appeals process available for any liens, levies or property seizures resulting from an audit, including appeals for hardship reasons.

Overall, if you are prepared and organized and can show that the issue at hand was a legitimate and unintentional mistake, then you will probably only face paying additional taxes. If nothing else, you will have definitely learned from the experience.

Sources:
• Inc.com: Preparing for an Audit
• WorldWideWeb Tax: How to Prepare for an IRS Audit


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By Michelle Cramer
Monday, April 24th, 2017 @ 12:04 AM CDT

Taxes |

The Right Way to Write-Off Business Expenses (Part 2)

PART 2 – HOME OFFICE AND MISCELLANEOUS

As a continuation of yesterday’s post, below are some additional tax deductions you should handle carefully.

Home Office
If you work from home, you can only write-off the percentage of your bills related to the area dedicated solely to your business. For accuracy, which is something the IRS appreciates, hire a contractor to measure your home office space professionally and provide the square footage that your home office occupies.

Once you have the measurements, figure out what percentage of your home is dedicated to your business. You can then write-off that percentage of your mortgage/rent, utility bills, etc. Keep in mind, however, that this area of your home must be used exclusively for your business. If it is, in any way, used for personal matters (i.e., your home computer is used for both business and personal), then you cannot right off percentages of your household bills.

Home Computer
If your home computer is used for both personal and business matters, then the expense of the computer is not deductible. Instead, you will need to keep a log of the time you use it for business purposes, much like with your home office. Then, determine a percentage of your time in which you use the computer for business and that is how much of the computer is deductible.

Another option would be to invest in a laptop that you use for business purposes only. This will allow for the entire expense of the laptop to be deductible.

Phone Bills
If you have a home office, phone bills do not fall under the category of bills you can write off a percentage of. As long as your phone, whether a mobile or landline, is not used a lot for personal calls, then you can write off the entire bill.

However, if you use the phone for both, then you will have to be sure and get an itemized bill from the phone company and indicate which calls, both incoming and outgoing, were business related. It’s a good idea to also indicate which client each call was related to.

The best and easiest way to avoid extra time and effort is to simply purchase a separate cell phone or get a separate phone line in your home for business calls only. If you opt for the separate cell phone, you can also write-off the phone itself.

Clothing/Uniforms
As a general rule, if you can wear it outside of your job, such as a new suit you wore for work but also to church or a funeral, then it is not deductible. However, if you perform as a clown for children’s birthday parties, then your clown costume is deductible. Another example would be the costume a Las Vegas showgirl might wear.

These are just a handful of the vast expenses that you might be able to write-off each year. It’s a good idea to consult with a professional accountant if you are not familiar with all the regulations. It’s better to spend a little extra money getting some help the first few times than to make a mistake and get audited.

Part 1: Travel Expenses and Vehicle Usage

Source:
• Entrepreneur.com: Top Tax Write-Offs That Could Get You in Trouble

Recommended Readings:
• Google Answers: Tax Write Offs When Self-Employed
• TheStreet.com: Top Business Write-Off Audit-Triggers
• About.com: 5 Year-end Small Business Tax Tips


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By Michelle Cramer
Sunday, April 23rd, 2017 @ 12:03 AM CDT

Taxes |

The Right Way to Write-Off Business Expenses (Part 1)

PART 1 – TRAVEL EXPENSES AND VEHICLE USAGE

Write-offs can be headache when it comes to preparing income tax returns for your business. They are often what causes a business to be red-flagged by the IRS because there are so many regulations and many small business owners just aren’t sure how to do it right. I will be addressing this in two parts, simply because there are so many different items to cover.

Here are some pointers on how to handle a couple of the most common tax write-offs correctly.

Travel Expenses
With any travel expenses that you plan to write-off, you will need to be able to prove that the travel was directly related to your business, such as a product convention or meeting with a client.

Flight costs typically aren’t a problem, even if you always fly first class. It’s the limo from the airport to the hotel that would be cause for concern. Meals are deductible at a rate of 50% of the bill. If you are taking client to dinner, you will need to be able to show that you discussed business at the meal.

This is where a journal or electronic log really comes in handy. When traveling on business, be sure to document your daily events, like which clients you spoke to, where and when you met and what you discussed. Should your business ever be audited, the IRS will require you to produce such a journal.

Family vacations are not a tax deduction, unless your family members are part of your business. You have to justify that by holding business meetings or by all parties attending a business convention while on the trip. If you go to the Bahamas and lay on the beach all five days, chances are you really shouldn’t try to write that off.

Vehicle Usage
If a vehicle is used exclusively for your business, then generally you can deduct the entire expenses for operation of the car. However, the standards of “exclusive use” are hard to meet. It’s more likely that your vehicle is used for both personal and business and you will, therefore, have to determine what operation expenses are considered deductible.

Generally, travel between two business destinations is considered a deductible operation of the vehicle. This can mean travel from your home office to the post office to deliver mail or the supply store to get office supplies. This also includes travel from one client’s location to another’s and back to your place of business.

Travel to work locations that are different from that of your regular place of business also count. However, travel from your home to your regular place of business on a daily basis is NOT deductible, even if you have your business advertised on the side of your car.

Generally, travel deductions using a vehicle are calculated by mileage. Again, in your journal, indicate the odometer reading upon departure from a business location and upon arrival at your new business destination. Also indicate how this travel relates to your business.

Part 2: Home Office and Clothing

Sources:
• Entrepreneur.com: Top Tax Write-Offs That Could Get You in Trouble
• TraderStatus.com: Travel Expenses, Meals & Entertainment

Recommended Readings:
• Google Answers: Tax Write Offs When Self-Employed
• TheStreet.com: Top Business Write-Off Audit-Triggers
• About.com: 5 Year-end Small Business Tax Tips


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By Michelle Cramer
Saturday, April 22nd, 2017 @ 12:03 AM CDT

Taxes |

IRS Audit Triggers

IRS Audit

Part of being a self-employed business owner is the requirement for a lot of record keeping. Incomes and expenses probably make up the majority of those records, simply because it is necessary in order to keep up with the IRS and their grueling and complex rules governing taxes on the income your business generates. If you don’t meet their expectations, your business could be red-flagged and even audited, and that’s something I’m pretty sure we all want to avoid.

So, how do you avoid it? First and foremost, you must keep accurate records. Estimates and assumptions about the income and expenses associated with your business will only draw attention to you. Your best bet is to write everything down, each and every day, even if it seems insignificant.

There are a number of things that trigger the IRS into examining your business practices more thoroughly. They are:

1) Not Filing
This is probably the most obvious trigger, and you would expect it would often be avoided. But many business owners, especially those who are just starting out, fear they won’t have the funds to pay the taxes they will owe. So they simply don’t file returns. Bad idea. It’s better to file and owe back taxes than to go to jail for not filing at all.

2) Overpaying Family Members
If a family member works for you, be sure that you pay them according to their actual responsibilities and experience and at a rate comparable to the rest of the job market. Don’t pay them more than they’re worth just because they’re family.

3) Income Boost
If your income for the current year is excessively higher than previous years, the IRS will want to know why. The reason may be legitimate, like the fact that the demand for your business skyrocketed. But keep in mind that the IRS will then expect your return to show additional expenses in order to meet that increase in demand.

4) Inconsistencies
Make sure your federal tax return is consistent with your state tax return; that the income and expenses match down to the last penny. If there are differences, even subtle ones, you’ve caught their eye.

5) Bad Accountant
The IRS has a checks and balances system with which they keep tabs on accountants and other tax preparers. If a preparer is doing something wrong, not only will they get audited, but so will all of their clients. This means you. So check your accountant’s references thoroughly before hiring him.

6) Extreme Expenses
If you have an itemized expense on your tax return that just doesn’t match up with your income, the IRS will notice. For example, if you’re claiming an income of $30,000 and itemizing a $5,000 desk for your home office… well, it’s pretty obvious that something’s not right and the IRS will want to follow-up.

7) Write-offs
As every business owner knows, incorrect write-offs are one of the largest triggers for an audit. If what you’re writing off doesn’t match what is expected of your business practices, the IRS will probably want an explanation. There are so many rules regarding write-offs that it’s a whole other topic in itself, which I will address tomorrow.

Bottom line: pay attention and be thorough when it comes to your income and expenses throughout the entire year. Don’t wait until January to put everything together for the previous year, but keep record as you go. This will help you to avoid mistakes that trigger audits.

Also, be smart. Don’t try to find loopholes and “work the system.” That’s what gets business owners in trouble. The IRS is cracking down on small business these days, so it’s best to just stick to the rules, even if it hurts a little.

Source:
• Entrepreneur.com: Top Tax Write-Offs That Could Get You in Trouble
• WorldWideWeb Tax: How to Avoid an IRS Audit


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The Right Way to Write-Off Business Expenses (Part 2)
Preparing for an IRS Audit

By Michelle Cramer
Friday, April 21st, 2017 @ 12:00 AM CDT

Taxes |

The Warning Signs of a Doomed Partnership

Just as in an unhappy marriage, the problems in an unstable business partnership tend to result in feeling unappreciated and ungratified, having unmet expectations and facing events that cause doubt and distrust. Problems left unattended will result in one or both of you dissolving the partnership.

To keep your partnership in tact, watch for the warning signs:

1) Communication Breakdown
If every conversation you attempt to have with your business partner turns into a war of words, then chances are you’re having a hard time communicating. When we’re holding a grudge against someone, we often have a tendency to always go on the defensive. Our ears shut off and our mouth won’t quit. If you can’t listen to each other, then you’re not communicating at all.

2) Everything is a Competition
Your partnership should be a compliment of each other’s strengths and weaknesses, but, when tensions rise, things tend to become competitive rather than complimentary. If you are constantly trying to out-do your partner, rather than work with him, then there’s probably an underlying issue that needs to be addressed.

3) Financial Problems
This can be anything from the business being under financial stress, to different views on how money should be spent, to disagreeing on the division of profits. If money is an issue, than so is something else.

4) Dominance Issues
If you’re fighting for control of the business, then you are probably not happy with the way your partner is managing her share of the responsibility. When you try to do everything yourself it comes down to a trust issue. There is something that has caused an inability to trust your partner’s productivity.

5) Different Goals
It’s safe to assume that, when you started the business, you and your partner had the same vision for the future. But, as time progresses, those goals may change and differ. That in itself is not a danger, but the inability to compromise and combine your visions is.

Keep your eyes open for the warning signs and meet issues head-on before they become problems. And, if things look bleak, you may want to consider going to a partnership coach before calling it quits. More often than not, an unbiased mediator can help put your business partnership back on the path to success.

Sources/Resources:
• SelfGrowth.com:Is Your Partnership About to Crash and Burn?
• NextLevel.com: Business and Professional Coaching


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By Michelle Cramer
Thursday, April 20th, 2017 @ 12:01 AM CDT

Ownership |

Picking the Right Business Partner

Nearly 70% of all partnerships fail, typically because the people involved were so excited about their idea that they didn’t take the time to make sure that they were compatible for a business relationship. The majority of partnerships are formed between friends who assume that since they already get along, there shouldn’t be a problem. There are distinct differences between getting along with a friend (or family member) socially and the relationship remaining strong under the daily stress of running a business.

Business partnerships are often compared to marriages. In fact, if you are in a partnership, you will likely spend more time with your business partner than you do with your marital spouse. Much like in a marriage, it’s important that you take time to first find out if you and your perspective partner are even compatible for the long term.

When considering starting a partnership with someone, you must first examine your own strengths and weaknesses to determine if you are partner material. If you have a tendency to work better alone, or prefer to do so, then a partnership is probably not for you. If you can consider the suggestions of others and be open-minded when making decisions, then you’d probably make a good partner. Talk to your spouse, family and friends to get their input as well.

Once you have determined that you are able to meet the challenges of being a business partner, you should to examine the relationship you currently have with the other person.

Ask yourself the following questions:

• Do we have the same motivation?
• Do we have the same values and work ethics?
• Do our skills and strengths complement each other?
• Are we able to communicate with each other, even on touchy subjects, in a cool, calm and respectful manner?
• Deep down, do I 100% trust this person?
• Have we been able to adequately resolve conflicts/disagreements in the past?

Hopefully the answer to all these questions is “yes.” If not, then the next item on your list should be to sit down with your prospective partner and discuss the reservations you may have about the partnership. Laying those items on the table, and monitoring the other person’s reaction to them, will be a strong indicator of whether or not the partnership will work.

Also, talk to the other person’s previous partners and employees to get their feedback on how well he/she works with others. Be aware that, should your prospective partner refuse to provide you with contact information for her former counterparts, then that is a red-flag that you probably shouldn’t do business with.

If all signs point to proceeding with the partnership, then it’s time to test the waters. Take on a challenge together, like meeting a deadline, as see how that goes. Determine your expectations for the other person and see if they are met throughout the project. It’s also important to clearly define the responsibilities of each person, as this will be something a partnership requires every day.

Take your time and be sure this partnership is the right one for you. Don’t let the excitement of your idea allow you to rush into such a commitment. The failure of a business partnership can be devastating, both to your business and personal relationship with the other person. Taking time to find the right business partner can result in a mutual motivation and support, as well as a highly successful business.

Sources:
• BusinessKnowHow.com: Is a Partnership the Right Choice for You?
• Inc.com: The Art of Picking the Right Partner


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By Michelle Cramer
Wednesday, April 19th, 2017 @ 12:00 AM CDT

Startup |

Internet Business Sees Holiday Shopping Boom

Now is the time to have an Internet business, as holiday shoppers are increasingly finding their stocking stuffers through online retailers.

From November 1st to December 3rd of this year, internet shopping rose to $12.42 billion, an increase of 25% since last year. The number of people making Internet purchases jumped 17%, while the amount of money spent by each buyer increased by 7%.

The retail areas seeing the most increase: videogames, jewelry and even tickets to concerts and shows.

An abundance of holiday Internet shopping occurrs on what is called “Cyber Monday,” the Monday following Thanksgiving each year. That is when online retailers debut their holiday products, virtual door busters and promotions such as free shipping with purchase.

However, with increased Internet shopping comes increased security concerns. An average of 46% of the 155 million web shoppers are concerned about the security of their personal information when making a purchase, but those numbers are typical.

Software developers such as Microsoft have been working hard to counteract shopper woes, such as upgrading security features of Internet Explorer web browser. The new version warns users if the site they are visiting is an imposter rather than an actual retailer. The down side is, as a new system, this only works 30-40% of the time.

Online retailers are also taking extra precautions. More frequently they are purchasing liability insurance that will cover themselves and their customers in the case of identity theft. By advertising this protection on their websites, retailers hope to encourage buyers to proceed with a bit more confidence.

Despite the reservations that the risk of identity theft pose, online purchases are expected to continue to increase over the holiday season and in future years as consumers enjoy shopping from the comfort of their own home. After all, who really wants to fight the crowds when you can get deals just as good online?

Online Holiday Sales Statistics

Sources:
• Business Week: Web Shoppers Spend More for Holidays
• Stamford Advocate: Online Shopping Popularity Continues to Rise


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By Michelle Cramer
Tuesday, April 18th, 2017 @ 12:00 AM CDT

Technology |

IRS Puts Small Business Under the Microscope

There’s a new(er) IRS commissioner in town, and he’s doing some extra cleaning. Mark Everson, who took office in March of 2003 has made security his main focus of the IRS. And now small business is facing increased scrutiny.

Enforcement is taking the main stage due to the tax gap currently sitting at about $345 billion. This amounts to all the money that is missing due to non-filers and those who claim the wrong income and don’t pay correctly.

Small business audits more than doubled in 2005, an increase to 17,867 from 7,294 in 2004. Some small business owners have voiced a strong disagreement with the audits, claiming it unfair that small businesses are being targeted and will face penalties for small or unintentional mistakes. Large business owners also have the advantage of the financial ability to hire highly-paid accountants to fend off those mistakes.

Everson feels that a focus on small business will help to minimize the national deficit and avoid possible tax increases in the future. 80% of the tax gap is a result of under-reported income and the majority of culprits tend to be small businesses.

Some experts believe that the funds the IRS is using for enforcement could be better spent on educating the public on an increasingly complex tax code. After all, chances are that the IRS may not even see the revenue they expect to find in small business audits to make up for the funds spent to find it.

Everson claims that there is nothing to fear if you are doing your best to report your income and expenses accurately come tax time. Nothing to fear, that is, except for the time an audit takes away from your business.

Sources:
• MarketWatch.com: Last-minute tax tips for Schedule C filers
• GovEXEC.com: IRS enforcement activities bring in record revenue


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By Michelle Cramer
Monday, April 17th, 2017 @ 12:01 AM CDT

Taxes |

Which Business Entity is Right for You? (Part 4)

PART 4 — PARTNERSHIPS

The first thing you should be aware of when it comes to General Partnerships, whose owners are known as GPs (general partners), is that it is managed by all partners and all partners are liable for the negligence and/or debts of the business.

Each and every partner has a say in how the business is run and, even if only one partner makes a mistake, each and every partner takes the heat for it. Of course, this liability is only a problem if you or your partners cannot be trusted to run the business.

Partnerships are often used when franchising a business or when all partners contribute equally to the success of the business, such as a law firm. Taxes are paid through each partners personal income tax. There are no costs or formalities for designating your business as a partnership entity, and the only document required is a Partnership Agreement, which is crucial and should include:

• Amount each partner will invest in the business and when said investments will be made (upfront, annually, etc.);
• Rights and duties of each partner;
• Method for distributing profits and sharing in losses;
• Policies regarding withdrawals of the business assets;
• Designated division of the business profits among members;
• Policies and methods for dispute resolution;
• Policies and methods for including a new partner;
• Method for dissolving the partnership, when and if necessary.

Typically profits are divided equally among members, but you can designate otherwise in your partnership agreement. Keep in mind that giving one partner a larger percentage of the business assets does indicate that they have a stronger say in the decisions regarding the operation of the business. It is usually in the best interest of all involved to stick to equal distribution.

A partnership lasts only as long as a good relationship between partners. It can be dissolved if the partners no longer wish to work together using the methods indicated in the partnership agreement, which can include the sale of the business as well as dismissing one member and bringing another in.

Partnerships also have the option of including one or more limited or silent partners (LPs). LPs are individuals who invest in the partnership but, based upon the Partnership Agreement, are limited in their involvement in the operation of the business. Also, LPs’ legal liability is generally limited to how much they invest, so they can basically reap the benefits of the partnership (i.e. profits) without being responsible for the debts.

It is important that you examine all of the available options for business entity designation and determine which is best for you and your business before you get the ball rolling. Please consult with a lawyer before before making any legal decisions.

Part 1: Sole Proprietorships
Part 2: Corporations
Part 3: Limited Liability Companies

Sources:
• Entrepreneur.com: Business Structure Basics
• Start-a-Business.com: General Partnership
• AllBusiness.com: Corporation, Partnership, or an LLC?
• About.com: Partnerships
• Wikipedia.org: General Partnership and Limited Partnership


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By Michelle Cramer
Sunday, April 16th, 2017 @ 12:00 AM CDT

Business Law, Startup |

Which Business Entity is Right for You? (Part 3)

PART 3 — LIMITED LIABILITY COMPANIES

Limited Liability Companies, or LLCs, combine several features of Corporations and Partnerships, but are neither. Often people call them “limited liability corporations,” but that is incorrect. The owners of an LLC are termed “members” rather than partners or shareholders. The number of members is unlimited and can be a combination of individuals, corporations or other LLCs.

LLC members are not held liable for the negligence and/or debt of the LLC they have ownership interest in, unless they sign a personal guarantee. Like a corporation, an LLC is an entirely separate existence from the individuals involved.

Another benefit is that there are fewer requirements for an LLC. It is not necessary to keep meeting minutes or record resolutions, as in a corporation, and you are not required to have a board of directors or make officer designations for the members.

Some states do have minimal requirements for an LLC, but what those are varies from state to state. Typically, you are also required to file Articles of Organization and Operating Agreement when registering your business as an LLC.

The designated distribution of income to the members is entirely flexible, leaving the division to be anywhere from 50-50 to 10-90, and, of course, open for division among any number of members.

As a member, you also have much more access to the assets of the company. You can take assets out for personal and/or business use without incurring tax liability. Owners also have more leeway when it comes to writing off business losses when associated with an LLC.

The lifetime of an LLC is limited. If any member dies or files bankruptcy, the LLC is dissolved. Additionally, an LLC is not nearly as appealing to possible investors, so if you are considering going public with you company, or issuing shares to your employees someday, an LLC is not the route you should go.

However, if legal liability protection and one level of taxation are primary concerns for your business owners — who consist of multiple and diverse individuals and/or businesses — than an LLC is probably just right for you.

Part 4: Partnerships
Part 1: Sole Proprietorships
Part 2: Corporations

Sources:
• Entrepreneur.com: Business Structure Basics
• About.com: Limited Liability Company 101
• Start-a-Business.com: Limited Liability Company
• AllBusiness.com: Corporation, Partnership, or an LLC?


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By Michelle Cramer
Saturday, April 15th, 2017 @ 12:00 AM CDT

Business Law, Startup |

Which Business Entity is Right for You? (Part 2)

PART 2 – CORPORATIONS

Corporations are considered a legal entity which exists separately and independently from the individuals who create and manage it. Only the corporation itself is legally liable for any negligent actions or debts it may produce. The individual shareholders are not liable.

There are a number of requirements for a corporation:

• Must have an elected board of directors or officers
• Must have an operating agreement
• Must keep records such as annual meetings, meeting minutes, record of resolutions and file annual reports.

Advantages
The benefits of a corporate entity are substantial. A corporation has an unlimited lifespan as it is not dependent on the life of an individual, as proprietorships and partnerships are. As long as annual reports are filed consistently, the corporation will remain in good standing.

The flexible transferability of shares is another large benefit. Ownership of shares in a corporation can be sold, transferred, given or inherited by simply endorsing and signing over an individual’s stock certificates. It is not necessary to file deeds or retitle anything.

You would also benefit from the increased ability to raise investment capital. It’s much easier to attract new investors to back your business if it is registered as a corporation because of the limited liability of shareholders and the easy transfer of shares.

Disadvantages
The major disadvantage of registering your business as a corporation is that it can create an additional tax burden. If your business is designated as a C Corporation, then the profits of your corporation are first taxed at the corporate level and then, any distributions to shareholders are also taxed on each individual’s personal income tax. S Corporations, however, are not taxed on the federal level — only the shareholders’ income is taxed.

If your business is large, or headed that direction, you might want to consider establishing your business as a Corporation. This is an especially preferred choice if you want to market your business to a number of investors, because the “Inc.” following the name of your business can be very appealing.

Part 3: Limited Liability Companies
Part 4: Partnerships
Part 1: Sole Proprietorships

Sources:
• Entrepreneur.com: Business Structure Basics
• AllBusiness.com: Corporation, Partnership, or an LLC?


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By Michelle Cramer
Friday, April 14th, 2017 @ 12:00 AM CDT

Business Law, Startup |

Which Business Entity is Right for You? (Part 1)

When starting a new business, you will be required to determine the type of business entity it is for tax purposes. There are a number of them out there and each one has different benefits and draw backs. It is best to understand them all before determining which is best for your company.

PART 1 – SOLE PROPREITORSHIPS
The sole proprietorship is the best option for someone who is starting a business in which she will be the only person involved. Many individuals who work out of their home, such as freelance writers, photographers, eBay business owners, etc., opt for a sole proprietorship for their business.

It is considered the quickest and easiest business setup process. There are no prerequisites for your business, an attorney is not necessary, and there are minimal costs for establishment of the sole proprietor entity. In most states, you simply register your business as a fictitious business name. In other words, [your name] doing business as [name of your business].

A fictitious registration does not, however, protect the name you choose for your business – anyone else can use that name. On the other hand, doing so does allow you to use the name of the business rather than your own for business banking accounts and other documentation.

There are some minimal formalities you may need to address when establishing a sole proprietorship:

• Obtain a Federal Tax Identification Number or EIN (otherwise, you will have to use your social security number).
• Obtain an occupancy permit for your place of business, if it is outside your home, depending on the requirements in your state.
• Obtain a business license, if your state requires.

Profits made on a sole proprietorship are considered the personal income of the owner and are taxed as such. It is best to set aside at least 25% (sometimes more) of any profits to pay in quarterly installments to the government. I recommend that you consult with an accountant to determine your best options regarding the taxes on your business.

There are two distinctive drawbacks to this type of business entity. As sole proprietor, the business you start has no separate existence from you. You are personally liable for the debts of the business, which means any debt you may be in default on will end up on your personal credit record. It is best to start this type of business with little to no debt associated with it.

Also, the existence of a sole proprietorship only lasts as long as you do. If a family member wishes to continue the business after you retire or pass away, he will have to register the business under his own name. Of course, as I pointed out, this process requires very little effort.

If you’re just getting starting as an entrepreneur, then I highly recommend that you designate your business as a sole proprietorship. Should the business begin to boom and grow, and you require some help to keep things moving, then you may want to consider other entity options.

Part 2: Corporations
Part 3: Limited Liability Companies
Part 4: Partnerships

Sources:
• Entrepreneur.com: Business Structure Basics
• Start-a-Business.com: Sole Proprietorship
• AllBusiness.com: Corporation, Partnership, or LLC?
• Wikipedia.org: Sole Proprietorship


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By Michelle Cramer
Thursday, April 13th, 2017 @ 12:00 AM CDT

Business Law, Startup |

What Employees Want from You

Keeping your employees happy is one of the key elements to maintaining a successful business. Though it is important, fair and competitive pay is not the only thing that employees look for to remain happy in a position. In fact, it’s only the beginning.

1. Flexibility
Employees want to be able to balance their job and their family responsibilities in a way that benefits both. Providing a flexible work schedule translates into a happier employee. If feasible, provide your employees with the opportunity to set their own hours, as long as the put in a certain amount of time each week. You will find that those employees will be much less likely to let their personal lives interfere with their work.

2. Job Security
Employees in a larger business want to know that they are not expendable. It’s important that you make laying people off an absolute last resort if something goes wrong, and make sure that your employees know that. It’s hard to be committed and loyal to an employer who has no concern about your job.

3. Fair Treatment
Far too many employers believe they must enforce strict rules and discipline in order to obtain the best performance from their employees. Granted, approximately 5% of employees do require a continual kick in the pants to stay on task. But most employees will respond much better to being trusted. Don’t hold it against your employee if he comes back from lunch five minutes late one day. Chances are he’s also the guy that stays a few minutes late without question when you need him.

Also, do everything you can to avoid office politics. Yes, you are their boss, but you also couldn’t run your business efficiently without them. You’ll get a much better performance out of employees if you treat them more like equals rather than subordinates. And don’t allow your seasoned employees to treat new employees like doormats. Your business shouldn’t be a hierarchy, it should be a team.

4. Appreciation
Recognize your employees’ achievements. Provide positive feedback when ever you observe a job well done, even if it something as simple as a successful telephone call. Make an effort to say hello each day and care about your employee. On Monday, ask her how her weekend was, and actually listen to her answer. Not only will this motivate your employee to work harder for you, but it will also open lines of communication and allow your employee to feel like she can come to you if she has a concern.

5. A Pleasant Environment
The spectrum of a pleasant working environment includes everything from sitting next to someone who wears deodorant every day to colorful walls, sunlight and fresh air. This also comes back to the fact that you should take time to talk to your employees each day and acknowledge their existence.

Encourage employees to get along with co-workers by hiring people with positive attitudes and great people skills. Consider providing opportunities for employees to socialize a bit, such as a birthday party over the lunch hour once a month for employees whose birthdays fall that month.

Recognize that employees want to be treated like adults and need more from you than a paycheck. Establish a positive relationship with your employees and watch your business thrive as employees become more devoted and enthusiastic about their jobs.

Sources:
• University of Pennsylvania: Giving Employees What They Want
• About.com: What People Want From Work
• MoreBusiness.com: Flexibility: What Employees Want in a Job


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By Michelle Cramer
Wednesday, April 12th, 2017 @ 12:00 AM CDT

Human Resources |

Determining Your Employee’s Salary

If you are hiring an employee for the first time, one of the most difficult tasks ahead of you is figuring out how much to pay him/her. The salary you offer must be fair and competitive, without paying too much for the job at hand.

SET BOUNDARIES
The first step to determining how much you will pay your new employee is to determine the ceiling and floor. The ceiling is the maximum amount you are willing the pay, and the floor is the least amount you should pay.

Decide how much the job is worth to you by asking yourself how much value someone in the available position will bring to your company. Also do some number crunching and determine how much you can afford to pay while still making a profit. For a salesperson, the pay is based on revenue and easy to determine. For administrative staff, you need to ask yourself what the cost would be to your company if there was no one filling the position.

Market rates are the source for determining the minimum you should pay. Candidates expectations are based upon the market, so you need to be aware of what the competition offers. You will first need to have a job description handy. Basing the market on title alone leaves lots of room for negotiation. For example, a marketing director can earn anywhere from $50,000 to $500,000 a year. Break the job down and be specific about the responsibilities it entails.

There are a number of sources available to determine the market value of the job you are offering. Call your local chamber of commerce and ask about similar jobs in the area. Read the local classifieds to see what others seeking employees are offering.

Search Google for “salary surveys” to compare business and trade magazine surveys of jobs nationwide. Or, you can also use websites such as the U.S. Bureau of Labor Statistics and/or Salary.com to determine past and current salaries locally.

TYPES OF PAY
There are several ways to pay an employee. Explore all the options based upon the job you are offerings before determining what works best for you. The following are types of pay to offer an employee.

1. Hourly
Hourly pay is typically associated with work product that is a direct result of the time put in, such as assembly line employees. You must meet the minimum wage requirements, which is $5.15 federal, but some state minimum are higher. This is also solely based on eight hour work days for a total of 40 hours a week. Hourly employees typically get time and a half for overtime and working on holidays.

2. Salary
Salaries are a fixed payment amount, usually determined by an annual salary that is divided into 52 weeks a year. Salary is usually associated with administrative positions, such as clerical or managerial jobs. Salaried employees are paid the same each pay period, regardless of sick days or vacation time (as long as it is within the parameters set by the company policy).

3. Commission
Commission pay is most often used in sales positions — a job that contributes directly to revenue. Most salespeople are paid a low base salary and then receive a percentage of the sales they bring into the company. This opens the opportunity for effective salespeople to make six and seven figures a year, which also means they are making 10-20 times that for your business.

4. Bonuses and Benefits
Keep in mind that most every applicant is going to expect some sort of incentive outside of legitimate pay. Consider offering bonuses occasionally as reward for a job well done. You should also look into benefits for your employees. Your first thought is, of course, health insurance and company stocks. But also consider the less obvious benefits such as a set amount of vacation time, paying for the employee to further their education, and even casual dress requirements. All of these make a job much more motivating.

PLAN AHEAD
When determining what the starting pay for your new employee will be, remember to leave room to grow. Everyone expects to and strives for earning a raise. Inflation, when the buying power of your employee’s salary drops while the amount is stagnant, occurs on a yearly basis. Salaries need to adjust to accommodate.

Also, consider the fact that, when and employee first starts he won’t know the ropes very well and will make mistakes, but, as time progresses, he will learn more and become more efficient, thus becoming worth more to your company. He will deserve a reflection of such growth in his paycheck.

Sources:
• Entrepreneur.com: How to Set Salaries
• Microsoft.com: 5 Steps to Determine an Employee’s Salary
• Bliss & Associates, Inc.: Deciding How Much to Pay Employees
• ItsSimple.biz: What Other Employers Are Paying


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By Michelle Cramer
Tuesday, April 11th, 2017 @ 12:01 AM CDT

Human Resources |

Hiring an Employee – The Interview Process

If you’re hiring an employee for the first time, the interview process can be just as intimidating for you as it is for those who apply for the job. Here are some tips for smooth and successful interviews.

Get the Word Out
Once you’ve determined exactly what you’re looking for in the person you hire, write out a job description. Be sure to include the work hours, what education and experience is required to fill the position, the characteristics needed to perform the job successfully, and, of course, where resumes should be sent.

It is best to have two job description formats, a brief description for periodical circulations such as your local paper, and a detailed description for online job search engines, such as Careerbuilder.com. Also, check with local colleges and see if they have a career center, as most provide an online job search for students.

Review and Prepare
Set aside time each day to review any resumes you’ve received. It’s a good idea to have the job description in front of you as a reminder of what requirements you presented for the position. Rate each candidate on a scale from one to ten. This will give you a quick reference on whom to call first for an interview.

Also, for those candidates you intend to meet with, jot down any questions you may have about information they indicated on their resume, such as why they were unemployed for two years, or why they want to leave their present position. Additionally, you will want to have a list of basic interview questions that you ask each candidate, to give you a basis of comparison.

Some suggested questions:

• What would be the perfect job for you and why?
• What characteristics in a supervisor motivate you to produce your best work?
• Name and explain your top two strengths and weaknesses.
• Where do you see yourself in five years?
• Describe two instances where your work was criticized and how you responded.

Conducting the Interview
Anyone who walks through your doors for an interview is going to be nervous, regardless of their credentials. Put them at ease by starting with small talk and neutral topics such as what the job entails or how and why you started the business and where you see it heading.

Then move on to questions about the information listed on their resume. Avoid questions with yes or no answers, but, rather, keep the questions open-ended. To avoid rehearsed answers use follow-up questions and keep the candidate thinking on their toes.

Have interviewees bring documentation with them to prove the accuracy of their resume, such as college transcripts or letters of recommendation from previous employers. Not everyone is honest on their resume, in fact, nearly 40% of job applications have some sort of inflated or bogus information, so have then verify it.

During the interview keep your eyes open for the expression of qualities you’re looking for in a potential employee. Is the candidate communicating clearly? Does she express passion for the industry? Pay attention to the nonverbal cues such as their posture and outward appearance. Did he take time to iron his shirt?

You may also want to consider having each candidate take a personality or assessment test as part of the interview process. I highly recommend investing in the Personality Puzzle Test developed by Florence and Marita Littauer specifically for employers and employees. Take it yourself and then provide it to potential candidates to see how well your personalities will click.

Before making any decisions, always call all references listed on the resume and anyone that may have written a letter of recommendation (to verify that he actually wrote it). Also, it’s always a good idea to perform background checks on education, judicial matters, and previous employers. You’d be surprised what some people think they can hide.

Be sure to give the potential employees a time frame for when they can expect to hear from you. They will be anxious, so don’t leave them hanging in the air on whether or not they got the job. Make personal calls or write rejection and offer letters. If it is a rejection, be sure to explain why so that they can see where they might need improvement.

For further information on the requirements for becoming a first time employer, be sure to check out yesterday’s post How to Hire Your First Employee.

Sources:
• Entrepreneur.com: Hiring Your First Employee
• Entrepreneur.com: Interviewing Applicants


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By Michelle Cramer
Monday, April 10th, 2017 @ 12:01 AM CDT

Human Resources |

Preparing Your Company for its First Employee

The signs are fairly obvious. Most of your waking moments may be spent running the business, and time is taken from your family and friends. Maybe you’re unable to keep up with demand and are actually having to turn customers away.

More or less, your stress level is beginning to climb rapidly as the papers stack up and nothing seems to get done. It’s time to get some help.

Before looking at prospects, consider these things:

What are you looking for?
Make a list of the things that need to be done for your business to run smoothly. Indicate which of those tasks you must do, which of the tasks you’d prefer to do, and which of the tasks can be delegated elsewhere. The latter is what you need that first employee for.

Think about what kind of manager you are in order to determine the best type of person to fit your style. If you’re the type that delegates and then does your own thing, then you will need someone who can think independently. If you get stressed occasionally, then you may want someone that works well under pressure.

Next, decide exactly how you want the business to grow with the additional help. If you’re looking to take this transition slowly, then you need someone for the clerical and administrative tasks that you just can’t seem to get to, such as filing and mail. If you’re ready to plow full speed ahead, you’ll want to find someone that can handle larger areas such as sales and distribution.

Once you’ve figured out exactly what you’re looking for, write out a job description. This will come in handy when you are coming up with help wanted ads and during the interview process, but it will also serve as a personal reminder of the load that will be taken off your shoulders once the right person is found.

What are the legal prerequisites?
There are several things you will need to do in order to legally be ready to hire someone.

• Obtain an Employer Identification Number (EIN) for tax returns.
• Obtain Workers’ Compensation Insurance.
• Register with the Department of Labor for your state.
• Invest in payroll software in order to properly withhold taxes. See the IRS Employer’s Tax Guide for further withholding information.
• Provide a safe working environment based upon the Occupational Safety and Health Act (OSHA).
• Familiarize yourself with IRS Form 940-EZ, which you will need to file each year.

What are the business prerequisites?
In addition to legally preparing for an employee, it’s a good idea to implement additional business practices prior to seeking help.

• Determine what your time-off policy will be, such as vacation time, sick days, maternity leave, etc.
• Set up employee benefits, if feasible, such as health insurance or a 401(k) plan, including a sign-up procedure.
• Determine the disciplinary and review procedures for your business.
• Create an employee handbook, which indicates your business policies, including those items previously listed. Include a signature page for the employee’s indication that he/she read the handbook.
• If you have any information you need to protect from the competition, such as the recipes for your gourmet restaurant or lists of clientele, have an attorney draw up a Non-disclosure Agreement and/or Non-compete Agreement for every future employee to sign.

Hiring an employee can be intimidating, as it will knowingly take up precious time and resources. Make sure that your reservations don’t keep you from waiting too long. Missing the right window of opportunity may force you to hire in a hurry, resulting in the wrong person for your business.

Even if your situation only seems moderately stressful, evaluate your business and whether or not even a part-time employee might make things run more smoothly. At the very least, you will be able to determine when you may need someone in the future and start planning ahead to make the transition easier.

Sources:
• Inc.com: The First Employee
• Nolo.com: Hiring Your First Employee – Ten Things You Must Do
• Microsoft.com: Five tips for Hiring Your First Employee
• AllBusiness.com: Ten Tips on Hiring Your First Employee


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By Michelle Cramer
Sunday, April 9th, 2017 @ 12:10 AM CDT

Human Resources |

Starting a Successful eBay Business (Part 4)

CONTINUED SUCCESS
BUILDING AN eBAY EMPIRE

Congratulations! Your eBay business is now up and running and bringing in the dough! You may even be ready to expand your part-time operation into a full-time adventure. Let’s examine some ways to upgrade your business and continue on this successful path.

Flexibility
It is important to be flexible. Be willing to change the market you’re in to match the current trends. New opportunities will come knocking, and you have to be willing to take advantage of them. Flexibility also means variety, which, as they say, is the spice of life.

Quality Customer Service
Upgrade your customer service to the next level. For example, you may want to provide a handy 800 number for potential buyers to reach you immediately for answers to their questions. Send customers an e-mail with each new phase in the conclusion of your transaction, such as thanking them when you receive their payment, notifying them when their item has been shipped, and following up with them when they receive the item to ensure satisfaction.

Providing a tracking number with every shipment earns brownie points and gives the buyer peace of mind. You may also want to consider providing discount shipping to your buyers with the purchase of more than one product from you. This strategy is a must if you are selling products such as books or movies, since the shipping cost for multiple items increases minimally. This option is very popular and one of the first incentives that buyers look for. A seller who doesn’t provide a multiple item shipping discount can really turn a buyer off.

Tips, Tools & Advice
Joining an eBay community can help you to determine what buyers are interested in as well as get advice from fellow sellers, or just meet new people through discussion boards, blogs and chat rooms. The PowerUp Newsletter provides helpful tips, ideas and eBay news.

There are also some great tools available to help you improve your eBay business. Sellathon.com provides a 30-day free trial of ViewTracker, which provides information on potential buyers, including what search terms brought them to your listing. Seller’s Assistant Pro is eBay’s desktop sales management tool. And eBay’s free program Turbo Lister allows you to recreate your listings in bulk, without having to retype each, and without loosing that professional quality.

Who You Are
Don’t forget to fill out the About Me Page. This gives you an opportunity to share with your potential customers what led you to start your eBay business and what ideals your business holds to. Providing this information to your buyers helps them to feel as though they can trust you and will keep them coming back.

eBay Store
The best way to boost your sales and expand your eBay business is to open an eBay store. On average, sellers see a 25% increase in sales within three months of opening an eBay store. Your store will cost a monthly fee, but you do receive discounts on other eBay fees and access to many other features and services that are not available with regular listings. You can create both auction-style listings and items with fixed prices, adding flexibility to your setup. Your eBay store will allow buyers to find your products in one location, on a customizable webpage designed just for your business.

eBay Store Fees
Subscription fees for an eBay Store vary depending on the size of your operation, starting at $15.95 for the basic store package to $499.95 for the anchor store package. For more information, visit the eBay Store Subscription Fees page to view side-by-side comparisons of the 3 available storefront packages. Also available is the eBay Store Fees page which contains information about Insertion, Final Value, Listing Upgrade and Picture Services fees.

Implementing these additions to your already thriving eBay business will have you well on your way to an eBay empire. Many eBay business owners see sales in the millions each year. Though some days you may have to stretch and stand on your toes to get there, success in the eBay world is well within reach.

View Part 1 – Learning the Basics
View Part 2 – Selling an Item
View Part 3 – Casual Seller to Powerseller

Sources:
• AllBusiness.com: Nine Reasons to Open an eBay Store
• Entrepreneur.com: eBay Made Easy
• Entrepreneur.com: Getting Started on eBay

Helpful Links:
• Entrepreneur.com: eBay Center
Owen & Emma’s eBay Store Library


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By Michelle Cramer
Saturday, April 8th, 2017 @ 12:00 AM CDT

Startup |

Starting a Successful eBay Business (Part 3)

CASUAL SELLER TO POWER SELLER

Now that you have a little experience under your belt, and have built up your feedback rating, it is time to transition from a casual selling hobby to an actual eBay business.

First, determine what exactly it is you want to do. Will your business be a full-time or part-time commitment? Remember, you can always start out part-time and see how it goes; you may want to expand later. Will you work from home or a commercial location? Will it be a one-person or couple operation, or will you hire employees?

The Product
Part of the transition to an eBay business is moving from selling miscellaneous items to a select category of products. The most successful eBay businesses specialize in a specific product category also known as a niche. Deal with products that most interest you, whether it is antique pottery or discount golf equipment. Your product line needs to be something that you can easily become an expert in, if you’re not already. This will give you a significant advantage over other sellers.

Once you have determined your products, research how many other eBayers are selling the same things. Competition can be fierce in the beginning, so you want to provide a product that will help your business to stand out as much as possible.

Next, determine how you want to set up your listings. You can either sell products by the auction method, by a fixed price only, or do both. If you have multiple numbers of the same item, you may want to list some as auction and some at a fixed price. This will give you an opportunity to see which way that particular item sells better.

Your Time
Selling on eBay can be time consuming, so establish a routine. Determine a block of time in your day or week that you will devote to your eBay business, if it is only part-time. If the business is a full-time operation, then map out your day by determining when you will respond to e-mail questions, when you will list new items, when you will package shipments, etc.

Also, when will you make trips to the post office for mailing? Most postal carriers, including the U.S. post office, will pick-up your shipments, if postage has already been paid and you arrange for them to do so. You can pre-pay postage through eBay or by establishing an account on the carrier’s website. If that is not currently an option, determine what day or days of the week you will drop your packages off. It is also important to indicate this in your listing details, so that the buyer is aware of how long it will be before the item is shipped.

The Details
Speaking of listing details, be sure that your listings reflect the professionalism of your business. Proofread and use the spell check option, which eBay provides, on all of your listings. Limit the type of fonts you use to two and don’t use background colors that make the words hard to read. Highlight important words like “Free Shipping” in a different color than the rest of the text, such as red, to draw the buyer’s attention to them.

Supplies
This transition period is also a good time to invest in whatever equipment you don’t already have readily available. A digital camera and postal scale are a must. It is helpful to have a digital camera with a macro setting so that you can take close-up shots of smaller items or details.

If you are working from home, you may want to consider setting aside a work area just for your eBay business. Not only will this make things simpler because everything is right at your fingertips, but also be able to use the space and organizational products you buy as home office tax deductions.

Start slow, listing only a few products each day, so that you don’t have them all ending at once and become overwhelmed. As time progresses and your routine becomes more established, it will be easier to step it up a bit. You’re your own boss, so determine a pace that works best for you and stick with it.

View Part 4 – Building an eBay Empire
View Part 2 – Selling an Item
View Part 1 – Learning the Basics

Sources:
• Entrepreneur.com: eBay Made Easy
• Entrepreneur.com: Getting Started on eBay
• AllBusiness.com: Setting Up a Home-Based eBay Business

Helpful Links:
• eBay.com: Getting Started as a Seller
• Entrepreneur.com: eBay Center
• AllBusiness.com: The eBay Business Plan


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By Michelle Cramer
Friday, April 7th, 2017 @ 12:02 AM CDT

Startup |

Starting a Successful eBay Business (Part 2)

SELLING AN ITEM

The first step to selling on eBay is to establish a seller account. This will require more personal information than your original registration with eBay, including verification of your identity, but it is, again, secure and never shared with other eBay users.

Choosing Your Product
Next, you need to figure out what to sell. When just starting out it is better to get a feel for the way it works and to iron out all the kinks before starting your business, so you may want to consider using the “Laundry Basket” approach. Take a basket around your house and fill it with items you don’t need or use anymore. This is always good for those spring cleaning or sort through the attic days. You can sell almost anything on eBay, but there are a few exceptions, which you can view on eBay’s Prohibited and Restricted Items List.

To list an item, make sure you are signed on and then click the “Sell” link at the top of any eBay page. The form for selling an item on eBay is fairly simple, and it will walk you through each step, with help links available along the way.

Be aware of the fact that eBay does charge fees for selling. You will first encounter insertion fees, which are based upon how many features you use in your auction listing. You will also be charged a final value fee when the auction ends, which is a percentage of the final sale price. A list of these fees can be found on the Basic Fees page.

Taking Photos and Developing Item Descriptions
Once you have determined the item(s) you’re selling, you will need to take quality pictures to put on your listing. Items without pictures are much less likely to sell. The first picture for every eBay listing is free of charge. Each additional picture is $0.15.

This is where a digital camera and scanner come in quite handy. If the item is flat, like a book, a scanner works great because it captures the cover well. Other items need to be placed against a solid colored contrasting background, so that the features stand out and the item can be viewed easily. Make sure your picture is crisp, not blurry. It is also recommended that you stay away from stock photos on the manufacturer’s website. Buyers want to see what the actual item you’re selling looks like.

Also, make a list of details about each item to put in the items description. The more honest information you provide to the buyer, the more likely they will be to bid on the item. Indicate the dimensions of the item, the size, the condition it is in, number of pages, etc. It is important to remember that, when describing the condition, you do more than say “good.” Tell the buyer exactly what you see.

You will need a heading for your listing. This will be the first thing potential buyers see on their search results, so it needs to be something that will grab the buyer’s attention, as well as indicate crucial keywords so that you listing will come up on as many search results as possible. Avoid using unnecessary words like “cute” or “wow” in your heading, as these are not words that a buyer will use in a search. Also, you are limited on the characters you can use in a heading, so you need all the space you can get.

Pricing
Next, determine what the starting price for your item will be. Items that start at $0.99 and under will often get the buyer’s attention more easily, but there is risk involved with starting the item that low, since it is uncertain how many bids you will get.

Do some research on ended auctions for items like the one you are selling and see how popular they are. You can do so by using the advance search and checking the “completed listings only” box. This will give you an indication on how high the bidding might go on your item and if the risk is worth it. For example, if the DVD you are selling typically sells for $10, then starting it at $0.99 shouldn’t be a problem. But if it usually sells for $3.00, chances are, your item may not go much past the starting price.

All auctions have the option of adding a “Buy it Now” or “Reserve Price.” Buy it Now gives the buyer the option of buying the item for a set amount, so long as no one has bid on it yet. This is great for items like DVDs, when you are willing to sell them below market value.

A Reserve Price allows you to indicate the minimum amount you are willing to take for the item. This amount is not revealed to any bidders. All they will see on the auction is whether or not the current price of the item has met the reserve price. If it does not meet the reserve by the end of the auction, you are not obligated to sell the item to any bidder. However, you will still have to pay the insertion fees for the auction.

Shipping Options
You will also need to determine shipping costs. This can sometimes be difficult, so I recommend that you first buy a postage scale and then prepackage your item before you list it, so that you can determine the actual weight for shipping. The form for listing your item provides a postage calculator that will determine the shipping costs, based on weight and package dimensions, for most carriers (USPS, UPS, FedEx).

You have the option of setting a flat shipping rate that you pre-determine, or a calculated shipping rate which is based on the buyer’s address and any handling charges you may add (which are not revealed to the buyer). I recommend adding the cost of shipping supplies, eBay listing fees (typically under $1) and Paypal transaction fees to your shipping charges, so that those are covered even if you item only sells for $0.01. PayPal does charge a percentage of the transaction amount when money is sent to you, though it is quite minimal (less than 5%).

The eBay listing form is very easy and there are helpful links indicated to get you through it. Once you’ve listed one item, you’ll have the form down, but it will take observation to see what works to grab the seller’s attention. Get some practice with small household items before transitioning to a full-blown business, so that you know what you’re in for.

View Part 3 – Casualseller to Powerseller
View Part 4 – Building an eBay Empire
View Part 1 – Learning the Basics

Sources:
• Entrepreneur.com: eBay Made Easy

Helpful Links:
• eBay.com: Getting Started as a Seller
• Entrepreneur.com: eBay Center


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By Michelle Cramer
Thursday, April 6th, 2017 @ 12:00 AM CDT

Startup |

Starting a Successful eBay Business (Part 1)

LEARN THE BASICS

Since its start in 1995, eBay is one of the fastest growing business venues around. Over two billion items and nearly $50 billion dollars in final sale prices were produced last year, and every year eBay gets bigger and better. If you’re ready to start your own business, or expand your current one, using eBay will almost guarantee your success. This week’s four part series will take you through the steps of starting a successful eBay business, starting with eBay basics.

Most people are well aware of eBay and its primary function, but some just haven’t had the chance to use it yet. eBay is an online auction website, where you can find most anything you’re looking for, and quite often reasonably priced below market value. Like normal auctions (though, it is much easier to understand the auctioneer), buyers bid on an item and the highest bidder at the close of the auction gets the item for that price, plus shipping charges.

It is free to join eBay to browse and buy, so I recommend that you first register. To do so, go to eBay’s registration page, where you will supply your contact information, as well as pick out a user ID. Be aware that, should you plan to use eBay as a business, this ID will be viewed by all. So pick something that reflects who you are and what your business will be.

Take some time to explore eBay and learn about the features. There are eBay communities for discussions with other users, a help page, information for buyers, information for sellers; the list goes on and on. And do some shopping as well. The best way to learn how to sell on eBay is to buy on eBay. This will give you an opportunity to find out what works and doesn’t work for your future listings.

Bidding and Seller Ratings
It’s important that you understand that bidding on an item is a legally binding contract, and it takes quite a bit of effort to back out of a bid, including a mark on your eBay record and a possible reprimanding by eBay. So be sure to fully read each auction and all the specifics before deciding to bid. If you have any questions about the item or the seller’s policies, e-mail the seller about it before bidding, since you may not like the answer they give you.

The most crucial item to examine when you are interested in an item is the seller’s feedback rating. This will also be the first thing your future buyers will look at. A seller’s feedback rating is their reputation as both a buyer and a seller on eBay. It is a comment that the buyer/seller leaves about that user at the end of the transaction, reflecting how that person presented him or herself as an eBay member.

You will find this rating on the top right hand side of the item listing page, under “Meet the seller.” It will first list the seller’s ID, followed by a number in parentheses, which indicates the number of positive feedback ratings the seller has received from individual eBay members.

The next line will indicate what percentage of all of the feedback the seller has received has been positive during their entire membership on eBay. By clicking on the number following the seller ID, you will be able to view all the feedback the seller has ever received, positive, negative or neutral, and a summary of what that feedback has been for the past 12 months.

I highly recommend that you do not buy from someone with a feedback score of less than 10 or a positive percentage of less than 90%, as these sellers either do not have the experience to guarantee a trustworthy sale, or have proved themselves to be inconsistent and untrustworthy to other eBay users.

This is also important to know when considering starting an eBay business. You will need to purchase some items on eBay, and be a good customer, in order to build up your feedback rating, so that future buyers will be more likely to purchase an item from you. What qualifies as a good customer is someone who pays quickly and communicates well with the seller. Easy enough, right?

Sign Up for a Paypal Account
It is also important to register with PayPal, which is owned by eBay. PayPal enables you to pay for your items using a checking account, debit card or credit card in a secure and safe manner. In fact, PayPal has received such notoriety for its safe process that many online stores outside eBay are beginning to accept PayPal for payments of online orders.

Most eBay sellers will only accept PayPal payments, because it guarantees the payment will be received. Your payment information is never sent to the seller, as the payment is sent directly to PayPal and then PayPal sends it on. PayPal will be necessary when you are selling on eBay, since most buyers prefer to pay this way as well, so it is better to go ahead and get your account established now.

There are many more aspects of eBay that you should familiarize yourself with before starting and eBay business. EBay is easy to use, and you can most certainly learn as you go if you must, but it is better to understand the way the site works in order to make it easier when you transition from buyer to seller. I have provided some helpful links below to get you started.

View Part 2 – Selling an Item
View Part 3 – Casualseller to Powerseller
View Part 4 – Building an eBay Empire

Sources/Helpful eBay Links:
• BizHelp24.com: Starting an EBay Business
• Entrepreneur.com: Getting Started on EBay
• eBay.com: New to eBay Help Page


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By Michelle Cramer
Wednesday, April 5th, 2017 @ 12:01 AM CDT

Startup |

How Changes in Congress Could Affect Small Business

Small business owners were glued to their televisions last week as election ballots were tallied. In the end, 51 Democrats had seats in the House, compared to Republicans 49 seats. The House currently has 230 Democrats and 197 Republicans, with eight elections still determined ties.

Based on a pre-elections survey done by Wells Fargo and Gallup, approximately 75% of business owners believed the congressional takeover by Democrats would have a direct effect on small businesses nationwide. Various issues are expected to come into play.

Trade Promotion Authority
President Bush has ambitiously been seeking renewal of the Trade Promotion Authority, which will lapse in June. Created in 1974, TPA allows the president to negotiate trade agreements. Congress can approve or squash the agreements, but cannot amend them, which protects the agreements from gruelingly being picked to pieces once they were made with the U.S.’s trading partners. The shift in power is expected to slow the President’s progress on getting a renewal approved prior to the lapse, if at all.

Taxes
Estate Tax/Death Tax have been a long time reformation agenda for small businesses. It is a taxation of 30-50% on assets that are transferred from one generation to the next upon death. In other words, if dad dies, and leaves son a business and property worth $20 million, it will be taxed up to $10 million. If an asset is left to a spouse or a charitable organization, the tax usually does not apply.

A repeal of the tax was on the table, but it is expected to fall to the wayside. There may be a bipartisan approach, but it is not expected to be anything immediate, as the estate tax is not currently a congressional priority.

Healthcare
As far as healthcare, small businesses have been pushing for some sort of reform that will allow them to provide affordable health insurance to their employees. One such hope was association health plans, which would allow small businesses to band together on one insurance policy, even across state lines. The idea is highly supported by Republicans, not as favored by Democrats. It is expected that some option will be extended to small businesses, although association plans will probably not be utilized.

Minimum Wage
The national minimum wage has been $5.15 per hour since 1997. Based upon calculations, someone working a full-time job at this rate would make just over $10,000 a year, which is the national poverty line. In last week’s elections, six states approved raising the state minimum wage. There are now 29 states, plus Washington D.C., whose minimum wage is higher than the federal.

Raising the national minimum wage is a top priority for Democrats coming into a new congressional year. There is speculation that an increase in minimum wage would harm small businesses and increase the unemployment rate. However, a study by the Center for American Progress found that employment in small businesses grew in states where the minimum wage has already increased. Inflation is another concern for critics, but, truth be told, the pressures and struggles for small business under an increase would be marginal.

Iraq
The war in Iraq was the number one issue on voters’ minds, according to exit polls. Though it may not be directly connected to small business, it deserves mentioning. The Democratic takeover of Congress and a new Defense Secretary, combined with the people’s dislike of the way the war is being handled, will likely lead to a change in approach and policy.

Democrats want the Iraqi government to take more responsibility for its development and the war on terror in their country. The plan for doing so is to start pulling our troops out of Iraq and handing over the reigns. There have been requests of President Bush to convene an international conference on Iraq. Other suggestions presented may be regional dialogues with our adversaries in Iran and Syria for assistance or developing three sectarian states of the country.

The replacement of Donald Rumsfeld has led most to believe that President Bush is more open to these suggestions. In his address to the country regarding Rumsfeld’s resignation, Bush stated, “Secretary Rumsfeld and I agree that sometimes it’s necessary to have a fresh perspective.”

Changes are inevitably upon the horizon. Whether those changes are positive or negative depends entirely upon perspective. I would like to close with a statement made by Todd Stottlemyer, CEO of the National Federation of Independent Business (NFIB):

“Small-business issues transcend party lines and we want to work with lawmakers from both sides of the aisle to create an environment where businesses can flourish and grow and strengthen the American economy. That’s what NFIB is all about, promoting and protecting the right of our members to own, operate and grow their businesses. The key is providing a climate within which to do that.”

Sources/Related Readings:
• NFIB: Midterm Election Results In
• Business Week: Small Biz OK With New Congress
• Inc.com: What Does a Democratic Takeover of Congress Mean for Your Company?
• San Francisco Chronicle: Changes From Election May Weaken Bush’s Trade Agenda
• Reuters Election 2006: Economic Impact of Likely Minimum Wage Rise Unclear
• International Herald Tribune: Elections, Rumsfeld Exit Open Door to Change


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By Michelle Cramer
Tuesday, April 4th, 2017 @ 12:00 AM CDT

Business Law, Operations |

6 Steps to Successful Sales

Selling is about the right ideas communicated in an effective way. The lucrative position of a marketing team is the salesperson, simply because he/she is the one who produces the actual sale. It is important, therefore, that as a salesperson, you know the essentials of being successful in your trade.

1) Focus on the Customer
Whether you are a door-to-door, over the phone, or in-store salesperson, the focal aspect of your sales pitch should be to connect with the customer. It is all about them; their problems, needs, company and situation. Truth be told, they don’t care about you and whatever issues you may have with rejection. They usually won’t be afraid to tell you no. So, focus on making your customer’s life better, and you’ve got your foot in the door.

2) Be Unique
Share a unique characteristic about yourself, which could be anything from where you grew up to the fact that you are on a champion bowling league. Communicate it to your customer through a fun button on your jacket or with a small gift, such as a pen. In other words, make yourself stand out and different from the status-quo, without wearing clown shoes.

Also, listen to the customer and discover something that you have in common. Use that commonality to connect with the customer on a more personal level. Don’t share an elaborate story about how your dog knows every trick in the book, but acknowledge the fact that you too are a dog lover.

3) Be Positive
Your attitude will inevitably come in full view when you are attempting to sell a product. If you are just plain tired of coming to work every day, your enthusiasm will be low and so will your sales. But if you strive to always have a positive attitude, regardless of circumstances, your success rate will likely be much higher.

And do not let the fear of failure stop you. If you’re afraid that you may not succeed in a particular sale, then you won’t. Fear prevents you from accomplishing goals and achieving your full potential, so don’t let it win. In the famous words of Mark Twain, “Courage is resistance to fear, mastery of fear, not the absence of fear.” Fear is part of life, so wake up swinging.

4) Pitch it Well
Know the business and the product like the back of your hand. It is important to be able to answer every question the customer may throw your way, and you can’t do that if you don’t know the information. Questions are important on your end as well. Ask questions that really make the customer think and that provide you with crucial information for the sales process. If you don’t know what the customer is looking for, then you can’t sell it to them.

A great exercise that will help you in developing a stronger sales pitch is the “ad reversal” process. Write an ad for the product you are trying to sell that would appear in a newspaper or magazine, and just start with the basics. Then, record yourself reading the ad out loud. Listen to the recording and make adjustments to make the “sound” of it more appealing. Repeat this process until you develop a verbal script for selling your product that you are pleased with.

5) Create a Means for Follow-up
Provide your customer with information they can look at later, whether it be a business card, a website or a brochure. It needs to be well designed and appealing. The better the design, the better impression you give the customer.

This is especially crucial if you were unable to produce a sale. If you give the customer further information to look over, you have opened an opportunity to follow-up. Ask them if they had a chance to review the material and if they thought of any questions you could answer or further information you could provide.

6) Utilize a Mentor
No one is the perfect salesperson, but everyone has quality traits in their salesmanship that you can learn from. Find someone, or even a number of people, that you respect, both in their personal and business ethics, and ask them to give you some pointers. The more you are able to learn from other people and implement, the more effective you will be as a salesperson.

Sources/Related Readings:
• Business Week: You’re Never Too Young to Sell
• EffectiveMeeting.com: Delivering an Effective Sales Pitch
• Entrepreneur.com: Ad Writing Made Easy
• Entrepreneur.com: Unlock Your Selling Potential


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By Michelle Cramer
Monday, April 3rd, 2017 @ 12:00 AM CDT

Marketing |

How to Write an Effective Advertisement

Children are often told that thunder is the sound of God bowling in Heaven.

See what I did there? I got your attention, didn’t I? Your first reaction may have been “What does thunder have to do with writing ads?”

The answer: everything.

The first, and most crucial step to writing an effective ad is to seize the reader’s attention with a strong opener — give your ad “thunder” (See, told you). Catching you prospective consumer off guard will inevitably get him to read the entire ad, if nothing else but to see what it’s all about.

Be sure to avoid opening with a question directed at your prospective consumer, as this is highly overdone. However, rhetorical and abstract questions are okay, when used properly. An example of this could be “Why is a square always a rectangle, but a rectangle is never a square?”

Then, create interest by bridging your opening statement to the product you are offering, such as my previous use of “thunder.” Follow by creating desire for your product by stating a problem and showing your product to be the solution. Tune in to the reader’s emotions. The point of your ad is to lure the prospect to contact your business in pursuit of a purchase.

Be sure that the text of your ad is appealing to the eyes by using short sentences and smaller paragraphs. White space is always effective. If you want to use color, be consistent and only use it in one or two places, such as the opening statement and your business’ contact information.

Graphics and pictures are always a plus, as they can be very effective in drawing initial attention to the ad, especially if your ad is one among many. Consider using a font other than Times Roman or Sans, if the option is available, but make sure it is still easy to read. And always remember to continually read and re-read your ad for spelling and grammatical errors. Any such error takes away from all credibility that a brilliantly written ad may have.

Finally, create a closing that connects to your opener. Your closing also needs to state the action you want the prospect to take, whether that be “Call 1-800-THUNDER today” or “Visit our website,” etc. Get feedback from coworkers, family, friends. They resemble your market and will let you know if something isn’t working right.

Still getting writer’s block? Try writing 10-15 opening statements and walk away, leaving them to sit overnight. Come back to them in a day or two and see which one jumps out at you.

And, if you fall short on experience, a great way to practice writing ads is to grab your local paper or telephone book and pick out some bad ads. Dissect them, making notes about why you think they don’t work. Then rewrite them! Not only will this give you confidence in your ability to write a great ad, but it will help you to learn and avoid what doesn’t work.

Finally, test your ad. Give it a week or two and see what revenue it brings in. Once you create an ad that works, stick with it. Keep it in the same format, venue and media type for as long as the ad brings in new calls or visits to your website.

Ad writing is simply an effective sales script on paper with eye catchers. Ads bring prospects to your door or website, but do not seal the deal, so be sure not to rely fully on them. Have an effective sales team in place, ready to transition the prospect from intrigue to consumer. You can even reverse the ad writing process to develop a great sales pitch.

And, always remember that your ad should leave your prospective consumer “thunder-struck.”

Sources:
• Entrepreneur.com: Making your Advertising Message Stand Out
• BellaOnline – Office Site: How to Write Effective Ads
• Hartfelt Promotions: Marketing 101: Writing Ads
• Entrepreneur.com: Ad Writing Made Easy


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By Michelle Cramer
Sunday, April 2nd, 2017 @ 12:01 AM CDT

Marketing |

Internet Search Advertising: Google vs. Yahoo

The idea was simple and logical. If an individual searches for golf clubs on the internet, it only makes sense that vendors selling golf clubs should advertise on a search engine to bring in more customers.

The recent demand for search advertising has produced serious competition between the two main internet search engines, Google and Yahoo.

Currently, search advertising is an $8 billion global industry, and its worth is expected to sky-rocket to nearly $22 billion in the next five years. No wonder the two major search engines are both still going strong. Both Google’s AdWords and Yahoo Search Marketing (YSM) offer search advertising by allowing advertisers to bid on space identified with keywords and adjacent to search results. The key to the development of their head-to-head lies within the differences in their network connections and business philosophies.

When Yahoo’s top executive, Terry Semel, joined the company four years ago, he brought with him a long list of Hollywood contacts, and Yahoo has recently starting building a headquarters in Hollywood. Semel is a no-nonsense businessman and doesn’t play around, implementing tough discipline in management into the company. Yahoo is beginning to lean more toward being a media company, rather than an innovator of technology. Their focus has, therefore, shifted to traditional, handholding partnerships with ad agencies.

Google, on the other hand, focuses on the individual potential of their staff. They depend on their engineers to come up with innovative ideas for the company, and therefore expect them to spend one day a week on a special interest project of their own. Google has some of the top engineers in the country under its belt, and continues to attract them. Their focus is technology and innovation, and the Google executives are well aware of the fact that they must remain innovative to stay on top.

Recently, as most know, Google acquired YouTube in an effort to expand its advertising market to video advertising. Now Google again expanding its borders and upping the ante. They are currently in the test phase of an online marketplace that will allow advertisers to bid on print-ad space in more than 50 major U.S. newspapers, including The New York Times and Denver Post, The Washington Post, The Boston Globe and the Chicago Tribune.

And Google’s leaps forward are beginning to leave Yahoo in the dust. Though Yahoo had maintained an edge for some time, a Web tracking firm recently showed Google forging ahead of Yahoo as the number one search engine. Google’s stocks are currently only ten percent below their all-time high, while Yahoo’s stocks have plummeted nearly 40 percent this year.

Advertising agencies tend to lean toward Google based on the fact that Yahoo has a tendency to be a late-bloomer when it comes to innovations, such as blogs and video. For example, Yahoo’s much anticipated new search technology for advertisers, dubbed “Panama,” was due to take flight this summer, but has already been delayed with an unspecified release date.

Critics expect Google to eventually hit a rough spot as their innovations begin to dwindle. However, considering recent and upcoming developments in Google’s advertising industry, I don’t foresee that happening any time soon. If you’re seeking search advertising as a marketing option for your company, it appears that Google is currently the way to go.

What’s your experience with Google and Yahoo search advertising? Please share your experiences and comparisons.

Sources/Related Readings:
•News.com: Google vs. Yahoo: Clash of Cultures
•CNNMoney.com: Yawns for Yahoo, ga-ga for Google
•Business Week: Google’s New Frontier: Print Ads
• Forbes.com: Google vs. Yahoo!


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By Michelle Cramer
Saturday, April 1st, 2017 @ 12:03 AM CDT

Marketing, Operations |