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<![CDATA[Any extended periods of downtime this winter are the prime times to take a hard look at your finances and review the money coming in, the money going out, and the money set aside for lean times. Snow Magazine’s finance and accounting writer Mark Battersby outlines seven areas for snow contractors to focus in on during seasonal downtime.
Take Stock Of The Operation’s Assets
Disposing of unneeded, unwanted, obsolete equipment or other property deserves some thought as part of year-round tax planning. There is, after all, no point in letting excess equipment take up space when it could be contributing to the operation’s bottom-line.
“Selling, donating those unwanted assets to a charity or actually abandoning them, creates cash and/or tax write-offs,” Battersby says. “Don’t forget to document each event, keep receipts and physically abandon assets, not merely store them away.”
Employee Or Not An Employee
California’s controversial new law for freelancers and others in the so-called “gig” economy is spreading the worker classification issue to more states. And the IRS also continues to challenge whether workers are employees or independent contractors.
Independent contractors are not subject to withholding, relieving the employer of liability for payroll taxes.
“Workers, for their part, can avoid higher tax bills and lost benefits by knowing their proper status,” Battersby says “For those uncertain whether workers are classified correctly, the IRS can provide a determination letter telling how it views the operation’s workers – as employees or independent contractors.”
In addition to using IRS Form SS-8 to request a determination of worker status, an employer can apply to the IRS if it has been erroneously classifying workers as independent contractors. This application for “530 relief” allows the operation to get relief from liability or payment if it has been classifying workers as independent contractors in error.
Shopping For Another Banker
Despite bank branches disappearing in record numbers and the growing number of financing options, credit card processors and other services available from a variety of sources, every small business still needs a bank. However, despite how important banks are to small businesses, the majority of businesses appear to be experiencing significant challenges when it comes to banking services.
According to a recent survey of more than 1,000 business owners, only 9% of small business owners say their current bank meets all of their needs. What’s more, a whopping 69% of small business owners don’t believe their current bank is meeting all of their needs and, thus, would be willing to switch banks.
A credit-card processor may offer less-expensive fees and the fast-growing Web financing community might offer more attractive rates. But only banks allow a business owner or manager to negotiate lower rates based on the number of services they utilize.
“Banks want your business,” Battersby says. “But while they’ll sometimes offer significant cash bonuses for opening a business account, remember, no matter how appealing that cash bonus might appear, it is the operation’s day-to-day banking needs that count. In the long term, meeting the needs of the business will have a bigger impact on the health of the business than any immediate cash benefit.”
Coping With Reality
What better time to take a closer look at the operation’s cash flow? Every business owner should have a plan for periods of tight cash flow, upcoming projects and financing needs.
“With this in mind, it is no surprise that the best-performing businesses in past downturns had strong balance sheets and were even taking on additional debt to purchase more assets, expand or even acquire competitors – all relatively inexpensively,” Battersby says.
Make The Most Of Customers And Clients
The importance of increasing the number of customers the operation has can’t be overemphasized. After all, the unexpected loss of a big customer, contract or project can impact even the most financially stable business. And it is unfortunate that customers are usually the first to go during tough economic times.
“An economic downturn or recession means that now is the time to take care of loyal customers, since they could also bring new customers to the business,” Battersby says. “Telling customers how much their business is appreciated or rewarding them through discounts, loyalty cards and gift certificates can reap big dividends.”
Win A Competitor’s Customers
Any business hoping to prosper in tough times must continue to expand their customer base – and that often means drawing customers away from the competition. This can be accomplished by offering more or something different than the competition does.
“Providing better customer service is often viewed as one of the easiest ways to outdistance the competition,” Battersby adds.
Find A Pro
Now might be a good time to shop around for a pro. While most business owners and managers know their operation inside and out, there are highly technical matters of law, accounting, management and marketing that are usually best handled by outside experts.
The first step to finding the right tax professional requires an inventory of what you – and your business – actually need in the way of services and advice, and equally important, how much you can afford to pay for that advice or services,” Battersby says. “The best way to find someone to render needed advice or guidance is via a referral from business associates, your banker or an attorney.”]]>
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