Many business-owner taxpayers are currently asking me the question which I actually think is the *best* one they can ask if they’re hit with an unexpected tax bill:

“What can I do so I don’t get hit with unexpected taxes next April?”

The answer? PLAN AHEAD!

The window of opportunity to pay less tax in 2015 is closing. Pretty soon, you’ll be stuck with whatever your plan is now.

Here’s a simple formula for you: More time to plan = Better tax plans = Less tax

Sure, there are strategies to pay less tax, find more deductions and above all else, reduce the chances for audit on your returns.

But if you want to really save on taxes, then plan your 2015 tax strategy. There is still time.

Over the last month, there have been times when I have met with a client, who owns a business (usually an LLC or a Sole Proprietorship), and they mention how hard they are getting hit with taxes, year after year. So, as you might expect, I offer to take a look at their tax returns for the past few years, and after doing so, I sometimes say to them,

“Exactly why aren’t you operating as an S-Corp?”

The answer is usually pretty similar, “I don’t know? … Should I be one?,” or “My prior accountant said I wasn’t ‘big enough’ to be an S-Corp,” or “My prior accountant said I ‘didn’t make enough money’ to be an S-Corp or ‘don’t have any risk’ in my business, so I didn’t need to be an S-Corp.”

Etc., etc.

I have rarely met an S-Corp structure which I didn’t like. But it is true — they don’t necessarily work for everyone. But, if done right, they often can return 4-5 figures of savings per year for a business.

Perhaps it’s an oversimplification, but when it comes down to it, there really are just three different tax rate tables:

1) Individual income tax rates
2) Corporate income tax rates
3) Trust income tax rates
Depending on your structure, and your business characterization, you might be operating under one, both, or all three of these rate tables.

So let’s take advantage of all of the planning opportunities available to you. If your income is at the higher brackets, you can easily save $10,000 or more per year in taxes just by making some tweaks in your business structures.

Plan ahead. Reap the rewards.

As we think about what it would look like for us to manage our bodies, there are all kinds of connections to other areas of our lives.

You see where I’m going here: It’s exactly the same for your business. If you measure your key metrics you can manage their performance. Each and every business has key performance indicators (KPI’s), some of which are common to other businesses, some which are industry-specific, and perhaps some which the company created for itself.

These sorts of things are our bread and butter, when working with local small businesses. A sampling of financial metrics…

* Average transaction value.
* Gross profit margin.
* A measurement of a company’s efficiency during the production process.
* How much is left over after COGS.
* Gross Profit divided by Total Revenue.
* Net profit percentage.
* The amount of profit for every $1 of revenue generated.
* Net Profit divided by Total Revenue multiplied by 100.
* Debtor days or receivable turn days.
* How long your customers take to pay you. (The sooner your customers pay, the sooner you can get that cash working for you.)
* 365 (days in the year) divided by (Sales on credit or invoice divided by Average Accounts Receivable).

More industry-specific KPI’s might include:
* Table turns per night.
The number of times a restaurant is able to sit customers at a table.
* Utilization.
The number of hours a machine in the production line can run.
* Rejection rate.
The number of defects rejected in an assembly line.

Non-specific KPIs might include:
* Customers won/lost.
* Customer complaints/product returns.
* Staff sick days.

You must absolutely integrate the RIGHT measurements to provide proper feedback on your business’ performance.

I hope this gets your juices flowing. Many of these financial indicators are things that WE can help you to implement … if you let us!

For many people, worrying about things can become more vexing than the original problem they were grappling with in the first place.

Since I’m a tax professional, I’ll use an image I can understand: Imagine that you are facing a terrible tax situation and facing five figures of potential tax obligation. You’ve hired a good accountant, and you’re praying she’s going to be able to help you. She leans over and says, “Don’t worry. I never do. I never worry about a thing. Instead, I just try to think positively.”

Now ask yourself: “Is this the person I want representing me? Someone who doesn’t worry about anything — not even what’s going to happen to her client?”

The answer, of course, is a resounding NO. You want an accountant who’s going to worry over the details of your situation. And cover everything that needs to be covered, so you don’t end up in hock for multiple six figures! What you want is for your tax person to worry, and then take appropriate action so that he or she is prepared.

So here is the exercise that has kept me from worrying needlessly — but rather, doing it productively. I start by asking these two questions to keep worry in its proper place …

1. Is the problem real and reasonable? If you’re getting ready to take a trip to a national park, for instance, it’s appropriate to “worry” about getting accurate directions and your car tuned-up before you go. Worrying about being shot by a sniper along the way, which is unlikely, is probably a waste of time.

2. Can something actually be done about the problem immediately? If you answer yes to this question, then you can probably come up with an action plan to get something done that will alleviate your worry. If your cashflow is down, how can you INCREASE it by selling more, and getting more new customers or clients — rather than worrying about the expense side of the coin. If your production has suffered recently, what are the positive steps you can take … rather than fixating on who to blame?

You get the idea.

Use these questions, and start sleeping better at night. I know I do…

For various liability issues, I’m reluctant to actually mention this company by name, but let’s say that there’s a big, popular company who made its fortune on the backs of lower-income taxpayers. This company is flooding the airwaves with a brand new program offering “free” federal tax preparation and $9.99 state tax prep.

Maybe you’ve heard about it? Well, like many such things, there are, shall we say … strings.

First of all, here are the restrictions: it only covers those filing the 1040EZ federal form, which covers only the very simplest tax issues. It can’t be used by anyone who has dependents, makes more than $100,000 per year, is age 65 or older, claims adjustment to income like alimony or tuition deductions, or itemizes their deductions. Thus, homeowners who deduct mortgage interest or people with large charitable contributions can’t use the 1040EZ.

Plus, filers have to pay fees for other forms and any other fees incurred which are conveniently not mentioned — and they have a tendency to pile up.

A few years ago, when this company first actually rolled out this strategy and was asked by stock investors why they were was doing this, an executive replied: “Our ability to monetize this program means a minimal impact on our net average charge,” Retail Tax President [for said company] Phil Mazzini told analysts. (Source: http://www.bloomberg.com/bw/magazine/content/11_05/b4213023812682.htm)

In other words: yes, we are offering “free” tax prep, but we still bring in the same fees!

It’s always enlightening to look at executive interactions with stock analysts to see why public companies do what they do, I’ve found.

So — in summary: don’t be seduced by the siren call of getting something for nothing. You usually end up paying for it, in a whole host of ways.

In fact, one of OUR revenue centers over the years has always been in fixing the mistakes made by these “big box” retail tax outfits and off-the-shelf software programs, and discovering loads of missed opportunities and deductions, which led to overpayment of taxes.

(Because, speaking of software: do you remember when a former Treasury Secretary used the leading tax software to do HIS taxes, unintentionally created a bunch of errors with it, and then blamed the software itself for all of his tax problems in front of the Senate? Not an uncommon issue, I’m afraid.)

The old adage IS an adage, because it’s so often true: you get what you pay for. It’s the foundation for a stable economic system because it’s almost always true.

So yes — this article is certainly self-serving, as you can see. I can’t get around that, unfortunately.

“You get the best out of others when you give the best of yourself.” – Harry Firestone

I discuss this all the time with my business owner clients — how to price their services. You see, often we might hear consumers say, “Well I would buy it if it were in my price range.” And, that idea tempts many business owners or sales people to lower their prices — just to sell more products.

This can be an extremely powerful urge.

However, as you already know, price reductions often create more problems than they solve. I’ve seen too many businesses (my clients) jump down to lower prices without consulting someone objective, only to see their revenues, profits AND business fall.

Here’s some of what you might see price reductions create within your business:

* Decrease of net profits
* Customers rush to the purchase of lower quality products
* Increasing customer demands to drop the price even lower
* Requirement of even more sales to make up the difference in revenue
* Needing a larger quantity of products and inventory to make up for lower margins

And, in the end, there will always be someone willing to go out of business faster than you. And you can’t (nor should you want to) keep up with that.

Remember this: price is not a benefit. The close of a sale is usually not determined on the cost of your product. If you properly “sell” your customers and prospects, they will purchase your products/services no matter what price you determine.

That’s the plain truth — and you’ve probably seen it in your own purchase patterns.

If a customer or prospect doesn’t buy — and they claim the cost had something to do with it — you can guess they probably wouldn’t have purchased anyway.

As a small business owner, and marketer, your job is to sell your products and services. But the actual art of selling has nothing to do with the price of the product.

By the time your contacts find out about the price, they should be determined to purchase no matter what the cost.

So, find “real” benefits (value) to sell to your customers and prospects. Help them to see how great their life is with your product, and you’ve got a customer. Point out their current pain, and your contact will do anything to get rid of it.

Set your prices and hold fast. If you’ve marketed correctly, you will still have customers anxious to do business with you.