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FINANCE |
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Claiming Charitable Contributions as a Business Expense |
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As a general rule, contributions to a charity from your business are not considered business expenses. Only a regular corporation makes charitable contributions on its own behalf and takes a deduction for them from its taxable income. All other businesses do not pay income tax and pass through the tax impacts of their activities to their owners. Among the pass-through acts are gifts to charities.
Unincorporated sole proprietors, partners in partnerships, and shareholders of S corporations treat charitable contributions by their businesses as if they had made the donations themselves. The same rules apply to multiple-member LLCs when they're taxed as either partnerships or S corporations. Part owners of organizations with multiple partners or shareholders receive a pass-through of business charitable contributions in proportion to their percentages of ownership. Business owners must itemize personal income tax deductions to receive tax benefits from charitable donations.
For the business to have a qualified charitable donation, a monetary cost must be incurred. Hence, no deduction is allowed for the value of an entrepreneur's time or the time of employees for volunteering with a charity. The amount of deduction for donating a non-cash item is limited to its book value. This is the value not yet already deducted, including deducted depreciation expense. No business charitable contribution has occurred for giving an item whose cost has been fully depreciated or was deducted as an expense when purchased.
Payments to a charity can be counted as ordinary business expenses if they are directly related to business matters. This includes, for example, purchasing advertising from sponsorship of charitable events. |
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DESIGN |
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Improve Your Layout and Improve Your Bottom Line |
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Your store's layout can influence a shopper's attitude, demeanor, and comfort level and even stimulate purchase behavior. A well-designed and inviting environment will positively impact the way people react to stimuli and how long they feel inclined to remain in the store.
It goes without saying that customers want to experience a pleasant shopping environment that is easy to navigate and in which merchandise is displayed in an appealing manner. This starts with a window display that draws eyeballs and invites shoppers inside.
Once they enter, customers should find it easy to move through the store. Most people automatically turn right upon entering a store and then move in a counterclockwise direction. Knowing this, put high-margin products, new arrivals, and promotional displays on the right.
Place higher-margin items in high-traffic areas and high-demand items in less trafficked parts of your store. Place complementary items near each other and items that need frequent restocking near storerooms or cash registers. Position high-impact items at eye level or just below.
The amount of merchandise you have on display depends on the customer experience you're trying to create. Having abundant product on the floor may increase sales, but crowded shelves can impact brand perception, especially if you're a high-end retailer.
Change displays frequently, both to give customers reasons to come back often and to highlight new products and seasonal specials. Plus, interesting displays and eye-catching visuals induce customers to linger longer and potentially increase the size and value of their baskets. |
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HOT BIZ TRENDS |
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March Madness Could Hold Secret to Business Success |
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March Madness brings 16 games a day of nonstop action, heart-pounding emotion, and buzzer-beating excitement.
And when you think about it, basketball is a lot like life in that it requires skill, practice, persistence, and drive.
The determination and ability to triumph on the hardwood is not unlike the grit and passion needed to succeed in business.
Here are some lessons for small business owners embedded in this season of sports drama.
Don't dwell on past mistakes. Athletes are trained be full-on in the moment. In business, too, you have to think about the here and now while planning for what lies ahead. You will inevitably make mistakes. Learn from them, then let go and move on.
Don't sweat the small stuff. Passion and drive are important, but succumbing to fear, pressure, or anxiety can consume you, causing your performance to suffer and your business to crash. A losing attitude can take you out of the game permanently.
Success on the field, on the court, and in business comes from confidence and trust. Trust yourself, and trust your team. Trust your experts. If you have people at your company who specialize in marketing or in finance, consider their opinions and trust their expertise.
Winning teams rely on teamwork and good coaching. In business, as in sports, there are times to be open to advice, feedback, and even criticism.
Whether the job is on the court, in the office, or on the shop floor, each team member has a role and a responsibility for the unit's ultimate success. |
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FINANCE |
| Tax Rules for Reimbursing Employees Apply to Owners Too |
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If you were in charge of finance at a large international corporation, you wouldn't give company money to an employee who merely asked for reimbursement of business expenses.
Instead, you would require the employee to provide substantiation of the expenses paid so you know what was purchased and the cost of every item.
As a small business owner, the same rules apply to reimbursements to you from your enterprise. In fact, the IRS requires that you deploy this process so that your business may obtain tax deductions for the reimbursed expenses.
This permits the company to deduct the amounts spent using the same expense categories as if the business had paid the vendors directly. Making this issue especially complex is the existence of special IRS rules for distinctive types of expenses.
Business Meals
You can slide a bit on keeping precise details about reimbursement for meals. The IRS requires substantiation for reimbursed business meals of at least $75. But you are wise to establish a much lower limit. This is particularly important for solo enterprises that are exposed to IRS questioning about business meal expenses comprising a substantial part of total expenses.
You can probably get by with not having every receipt for coffee you purchased for customers. But receipts are necessary to support claiming larger meals as business meals. Whether reimbursing yourself or employees, a sound practice is requiring receipts for any business meal of at least $25.
Meal receipts should include the name of the business associate for whom the meal was purchased. The business nature of the meal should also be documented, such as the general reason for meeting.
For very large meal costs, such as an entire table for many company attendees at a special event, a recommended policy is recording some details on the receipt. This can entail noting the name of the event sponsor and, in some cases, the name of the caterer.
When reimbursing for travel expenses, the amount for meals must be separated. Surely you do eat when traveling away from home for business, but only half of travel meal costs are tax-deductible, unlike a 100% deduction for travel transportation and lodging. And you cannot deduct any extra costs incurred to bring your spouse along on a trip that's primarily for business.
Business Mileage
Both you and any employees should have a record of business miles driven with personal vehicles to qualify for reimbursement from the company. A mileage log for each trip will state the number of business miles driven, the location, and the general business purpose.
The reimbursement rate may be whatever you decide. However, the tax deduction cannot exceed more than the amount per mile that's established by the IRS at least annually.
Business Gifts
Remember that the IRS does not allow a tax deduction for a business gift of over $25. Moreover, if you give a gift to an employee or contractor, many IRS rules are applicable. Most importantly, a gift card to anyone is considered cash compensation. The value of these must be added to the employee W-2 or contractor 1099. Your accountant can help identify other situations where this compensation standard applies. |
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Gold Gerstein Group
505 Pleasant Valley Avenue
Moorestown NJ 08057
856-727-0100 Office
856-727-0772 Fax |
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| www.g3cpa.com |
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| info@g3cpa.com
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| How to Win Big in Today's Economy |
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| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
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Find out how by requesting my free report
"How to Win Big in Today's Economy" by
replying to this email. |
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| Just reply to this email and I'll send it right out to you. |
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| Quick Quiz |
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Just reply to this email for the answer.
Which woman founded modern nursing and was nicknamed "Lady with the Lamp"? |
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| Worth Reading |
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12 Small Business Positions that Should Be Full-Time
By The Young Entrepreneur Council |
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Small Business Trends
Part-time and contract positions have become the norm for many workers and businesses, much to the chagrin of many advocates for workers' rights. But business owners, including entrepreneurs, need to seriously consider making part-time positions full-time. Know what is essential to make your company grow, and hire accordingly.
How to Fight App Fatigue
By Ali Surani
Small Biz Daily
Having an app for everything often leads to one thing: app exhaustion. This occurs when consumers are no longer interested in downloading a new app. This presents a crucial challenge for developers. Consumers don't want redundant apps, so how do you make sure your offering stands out in the crowded marketplace? This article gives some suggestions for how you can reinvigorate your apps, including using chatbots and voice-controlled systems or exploring augmented reality.
32 Entrepreneurs Share the Books They Always Recommend
By Nina Zipkin
Entrepreneur.com
What do a children's novel, a history of the making of the atomic bomb, a collection of lessons from an astronaut, and numerous guides to better health and wellness all have in common? They're titles that come recommended to you by some leading entrepreneurs. While some picks on this list seem obvious, others may surprise you. Expand your mind and maybe gain some business inspiration.
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LINKS YOU CAN USE
This Month - Business Websites |
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Many business interactions happen online. Show the same amount of care in choosing or building a website as you would in creating the best physical location for your business. Here are some resources to help you get started.
No one wants to have a poor business website. Read this list of common mistakes before you start building one:
The 6 Mistakes to Avoid When Building a Business Website (and What to Do Instead)
Creating a good website can be overwhelming. This article, by a webmaster who has worked on small business websites, gives a comprehensive primer on what you need to know:
10 Key Steps To Building A Great Small Business Website
A good website can only work if people can access it. This article delves into specifics to remember when finding the proper web hosting service:
Secrets of Web Hosting for your Small Business Revealed
Ideally, your website does more than advertise your business: it also creates and generates business. Here are some points to keep in mind to make your website effective:
How to Make Your Small Business Website Really, Really Effective
Online businesses present unique opportunities (and challenges) for customers, or potential customers, who have disabilities. Accessibility legislation can vary by jurisdiction, but this article gives some general tips to help you think about making your website as accessible as possible:
Making Small Business Websites Accessible for Everyone
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