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Friday, January 13, 2017

Horror over the Air



Here is a story with a message for all businesses.

 

A cell phone senior citizen customer went to a retail distributor for a major cell phone carrier, with a request to repair a power cord connector on a “flip” phone. It seems the plug could not be inserted in that particular phone, while it functioned fine on another phone in the household. The store representative stated that the connector was damaged beyond repair and, proceeded to “up-sell” the customer to two “smart phones” in the household. The sale included the ability to rescind within 14 days.

 

Within 2 days the customer retuned to the distributor and wanted to rescind the sale because the new phones increased the monthly charges approximately four times over those preciously paid, without much added value, based on past use. The distributor rescinded the sale, returned two new “flip” phones, and recorded new “flip” phone sales on the cell phone company records. He could have simply reinitiated the original service the customer had. In addition to selling something with limited customer value, recording a “new” sale is a major source of the issues here. A new sale started a new two year contract!

 

Over that two year period the customer attempted to upgrade to more expensive “smart” phones on multiple occasions with the same service provider, each time being told by the service provider that this could not be done until the two year contract period expired. Now, here was a company turning away the opportunity to increase revenue from a customer. Smart???

 

As the contract termination period approached, the customer requested that the service provider remove the exorbitant cancellation fee for the last 30 days of the contract, and was refused.

 

By the way, the original “flip” phone problem was repaired with a slight bit of pressure of a screw driver.

 

Here was a customer that was now committed to leave this service provider, and never do business with the distributor again!!! Their friends, family and acquaintances are hearing this story as well!!!

 

A lot to learn from this example. How does your business compare?

 

 

Steve Koenig, SCORE Counselor


 

 

 

 

Actual Expense Method for Business Use of a Vehicle

 

Choosing the Actual Expense Method

 

If you do not choose the standard mileage rate method, you can chooses the actual expense method for the business use of your vehicle.

 

Under this method, you can deduct the business use percentage of your various automobile expenses.

 

To figure your business use percentage, simply divide the number of business miles by the total mileage for the year.

 

Actual Car Expenses Include

 

Depreciation

Gas

Garage Rent

Insurance

Lease Payments

Licenses

Maintenance

Oil

Parking Fees

Registration Fees

Repairs

Road Tolls

Tires

 

Interest Expense

 

If you are an employee, you cannot deduct any interest paid on the car.

 

Taxes Paid On The Car

 

If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions on Schedule A (Form1040).

 

 

 

Depreciation, Special Allowance, Section #179 Deduction.

 

Under the actual expense method, you can recover the (business use percentage) cost of your vehicle by depreciation each year.

 

Generally, there are annual limits (on the combined Section #179 Deduction, Special Depreciation Allowance Deduction, and Regular MACRS Depreciation Deduction) shown in the applicable IRS Tables.

 

The depreciation limits are not reduced if you use your care for less than a full year.

 

The depreciation limits are reduced if your business use of the car is less than 100%.

 

MACRS Depreciation Methods are used to figure depreciation on vehicles:

 

            Passenger Vehicles are under the Listed Property category

 

            Must use your care more that 50% for business each year.

 

            3 Depreciation Options:

  • 200% DB/HY Convention/5 year recovery period
  • 150% DB/HY Convention/5 year recovery period
  • Straight Line/5 year recovery period
     
                                                                Section #179
     
  • Section #179 must be claimed only in the year you place the car in service.
  • You must use the car more than 50% for business.
     
                                                                Special Depreciation Allowance
     
  • Amount allowed per year is based on annual IRS rules.
     
    To figure depreciation, your need to know the following:
     
  • Your basis in the car
  • The date the car was placed in service
  • The depreciation method and recovery period you will use.
     
    Basis:
     
    Is generally the cost of the car (this includes any amount borrow or pay in cash, other property, and services)
               
    Placed In Service:
     
    Depreciation begins when you place your car in service (when it is available for use in your business).
     
    Method of Depreciation:
     
    See above for the various methods.
     
    Business Use Percentage:
     
    You need to keep written mileage logs of the total mileage and the total business mileage for the vehicle each year.
     
     
    Tax Tip:
     
    Claiming business use of an auto requires detailed record-keeping that documents and substantiates to the IRS should an audit occur. It can be an audit target as it is prone to abuse. With proper records, you can feel confident you will prevail should the IRS question your tax return.
     
     
    This article was written by Donald M. Scherzi, CPA, CFP, LLC
    Mike Lupo, SCORE Counselor
     
     

Tuesday, December 13, 2016

Cost of Confusion



How many ------ people does it take to change a light bulb? There are as many answers to this joke as there are to filling in the blank in the question.  But when it comes to purchasing a car, I recently came across a situation where it took 12 people from the dealer to be involved directly with me. I have purchased cars from dealers in the past, and it took only 2, sometimes 3 people to make the deal happen. This is a dealer that is out of control! This is also a story with many teachable moments. See how many mistakes were made. How many are made in your organization?

 

There were 3 sales people (one rather junior, who did most of the work. We all started somewhere), 2 sales managers, 1 technician, 2 sales administrators and finally 4 people representing the finance function (including one who collected the funds and provided receipts). I should make it clear that this was a cash sale, without any financing involved.

 

Previewing the car and coming to terms on a price was similar to other transactions. Two days prior to entering this dealership, some 60 miles from my base of operation, I called to first reconfirm that the specific car I found on line was actually on site available for sale, and to confirm that this New England dealership could handle the process of transferring the registration of the Florida plates. I spoke to the sales rep who answered the phone, held me on the line and then confirmed all the above.

 

Two days later, as I was preparing to visit the dealer, I called again with the same questions. A different sales rep held me on the line, and responded “yes”, as the first rep was not at the dealership at the time. When I arrived at the dealership, I asked for a specific sales rep that I found on the dealer web site as “good” to deal with. Unfortunately he was not available and I was redirected to the person that answered the phone earlier in the day, after I found that the first rep from two days earlier was also not available. This rep brought the car around and we did a test drive. There were some discrepancies with the on line site list of options. While this is a dealership mistake these were not deal breakers, however during this process our rep (been with the firm for one month) obtained help from a more experienced sales person (who I later found out described himself as a sales manager)., who took control of the discussion. Now I had two dealer people in the discussion, and we arrived at a deal.

 

Understanding the process needed for Florida plate transfer was a research and time consuming project on the part of the sales organization personnel. A mistake!! However, it appeared that no one knew how to get it done.  The result, after hours of research, was that I walked out on the sale.

 

The above occurred on a Friday, over 60 miles from my base of operation. Over the weekend, our own time and research made a solution visible. On Monday, the sales manager’s manager I called determined that the car was still available and the previously agreed deal could still be accomplished.

 

After making the 60 mile trip once again, the two of the sales people who made the deal said they were trying to find a phone number to reach me over the weekend. They made the mistake of not obtaining it from me earlier, they had my address only. It did not seem they had anything new to add, however. I brought copies of all the needed forms and a list of contacts, I had already confirmed.

 

The novice sales person and I spent hours filling out the forms and reconfirming the data and contacts. He took notes on pieces of scrape paper found lying around on a shared desk. He turned this information over to a sales administrative desk where two people created on line seller forms, reflecting incorrect information through three cycles to get it right, due to the difference in transferring Florida plates in place of registering in their home state. They only understood one way to do things, yet another set of mistakes on the part of the selling organization. I finally had to tell them how to fill out their own forms, which they did.

 

The sales people are compensated with a flat fee (no matter the price of the car) going to the initial sales person. In this case the fee was split 50/50 with the novice and the person that took my first phone call and provided the information I needed.

 

The corrected documents were forwarded to a busy finance person. After a very long wait, the novice sales person under pressure from me, attempted to move the file to another finance person. After a quick review this finance person gave the file back to the first finance person. Another set of dealer mistakes here.

 

 The overworked finance person, finally presented me with yet another set of documents that substantially altered the price, based on a set of administrative tasks she said no one else understood. She said she had a process to deal with our issue, that was not known by anyone in the sales organization, and was different then the one I was promoting.  More mistakes here.

 

Her process added about 30% to my costs. When I explained the time and effort a group of people, including myself, put in to the process, I was now promoting, she initially refused to deal with it. Yet another mistake! She asked me to leave her office so she could deal with other customers. Another Mistake! I refused! Escalating to her manager produced an agreement to go my way which was simpler, faster, less costly and all the forms were completed.

 

When the finance person finally prepared he needed documents, and forwarded them for processing, one of the major seller documents was incomplete, and had to be redone and resent. The fee I had paid the dealer to pay the Boca firm, did not get paid. More mistakes!!! And more time before I could drive the car off the lot, even though I paid for it. This added delay caused a five additional day delay (due to a holiday weekend) before I could drive the car off the lot. Ridiculous!!

 

On the day the documents arrived at the dealer, the novice called to tell me so (a day after I told him it was being overnighted to the dealer. While the novice told me he worked until 8 PM that day, I arrived at about 5 PM as I told him I would. Not only was he not around, but the sales manager was gone as well. The car was delivered without floor mats, only one key and a stolen previously mounted (when I paid for the car) EZ pass transponder. Mistakes, Mistakes and more mistakes!

 

One needs to ask why anyone would conduct business with this seller again or recommend anyone do so? Without changes, this dealership is not maximizing profit potential, losing potential references and customers, and is likely to fail.

 

How many mistakes did you see (not just those I mentioned)? How many similar mistakes are being made in your business?

 

 

Steve Koenig, SCORE Counselor


 

 

 

What To Do If You Cannot Pay Your Taxes On Time




If you find yourself in a situation where you are unable to pay your tax bill in full on time, the following options will be helpful.

 

1-File on time and pay as much as you can. File on time to avoid a late filing penalty. Pay as much as you can to reduce interest charges and a late payment penalty. You can pay online, by phone, or by check or money order. Visit IRS.gov for electronic payment options.

 

2-Get a loan or use a credit card to pay your tax. The interest and fees charged by a bank or credit card company may be less than the IRS interest and penalties. For credit card options, visit IRS.gov.

 

3-Borrow from a family member, friend or co-worker. It is always possible to ask someone you know to lend you the money to pay your tax bill. To protect all parties, have a formal written loan agreement prepared to avoid potential problems in the future.

 

4-Use the IRS Online Payment Tool. You don't need to wait for the IRS to send you a bill before you ask for a payment plan. You can use the IRS Online Payment Agreement tool at IRS.gov. You can even set up a direct debit agreement. With this type of payment plan, you won't have write a check and mail it each month. It also means you won't miss payments that could lead to more penalties and interest charges.

 

5-File Form 9465, Installment Agreement Request, with your Tax Return. File you tax return on time along with Form 9465 to set up a monthly payment plan with the IRS.

 

BOTTOM LINE:

 

Don't ignore a tax bill. The IRS may take collection action if you ignore your bill. Penalties and interest charges will continue to accrue until your tax bill is paid in full. Contact the IRS right away to talk about your options. If you a suffering a hardship, the IRS will work with you.

 

 

This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor

Monday, December 5, 2016

Life or Death





I recently came across a business article that hit me square in the face. Among other things it said: Business owners failing to put a few hours a week into education can make the difference between “life and death”.  WOW that can be a rude awakening for many small business owners! How about these subjects: Business Strategy; Planning; Financials; Marketing; Sales; Purchasing; Production; Facilities, Personnel; Capital, Contracting; Presentations: and the list can go on. 

 

How about you and your business?

 

Steve Koenig, SCORE Counselor


 

New Tax Return Due Dates-Effective for 2016 Tax Returns




There are new filing deadlines applicable to tax returns for tax years beginning after December 31, 2015.

For calendar year taxpayers, these new deadlines will be effective for 2016 tax returns that are due in 2017.

Partnerships: The due date for partnerships to file Form 1065, and Schedule K-1 will move from April 15 to March 15 (or the 15th day of the 3rd month after the end of its tax year).

C Corporations: The due date for C Corporations to file Form 1120 will move from March 15 to April 15 (or the 15th day of the 4th month after the end of its tax year).

S Corporations: The due date for S Corporations to file Form 1120S, and Schedule K-1 will remain unchanged (due date will be March 15th, or the 15th day of the 3rd month after the end of its tax year).

Individuals: The due date for Individuals to file Form 1040 and Schedule C will remain unchanged (due date will be April 15th).

NOTE:

An extension of time to file a tax return IS NOT an extension of time to pay any tax due. Failure to pay tax due could result in various IRS penalties and interest charges.


This article was written by Donald M. Scherzi, CPA, CFP, LLC

Mike Lupo, SCORE Counselor

Monday, November 14, 2016

Cybersecurity Awareness




Forewarned is Forearmed:

Florida Small Business News reported on Symantec’s 2016 Internet Security Threat Report (ISTR)

Spear-phishing attacks targeting employees increased by 55 percent in 2015.

Over the last five years, there has been a steady increase in attacks on small businesses. 43 percent of all attacks were targeted at small businesses last year.

Small business owners need to educate their employees on how they can avoid these types of attacks.

A new zero-day vulnerability was discovered.

Zero-day vulnerabilities are security holes in browsers and website plugins that groups exploit before a vendor can be aware of and fix the problem.

The number of zero-day vulnerabilities in 2015 more than doubled, a 125 percent increase from 2014.

There are major security vulnerabilities in three-quarters of popular websites.

Cybercriminals take advantage of vulnerabilities in legitimate websites to infect and scam users. Being wary of security holes while browsing websites—even popular ones—can help your information stay secure.

500 million personal records were stolen or lost.

There were nine mega-breaches in 2015.

Ransomware increased by 35 percent.

In ransomware attacks, hackers usually encrypt stolen data and demand ransom for its release. In 2015 the focus shifted from PCs to smart phones, Mac, and Linux systems. 

Symantec, recommends that companies do not pay ransom when they are attacked because it funds subsequent attacks.

Now you Know!

Steve Koenig, SCORE Counselor