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Monday, February 23, 2015

Labor on the move

The labor market is improving. According to the Labor Department in September the hiring rate was 3.6% and the rate of resignations was 2%, both figures increased substantially. This indicates that the economy is improving and more people are able to move around.

What is the impact on your business?

Steve Koenig, SCORE Counselor



Saturday, February 21, 2015

Businesses Upbeat

A November 14, 2014 article in the Sun Sentinel described a survey of business owners in SE Florida. The key finding described was that 68% believe revenue will be up next year, and they are working with that in mind.

How about your business?

Steve Koenig, SCORE Counselor



Monday, February 16, 2015

Selling With Partners

I took my car to a new dealer for service recently and noticed an interesting joint selling activity in the waiting room. While waiting for the work to be done I was offered, not only the donuts and coffee found at many car dealers (some for a fee), but also a no cost sandwich, salad and soft drink selection, courtesy of a well advertised nearby small restaurant. How about all the waiting rooms near your business?

Can you make something like this work for you?

Steve Koenig, SCORE Counselor



Friday, February 13, 2015

Does Color Have Value?

A customer went into a small, family owned, hardware store to purchase white touch up paint for an appliance. The clerk accompanied the customer to the appropriate aisle and handed over a white appliance touch up pen costing $6.95. The customer looked at the shelves and found a bottle of  white liquid touch up paint for $5.95. Upon looking closer the customer found another bottle of touch up paint priced at $4.95 but the color was almond, not white. Upon inquiring why the white touch up paint cost $1.00 more than the almond, the clerk responded with: “That’s the way it is!”

“This is why I do not come here often!”, was the response of the customer.

Now here is a case where the clerk led the customer to the highest priced item first, then had a very weak excuse for the two different prices for the colors of the lower cost items.

Does color have value….yes, and it can be negative value!

What about the way your business would handle a similar situation?


Steve Koenig, SCORE Counselor


Tuesday, February 10, 2015

Cybersecurity tips from the FCC

The FCC released a one-page Cybersecurity Tip Sheet which outlines the top ten ways entrepreneurs can protect their companies – and customers – from cyberattack.  

1. Train employees in security principles

2. Protect information, computers and networks from cyber attacks

3. Provide firewall security for your Internet connection

4. Create a mobile device action plan

5. Make backup copies of important business data and information

6. Control physical access to your computers and create user accounts for each employee

7. Secure your Wi-Fi networks

8. Employ best practices on payment cards

9. Limit employee access to data and information, limit authority to install software

10. Change Passwords and authentication

If you want more details check the FCC sites.

How does your company handle security?

Steve Koenig, SCORE Counselor



Saturday, February 7, 2015

Taking on the BIG GUYS

I recently came across an article outlining how one small business competes with the “Big Box Shops” (BBS) that I thought the subject was worth discussing.

Some say that BBS operations have power that allows them to hurt “Small Business America” (SBA). They use and abuse their purchasing power to dictate to the marketplace, they argue. Some small businesses are winning in this battle however.

Generally the small business cannot win on price or brand awareness. But they can win on service.

Smaller is better when it comes to intimate relationships with customers, product knowledge and product selection.  A business can go “wide”, as the BBS does, or “deep”, as the successful SBA can.  Specializing and discussing a customer’s needs that lead to providing appropriate guidance, something the BBS cannot do, can go a long way. Specializing provides the opportunity to go even deeper with related product and/or service offerings, another advantage over BBS operations. The result is customer loyalty, repeat business and great word of mouth marketing.

Suppliers often prefer to do business with small businesses. They know they will not be whipped into compliance. And let us not forget that even a small business can be on the web.

How do you compete with the BBS?

Steve Koenig, SCORE Counselor


Thursday, February 5, 2015

No Cost Sales

Perhaps you have heard the story of one of the stores that does not put a price on any of its products. It tells customers to “pay what it is worth” as they leave the store. As the story goes, these stores have increased revenue as a result.

What can this mean for your business?


Steve Koenig, SCORE Counselor



Sunday, February 1, 2015

Tax Changes for 2015: A Checklist

Welcome 2015! As the new year rolls around, it's always a sure bet that there will be changes to current tax law and 2015 is no different. From health savings accounts to retirement contributions and standard deductions, here's a checklist of tax changes to help you plan the year ahead.


For 2015, more than 40 tax provisions are affected by inflation adjustments, including personal exemptions, AMT exemption amounts, and foreign earned income exclusion, as well as most retirement contribution limits.

For 2015, the tax rate structure, which ranges from 10 to 39.6 percent, remains the same as in 2014, but tax-bracket thresholds increase for each filing status. Standard deductions and the personal exemption have also been adjusted upward to reflect inflation. For details see the article, "Tax Brackets, Deductions, and Exemptions for 2015," below.

Alternative Minimum Tax (AMT)
Exemption amounts for the AMT, which was made permanent by the American Taxpayer Relief Act (ATRA) are indexed for inflation and allow the use of nonrefundable personal credits against the AMT. For 2015, the exemption amounts are $53,600 for individuals ($52,800 in 2014) and $83,400 for married couples filing jointly ($82,100 in 2014).

"Kiddie Tax"
For taxable years beginning in 2015, the amount that can be used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $1,050 (up from $1,000 in 2014). The same $1,050 amount is used to determine whether a parent may elect to include a child's gross income in the parent's gross income and to calculate the "kiddie tax". For example, one of the requirements for the parental election is that a child's gross income for 2015 must be more than $1,050 but less than $10,500.

For 2015, the net unearned income for a child under the age of 19 (or a full-time student under the age of 24) that is not subject to "kiddie tax" is $2,100.

Health Savings Accounts (HSAs)
Contributions to a Health Savings Account (HSA) are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Medical expenses must not be reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return.

A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care.

For calendar year 2015, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage (unchanged from 2014) and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage (up $100 from 2014) and $12,700 for family coverage (up $200 from 2014).

Medical Savings Accounts (MSAs)
There are two types of Medical Savings Accounts (MSAs): the Archer MSA created to help self-employed individuals and employees of certain small employers, and the Medicare Advantage MSA, which is also an Archer MSA, and is designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare. Both MSAs require that you are enrolled in a high deductible health plan (HDHP).

Self-only coverage. For taxable years beginning in 2015, the term "high deductible health plan" means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,200 (same as 2014) and not more than $3,300 (up $50 from 2014), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,450 (up $100 from 2014).

Family coverage. For taxable years beginning in 2015, the term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $4,450 (up $100 from 2014) and not more than $6,650 (up $100 from 2014), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,150 (up $150 from 2014).

AGI Limit for Deductible Medical Expenses
In 2015, the deduction threshold for deductible medical expenses remains at 10 percent (same as 2014) of adjusted gross income (AGI); however, if either you or your spouse were age 65 or older as of December 31, 2014, the new 10 percent of AGI threshold will not take effect until 2017. In other words, the 7.5 percent threshold that was in place in earlier tax years continues to apply for tax years 2015 and 2016 for these individuals. In addition, if you or your spouse turns age 65 in 2015 or 2016, the 7.5 percent of AGI threshold applies for that year (through 2016) as well. Starting in 2017, the 10 percent of AGI threshold applies to everyone.

Eligible Long-Term Care Premiums
Premiums for long-term care are treated the same as health care premiums and are deductible on your taxes subject to certain limitations. For individuals age 40 or younger at the end of 2015, the limitation is $380. Persons more than 40 but not more than 50 can deduct $710. Those more than 50 but not more than 60 can deduct $1,430, while individuals more than 60 but not more than 70 can deduct $3,800. The maximum deduction is $4,750 and applies to anyone more than 70 years of age.

Medicare Taxes
The additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married filing jointly), which went into effect in 2013, remains in effect for 2015, as does the Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (AGI) more than $200,000 ($250,000 joint filers). Investment income includes dividends, interest, rents, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts and self-employed individuals are all liable for the new tax.

Foreign Earned Income Exclusion
For 2015, the foreign earned income exclusion amount is $100,800, up from $99,200 in 2014.

Long-Term Capital Gains and Dividends
In 2015 tax rates on capital gains and dividends remain the same as 2014 rates; however threshold amounts are indexed for inflation. As such, for taxpayers in the lower tax brackets (10 and 15 percent), the rate remains 0 percent. For taxpayers in the four middle tax brackets, 25, 28, 33, and 35 percent, the rate is 15 percent. For an individual taxpayer in the highest tax bracket, 39.6 percent, whose income is at or above $413,200 ($464,850 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent.

Pease and PEP (Personal Exemption Phaseout)
Both Pease (limitations on itemized deductions) and PEP (personal exemption phase-out) have been permanently extended (and indexed to inflation) for taxable years beginning after December 31, 2012, and in 2015, affect taxpayers with income at or above $258,250 for single filers and $309,900 for married filing jointly.

Estate and Gift Taxes
For an estate of any decedent during calendar year 2015, the basic exclusion amount is $5,430,000, indexed for inflation (up from $5,340,000 in 2014). The maximum tax rate remains at 40 percent. The annual exclusion for gifts remains at $14,000.

Individuals - Tax Credits

Adoption Credit
In 2015, a non-refundable (only those individuals with tax liability will benefit) credit of up to $13,400 is available for qualified adoption expenses for each eligible child.

Earned Income Tax Credit
For tax year 2015, the maximum earned income tax credit (EITC) for low and moderate income workers and working families rises to $6,242, up from $6,143 in 2014. The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.

Child Tax Credit
For tax year 2015, the child tax credit is $1,000 per child.

Child and Dependent Care Credit
If you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax year or incapable of self-care) in order to work or look for work, you may qualify for a credit of up to $1,050 or 35 percent of $3,000 of eligible expenses in 2015. For two or more qualifying dependents, you can claim up to 35 percent of $6,000 (or $2,100) of eligible expenses. For higher income earners the credit percentage is reduced, but not below 20 percent, regardless of the amount of adjusted gross income.

Individuals - Education

American Opportunity Tax Credit and Lifetime Learning Credits
The American Opportunity Tax Credit (formerly Hope Scholarship Credit) was extended to the end of 2017 by ATRA. The maximum credit is $2,500 per student. The Lifetime Learning Credit remains at $2,000 per return.

Interest on Educational Loans
In 2015 (as in 2014), the $2,500 maximum deduction for interest paid on student loans is no longer limited to interest paid during the first 60 months of repayment. The deduction is phased out for higher-income taxpayers with modified AGI of more than $65,000 ($130,000 joint filers).

Individuals - Retirement

Contribution Limits
The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan increases to $18,000 (up from $17,500 in 2014). Contribution limits for SIMPLE plans increase from $12,000 to $12,500. The maximum compensation used to determine contributions increases to $265,000 (up $5,000 from 2014).

Income Phase-out Ranges
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by an employer-sponsored retirement plan and have modified AGI between $61,000 and $71,000, up from $60,000 and $70,000 in 2014.

For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by an employer-sponsored retirement plan, the phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by an employer-sponsored retirement plan and is married to someone who is covered, the deduction is phased out if the couple's modified AGI is between $183,000 and $193,000, up from $181,000 and $191,000.

The modified AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly, up from $181,000 to $191,000 in 2014. For singles and heads of household, the income phase-out range is $116,000 to $131,000, up from $114,000 to $129,000. For a married individual filing a separate return who is covered by a retirement plan, the phase-out range remains $0 to $10,000.

Saver's Credit
In 2015, the AGI limit for the saver's credit (also known as the retirement savings contribution credit) for low and moderate income workers is $61,000 for married couples filing jointly, up from $60,000 in 2014; $45,750 for heads of household, up from $45,000; and $30,500 for married individuals filing separately and for singles, up from $30,000.

Barry Eisenberg, SCORE Counselor

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