Business Record - Iowa Biz

There is no tax fairy

Image by Getty Images via @daylife

It's okay to dislike taxes.  In fact, it's normal and healthy. But that doesn't make them go away. It would sure be nice if a Tax Fairy could wave her wand and make them disappear. 

It's not going to happen.

People will have been seeking the Tax Fairy as long as there has been an income tax.  That's fine, until you think you have found her. 

- The founder of Buy.com sought the Tax Fairy in "OPIS," a tax shelter marketed by a national accounting firm designed to generate artificial losses.  The Tax Court ruled that there was no Tax Fairy, imposing $25.7 million in taxes and $10.7 million in penalties. 

- A defense industry consultant looked for the Tax Fairy in the "Millennium Plan," attempting to deduct contributions to a Section 419A(f)(6) welfare-benefit plan while earning tax-sheltered income and retaining access to the funds contributed.  The Tax Fairy never showed, and the Tax Court upheld $5.7 million in additional taxes and $870,000 in penalties.

- A group of medical professionals in North Platte, Nebraska, sought the Tax Fairy through a CPA from Bakersfield, California.  They attempted to hide their income and deduct personal expenses in "loan-out" corporations.  They were sentenced last week on federal tax charges, and the Tax Fairy never showed.

Tax professionals can do a lot.  They can make sure you pay no more than you need to; with the right facts they can delay your tax and sometimes get you nice refunds. They can guide you safely through the dangerous and byzantine byways of the tax law. 

But if you make a lot of money and you want to continue to control and use it, you will eventually have to pay taxes.  There is no special "de-tax" plan or double-secret pay-no-taxes-ever trust scheme that your preparer is just too lazy or ignorant to tell you about.

There is no Tax Fairy. 

- Joe Kristan

Image courtesy Wikipedia Commons.

Do you know how to innovate?

As our world moves quickly away from the Industrial Age into this Technology/Idea Age -- we're being called upon to build something very different than our parents or grandparents did.

Our generation is being asked to create ideas, technologies, new solutions to age old problems -- all of which require us to be innovative.

What does that actually mean?  It means coming up with something new, being creative, coming at problems in a fresh way.  In business it means finding better ways to be valuable to your customers' lives.

A lot of people believe that they're not creative or they can't do that sort of work.  I think that's rubbish.  Everyone has it in them to find new answers.  Or even to ask new questions that lead to new answers.

How do you do it?  I might suggest you read a book I just finished called Innovate Like Edison by Sarah Miller Caldicott. (click here to check out the book*)

In this book, Caldicott identified the five competencies of innovation and then tells stories of how Thomas Edison (said to be the world's greatest innovator) and many modern day thinkers/business leaders exemplified these skills.

They are:

1. Solution-Centered Mindset: Keeping an unwavering focus on finding solutions. 
2. Kaleidoscopic Thinking: Juggling multiple projects, generate many ideas and then make creative connections or discern patterns 
3. Full-Spectrum Engagement: Managing and balancing a massive workload with social life, family and other obligations.
4. Master Mind Collaboration: Multiplying individual brain power by bringing the right people together.
5. Super-Value Creation: Targeting all creations to an existing market and provide value to potential customers.

Before you poo poo this as something you don't have to worry about -- consider this recent quote from Seth Godin.

“For 80 years, you got a job, you did what you were told and you retired. People are raised on this idea that if they pay their taxes and do what they’re told, there’s some kind of safety net, or pension plan that’s waiting for them. But the days when people were able to get above average pay for average work are over.

If you’re the average person out there doing average work, there’s going to be someone else out there doing the exact same thing as you, but cheaper. Now that the industrial economy is over, you should forget about doing things just because it’s assigned to you, or “never mind the race to the top, you’ll be racing to the bottom.”

Whether you own the business, push a broom at the business or both -- the world has changed and is demanding that we keep pushing to the top or get out of their way -- because they're going to get there with or without us.

So... looks like it's our time to decide.  Innovate or Irrelevant.

- Drew McLellan

*Affiliate link

Building going geothermal

More and more new commercial buildings are going geothermal as a viable means to reduce energy costs.  The 40,000 square foot Central Iowa Shelter & Services building, currently under construction south of downtown Des Moines, features a geothermal system.  The mechanical engineer for the project, Alan Langley of Alvine Engineering, says “the trend in Iowa is more buildings are using geothermal systems, in fact about 80% of the schools we design use geothermal systems. Offices and healthcare are good candidates also.”

Alan also adds “the trend started in Iowa when the utility companies started to provide hefty rebates for energy conserving systems like geothermal”.  Basically, the utilities pay companies to lower their energy usage rather than bring on a new power plant costing millions of dollars.

A commercial system costs $16-$20 per square foot so the cost for a geothermal system for a 10,000 square foot building would be $160,000 to $200,000. The payback is typically 5 to 7 years and from day-one heating and cooling costs should be reduced by 35%-45%.

A geothermal system takes advantage of the earth’s constant temperature.  The diagram shows the earth’s temperature near the surface in Iowa to be about 52 degrees.  Therefore, the temperature of water when circulated through a closed system of vertical or horizontal loops nears a constant 52 degrees.  The loop is tapped into by mechanical equipment which either transfers heat to the loop during the summer or takes heat from the loop during the winter.

An amazing result of the loop is the potential transfer of energy within a building during the winter.  The interior zones of a large office building many times require year-round cooling while the perimeter usually requires heating.  Mechanical equipment removes heat from the interior zone and transfers the heat to the loop.  Mechanical equipment at the exterior zone reverses the process and removes the heat from the loop providing heat where it is needed. Now that is being Green!!!

When to seek seller financing

Sellers hate it, but buyers are bound to ask themselves, “What is wrong with this business, when the seller will not bet on the future viability or their business and I am? I mean, other sellers are willing to provide seller financing?"

Here are some good reasons why seller financing is important:

• Seller financing increases the chances for a sale.
• The seller will usually get a much higher price.
• The tax advantages are better than an all-cash purchase.
• Seller financing tells the buyer that the seller believes in the future of the business.
• Most banks will require some seller financing i.e. “If you don’t believe in the future of the business (and you know more about it than we will ever know), why should we believe in it”?

Lastly, Sellers will need to protect themselves in the same manner that a bank does when making a loan.  Some areas you may want to include would be:  Require good financials from all parties, run credit checks, use an attorney, get more than one party to guarantee payment, require quarterly financials, have a balloon payment option, keep title to the equipment, etc.

Feel free to contact me if I can be of assistance.

- Steve Sink

CBI

M&AMI

ss@phxaffiliates.com

 

Upcoming employee ownership events

2012 will be a big year when it comes to the number of businesses that will experience a transition in ownership. The driving factors are the rebound in business values and the potential threat of increased capital gains in 2013.

This spring offers a multitude of conferences that explore how to drive value and strategies for transitioning a business. The following is list of conferences that any business owner that is thinking of selling their business should consider attending:

National Center for Employee Ownership Annual Conference, April 25-27, 2012 Minneapolis, MN

The Annual Confernce on Open-Book Management, May 9-11, 2012 St. Louis, MO

ESOP Association Annual Conference, May 10-11, 2012 Washington D.C.

National Worker Cooperative Conference, June 22-24, 2012 Boston, MA

To get more details just click on the link for each conference. All of these conferences are well run and have occurred for multiple years.

- Victor Aspengren

Guilty of innovation pitfalls?

Image by Getty Images via @daylife

In Blueprints for Innovation, Prather and Gundry list five pitfalls to innovation. If you're trying to change a process, create a new product or service, or get your team to think in new ways, check out this list of pitfalls. Are you guilty of letting any of them hold you back? Be honest with yourself. Ask others their perspective.

1. Working on the wrong problem. You may be expending too much energy on something minor or even something that only you see as an issue.
2. Judging ideas too quickly. There could be a "nugget" buried within a thought and you'll miss it if you're evaluating rather than really listening.
3. Stopping with the first good idea. When you explore a variety of ideas, you can more carefully analyze, bring key thoughts to the top, blend the best of the best, and chart the path to innovation.
4. Failure to get a sponsor. You can do few things in isolation, and innovation is dead without the support and blessing of key decision makers and influencers. Selling your idea to others is crucial to moving them forward.
5. Obeying rules that don't exist. Know what's written in stone and what you see as true because it's always been that way. Innovation comes from those who think differently.

So what do you think? Recognize any stumbling blocks within that list to your own efforts to be more innovative? If so, focus on how you can eliminate it this week.

- Shirley Poertner

So, who is ready to step up to the next level?

Image via Wikipedia

Growing a business quickly requires that you can bring new employees into your business and bring them up to speed in their tasks. Too often, bringing a new person on requires one of your best employees to take precious time to train the new person. The same can be said about developing new processes which you want everyone to start using. Whether these are processes used in serving the customer or managing information, everyone involved needs to know how to do these new procedures correctly.

I have had great success managing this problem through my employees. Many of my employees would ask for opportunities to learn new things on the job or just work on something different. My solution was to have the employees write written instructions on how do do certain procedures. I fell into this by accident one evening late when I was trying to create a document for my employees.  It finally dawned on me that many of the employees knew the details much better than I did.  I can be a bit slow at times! Perhaps this sounds simplistic, but think about it.

• If the procedure is new, the person who developed it is probably best suited to write down how to perform the procedure.
• Writing the process down moves company knowledge onto paper and out of a single person's mind - great insurance should that person leave. This is also a great way to deal with new locations or virtual employees.
• Asking the employees to write out processes engages them in the entry point of management and challenges them to try new things. This is a quick way to find out who is ready for the next level.
• Asking the rest of the employees to improve the instructions over time is a great crowd-sourcing approach to improving the process over time.

Finally, asking the employees to develop, write and improve the processes your company uses, engages the employees in the business and enables you to grow faster.

Mike Colwell
www.bizci.org
www.startupmodels.com

I want my tax forms right now!

Impatience can be a virtue for the entrepreneur.  You succeed because you move faster than the competition, because you don't wait for somebody else to take care of your customers.  That's one reason tax time can drive you crazy.

When you were just starting out, you got your W-2, you filled out your forms, and you were done with your taxes in January, except maybe for waiting for your refund check.  Now, you almost certainly have to wait until well into February to have all of the information you need to file your returns.  For many entrepreneurs, the wait extends past the usual April 15 deadline.  What are the deadlines for issuing the forms needed to preparer 1040s?

W-2s are supposed to be issued by the end of January.  Wait for yours.  No reputable preparer will e-file your return in January off of your pay stub.  If it becomes clear that your employer won't be issuing one -- and that usually means waiting until February, at least -- you can file your return by attaching Form 4852 in place of your W-2.

1099 forms, reporting interest, dividends, independent contractor proceeds, among other things, normally are supposed to be sent to recipients by January 31.  Many financial institutions have received extensions as the information for these forms has gotten more complicated -- "qualified" dividends and basis of stock sold out of brokerage accounts, for example.  You might not have all of these until nearly March.

K-1 forms from partnerships and S corporations are not subject to a January 31 deadline.  The K-1s, which tell owners what items of their partnerships and corporations to report on their 1040s, can legally be issued as late as September 15 for calendar-year businesses.  These entities can be very complicated, and it can take a lot of time to prepare their returns.  Many of them have to wait on their own K-1s from other partnerships before they can issue yours. So there is no good alternative to patience.

But I'm in a hurry for my refund!  Shouldn't I just file anyway with what I have? 

Probably not. Unless you are waiting on an enormous refund, one that can save your business, it pays to stifle your impatience and delay filing until you have all of your tax information.  It's better to extend than amend:

• Extended returns are not an audit flag.  Incorrect returns are.  The goverrnment continues to get better at matching K-1s and 1099s with returns, and chances are they'll come asking if they are different.

• If you have to amend your return later because you didn't wait on a K-1, you get to pay the preparer twice. 

• Every amended return or IRS matching notice is one more chance for the tax authorities to botch your account.

Patience is hard.  But sometimes, when it comes to filing your taxes, it's smart.

Related: Reading your K-1: partnership debt basis

Learn about marketing lagniappe

Those of you who've been in Des Moines for awhile are probably familiar with The Lagniappe, a store located in Valley Junction that sells art, jewelry, gifts and in the last few years, has added the rooftop wine bar.

If you've bought anything there you know that they always toss a little gift or something extra into your bag at the check out.  That's lagniappe.  

The word came into the rich Creole dialect mixture of New Orleans and there acquired a French spelling. Today, it denotes a little bonus that a friendly shopkeeper might add to a purchase. By extension, it may mean "an extra or unexpected gift or benefit."

So what is marketing lagniappe?  That's the question author Stan Phelps posed when he started looking for 1,001 stories of businesses that went above and beyond and did a little something extra for their customers.

The result of his two year search is the just launched book What's Your Purple Goldfish?  As you might expect from an author who has spent 24+ months studying a business model where you give a little -- Stan has made it possible for you to get the book for free. (see below)

This book is more than just a collection of stories.  It is a playbook for your business.  I guarantee you, among the many examples -- you will find plenty to riff off of for your business.  

At MMG we talk a lot about the power of word of mouth.  There's just nothing more influential than having someone you know and trust endorse a product, service or person.  But...people seem to think that just magically happens.  Well, it does not.  You have to be remarkable enough to generate that buzz -- and that doesn't happen by accident.  

This book will help you teach you about the spirit of marketing lagniappe -- and how to bring it to life for your customers.

To get your FREE PDF of the book. Download and read the book here on Scribd. If you enjoy it, Stan invites you to share it with others freely.

If you'd rather have an ebook version (click here to buy) or the paperback (click here to buy) you can do that too.

Either way -- you'll be glad you did.  I promise.

P.S.  I was delighted when Stan asked me to write the forward for this book.  If you'd like to see what I said -- click here.

- Drew McLellan

File formats matter

What do .csv, .xls, .xlsx, and .ods all have in common?

They're all different ways to represent spreadsheet information. However, they're not all created equal.

I recently had a client that was working on a large analysis piece. He downloaded a data set in a CSV format, and proceeded to add multiple tabs of equations into it over the course of many, many hours. The entire time, he thought that autosave was storing these equations.

Excel crashed.

He then opens his (still csv) spreadsheet. All of the tabs are missing. He goes to the recovery files. All of the tabs are missing. He goes to his backup. All of the tabs are missing. It is like they never existed in the first place.

The problem is that csv is a very simple format. It doesn't support multiple tabs. It doesn't support much of anything. However, it is really easy to write, really efficient in storage space, and able to be imported into virtually any spreadsheet or database program, so it is a popular format for data sets.

Excel translated this file internally into it's own formats (.xsl or .xslx) which do support these formats. However, the autosave down-converted it back to csv, stripping all of the analysis out of the file.

All of this would have been avoided if he would have initially saved a verson as an .xslx format file, then made the changes.

C'est la Vie.

- Jon Thompson

Des Moines' New Year's resolutions

Who still has their New Year’s resolution intact? 12 days would probably beat any record of mine!

Now maybe it's not your resolution, but a goal I often hear, especially from young professionals, is to take more action and be a stronger part of their community. This is the year to go with that!

David Elbert’s column for the Des Moines Register got me thinking about upcoming projects for Des Moines in 2012. Here is my take on a few that he notes and a few others to keep in mind:

1) Principal Riverwalk – I know, I know, they've been saying this project would be finished for a while now. This is the year I think it finally happens! Finishing the World Food Prize Hall of Laureates was a great step in getting the riverwalk area ready for completion. This riverwalk will do a lot for Des Moines in making the best use of its most aesthetically pleasing geography.

Here is the page where Principal outlines the projects still to be completed. There is a contact us page for those looking for volunteer opportunities on projects.

2) Walnut Street Transit Mall – Well the first attempt didn't go so well. In fact, the only thing that travels down Walnut Street as it is today is buses. That is all about to change. The plans for Walnut Street plans aim to make it a retail and entertainment attraction area, and hope to open the road to normal traffic as well.

This is something I can't wait for! It should expand the arts and culture feel in downtown Des Moines as well as help make downtown feel complete. I've always felt this is the one area I'm supposed to avoid downtown. It should be quite the opposite soon!

3) The Tomorrow Plan – Led by the Metro Planning Organization, The Tomorrow Plan is aiming to create a 30-year sustainability plan for the Des Moines region. While the process has been underway for some time, the majority of the effort and results will come out in 2012.

There are many opportunities to get involved in this initiative, from a speaker series to public hearing events. This sustainability outlook should be especially important to young professionals as it is taking a look at the best use of the region for the next 30 years. Be sure to visit The Tomorrow Plan online to stay up to speed and see upcoming events.

4) YPC Rain Garden – The Greater Des Moines Partnership's Young Professionals Connection (YPC) had been approved to build a rain garden for downtown Des Moines. The exact location is still awaiting confirmation. Already making plans and mapping out resources is YPC's Impact Downtown committee which will take the lead on the project.

This initiative is a great opportunity for YPC to aid downtown Des Moines in a very tangible way while adding to the sustainability of the area. The Impact Downtown committee meets monthly and is open to anyone wanting to take part in the process. Please visit Young Professionals Connection's calendar online for upcoming meetings and a soon to come webpage for the project.

Now, jump off the couch and take a part in seeing Des Moines take some pretty darn cool steps forward in 2012!

- Jason Wells

What direction should a home's windows face?

I have always enjoyed a daylight filled room and the warmth of the sun in the winter.  One of the first things people ask for when I am designing their dream home is lots of windows.  I translate that to mean “give me south facing windows so I can be warmed by the sun as I have my coffee and watch the snow fall.”

Yet it amazes me, when I see the McMansions in the suburbs of America, how few pay any attention to the direction of the sun.  The shadow cast on this behemoth suggests the large blank wall could face south.  What a shame!  The owners are robbed of one of the easiest sustainable design principles; passive solar energy by just letting the sun shine in and heat the space during the winter.   This is an example of using a stock plan with no attention to the orientation of the house. 

The best orientation for a house is with windows to the south since it is easiest to shade glass during the summer and let it shine in during the winter.  The next best is east so you get light in the morning and not the beastly sun in the summer afternoons.  Since the back of the house typically has the most windows, that means 75% of homes do not have the best orientation and 50% are a disaster (since homes have an equal chance of facing any one of the four directions).

Finally, I was looking to move to the country and was amazed time after time how a new home was built on 10 acres and still faced the street.  Certainly with that much land one could have oriented the house to take advantage of the sun.  I saw many huge windowless walls facing south…must have been the walk-in closet.

Next home, think about the benefits of the sun on your pocket book and state of mind!

- Rob Smith

Feed your back burner

Image via Wikipedia

It's soup season. Don't you just love the aroma of a hearty pot of soup that's been simmering all afternoon when you walk into the house after a long winter's day at the office or in the field? I do. 

Our creative minds work kind 'a like that stock pot full of soup on the back burner of your stove.

The back burner of our minds work in much the same way as the back burner of a stove, slowly brewing a pot of vegetables and broth into a delicious, succulent feast of soup. All we have to do is put each of the ingredients in the pot, stir them up, and then leave them alone to cook, only periodically adding a dash of this or that and stirring the pot.

A soup on the back burner needs to cook slowly; if we cook it too fast, the flavors don't blend properly or we burn the ingredients. The back burner of a stove requires little attention; we can cook something else on the front burner at the same time.

Putting problems and decisions on the back burner does two things according to Richard Carlson and Joseph Bailey in Slowing Down to the Speed of Life:

• It allows us to slow down to the moment and attend to what is happening now and enjoy our lives.
• It puts our most creative and intelligent thinking to work on issues that we have no immediate answer for.

We can solve problems with far greater ease if we feed our back burners. Try intentionally setting on your back burner a pot of problems, a handful of possible solutions, facts, and a timetable for when you need an answer. Like the ingredients of a soup, the thoughts you put on the back burner must now be left alone to cook properly while you go about the daily responsibilities of being a leader.

When you revisit the problem after it's simmered a while, you'll find the ingredients have come together in a way that will surprise you. And the solutions that surface will be much different -- and better -- than what you'd have gotten by turning up the heat and rushing the process.

It's like Emil Vollmer, the inventor, said years ago, "The challenge is the thing. I might not get the answer right away. I might have to walk away, have a cup of coffee, but when I come back, the idea comes to me."

- Shirley Poertner

The cost of delays

As I sit in an airport and patiently wait for a delayed plane, it brings to mind the cost that is paid for delays in dealing with important issues. Specifically, those delays that impact the culture of your organization.

The key delay that impacts a company's culture is the tough conversation that needs to be held with key leaders. The problem is there, everyone is aware of it, but as the CEO or owner, you procrastinate due to loyalty, fear, and the potential repercussions that could arise - hoping that the problem will correct itself and you can avoid an uncomfortable situation.

The cost of not having this conversation is not easy to measure, but it is significant. Think of it this way - the good of the one vs. the good of the whole. One person working at 80% efficiency is tolerable, but if a key leader creates 80% efficiency in those they lead...it really is an easy answer.

Being patient and allowing time to pass can be a wonderful tool in correcting problems, but there is a fine line between success and failure. If you have the ear of your employees, they will let you know when the time is right. Take a deep breath, accept what is in front of you, and move forward.

My delay just ended, what about yours?

- Victor Aspengren

Thinking of Selling Your Business?

If you are thinking of selling your business here are some guidelines, based on the actual sales for various businesses:
* Restaurants (full service): 30 to 35% of reported sales plus inventory.
* Motorcycle dealerships:  10 to 12% of annual sales plus inventory.
* Car Wash-self-service:  4 times annual reported gross sales.
* Convenience Stores with Gas: 2.5 to 3 times owner’s earnings and benefits.
* Dental Practices:  60 to 65% of annual sales.
* Fitness Centers: 70 to 100% of annual sales plus inventory.
* Manufacturing-Metal Fabrication:  6 times EBITDA.
* Pizza:  Nonfrachise 35% of annual sales plus inventory.
* Pizza:  Franchise: 45 to 55% plus inventory.
* Retail:  30 to 35% of annual sales and market value for the inventory.

These are historical averages based on reported sales.  Individual sales will naturally vary based on location, earnings, seller financing and other issues.   Feel free to contact me if you would like additional information on you business.

Steve Sink
ss@phxaffiliates.com
Certified Business Intermediary
Merger and Acquisition Master Intermediary

You get what you measure for

Image via Wikipedia

I was taught that saying many years ago.  You get what you measure for.  If you measure only for profit, you may have fewer but profitable sales.  If you measure for sales volume, you may not get the profit you want. If you measure everything, you will run out of time!

Choosing what you measure is critical to long term success.  Just as critical is to make sure you re-evaluate those measurement targets to make sure you are measuring what is relevant at that time.

In a startup business, number of users / customers and cash flow break even are two critical measurements.  In a more mature company you probably want to measure profitability and return on invested capital. Deciding what to measure when is the key.

• Measure those things that sustain you.  Revenue, gross margin, profit.
• Measure those people who sustain you.  Customer renewals and satisfaction.
• Measure those who enable you. Vendor or partner satisfaction, employee productivity.
• Measure those things that create growth in your business, new customers, new product success. 

You need to find a balance of enough relelvant measurements without overloading. You also need to spread out the job of measuring to everyone on your team.  The act of measuring the business will hopefully more fully engage team members in what is important. 

- Mike Colwell

Williams-Sonoma as The Grinch Who Stole Christmas

We've all made it through the holiday shopping gauntlet. It's time to sit back and reflect on what we experienced and what we've learned. This year's holiday Customer Service lesson comes from the folks at Williams-Sonoma.

Being a bit of a coffee snob, I like having a coffee maker that grinds and brews. I've had one from Capresso that has been such a lemon I vowed never to buy one from them again, but it was expensive and I've tried to grumble my way through until a better option came along. My wife and I found what we think is a winner at Williams-Sonoma, when we saw the new Breville model.

Living outside of Des Moines, our shopping trips are generally planned ahead of time and are spaced out on the calendar. So, my wife called the folks at Willams-Sonoma at Jordan Creek and explained that she needed the coffee maker but was afraid they would be sold out. She explained that she would be willing to provide a credit card number over the phone to make the purchase so they could hold one for her until the next time she would be in Des Moines. The person at Williams-Sonoma assured her that they had a ton of them and not to worry.

You're already ahead of me, aren't you?

Sure enough, my wife went to the store to find that they had been completely sold out. There would be no coffee maker under the tree for Christmas. This set off a domino effect of customer service issues:

• The clerk at the store said they'd be happy to order one on-line at that moment, adding that they would "throw in free shipping" as if to make up for the mistake. My wife explained that she'd been online looking at it and knew that she'd have gotten free shipping anyway if she'd ordered it online herself.
• On Christmas Day, my wife was disappointed and frustrated when all she had to give me was a picture of the coffee maker and a promise that it would ship in a few days.
• The ship date for the coffee maker was scheduled for December 28th, but as of January 2nd it still hadn't shipped.
• There's been no proactive communication from Williams-Sonoma about the delay or why on January 2nd the estimated ship date still said December 28th, forcing us to have to continually initiate communication with the company to find out what was going on.

So, what's the Customer Service lesson in all of this? When a customer contacts you, money in hand, and wants to buy a product or service, you should strike while the iron is hot and complete the transaction. Sometimes providing good service means making the sale. 

- Tom Vander Well

Taxes: What's new for 2012

Happy New Year! So what does the tax law have in store for you in 2012? 

For entrepreneurs, the biggest change in the tax law might be the new rules for fixed assets.  Congress has not re-enacted the rules allowing "100% bonus depreciation" for new fixed assets. Instead, "50% bonus depreciation" applies.  For qualifying property, taxpayers will be allowed to deduct half of the cost of fixed assets placed in service in 2012; the remaining half of the cost will be depreciated over a period of years under the "MACRS" rules.  For example, a taxpayer buying a $10,000 computer system would get to deduct $6,000 this year: $5,000 "bonus" depreciation and 20% of the remaining $5,000 cost ($1,000) under the usual rules for five-year property.

The "Section 179" deduction limitation for fixed assets has also changed this year.  Section 179 allows businesses to deduct the cost of fixed assets -- new or used -- that would otherwise have to be capitalized and depreciated over a period of years.  For 2011, up to $500,000 in assets qualified for Section 179 treatment.  That goes down to $139,000 in 2012.

A few other tax numbers for 2012:

• The business mileage standard rate is 55.5 cents, unchanged from 2011.
• The maximum compensation or self-employment income subject to FICA tax is $110,100; the maximum eligible for the reduced rate through February is $18,350; amounts over that paid as compensation will be recovered through a special 2% income tax, unless the break is extended beyond February.
• The maximum 401(k) deferral for 2012 is $17,000 (up from $16,500), plus the $5,500 "catch up" for taxpayers 50 and older.

Have a great 2012!

- Joe Kristan

Flickr image courtesy prettyinprint under Creative Commons license.