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Six midyear tax moves for small business owners

(Business Finance) Mid to late summer months many businesses experience their mid-year “slump,” a time to take the opportunity to reflect and plan your taxes strategy.

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How Small Business Owners Use the Midyear “Slump” to Get Ahead of Tax Season

Tax moves you should make right now

During the mid to late summer months, many businesses experience their mid-year “slump,” a time to take the opportunity to reflect on the past few months and plan for remainder of the year. One big consideration at this point is the company’s anticipated tax liability.

When tax filing season hits, the time has already passed for your company to make substantial adjustments to avoid unpleasant surprises. The additional time that summer provides in an entrepreneur’s busy schedule allows for examination of various aspects of company finances before business picks up again.

 

How mid-year tax planning helps you stay ahead of the game

Tax filing season may seem far away, but consider how quickly the past six months have gone! Rather than waiting until January to gain a firm understanding of where your firm’s tax liability stands, making a more proactive effort means you’ll probably enjoy fewer complications and reduce surprises when the time comes to file.

Planning for tax season well ahead of time helps a business adjust its strategies (if necessary) to ensure a relatively painless filing process. According to Natalie Cooper, editor of BankingSense.com, “For small businesses, the mid-year ‘off season’ is the perfect opportunity to take stock of how the year has gone and decide on a game plan for the second half.”

Considerations for the mid-year tax review

While conducting their mid-year tax reviews, small business owners should engage in one or more savvy tax-planning activities, for example:

  • Consult with a tax professional. Navigating the complex process of tax planning is often time-consuming and confusing. Talking with an accountant during the “off-season” ensures ready access to his or her time and can help you gain valuable insight into the current state of your company finances. Tax professionals also provide an outside perspective, and can identify areas where their client can improve a process or take advantage of a new tax break.
  • Examine the company’s entity structure. Expanding companies may not realize they have outgrown their legal structure until long after they could have enjoyed the new protections and tax benefits. An accountant and attorney can help a business owner decide whether the time has come to convert from a sole proprietorship to a corporation or some other, more suitable, entity.
  • Project profit and loss. Compare the company’s current financial statements against those from the same period last year. Measurable changes – for better or worse – may indicate the need for adjustments.  Taking into account expected decreases or increases in sales for the rest of the year, use data from the first two quarters to determine whether estimated tax payments should change accordingly. The result will be fewer surprises at tax time.
  • Set up a retirement account. During busier times, the thought of retirement may rarely pass through an entrepreneur’s mind. However, if you’re generating regular and significant profits, you should begin setting money aside for this milestone as early as possible in your career.
    Banking and financial professionals help customers choose between retirement accounts such as SIMPLE, SEP IRAs, and 401(k)s to ensure they and their employees receive the optimal savings and tax benefits.
  • Invest in new equipment and furniture. Under the Section 179 Deduction, small businesses receive tax benefits for purchase of “capital assets” such as desks, computers, POS terminals, and other tangible resources. Take advantage of summer downtime to seek out the best vendors and prices for such items. Don’t forget to maintain documentation of these purchases for tax time.
  • Set up benefits for employees. If you are considering offering health, dental, vision, disability, life, or other types of benefits to employees, you might take the opportunity to study the issues in depth over the summer. Not only does the extra time allow companies to choose the best and most cost-effective plans; it also gives them time to benefit from the resulting reductions in payroll taxes.

These represent only a few of the many ways business owners can prepare for tax season over the summer. But they are some of the most effective and compelling ways to remain competitive and decrease your tax liability.

Entrepreneurs who take these and other tax-conscious steps remain free to commit their full attention to running their businesses effectively for the remainder of the year. When tax season hits, it certainly will not catch such savvy business owners off guard!

What steps will you take this summer to examine company finances and prepare for tax season?

Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. When he's not consulting, glued to a headset, he's working on one of his many business projects. Follow him on Twitter and LinkedIn.

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Business Finance

Bankruptcy doesn’t mean what it used to; no longer the end

(FINANCE NEWS) With the way the world works now, bankruptcy doesn’t necessarily mean game over.

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bankruptcy highest paying internships money

When it’s over, it’s over. Perhaps you heard your best friend utter this phrase after a bad break-up. It’s true, most things that end, end for good. Except in this case, when it comes to the retail business.

We have seen a record number of retailers declare bankruptcy this year. Beloved teen retailers like Wet Seal have closed down their stores and malls have become ghost towns.

Reuters estimates that nineteen major retail chains have already shut down for good. While you may not miss the tight, neon dresses sold at Bebe, closures of all of these retailers result in a tremendous loss of jobs.

And it is not only job losses from the store in your hometown, often it is hundreds of locations across the nation.

For most of these retailers, bankruptcy was the definitive end to the business. After filing, most companies choose to close all locations and liquidate the assets. This is the most common path to take, until now.

Even with the surge of bankruptcy, those behind the business are finding alternative paths to keep the business alive.

Behind the scenes, there are three core groups invested in every business: the company’s creditors, vendors, and landlords. All of these groups have a vested interest in keeping the company alive even if they are in debt.

The most recent trend for bankrupt businesses has been to keep stores open and negotiate debt loans rather than shutting down everything. The truth is that a lot of these businesses still attract customers and have a large cash flow, even if they are technically bankrupt.

For instance, Toys ‘R’ Us manages to take in $800 million each year on average which makes it a viable business. Of course, they are $5 billion in debt, but with an extension and restructuring of their business, they could one day turn a profit. However, this will only happen if they are given the chance to keep their doors open.

There are other options to lending helping hands to bankrupt businesses. After the popular teen retailer Rue21 declared bankruptcy landlords agreed to reduce their rents 20% on average. Though these situations are not ideal, this mentality gives businesses a life beyond bankruptcy and save thousands of jobs in the process.

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Business Finance

Everyone’s favorite online retailer is set to accept Bitcoin by October!!!

(FINANCE NEWS) One big name online retailer is about to hop on the cryptocurrency train and start accepting Bitcoin at check out as soon as October.

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tokenai bitcoin amazon

Crypto currently

There’s no denying that cryptocurrency has taken off like wildfire, but will Amazon be jumping on the bitcoin bandwagon?

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According to one top source, Amazon has already started flirting with the idea and could be ready to fully use bitcoin in October.

Kind of a big deal

The news broke via The James Altucher Report, which is run by the former hedge fund manager and venture capitalist James Altucher. Altucher uses his experience in the business realm, where he has cofounded over 20 companies, to offer realistic financial advice and insight.

He communicates via his popular newsletters, blog and podcast. According to Altucher, Amazon is geared up to change their payment options as early as October.

Already Testing the Waters

Last year, Amazon partnered up with Digital Currency Group, a major investor in Bitcoin, to act as an intermediary between them and their clients. Amazon’s role is to handle all transactions, many of which include the popular cryptocurrency.

Major companies like Google, Ebay and Paypal already accept bitcoin so it is just a matter of time until Amazon follows suit. Even Japan and Russia recognize it as legal currency.

Amazon + Bitcoin = AmaCoin?

Don’t think of bitcoin as Amazon’s only option. Some speculate that Amazon may one day create their own currency.

As a company that has already started testing drones as a future delivery method, custom currency does not seem so out of this world.

The blockchain option has been a refreshing alternative to using traditional banks, especially for those who do not have faith in the current banking practices.

There are questions

If Amazon jumps onboard and rolls out a plan to use bitcoin this year, Altucher anticipates a major surge in its value. Since they have yet to announce an official strategy, and because the option of them creating their own currency is still up in the air, it is unknown how Amazon will integrate it into their system.

Will Amazon find a different way to accept bitcoin? Perhaps a brand new way? If Amazon does start using bitcoin they will join many other tech companies that have already anticipated the growth in its value. Amazon isn’t the only company that has started transitioning over. Many other tech companies have already started to become intermediaries to manage digital transactions.

#AmazonBitcoin

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Business Finance

Pirate Bay is mining cryptos using their users’ CPU… those scallywags

(FINANCE NEWS) Cryptocurrency and mining and pirates. It all sounds like something out of a sci-fi novel, but trust us, it’s 100% real.

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bitcoin pirate

Who pirates the pirates?

Well, pirates, naturally. Piracy is a fractal. There is nothing so small that someone won’t strap on an eyepatch, grab a parrot and snag themselves an unlawful piece.

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Such is the swashbuckling tale recently broken on Reddit about Pirate Bay, which is borrowing visitors’ CPU cycles to mine cryptocurrency.

TRANSLATION, PLEASE?

To translate that from Internet to English, “mining” cryptocurrency means volunteering your computer to verify blockchain transactions. We’ve covered blockchain in depth before, but the short version is it’s a particular security protocol that encrypts tokens representing money.

When you join a cryptocurrency exchange, you use that exchange’s blockchain to encrypt your stuff.

Some members of an exchange volunteer their computers to verify that transactions have taken place. Then they’re encrypted, never to be futzed with again. Those members get paid for their trouble with fractions of coins from the exchange.

The volunteers don’t actually do anything. The verification and encryption are automatic. That’s the point of cryptocurrency: no flighty or nefarious humans are involved in the bookkeeping. It’s all about the robots. That said, somebody owns the robots, and robot time is worth money. Therefore, miners.

SIXTEEN COINS – WHAT DO YOU GET?

“Miners,” in common currency dork parlance, are folks who invest in verifying transactions on a large scale, turning those fractions of coins into meaningful profit. It’s a smart way to make consistent money.

One big caveat: you need serious computing power to do it enough to matter.

Lifewire estimates an upfront cost of $3000 to $5000 to get real money out of the process. That said, their estimate also says 50 dollars a day in profit, which means over the course of a year you’re talking 3 to 5 times the money you put in. Ain’t chump change.

YAR

Which brings us to Pirate Bay. Pirate Bay is, as I’m sure the pure and innocent readers of American Genius would have no reason to know, a torrent site where various forms of media may be secured for free by nefarious means.

You’re shocked, I’m sure. Not everybody is, it turns out: as of this article, it’s the 88th most popular website on Earth. 25th in Canada! Canadians, man. They’re tricksy.

So, unsurprisingly, is Pirate Bay.

To state the obvious, swiping media and giving it away is not a working business strategy. Robin Hood did not have a positive P&L ratio. Typically – I’m told, I of course would have no way of knowing this myself – torrent sites support themselves through ad revenue. That wasn’t cutting it for Pirate Bay, plus they just wanted to get rid of the ads for an improved user experience, so they experimented.

Their first scheme was borrowing users’ CPUs while they were on the website, using unused processor cycles to mine cryptocurrency.

BROTHER, CAN YOU SPARE A CRYPTODIME?

The rollout was flawed. In fact the rollout was nonexistent: the only reason anybody even knew it was happening was somebody effed up the miner script and it started taking 100 percent of users’ CPU cycles as long as they were on the page. Oops.

But fair dues, Pirate Bay did exactly what tech folks should do when caught with their digital drawers down.

They fessed up in an official statement that explained their intent, addressed the problem people were complaining about, and invited further input. That’s more than can be said for, say, Uber.

More to the point, if the cryptocurrency mining plan goes forward, Pirate Bay will be providing a service to consumers in exchange for compensation at stated rates. The fact that it all comes in a novel form – the service is peer-to-peer, based on a model of free sharing; the compensation is provided voluntarily by people who aren’t receiving the services; the rates are measured in CPU cycles rather than money – doesn’t change the fact that fundamentally, “service to consumer for compensation” equals “business plan.”

For another time

Whether it’s a workable business plan or not is a question for Future Matt. Present Matt just has a question: if it does work, if Pirate Bay becomes a self-supporting enterprise trading encrypted, peer-to-peer money for an encrypted, peer-to-peer service, what then? At what point does it become more reasonable, and for that matter more ethical, to accept peer-to-peer transaction as a real thing and regulate it accordingly, as opposed to banning it outright?

Ask Piet Heyn. Better yet, order a mojito and run it past Captain Morgan. (It’s better because you get a mojito.) Back in the days of real pirates, when you wanted to rein them in, you just legalized them. If Pirate Bay establishes a legitimate revenue stream, that may well be the smart next step.

#PirateBay

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