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How to protect your small business from a tax scam in 2017

(FINANCE NEWS) Experts say that small businesses are more vulnerable to fraud, whether by employees or outside vendors. Here’s what you must know.

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It could happen to you

April is looming in just a few months, which means everyone is trying to understand and get their taxes filed. It also brings out the criminals who prey on vulnerable individuals. If you’re a small business owner, you might believe that your business won’t be targeted by tax scammers, but according to the data, that is not at all true.

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What are the scams?

The Association of Certified Fraud Examiners reports that the typical organization loses about 5 percent of revenues each year due to fraud. However, I could not find any statistics about how much of that is from tax scammers. The ACFE says that small businesses are more vulnerable to fraud, whether by employees or outside vendors.

Don’t get fooled by any tax scam

  1. Phone scams – The IRS will not call your business and make threats. The IRS will send you a letter if you owe them money or are being audited.
  2. Fake charities – Don’t give money to a non-profit without checking their status. Sometimes, the name will be quite similar. If you are trying to get a tax break through charity, do your homework.
  3. Phishing emails – The IRS does not send threatening emails. See phone scams.

Tax preparers can also scam your business
Your tax preparer should never charge you a percentage of your refund. You should never hide money in an offshore bank or falsify income. If your tax preparer suggests that you file false documents, run, don’t walk to a professional CPA.

If the tax shelter your advisor is suggesting sounds too good to be true, it probably is.Click To Tweet

You are responsible for everything on your tax return, even if someone else advised you to do it. Your tax preparer should be willing to explain every number on the tax form to you. Don’t try to cut costs with your tax preparation. It’s just not worth the fines and penalties, the headache and the stress, and the worry about whether you’ll get caught.

Know who is giving advice

Use a local CPA or tax preparer with the credentials to handle your business. Know what you’re sending in to the IRS. Use the small business resources from the SBA and IRS to understand your taxes and avoid being scammed. You can also report fraud to the IRS and work with the government to get your taxes in order.

#TaxScams

Dawn Brotherton is a staff writer at The American Genius, and has an MFA in Creative Writing from the University of Central Oklahoma. Before earning her degree, she spent over 20 years homeschooling her two daughters, who are now out changing the world. She lives in Oklahoma and loves to golf. She hopes to publish a novel in the future.

Business Finance

Yes, cryptocurrency pricing has been manipulated

(FINANCE) Research shows that some cryptocurrency value has potential to be manipulated by fraudulent bots. Welp.

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Yes, cryptocurrency price can be manipulated, thanks for asking. A new research paper in the Journal of Monetary Economics dove into how bad actors may be controlling the Bitcoin (BTC) ecosystem, and found that one person may have pushed Bitcoin from $150 to $1000 in 2013. One. One person.

Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman published “Price Manipulation in the Bitcoin Ecosystem,” a paper describing how fraudulent activity likely influenced trading activity leading to increased BTC-USD exchange rates in 2013.

Their paper specifically analyzed suspicious activity on the (since shut down) Mt. Gox Bitcoin currency exchange. Mt. Gox used to be the hotshot for crypto exchange, with over seventy percent of worldwide bitcoin transactions taking place on its platform.

Late in 2013, the USD-BTC exchange rate spiked from around $150 to over $1000 in two months. There was also a period where over 600,000 Bitcoins valued at $188 million were acquired fraudulently.

Former CEO Mark Karpelès worked super hard to cover up the fraudulent activity, but Mt. Gox eventually met its Mount Doom and shut down in 2014.

According to the research, on days where suspicious activity took place, the exchange rate rose an average of four percent a day. Analysis shows that the exchange rate declined on days without suspicious trading activity.

Price manipulation was due in part to how thin the crypto market was in 2013. At the time, only around 80 cryptocurrencies were around compared to over 843 today. This made the market more susceptible to price manipulation.

Fraudulent activity was primarily attributed to Markus and Willy, two bots that appeared to be performing valid trades. However, the bots didn’t own the bitcoin they were using, so all the trades were fake.

When Mt. Gox was hacked and millions of dollars of Bitcoin were stolen, it was due to bots creating fake trades and artificially increasing BTC pricing.

The high volume of trades signaled heavy trading activity, driving up the exchange rate on Mt. Gox. The platform profited greatly from transaction fees from legitimate, non-bot trades. But even without fraudulent activity, exchanges were higher on days these bots were active.

Although it’s alarming that bots potentially jacked up prices, better security systems are set in place for crypto exchange now.

Blockchain keeps users responsible by keeping a record of anyone who changes or updates any element of a crypto transaction.

So while theoretically crypto pricing can still be manipulated, it’s a bit more difficult with the checks blockchain puts in place to identify all users and activity. It’s still worth staying vigilant though, because even with blockchain in place, cryptocurrency markets are not regulated.

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Business Finance

Kodak’s cyrptocurrency could save themselves and photographers

(FINANCE NEWS) Kodak’s foray into cyrptocurrency is more than a financial play, it could be their very salvation in some peoples’ eyes.

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Not one to be left behind, Kodak recently announced their decision to hop on the cryptocurrency bandwagon with their own currency for photographers: KodakCoin. It’s not as hokey as it sounds, we promise.

It’s easy to make fun of Kodak, the Blockbuster of film companies, for buying into the cryptocurrency world, but their motive isn’t as bizarre as it first appears.

KodakCoin is actually a virtual token that will be used on Kodak’s new photographer platform, KodakOne. The idea behind the platform is that photographers can register their work and monetize any cases of copyright infringement, all through the KodakCoin system.

KodakCoin itself is based in the same foundation as Ethereum, and the KodakOne platform uses the same blockchain technology that we’ve come to expect when dealing with cryptocurrency.

As far as KodakOne goes, most of the authentication process is autonomous. Once photographers have uploaded their work and records of fair use, KodakOne searches for instances of unauthorized uploads and then requests payment from the uploader. The payment is processed in KodakCoin, and photographers are left with 60 percent of the resulting currency while Kodak and Wenn Digital share the other 40 percent.

Perhaps the most interesting aspect of this whole affair is the effect that merely announcing KodakCoin had on Kodak’s stock. After revealing KodakOne and the accompanying KodakCoin at CES on Tuesday, Kodak’s stock hit a high point that more than doubled their previous stock value. This goes to show how infatuated our culture is with cryptocurrency at this point, but it also raises some questions about Kodak’s true motives: is KodakCoin a legitimate enterprise, or a Hail Mary pass?

Kodak’s official stance on the matter is that their move into cryptocurrency represents their initial business goal: to provide photographers with a stable, supportive platform that places their needs and concerns above those of similar venues. On the other hand, sources virtually everywhere have been quick to skewer Kodak for what appears to be an obvious bid for relevancy in an era unsuited for the dinosaur of a company.

There’s no telling where KodakCoin will take the aging company, so for now, these speculations will have to do. KodakCoin goes public on January 31st of this year.

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Business Finance

Super-investor Warren Buffett calls cryptocurrencies a mirage

Famed investor Warren Buffett has stated he believes cryptocurrencies like Bitcoin will end badly because they are a “mirage.”

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For many, cryptocurrencies have become an investment well worth the risk, but for many others they are something to vehemently rail against. Try posting something on Facebook about crypto and see if you don’t get lovers and haters instantly weighing in.

One of the most prominent members of the “rail against” group is CEO of Berkshire Hathaway, Warren Buffett.

Buffett, while widely respected for his shrewd investment foresight, is not a fan of cryptocurrency and warns potential investors he thinks, “almost with certainty they [cryptocurrency] will come to a bad ending.”

Buffett went on to state to CNBC, that he didn’t really understand how Bitcoin operated but he would never “have a position in them.”

Will Buffett’s word have an impact on cryptocurrencies like Bitcoin? Surprisingly, Buffett’s words have had little effect (so far) on Bitcoin’s value.

Remember a few months ago when Buffett bought Synchrony? The lesser-known stock seemed to take off overnight after Buffett/Berkshire Hathaway’s investment, leading us to believe than many powerful investors take heed of Buffett’s business acumen, which could potentially impact how other investors feel about cryptocurrencies overall.

Buffett told the Washington Post, “there are basically two kinds of assets: one you look to the stream of income it will produce and the other you hope like hell that someone will pay you more for it.” The second type would most definitely include Bitcoin.

Buffett contends that since cryptocurrencies are backed by computer power instead of a national bank, they are unreliable and fluctuate too much to be trusted.

The takeaway?

There is no doubt that Buffett is the go-to man for investments, but how can you repudiate Bitcoin and other cryptocurrencies worth if you admittedly do not understand how they work? If you don’t understand how they work, how could you possibly appreciate their value?

I’m not sure if this was meant to be a sarcastic statement on Buffett’s part, or if he genuinely doesn’t understand how they work, but still dislikes them. Back in 2014, Buffett told investors that it was nothing more than a “mirage” and that investors should “stay away from it.”

There’s no doubt, the man is a genius in the business sphere, but is he right about cryptocurrencies?

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