Choosing the Best Entity for Your Business

Sole proprietorships are the most popular business entity in the U.S., with about 27 million businesses listed as sole proprietorships.

Deciding on the proper structure for a new business in your state– sole proprietor, partnership, limited liability company (LLC) or corporation – will depend on the type of products or services your business will provide, the ownership structure and the financial situation.  Consider these factors when deciding on a business ownership structure:

Complexity 

If you are starting your business without a lot of capital, you may wish to choose a simple structure, like a sole proprietorship or partnership.  More complex corporate structures like corporations and LLCs are more expensive to maintain, and require certain operational formalities that may not be needed if you have a simple business.

Risk 

If your business is inherently risky – for example, stock trading or construction – you will probably want a business structure that protects your personal assets from business claims, like a limited liability company (LLC) or corporation.

Taxes 

Taxes on business profits for partnerships, LLCs and sole proprietorships are all reported on the personal income tax returns of their owners, who must pay income taxes on all net profits.  Corporations pay corporate taxes at special rates on any profit at year-end.

Investment Capital 

With a corporate structure, you can sell shares in your business to raise investment capital.

If you are still uncertain which entity would be best for your company, give us a call at (714) 533-2600 and a CPA can help guide you in the right direction.

Save Your Business Miles! It Can Save You Thousands!

If you have to travel for business, you may know that you are allowed to deduct your business miles traveled. Some companies have a system setup for their employees to enter their trips and it will calculate it for them.

However, if you own your own business or you are not compensated by your employer for business miles traveled, then you have to track your miles on your own. When it comes to showing proof for tax deductions, it becomes difficult to show if you did not track every time you traveled for business.

Luckily, with new technology on smartphones an app can be used to track your miles and save them. This will let you know how much you are traveling and how much you would be able to write off when it comes to your taxes. It is more efficient than writing it on paper and will not be lost as easily.

Blue Ocean Strategy-What is the Next Big Idea?

For many business owners, their focus is how to compete in their competitive industries. For the restaurant industry there are endless amounts of competitors that provide similar products. For other industries, they might be trying to sell the exact same product.

The question that is then asked is how to differentiate from the competitors? What can be done to become the better option? For many businesses it becomes the customer service or extra amenities offered. While this may separate the business from the below average industry competitors, these types of things should be a given of what to do when trying to run a good business.

Then what can really differentiate your business from competitors?

To help answer this question, consider a blue ocean strategy.  This strategy created by W. Chan Kim and Renée Mauborgne states that most businesses operate in red oceans. These red oceans are described as shark infested waters filled with blood from countless competitors fighting for scraps of market share. What they suggest for businesses who want to prosper is to create their own new blue oceans. These oceans are uncontested and creates new demand for a new market. 
Why fight a for small share of profits against so many competitors when you could create your own market contesting against no one else? 

This may seem hard, but this progressive thinking about your business could be what gets you to where you want your business to go.

3 Ways Technology Can Help Improve Your Business

Change can be scary. Technology advances at a much quicker rate than before and it is hard to keep up. Year after year there are new software programs, gadgets and devices that come out that are made to make life easier.

 

But how does this affect businesses?

 

These new technological advances can help to improve your business. From simple attachments for smart devices to read accept credit card transactions to tablets that allow customers to enter their information electronically.

Here are 3 ways technology may help your business:

1. Keeping Track of Information

Database systems have taken over the file cabinet in your office. For some industries, a paper trail of information is still needed for security and audit purposes. But for many businesses, a cloud based server can help to keep track bank statements, invoices, bills, and any documents related to the business.

2. Convenient Payment Options

As time goes by, less people are carrying around cash to purchase items. Now there are more options for businesses when it comes to credit card scanners. Any mobile device such as a smartphone or tablet can be used to process transactions. While this comes at the cost of processing fees, it reduces risk of losing customers and helps to keep track of sales.

3. Staying in Touch with Customers

It is a lot easier to keep in touch with customers now by being available on different online platforms. Social media gives businesses the opportunity to exhibit their product or services to attract new business. This has helped many businesses in the food industry advertise their food and start trends that followed by thousands to millions of people.

Not all businesses are the same and some technologies may not suite your type of business. Regardless, it is worth it to try something new to improve your business.

How to Avoid Tax Fraud, Advice from Scammers Themselves

As a company who follows the three basic principles of Honesty, Integrity, and Innovation, we do not condone Tax Fraud, and we certainly will never perform such acts for anyone who requests such atrocity. So what is Tax Fraud? According to tax whistleblower, it is a general term, which can trigger many different laws found in Title 26 and Title 18 of the United States Code. It is basically a taxpayer’s intent to defraud the government by not paying taxes that they know are lawfully due.

Krebsonsecurity.com has talked about one of the successful scammers who explained how he was able to file a tax fraud by using prepaid debit cards. This kind of method has been used for several years because it has been a indispensible tool of tax fraudsters. The scammer named Peleus reported that he was able to bypass the IRS Fraud Filters, and was able to find great success at the state level. The important thing was, according to Peleus was having a bogus refund sent to a unique prepaid debit card account for each filing. In March 12, 2015, Utah State Tax Commission Chairman John Valentine has reported to the U.S Senate Finance Committee that suspicions returns has been about the direct deposit information changed from the previous year’s ban account to prepaid debit cards.

The problem with transferring funds to prepaid debit cards is that they cannot be traced or recovered, which is a perfect way to commit tax fraud. It seems that prepaid debit cards are most preferable to fraudsters because the identity thief doesn’t have to interact with banks, credit unions or checking cashing stores that may become suspicious when one person starts bringing in multiple tax refund checks to be cashed or deposited.

HOW TO AVOID THIS

–          Try to file your taxes as early as possible. However, if the state taxes have been “filed” already, then immediately report this issue with the state revenue agency.

–          Have a CPA or Accountant do it for you. Accountants are born to study all of the complications of the tax law, and they have to make sure their clients are safe. This is a good opportunity as there are many fraudsters out there who want to file a fake tax return. Accountants usually charge a fair price for their services, especially in Orange County.

–          Consider placing a fraud alert freeze on your file at the major credit companies. If fraudsters have enough personal information to file a fraudulent tax return under your name, then they can use that data to commit other crimes. Placing a fraud alert on your credit file every 90 days is the cheapest way since it is free.

Be sure to make sure your personal information is safe from crooks, and also use this information as a way to help you understand how fraudsters operate so you can use this information to help your sound more legitimate when you report a tax fraud claim.

 

***ARTICLE BASED ON TAX FRAUD ADVICE, STRAIGHT FROM THE SCAMMERS from krebsonsecurity.com ***

 

Mark Cuban’s Success Story

Mark Cuban, the owner of the Dallas Mavericks, is currently worth an estimated $3 billion. Although most of his money mainly came from 2 transactions during the dot com era, he was a natural born leader who had the expertise of an experienced entrepreneur from a young age.

During the 1980’s, he was majoring in Business Administration at Indiana University and was saving up money to buy himself a bar. One of the professors in his school considered this action very brave and risky because he has never seen a student or an MBA student own a business while attending school. Eventually, Mark was able to turn his bar business into a successful student bar in the area. Mark opened up a new business after he completed school called MicroSolutions, a computer company that he sold after 7 years to another company called CompuServe in 1990 for $6 million. He used his money to retire for the next 5 years to travel around the world and partied around.

After Mark’s retirement during the 1990s, he began listening to his former university’s basketball team games. He began another new business with a partner called AudioNet, which eventually spread across hundreds of sports channels and radio programs, as well as product launches and fashion shows. Eventually AudioNet had to rename itself to Broadcast.com and was one of the first internet radio sites in the world. It was then later bought out by Yahoo and Mark took in $1.7 billion in Yahoo stock.

Once the 2000s came out, Mark Cuban became the majority owner of the Dallas Mavericks and bought them for $280 million. The team was considered one of the worst in the league, but because of Mark’s management, he had turned the team into a $1.15 billion team.

Mark Cuban is considered one of the best examples of a business entrepreneur who dedicates himself to becoming a self-made man. Additionally, from being an owner of a media company and a basketball team, he also invests in businesses and product lines.

ARTICLE WRITTEN BY VANESSA PAGE – INVESTOPEDIA.COM

Happy Holidays! Year-End Tax Saving Tips to Spend or Save for the Holidays

It looks like the end of the year is coming, and we are pretty sure many of you are still frantically shopping for gifts for your family and friends. Do you ever wish you had more money to spend for your friends and family, but just could not figure out how you can save more money?

Well have no fear! We are an Orange County CPA firm who will be here to provide tips on how you can cut tax spending to save or have more money to spend for you your loved ones.

Capital Gains and Dividends. The tax rate on qualified capital gains (net-long term gains) and dividends range from 0 – 20%, depending on the individuals income tax bracket.

STRATEGY:  Spikes in income, whether capital gain or other income, may push gains into either the 39.6 percent bracket for short-term gain or the 20% capital gains bracket. Spending the recognition of certain income between 2016 and 2017 may help minimize the total tax paid for the 2016 and 2017 tax years.

State and local sales tax deduction. The PATH Act made permanent the itemized deduction for state and local general sales taxes. That deduction may be taken in lieu of state and local income taxes when itemizing deductions.

STRATEGY: Generally IRS tables based upon federal income levels and a taxpayer’s number of departments are used for this optimal deduction. Taxpayers who wish to claim more than the table amounts must provide adequate substantiation.

Tuition and fees deduction. The PATH Act extended the above-the-line deduction for qualified tuition and related expenses for two years, for expenses paid before January 1, 2017. The maximum amount of the tuition and fees deduction is $4,000 for an individual whose AGI (Adjusted Gross Income) for the tax year does not exceed $65,000 ($130,000 in the case of a joint return), or $2000 for other individuals who’s AGI does not exceed $80,000 ($160,000 in the case of a joint return)

STRATEGY: Payments by year-end 2016 may be particularly critical to taking this deduction. There is some – but not unlimited – flexibility regarding the deductibility of tuition paid before a semester begins. As with the AOTC, the deduction is allowed for expenses paid during a tax year, in connection with an academic term beginning during the year or the first three months of the next year.

Nonbusiness energy property credit. The PATH Act extended the nonrefundable non business energy property credit allowed to individuals, making it available or qualified energy improvements and property placed in service before January 1, 2017.

STRATEGY: Several overall limitations apply. A credit amount for qualified energy efficiency improvements equals 10 percent of the amount paid or incurred during the tax year and 100% of the amount paid or incurred for qualified energy property during the tax year. The maximum credit amount for qualified energy property varies depending on the type of property, further all nonbusiness energy property carries a $500 maximum lifetime credit cap.

Individual Shared Responsibility Payments. For 2016, the individual shared responsibility payment is the greater of 2.5% of house-hold income that is above the tax return filing threshold for the individual’s filing status or the individual’s flat dollar amount, which is $695 per adult and 347.50 per child, limited to a family maximum of $2,085, but capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2016.

STRATEGY: Open enrollment for coverage through the Health Insurance Marketplace for 2016 has closed. However, some qualifying life events may make an individual eligible for non-filing season special enrollment.

Medical expense deduction. Taxpayers who itemized deductions (for regular tax purposes) may claim a deduction for qualified reimbursed medical expenses to the extent those expenses exceed 10% of adjusted gross income (AGI), unless the tax payer falls within an age-based exception. Taxpayers (or their spouses) who are aged 65 or older before the close of the tax year, may apply the old 7.5% threshold for tax years but only through 2016.

STRATEGY: Tax payers who are age 65 or older may consider accelerating medical costs into 2016 if they want to itemize deductions since the AGI floor for deductible expense rise from 7.5% to 10% in 2017. For deductions by cash-basis taxpayers in general, including for purposes of the medical expense deduction, a deduction is permitted only in the year in which payment for services rendered is actually made.

 

A Smart Business Decision Maker = A Successful Entrepreneur

Many successful business leaders all share a common skill that most people do not posses. Although this skill comes in all forms and is dependent on the amount of opportunities given to them, they all still have to undergo a process whether it takes a long time to process or a very short amount of time. That skill, my fellow entrepreneurs is: Smart Business Decision-making. Every day people from all over the world make decisions. You may not realize it but you, the reader, just made the decision to read this article (Thanks by the way!). However, let’s take it to a business perspective; business leaders, (including yourself) “make dozen of decisions a day” that creates an impact to the success of their company while creating an influence factor to employees as well. “Developing such a skill requires a combination of education, experience, and intuition.”

Marci Martin, author of Business News Daily who wrote the article “How to Make Effective Business Decisions” has stated a great quote: “There are many things that influence how an individual makes decisions. They include emotions, perceived personal and professional risks and rewards, preparation through experience or education, deadlines, stress and a host of others. It is important to mitigate the irrational and embrace the rational.”

Many decisions always comes with a process, as mentioned above, there are many factors that come into play before coming up with a conclusion. Some of those decisions usually come from a “gut feeling” while others come from undergoing a long process of asking others, and a more common form would be the opportunity cost (Is it more beneficial to me than the cost?). As Martin mentioned, the “bottom line is that being an effective decision-maker requires practice.”

Gayle Abott, President of Strategic Alignment Partners, a human consulting firm, has implemented a four- point strategy to deploy whenever you must act:

–          Identify the problem.

–          Analyze the possible solutions

–          Evaluate the possibilities that are likely to bring you closer to your goal.

–          Make the decision.

However, as easy as this 4 point system sounds, this type of strategy does not come easily for any beginner. As Abott has said in Business News Daily, it takes years of practice to master this skill. Many people who have become masters did not simply start off as talented decision makers, they made many mistakes in the past, learned from them, and simply moved on. The most crucial part in any decision making in a business, is the ability to learn from them. It is not easy as you think it is because people still make the same mistake, whether it’d be motivated by an emotion, by influence, or by stubbornness. The reality is that, it will not be easy to become a smart business decision maker until you have made enough decisions to consider yourself a smart business decision maker. 

This Skill is What Determines the Success of Your Business

Just recently, there was an article written by Matt Fore who talked about an important skill that would subsequently determine the success of your business. In his article, he provided an example from his experience about one of his business friends and talked about this important skill that he was lacking, and how it failed to bring him to the path of financial success.

 

The story unfolds to talk about a man named Earl who was a business man and a magician who performed amazingly for audiences such as adults and families. In fact, his talent was so good, that he was comparable to Houdin Thurstonfield, however, given his talents, he could not generate enough viewers to come to his magic show. Although his talents were astonishing and jaw-dropping, he lacked this important skill needed to get a business of his magic show going.

 

Do you know what skill he is lacking?

 

If you guessed Communications, you are certainly correct!

 

The most important skill that determines the life of a business is communication. Many Orange County CPA Firms and Entrepreneurs including Matt Fore will tell you that “An effective marketing campaign should stir a response; it should stir a conversation. It should give a compelling reason for the client to reach out and receive a benefit.” (Fore)  

 

Communication is very important in business because it plays a fundamental role in all the factors of business. The internal part of your business, which is yourself and the partner/employees are crucial because communicating effectively within your business organization will efficiently complete short term goals and possibly long term goals. Additionally, you want to make sure that your external communication is also well trained, for example your consumers. How are they receiving the messages that you send out to them? Compare what you see and what they see in your advertisements, are you both in the same page?

 

Another thing to note too is that communication builds and maintains relationships, communication is very important because you want all your business partners to understand your situation, your goals, and any other factor that your partners may want to know. A CPA firm typically asks for effective communication. In fact, it is practically required that you have effective communication skills, otherwise, your CPA will not be able to get the job done correctly if you don’t!

 

So there you have it, communication. Remember to always have a good mindset and make sure to always answer any questions if needed from your fellow business partners or consumers.

 

***ARTICLE BASED OFF OF MATT FORE OF ENTREPRENEUR.COM***

Rick Alden, The Willy Wonka of Skullcandy

 

We can safely assume that most of us know what Skullcandy is right? Well, if you do skip this paragraph. If you don’t, well where have you been for the last 8 years? Well anyway, Skullcandy are a pair of headphones that has a skull as its logo. To simply put, Skullcandy is a company that sells hands free audio products that enable users to be able to listen to music at high quality, while having that hip fresh look to them. Surprisingly, the music quality is pretty good, they have very nice bass subwoofers that do not damage ears.

 

HOW DID THEY START OUT?

Rick Alden is the founder of Skullcandy, and simply started out promoting snowboarding events and began fiddling with his items. He eventually began selling bindings that holds skis and snowboards together with the user.

One day, while he was hauling to the top of a Park City peak for another powder run, he had to pull out his ear buds from his music player and use them to answer his phone. However, an idea suddenly occurred to him. “What if there were headphones that could seamlessly switch from music to phone calls? And what if they looked good as they worked? That was when Skullcandy was born.

 

 

THE BIRTH OF SKULLCANDY

One of the first products that came out before Skullcandy became official, was a set of headphones called Skullcrushers. They were designed to appeal to skateboarders and snowboarders who loved a ton of bass.

So Long story short, the Skullcandy product was a success. In a sea of black and white we became a groundswell of color and style that the world had been waiting for. Skullcandy’s commitment to counterculture and self-expression scratched the audio itch of core up-and-comers and underdogs that nobody else could reach. They have teamed up with kindred risk takers and pioneers living at full volume like artists, athletes, DJs and helped grow events that were far away from the main stage and mainstream. Skullcandy’s street cred grew and grew until they boldly secured their place on store shelves and the heads of trendsetters and innovators.

 

 

WHAT MAKES RICK ALDEN SO SUCCESSFUL?

Rick is extremely driven by his passions, just like his work with skating, snowboarding, and the art of tinkering in his garage. He is all about getting the job done and this mindset attracted many individuals who share the same mindset as him. With him and his partners, they all had the attitude of driving this headphone and phone idea into the market.

There were many guarantees with the product such as: “If it doesn’t sell, we’ll buy it all back; we’ll rotate to get the best product mix.” Luckily, they never bought anything back.

They have always wanted to build their tech into other gear. Implementing audio into helmets, backpacks etc. So they took this idea to one of the top producers of snowboard and ski helmets, Giro. They loved the idea of putting speakers into their ear pads and wiring, not just music but cell phone functionality as well and agreed to print the tagline “Powered by Skullcandy” And that’s when their business soared.

Next, Rick would going to shops asking his potential clients to sell his products. Certain stores would initially refuse the offer because they thought his product were headphones, however, he pointed out the Giro helmet with speakers for them, which changed their minds.

Next, he pitched sales to Best Buy, Target, and Circuit City. He didn’t expect these companies to say yes to his offer, and wanted to buy his product in large amounts. However, he wasn’t sure how he could build that much product to meet his demands. So he found a Chinese manufacturer from China and was able to deliver his products to his chains.

 

SKULLCANDY TODAY

Today Skullcandy is a global brand bringing the noise and pushing boundaries far and wide. They have successfully modernized audio and leveled the playing field by making high fidelity affordable and high style attainable . More importantly They have designed their headphones to be used and abused, not put on a shelf or in some fancy case. They are made to be a trusty sidekick riding with you through thick and thin as you charge hard at everything you do.

Look At How Shaq became a Successful Business Man!

We all know who Shaquille O’Neal is; the notorious 7 foot 1 inch basketball player who has been playing in the NBA League for 19 years! 

When we were all watching him play in the court, we probably all never thought that this guy would make it BIG in the business world. We probably all wondered what this man was going to do when he retires from basketball at some point during his basketball career.

Well guess what… This man has made it, and he is probably more successful than most people in the world! In fact, he even already made a name for himself out there before he even retired as a “media personality and commentator.”

Wanna know how much Shaq is worth today?

According to The Richest Mag, his estimated worth is a whopping number of more than a quarter of a BILLION dollars! (More than $350 million to be exact)  That’s insane! Well, of course, along with his earnings from his long-playing career in basketball.

 

WHAT HE DID AFTER HIS RETIREMENT FROM THE NBA

Shaq has been venturing off into many different aspects of business, and actively looking to find something that will not only peak his interest, but also find opportunities for growth in his earnings from NBA. Although he is still somewhat active in the media, he is also looking for ways to grow his money by investing his money carefully without exposure of his business activity in the media.

Most of us probably know that he owns restaurant franchises like 5 Guys, but do you know how many he actually owns?

If you guess a number less than 100, then you’re just like most people! If not, good for you! He owns 155 different locations! Think about it, he owns 155 locations, he gets a percentage from each of the franchise’s annual profits, and lets assume that each of these franchises roughly nets him about $150,000 per year. Now multiply that number times 155. What do you get? 150,000 x 155 = $23,250,000! Shaq is literally making $23 million annually! WOW! (You can buy lamboghinis left and right!)

Not only does he own these franchises, he also made deals with food companies like Fruity Pebbles, Muscle Milk, Vitamin Water, and AriZona Cream Soda. One thing that makes Shaq a great business man is his good ethics, he chose these companies because he actually consumes these products. This will make him more genuine as an actual human being rather than a robotic psychotic business bot.

We will not get into too much detail here, but some of the other business industries that you should know that he owns are very notable:

–          Fitness Franchises (Owns 40 24 Hour Fitness locations)

• He even added his own style to the gyms for branding (Smart Move Shaq!)

–          Tech Investments (He invested in Google, before they went public! They were $85 per share in stocks, now they’re over $700!)

–          Real Estate (Investing in real estate has been highly profitable for many athletes. He owns both residential and commercial properties that net him millions of dollars, not only that, he also likes to have fun while doing business, therefore he also owned nightclubs too in Vegas! How cool is that?!

Overall, Shaq is a very great example of a successful entrepreneur. Follow his example, you don’t have to be a basketball player to reach this level of success, all it takes is your interests, drive, and determination to make it big in the business world!  

*Blog Based on Nat Berman’s article from moneyinc.com*

How Does your Passion Reach Success?

Imagine yourself doing something that you are most passionate about, and then making tons of money just by doing that “something” you are most passionate about.

 How much better would your life be?

You can enjoy that lavish lifestyle, going out eating some delicious lobster with your buddies, going out to try that one wine bottle that you’d think you’d never get to try, or drive that Mercedes Benz model that you’ve dreamed about, picking up girls in the streets with your ride (or guys, whatever preference, no judgments here!).

The reason I ask this is that, I’d like to talk about a young individual who was able to make it big without having any sort of experience working in the business world, and then attempt to inspire the readers (you) that anything you do that you are passionate about can drive you to success. (Along with hard work of course.)

Connor Franta, an American Youtuber, entrepreneur, and writer, mainly created videos for his fans about his life, talking about his day and expressing his thoughts and opinions about everything while implementing a lot of humor into his videos. Not only did he make videos about his daily life, he also created many videos about relationship advice in which majority of his audience seems very interested in. Nonetheless, Franta enjoyed what he did that kept him going. Not only did he make videos, he was also very timely and persistent with his videos making sure that his audience was thoroughly entertained. In fact, he was always active with his youtube channel. However, his youtube fame did not last very long. Luckily, with his smart thinking about drive to become successful, he began taking different approaches to advance his passions. Since Franta is a coffee addict, (his fans also know) he began to take on the idea of selling his own coffee brands. He figured it would be beneficial to be authentic about selling something that he is crazy in love about.

How did he start this new product brand?

Franta began by approaching a company in San Francisco called Ritual Roasters, which was a wholesale company that had a variety of different coffee beans. The process was a simple one for him: He picked out the bean that he loved and then designed the package. Once it was created, he did a test run of the sales of the product in a span of 48 hours. At the end of it, he was able to sell thousands of pounds of the coffee! And from then on, it became an ongoing business. See what happens when you treat coffee like its your world?! YOU BECOME RICH!

How is he staying consistent with the coffee business?

Franta formalized his business, where he named his product Common Culture Coffee, under the umbrella brand called Common Culture. With his creativity and strategy to consistently produce revenue, he created a subscription plan for the coffee beans. The product itself is handled by his wholesaler company Ritual Roasters, while Franta manages the creative side by creating the new packaging of the beans. The most important aspect of his skills however, was the company presence. His company has more than 70,000 Twitter followers, and 160,000 on Instagram, and “is growing everyday” he says. His expertise is advertising, and still working to improve his advertising skills.

What did I learn from this?

Well, the most important thing to take away from this blog, is to understand what it took for this young indivdual to reach success. Someone who came from a completely different background, without any knowledge in the business world, who suddenly became a millionaire. The point is, anyone can become a millionaire if the passions and drive to become successful is there. As Franta would say “Never underestimate the power of pure passion” Look into what you love to do, and drive it into a business! You never know!