Small Business Services

Costs incurred while entertaining customers, prospective customers, clients, suppliers, employees and other business associates are valid business expenses that are subject to conditions and restrictions. For entertainment costs to be deductible, the following must be documented: the time, place and nature of the entertainment, a description of the business purpose involved, the amount of each separate expense, the business relationship and identification of the persons entertained. A calender diary is recommended to maintain this information.

In order to avoid any future problems and to avoid any mismatching reports with the IRS, you should include this amount on IRS Schedule B, both as a positive and negative amount. Enter the Form 1099-INT amount on Schedule B, line 1 as income. Enter the same amount as a negative adjustment on Schedule B, line 1 and enter "Nominee Distribution" as the negative adjustment description. Speak to your local CPA if you have any questions about the reporting of this incorrect interest.

MACRS is the abbreviation for Modified Accelerated Cost Recovery System. It is a statutory method of depreciation allowing accelerated rates for most types of property used in a business or income producing activities.

Some aspects to consider are licenses required, zoning laws and other regulations that vary from state to state and business to business. Depending on the type of business you are running, you may also need establishment licenses, liquor licenses, delivery and/or transport licenses. Your local SBA office or Chamber of Commerce will provide you with general information. The first decision is to decide about your form of organization. You can choose to be a sole proprietorship, corporation, s corporation or partnership. Speak to your local CPA for advice specific to your business and location.

When you buy a franchise, you are purchasing a business which operates under the name and image of a large company. The concept is that you get the best of both worlds. The freedom of running an independent business and the security of working for a big company. The relative freedom and security will vary depending on the franchise. Generally, you will benefit from regional or national advertising. You get associated goodwill revolving around the larger companies reputation and image. All franchise opportunities should be thoroughly investigated prior to purchasing one. Speak to your local CPA about your franchising opportunity.

The kind of record keeping system depends on your business and industry. Your local CPA can provide you with many options. When deciding what is necessary and what is not necessary the follwing questions should be asked: How will this record be used, how important is this information likely to be, is this information available elsewhere in an equally accessible form. A separate business checkbook is highly recommended for any operation. Too many people comingle their personal and business accounts. There are various "one write" or automated systems available to help simplfy the record keeping function.

The importance of keeping adequate, legible, complete records cannot be stressed enough. Without records you cannot see how well your business is going and where it is going. All business transactions should be documented with checks or credit cards. Undocumented cash transactions should be avoided if possible. At a minimum, records are needed to substantiate your tax returns under federal and state laws, including income tax and social security and sales tax laws. It also is necessary to substantiate your request for credit from venders or loans from lending institutions. It also is necessary to substantiate your representations and claims about the business should yo wish to sell the business. Speak to your local CPA to set you up on a good bookkeeping system.

The basic three questions a lender will ask you is: How much do you want to borrow?; How will you use the loan?; and How will you repay the loan?. You must be prepared to answer these questions. When you apply for the loan, you must be able to provide prior, current and projected financial statements and a business plan which includes the name of the business, location, production facilities, business goals and legal structure. A description of your business experiences and management capabilities, as well as the expertise of your key personnel will also be needed.

You must withhold federal and state income taxes and contribute to unemployment and workers compensation funds. You must also match their social security contributions. You may want to also check into "key employees" life and disability insurance programs. Laws vary from state to state. Speak to your local CPA about the financial responsibilities in your jurisdiction and industry.