Small Biz Hack: It Only Starts with Tax Prep
Happy New Year! Now that the parties are all over and you are back to the daily grind, I know that you are knee deep in preparing to distribute your 1099’s and W2’s by the end of the month. I won’t even talk about it because I know that you are working on it. You are a well-oiled compliance machine! In addition to your annual tax preparation burden, don’t forget to do a couple of other things that will make your life a lot easier this year as a business owner.
Small Biz Hack: Change the Oil in your Vehicle
Wait, is this advice on how take care of my car, or is this about my business? Well, it’s both. I grew up hearing that you should change your oil every 3 months or 3,000 miles. The New York Times says that this old rule of thumb is pretty much history, however, despite the new technology of oil and engines, it is still important to get your oil changed in January. Most of us use our personal vehicles in our businesses. IRS requires us to keep a log of miles driven for business purposes. Talking to many business owners, this proves to be a challenge. I would suggest that you change your oil every January because the quick lube place or mechanic will record your mileage on your estimate and make suggestions when to return to service your car again. This at least gives you a verified 3rd party mileage check once a year so you know at the very least how much you have driven, year to year. This makes it a lot easier to calculate you business vs. personal miles. Plus, you vehicle will appreciate you a lot more by lasting longer.
Small Biz Hack: Assess a Value to Your Business
In addition to changing your oil on your vehicle, you want to take this opportunity in January to set the value to your business. You really need to sit down with your partners or owners of the company and assess a dollar figure to the value of the business. This is very important because things happen during the course of the year. You may have a partner that becomes ill, incapacitated or worst case scenario, dies. This will leave your business in disarray. It’s difficult enough to get through situation like this, However when you combine it with the fact that you may have to buy their spouse out of your business, this becomes very difficult for all parties to agree on what the business is worth at the present time. Additionally, one of the owners of business may decide to take a job elsewhere, or start a new venture, or they just might want their money out of the investment. In any of these scenarios, it causes a major disruption to the business. If you assess this business value in January as part of your normal operations and strategic planning for your company, you will have peace of mind. All the owners will have already assessed the value for the business that will stand for that year. So that all partners involved understand that if they need to pull out of the business for whatever reason, they already have agreed-upon a set value for the business in the current fiscal year. There is no arguing in court that is worth twice as much as it is, there is no reviewing of financials and needs to take place. All you need to have is proof that you have all agreed upon set value of the business for the year. I’ve seen many attorneys and other advisors have their clients write this into their operating agreement, if the business is an LLC, or the shareholder agreement if the business is a Corporation.
PHOTO CREDIT: Jerry Keisewetter, Creative Commons License
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