Red Flags for Audits

As tax season comes to a close, many taxpayers put the IRS out of their mind until the next tax season rolls around. However, some taxpayers aren’t so lucky as they are recipients of dreaded IRS letter stating, “Dear Taxpayer, Some of the information that you provided to us does not agree with information we received from other sources.”

In actuality, the percentage of taxpayers who will face an audit is fairly small compared to the number of tax returns filed — overall, the examination rate of tax returns in 2006 was just under 1 percent. However, some taxpayers are more likely than others to face an audit based on the information provided on their tax return. So what triggers a red flag for the IRS? While audits can be done for a number of reasons, often the IRS will take a closer look if the following applies:

  • Higher incomes.
  • Income other than basic wages, for example, contract payments.
  • Unreported income, such as investment returns.
  • Home-based businesses, especially when in addition to salary income and home-office deductions.
  • Noncash charitable deductions.
  • Large business meal and entertainment deductions.
  • Excessive business auto usage.
  • Losses from an activity that could be viewed as a hobby rather than a business.
  • Large casualty losses.

Identifying Your Corporate Culture

Have you ever wondered why some companies are perceived as more successful than others? Product mix? Customer base? Leadership? While there are many reasons why some companies outperform others, it is increasingly clear that some success is tied to an organization’s “corporate culture.”

Culture is a set of shared attitudes, values, goals and practices that characterize a company or corporation. Every organization has its own unique culture. Most organizations don’t consciously try to create a certain culture. Rather, it develops naturally, based on the values of top management of the organization. What management pays attention to is often the strongest indicator of the organization’s culture. Their view of the organization’s culture is often based more on hope than grounded in objective fact. Culture drives the organization and its actions. It is somewhat like “the operating system” of the organization.

Why would an organization be interested in assessing its culture? If an organization wants to maximize its strategic objectives, it must understand whether the existing culture supports and drives the actions necessary to achieve goals. It allows you to identify the gap between the real and ideal culture. Here are some signs that your culture is in trouble:

  • No clear belief about how to succeed
  • Morale problems
  • Complaints pertaining to communications
  • Attrition greater than prior years
  • Office politics
  • Dissatisfied Customers/ Customer Complaints

So what can you do once you have recognized that your culture needs help? Create a vision that is embraced by everyone. Have a set of values and a way to define what those values are.

There needs to be two-way communication between management and employees to share and receive feedback on the corporate culture. Management must lead by example in changing the current culture. A plan should be in place to recognize and reward the activities that support and promote the corporate culture. Recognize that the current culture did not happen overnight and it will take time to change old habits.

The $700 Billion Bank Bailout – What Does it Mean to You?

In 1998, government passed legislation approving a bank bailout of historic proportion. The Emergency Economic Stabilization Act of 2008 authorizes the United States Secretary of the Treasury to spend up to $700 billion to give banks a fresh injection of liquidity to help recover from the subprime mortgage crisis. The bailout is the biggest government intervention in the financial markets since the Great Depression and is aimed at helping the nation’s economy withstand the financial turmoil and avoid falling further into recession.

Here’s how it will affect you:

  • The bailout could help home builders and mortgage lenders but is unlikely to bring fast relief to you if you are trying to buy or sell a house.
  • Most analysts predict that house prices still have further to fall and must hit bottom before demand will pick up. Houses on the market may be there for a while.
  • Credit markets will hopefully be improving within the next few weeks as banks become more comfortable in lending again. If you have good credit you will probably still be able to get money, but those with less than great credit will have a difficult time for the foreseeable future. Interest rates may be higher, even for those with good credit. Down payments for all types of loans will be increasingly important now for individuals as well as small businesses.
  • If you have fallen behind on your home mortgage the bailout will do very little for you right now. The law directs the Treasury to “maximize assistance for homeowners” and write monthly progress reports but says little else.
  • If you or your small business is fortunate to have a lot of cash on hand, the bill will make it easier for you to keep your money at a single institution. The prior $100,000 limit on deposit insurance was increased to $250,000 per depositor through December 31, 2009.
  • Whether your taxes will go up as a result of the bill will depend on what the next president does. The government will borrow money to fund the asset purchases from the banks. These initial loans will add $2,300 in government debt for every American.
  • It is uncertain when the market may recover so if you were hit hard by the recent drop in the stock market, it may take time to recoup your losses. If you are considering adding to your portfolio, take it slowly. Exercise caution when there is volatility in the market.

You may need to relearn a basic concept: spend less than you make.

Social Media In Business

Time Waster or Money Maker


The buzz around Internet Social Media has turned into a roar over the past year, creating both opportunity and anxiety for countless small businesses. For small businesses trying to decide whether social media will be a time waster or a money maker, keeping abreast of the latest social media networks is crucial.

What exactly is Social Media anyway? In short, Social Media is just an efficient and inexpensive means of connecting to people or businesses you might not otherwise connect to on a more regular basis. Using Social Media Internet tools such as Facebook, LinkedIn, Twitter, and blogging allows you to interact with your customers and prospects on a more personal level.

Is Social Media applicable to small businesses or is it just the latest fad among kids? With 200 million Facebook users and 20 million people on Twitter, and the number of users increasing daily, these networks are just too big to ignore. Social media networks are here to stay. Using them is absolutely necessary for businesses who want to form connections with the next generation of business owners. As your older clients retire, many of them will pass their businesses down to their children. These children were born with a mouse in their hand and will be accustomed to using tools like Facebook as their primary communication method. The next generation will use Social Media as easily and frequently as you now use email.

What can my small business hope to achieve by using Social Media? For most small businesses, attracting more visitors to the company website is a primary goal. However, making sure that customers and prospects can easily find your website in an online search is increasingly difficult for most small businesses. Many larger businesses employ professional search optimization consultants to create web pages that result in higher search engine rankings. Many experts are now predicting that the Google search will become less dominant in lieu of other types of Social Media sites such as Facebook and Twitter. Not using the Social Media networks to promote and point people to your website is a mistake.

What is Facebook? If you have teenagers, you’re probably already familiar with this site. Facebook is currently more popular with today’s youth, but the “over 35” age group is the fastest growing segment. Users can create a profile which contains a picture, name, address, and bio. Users can share messages through mail and instant messaging, making email virtually obsolete for today’s younger generation. More and more Facebook users perform searches via Facebook rather than Google, making Facebook a valuable marketing resource for businesses. Having a page on Facebook may help your company locate potential employees. You can also market on Facebook by creating events and having people register to attend. Joining is free of charge.

How is LinkedIn different from Facebook? LinkedIn is basically Facebook for business people. Joining is free, but users can pay a small fee to make more than a few contacts each month. The object of LinkedIn is purely business networking. LinkedIn users create a profile, much like an online resume’, that includes their past work experience, education, and a professional summary. This information is used to make connections to other people on the service. Unlike Facebook, there is a minimal amount of messaging or posting of photographs.

What is Twitter and how can I use it for business? The newest social media tool to sweep the masses allows users to post brief messages that answer the question “What am I doing?” Twitter is also used to allow news to spread quickly. It inadvertently also serves to answer the question “What are you thinking?” By using software tools, businesses can set up searches that notify them whenever someone mentions a product or service they offer, or asks a related question. By providing free answers to these questions, the businesses hope to build rapport with the user and perhaps gain a new customer. Using Twitter may result in better customer relationships and stronger customer loyalty, new customers, and increased site traffic and brand recognition. Twitter is used by many business giants, including IBM, Jet Blue, Dell, and SAP, for marketing, branding, and communication.

How can blogging help my small business obtain a higher ranking on Google or other search engines? For companies lacking the budget to hire an expensive search engine consultant, blogging may be an easy way to publish fresh content online and draw more visitors to your site. Blogging is nothing more than writing an article and publishing it on the Internet. The words in the article become indexed by Internet search engines and will hopefully be discovered by potential clients who contact your small business. The more articles you publish on a current basis, the greater visibility your company will have on Internet search engines, resulting in more visitors to your website. The more helpful content you have on your site, the more likely a web visitor is to read it and contact your business.

Learning your way around the Social Media network may seem overwhelming at first, but remember that it wasn’t all too long ago that fax machines seemed mysterious. 37% of adult Internet users and 70% of teens use social networking sites monthly. If these users aren’t part of your current or future target markets, chances are they should be.

What Not to Do With Your 401(k)

As we’ve discussed in previous issues of Money Watch, millions of Americans are not saving the right amount forretirement—most people just aren’t saving enough. But what about those who think they are saving what they should, but find out as retirement approaches that they’ve made poor investment decisions? Recent studies have shown that many people are doing exactly that.

Common investment errors can cost you hundreds of thousands of dollars if you aren’t aware of them and keep making the same mistakes year after year throughout your career. Take a look at this checklist and ask yourself the following questions. If you find yourself answering “yes” to any of the questions, you may be making big blunders whereit comes to investing and it is time to reassess your retirement savings strategy.

Are you loading up on your own employer’s stock?

Twenty percent of investors have half or more of their balance in their employers stock. Most often, this is the case because people feel they know their company and therefore this option seems less risky. However, a single stock is typically many times as risky as a diversified portfolio. Cases like Enron would go to prove that putting too much stock in your company (or any one investment option for that matter) comes with a high risk. If you own any employer stock in your 401(k) – think about selling it or at least limiting it to a small percentage of your portfolio.


Are you being too conservative?

Don’t put too much of your money into low risk choices like stable value, bond and money funds. Of course, these offer some protection from market setbacks, but they lack the growth potential you need to end up with adequate income at retirement. Instead, create a blend of stocks and bonds that allows for sufficient gains, but also provides some cushion from drops in the market. You’ll need a sizeable nest egg, and conservative choices with little risk will not pay off.


Are you dividing your money evenly like a pie?

Some people think diversifying means putting equal amounts into all the options. However, that approach will not balance your portfolio adequately. Depending on your plan’s options, you could end up with too many bonds or other investments that won’t help you achieve your goals. Go to and plug in your choices to see how your portfolio breaks down the asset classes—large and small stocks, bonds and foreign shares. Next, you will want to compare your current mix to the one the Asset Allocator suggests. This will give you an idea of whether you should rebalance your 401(k).

Navigating retirement savings can be a complicated task and there are many forces that can get you off track —not saving enough for retirement, or simply making bad choices where it comes to investing. Avoiding the common errors above won’t guarantee that you will have a giant nest egg, but it will help make sure you are making the most of everything you are putting aside for retirement.

Page 114 of 118« First...102030...112113114115116...Last »