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Marketing Your Service Business

Whether you are a seasonal tax preparer, a neighborhood car wash, a painter or a realtor, consumers can’t go a week without the services of a local entrepreneur. One the hardest parts of being in a service business lies in how you go about creating your market. As such, a sizable roadblock often encountered is how hard it is to promote a product that technically does not exist until the customer has made their purchase.

Listed below are 5 ways that you can promote your service business.

Make sure customers can find you. The vast majority of both male and female shoppers do research on the web before making a purchase. Furthermore, women shoppers in particular look for “deeper” information when deciding on which company or service to choose. For these reasons, having a company website is a smart and affordable way to ensure that your business and the services you offer can be found.

Let customers know you. Good relationships are built on trust. So it’s natural that customers want to learn as much as they can about your company and the people that stand behind it. Once you’ve created your website, why not consider integrating your blog into it? Studies (like this one) indicate that business blogging can lead to as much as 55% more site visits when compare to sites that don’t. But the real point of the blog should be to let customers know more about just who you are!

If you look at the category Who’s The Boss on our site, you can get some insight into our CEO Jared Rogers. Under this category, he showcases things about the company and his story, photos, family and hobbies. Why? So that you get to know more about him and see if his personality matches with yours. The reality is that most service businesses are differentiated not by their services, but by the people who provide and stand behind them.

Tout your USP or value proposition. What will make customers or clients select your company vs. your competitor’s? Many people choose the service provider that offers the greatest value for their money, as there’s often price parity among the principal players. Thus, one should craft their Unique Selling Proposition (USP) and communicate it to each and every prospect you interact with. So the best way to win business is not to cut your prices or rates, but instead add products or services that elevate your USP – making it too good to resist!

Offer your customers incentives. Customers who’ve had positive experiences with your company in the past will happily return. But tempting new customers requires making a special offer. Businesses that provide home services (e.g. rug cleaning, painting, home heating or air conditioning) can benefit by sending consumers coupons through a service such as Valpak. Your coupon offer will be mailed in an envelope with others, thus your cost of mailing is less than if you did it stand alone (thus allowing you to send to a greater number of people). Although you won’t have the undivided attention of your consumer, mail from a known marriage-mail provider is often well-received. For long-term results, create a offer that will motivate new customers to make more than a single purchase.

Communicate with your prospects frequently. It costs considerably less to keep a customer than to win a new one. Thus, it’s smart to maintain campaigns that upsell or resell to existing ones. To do this, you should communicate with your customer database at least every four to six weeks. If you don’t, you’re missing opportunities to grow your business. Now, every communication doesn’t have to be a sales pitch. What you are trying to do is create Top Of Mind Awareness.

In this post we talk about how you can get new clients via a referral program that emphasizes TOMA. Essentially, you want to use a combination of alternating sales calls with e-mail and postal mail. By interspersing e-newsletters containing case histories, postcards with promotional offers and calls offering relevant and valuable information, you will ensure that YOU are the one they think of when it’s time for them to make a purchase.

By Administrator|2015-06-30T21:39:24-06:00June 30, 2015|Categories: Business Talk|Tags: client referral program, how to ask for referrals, How To Market Your Service Business, Marketing Your Service Business, tips for marketing your service business, TOMA, top of mind awareness, Unique selling proposition, using a blog to market your business, Using a USP to Differentiate Your Business, USP, Valpak, Valpak marketing|Comments Off

Home Office Tax Deduction Requirements

If you use part of your home for business, the IRS will generally allow you to deduct certain expenses come tax time. The home office deduction is available for homeowners AND renters, and applies to all types of homes. In order to take the deduction, there are two basic requirements that you must satisfy:

Regular and Exclusive Use
You must “regularly” use part of your home “exclusively” for conducting business. For example, if you use an extra room to run your business, you can take a home office deduction for that extra room. The exclusive portion of the equation usually means that you can’t use that room for other things. Meaning, if the room is your den and you also use it for entertainment or other social activities, then the deduction will not be allowed. Also, if the room or space isn’t used on a regular basis (i.e. you only have business meetings in that room once a quarter), the deduction will also not be allowed.

Principal Place of Your Business
In addition to the above, you must show that you use your home as your principal place of business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business. You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business.

How to claim the deduction
Generally, deductions for a home office are based on the percentage of your home devoted to business use. Thus, if you use whole or part of a room for conducting your business, you will generally need to figure out the percentage of your home devoted to your business activities. However, note that there are TWO methods for you to determine the deduction:

Simplified Method
For taxable years that started on or after, January 1, 2013 (filed beginning in 2014), taxpayers have the option of using the simple method per IRS Revenue Procedure 2013-13. The standard method (discussed next) has some calculation, allocation, and substantiation requirements that some consider complex and burdensome for small business owners. The simplified option can significantly reduce the recordkeeping burden by allowing a qualified taxpayer to multiply a prescribed rate by the allowable square footage of the office. In most cases, the deduction is calculated by multiplying $5, the prescribed rate, by the area of your home used for a qualified business use. However, note that the area you use to figure your deduction is limited to 300 square feet. So if your office is larger than this number, you may want to take the time to use the next method.

Regular Method
Taxpayers who use the regular method (required for tax years 2012 and prior), must determine the actual expenses associated with their home office. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Once the amount spent on each category is determined, one must then allocate them between the space used in connection with their business and the rest of the dwelling. To do this, one will use IRS Form 8829.

Where to deduct
Where you take the deduction on your tax return depends on how you conduct your business:

If you are self-employed: report the entire deduction on line 30 of Schedule C (Form 1040). Whether you need to complete and attach Form 8829 to your return depends on which method you used above to perform your calculation.
If you are an employee: you must itemize deductions on Schedule A (Form 1040) to claim the deduction, generally on line 21 (unreimbursed employee business expenses).
If you are a member of a partnership, multimemeber LLC or S-Corp: take a look at this post for more information on how to claim the deduction.

To learn more about the following, we suggest that you take a look at IRS Publication 587:

Types of expenses you can deduct.
How to figure the deduction (including depreciation of your home).
Special rules for daycare providers.
Tax implications of selling a home that was used partly for business.
Records you should keep

By Administrator|2015-06-21T22:47:04-06:00June 21, 2015|Categories: Tax Talk|Tags: home office deduction $5 per square foot deduction, home office deduction regular method, home office deduction simplified method, home office expense worksheet, Home Office Tax Deduction Requirements, home office tax deduction tests, how to claim the home office deduction, how to deduct home office expense for partnership, how to deduct home office expenses on income taxes, IRS Form 8829, IRS Publication 587, IRS Revenue Procedure 2013-13, Rev proc 2013-13, S-Corp home office deduction, where to deduct home office expense for s corp, where to deduction home office expense|Comments Off

What moving expenses can you deduct?

Over the past year or so we’ve had a few of our clients move to another state. In addition to knowing if their new city imposes an income tax the next question usually is “What moving expenses can I deduct?” The answer is really a two part matter of can I deduct my moving expenses AND what expenses can be deducted.

Who can deduct moving expenses? In order to deduct your moving expenses, you must meet the following three requirements:

Your move must be closely related, both in time and in place, to the start of work at your new job location.
- Time: Moving expenses incurred within 1 year from the date you first reported to work at the new location can “generally” be considered closely related in time to the start of work.
- Place: If the distance from your new home to the new job location is not more than the distance from your former home to the new job location, you can “generally” consider yourself as satisfying this test.
You must meet the distance test. Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. See the illustration below for an example.
You must meet the time test. If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). If you are self-employed, you must meet the above AND work a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test).

What moving expenses can be deducted? Once you determine that you qualify to deduct your expenses, you should keep track of the cost related to the following (which are deducted on IRS Form 3903):

Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and
Traveling (including lodging but not meals) to your new home.

Moving household goods and personal effects. You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. For purposes of moving expenses, the term “personal effects” includes, but is not limited to, movable personal property that the taxpayer owns and frequently uses.

Travel expenses. You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. This includes expenses for the day you arrive.

If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either:

Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or
The standard mileage rate per the IRS for the tax year of the move (as it is indexed annually)

Nondeductible expenses. The following expenses are not deductible:

Pre-move househunting expenses
Return trips to your former residence
Any part of the purchase price of your new home
Expenses of buying or selling a home (including closing costs, mortgage fees, and points)
Expenses of entering into or breaking a lease
Home improvements to help sell your home
Loss on the sale of your home
Mortgage penalties
Real estate taxes
Security deposits (including any given up due to the move)
Storage charges (except those incurred in transit and for foreign moves)
Car tags
Driver’s license

If you need more information feel free to give our office a call, shoot us an email via the address in the footer or check out IRS Publication 521.

By Administrator|2020-09-14T13:19:36-06:00June 14, 2015|Categories: Tax Talk|Tags: deductible moving expenses, employer reimbursed moving expenses, IRS Form 3903, IRS Publication 521, moving expense tax credit, moving expense tax form, moving expense time test, moving expenses 50 mile distance test, moving expenses deduction, moving expenses distance test, moving expenses mileage rate, moving expenses mileage test, moving expenses tax, moving expenses tax deduction, nondeductible moving expenses, What moving expenses can be deducted?, What moving expenses can you deduct?, Who can deduct moving expenses?|Comments Off

10 Ways To Get Word Of Mouth Marketing

It’s not uncommon for us to get new bookkeeping clients who are relatively “new” in their business endeavors. When we discuss their business and needs, we will often ask “What are you doing from a marketing perspective?” When “word of mouth marketing” is their response, we often feel compelled to have a teaching moment with them.

Word of mouth marketing is not a marketing vehicle in and of itself. It is the direct result of doing other tasks well within your business, one of which is other marketing. This post highlights 50 ways that you can market your small business. Shown here are the things that will help you generate that word of mouth buzz that so many businesses crave:

Provide an excellent product or service. If what you have to offer is just average, or even worse undesirable, don’t expect customers to extol your virtues. What you sell and how you sell it, should live up to or exceed what your customers expect. This is based on your ads, sales pitch and industry standards. If they’re happy with what they’ve bought, they will sing your praises to the heavens. Yet remember, word of mouth works two ways. If customers are unhappy with your company, they will complain loudly and publicly about their bad experience. Don’t believe us? Just look at this post about a poor customer service experience we had. Which leads us to our next point…

Excel in your customer service. This post will give you several ways to be better than your competition, so we urge you to read it. Yet a few basics to know: Be polite. Answer your customers questions as accurately and quickly as possible. Don’t keep them waiting unnecessarily. If you can do something for a customer, then do it. If you can’t, tell them so and send them to someone who can (even a competitor). By helping your customer solve their needs, they will remember you and send your their friends and family when they have a similar problem.

Give your customers something for FREE. People have needs that require solutions. When they look for those solutions, they will go to the internet, call their friends or even visit your establishment. However, there’s so much noise in the world that it’s hard for prospects to know exactly what’s worth buying. Most people buy stuff that they have a personal connection with or that is recommended by a trusted friend. By giving away your work (or a sample of it) you allow future customers (or readers or fans or whatever) the opportunity to hear about it, see the value in it, and then reward you for it.

Thank your customers for their business. Everyone likes to be appreciated and customers are no exception. When a customers pays you for services or a new customer signs their paperwork, why not send them a handwritten thank you card? Doing something your competitors don’t will set you apart as a business who cares about their customers and is worth recommending.

Make you and your employees “likable” in their interactions. We’ve said it before and we’ll say it again, customers do business with those who they know, like and trust. As such, make sure that when you interact with your customers, that they like dealing with you. Be friendly; no matter how rude or angry a customer may be. Never raise your voice, be sarcastic, or speak in a demeaning way to customers. Smile when you speak to them. Take a genuine interest in their needs, concerns and wants. When a customer likes dealing with you, they will like sending others to you.

Be personally visible to your market. The goal here is to not be viewed as a salesperson, but as a friend or problem-solver. If you take the information regarding providing “free” stuff and combine it with this point, you will be seen as just that. As such, join networking groups and industry groups that your customers join and be a regular attendee at meetings and events. Talk to people at meetings to find out what they do and what’s important to them and what challenges they face. When you can, give them tips or point them to resources they need, even if it isn’t a service that you offer.

Be Active in Social Media. A social media “share” spreads the word about your company to all the people who follow and like your information. While you don’t need to set up an account on each, Facebook, Twitter, Linked, Pinterest, Instagram and SlideShare are all good places to start. Choose the social media channels that are most likely to reach your target customers. Also, the easier you make it for customers and prospects to share your information and promotions, the more likely it is they will do so. As such, consider adding the corresponding social media buttons to your website.

When people praise you, ask to use their testimonial. You can post it on your website and/or in promotional material. Their comments can help prospects “hear” good things about your company. This is exactly why we have a testimonials page!

Make your business easy to find. Start by having a website, even if it is just a simple landing page. Make sure that it is listed on Google, Bing and Yahoo’s business promotion sites. If you have a location, make sure that you have singe indicating what you do, hours of operation and phone number. If you have vehicles, make sure your name is painted/wrapped in big letters on them so anyone who sees it knows how to reach you. Leave “extra” business cards with customers so they can hand them out when a neighbor asks if they were happy with the job you did… and how to get in touch with you.

Refer business to noncompeting businesses. When you refer customers, patients or clients to others, those businesses are more likely to refer business to you. Remember, those who give freely of themselves will receive the same in return.

Reward those who refer business to you. How you thank them will depend on the nature and what is considered ethical in your line of your business. It may be in the form of a hand-written thank you card, a coupon, a cash reward, or whatever else is practical or expected for your line of work. But the point is this; rewarding those who help you will make them feel their efforts are appreciated, which will make them be glad to recommend you to more people.

By Administrator|2015-06-07T14:33:55-06:00June 7, 2015|Categories: Business Talk|Tags: 10 Ways To Get Word Of Mouth Marketing, 50 ways to market your small business, failing to test your marketing, holding your marketing accountable, How Giving Away Something For Free Can Make You Money, How To Get Word Of Mouth Marketing, how to offer good customer service, not having a marketing budget, simple marketing plan, simple marketing plan contents, small business marketing, small business marketing ideas, Top Small Business Marketing Mistakes, Why "Free" Is Your Best Marketing Strategy|Comments Off

Top Small Business Marketing Mistakes

Recently we were having lunch at Columbus’ Curry, a new quick dining establishment specializing in Indian cuisine. During this visit, we had the fortunate opportunity to meet the owner. Turns out that they had only been open for four weeks, but they indicated that things were going well thus far. At some point, our conversation turned to what the “most important” thing to focus on should be. Our response? Generating sales!

As we’ve said in previous posts, nothing happens in an organization until a sale is made and sales don’t happen without marketing. Unfortunately, many new/fledgling small businesses often underestimate their marketing needs. With that said, we figured we’d discuss the top marketing mistakes new business often make and how you can avoid them.

No marketing plan. Failure to plan is like planning to fail – we’ve all heard that statement correct? Well, if you don’t have a marketing plan, then you can rest assured that your marketing will not be is effective as it needs to be. People often think that a marketing plan needs to be this overly complicated document that takes months to develop. That is not the case. A simple marketing plan can be made in short order. Take a look at this article to see just how to put one together and what it should contain.

No marketing budget. Equally egregious as not having a marketing plan, is not having a marketing budget. When you start a business you may be consumed in pouring all of your dollars into research and development, product engineering, hiring staff or outfitting your headquarters. However, if you don’t have the budget to tell your target market about your product or services, how will they find you? “Oh, if we build it they will come” is your response? Read the next bullet dear friend.

Having a “build it and they will come” mentality. We’ve written about this before in our Small Business Marketing 101 post. The key takeaway from it is that even with a highly visible location it’s EXTREMELY hard for potential customers to “see” you. The only way to ensure that the do, is to market to them. Furthermore, even if they know you are there, what is going to make them choose you over your competitors? For that, we recommend that you emphasize your Unique Selling Proposition or USP in all of your marketing collateral.

Failing to “test” your marketing. Marketing should never be viewed as a “one and done” type of activity. The one thing that is constant in the world is change. Thus, you must frequently look at your marketing activities, vehicles, collateral, etc. and make sure that it is working. If it isn’t, then you need to make adjustments to it. If you do a mailing and you get a 2% response rate, test doing a similar mailing but tweek the headline, body, mailing list, etc to see if the results change. Keep “testing” various elements of the campaign until you get the desired result. All of this leads us to the next point.

Not holding your marketing accountable. If you are involved in various marketing activities, you should always hold your marketing ruthlessly accountable for revenue. One of the first things we ask customers is how they heard of us. Why? We want to know which vehicle brought them to us. We then track various metrics associated with this such as number of leads, leads converted to customers, revenue spent per customer, cost of client acquisition, etc. If we don’t see the return on investment for a particular vehicle we either 1) test it, 2) change it or 3) abandon it. If we get to the third, that allows us to shift those dollars to something that IS producing desired results. The worst thing you can do is continue to pour money into something that is not generating sales.

Trying to reinvent the “Marketing” wheel. Marketing is not hard stuff (in simplistic terms of course). Yes, there is the need to reinvent and refresh your marketing so that it remains relevant and in sync with the times, but you don’t have to go back to the drawing board to make it yours. In this post, we talk about 50 ways that you can market your small business. The point? You don’t have to start from scratch; look at the items, choose what works for you and then make it fit your business.

Continuous planning without execution. The fear of failure is a very powerful thing. In this post, our CEO Jared Rogers talks about getting over his fears when he struck out to head the Beverly office. In the end he got over them and started doing things. The point is that you can be so busy preparing, organizing, and researching your marketing to prevent failure that you never get around to the actual marketing. To combat this remember:

Activity is not productivity.
In order to sell a million of something, you have to sell the first ONE.

At some point you have to start your marketing and just see what happens. Remember, mistakes are the price of entry into the world of success. A failed promotion means you have SUCCESSFULLY determined what does NOT work; and that is a invaluable tool in getting you closer to discovering what DOES work.

By Administrator|2020-09-18T11:21:20-06:00May 24, 2015|Categories: Business Talk|Tags: 50 ways to market your small business, Columbus' Curry Chicago, dealing with fear, dealing with fear and anxiety, failing to test your marketing, fear of failure in business, Having a "build it and they will come" mentality, holding your marketing accountable, not having a marketing budget, simple marketing plan, simple marketing plan contents, small business marketing, small business marketing ideas, Top Small Business Marketing Mistakes, Unique selling proposition, Using a USP to Differentiate Your Business, USP|Comments Off

Avoiding 401(k) Early Withdrawal Penalties

The point of investing in a 401(k) plan is to build your savings for retirement. Generally, if an individual withdraws from their 401(k) plan before reaching age 59½ they are taking what are called ”early” or ”premature” distributions. As such, individuals must pay an additional 10% early withdrawal tax, unless an exception applies, AND include the amount of the distribution in their income when they file their income tax return.

Sometimes you have no choice and are forced to tap into your account. Here are some ways that you can make withdrawals and avoid getting hit with penalties for doing so.

Age – Begin after age 59½ once you leave your employment (at any age).

Separation From Service – Begin after you separate from service during or after the year you reach age 55 (age 50 for public safety employees in a governmental defined benefit plan).

High Unreimbursed Medical Expenses – If you, your spouse, or your qualified dependent face these expenses, you may be allowed to withdraw a limited amount (the actual expenses minus 10% of your AGI) without penalty.

Death – If you die, your beneficiaries are able to take distributions from your 401k without penalty.

Disability – If you are “totally and permanently disabled” by IRS definition, you may be able to take distributions from your 401k without penalty.

Series Of Substantially Equal Periodic Payments – Essentially you agree to continue taking the same amount from your plan for the greater of five years or until you reach age 59½. There are three methods of doing this:

Required Minimum Distribution method – This uses the IRS RMD table to determine your Equal Payments.
Fixed Amortization method – Under this method, you calculate your Equal Payment based on one of three life expectancy tables published by the IRS.
Fixed Annuitization method – This uses an annuitization factor published by the IRS to determine your Equal Payments.

IRC Section 72(t) provides additional methods for taking a distribution from your 401k which can occur before leaving employment (if the plan allows). However, note that the following are NOT applicable to a 401(k), but DO apply to an IRA withdrawal:

Qualified higher education expenses
Qualified first-time homebuyers, up to $10,000
Health insurance premiums paid while unemployed

So if you are considering using your 401(k) funds for any of the above, you might want to make a “trustee-to-trustee” transfer to an IRA account first and then take the distribution from that account.

By Administrator|2015-05-18T22:48:53-06:00May 18, 2015|Categories: Tax Talk|Tags: 401k withdrawal penalty exceptions, Avoiding 401(k) Early Withdrawal Penalties, exceptions to 10 penalty on 401k distributions, Exceptions to 10% Tax on Early Distributions, exceptions to 401(k) early withdrawal penalty, exceptions to early withdrawal penalty, Exceptions to Tax on Early Distributions, how much is taxed on 401k early withdrawal, IRC Section 72(t), taking a 401k distribution early|Comments Off

Spending to Save Taxes vs. Generate Revenue

A few weeks ago we were speaking to one of our business clients about their tax planning needs for the upcoming year. During this session, we got to talking about how spending money yields a “tax rate” reduction of one’s taxes for every dollar they spend. This then prompted the analysis of spending to save on taxes versus to generate revenue. Let us elaborate.

How Income Taxes Work. A while back, we wrote about how the income tax system works with regards to refunds and balances due in this post. The short version is that for each $1 you earn, you have to pay an associated amount of taxes based on your marginal tax bracket. Conversely, for each $1 you spend on a deductible expense, it reduces your associated taxes by the tax rate applicable to your highest marginal tax bracket.

Spending To Save On Taxes. One of the things we always try to convey to clients is to spend money on what makes financial, life or business sense. Don’t spend money to save on taxes; if you receive an associated tax benefit, that’s just icing on the cake. Why? Let us illustrate.

Let’s say that Ricky lives in his mothers basement. She doesn’t charge him any rent, but he gets this “idea” of buying a house so he can get a tax deduction. So he goes and gets a mortgage and spends $10,000 on mortgage interest, which is tax deductible. To keep things simple, we’ll assume that all of the mortgage interest is reflected on his return and that his last marginal tax bracket is 25%. Based on this, he can expect to see his tax liability drop by $2,500. But let’s look at it another way…

Ricky wasn’t paying anything to live in the basement. Zero, zip, zilch! But to get a $2,500 tax deduction, he went out and spent $10,000 on mortgage interest? In the world of Finance we go by two rules:

Cash now is better than cash later – due to inflation $1 today is worth more than $1 in the future so give me the money NOW!
You only “save” money when you spend $0 – spending money is just that, an expenditure (no matter how big of a discount; sorry discount shoppers).

Using these two rules, it’s pretty clear that Ricky is in violation of the second.

Spending to Generate Revenue. Thus, if you are faced with a decision to spend money, we usually recommend that you do so to generate more revenue (especially if you are in business). Why? There are numerous reasons but some include:

You won’t see as big of a tax reduction as you would hope for by spending it on deductible expenses (see the example above).
Increased revenue will allow you to spend on more beneficial expenses (e.g. increased payroll for yourself).
Who doesn’t like more money? Oh yeah, the Capital One Baby!

So let’s change things up and assume that Ricky owns his own delivery business. He files his business income and expenses on a Schedule C so any profit from his business shows up on his personal return and is taxed at his marginal tax rate (25%). For this tax year thus far, he has $50,000 in profit (income less expenses) from his business.

Instead of buying a house, he decides to spend $10,000 on some billboard advertising. Now his profit is only $40,000 because the advertising expense is tax deductible. But those ads generate $25,000 of new business. Way to go Ricky! So his profit then becomes $65,000. Sure, he will have to pay $3,750 more in taxes ($65K – $50K = $15K x 25%) then he would have had to if he didn’t run the advertisements. But the flip side is that he will be left with $11,250 in more cash.

Now, if Ricky has a smart tax accountant on his team (like us), they might tell him to open a SEP IRA where he could put almost all of that additional $15K above his original $50,000 profit towards his retirement savings. Best thing about that is 1) it’s deductible on his tax return and 2) he’s funding the day he can park that delivery van for good!

Need some help with your tax planning? Want to brainstorm on how you can best spend your money? Give us a call or shoot us an email and we’d be happy to chat with you!

Until next time…

By Administrator|2015-05-10T22:52:15-06:00May 10, 2015|Categories: Business Talk|Tags: Capital One Baby, don't spend money to save tax dollars, filing taxes for the self employed, how income, retirement saving, self employed retirement savings accounts, SEP IRA, spending money to save on taxes, Spending to Save Taxes vs. Generate Revenue, tax tips for self employed|Comments Off

Our 4th Tax Season

It’s sort of become a tradition for us to provide a recap of how our previous tax seasons have gone. What is special about this year is that while it is our fourth with our Beverly retail office, it marks our 10^th year in business! Keep your eyes peeled for a future post on that topic and some special things we will be doing to celebrate.

As always, we’ve still got some more analysis to do, but here are some of the preliminary successes that we are aware of:

20% growth in client load
49 new clients entrusted us with their tax situation
Revenue growth in excess of 45%
Processed returns in 19 states, which is slightly down from last year, BUT does not include anything we have on extension (which could send us above the number of states processed last year).

Our Challenges We won’t rehash too much of this here as we already put out a post on why this was the worst tax season in 35 years. We’ll just simply let you read that one at your leisure!

Our Triumphs. There were a lot of things that did go well this season. The short version includes:

Staffing – We had some of our seasoned folks come back and we added new faces to the lineup. Without either Stephanie or Patricia working in the trenches this year, things would have been a lot harder than they were. Thank you ladies!
Bus Benches – We’ve written about how bus benches work in the past. What we noticed this year is that the longer they are in the public space, the better they do over the long haul. This year alone we can attribute 18% of our new clients coming as a result of these benches. With a little bit of refining, looks like this will continue to be a medium we advertise with.
Gaining Scale – Scale can mean a lot of things in business. What we are referring to is that fact that the business is taking on a life of it’s own. It’s reached a size where things are sort of just “naturally occurring” and it’s now our job to simply try and guide it. This is a good thing though and something that we’ve been anticipating for the past 3 years. It now means that we can begin to transition how we do things and set our focus a little further down the road instead of simply where are next sale will come from.

While growing a financial service business is not easy in today’s competitive environment, it’s satisfying to know that we’re still able to make progress towards the goals we set out for ourselves 10 years ago.

If you want to know how any of our past seasons went, feel free to read about them here:

Season One
Season Two
Season Three

Here’s looking to a bright future and since we’re 80’s babies, only this song would be considered fitting!

By Administrator|2015-04-27T14:16:58-06:00April 27, 2015|Categories: General Ramblings|Tags: challenges of a tax preparation business, how bus benches work, how to grow your tax business, my fourth tax season, our fourth tax season, our tax business grew, the worst tax season in 35 years, Timbuk 3 The Future's So Bright, we grew our tax business|Comments Off

Want New Clients? Ask Your Existing Ones!

re·fer·ral

rəˈfərəl/

noun

an act of referring someone or something for consultation, review, or further action.

There are certain professions (e.g. realtors, attorneys, tax professionals, etc.) who source a majority of their “new” business from referrals. However, ALL businesses can benefit by asking for them. The key is to make sure you have a program in place to do so and that you actively utilize it. This post will tell you how to create such a program and set it up so that the probability of you reaping the rewards are maximized.

Create your customer database. The first place to start when creating a referral program is your database or “house list.” Don’t have one? Well, this is where you start! Create a list of anyone and everyone that you have ever done business with. “But I’ve been in business for 10 years. Do you seriously expect me to go back and find everyone who’s ever paid me during that time?” Well, you certainly don’t have to, but it’s to your advantage to so. It’s often said that it cost 5-7 times more to obtain a new customer than it does to keep (or sell to again) an existing one. Thus, the more existing clients you can identify, the better your referral program will work.

Mine your customer database. The next step is to review your database and identify those who match your IDEAL profile. Who are those clients?

The ones who you like to work with.
The ones who you have a good relationship with.
Those who pay their bills in a reasonable amount of time.
Those whom you have helped with a particular challenge.
Those whom you saved money.

The list goes on and on. But essentially what you are looking for are those clients whom you would like more of in your portfolio AND those whom are most likely to recommend you. Those who you have helped in the past are already predisposed to mentioning you to others. But why not just ask all the clients whom you’ve worked with? Well, clients tend to refer those who are similar to themselves. So if you want more problem clients, then ask the ones you hate working with to send you business and you’ll wind up with more of the same!

Create a touch program. Now that you have your list, you need to stay in regular contact with them. You’ll understand why in the next step. You can do this in a number of ways, but essentially you want to create what is referred to as a touch program. A touch is considered an interaction and can materialize in many forms. These include monthly newsletters, email blast, blog posts, holiday cards, birthday/anniversary cards, client promo gifts, client appreciation events, phone calls, emails, etc. The exact mechanism that you use to “touch” your customer is pretty irrelevant. The key is that you simply do it. How often should you contact your customers? The numbers vary depending on who you talk to but most agree that monthly is a minimum.

Maintain top of mind awareness. The real point of the touch program is so that you create Top Of Mind Awareness (TOMA). What exactly is this? Well, it’s when you are the first person (i.e. top of mind) your client thinks of when either they OR a friend have a problem that needs to be solved. You want them to call you first, not the competitor. You want them to tell their friends about you, not that store down the street. Chances are, if they hear from you every month, you will be the one that they think of. But what if they throw your monthly communication straight into the trash? Doesn’t matter. The fact of the matter is that they knew that it came from YOU before they threw it into the trash!

Ask for the referral. Okay, so now that you’ve done all of the above, it’s time to do the following:

Ask your client for referrals. Yes, ASK them. The number one reason sales folks fail to get business is because they never explicitly ask for the sale. The same can be said for referrals. When you complete a sale or a job, ask your client if there is anyone else they know whom you could help. If the client seems squeamish, hand them a stack of business cards and tell them to just pass them on if they think of someone. If they are willing to give you a name and phone number, that’s even better!
Have a letter made describing how to refer to you. If you can tell your client who your ideal client is, how to spot them and how to send them to you, it makes the process run that much smoother. We no longer use this exact document, but it is one that we would give our clients who visited our office and picked up hard copies of their returns.
Incentivize your clients to refer you. Some clients will be motivated by monetary compensation. Some will be happy if you mention their referral action in your newsletter. Some don’t want anything and just want to make sure their friends are sent to someone they trust and know will do good work. But no matter how you incentivize the act of making a referral, make sure that you have a way to say “thank you” to your clients.

If you need help with a business matter (like how to get more clients), why not give us a call for your FREE 30 minute business brainstorming bout. This session (valued at $250) is yours for FREE if you mention this post (or BBB). In it, we’ll evaluate one challenge facing your business and give you an actionable way to address it. To schedule your BBB, simply give us a call at 773-239-8850 or shoot us an email via the link in the footer of this page.

By Administrator|2015-04-19T17:34:29-06:00April 19, 2015|Categories: Business Talk|Tags: accountant referral program, attorney referral program, client referral form template, client referral letter, client referral program, client referral solutions, client touch program, how to ask for referrals, how to create a referral program, how to get your clients to recommend you, realtor referral program, reward clients for referrals, TOMA, top of mind awareness, Want New Clients?, who to get referrals|Comments Off

Worst Tax Season In 35 Years!

We’re usually pretty positive and “Pollyannaish” when it comes to things around here. But this tax season is REALLY different. Things are taking much longer than they should, clients are delaying, there aren’t enough hours in the day; the list is endless. The last time things were this bad was back in 1986 when Congress enacted the Passive Activity Loss rules. But why is 2015 so bad? Take a look below:

The Budget. Congress has shrunk the IRS budget over the past five years, while at the same time requiring the agency to administer even more complex laws. The IRS topline budget for 2015 is about 10% less than it was in 2010. But the real drop is actually steeper since the 10% doesn’t account for cost increases that have occurred in the past five years. During roughly the same period, the number of IRS personnel has fallen by at least 8%. Furthermore, the amount of money the agency has for staff training has dropped by more than 85%.

What this means is that the average taxpayer has to 1) wait almost an hour to speak to a representative, 2) greater than 50% of taxpayers that call the IRS wind up hanging up without getting an answer and 3) even us practitioners can’t get our work/cases solved in the same amount of time with the agency. Frustration on all fronts would probably be an understatement.

More Work and Complexity. This tax season is the first where the IRS has to administer the premium tax credits and individual mandates under the Affordable Care Act. Firsts are never perfect, of course, so it should be expected that this will be long, painful and not easy for most taxpayers or professionals. Need help figuring it out? See the first pain point above!

Tangible Property Repair Regulations. New and effective for 2014, these regulations changed how we evaluate repair costs as they relate to tangible property. If you file a Schedule C, E or F, you have the potential to experience what may be the single biggest pain in the arse of the entire 2015 tax season.

While the IRS gave small businesses a reprieve from having to fill out Form 3115, Change in Accounting Method, for those with many years’ worth of assets on their books (e.g. landlords), you may still want to fill one out. This is because 1) you will forego audit protection if you don’t submit it with your return and 2) you may need to calculate a Section 481 adjustment if things are still being depreciated and shouldn’t.

The best part of Form 3115? It has to be sent in via paper to Ogden Utah prior to you filing your return and then again when you electronically file it. With that being said, the average tax preparer is probably completing more Forms 3115 this year than in all of their career.

Needless to say, all of the above hasn’t made for an “easy” tax season to say the least. So if you know someone in the tax industry, make sure you give them a hug or tell them that it will be alright. Many of us could use the love!

By Administrator|2020-09-14T13:27:27-06:00March 23, 2015|Categories: General Ramblings|Tags: 1986 Passive Activity Loss Rules, 2015 Tax Season challenging, 2015 tax season is painful, Complicated Tax Code Contributes to Challenging Tax Season, Form 3115, IRC Section 469, Rev. Proc. 2015-20, Tangible Property Repair Regulations, Why 2015 tax season is so challenging, Worst tax season ever, Worst Tax Season In 35 Years|Comments Off

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