Is Your Business Screaming For An IRS Audit?

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As tax time nears you should be aware of the trends that are clear – the IRS is targeting more small businesses for audits and they’re denying deductions left and right.  Sole proprietorships are especially at risk. I have confirmed with my CPA networks that there is a huge risk to continue to operate as a sole proprietorship. Our CPA contacts are also recommending that you should get off schedule C in 2014 ASAP.

Here are just a few of the audit trigger red flags that IRS agents are watching for:

  • claiming 100% business use for your vehicle (this will almost certainly invite an audit)
  • large deductions that seem out of proportion for the business (this is what their computer systems look for)
  • any schedule C deductions for business travel, meals or entertainment (you are able to take these deductions but if excessive and if audited not documented properly you are toast)
  • hobby losses claimed as business expenses (you best be able to prove you were a real business)
  • regular wage income combined with large schedule C losses (you must prove you had a real business, which we teach you those requirements on the training below)
  • any documentation that doesn’t meet their strict substantiation requirements (this is NOT your CPAs responsibility, it is yours)

 The vehicle deduction is a very common slipup. The IRS knows that 100% business use is extremely rare, especially when there’s no other vehicle for personal use. Activities like photography, dog breeding, car racing or other sports or outdoor activities are tough to substantiate as business expenses because they look like hobbies to the IRS.

Could your business be sending an “audit me!” message to the IRS? The surest way to protect yourself is to establish a complete foundation for your business, starting with a properly formed separate legal entity. Do you know the 5 essential elements of a complete business foundation? Take advantage of this brief, free training to find out where you may be vulnerable to the IRS!

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NEW TrainingThe 5 Essential Components for a Complete Business Foundation: 
http://budurl.com/LaunchWithConfidence

Pick your time and date to be part of this special training.

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Watch this FIRST, Before Forming an LLC or Corporation

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If you’re looking to form an LLC or corporation you must watch my BRAND NEW training to help you learn the 5 Essential Components of a Complete Business Foundation.

Why is this so important? Here’s what my friend, Attorney Lee Philips, said about businesses that rely on online articles of incorporation as their only form of legal protection:

“We slice through those in 15 minutes in court and go after the individual every time. That piece of paper provides NO protection!”

This is a direct quote from a legal expert who has served as counselor before the Supreme Court and tried many cases representing plaintiffs. His courtroom experience has shown him that most business owners have no clue what complete formation entails.

Over the last 16 years my company, NCP, has helped thousands of entrepreneurs launch with confidence. Our COMPLETE FORMATION PROCESS ensured that they were starting out with more than just a flimsy piece of paper that provided no protection.

Lee’s comments inspired me to take our training to the next level – we want every NCP client to be CLEAR beyond all doubt what it takes to form a complete and secure business foundation. The result is my  BRAND NEW training called, the 5 Essential Components for a Complete Business Foundationand now you get access to it for FREE (for a limited time).

 

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The Massive Benefits of having a U.S. Company

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If you are based outside the United States, whether in Canada, the UK, Europe, Asia, Australia, New Zealand or South America, there are many compelling reasons to establish a U.S. corporation or LLC (Limited Liability Company). Since 1997, Nevada Corporate Planners (NCP) has helped hundreds of business owners around the globe start their U.S. business and take advantage of this extraordinary opportunity to open up lucrative new income streams.

Here are just a few of the powerful reasons to form a U.S. company:

1. HOW TO BUILD TRUST WITH U.S. CONSUMERS ONLINE

Online spending by U.S. consumers is at $183.9 billion and growing! One of the best ways to capture your share of this massive market is to have a U.S. company with a U.S. office. You might be surprised to learn how affordable and simple it can be to establish a U.S. presence that gives your business instant credibility. In most cases, U.S. consumers prefer not to risk dealing with customer service, return, refund or liability concerns in another country. With today’s search technology, it’s easy for them to click on the next listing and choose a U.S. supplier for similar products or services. As a result, you could be losing 20-40% of your sales every year, simply because your website doesn’t list a U.S. location!

2. HOW TO ESTABLISH CREDIBILITY WITH U.S. BUSINESS PARTNERS

In addition to the image benefits of having offices outside your home country, there are many practical advantages to establishing an international presence in the U.S. Most U.S. businesses prefer working with other U.S. companies to minimize tax and legal complications. Having a U.S. presence removes these barriers and can open up profitable new opportunities for joint ventures and strategic alliances. Potential partners are scanning your website right now to see if you have an office in the U.S. You could be losing revenue because of a perception issue that can be easily and inexpensively fixed!

3. HOW TO PROTECT YOUR ASSETS FROM DEVASTATING LAWSUITS

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Are You Looking to Build Business Credit? Here are the Most Important Business Credit FAQs

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Why do banks look to the business credit bureaus like Dun & Bradstreet®, Corporate Experian® and Corporate Equifax® as part of their business lending process?

The main reason lenders use these rating and reporting services this is to minimize risk. Known informally as “The Big Three,” they have built a reputation for offering the most accurate and up to date information available on business credit history. Lenders pay a fee to receive detailed reports on a company’s payment history with other lenders, types of business credit they’ve used in the past and information on current loans. Business credit profiles are considered an important indicator of a company’s financial health and how likely they are to be able to pay back a business loan in the future.

Why is it important to build a business credit profile for my company with Dun & Bradstreet,® Corporate Experian® and Corporate Equifax® (the big three)?

Building a strong business credit profile is very important, not only to secure vendor lines of credit, banking lines of credit and other types of business loans, but also to get the most favorable terms and interest rates. Even if you’re not seeking financing at this time, it’s important to know that potential alliance partners and customers may also pull profiles on companies they’re evaluating for new business. If your company has a weak profile (or none at all) you may be losing out on other opportunities without even realizing it. You won’t know these companies are looking at your profile unless you subscribe to a paid business credit monitoring service, which can be a good idea for certain businesses.

What is the difference between vendor credit and cash lines of credit?

Both are very important to your business. You probably already work with several vendors for day to day materials and supplies but odds are that most of them are not reporting your good payment history to the big three. In fact, over 90% of vendors do not report and many businesses are shocked to learn that their business credit score and rating is either weak or nonexistent. Building lines of credit with vendors that report to the big three will help you establish a strong business credit profile in addition to managing your cash flow and using the vendor’s credit to help grow your business.

Items like payroll and marketing require cash, not vendor credit.  Cash lines of credit provide funds that can be used immediately for any investment or expense your business requires. Some examples of cash lines of credit include loans, cash advances, merchant account advances, accounts receivable financing, equipment financing or retirement plan financing. Fast Business Credit offers a $50,000 guarantee. The key question you will want to ask is how much of that will apply to vendor lines of credit and how much will be cash lines for your business. The answer depends on certain business and personal criteria. Yes, your personal credit history does come into play, especially with business lines of credit. Personal guarantees are almost always required for most cash lines of credit.

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Are Your Business and Assets Properly Protected?

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Probably not, but let’s check and see. Let me ask you these questions:

1. If you have an LLC  did you have it managed by managers or by members? Do you know the difference?

2. Does your LLC have the correct operating agreement? If the LLC was taxed as an S or C corporation is there language that covers that in the operating agreement?

3. When you formed an LLC did you pay attention to how it will be taxed(there are four options)? Did you proactively make a choice or check some boxes on the SS4 application or worse you let someone else do it for you and this was never addressed?

4. Do you know when a single member LLC disregarded for tax purposes makes sense to protect assets and when it does not make sense for running a business?

5. Are you familiar with the “charging order” and recent cases and it related to a single or multimember  LLC?

6. Do you know why your professionals all want you to incorporate in your home state and why you get different answers from them consistently?

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