If You Choose Not to Decide, You Still Have Made a Choice

You may remember these lyrics from a 1990′s song if you’re old enough. It was (and still is) a great tune, but I have to say that this message is still haunting some entrepreneurs and business owners today.

You see, you can be neglecting your business if you are deferring the decision-making process. Let’s not beat around the bush…I’ve seen the results of this neglect over the years in my role as a business partner. Not pulling the trigger on filling a key position in the organization; deciding not to put up a website because your customers are still calling; deciding to decide later. Sure, there are always reasons to defer decisions, but can you afford not to act?

Your competition is out there every day making decisions…some of which may leave you eating their dust. Taking risk is part of leading your business – decision-making leads to change, and change can be risky. But risk often leads to rewards. And without the rewards that come to a business, stagnation and decreased profitability can occur. Can your business afford that in this economic environment?

If not, I suggest you choose to make the tough decision that you’ve been contemplating for these past months. Don’t go it alone though – gather your trusted advisors…your operations manager, controller, attorney, CPA…vet your idea and craft your plan. Then make a choice to implement your decision…choose free will.

Is Doing More With Less Actually Detrimental?

Over the past 24 months, doing more with less has become a necessity.  This is true not only in our home lives (discerning wants vs. needs, especially with our kids), but also with our companies.  The economic downturn caused us to re-evaluate our staffing levels and to pare down our overhead.  And, more often than not, the workload of those departed employees didn’t disappear.  Rightly so, owners and managers have shifted those duties on to those wonderfuly talented and highly loyal employees who remain.  Today, those folks are wearing a myriad of hats – customer service, HR, payroll, IT, accounting – among others.  They cover a lot of ground for the company…but, how well are they serving our companies?

Truth is, probably not very well.  Sure, they are juggling 10 things in the air at any one time…but if one falls to the ground, will it bounce or will it shatter?  If it bounces, it likely will have little impact on the company and recovery is easy.  However if it shatters, what will the damage look like and what exposure will the company have?

In the world of accounting and finance, there are plenty of potential exposures and they can not only be a pain in the checkbook, but also get your company in hot water.  Think about missed filing dates -> penalties + interest.  Think about incorrect reports provided to the bank -> lost credibility, damaged relations, more stringent reviews.  Some of these can have serious long-term detrimental impacts to your company.

Best advice is to get the appropriate oversight in place – hire a part-time CFO or controller to ensure that all of your reporting is reviewed, correct, and submitted on time.  This will allow you, the business owner, to sleep better at night.

Your Vote Counts!

Ever wonder when it was the right time to let your voice be heard? Well, right now is one of those times for small business owners. Congress is in the midst of wrangling over how to “fix” the new requirements for Form 1099 that were included in the Healthcare Reform Law. Options range from a full repeal of these requirements (with other consequences) to a proposal to provide certain exemptions to lessen the impact.

The Small Business and Entrepreneurship Council has started a petition and your vote counts! Click here to find out more about what simple action you can take to get your voice heard.

Congress Can’t Get Along – Are You Impacted?

Congress just can’t get along…so what’s new? It’s just that they agree that the new requirements for issuing 1099′s is untenable for business, but they can’t figure out how to work together to get it passed. On Friday, the House rejected a bill that would have repealed the provision because the two parties disagreed on how the lost revenue was to be made up.

According to The Wall Street Journal, this new requirement would hit about 38 million businesses, charities and tax-exempt organizations. Another consequence is that the IRS would also be strained by the increase in paperwork required for compliance with this new regulation.

Hopefully cooler heads will prevail and these politicians will ease the compliance burden on businesses. More updates to follow…maybe when they start working toward setting the politics aside.

In the meantime, keep requesting those W-9′s!

How to Handle The New 1099 Requirements

In the last post, I told you about the upcoming change that will impact your company related to Form 1099 beginning in 2012.  It seems like a long way off – those 1099′s won’t have to be issued until January 2013.  However, you’ll have to have systems in place beginning January 2012, so that your company is gathering the proper data throughout the year to support that new reporting requirement. 

Even though many of the compliance details have not been defined, here are some things to consider doing now:

1. Require W-9′s from all NEW vendors.  By collecting W-9′s from your vendors as you set them up in your system, you will save on the work that will need to be done later.
2. Contact existing vendors to request their W-9.  Run a report of the spend by vendor for 2009 to determine which vendors exceed the $600 threshhold.  Send a form letter to those vendors requesting their W-9.

Taking these steps now will prevent the crushing workload that this requirement can bring to your company.  Remember, these are the things you can and should do now.  There may be other tasks that will be required once the regulations are finalized and released by the IRS.

Best to start now!

What Tax Change is Hidden for You in Health Care Reform?

Just when you thought Health Care Reform was all about Health Care…

Get ready for a change that will ROCK your accounting department. Remember that year-end ritual of trying to figure out which of your vendors to send 1099s to?

Good news – it just got simplified.
Bad news – the workload has increased exponentially.

Beginning in 2012 (don’t get too excited, you only have 18 months to prepare), all companies will have to issue IRS Form 1099 to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

Currently, 1099 tax forms are used document income for individual workers other than wages and salaries.  Freelancers receive them each year from their clients, and businesses issue them to the independent contractors they hire.

Under the new rules, if a freelance designer buys a new iMac from the Apple Store, they’ll have to send Apple a 1099.  A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.

Bottom line – it’s all about trying to capture unreported income that can be taxed (remember that the decline in the economy has hit the government’s coffers, too).

Stay tuned…the IRS will issue regulations on the new law sometime next year, at which time more details will be known on the compliance end.  Meantime, I’ll have some suggestions as to what actions you can take now to start preparing.

Want to Get Paid Faster?

Picture this – you have just landed the BIG one for your company…mega-volume (or a big project) with a mega-retailer (or huge corporate client)!  No time to think…just get the ball rolling with the customer/client – git ‘er done!

I hear time and again from business owners lamenting how much jumping through hoops they did to land the business.  However, when I ask them how much effort they made to understand the payment terms and paperwork process of these large companies…well, you can hear the crickets chirping.

Many times, you’ll need to be EDI compliant.  If you’re not there, you’ll need some IT help.  But there is one simple and effective step you can take to avoid the angst of AR follow-up…provide a copy of your signed W-9 with your first invoice to the customer.  Remember, these are companies with huge and decentralized (and sometimes outsourced) functions – including Accounts Payable.  They don’t know your company and probably don’t care if you get paid according to terms.  They are processing paperwork, period.  If your company is not set up in their vendor master, they cannot pay you.  Typically, they cannot set your company up in their vendor master unless they have a W-9 (this is an AP department policy that you are not aware of).

So, the next time you do business with a new customer, make your own policy to include a copy of your W-9 with the first invoice.  Your cash flow will thank you for it, along with your AR clerk!

One Giant Leap!

Okay, okay…I’ve held out long enough! 

Folks have finally convinced me that I should blog because I have relevant and helpful information to share with business owners – I agree with them.  But it is a leap of faith.

Who will want to read my blog?  Well, I guess time will tell.  I’m sure the people who started blogging a few years ago were thinking the same thing…now there are millions of folks blogging about any and every topic imaginable!

No need to worry, however, because I will be focused on the topics that are relevant to small and mid-sized businesses.  I’m looking forward to it – thanks for joining me for the ride…or should I say leap?

All the best,

Patty