A Business Owner’s Letter to Santa Clause by Cliff Ennico

Ciff Ennico HeadshotDear Santa:

Well, another year has gone by.  My business is surviving, by a thread, but I’m still facing lots of challenges.  You know I’ve been really, really good this year (maybe that’s the problem with my business – I’m too darned good for my own good and should borrow more from the “ruthless entrepreneur” playbook, but never mind).

So here’s my wish list for the 15 things I would really, really love to see under the tree this Christmas morning. (Yes, I know there are 12 days of Christmas but that song really wears on you after the first 27 listenings).

  1. A simplified sales tax system that will protect “brick and mortar” retail stores (by requiring online retailers to pay tax on sales made to their customers), and increase state sales tax revenues (by requiring sellers to collect tax on sales made to anyone in the United States, not just in their states), but keeping it simple for everyone (by requiring sellers to collect tax under the laws of their own states, and remit the tax to their own state tax authority, not the states where their customers are located).
  2. A simple, easy to apply test that would enable me to figure out which of my workers should be treated as “employees”, and which as “independent contractors”, for income tax purposes, without having to involve my lawyer, my accountant and a “Magic Eight Ball” (ask8ball.net). (By the way, a belated “thank you” for giving me that last year — it’s really helped me figure out Obamacare.)
  3. A law prohibiting large company “bullies” for suing little people like me for infringing their trademarked brands when the product or service I’m selling has nothing whatsoever to do with the industry they are in and there’s no possibility anyone will confuse the two of us with each other.
  4. Simple, easy to follow instructions telling me when I can, and cannot, use content from someone else’s book, music recording or website in my marketing and promotional materials without getting the copyright owner’s permission.
  5. Health insurance for me – not my employees – that I can deduct.
  6. Clarification of how “benefit corporations” – a new legal entity that combines for-profit and nonprofit benefits – will be taxed by the IRS, so that well-intentioned folks can set up their businesses this way.
  7. A generation of young workers with a strong work ethic who don’t expect life to hand them everything the way their parents did.
  8. Immigration laws that allow only “the right people” in – people (whatever they look like, wherever they come from, whichever direction they face when they pray) who are willing to work hard, make sacrifices for their families, live clean and moral lives, and invest in their own education and personal development so they will never, ever become dependent on other people, or want to blow them to smithereens. Oh, and it would also be great if they could speak English well enough that my customers can understand them.
  9. Customers who recognize that the excellent service and personal assistance they receive from small businesses requires that they pay a slightly higher price than the online “deep discounters”, and who are willing to pay that premium.
  10. Federal, state and local government officials who have actually worked in a small business at some point, understand our concerns, and know how to balance their budgets the way we have to do ours.
  11. Changes to the tax laws allowing startups to issue shares to employees, directors and others in exchange for “sweat equity” services without creating massive tax headaches for the recipients.
  12. Lenders that are willing to take our cash flows, characters and future prospects into account when deciding whether or not to lend us money, not just our credit scores.
  13. Federal, state and local government officials who recognize that every time they increase taxes or otherwise make it more expensive for me to run my business, those increased costs come dollar for dollar out of my own pocket, and that I can’t always raise my prices to cover them.
  14. A national school system that integrates business and financial skills into the educational curriculum from kindergarten through grade 12, so that kids’ understanding of business and profit-making activity isn’t limited solely to the misinformation they get from disgruntled anti-capitalist teachers or the villains in animated Hollywood movies.
  15. A law making website owners at least partially responsible for monitoring the communications that take place on their sites and making sure they do not lead to criminal activity or terrorism.

Of course, anyone who believes that any of these wishes will ever be fulfilled in our lifetimes probably . . . also believes in Santa Claus.

A very Merry Christmas, Happy Chanukah, Joyous Kwanzaa, Festive Winter Solstice and/or Non-Faith-Based Celebration of the Calendar Year-End to all my readers.  (If you want someone to wish you Happy Holidays, read someone else . . .)

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and host of the PBS television series ‘Money Hunt’.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2015 CLIFFORD R. ENNICO.  DISTRIBUTED BY CREATORS SYNDICATE, INC.

Ebay may soon come to a mall near you

Ebay_Store

It’s no small secret to current eBay sellers that the online marketplace is trying to reignite its growth in the ecommerce world. After all, for the last couple of years eBay seemed to be taking a sit and wait approach as policies kept changing, causing many longtime sellers to make the exodus over to Amazon where sales have been running strong and (for the most part) sellers have felt that they were being treated better.

Instead of trying to lure these sellers back with the promise of a new an improved eBay, however, the online marketplace has decided to turn its attention to attracting new sellers. This time, the were doing it by temporarily opening what they are calling “outposts” in Westfield Malls around the United States. These outposts are designed to entice new sellers into bringing holiday gifts they don’t want and listing them online.

While this may sound a lot like eBay’s valet service, in this venture, would-be sellers will list the items online themselves, allowing them to learn just how easy the listing process really is. Of course, if they don’t want to actually go through the learning process, they can still use eBay’s valet service to list the items for them. EBay will even waive the valet fees, which generally run from around 20 to 40 percent per item.

Before you encourage your non-selling friends to run out and head to a mall to take advantage of the offer, keep in mind that the eBay stores will only be around for a couple of days after Christmas, more specifically from December 26th to December 27th.

In other news, eBay is also in the process of playing around with a faster shipping membership for German buyers. This process supposedly replicates Amazon’s “Prime” membership service and lines up with eBay’s desire to move further away from the old “auction” style listings and more towards fixed price. In fact, a recent report states that approximately 84 percent of eBay’s total sales volume are based on the sell of fixed price items. The company hasn’t announced there will be no more auctions, but one can’t help but wonder if that might one day be the case.

Do you think the temporary outposts will encourage more people to try eBay? Leave a comment below.

How to outline goals for success in the new year

Happy new year!

I don’t know about you, but as the year draws to an end, I usually take a step back and reflect on how the year went, or rather, what went right and what went wrong and more importantly — how I can do better. Once I’ve evaluated the year and took a hard look at this, I can then take this information and outline my business goals (and personal goals!) for the new year.

Keep in mind that outlining your goals is a little different than actually setting your goals. During the outlining phase, you are determining what you need to work on as a way to improve your business. Once you have this figured out, then you can use the information to actually set your goals.

Below are some questions to ask that can help you outline the areas that you may need to work on.

What areas of my business need organizational attention?

Look for areas of your business that may be lacking in organization. For some, this may be their inventory or shipping stations. For others, it may be their bookkeeping or their actual office space. Once these areas have been identified, you can then formulate goals that will help you take control of these problem areas in your business.

How much do I need to make in the coming year?

This is perhaps the biggest goal you will be outlining for your business and if often one of the hardest. To help with the process, consider the different types of expenses you have both in your business and in your personal life. Look at your previous year’s sales numbers as a base for determining the amount of money you need, then use a percentage of that to determine how much you more you actually want to make. Some sellers try to up their sales by 20 or 30 percent each year, but the ultimate amount you need to make is really up to you and is based on what you are making now and how much you actually want/need to make.

How can I improve my inventory?

If you have been selling for any length of time, you know that the way to have a successful online business is to constantly expand and update your inventory. Take a look at what items in your store have worked and what products didn’t. Are there new niches you can sell that relate to the products you already have on hand? Are there products that you need to move out of your store by either marking them down or donating them so that you can make room for new merchandise?

Once you have completed your outline by answering these questions, you can then move on to setting your new goals for the upcoming year.

What are your goals for 2016? Leave a comment below.

How to put a little extra jingle in your pocket with expedited shipping

Christmas presents

Can you believe it’s only fifteen days until Christmas? As an eBay seller, this means that you have made it through both the pre and peak phases of this year’s holiday shopping season. You may be letting out a big sigh of relief right about now, but it’s not time to be resting on your laurels. There are still two phases left for holiday shopping. The “last minute” phase, which runs from about the 15th to the 24th and the after Christmas phase, which runs from December 26th to about the second week of January.

Today, let’s talk about the “last minute” phase and how you can use it to make a little extra cash for the holiday season.

Although many buyers shop early to get the best deals, there will always be those who haven’t quite gotten into that holiday spirit yet and generally don’t even start thinking about buying for the holidays until the last possible moment. Here’s how you can cash in on those last minute buyers.

Offer expedited and/or overnight shipping. While last minute buyers are still on the lookout for those last-minute deals, these types of buyers aren’t as worried about getting the lowest price, they just need to make sure that what they buy will arrive before the big day. Offer expedited and/or overnight shipping to help ensure that their items make it there by Christmas Day.

Promote that you offer expedited shipping. Use social media to let buyers know that you have what they need and you are ready to ship it quickly. You may also find it beneficial to offer promotional shipping as a way to get the buyer to spend more in your store. As an example, you could offer free expedited shipping to buyers who purchase at least $100 in your store. You can find out more about running these types of promotions on eBay by visiting here.

Keep an eye on carrier deadlines. Unfortunately, all good things must come to an end. At some point, there will be a cutoff point for the carrier you use and any items shipped after that cutoff point are not going to make it before the big day unless Santa stops and picks it up from you himself. Knowing these dates and letting buyers know them can make the difference between a merry Christmas and having to deal with a disgruntled buyer who doesn’t understand why their items didn’t arrive even though they paid for the expedited shipping.

Do you offer expedited shipping for last minute buyers? Leave a comment below.

Thinking About Crowdfunding? Watch the Fine Print by Cliff Ennico

cliffMake no mistake about it.  If you own a small business or startup company, 2016 is going to be the year of crowdfunding.

For several years now, it has been possible to raise money online for “projects” (such as a new invention, a documentary film, or a nonprofit campaign) using websites such as KickStarter and IndieGoGo.  Basically, you make a pitch for money, take whatever you get, and give your contributors goods or services (or maybe just a “thank you”) in return.  Nobody guarantees you will get a dime, and (if you’re smart) you don’t guarantee contributors any sort of return on their investment.

Starting May 16 of next year, it will be possible for the first time to raise capital for your company via crowdfunding, and give contributors stock in your company in return for their contribution.  You will not be able to raise more than $1 million without jumping through some pretty expensive hoops, you will have to make your crowdfunded offering via a “funding portal” registered with the SEC to make sure everything goes fairly and smoothly, and you will have to comply with about 600 pages of government regulations, but you will be able to raise money from strangers on the Internet.

There will no doubt be tons of books published next year to help companies through the complicated crowdfunding process (including – full disclosure – one by yours truly), and that a number of financially-savvy entrepreneurs will set up consulting firms to help startups navigate the process for a fee or commission

But a number of companies – including seedinvest.com, circleup.com and angellist.co – are getting a head start on the crowdfunded business by helping companies with so-called “506(c) offerings”.  These offerings, which the SEC authorized back in 2013, allow companies to raise funds using “methods of general solicitation and general advertising” as long as each and every investor is an “accredited investor” as defined by the SEC – someone either rich enough or sophisticated enough not to need the protection of the federal and state securities laws.

The main service these companies provide is to ensure that each investor meets the SEC qualifications – as I’ve written in previous columns if you make one mistake here it could cost you both your company and your life’s savings.

If you do plan on doing a 506(c) crowdfunded offering before the new rules kick in next May, here are some things you need to look for in the website’s online contract form.

Non-Exclusivity.  Never, ever, give a crowdfunding website the exclusive right to manage your offering.  This is a new and untested process, and it may be years before we learn the “right” way to put together successful crowdfunded offerings.  You may sign up with Website # 1 only to discover later than Website # 2 has a better mousetrap.  If that happens you should have the right to work with both websites, and pay each of them a commission based only on the amounts they raise for you.

Also, make sure you can terminate the contract “for any reason” upon reasonable notice to the website (30 days is customary).

Fee Calculation.  Crowdfunding websites want their fee to be based not just on investments they raise for you, but on the entire amount you raise both offline and online.  That’s more fair than it sounds, as investors who learn about you through the website could do business with you directly and circumvent the obligation to pay fees to the website (I’m not sure how the site would find out about that, but if they did you would be in trouble).  Their fee should not, however, include money you raise prior to signing the crowdfunding contract or from people with whom you have a pre-existing relationship (you will need to identify these before signing the contract).

Ownership of Intellectual Property.  You will be responsible for the accuracy of all documents, financial statements and other material you post on the site.  The website should have the right to use this material as needed to help you with your offering, but watch out if the site asks you to “assign” your copyright to them – this means they own the rights to your content and can use it for other purposes (for example, to help other companies with their offerings).  All they should get is a “non-exclusive, perpetual license” to use your material only to help you with your offering and comply with government regulations.

Post-Offering Paperwork.  Some websites will want you to provide financial information to them for one to two years after your offering is completed.  You should not have to do this, however, if the site failed to generate at least one investment for you.

Government Filings.  Some offerings will require you to file documents with the SEC and state regulators.  Will the crowdfunding company take care of those?  If not, expect to spend anywhere from $1,000 to $10,000 for a lawyer to prepare them.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and host of the PBS television series ‘Money Hunt’.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2015 CLIFFORD R. ENNICO.  DISTRIBUTED BY CREATORS SYNDICATE, INC.

What you should know about estate sales

antique shop

Although some areas are the nation seemed to be blessed with constant mild temperatures that allow for yard sales year round, the cooler temperatures typically put an end to using these types of sales as a way to get inventory around the rest of the country. Cold weather doesn’t generally put a stop to estate sales though and for those willing to take a chance, can be a great alternate source of inventory for sellers.

Unfortunately, a lot of sellers are hesitant to attend estate sales, either because they fear they will overpay for items or just the uncertainty of what all is involved. Some sellers simply avoid them too because they feel the prices will make the items they buy too high to resale online for a profit.

While there is some merit to these concerns, this is not always the case. An estate sale can actually be a great place to pick up some higher quality items for great prices — if you do a little prep work first.

Research before you go. Many estate sales post information online prior to the big day and often include photos of the items that are offered for sale. Keep in mind that prices are often not listed when you find them online, however, but viewing the photos for the items, can make it easier to research before you go.

Decide when to attend. Since most estate sales go on for a period of several days, it is sometimes hard to know exactly when to attend. Come early and you’ll get the best finds. Attend later and the items you may want may no longer be there, but you can often get the best deals for what is left. If time permits, some sellers find it advantageous to visit estate sales on the first day to purchase items they are willing to pay top dollar for and then return on consecutive days to see if they can get better deals on the items that are left that they may still want.

Don’t be afraid to haggle. It may be a little harder to get a lower price from someone who is selling off their beloved family member’s items, but it doesn’t hurt to ask. When an estate sale is run by an actual company, you may find that some are more than willing to negotiate and some won’t budge on the price of the items until the last day (if at all). Keep in mind that it is actually more advantageous to ask for a lower price if you are buying multiple items instead of just one or two.

Inspect each item carefully. There are no refunds offered at estate sales, so it pays to take a little time to check over each item before you purchase it. Don’t be afraid to bring a magnifying glass to help identify trademarks or to look for hairline cracks. Hint: You can also use the photo option on your phone as a makeshift magnifying glass. Simply hold the camera over the item and swipe the image to make it larger. In addition to a magnifying glass, some sellers find it helpful to bring flashlights and even a mirror to enable them to check underneath furniture items or other types of heavy items to look for markings or at the craftsmanship of a piece.

Finally, don’t get discouraged if you don’t leave with much during the first few estate sales you attend. Just as you had to get use to going to yard sales, there is a bit of a learning curve. Some sellers find that attending a couple of yard sales without planning to buy anything actually helps them learn to navigate this new way of buying without all the pressure. Once you get become more familiar with the process, you can then dive right in and start buying.

Have you attended an estate sale? Leave a comment about your experience below.

Amazon Unveils Newly Designed Drone for Prime Air

drone
As you may recall, about two years ago Jeff Bezos, the CEO of Amazon chose Cyber Monday to announce to the world that the online marketplace would soon be using unmanned drones to deliver packages to buyers. Although it was seen by some as either a joke or more than a little “out in left field”, Bezos assured us that the program, known as “Amazon Prime Air,” would revolutionize the shipping industry allowing packages to be delivered to buyers in as little as 30 minutes.

Unfortunately, the United States Federal Aviation Authority (FAA) has (so far) kept Amazon from launching its fleet of drones, but that doesn’t mean that the dream is over. Instead, Amazon is still moving full steam ahead with its drone program as it waits for the FAA to catch up with this new technology trend.

In fact, Amazon once again chose Cyber Monday (November 30) to release new information about its drone program. This time, showing a video of a new and improved drone that looks more like an airplane, or perhaps, depending on your perspective, a glider. Yellow, blue and white, the new drone can travel up to 55 mph and out to a distance of around 15 miles. It still takes off vertically (think quadcopter), but has a rear propeller that allows the drone to be flown more like an airplane.

Although quite a few commercials have made fun of the previous drone’s dropping of packages to the ground, the new model reportedly actually touches down at a landing area pre-chosen by the buyer. The drone will also immediately notify the buyer of its arrival to the area so that packages aren’t wrongfully taken from the touchdown zone without the buyer’s knowledge.

While the whole plan may still sound a little “Back to the Future-ish” and there are many more hoops that Amazon will have to jump through, if you think that it’s still a publicity stunt or a far-off dream for the online marketplace, you might want to think again. Drones are a hot Christmas toy for presents this year and you can bet that as people become more accepting of the idea of drone deliveries, the FAA will work out a plan that will be amicable for both parties allowing a new revolution in shipping to begin.

What do you think about Amazon’s new drone design? Leave a message below.

Year-end Tax Planning for 2015 by Cliff Ennico

cliff ennicoFor most people, the end of December is called “the holidays.”  For lawyers, accountants and other financial types, however, it’s called “year-end.”

While most of us celebrate with turkey, egg nog, ugly sweaters and football (often all at once), these folks are working late hours trying to save their clients as much money in taxes as possible before the ball drops in Times Square.

Thanks to the continuing political gridlock in Washington, 2015 wasn’t a big year for major changes in the tax law.  Given the Presidential election next November, odds are 2016 won’t be a big year for tax law changes either.  After the election, though, look for some dramatic changes, especially if the Democrats keep the White House and regain control of the Senate.

For now, the basic year-end advice still applies:  defer the recognition of taxable income into 2016, and accelerate deductible expenses into 2015.  Wait until January to send out invoices for work performed in December, and prepay in December expenses you know you will incur in January.  Here are some other tips:

Avoid the Obamacare Penalties.  Under Obamacare, individuals who choose not to get health insurance through government exchanges, on their own or via their employers have to pay an additional tax.

If you did not have health insurance coverage in 2015, you’ll have to pay the higher of:

  • 2 percent of your yearly income above the tax-filing threshold (generally about $10,150) up to a maximum cost of the national average premium to purchase a “Bronze Plan” from the federal healthcare exchange; or
  • $695 per person ($347.50 per child under 18). The maximum penalty per family using this method is $2,085.

These costs have more than tripled from last year, when the penalty was $95 per person or 1 percent of household income.

New Filing Deadlines for 2016 Returns.  Partnerships, LLCs taxed as partnerships, and S corporations, which used to file their federal tax returns on April 15 of each year, now have to file them on March 15.  Regular or “C” corporations, which used to file their federal tax returns on March 15 (if they use a calendar year), now have to file them on April 15.   The filing deadlines for 2015 tax returns are unchanged.

Contribute to Your Retirement Plan.  You can still deduct contributions to an IRA, 401(k) or other retirement plan, even if the contribution isn’t made until just before you file your 2015 tax return sometime in 2016.  Heck, you can even set up a new retirement plan after December 31 and still deduct your contribution in 2015 as long as you make the contribution before you file your 2015 return.

If you are over age 70-1/2 and are forced to take taxable distributions from your IRA, consider donating up to $100,000 of your IRA funds to charity.  The transfer will count toward your “required minimum distribution” for the year, and will not be included in your income as other distributions will.

Hold On To Your Stock, Unless You Lost Money.  Short-term and long-term capital gains rates took a big jump last year because of the 3.8% “net investment income tax” that was part of Obamacare.  To avoid the tax, hold onto any stock that appreciated in value during 2015.

If you lost money in the stock market, consider “loss harvesting” –selling your “losing” stocks before December 31 to realize losses. You can then use those losses to offset any taxable gains you have realized during the year. Losses offset gains dollar for dollar. And if your losses are more than your gains, you can use up to $3,000 of excess loss to wipe out other income.

If you have more than $3,000 in excess loss, it can be carried over to the next year. You can use it then to offset any 2015 gains, plus up to $3,000 of other income. You can carry over losses year after year for as long as you live.

Prepare for the 2016 Election.  Predicting the outcome of any election is a fool’s errand.  But here’s one fairly safe forecast:  whoever wins the White House next year, lowering taxes for upper-income Americans (that means you) won’t be anyone’s priority.  Start planning now for post-election increases in tax rates, and the gradual elimination or phasing out of some popular deductions for people in higher-income brackets.

Here’s my personal rule of thumb:  the more a tax deduction or credit is perceived as furthering a “positive” social or environmental goal, the more likely it will survive any post-election tax reform intact.  So make tons of charitable contributions, and look into energy tax credits for solar panels and other “alternative energy” or “sustainable energy” home improvements.  Consider buying an electric car.  And moving to a state with no income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming).

Don’t Obsess.  Chances are there isn’t much you can do between now and December 31 to make a dramatic change in your 2015 tax liability.  Enjoy your holidays.  Worry about taxes next year.

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and host of the PBS television series ‘Money Hunt’.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2015 CLIFFORD R. ENNICO.  DISTRIBUTED BY CREATORS SYNDICATE, INC.