Happy New Year, ChiBizHub Partners!
A new year brings new opportunity and we believe this is the year for entrepreneurs and small business owners to grow and thrive!
With a new year comes new responsibilities, goals and challenges. We want to ensure that your business is equipped with all of the tools and resources it needs to be successful which is why this month’s newsletter spotlights two individuals who offer up you some candid and thoughtful insights and tips to help you reach your goals:
1. Yolanda Ruiz at the Internal Revenue Service Small Business & Self-Employed Tax Center shares important deadlines as well as common misconceptions about the IRS and the upcoming tax season.
2. Virginia McGann, President of Value Management Resources, a financial management company focused on bookkeeping, accounting, financial reporting and operations shares three tips that will help you better understand your financial and your business potential.
Lastly, there are many events and discussions this week to broaden your perspective! Be sure to read through this email and RSVP for those events that resonate to you.
On behalf of all us at ChiBizHub, we look forward to working with you and all our fellow entrepreneurs and small business owners across the city to help highlight future opportunities as well as listen and learn about what support and resources are needed to assure continued growth.
It's Tax Season!
Q&A with the Internal Revenue Service Small Business & Self-Employed Tax Center
The Internal Revenue Service Small Business & Self-Employed Tax Center is a one-stop service for business owners with assets under $10 million and for taxpayers who file Form 1040, Schedules C, E, F or Form 2106.
To help shed light on common misconceptions about the IRS this upcoming tax season we welcome Yolanda Ruiz:
Q: You provide expert guidance and technical assistance to small and medium-sized businesses on tax preparation. Why is this work important?
A: The last thing a business owner wants to do is to attend a tax workshop. However, tax education is key to being compliant & growing your business. Business owners may fall into common pitfalls if they don’t know about them. One such pitfall is not keeping good records. It’s a disadvantage to the business because they may not be accounting for all expenses they can deduct. Another pitfall is not making estimated tax payments and waiting to pay their taxes when they file. By procrastinating, they are faced we a large tax liability that they may not be able to pay, and now the IRS is adding penalties and interest. It’s so important to keep current with tax payments because once you fall behind it’s hard to catch up.
Q: What are some important deadlines that small business owners should be aware of as they file their taxes?
A: Business owners should remember that their estimated tax payments for 2020 income are due on April 15th, June 15th, September 15th and January 15, 2021.
Q: Many people are afraid of tax season and the IRS in general. What is the biggest misconception that people have of the Internal Revenue Service? Why are these myths incorrect?
A: A misconception with business owners is that they may be reluctant to take all of their expenses to avoid scrutiny by the IRS. As a business owner, you should account for and take all of the ordinary and necessary expenses in conducting your business. What constitutes “ordinary & necessary” expenses may vary from business to business however, you should deduct all expense in conducting a business. Just remember to keep your receipts!
Another misconception is that you don’t need a tax professional or accountant, you can keep the records and do the return yourself. If you aren't comfortable doing the return, tax professionals (including accountants) have years of education & experience. Also, a tax professional knows what expenses are deductible. They can help you to maximize your deductions and lower your tax liability legally - this is called tax planning.
Q: What is the best way for a business owner to contact the Internal Revenue Service if they have further questions?
A: We have a Small Business/Self-Employed Tax Center on irs.gov where business owners can find all the tax information they need. Check out the website via this link https://www.irs.gov/businesses/small-businesses-self-employed
Value Management Resources Shares Top 3 Tips to Help Your Business Thrive in 2020!
This month, Virginia McGann, President of Value Management Resources is sharing three helpful tips that can start your business on the right financial track in 2020!
You cannot sell at a profit if you don’t know how much it costs you to make your product or service. How can you set the right price? Know your direct costs (material, labor, shipping, marketing specific to that product or service, etc.) and your indirect costs (rent, insurance, phone, etc., (also known as overhead costs). When recording your direct costs or expenses, be sure to include some descriptor (in QuickBooks, indicate a “class”) that will attribute that cost to the item/service for sale. Also, be sure to get to know your typical total monthly indirect/overhead costs; you need to know what your monthly costs run. You must be able to answer the question: “How much does it cost to run my business each month?”
Calculate your margin: what is the difference between your sales and your costs? That figure, expressed as a percentage, is different for each industry. There are resources available online that will give you guideposts to compare your margin with other firms in your field. If you’re doing better than the average – and your sales are growing – that’s a great sign. You are moving your firm in the right direction. If your margin is below the industry standard, or if your sales are stagnant or falling, your pricing, cost of goods/services or both may need some adjustments.
Most companies will need outside financing at some point to scale up. Knowing your numbers is essential to securing funding, whether debt or equity financing. Funders will want to know specifics about your operations, so keep up to date on your bookkeeping so you can speak with confidence about various costs and sales figures. When the business owner replies, “let me ask my accountant,” they seldom get the funding requested. If you don’t know enough about your business to answer vital questions, why would a funder take a chance on you and your firm?
Our team helps grow entrepreneurship in Chicago every day.
Our newsletter delivers insights, inspiration and events to keep you growing and knowing.