Notice 2008-1 The IRS has released its first Revenue Ruling for the year 2008, which provides clarification for rules that allow a 2%-shareholder/employee to deduct accident and health insurance premiums. Accident and health insurance premiums paid or furnished by an S corporation on behalf of its 2-percent shareholders in consideration for services rendered are treated for income tax purposes like partnership guaranteed payments.

The Internal Revenue Service is looking for 115,478 taxpayers who are due refund checks worth about $110 million after the checks were returned as undeliverable. The refund checks, averaging about $953, can be claimed as soon as taxpayers update their addresses with the IRS. Some taxpayers have more than one check waiting.

Businesses paid $554 billion in state and local taxes in fiscal year 2006, representing 45% of total taxes collected by all state and local governments, according to the annual study prepared by Ernst & Young LLP in conjunction with the Council On State Taxation (COST). 

Key findings of the study include:

State and local business taxes totalled $554 billion in FY2006, up 10.2 percent for the prior year.

Property taxes were the largest state and local business tax, accounting for $205 billion in 2006, representing 37% of total state and local business taxes.

Sales taxes on business inputs were the second largest state and local business tax, accounting for $125 billion in 2006, or 23% of total state and local business taxes.

Corporate income tax totalled $52 billion in 2006, representing 9% of total state and local taxes.

As we all know, work can take over. You breathe it, live it, dream it...it's part of you. Its ingrained in your thoughts. Technology has allowed most of us to work from anywhere...even home, and we do! Sometimes it becomes too much.

I just returned from a 4-day vacation where I was finally able to get away. I didn't bring the laptop and let my staff know to keep calls to a minimum. It worked! I came back from vacation with a great new perspective and fresh energy.

While this is not my line of expertise, I thought it was important to remind all fellow entrepreneurs to slow down and live a little. Getting away a couple of days every couple of months can keep you motivated about your business all year long.

I just attended an internet marketing seminar based upon the principles of e-mail marketing. I came away with a bunch of great information that I will be able to implement immediately. I was surprised to hear about things I was doing wrong and how many other businesses were in the same boat. I am not going to lay the details of what I learned out here but I will recommend that you do some research about the best strategies for email marketing. Here are some links to get you started. Good luck!

http://www.brightwavemarketing.com/

http://www.silverpop.com/index.html

I like to keep up with outside resources that promote a healthy customer service environment. This link provides great resources to assist in the development of improving the way one deals with and handles clients. Please view the following website   http://www.managementhelp.org/customer/service.htm.

Here is a website that has a number of articles for business owners. The articles range from business to self improvement and are detailed and very helpful. I hope that this site provides information that will help to improve your business. Click on the following link below to bring you to the whole article.

 

http://ezinearticles.com/

 

I'm fortunate to be able to work day in and day out with entrepreneurial minded people.  One characteristic in common with all of these people is VISION.

Vision is probably the first step in starting a small business.  Without vision, there is no dream, no plan, and probably no success.

When making the determination whether a particular business opportunity is right for you, consider the following:

1) does the business tap into your skills, experience, and interests?  You should be passionate about your vision. Without this passion for loving what you do, you run the risk of failing the project. 

2) can this vision make money?  Determine your breakeven point.

3) do you have a plan? Write a business plan.  This may include a business description, a sales revenue forecast, profit and loss forecast, capital spending plan, cash flow forecast, marketing plan, personnel plan, and specific business goals.

4) do you have ample capital for the project?  There are numerous sources of capital for your startup including your own salary and savings, home equity, credit cards, investment from friends, family, and business associates, banks, commercial lenders, venture capitalists, and the sellers of existing businesses.

5) do you have a marketing plan?  How will you get your product or service in front of potential buyers?

Make your VISION a REALITY with a little advance planning.  Next time we'll discuss the types of legal structures available for your business.

I found an article that talks about business performance. Making sure that your company is functioning competitively will determine its success. There are questions asked in this article that help you ready your business for success. Enjoy!

http://www.pwc.com/extweb/challenges.nsf/docid/3ddf16cc86dc60b18525701300574bf0

It is tax time!  We might as well try to find some humor and enjoyment in a sometimes difficult and distressing responsibility.  I see that Turbo Tax is doing a promotional contest using YouTube where contestants upload tax rap videos.  Here is one that I found entertaining.  Enjoy.

If you need some help getting your taxes prepared, contact our tax professionals at Integrated Tax Solutions.  Click here to get a free tax consultation with one of our experts.  It can't hurt!

It is always important to focus on personal growth. I found a website that focuses on many different areas of an individual’s personal growth and development. A few areas that the site focuses on is time management, stress management, information skills, communication skills, memory improvement, leadership skills, problem solving, decision making, project planning and practical creativity. You owe it to yourself to set aside twenty to thirty minutes to review the information.

http://www.mindtools.com/pages/main/newMN_HTE.htm

There is an Associated Press article on Law.com about the mess that Anna Nicole Smith left behind for her estate. In addition to the paternity suits, DNA tests and jurisdictional wars between the Bahamas and the U.S., there is also the highly personal tragedy of an infant daughter who will never know her mother.  This tragedy, and the uniqueness of Smith's life underscores the need for proper and up-to-date estate planning.

If you have reviewed my previous post on "How to Hire Passionate Employees", then it is also important to make sure you are getting the most out of each employee.  I found the most amazing article to assist business management on how to strategically and properly dismiss a poor performer. I found this interesting because it provides tips on evaluations pinpointing areas of concern and dealing with areas of frustration. Please take the time to review the article as I am sure you will find it to be useful just as I did.

For years, our company has put on a series of Corporate Boot Camp Seminars in Reno and Las Vegas to teach people about the basic essentials of forming and maintaining their new business entity, and becoming successful.  In our Boot Camp, I make a presentation about Nevada's past, present and future as an incorporation center that attracts tens of thousands of new corporate and LLC filings every year from people living outside of Nevada.  I am frequently asked to compare the benefits of incorporating in Nevada to that of incorporating in Delaware, which has a long-standing reputation as a corporate haven.

My answer to those questions is lengthy and technical.  But to boil it down to its simplest form, Delaware law is designed for large, publicly-traded companies and Nevada law is designed for privately-held companies.  Delaware protects stockholders by holding officers and directors responsible, while Nevada protects officers and directors - who are frequently also the owners.

I bring this up to provide some perspective to some interesting statistics that I stumbled upon.   The Ewing Marion Kaufman Foundation released a study that ranks all 50 states for their level of entrepreneurial activity.  It is no surprise that Nevada is ranked very high.

But guess which state is ranked dead last.  New York?  California?  Massachusetts?  No.  Last place belongs to DELAWARE!  While Delaware enjoys this great reputation for being a corporate haven, the truth is that for all the corporate filings it generates, it is a terrible environment for nurturing entrepreneurism.  Its corporate laws just are not designed for small business.

ADVANTAGE:  NEVADA

Download KIEA_state_052206.pdf

The January edition of CFO magazine has an interesting article about the relationship between state development authorities and same-state taxing agencies.  The article documents that a number of state development organizations promise and deliver some nice incentives to encourage corporate moves and expansions.  The "hook" in some incentive packages is that state taxing authorities recoup the incentives (and sometimes more) through tax channels.

The magazine did a poll of CFOs across the country and asked them to rate the "business friendliness" of all fifty states when it comes to taxes.  The exact wording of the question was, "What is your overall impression of the tax environment in this state?"  Nevada was rated by CFOs who responded to this poll as having (the) most fair and predictable tax environment.

The Commerce Department released a report last Thursday showed the Personal Savings Rate in the U.S. at its lowest rate since 1933.  In 2006, the average consumer spent 1% more than they made during the year.  Obviously, the only way that can happen is if people are spending previous savings or are living off of their debt. 

It's not a good sign for our economy, and it was combined with a report that manufacturing was contracting in the month of December, which is a early sign of recession.  It might be time to start thinking about your asset protection strategy.

I wanted to focus this session on “How to Hire Passionate Employees”. It is a continuous issue that costs companies thousands of dollars each and every time an employee is brought into the company. This article gives both good advice and great tips that will put companies, especially smaller companies, on the right track when it comes to hiring the passionate employee.

The following link will bring you to the article where you can obtain the information on hiring passionate employees.

http://money.cnn.com/2006/07/11/news/economy/annie0712.fortune/index.htm

Works Cited:

Fisher, Anne. "How to Hire Passionate Employees." CNNMoney.com. 12 July 2006. 1 Feb 2007 http://money.cnn.com/2006/07/11/news/economy/annie0712.fortune/index.htm

I stumbled on an interesting blog today, written by Francis Foster, professor of law at Washington University School of law on the topic of Trust Privacy.  In her post, Professor Foster describes how Marlon Brando was able to maintain the one thing he sought most in his life, privacy, through the use of his estate planning trusts.  She describes the feeding frenzy of the media when Brando's will was filed for probate back in 2004, and how the will devised his entire estate to his living trust, which was not part of the public record.  That serves as a good reminder to the rest of us that when we put all the details of our final wishes into a will, we could be publicly airing our dirty laundry, the dis-function of our family relationships and other details for the whole world to see.  Follow Brando's example, and use a living trust to preserve your family secrets.

Here is some information provided by SCORE to help you get organized:

When you organize your business and eliminate the clutter, you will feel re-energized. You will find that you are easily motivated to get straight to work when you don’t have a mess to deal with. You will save time otherwise wasted looking through piles or searching for a missing document on your computer. Begin by establishing a plan. Prioritize your list, set a date with yourself and identify your motivation.

In just 60-seconds, you will learn how to organize your business.

What can you do when you own highly appreciated assets and your estate value exceeds the Federal Estate tax equivalent exemption?

A Unitrust, also called a Charitable Remainder Trust or CRT, allows taxpayers to reduce estate taxes, eliminate capital gains, claim an income tax deduction, and benefit charities.  It also requires that a fixed percentage (minimum 5%) of the annual value of trust assets be paid to the income beneficiary. For example, a CRUT with a value of $2,000,000 and a 5% payout would pay $100,000 to the income beneficiary in that year. If the investment performance for that year was 10% and the value of the trust on the valuation date was $2,200,000 the income beneficiary would receive $110,000 in that year. Another benefit of the CRT is that it will allow for additional contributions. The Unitrust will generally produce higher amounts of income but a smaller tax deduction.

We hear a lot these days about "realizing our dreams."  We are encouraged to be pro-active so that our "unplayed music does not die with us."  We live in a land of opportunity, yet we seize so little during our lifetimes.  Why?

I believe the number one killer of dreams is procrastination.

Lord Acton is quoted as saying, "A wise person does at once what a fool does at last.  Both do the same thing; only at different times."

Considering that achievement often requires great risk, vision and a steadfast discipline, it could be said that procrastination is the "flip side" of achievement.  Waiting to follow a dream and putting off what one knows must and should be done are not the measures of achievement.

We procrastinate on the little things in life because they do not have overly-serious consequences.  How many gallons of water were wasted before the leaky faucet was finally fixed?  How much more did that car repair cost after that strange sound was ignored for six months? 

But it is the major life-changing decisions where procrastination really takes its toll and kills dreams.  For example, how many times did the person who hated his job for 20 years tell himself it was time to be his own boss?

Several years ago my wife and I updated our estate plan.  We had put of doing so for more than a year.  And it had been ten years since the initial estate plan had been drawn up.  A lot had changed in that time.  Something as simple as picking up the phone got the ball rolling.  The process was simple.  On the ride back home from the attorney's office we both felt a sense of peace and organization.  Updating our estate may not be the world's greatest achievement, but it was big on our scale.  Getting it done gave us a sense that action had prevailed over procrastination.

Procrastination is the path of least resistance and it is the path that leads to unrealized potential.  What are you procrastinating about?

Imagine only paying advertising dollars for people specifically looking for the product or service your business offers. The days of mass advertising using TV, radio even newspapers for your small business are dwindling away.

Think about it. With radio and TV, your commercial message is targeting people who may or may not have an interest in your company. The power of pay-per-click (PPC)advertising on the Internet using 2 of the main PPC powerhouses, Google and Overture (Yahoo) allows businesses to only pay for people who click on the ad they are running, hence the term "pay-per-click". This ensures businesses are receiving targeted traffic from people who have searched for their specific products or services.

The Internet allows businesses to compete on a level playing field with competition of all sizes. In addition, Google and Overture give you the power to test your message and landing page without spending BIG bucks. Start with Google. Its easy to setup and has a complete tutorial. Trust me, you can do it and the results are instantaneous. Don't spend BIG bucks on a website until you test a couple of different 1-page websites to see if you can even generate traffic! Whats the point of having a 12 page website if you can't get nobody to visit?

Now you can test new business ideas or new ad ideas at a low cost without a ton of leg work.

Good Luck!

Recently I read a very interesting article in the Wall Street Journal that could have a big impact on unincorporated business's involved in e-commerce. In another attempt to keep the internet secure and free of "phisher" sites Microsoft Corporation is taking an aggressive leap forward with it's introduction of Internet explorer 7. IE7 has a security feature that will turn Web-address bars green and display owners' identities when consumers visit secure sites from businesses verified as legitimate. The color change will be a boon for consumers, who have been barraged in recent years with "phishing" scams designed to lure them to fake versions of popular Web sites, like eBay or their bank, to filch their account numbers. The hope is that the program will help reduce fraud, lift trust and boost e-commerce. But browsers won't turn green for everyone. Thats because sole proprietorships, general partnerships and individuals won't be eligible for the new, stricter security certificates that Microsoft requires to display the color.

Learning is a critical component to success.

If our ego is in check, we will recognize that there is always a new way to look at things.  In fact, the more we know, the more we realize that there is much more out there that we don't know.

There are many sources for additional learning.  Community colleges or universities are excellent places for continuing education.  Many have evening programs just for this purpose.  For those of us separated by distance from the nearest institute of higher education, many schools now offer certain programs or courses online. 

Evaluate your skills, experience, and interests, and then find programs to match. 

In addition to the university system, continuing education is available through credible seminars and courses offered by Fred Pryor Seminars, Dale Carnegie Training, and many others.  These programs are often less taxing on your time, affordable, and bring value to you as an individual.  Watch for them as they visit your city or go to their websites for more information.

Make a commitment today to expand your knowledge base through continuing education and training.  It pays.

In another court decision made this year involving the CFTB, the court ruled that a Nevada LLC with a California resident as the manager, which held ownership interests in other California partnerships and LLCs was "doing business" in California, and subject to the $800 annual tax.

The ruling supports the long-held position by the CFTB that any management activity - no matter how minor - that occurs in California will create a tax nexus there.  Here are the facts that existed in this specific case that led to the conclusion of the court:

One of the issues raised in the Northwest Energetic Services case mentioned in my last post, is the question of "when is a fee really a fee, and when is a fee really a tax?"

Norrthwest's attorney, Amy Silverstein, of Silverstein & Pomerantz, LLP in San Francisco, argued that the "fee" imposed by California was an attempt to replace lost revenue that the Legislature thought would occur with the passage of the California LLC Act in 1994.  Because the Legislature thought they would lose revenues due to the tax intricacies of LLC flow-through status, they had imposed two revenue-generating provisions:  an LLC annual "tax", and the LLC annual "fee".  But, just because it is called a "fee" doesn't make it a "fee".

A couple of years ago, I had occasion to call the California Franchise Tax Board while doing research for one of my books.  I had heard that California was imposing a state tax on all of the world-wide income of any LLC formed or registered in California, and I didn't believe it.  The concept was so ridiculous on it's face that I never dreamed that even the CFTB would stoop to such an unconstitutional low.  My phone call to the CFTB, however, confirmed what I had been told.  They were completely ignoring the U.S. Constitution, and were imposing all the tax that they could get away with.

Well, as I was cleaning off my desk this week, I came across some information that I originally read last April but never got around to posting, that forces the CFTB to change its approach to LLC taxation.

Today I read an article about a recent legal decision in the case of Tax Commissioner of West Virginia v. MBNA America Bank, N.A. that is not just a little bit disturbing.  This case, which was filed November 21st of this year, flies entirely in the face of everything we thought we knew about the application of tax nexus rules across state lines.

The previous standard had been the landmark case of Quill v. North Dakota, in which the United States Supreme Court ruled that nexus only exists when the seller of tangible goods has a physical presence in that state.  Now, however, the MBNA case abandons the requirement that physical presence is required in order for a state to impose a tax. MBNA, one of the largest credit card issuers in the country, had no physical facilities, operations or employees in West Virginia.  It marketed VISA and Mastercard solicitations through the mail and by telephone from outside the state.

Even with these limitations, West Virginia ruled that MBNA is responsible to pay state corporate taxes on their WV-connected income.  This is going to create a tremendous fallout, and a domino-effect in many other states.  Ultimately, it will end up at the U.S. Supreme Court, which could take a couple of years.

An often overlooked, but extremely valuable resource available to us all is our own community.  Within our community are other entrepreneurs, teachers, leaders, and gurus with expertise in a variety of subjects. 

We should be familiar with our own goals, values, strengths, and weaknesses.  If we are honest in evaluating ourselves, it should be easy to align ourselves with others who share our goals and values. 

Look into joining community organizations that not only share your values, but are also of interest to you.  If you haven't done so already, join your local chamber of commerce, register with The Better Business Bureau, join your relevant merchant association, or volunteer to serve your favorite charity or charities.  These organizations offer opportunities to network, to learn new skills, and to hone our leadership abilities.  You may be surprised at the opportunities that come your way via your activity within these community organizations.

So be active in your community.  Be a good citizen.  Keep your mind open to new ideas offered by others.  In doing so, you'll find yourself a little bit further down the Highway to Success.

Most businesses spend little time thinking about marketing, let alone planning an entire event around it. Marketing should be a huge part of your business and not something considered when everything else is done. It is important to spend some time each month brainstorming marketing ideas. Here is a quick list to help you get started.

1. Gather 1 or 2 of your closest associates in the area being brainstormed for a period of no less than 4 hours.

2. DO NOT meet in anyones office. Instead use someones home, backyard, or a quiet bar.

3. Set the 2 most important rules - no straying from topic and no ideas are bad ideas.

4. Layout all the facts you know, and those you would like to know on a big white board.

5. Identify 3 overall goals for your brainstorming session.

6. Set a reasonable amount of time to discuss each goal. (minimum of 1-hr each)

7. Allow people to relax - some may want a beer, others like music in the background....allow people to be relaxed and comfortable.

8. Don't treat this like an official business meeting - do not allow position or rank within company to control or dominate any discussion or topic.

9. Have the Internet and other related materials readily available and research what your competitors and similar business models are doing.

10. Have fun - brainstorming should be fun, low stress, and most importantly PRODUCTIVE.

Hope these help! Stay tuned for much more in the area of Marketing!

Chris Bache - Founder - Marquis Advertising, Inc.

When it comes to death and taxes, most of the focus lately centers on Congress' ongoing battles over the federal estate tax. But many states impose their own taxes and costs when residents die. Estates too small to trigger the federal tax can easily rack up thousands of dollars in state death taxes and probate costs. Far from being repealed along with the federal tax, this state burden is on track to rise over time.

• Some states have their own estate- or inheritance-tax systems that are independent of the federal estate tax system.
• Another group of states is imposing new estate taxes to make up for revenue from the waning federal tax.

The federal estate tax is scheduled to phase out over the next few years and disappear entirely in 2010 -- only to return in 2011 when the temporary repeal expires. Opponents of the estate tax are struggling to make repeal permanent, but are facing stiff opposition in the Senate. (The House has already voted to permanently repeal it.)

A number of states have estate or inheritance taxes that are independent of the federal system. State estate taxes, like the federal version, are assessed on the estate as a whole. But states can have different rules about who pays.

In the past, most of the other states haven't had to impose separate taxes to get a piece of their residents' estates. Instead, the states received a portion of what the estate owed the federal government. This "pickup" tax raised state coffers without the estates owing any extra tax. However, states are losing this boost. The federal law temporarily repealing the estate tax has already phased out the states' ability to take a portion of said tax. That cost states billions in lost revenue. So it's probably not surprising that many states are trying to hang on to their piece of the pie by decoupling their estate tax system from the federal system. In effect, they're pretending that the repeal isn't happening and taking from their residents' estates some of what they used to get from the federal government.

Some states made their decoupling temporary, hoping that revenues would improve enough in coming years so that they wouldn't miss the lost tax. The states also might get a break if efforts to make the federal repeal permanent fail. The full state death-tax credit would return, along with the rest of the federal estate tax system, in 2011.

Regardless of how this issue plays out, properand thoughtful estate planning can serve to minimize the impact of estate taxes while maintaining one's privacy and bypassing probate.

In the coming years, there will most likely be a lot of changes to the way states impose their estate taxes. For example, the substantial changes to the federal estate tax laws enacted in 2001 under the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) include the gradual phase-out of the state death tax credit. This means that states with only a pick-up tax in place will entirely lose their estate tax revenues unless additional state estate taxes are enacted (which many have already done). Just keep in mind that the billions of dollars of associated lost state revenues will have to be made up somewhere. (Translation: look for some form of higher state taxes imposed to make up the shortfall.)

My appreciation for the Thanksgiving holiday has matured over the years.  There was a time when all Thanksgiving really meant to me was a great meal by my grandmother that inevitably turned into an eating contest with my younger brothers, followed by a football game on TV as we lay on the floor, writhing in the bloated discomfort of our engorgement.  Then we had pie.

I find myself a lot more contemplative these days about Thanksgiving.  It really isn't about the turkey dinner or the football game anymore.  And, while my thoughts during Thanksgiving - and the entire holiday season, for that matter - turn increasingly toward my family, I am also reminded that sincere expressions of gratitude are a tremendous source of both internal and external power in business settings as well.

The most common question associated with the Business Credit Builder Program is "what type of business credit will be available to a business owner with a newly formed entity that does not require a personal guarantee?"  Good question!  The lines of business credit we begin with are carefully chosen based upon the following criteria -

1. The business line of credit must report to the major business credit reporting bureaus.

2. The business line of credit must report positive credit experiences to the major credit reporting  bureaus. (many business lines of credit only report late or missed payments)

3. The business line of credit must report on a monthly basis to the business credit reporting bureaus. 

Additional considerations for choosing vendors exist of course, but these three examples provide insight into the knowledge our Credit Coaches have access to that insure our clients have a positive credit building experience.  Not only do we recommend the vendors, we have the applications available to insure our clients are truly put on the "fast track" to building corporate credit. 

Assisting our clients in establishing the initial set of vendors provides them with the momentum needed to generate the purchase / payment activity.

Purchase / Payment Activity = Vendor Reporting Activity = Credit Score

The Credit Coach supports the process through regular follow up and additional vendor recommendation.   

Next Week - Vendor Progress Tracking

Last may, the IRS announced that it was to stop collecting federal excise tax on long-distance telephone service.  Since 1898, the IRS has collected a tax, which was 3% at the time, on all long distance communications.   Courts have ruled that long-distance communications of yesteryear are not the same thing today, and ruled that the tax is improper.  The result is that taxpayers can file for a refund of all federal telephone excise taxes paid after February 28, 2003, with interest

The IRS has published information to instruct and assist taxpayers on this issue:

1. Telephone Tax Refund Questions and Answers for Small Business and Tax-Exempt Organizations
2. IRS Announces Standard Amounts for Telephone Tax Refunds

Don't get sold on frequency or branding. Radio stations sales people will tell you this because it will get a longer contract and will let you think results may not appear until weeks have passed. But your not Pepsi or McDonald's and branding and frequency campaigns are sure to do one thing...break you.

The fact is you need immediate response and revenue from your campaign. Welcome to the world of Direct Marketing.

A wise man once said, "All of the easy things have already been done; from here on out it is high adventure." 

Those of you who run your own businesses will certainly agree that the process is high adventure.  But what about the easy stuff?  There is no reason to re-invent the wheel.  Fortunately for us, many business topics have already been written about in depth by experienced authors.  These books can be a valuable asset to any business owner.

Compliance - the act of adhering to, and demonstrating adherence to, a standard or regulation. Compliance is KEY in the business credit building process and can make the difference between a client’s ability to establish lines of business credit or being declined. Potential vendors and commercial lenders seek to verify and validate specific information when a corporation submits an application for business credit. The most common compliance issues a corporation must address before applying for business credit is as follows:

The US Department of Treasury has published a one-page summary of impact that increased taxes will have on millions of Americans if permanent tax relief is not passed by Congress.  To summarize a summary, unless permanent tax relief is passed, by 2011:

• A family of four with two children making $60,000 in annual income today will pay 58% more taxes.  If the family makes $50,000 per year, the taxes will be 132% higher.
• 115 million taxpayers will average a tax increase of $1,716.
• 26 million small business owners will average a $3,637 tax increase

The Internal Revenue Service today issued guidance emphasizing the need for employers to track the amount of expense reimbursement allowances paid to employees on a per diem basis.   Revenue Ruling 2006-56 tells employers that if they routinely pay per diem allowances in excess of the federal per diem rates, but do not track the allowances and do not require the employees either to actually substantiate all the expenses or pay back the excess amounts, and do not include the excess amounts in the employee’s income and wages, then the entire amount of the expense allowances is subject to income tax and employment tax. 

Please accept my thanks and appreciation for the opportunity to share the knowledge NCH has afforded me the opportunity accumulate on Building Business Credit.   I look forward to sharing my experience through the use of this weekly post in an effort to raise awareness about Business Credit.

I have a healthy appreciation for businesspeople who invest time in improving themselves and their businesses.  It is too easy to get caught up in the day to day transactions and status quo; consequently putting off planning and associated change.  The fact is that businesspeople who perform regular self-evaluations and then take action to correct areas of weakness are those who break from the pack in their respective industries.

The Washington D.C.-based Small Business & Entrepreneurship Council released their annual survey which ranks the policy environment for entrepreneurship across the nation.  The Small Business Survival Index 2006 ranks all 50 states in order of their respective friendliness to business.  This ranking is based on 29 major government-imposed or government-related costs imposed on small business.  The top 5 states in the 2006 Index are:

1. South Dakota
2. Nevada
3. Wyoming
4. Alabama
5. Washington

I understand the top three on the list, but I am going to have to read the report to see how Alabama and Washington show up that high.

Samuel A. Donaldson, Associate Professor of Law at the University of Washington has published an abstract that explains the several developments in federal income, estate and gift taxes that effect individual and small business taxpayers.  His summary contains updated information covering a period from August 2005 through September 2006.  And, it is free, which is always good.

Today, the Internal Revenue Service issued the 2007 mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Starting January 1, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

• 48.5 cents per mile for business miles driven;
• 20 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service to a charitable organization.

The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile.  As such, the mileage reimbursement has been increased to reflect rising gas prices. Runzheimer International, an independent contractor, conducted the study for the IRS.

See Revenue Procedure 2006-49 for further details.

For years promoters have touted the use of Family Limited Partnerships (FLP) as a tool for owning and protecting assets and providing a mechanism for passing them on to the next generation.  The FLP has been used so frequently that it could lead one to the impression that the FLP is a separate kind of entity.  It isn't.  It is simply a Limited Partnership used for family purposes.  Similarly, the LLC is becoming used for family purposes, which has coined the usage of the Family LLC.

A charitable remainder trust (CRT) could address many of your personal financial goals while providing the ability for you to make a significant gift to the qualified organizations of your choice.  CRTs are planning tools that allow you to take control of your social capital —  the portion of your wealth that is customarily paid in taxes to the government.  With a CRT, you designate the qualified organizations that will receive your social capital and you also receive significant financial benefits.  Anyone who is subject to paying capital gain taxes on appreciated assets and whose estate is subject to estate taxes is a candidate to benefit greatly from a CRT.

I am frequently asked about the impact of a husband and wife owning the membership interest in an LLC in a community property state.  It is and interesting issue that is unresolved in many respects.

I read an article recently by Peter Schiff, a CEO of Europac, who addresses the fact that all the media attention being given to the record breaking heights of the Dow Jones Industrial Average is a lot of hype.  Given the fact that we are a month before a major election, I don't know who would want to hype the stock market to give the impression that the economy has never been stronger - that is another discussion.

I came across a fascinating website the other day called TheCEOProject, which released a report last July that outlines the factors they discovered which makes exceptional CEO's exceptional.  For the past 15 years, they have studied and worked with about 700 CEOs of fast growing, mid-sized companies with revenues between $15 million and $1.2 billion.  That experience has taught them the profound difference between run-of-the-mill chief executives and the peak performers.