Is your business stuck in the mud with its marketing plan?
A good marketing plan should be like a network of well-paved, clearly marked roads shooting out into the world and leading back to your company. But, all too easily, a business can get stuck in the mud while trying to build these thoroughfares, leaving its marketing message ineffective and, well, muddled. Here are a few indications that you might be spinning your wheels.
Still the same
If you’ve been using the same marketing materials for years, it’s probably time for an update. Customers’ demographics, perspectives and expectations change over time. If your materials appear old and outdated, your products or services may seem that way too.
Check out the marketing and advertising of competitors, as well as perhaps a few companies that you admire. What about their efforts grabs you? Discuss it with your team and come up with a strategy for refreshing your look. You might need to do something as drastic as a total rebranding, or a few relatively minor tweaks might be sufficient.
Overreliance on one approach
While a marketing plan should take many avenues, sometimes when a business finds success via a certain route, it gets overly reliant on that one approach. Think of a company that has advertised in its local phonebook for years and doesn’t notice when a competitor starts pulling in customers via social media.
This is where data becomes key. Use metrics to track response rates to your various initiatives and regularly reassess the balance of your marketing approach. Unlike the business in our example, many companies today become too focused on social media and ignore other options. So, watch out for that.
Inconsistent message
Ask yourself whether your various marketing efforts complement — or conflict with — one another. For example, is it obvious that an online ad and a print brochure came from the same business? Are you communicating a consistent, easy-to-remember message to customers and prospects throughout your messaging?
In addition, be careful about tone and taking unnecessary risks — particularly when using social media. It’s a difficult challenge: You want to get noticed, and sometimes that means pushing the envelope, but you don’t want to end up being offensive. Generally, you shouldn’t run the risk of alienating customers with controversial material. If you do come up with an edgy idea that you believe will likely pay off, gather plenty of feedback from objective parties before launching.
Reconstruction work
A marketing plan going nowhere will likely leave your sales team lost and your bottom line suffering. Maybe it’s time to do some reconstruction work on yours. Contact us for more information and further suggestions.
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What’s better than giving? Giving and tax breaks combined! Charitable deductions for appreciated stock.
Planning on making a substantial contribution to a charity or college before 2018 ends?
You should consider donating appreciated stock from your investment portfolio instead of cash. Your tax benefits from the donation can be increased and the organization will be just as happy to receive the stock.
This tax planning tool is derived from the general rule that the deduction for a donation of property to charity is equal to the fair market value of the donated property. Where the donated property is “gain” property, the donor does not have to recognize the gain on the donated property. These rules allow for the “doubling up,” so to speak, of tax benefits: a charitable deduction, plus avoiding tax on the appreciation in value of the donated property.
Example: Taxpayer A and Taxpayer B are twins, each of whom attended a University. Each plans to donate $10,000 to the school. Each also owns $10,000 worth of stock in ABC, Inc. which he or she bought for just $2,000 several years ago.
Taxpayer A sells his stock and donates the $10,000 cash. He gets a $10,000 charitable deduction, but must report his $8,000 capital gain on the stock.
Taxpayer B donates the stock directly to the school. She gets the same $10,000 charitable deduction and avoids any tax on the capital gain. The school is just as happy to receive the stock, which it can immediately sell for its $10,000 value in any case.
Caution: While this plan works for B in the above example, it will not work if the stock has not been held for more than a year. It would be treated as “ordinary income property” for these purposes and the charitable deduction would be limited to the stock's $2,000 cost.
If the property is other ordinary income property, e.g., inventory, similar limitations apply. Limitations may also apply to donations of long-term capital gain property that is tangible (not stock), and personal (not realty).
If you hold appreciated company stock from prior stock options or stock grants, this may be a strategy to offset the gain built into that stock while also achieving your charitable giving goals. The goal is to gift the property that has the highest objective dollar value of built in gain and work your way backwards from there. Remember however, if you are in a position to realize 0% capital gains in any year then this strategy would be a waste. Use this strategy in high-bracket years to balance gains and reduce your overall tax liability. Charitable giving is one of the few remaining itemized deductions under current law and can be used to great effect!
For personalized plans and gifting strategies, please contact our office to setup a consultation.
Is the Qualified Business Income Deduction (20% QBI) 199A deduction right for you?
The IRS now offers a 20% deduction for all “pass-through businesses” – great news! However, modifications and restrictions apply…..
For tax years that begin after Dec. 31, 2017:
- pass-through businesses, e.g.,
- sole proprietorships,
- partnerships,
- limited liability companies and
- S corporations,
may be able to take a deduction of up to 20% of their business income from a qualified trade or business (qualified business income (QBI) deduction). (Code Sec. 199A) The deduction can't exceed 20% of the excess of the taxpayer's taxable income over his net capital gain for the tax year.
Here are some planning ideas for taxpayers who may be able to qualify for the deduction:
Specified service trades or businesses
Specified service trades or businesses (SSTBs), e.g., businesses that involve performance of services in the fields of health, law, consulting, athletics, financial services and brokerage services, don't fully qualify unless the taxpayer's taxable income is equal to or below the threshold amount—$157,500 ($315,000 for married individuals filing jointly), indexed for inflation for tax years that begin after 2018—and don't qualify at all if the taxpayer's taxable income is above $207,500 ($415,000 for married individuals filing jointly), indexed for inflation after 2018.
- As a result, taxpayers who are in those businesses need to make estimates of their 2018 taxable income and 2019 taxable income, and consider shifts of taxable income if those estimates indicate that either year's taxable income is likely to be near the $157,500 - $207,500 ($315,000 - $415,000 for married filing jointly) range. For example, a single self-employed lawyer who anticipates that he will have taxable income of $125,000 for 2018 and $200,000 for 2019 will be able to increase his 2019 QBI deduction if he can shift taxable income from 2019 to 2018 and/or shift deductible expenses from 2018 to 2019.
- Taxpayers in SSTBs whose taxable income is too high to qualify for the new deduction should consider incorporating and/or changing/expanding their business model so that they are not SSTBs.
- And, in certain cases, married couples may benefit from filing separately to avoid the SSTB limit.
Beware of “Cracking”
The IRS is making a special attack on businesses that provide services or property to businesses that are otherwise SSTBs. Recently released regulations state that an SSTB includes any trade or business that provides 80% or more of its property or services to an SSTB if there is 50% or more common ownership of the trades or businesses. If a trade or business provides less than 80% of its property or services to an SSTB and there is 50% or more common ownership of the trades or businesses, that portion of the trade or business of providing property or services to the 50% or more commonly-owned SSTB would be treated as a part of the SSTB under the proposed regulations.
This regulation was proposed in response to reports that some taxpayers have contemplated a strategy to separate out parts of what otherwise would be an integrated SSTB, such as the administrative functions, in an attempt to qualify those separated parts for the pass-through deduction. IRS calls this “cracking” and believes this strategy is inconsistent with the purpose of Code Sec. 199A. Why, IRS, why???
IRS Provided Example: Law Firm is a partnership that provides legal services to clients, owns its own office building and employs its own administrative staff. Law Firm divides into three partnerships. Partnership 1 performs legal services to clients. Partnership 2 owns the office building and rents the entire building to Partnership 1. Partnership 3 employs the administrative staff and through a contract with Partnership 1 provides administrative services to Partnership 1 in exchange for fees. All three of the partnerships are owned by the same people (the original owners of Law Firm).
Because there is 50% or more common ownership of each of the three partnerships, Partnership 2 provides substantially all of its property to Partnership 1, and Partnership 3 provides substantially all of its services to Partnership 1, Partnerships 1, 2, and 3 would be treated as one SSTB under the proposed reliance regs.
Taxpayers who are subject to the W-2 wages limitation.
Except as provided below, the QBI deduction cannot exceed the greater of:
- 50% of the W-2 wages with respect to the qualified trade or business (W-2 wage limit), or
- the sum of 25% of the W-2 wages paid with respect to the qualified trade or business plus 2.5% of the unadjusted basis, immediately after acquisition, of all “qualified property.” Qualified property is certain tangible, depreciable property which is held by and available for use in the qualified trade or business at the close of the tax year.
The above limit does not apply for taxpayers with taxable income below the threshold amount (—$157,500 ($315,000 for married individuals filing jointly). The application of the limit is phased in for individuals with taxable income exceeding the threshold amount, over the next $100,000 of taxable income for married individuals filing jointly ($50,000 for other individuals).
The trade or business of the performance of employment services is not a qualified trade or business for purposes of the QBI deduction. As a result, an S corporation owner who qualifies for the QBI deduction, and for whom the W-2 wages limitation does not limit his deduction, will increase his QBI deduction by minimizing the amount of wages the S corporation pays him. However, where the W-2 wages limitation does limit his deduction, he may be able to increase his QBI deduction by increasing the amount of wages the S corporation pays him.
And, as indirectly illustrated by the above illustration, partnerships and sole proprietorships can benefit by converting to S corporation status. That is, a partnership or sole proprietorship cannot pay its owner(s) a salary and thus cannot take advantage of the technique of being able to take the deduction while in excess of the applicable threshold ($157K/315K). Converting the partnership or sole proprietorship to an S corporation opens up this planning technique.
Businesses that are subject to the W-2 wage limitation can also benefit by hiring employees instead of independent contractors.
EXAMPLE A sole proprietor who is not an SSTB earns $500,000 of QBI. Her business has no W-2 employees and no qualified assets; her QBI is determined after paying $100,000 to several independent contractors. She is over the phase-out limit, so her Code Sec. 199A deduction is zero because of the 50% W-2 wage limit. If, however, she hired employees to replace the independent contractors, her deduction would be $50,000 (50% of $100,000). (Note that, as a result of making this change, she would have additional payroll costs, and it might not sit well with the independent contractors if she wanted to hire the same people as employees—any of those people who themselves took QBI deductions will lose those deductions to the extent that their income converts to employment income.)
For more information, please Contact Us today!
How to reduce the tax risk of using independent contractors
Classifying a worker as an independent contractor frees a business from payroll tax liability and allows it to forgo providing overtime pay, unemployment compensation and other employee benefits. It also frees the business from responsibility for withholding income taxes and the worker’s share of payroll taxes.
For these reasons, the federal government views misclassifying a bona fide employee as an independent contractor unfavorably. If the IRS reclassifies a worker as an employee, your business could be hit with back taxes, interest and penalties.
Read more
Tax document retention guidelines for small businesses
You may have breathed a sigh of relief after filing your 2017 income tax return (or requesting an extension). But if your office is strewn with reams of paper consisting of years’ worth of tax returns, receipts, canceled checks and other financial records (or your computer desktop is filled with a multitude of digital tax-related files), you probably want to get rid of what you can. Follow these retention guidelines as you clean up.
3 ways to supercharge your supervisors
The attitudes and behaviors of your people managers play a critical role in your company’s success. When your managers are putting forth their best effort, the more likely it is that you’ll, in turn, get the best performances out of the rest of your employees. Here are three ways to supercharge your supervisors:
Should you file Form SS-8 to ask the IRS to determine a worker’s status?
Classifying workers as independent contractors — rather than employees — can save businesses money and provide other benefits. But the IRS is on the lookout for businesses that do this improperly to avoid taxes and employee benefit obligations.
To find out how the IRS will classify a particular worker, businesses can file optional IRS Form SS-8, “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” However, the IRS has a history of reflexively classifying workers as employees, and filing this form may alert the IRS that your business has classification issues — and even inadvertently trigger an employment tax audit.
Tax credit for hiring from certain “target groups” can provide substantial tax savings
Many businesses hired in 2017, and more are planning to hire in 2018. If you’re among them and your hires include members of a “target group,” you may be eligible for the Work Opportunity tax credit (WOTC). If you made qualifying hires in 2017 and obtained proper certification, you can claim the WOTC on your 2017 tax return.
Whether or not you’re eligible for 2017, keep the WOTC in mind in your 2018 hiring plans. Despite its proposed elimination under the House’s version of the Tax Cuts and Jobs Act, the credit survived the final version that was signed into law in December, so it’s also available for 2018.
Use benchmarking to swim with the big fish
You may keep a wary eye on your competitors, but sometimes it helps to look just a little bit deeper. Even if you’re a big fish in your pond, someone a little bigger may be swimming up just beneath you. Being successful means not just being aware of these competitors, but also knowing their approaches and results.
And that’s where benchmarking comes in. By comparing your company with the leading competition, you can identify weaknesses in your business processes, set goals to correct these problems and keep a constant eye on how your company is doing. In short, benchmarking can help your company grow more successful.
Small business owners: A SEP may give you one last 2017 tax and retirement saving opportunity
Are you a high-income small-business owner who doesn’t currently have a tax-advantaged retirement plan set up for yourself? A Simplified Employee Pension (SEP) may be just what you need, and now may be a great time to establish one. A SEP has high contribution limits and is simple to set up. Best of all, there’s still time to establish a SEP for 2017 and make contributions to it that you can deduct on your 2017 income tax return.