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FINANCE
Misconceptions about Business Vehicles and Taxes
There are many misunderstandings around tax deductions related to business vehicles. One common one is that a business automatically receives a tax deduction for vehicle costs just because the vehicle serves a business purpose.

Usually, the vehicle is only partially used for business; often it's the business owner's personal automobile. Although it may be titled in the company name, expenses for a personal/business use vehicle aren't considered business expenditures. Deducting vehicle costs as automobile expenses is actually an inflated deduction, and it may disguise wages that are actually subject to payroll taxes.

A genuine company vehicle is used almost entirely for commercial purposes; however, incidental personal use, such as driving home after work appointments, is acceptable. Routine commuting is considered non-incidental personal use.

Personal use of a company vehicle is a form of compensation to the user; in allowing an employee to use a company auto, a value for personal use miles will be added to his or her reported taxable wages. (Rates per mile are set each year by income tax authorities.) Similarly, a business owner's personal miles will be added to his or her wages or profit distributions. Therefore, your mileage records and those of your employees must separate business miles from personal miles.

Rather than using company vehicles for personal purposes, it's easier for the company to reimburse the owner/employees at the standard mileage rate when using their personal vehicles for business purposes. The general standard practice is not to title any vehicles used for personal purposes in the company name.

 
HOT BIZ TRENDS
Failure Can Lead to Success ... If You Learn from It
 
Nobody sets out to fail. Nobody plans to make mistakes. But perhaps they should - because everyone knows you can learn a lot from failure.

While nobody likes to fail, studies show it isn't necessarily a bad thing. Mistakes may highlight flaws that, when overcome, lead to success. After years of failed electrical experiments, Benjamin Franklin finally achieved success. When he did, he claimed he hadn't failed but instead had discovered 10,000 ways electricity doesn't work.

Franklin's positive attitude got results, whereas fear of failure may stop you in your tracks.

Harvard Business School professor Amy Edmondson coined the phrase "psychological safety" to describe feeling secure enough to take risks and to accept the possibility of making mistakes.

This is an important concept because it's hard to make progress without it. If individuals worry that major repercussions are sure to follow an error, they'll keep doing what they've always done. And presto - opportunities for innovation, creativity, and change evaporate.

In fact, a company with a culture that learns from mistakes can gain a competitive advantage. As Edmondson points out, "a culture that makes it safe to admit and report on failure can - and in some organizational contexts must - coexist with high standards for performance."

Today, companies must take every competitive advantage available - including learning from mistakes. Currently, however, those who do are few and far between. Notes Edmondson, "The wisdom of learning from failure is incontrovertible. Yet organizations that do it well are extraordinarily rare."

It's time to make your mistakes work for you.

 
TECHNOLOGY
Be Smart about Protecting Your Smartphone
Your smartphone is a treasure trove of personal data and confidential corporate information. It probably offers access to passwords, financial accounts, credit status, and purchasing habits, not to mention your online browsing history. It contains information that can be used to track where you've been and even ascertain whom you've met with. So much for private conferences.

All that's keeping this information away from would-be hackers, trolls, and cyber criminals is a simple password or fingerprint scan, both of which could easily be bypassed by someone with bad intentions and the right tools.

Fortunately, smartphones are getting smarter about security, and phone manufacturers are working to build devices that are less hackable. Some devices now feature encryption software to safeguard against breaches. Others hide users' personal or confidential information behind a type of firewall.

At a more sophisticated level, phones have been developed for the defense and intelligence communities that store data on a separate device so that if hackers penetrate a phone, there's nothing to find. These phones also have a self-destruct mechanism that activates if someone tries to open or compromise them in some way.

Barring purchasing a defense-grade cell phone, your best option for securing your data is to keep your phone and apps up to date and to notice if your phone is behaving strangely or uncontrollably. Don't click on sketchy links, never loan your phone to a stranger, and avoid public hot spots.

Think about it: You secure your car with an alarm system. You've likely installed a corporate security system and protected your business from cyber attacks. You've trained employees to recognize scams. So, protect your smartphone now - and urge your employees to do the same.

 
FINANCE
Your Vigilance Can Prevent Accounting Issues
 
As a business gets rolling, a myriad of factors can combine to create accounting issues. Although perfect accounting is as mythical as the unicorn, it's important for business owners to adopt a strategy of keen bookkeeping oversight. The alternative is certain to result in mistakes, which can jeopardize the progress of your business.

In fact, losing track of your financial data is bound to result in inaccuracies that can cripple an operation. Sound basic procedures go a long way to promoting business success.

Receivables reconciliation

Matching customer payments to invoiced work is clearly a crucial objective for every enterprise. The proliferation of accounting software to aid in this process has been both a blessing and a curse. The blessing is that less time is spent finding invoices and comparing payment amounts. No more verbal quotes and hand-written invoices; accounting software permits simplified tracking of unpaid invoices and eliminates disputes. Moreover, summary financial statements of income and costs are compiled with no additional steps.

Its curse is that it results in a false sense of comfort that the computer accurately records what's transpired. In fact, accounting applications only record what a human enters. You must scrutinize reports regularly to ensure that transactions are posted to the correct accounts.

For example, entering a received payment and not applying it to an invoice - or to the correct invoice - results in erroneous statements of income and costs. Prevent this by monitoring accounts receivable aging reports to be sure payments are posted to the correct invoices. An accounting program should produce "cash basis" financial statements, which by definition will not indicate any balance for accounts receivable - unless an error has been made.

Payables problems

Another bookkeeping goal is paying bills received from vendors. Accounting software facilitates the entry of a bill and subsequent payment. But correctly applying payments to existing bills in the system may be problematic: for example, matters are distorted when someone pays a bill by company credit card and then pays the credit card bill. Failure to follow the exact steps in these events will render inaccurate reporting of income and expenses. This solution rests with examining accounts payable reports; a "cash basis" balance sheet should not contain any amount for the accounts payable account.

It also makes sense not to enter loan payments as bills to pay. The indebtedness is already in the bookkeeping system and is reflected as a liability on the balance sheet. Loan payments, therefore, need not impact the accounts payable process. Simply record a check and apply respective amounts to the separate accounts for the liability and interest expense.

You can reliably compile business income and expenses by setting high standards of accuracy for accounts receivable and accounts payable. Tax professionals will know if accounting software mistakes have been made in these areas, and won't permit income tax reporting of spurious data.

However, it's difficult for your accountant to locate errors that occurred over long periods. In order to eliminate problems later, it's important to quickly find bookkeeping mistakes and immediately correct them.
 
 
Michele Ball
 
 
 
 
 
Perfect Additions
 
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Worth Reading
Stop Managing Your Time and Start Owning It
By Thomas Oppong
 
Thriveglobal.com
 
Everyone knows there's never enough time in the day. The solution: It's simply a matter of taking ownership of your time. Find out the four ways to spend your time. And as Oppong says, choose wisely. One thought: control interactions with others. Oppong quotes Warren Buffett: "You can't let other people set your agenda in life."

The Business Consulting Industry Is Booming, and It's about to Be Disrupted
By Soren Kaplan


Inc.com

Disruption is coming to the $250 billion consulting industry, Kaplan says. Why? Basically, it's the usual: firms are entrenched in their own ways of doing things and are susceptible to more nimble, technologically minded newcomers. Which area of consulting will be the first to feel the impact of new competitors? Read to discover this.

Successful People Make Decisions Differently
By Stephanie Vozza


Fastcompany.com

Do successful people make decisions differently? In fact, they do. Vozza quotes author Mike Whitaker: Successful people are good, disciplined decision makers, and, Whitaker suggests, they have "a methodical way of looking at choices." They clearly define what they want and implement four key strategies to achieve those goals. What are the strategies? Find out by deciding to read this.

LINKS YOU CAN USE
How to Delegate
Entrusting someone else to do the task at hand sounds simple. But most of us struggle to delegate well.

Since delegation is key to successful business management, it's worth the time to develop the skill. These links may help:

Success at delegating is achievable. Follow these three steps to become a delegation pro:
Mastering the ART of Delegating

Do you find it difficult to delegate? Among these helpful hints: How to let go:
7 Strategies for Delegating Better and Getting More Done

Find out how to do it right, and even more important, how to avoid the dreaded reverse delegation tactic:
How To Delegate More Effectively In Your Business

Are you too busy to delegate? Learn to use "the power of other people's help":
Successful Delegation Using the Power of Other People's Help

"Should I delegate that?" Find the answer to that question here:
Should You Delegate That? A Comprehensive Guide
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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