The Legal Intricacies of Claiming the Home as a Place of Business
Like all matters of law, taxes hinge on precise, confusing and ambiguous code. The self-employed and independent contractors know all too well how the IRS uses befuddling rules to determine who is eligible for a certain deduction. Using the home as a place of business is one of the most useful deductions to make. However, knowing the tests that IRS representatives use to determine eligibility can save future hassles and serve as a good defense when the deduction is questioned.
The IRS first applies an exclusivity test to determine if the self-employed can indeed claim an area for work or storage. The area must be exclusively used for work. A family den where kids play cannot also be a work area. Clearly, that would result in a lot of tax abuse. To ensure that this deduction is allowable, have a fixed area with a desk and basic equipment where the majority of work is completed.
The second test determines if the space at home constitutes a person's primary place of residence. For a section of a home to qualify, it must be your predominant place of work. Someone who works at a corporate office and browses email at home usually cannot claim business use of the home on tax returns. Another example is the independent contractor who prefers to work at home, but has access to an office. The IRS will want to know if working at home is merely for convenience. If so, it may not qualify as a deduction. The place where administrative work is completed is one aspect that the IRS uses in its determination. Sending emails does not suffice to make a space a business location. However, if writing bills, making invoices and doing similar paperwork take place in the home, the dedicated area for it most likely will qualify. It's normal to meet clients and have meetings elsewhere, but the bulk of the administrative tasks and actual job duties should occur in the space being claimed. By knowing the fine distinctions between what the IRS qualifies as acceptable and what it rejects, the self-employed and independent contractors can escape stressful encounters with tax representatives.
- Written by Phillip (Phil) Thow Scottsdale, AZ
Thinking of Quitting Your Job to Start Your Own Business
If you are thinking of giving up your day job to start your own business, there are obviously some key things you should consider before turning in your resignation letter.
Finances
Take an honest look at your current financial situation. Do you have an emergency fund? Are you drowning in consumer debt? If these two areas are not where they need to be, then you may need to stay put for a while. You can pay off your debt or build up an emergency fund so that you can weather the rainy day storms that inevitably come along when you are first starting any new business. This doesn’t mean you can’t start your new business, as a part-time endeavor that you work on after hours and on the weekend. Many of the world’s best startups began in the garage after work or school.
Business Plan
Have you taken the time to write up a simple business plan yet for your new idea? If not, go ahead and do that before you quit. Jot down what you will sell (products or services), who you will sell it to (who is your target audience- a necessary component for any business), and how you will market (pay for ads, go to trade shows, social media, flyers, bricks and mortar locations, online store, etc.). These three components are the basic elements needed to start and run any successful business.
Plan B
Go ahead and think about it now, so that if your new business just doesn’t hit the market right and explode enough for you to make ends meet, what you are going to do then. Write down how much time you can afford to give yourself based on your financial situation (since you’ve already evaluated that). Write down what your options are for either increasing revenue (sell everything off) or decreasing costs (partner up with someone, get venture capital from somewhere).
Once you’ve taken the time to think through these three areas, you will know if now is the best time to take the plunge; or if maybe you should start slowly and work on your new business idea part-time for now.
- Written by Phillip (Phil) Thow Scottsdale, AZ
What exactly is Business Casual
Business casual is a term that many seem to confuse with actual “casual" attire. How'd that happen? One could blame it on Silicon Valley and on all of the tech startups, possibly with good reason. But the demise is probably also somewhat due to the technology era as a whole and not just because a few pioneering tech execs were famous for wearing jeans and a nice shirt both to the office and to highly publicized product launches. Working in the technology sector brings with it the allure of crawling under desks, installing servers, working with small tools like screwdrivers and such to connect server racks, etc.
The definition of business casual used to simply indicate attire that did not require a suit and tie. It was typically seen as khakis or more comfortable (cotton) pants. Polo shirts, sweaters, and vests usually accompanied the khaki pants. In the early days of business casual, if you weren't in a tie, you were considered to be dressed business casual. But then khakis got casual, really casual. With some containing cargo pockets and fitting more slouchy than even jeans would. That appearance left the business casual world and turned into hiking or lounging attire; totally casual by most standards.
Today, business casual depends on your company’s definition of it in the employee handbook. Jeans may or may not be allowed. Socks and stockings may or may not be required. Ties, sports coats, button down shirts and cuff links are likely not a requirement in a business casual environment. For women, the type of shoes allowed (open toe, sandals, or only closed toe) is sometimes included in a company’s definition of a business casual dress code.
One thing to keep in mind though; business casual does NOT mean anything with holes. Clothes that are tattered, torn, or visibly worn should never be worn to the office.
- Written by Phillip (Phil) Thow Scottsdale, AZ
What is “5S” and How Will it Make My Business Better?
There certainly are a lot of business acronyms floating around any longer and it is hard to know what is meaningful and helpful and what is just fodder for someone's slick sales presentation.
One of the acronyms that has filtered into many workplace efficiency methods is “5S”. Originating in the Japanese manufacturing philosophy of “Just in Time Manufacturing”; the five Japanese words seiri, seiton, seiso, seiketsu, and shitsuke can be transliterated into English to mean Sort, Straighten, Sweep, Standardize, and Sustain. Examining and refining each process and work area in light of these five concepts can increase efficiency and remove workplace strain, stress, and confusion thereby reaping exponential gains. Additionally; 5S is not intended to be a one time event; but an on-going cycle of improvement as new ideas are discovered and new efficiencies found.
Let's look quickly at each of these terms to see how they can improve your business.
1) Sort. Group together the tools or items necessary to do a particular task and place them in the station where the task is performed. Remove anything else not essential to the task. So often, items migrate around to other desks or work stations and time is lost searching for those items when they are misplaced. Efficiency is gained in minimizing time searching for misplaced tools and working around non-essential items.
If you discover through this process that you need an item in multiple work stations; acquiring enough of these items to stock them at each station will often pay off in gained efficiency. Consider this investment.
2) Straighten. Now that essential tools and items have been located at appropriate work stations it is time to organize them in a logical manner which complements work flow and frequency of use. Items which are used most frequently should be easiest to reach when and where you need them. Additional clutter should also be removed at this phase.
3) Sweep. Not just general cleaning – deep cleaning. A happy and efficient work space is a clean work space and a clean work space is easier to keep that way. This step in particular is one that is cyclical and you will spend less time doing it in the future if you do it well the first time.
4) Standardize. A place for everything and everything in its place. Establish each item's home and a method to make sure it stays there when not in use. A great example is a mechanic's tool board with a peg for every tool and each tool outlined on the board behind to clearly identify missing tools and return them to the proper peg. Color-coding duplicate items to specific work areas is also helpful.
5) Sustain. Another especially cyclical step in the 5S method is to continually evaluate methods to keep the other steps in order and in operation. Are there steps that are breaking down and not happening as they should? What is the reason and how do we work around it to improve the process. No step is more important than the others; but this last step insures that you are getting the maximum benefit from the ones before it.
Now that you have a simple understanding of 5S and how it works you can begin to identify how to implement it in your workplace and reap the benefits of efficient processes and work areas.
- Written by Phillip (Phil) Thow Scottsdale, AZ
What Makes a Product Go Viral
Many may believe that it is just sheer dumb luck that causes a product to suddenly go viral. But they would be wrong, flat out wrong. There’s actually a conclusive scientific reason behind what elements cause a product to ‘magically’ go viral in the marketplace. Let’s take a look at those elements.
Personal Connection
A Viral product somehow manages to create a personal connection between itself and the consumer. Whether they draw you back to a simpler, more enjoyable time in your life or they remind you of stories your grandpa once told you about his life, products that create a personal connection will magically find themselves in the shopping cart (physical or virtual) more often than those that do not create this connection.
Story
Speaking of stories your grandpa once told you, viral products need a story and need for your consumers to be able to re-tell that story over and over again. That’s true viral marketing genius. Whether it’s a pet rock, a pair of shoes that is donated for every pair you buy, or a company that honors an online sales error even though it resulted in a loss of over $1.5 million in revenue; those are the stories that people will tell over and over again and it becomes modern folklore, memorable, and before you know it people want to become a part of that story.
Value, Pure and Simple
A product doesn’t have to be elaborate to go viral. That point has been proven in spades. But a product that offers simple value to its consumers, something that improves their life in a simple and unencumbering way, that product will become the single source over other products with more bells and whistles.
Identity
The last element to a viral product is identity, meant here in two ways. For starters the consumer needs to identify with the product. Can they see themselves using it? If they can easily do that, via your clever marketing, then they won’t know how they lived without it and must have it. The second way to infuse identity into your new viral product is in its packaging. Distinctive logos or colors used in the marketing and packaging will make it easy for your consumer to spot that product that they know they can’t live without.
Remembering these four elements in your product launch and campaign will help you get closer to your goal of creating that next viral product.
- Written by Phillip (Phil) Thow Scottsdale, AZ
Why Income is Declining for Males
A recent study by a Massachusetts Institute of Technology (MIT) professor has shown an alarming trend. The income of male workers is declining, while the earnings for female workers have increased. In an effort to determine the cause, it seems apparent that the demise of two-parent households as a stable environmental structure may be to blame.
An MIT professor, David H Autor, is a well-respected labor economist and has compared some startling statistics to try and understand this puzzling phenomenon. Over the past 30 years, the percentage of children who were raised in a two-parent home has decreased from 82 percent down to a feeble 63 percent. To add to this statistical proof, the majority of single parents who are left to raise children in a single-parent environment are female. Growing research evidence indicated that men who were raised by a single mother “appear to fare particularly poorly,” according to Professor Autor in this recent research analysis.
On average men are still earning more than their women counterparts and peers. However, the gap is narrowing, and the trend could spell economic disaster for future generations. An interesting twist that adds to this puzzling equation is the fact that women have been earning college degrees in droves yet, conversely, men are not.
With this being the technology era, a college degree, primarily in mathematics, science, or technology, are key components to America performing competitively amongst our own peer nations. Studies have shown that boys raised in single-parent homes are less likely than girls are attend college. Additional studies have indicated that females are up to 14 percent more likely to complete college than males are, when a stable father figure is not found within the home.
More research and exploration is needed to confirm these early findings. As a nation, we owe it to ourselves and our children, and their children, to reverse these startling results.
- Written by Phillip (Phil) Thow Scottsdale, AZ
Dealing With Workplace Confrontation
Phillip Thow isn’t exactly the Chuck Norris of online business advice. But he does have some good ideas, and his website can teach a lot of good managing tips, including tips for dealing with some irritating (and sometimes aggressive) situations that business consulting alone can’t really help you with. If you’ve got an interpersonal problem with your employees or a colleague, you can still help to solve the problem before it gets blown out of proportion. Here are some ideas with a Phillip Thow seal of approval:
Make sure you’re respecting the other person – and the other person knows it. If you know a person has a bone to pick with you – or you have to confront them about something – make sure you’re not just avoiding the topic or making a mockery of it. Address the problem, making sure you express your concern for their opinions.
Another thing business consulting won’t teach you is the importance of keeping your own opinions mellow and under control. There’s a reason Phillip Thow isn’t the Chuck Norris of the business world: Chuck Norris tactics don’t work very well in the business world. If you’ve got a difficult client or co-worker, you’re not going to be able to solve your problem with a good round-house kick. Nor is a good, hearty argument (or screaming match) going to solve anything. If you lose your temper, you’re already losing your argument; the second you’re willing to raise your voice, you’ve lost your colleague’s respect, and you’ve shown you don’t have any respect for their argument, as well. Make sure you can keep your cool – and if you can’t, respectfully ask to meet with this person at a later time.
- Written By: Phil Thow |
