Archive for April 2011
Standard Mileage Rates are Increasing: Find Out How Your Home Office Can Help You Deduct Even More
April 28, 2011 | 
Author With gas prices on the rise, the IRS has announced an increase in standard mileage rates effective July 1st. For business miles, the rate is increasing from 50.5 cents per mile to 58.5 cents per mile.
Who is impacted by this increase?
- If you reimburse your employees or are an employee that gets reimbursed for mileage, be sure the rate is the increased rate as of July 1st (assuming your employer uses the same rate).
- The increase also applies to medical and moving miles, which are increasing from 19 cents per mile to 27 cents per mile.
- If you use the standard mileage rate to deduct your business vehicle expense, this means an increase in the amount you can deduct.
**TIP** In your mileage log, be sure you can total your mileage before July 1st and after July 1st so your mileage after July 1st gets the new increased rate.
How Your Home Office Can Help You Deduct Even More Business Miles:
With the increase in gas prices, I have found that several of my most recent conversations with clients have been focused on the home office. With the rise in gas prices, more and more people are telecommuting, which means more and more home offices.
One of the great tax perks of a home office is being able to deduct travel to and from your home office. Sometimes travel to and from a home office is not deductible because it is considered commuting, but in certain circumstances, it can be a deductible business expense. If you use the standard mileage rate to calculate your business vehicle expense, deducting the travel to and from your home office, on top of the increase in standard mileage rates, can add up to big tax savings!
Here’s how to make sure your travel to and from your home office is deductible so you can really take advantage of the increase in the standard mileage rates:
There are two requirements that must be met in order to deduct the travel to and from your home office.
First: Make sure your home office is used exclusively for business
The room or specific area in your home that you use as your home office must be used exclusively for business. So, for example, your home office doesn’t qualify if it is a room that your family also uses as a den or a guest room that is used by overnight visitors.
Second: Make sure your home office qualifies as your principal place of business
The key to being able to deduct travel between your home office and other business offices or locations is making your home office your principal place of business.
If your home office is your only office and you use it on a regular basis to conduct your business, then it is most likely your principal place of business.
But what if you have another office location in addition to your home office?
Your home office is considered to be your principal place of business if:
It is the only fixed location in which you perform administrative or management activities for your business. These activities include billing customers, clients or patients, keeping books and records, ordering supplies, setting up appointments, forwarding orders, writing reports and other such tasks, OR
You regularly use it to meet with customers, clients or patients in the normal course of your business. Caution: You must physically meet with customers, clients or patients at your home office. In addition, their use of your home must be substantial and integral to the conduct of your business. Occasional meetings in your home do not qualify. Similarly, telephone calls to customers, clients or patients are not enough. The customers, clients or patients must be physically present in your home office.
It may seem a bit confusing. That’s because these rules are very specific, not to mention regularly changing!
Many times, I find that getting your home office to qualify as your principal place of business is simply a matter of changing what you do at your home office. Here is a recent situation I had with a client on making her home office her principal place of business.
Before: Home Office Did Not Qualify as the Principal Place of Business
My client is a self-employed real estate agent who spends most of her time at her clients’ homes and out in the field showing houses. She has an office that she rents from another real estate agent in addition to a home office. She performs administrative and management tasks for her business, such as phoning clients, setting appointments, ordering supplies, and keeping her books at her rented office space and then also takes this work home to finish it at her home office.
Her home office did not qualify as her principal place of business because she did not meet with clients there as part of her normal business operations (her meetings with clients were at their houses or the houses they were considering buying) and she had another fixed location (her rented office space) where she conducted substantial administrative and management activities for her business.
After: Home Office Does Qualify as the Principal Place of Business
After discussing her situation, I went through a few options with her that would make her home office deductible. We ended up with the one that best fit her business goals but still qualified her home office as her principal place of business. The solution was to move all of her administrative and managerial tasks to her home office and only perform those tasks at her home office. She then used the rented office space as a place to meet with clients and for other business tasks.
The end result: a tax savings of $4,000 per year because she could claim the home office deduction and the travel to and from her home office.
Posted in business standard | 
Tags: Business Vehicle, Conversations With Clients, Mileage | 
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Business Management – Guideline to Effective and Efficient Management
Every transaction or activity carried out by a business is commonly done within the scope of the frame-work laid out by the management. Therefore any activity done outside this is counter productive and will not promote the objectives of the organization.
A manager should set the targets to be achieved by the employees. Objectives should be clearly stated, measurable, prioritized and timed. A good manager constantly checks weather these targets are being achieved and takes corrective measures when called upon. He should be able to predict any impossibility and act beforehand.
When it comes to purchasing, it should be made from the cheapest source not forgetting to check on quality of the products. Apart from that, sales increasing policies such as displays and advertising budget should be affordable. A sales manager must also set reasonable prices and not exploit customers.
Lack of records can easily bring down a business; record keeping helps in detecting problems in advance. Updating records constantly will help run a business in an organized manner thus improving efficiency.
Apart from being given instructions, staffs also need to be motivated. Good supervision will lower operating costs by reducing the number of errors made while increase quality of work.
In any organization, the secret to getting the most out of workers is by boosting their morale. Once the employees are motivated, they will work hard towards achieving the company’s set objectives and thus ensure the success of the business. Some of the ways of motivating workers would include periodic salary increments, rewarding best performing employees, organizing team building activities just to mention a few.
Posted in business management | Tags: Impossibility, Organizing Team, Record Keeping | No Comments »
Great Plains Support: Switching From Gp Standard to Business Ready Licensing
Microsoft Dynamics GP ERP, or former name for this accounting application is Great Plains Dynamics. With the competition increase, especially with the introduction of such small and mid-size business ERP as SAP Business One, Microsoft Business Solutions changes the licensing schema. Now you can get so-called Business Ready license, where most of the Great Plains Dynamics GP modules are included. Historically, however small GP customers are on Great Plains Dynamics GP Standard, where you had to pay for each module separate. Of course, this paper is our unofficial opinion, based on our relations with existing Great Plains customers:
1. GP Business Ready advantages. If you have company growth and now you are looking forward to implement such Great Plains modules as Manufacturing, Collection Management, Fixed Assets, Multicurrency, Sales Order Processing, Purchase Order Processing and others, you may benefit from the switch, especially considering relatively low cost to switch. Consider the situation, when you currently have very basic Great Plains modules set: General Ledger, Payables Management, Receivables Management – that’s all, and you need additional functionality for your growing and becoming more complicated business processes
2. Be defensive. If you are staying with the same number of transactions in Great Plains Dynamics GP, then, you probably should stay with the GP Standard or Module based pricing. New modules available through Business Ready program would not help you out or contribute to your current business processes, we assume that MRP and Manufacturing is not your specialization
3. Manufacturing or Discrete Production. In the case if you are in Manufacturing business, you may definitely win in switching to Great Plains Dynamics GP Business Ready licensing. We assume that you are currently using inventory control and GP bill of materials modules to cover your Manufacturing business processes
4. Annual Enhancement, DeLuxe support plans cost comparison. If you are on Modules based model, then if you switch to Business Ready, you should calculate the cost of annual enhancement program, which you will have to pay each year to be enrolled into the program. Typically switching to Business Ready license increases the annual support cost