Jake Snelson - Vyde

Why Keeping Track of Your Product Inventory is Essential to Your Small Business Success (Plus a Free Inventory Tracking Sheet)

Keeping track of product inventory might just be an entrepreneurs least favorite task. However, it’s necessary if you want to be a successful business owner.

Tracking product inventory is useful for multiple reasons.

It lets you know what products are best-sellers.
You can save money by not over ordering.
Free up space by only ordering what you need.

We’re going to help you develop habits that make taking inventory easier so that you can easily keep track of your inventory.

Identify Product Inventory Patterns

Product inventory patterns are helpful so that you can keep your shelves stocked and never miss out on a sale. You need to determine which items are flying off the shelves and which ones are sitting, so that you can keep up with your customers.

It may take a couple months of consistent tracking before you see patterns. However, once you begin to look for patterns, you will see them. Once the patterns become apparent, you can start making smart decisions regarding ordering.

Figuring out what products aren’t selling can help you save money. You don’t want to over order and lose money on products you can’t sell. Retailers lose about 3.2% of their revenue in overstocks. Keeping track of your product inventory can help lower that number.

Another important trend, or pattern, to look for is which products sell during different seasons. Obviously, summer products are going to sit on the shelf during December and January. And Christmas items aren’t going to be in high demand in June. However, seasonal items will be in high demand for a couple of months and you don’t want to lose out on revenue because you didn’t keep enough in stock.

To avoid this, research your past sales and set goals on what you want to sell this year. Then, make your order. Also talk to your supplier on rush orders, just in case you exceed your goal and need to order more products.

Prioritize Top Selling Items

It’s important to keep your most popular products in stock at all times. In a day and age where people can find just about anything online, and for a cheaper price, it’s crucial to keep your most sought after products in stock.

Typically 80% of your demand is for 20% of your products. Running out of these popular products can result in a 4.2% loss in overall revenue.

In order to avoid running our of your top selling items, create a system that prioritizes these items. Perhaps they are the first items on your inventory tracker, so that you can always do a quick look to see where you’re at. Another good way to prioritize these items is to use a visual system. Mark your most popular items so that you can quickly look around your storage and check up on those items often.

Whatever method you use, just make sure you have what you need so that you don’t lose out on sales!

Create an Product Inventory Backup Plan

There are so many options for tracking product inventory. Some people may suggest one system over another, but ultimately, the best system is the one that works for you and your business. Whether you choose a system that uses barcodes, tracking by hand or a visual system, just make sure it’s effective in your business.

However, if you choose a system that is online or needs a computer in order to know how much product inventory you have, you need to have a backup plan. What are you going to do if the system’s server is down? What if you lose power and can’t access your systems? Can you continue with business as normal?

If you rely on technology for your inventory use a thumb drive to back it up. You could even print it off and keep it in a safe place in case you run into a issue next time you do inventory. You can look at your backed up copy to see the differences. It doesn’t hurt to let your accountant know how much you have in inventory either. Plus, we love all of kind of stuff!

How to Determine if Content Marketing is the Right Choice for Your Small Business

We all know that the marketing landscaping is changing. Traditional marketing such as television or print ads, billboards and phone books aren’t effective. When was the last time you even opened a phone book? Content marketing is the new wave. It’s a great way to draw customers in and help them learn about your business. There’s just one thing holding back. What is content marketing exactly?

There’s no reason to be embarrassed about not understanding content marketing. Most business owners use it without even realizing it! According to the Content Marketing Institute, “Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience — and, ultimately, to drive profitable customer action.”

There are two parts of content marketing that are the most important: valuable content and profitable customer action. We’ll discuss how to achieve both and why it’s good for your business.

Content Marketing Should be Valuable

Content marketing only works if your customers get value from your marketing. This makes it hard to come up with content because everyone is different and what some fine valuable, others don’t. The best way to see if your content has value is to follow these guidelines

Is it findable? Great content is only valuable if people can find it. This means that you need to search engine optimize (SEO) your content with relevant keywords so that people can find it when they do a search.
Is it readable? Readers have short attention spans, so it’s important to make sure your content is easy to read. Breaking information down into bullet points and using section headers can really help with this.
Is it actionable? Like we mentioned before, your content needs to make your audience take action. A call to action is necessary for great content marketing.
Is it shareable? Going viral is a real thing, and it can be great for business. People should be excited to share your content with their friends. When they share your content, it increases the number of people you reach.

If you follow these guidelines, your content will be valuable, no matter what the subject is.

It’s easy to understand why valuable content is good for the consumer, but what does it do for you and your business? The way people make purchases has changed. Most people will do a lot of research before they make a purchase, so if you can be a part of that research process, people will come to you ready to use your services. Which, brings us to our next point. How can we turn content marketing into profitable customer action?

Content Marketing Should have Profitable Customer Action

Although the marketing landscape has changed, the goal of marketing hasn’t. In order for content marketing to bring in more business, you have to get customers to take action. This action doesn’t necessarily have to be to make a purchase, although that is the end goal. Sometimes action means sharing a post, leaving a comment on a video or contacting your sales team.

In order to get customers to take action you have to prompt them. This prompting is referred to as a call to action (CTA.) A call to action needs to tell your customers exactly what you want them to do. The following tips will help you write a killer (and effective) CTA.

Use strong verbs to promote action (buy, order, sign up)
Elicit emotion to draw customers in
Tell them how you’ll solve their problems
Put a deadline on the CTA so that people want to take advantage of it now!

There are two stages in converting content consumers in customers. The first stage turns visitors (either of your website or social profiles) into leads. This is the convert stage. In the convert stage you are trying to get your visitors to head your call to action. In most instances you call to action will lead them to a form where they can give you their contact information. Once you get their contact information, you can turn a visitor into a lead.

Managing customer relationships is how you can turn your leads into customers. This step is called the close. The close may require a sales team member to contact your lead and pitch them your product or business or simply answer questions the lead has. Once your team has made the close, you’ll want to keep in touch with your customers and make sure they are still happy with your business and your products. As long as they are, you’ll turn your customers into promoters. Which is the best kind of customer you can have.

As you can see, content marketing is consumer focused, but the payoff is well worth the effort. Check back in next month and learn about what types or content marketing you can use.

FAQs on Content Marketing for Small Business:

What is content marketing exactly?

Content marketing is a strategic approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a defined audience and drive profitable customer action.

How can I ensure my content is valuable to my audience?

To ensure valuable content, make it findable through SEO, readable with concise formatting, actionable with clear CTAs, and shareable to increase its reach and impact.

Why is valuable content important for my business?

Valuable content engages consumers during their research phase, positioning your business as a trusted resource, leading to increased conversions and customer loyalty.

How can I turn content marketing into profitable customer action?

By incorporating effective calls to action (CTAs) that use strong verbs, elicit emotion, offer solutions, and include deadlines, you prompt consumers to take desired actions, ultimately converting leads into customers.

What are the stages in converting content consumers into customers?

The convert stage involves turning visitors into leads through CTAs and forms, while the close stage entails managing customer relationships to convert leads into customers through sales interactions and fostering customer satisfaction to turn customers into promoters.

What is the Widow’s Exemption?

The widow’s exemption reduces the tax burden on widows by reducing the amount of a widow’s taxable income. States individually determine the widow’s exemption rules and laws for themselves. It is not a federal exemption.

Most commonly, the widow’s exemption effects the state inheritance taxes. When one spouse dies, he or she typically leaves all, or most, of his or her estate to the surviving spouse. The widow is then exempt from paying state inheritance taxes on his or her dead spouse’s estate.

Because it is a state by state exemption it’s important to understand what the laws are in your state. Federal laws don’t regulate what each state can do. If you don’t understand the widow’s exemption in your state, it’s best to talk with a tax professional.

Some states apply the widow’s exemption to property taxes. Florida is one of the states that give widows an exemption from property taxes.

The Widow’s exemption is only available to widows who remain unmarried after his or her spouse dies. This applies to exemptions from inheritance and property taxes. In the eyes of the government, you are no longer a widow when you remarry; therefore, any remarried widows would have to pay taxes.

Widow’s Exemption Scenario

Mindy’s husband passed away six months ago. When Mindy met with her Certified Public Accountant (CPA) after her husband’s death, she learned that she was able to take advantage of tax breaks for widows.

Mindy will still file last year’s taxes as married filing jointly because her husband would still need to pay any taxes owed. However, going forward she can file as widowed, unless she gets remarried.

She can also take advantage of the widow’s exemption. In Mindy’s husband’s will he left his entire estate to her. Mindy isn’t currently working, so she doesn’t have the funds to pay the taxes on the inheritance. With the widow’s exemption she can keep the inheritance to live on without having to pay taxes she can’t afford.

How to Respond to Bad Reviews of Your Small Business on Yelp & Google

Online reviews provide a forum for customers to share their experiences with a business. Which is outstanding if you have positive reviews, but if customers are posting bad reviews it can hurt your business.

You can’t remove bad reviews from online review sites like Yelp and Google; and you shouldn’t want to! Trying to remove bad reviews, no matter how untrue or unfair they are, shows that you aren’t able to take criticism. It also makes it look like you aren’t willing to be honest and open about your company. Instead of trying to get bad reviews removed, learn how to respond to them.

Use the following tips to respond to bad reviews.

Apologize to the Reviewers for a Bad Experience

You never want your customers to have a bad interaction with your business, but eventually it’s bound to happen. When you are responding to reviews the best thing you can do is acknowledge your customer’s dissatisfaction and apologize for it. This doesn’t mean you are taking all the blame for the situation. You’re just apologizing that they didn’t enjoy your services. A simple, “I’m so sorry you had a bad experience.” shows that you care about your customers.

Nothing turns the mood from anger to understanding quicker than seeing a small business owner show humility. A simple apology can help you change the mind of a disgruntled customer, or (and perhaps better yet) it can change the mind of a new customer who saw that despite a customer’s bad experience the business owner went out of their way to try to right the situation.

Address Specific Points of Bad Reviews

Have you ever been in an argument where the person you’re arguing with just keeps listing things you’ve done that upset them? That’s basically what’s happening when people are reviewing your business online. They’re mad about something and boy, do they let you know what went wrong!

When a reviewer starts to list the ways you’ve upset them, start taking notes. These points will give you concrete issues to address in your response. Try to address each point that your reviewer mentioned. In your response, you’ll want to do the following things:

Thank your reviewer for letting you know where issues are in your business.
Let the reviewer know how you are, or are planning, to address the issue.
Explain what may have caused the issue and again, explain how you plan to fix it.
Offer an olive branch. This doesn’t mean you need to pay them back for their bad experience, but offer to have them visit your business again and give you a second chance.
Give the reviewer a way to reach you. This shows that you are sincere in wanting to fix their bad experience.

Try to Resolve the Issue

Bad reviews can easily offend small business owners. Especially, when that review is unfair or a down right lie. However, if you can change your perspective and take the bad review as constructive criticism, then you can change a bad reviews into an opportunity to improve your business. If the reviewer mentioned a legitimate issue within your business, you must take their advice and make a change.

Like we mentioned in the previous point, you need to tell your customers how you are addressing their concerns. This validates the customer and lets him or her know that you are always striving to improve. When a customer sees that a business is doing their best and wants to improve, it can change their perception of the business. This means that you can turn a negative review into a positive one. If a customer sees your response and is impressed with you, they may edit or even remove their review. It never hurts to try and change the mind of a customer who had a bad experience.

Now that you have a few tools to respond to bad reviews you can combat those internet trolls. Just keep in mind that a constant stream of bad reviews can be indicative of a deeper issue for your business. However, if you occasionally have a bad review, then it is probably an isolated incident, and now, you know how to deal with that.

Frequently Asked Questions (FAQs) about Responding to Bad Reviews

Should I try to remove bad reviews from sites like Yelp or Google?
No, you shouldn’t try to remove bad reviews. Removing them can give the impression that you’re unable to handle criticism and lack transparency. Instead, focus on responding professionally to show you value feedback and are committed to improving.
How should I respond to a bad review?
Start by apologizing for the customer’s negative experience. Acknowledge their dissatisfaction and express regret without necessarily taking full blame. A simple, sincere apology shows you care and can help calm an upset customer or even positively influence potential customers reading the review.
What should I address in my response to a bad review?
Address each specific point raised by the reviewer. Thank them for their feedback, explain what caused the issue if possible, and let them know how you’re planning to fix it. Offering a resolution, like inviting them back for another try, shows sincerity and commitment to improvement.
How can I turn a bad review into a positive opportunity?
Use bad reviews as constructive criticism. By addressing legitimate concerns and making changes to your business, you demonstrate that you’re constantly striving to improve. This can lead to changed perceptions and, in some cases, the reviewer may even update or remove their negative feedback.
What should I do if my business receives multiple bad reviews?
A constant stream of bad reviews might indicate a deeper issue within your business that needs to be addressed. Review the feedback to identify recurring problems and work on resolving them. Occasional bad reviews, however, are likely isolated incidents and can be managed with the strategies mentioned above.

What is Underwithholding?

Underwithholding is when you haven’t had enough income taxes withheld during a year. If a tax payer’s incomes taxes are underwithheld, it does not mean that tax payers doesn’t have to pay the taxes. Tax payers pay the underwithheld taxes when he or she files a tax return.

The withholding amount is determined by how many credits you claim on your W-4. Claiming too many credits is what causes underwithholding.

Underwithholding isn’t necessarily a bad thing. Some people prefer to have more money now and pay their taxes later. In that case, underwithholding could be a good thing. However, if you know you are underwithholding, then it’s smart to set some money aside to pay taxes. If you underwithhold by mistake, you would need to pay the government those taxes. If you can’t pay your taxes all at once, you can set up a payment plan with the Internal Revenue Service (IRS) to make your payments slowly.

Underwithholding Scenario

A mid-sized company employs Bill Jones. When Bill was hired he filled out a W-4 form and claimed as many credits as he could in order to lower his taxes. This worked really well for Bill because he had more income coming in. However, when he began filing his tax return in March, he realized that he hadn’t paid enough in taxes. Because he took so many credits his employer had underwithheld his income taxes.

Bill ended up having to pay taxes with his tax return. He decided to change the number of credits he was claiming so that he wouldn’t have to pay taxes with his return again next year. Instead of claiming as much as he could, Bill decided to only claim 2 credits. Bill won’t know if he withheld enough taxes until next year when he files his tax return.

How to Create an Email Marketing Campaign that Drives Sales

If you’re not using email marketing in your small business, it’s time to fix that! Email marketing is an essential tool for small business owners. It’s the perfect way to reach out to your customers, remind them of your business and build a community.

While it’s great to build a relationship with your customer base, email marketing needs to bring in more business. The following tips will help you create better emails that will convert email addresses to sales.

Create an Attention Grabbing Subject Line

Your subject line is the first impression you’ll make with your readers. A lot of times, it’s the only part of your email that your customers will read. Which is why it’s so important that you make it intriguing.

A good rule of thumb, when you’re crafting a subject line for your email marketing campaigns, is to keep it short. Some screens cut subject lines off after 50 characters. Effective subject lines get to the main point quickly, but still leave the reader intrigued enough that they’ll open the email. If you can’t fit everything in the email, use the pre-header text to give more information about what’s in the email.

Another good practice is to tell your customers what they can expect from the email they’re about to open. If you’re sending a freebie then let them know! Your content should be enticing so that when you tease it in your subject line people can’t wait to open it.

Make Your Email Marketing Personal

Small businesses have a leg up over big companies in one particular area: they can get to know their customers on a personal level. As a small business owner, you probably know most of your clients. You can strike up a conversation with them and remember details of their lives. This relationship is what drives people to your company. You need to replicate this relationship in your emails.

The easiest way to make your email marketing more personal is to use customers’ names throughout the email. Most email marketing services use coding to input your customer’s name in an email. This makes it easy to send bulk emails that are still personalized. Make sure you use your customer’s names throughout the email and not just at the beginning. People love hearing their own name and if they come across it in the copy of the email it will draw them back in and keep their attention.

Make Your Emails Easy to Read

If you’ve crafted an attention grabbing subject line, you can get your emails opened. However, if you don’t make your marketing emails easy to read, you’ll never make the sale. A reader should flow easily through your email. The main points should be easy to discern. If your reader only has a couple of minutes to scan your email they should be able to get everything they need quickly.

Big brands are great at all of these techniques. One trick they use to make emails easy to read and still draw the reader in is graphics. Instead of saying “We’re having a great sale!” in text they put it on an image. The word “SALE!” on a picture takes less time to read and digest, and it grabs your attention. Infographics and charts are also useful when you’re trying to get people’s attention.

Make Mobile Friendly Campaigns

Finally, when you’re creating an effective email marketing campaign, you’ll want to make sure it’s mobile friendly. Most people open their emails on mobile devices. In fact, 53% of emails are opened on phones. This trend is only increasing, so it’s critical that you understand how to create emails that work on computer and phones.

The most important part of creating a mobile friendly is making sure it will fit on a smaller screen. It’s best to design your email in one column. This helps people to see it on a small screen without making the user scroll to the left or right.

We talked about using graphics in your emails to make things stand out, but you need to be careful with images. They need to be optimized so that they load quickly, and you need to add descriptive text (also known as alt text) so that if the image fails to load, the reader can still get a sense of what the image was. Experts recommend using 3-5 images in an email.

What is a Tax Credit?

A tax credit reduces the amount of tax a business or individual has to pay. The government uses tax credits to encourage or reward behavior that they find beneficial. For example, the government can give a tax credit to people for replacing old appliances with new, energy efficient ones. Most tax credits are given to benefit the economy or environment; however, the government can create tax credits for any reason.

Tax Credits cover expenses that you have paid during a tax year. In most cases, you have to meet certain requirements in order to qualify for a tax credit. Because there is such a wide range of tax credits, it is good practice to check with your accountant before you make purchases that could be tax credit. Once you are aware of the qualifications for each credit, you can follow the regulations so you can claim the tax credit.

Both tax credits and tax deductions reduce the amount of tax liability, but there is a difference between the two. Tax credits directly reduce your taxes. Tax credits are “dollar-for-dollar,” meaning that if you owe $1,000 in taxes, but have $1,000 of tax credits, then you would owe zero dollars in taxes. A tax deduction, on the other hand, decreases your taxable income. If you made $100,000 but had $20,000 in tax deductions, you would only be taxed on the $80,000 for that tax year.

Tax Credit Scenario

Derek is a doctor of chiropractic and owns his own business. As a small business owner, Derek tries to take advantage of as many tax credits and deductions as he can. After reviewing the business tax credits, he’s decided to make some changes in his business so that he can take advantage of these credits.

First, Derek is going to start a retirement plan so that he can take advantage of the Credit for Small Employer Pension Plan Startup Costs. Most employers with fewer than 100 employees don’t have retirement plan options. The government encourages business owners to start pension plans by offering a tax credit. The Pension Plan Startup Costs tax credit offers a credit of 50% or $500 a year for three years. This should help offset the costs of setting up a plan and educating employees about it,

Another tax credit Derek can take advantage of as a small business owner is the Credit for Employer-Provided Childcare Facilities and Services. Derek has a few working mothers on his staff. To help ease the burden on them he has decided to pay for some of their child care services. The employer-provided childcare services tax credit offers small business owners a 25% credit or up to $150,000 a year.

Finally, Derek is going to take advantage of the Credit for Small Employer Health Insurance Premiums. The small employer health insurance tax credit rewards small business owners who pay for insurance coverage for their employees. However, it is a little harder to take advantage of. You must have at least 10 full-time (or full-time equivalent) employees. Those employee must have wages under a certain amount, which changes each year. Small business owners must purchase plans through the Small Business Health Options Program (SHOP.) Finally, you can only claim the credit for two consecutive years.

When Derek does his taxes for the next year these tax credits will be deducted from the taxes he owes and will lower what he pays in taxes.

Frequently Asked Questions:

1. What is a tax credit?

A tax credit is a financial incentive provided by the government that directly reduces the amount of tax a business or individual has to pay. Unlike deductions, which reduce taxable income, tax credits lower the actual tax liability dollar-for-dollar.

2. How does a tax credit differ from a tax deduction?

A tax credit directly reduces your tax bill, meaning if you owe $1,000 in taxes and have $1,000 in tax credits, you owe nothing. A tax deduction, on the other hand, lowers your taxable income, which reduces your tax liability indirectly by lowering the amount of income subject to tax.

3. What types of expenses can qualify for a tax credit?

Tax credits can cover a wide range of expenses, such as energy-efficient home improvements, retirement plan startup costs for small businesses, and employer-provided childcare services. The specific expenses that qualify depend on the type of tax credit and the criteria set by the government.

4. Are there specific requirements to qualify for a tax credit?

Yes, most tax credits have specific eligibility requirements that must be met to qualify. These requirements vary depending on the type of credit. It’s advisable to consult with an accountant to understand the qualifications and ensure you meet them before claiming a tax credit.

5. Can a small business owner claim multiple tax credits?

Yes, a small business owner can claim multiple tax credits, provided they meet the eligibility requirements for each. For example, a business owner might claim credits for starting a retirement plan, providing childcare services, and offering health insurance to employees, all within the same tax year.

An Accountant’s Secret to Making Your Business Credit Cards Work For You

Credit cards get a bad rap. They are intertwined with massive debt, but that doesn’t have to be the case. Learning how to use business credit cards can help you move your business forward.

We don’t recommend getting into credit card debt. That is not going to make your business credit card work for you. Instead, we recommend using business credit cards to make purchases that you know you can afford.

The only way to effectively use business credit cards is to pay them off, in full, each month. If you can’t do that, then you can’t make credit cards work in your favor and you’ll be a slave to the credit card company.

If you can pay off your credit cards each month, then you can take advantage of these benefits.

Build Credit with Your Business Credit Cards

The most important thing you can do with your credit cards is to build credit. A lot of people want to pay cash to avoid going into debt, but when you own a business that’s just not possible. Your business must have established credit.

One of the best reasons to build credit through business credit cards is so that you can make future purchases. Business who don’t have any credit have higher loan rates, if they can even qualify for a loan. However, if your business has a solid credit history you will be able to get loans to grow your business.

Earn Rewards from Your Cards

Who doesn’t love earning rewards? Earning rewards from your business credit cards is like getting free money (or travel, or whatever reward your card offers.)

The key to this “free money” is to pay those credit cards off in full! Like we discussed before, this is the only way to get the most out of your cards.

When you’re choosing business credit cards look at all the different rewards options and choose which will benefit you and your business the most. If you travel a lot, then choose a card with reward miles; then you can save money on flights, and maybe even get in-flight perks! If travel isn’t a big deal for you, cash back rewards are always great. You can use your rewards in countless ways.

Track Your Business Expenses

First and foremost, we want to emphasize that you need a business credit card. You shouldn’t be using a personal credit card for business purchases. This causes a lot of headache when it comes time to reconcile accounts. As bookkeepers, we beg you to separate your personal and business expenses!

Second, credit card statements are a great way to keep track of your business’ expenses. The Internal Revenue Service (IRS) allows you to use credit card statements as proof of purchase, so if you lose a receipt but have a credit card statement, you can still prove that you made a business purchase. Most credit card companies keep records of purchases for years. If you have an online account, you can access those anytime.

Monitor Business Finances

As long as we’re talking about business expenses, we might as well mention monitoring your business’ finances.

Employers can hand out company cards to employees, which has a lot of benefits (like not having to run to the store to pick up a birthday cake yourself.) But, there’s always a risk involved with handing out a card. If you want to make sure your employees aren’t abusing the credit card, you can monitor all the purchases.

Another common scenario, as employees move up in the company they get company cards. Managers need to have access to company money and a credit card is a great way to get them that access. If this is the case in your company, look for business credit cards that allow you to give your employees their own cards free of charge. Some cards will even allow you to set spending limits for each card. This can help you monitor who is keeping to their budgets.

Don’t let your business credit cards get the best of you. Learn how to use them and make them work for you!

Claiming Travel Expenses on Your Business Trip (Plus How You Can Afford to Bring the Whole Family)

Business travel expenses add up quickly when you’re trying to impress clients or even just need to stay a couple nights in a new city. Hotels, food and transportation costs add up quickly. Luckily, the Internal Revenue Service (IRS) counts business travel expenses as deductible items. Claiming travel expenses can help you save money whenever you have to leave town on business.

When you’re claiming travel expenses you want to make sure that you’re doing it correctly, so that you can avoid a tax audit. Knowing what constitutes a business travel expense and how to claim them will keep you safe.

What Constitutes a Business Travel Expense?

The IRS allows you to claim travel expenses when you leave the general area of your tax home for longer than a day’s work. Your tax home is wherever you do your work. That means if your tax home is in Salt Lake City, but you have to travel to San Diego for business, claiming travel expenses would be acceptable.

However, if your tax home is in Salt Lake City, but you live in Las Vegas and you travel to Salt Lake during for the week for work, where you stay in a hotel and eat out at restaurants but return to Las Vegas every weekend, you cannot claim travel expenses. Salt Lake would be the tax home so any expenses to get to and from your tax home would not be deductible.

What Expenses can I Claim?

After you’ve determined if your expenses qualify as business travel, it’s time to determine what is deductible. As with all business expenses, claiming travel expenses must be necessary and ordinary. You cannot claim any travel expenses that are lavish, extravagant or personal.

The IRS allows you to claim the following travel expenses:

Travel by plane, bus, car or train.
Taxi fare between your hotel and the train/bus station or airport. Transportation between your hotel and the work location. Travel from customer to customer or from your work to a customer. Ubers or other ride sharing services are also deductible.
Shipping of baggage and other necessary business tools. This can include, but isn’t limited to, displays and sample materials.
Use of a car, for business purposes. This includes a car rental. You can deduct mileage for business trips only; you must subtract any personal use. Any tolls or parking fees can also be claimed as travel expenses.
Meals and lodging
Dry cleaning or laundry services
Business calls, or other forms of communication, such as faxes.
Any tips paid on these services.
Entertainment costs when you’re doing business.

Other expenses can be claimed, but it’s best to consult your accountant with any questions.

How does Claiming Travel Expenses Work?

If you plan on claiming travel expenses we have one piece of advice: keep your receipts. The fastest, easiest way to prove how much you can deduct on a business trip is by knowing what you paid. Save all of your receipts from meals, hotels, cab rides, absolutely any time you pay someone ask for a receipt. (When you’re tipping keep track of how much you pay and where you paid it so that you have a record of it.)

When you file your tax return you’ll fill out an IRS from for business trips and submit with your tax return.

How Can I Turn My Business Trip into a Vacation?

Business trips can be incredibly boring if you go back to your hotel alone and watch TV every night. However, if you plan it out right, you could bring the whole family along and turn your business trip into a memorable family vacation.

If you are in charge of the plans for your business trip, then it makes it a lot easier to add some family time. Because you need to focus on business while you’re on your trip, try find a way to extend the trip so you can spend a few days with your family. The IRS isn’t usually too keen about adding days to the end of your trip, so try to schedule meetings late in the week (Thursday or Friday) and at the beginning of the week (Monday or Tuesday.) That way you can spend the weekend doing fun family activities.

Just because you’re bringing your family on a business trip doesn’t mean that their expenses are business related. You must keep your family’s expenses separate from your business expenses. You can’t deduct anything that you do for your family as business expenses. However, as long as the trip is mostly business your travel to and from the destination is still considered a business expense.

What is Sales Tax?

Sales tax is a consumption tax on goods and services. State governments, along with county and local governments, set the sales tax; however, not every state has sales tax.

The purpose of sales tax is to fund government projects. The revenues from sales tax are used to fix roads, improve communities, or build infrastructure.

Consumers pay sales tax at the point of sale on goods or services. Businesses charge the consumers and then pass the taxes onto governments. Businesses are liable to pay sales tax if they have any presence in the state. This can mean a brick-and-mortar business, an affiliate, an employee or any other type of presence. States have passed laws requiring online retailers, like Amazon, to charge and pay sales tax.

Because products can pass between many businesses between production and the final sale, only businesses who sell directly to customers have to pay sales tax. The other businesses who handle the products get a resale certification from the government. The resale certification says that the business is not liable for the sale tax because they are not selling directly to consumers.

Sales Tax Scenario

Sales tax at brick-and-mortar businesses are fairly straight forward. We’ll present a scenario for affiliate sales taxes.

Jordan is a tech blogger. He uses affiliate links from several companies to make money from his blog. Jordan lives in Georgia, where there are affiliate nexus laws. Affiliate nexus laws state that companies who use affiliate links and make over a certain amount from those sales must pay sales tax.

The Georgia nexus affiliates state that if a company makes over $50,000 from the nexus in Georgia, then the company must pay sales tax. The companies who work with Jordan have a two options on how they want to proceed. First, they can wait and see if the hit the threshold of sales before paying the taxes. The downside to this is that they may be liable for any penalties or interest due on the unpaid taxes. The second option is that the company collects sales tax up front and then if they have to pay sales tax, they already have the funds set aside to do so.

Jordan, as an affiliate, doesn’t have anything extra to do. However, some companies avoid working with bloggers who live in states with affiliate nexus laws. As more states enact affiliate nexus laws this may change.

Resources

Author: Jake Snelson