Our first major magazine ad...

We've done some advertising in the past, but our first major advertisement in an international magazine will be in the October 2006 issue of the Linux Journal (check it out - page 75). We are very much "tech geeks" here at OffAssist and this is one sector of the market we've been looking for ways to reach. We feel this is a good step in that direction. The ad will run for 3 months, we may continue it and/or update the ad at that time. Pretty nifty, eh?

The Tower is Falling

Candy was nice enough this morning to send over a very telling article about Tower Records:

The Demise of Tower Records sign of digital age
by Rob Lever

Tower, whose non-US operations are not affected by the bankruptcy filing, failed
to keep up with a fast-moving landscape involving online retailers such as
Amazon.com and discounters like Wal-Mart, as well as a move to digital music,
say analysts.

While you cannot completely blame digital music for Tower Records bankruptcy, you can blame Tower Records lack of flexibility and attention to what their customers are buying and where. Tower Records does have a digital presence. However, it is used solely for the distribution of physical product with a sound clip here and there of popular titles.

The great thing about the internet is that you can get a lot out of it, especially if you are an international company such as Tower Records. The downside is, you have to put something into it to get that return.

So where did Tower Records fail? In the web eyes of its prospective customers. By failing to provide even the most basic of services provided by online competitors, they lost the attention of their customers. Most of these customers probably didn't even feel they were hurting Tower Records business. Why? Because Tower Records did not make it obvious even to their loyal customers that online business was important to them.

So, what could Tower Records have done? Tower Records has stated that online music providers are not their major competition, Wal-Mart is. Tower Records could never hope to beat Wal-Marts pricing so their attack should have been at easy of getting the music. Getting your music through download is probably the easiest way there is, plus, you can often cut cost since you don't need a physical establishment to sell the product or media to store it on.

Sale of digital music would have drawn attention back to Tower Records. If done properly, it would have pushed not only digital sales, but physical sales both online and off as well.

I think they are right, digital music downloads did not kill Tower Records. Tower Records killed themselves by ignoring digital music downloads. Yet another case of a brick-and-mortar business failing to adapt to a click-and-order world.

Your Bookkeeping Stinks! A book review

Your Bookkeeping Stinks!
By Scott Gregory, CPA

The world is filled with accounting books. It is easy to find books on paying your taxes and balancing your checkbook. There are even books that introduce you to double-entry accounting. Understanding these books, however, is hardly ever easy. Rare is the book that is written to be understood by the average business owner. Luckily, "Your Bookkeeping Stinks!" is one of those rare gems that is both informative and easy to read, even if you are not a CPA.

Gregory is experienced at working with the owners of small businesses. This is evident in the simple and to the point topics that he covers in this 50 page book. You will not find a lot of "How-To's" in this book. What is covered are the many pitfalls and time sinks that many new (and old) business owners find themselves caught in time after time.

The book is broken down in to 21 "Stinkers". These topics range from balancing your checkbook to how to prevent fraud from occurring within your business. Gregory has even included a checklist at the back of the book to help readers ensure that all the "Stinkers" have been cleared from their business. The book also includes an appendix with a list of monthly reports to help business owners understand the health of their business.

I have two problems with "Your Bookkeeping Stinks!" First, it is too short. At only 50 pages, it is easily read in one sitting and just as easily forgotten. Second, at times is reads like a QuickBooks advertisement. The solution for a "Stinker" is most often, “Get good accounting software, like QuickBooks."

However, these shortcomings aside, "Your Bookkeeping Stinks!" sets itself apart from the pack of self-help accounting books by ease of reading, and well categorized content. Scott Gregory’s "Your Bookkeeping Stinks!" is a good book for someone who wants to understand the world of accounting without being an accountant.

Cute Little Store: A book review

Cute Little Store
By Adeena Mignogna

Reviewed by Tom Beauchamp

Walk into any book store and you will see a thousand books on starting a new business. You will see books on how to write a business plan, or how to get a loan. You will also find books that stress the importance of marketing, or of good legal documents. However, few and far between are books like “Cute Little Store” that provide a good overview all in one package.

Mignogna has done an excellent job of bringing together the true story behind a “Little Cute Store. While you will not find a lot of in-depth information on any one topic, what you will find is a wealth of information on general topics (bookkeeping, marketing, management) that truly captures the essence of small retail businesses. Having owned a similar business myself, I know how difficult those first few years can be and how important it is to learn from the experience of others.

The important topics in the book are highlighted by “Cute Little Tidbits”. These informational gems pass along many hard learned lessons and should not be ignored. The book wraps up with a brilliant questionnaire that really should open the reader’s eyes to why they want to their own business and just how ready they are for their dream to become reality.

This book should be required reading for anyone looking to open their own retail business. Also, I would recommend it to any business owner that wonders if what they are going through is normal. With well laid out information, a great list of recommended reading, and true entrepreneurial spirit, Adeena Mignogna has captured the experience of the “Cute Little Store”.

Effects of Worker Reclassification

The IRS has the power to reclassify workers that an employer treats as independent contractors as employees.

The reclassification of an independent contractor as an employee has possible consequences both to the employer and to the reclassified workers and to other employees.

Consequences to the reclassified worker:

• The worker may become eligible for benefits that he was not receiving.
• The worker is no longer liable for self-employment taxes.
• The worker becomes liable for Social Security and Medicare taxes which are imposed at a lower rate than are self-employment taxes.
• The may be entitled for a refund of self-employment taxes for all open years.
• The worker loses the ability to deduct business expenses on Schedule C.
• Unreimbursed employee business expenses are now deducted on Schedule A subject to the two percent floor.
• The change from deducting business expenses on Schedule C to Schedule A can result in an increase in adjusted gross income which may affect the taxpayer’s eligibility for credits, such as the credit for child and dependent care credit and the child tax credit and possibly other tax benefits.
• There is an increased possibility that the taxpayer will become subject to alternative minimum tax since employee business expenses are a tax preference item and are not deductible in computing the alternative minimum tax.
• If the worker has not filed a tax return for the year(s) for which the reclassification applies, he must file a return reporting the 1099-MISC income as wages and must pay the employee portion of Social Security and Medicare taxes which are reported on Form 4137. (Scratch out “Tips” and insert “Wages” on Form 4137.)
• If a tax return has been filed for the year(s) affected by the classification, the worker must file form 1040X, (a) computing the differences between self-employment taxes paid and the Social Security and Medicare tax owed, (b) removing any deductions claimed as a self-employed taxpayer on Schedule C, (c ) claiming any allowable employee business expenses on Schedule A, and (d) making all other changes as necessary.

Consequences to the employer and other employees:

• The employer must pay all the taxes that should have been paid under the income tax and Social Security and Medicare tax withholding provisions. The code specifically includes withholding taxes that the employer should have withheld, although the rate is possibly lower than what it would have been if the worker had been classified as an employee.
• The employer must issue corrected W-2 and 1099 for the year(s) of reclassification.
• The employer will have to evaluate all of his benefits plans to determine the consequences of the reclassification.
• The employer may face possible claims and litigation from the reclassified employees.
• The reclassification could result in the disqualification of the employer’s qualified retirement plan. If the plan called for benefits for all employees and the reclassified employees had not been afforded those benefits, IRS may determine the plan had not been operated according to the plan’s own rules. The treatment of additional, often non-highly compensated, workes as employees may cause the plan to fail a number of tests that depend on the number and ratio of highly compensated to non-highly compensated employees, including the non-discrimination, coverage, and participation tests.
• Failing to have included the reclassified employees in a group health plan, a cafeteria plan, an education assistance plan, or a dependent care assistance program may requite other employees to hav to include in their income the benefits they have received if those plans are found to be discriminatory.
• A stock option plan may be found to be discriminatory because it did not include the reclassified workers which may result in the stock option plan to be classified by IRS as discriminatory. If so, all of the participants under that plan may face additional taxes on their exercises of their stock options. The employer may be allowed additional payroll deductions but would be faced with additional employment taxes since they were neither withheld nor paid when the stock was purchased.
• Reclassified workers may seek benefits which they have not received in the past under ERISA.


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LORIN BROWNING

Licensed by US Department of Treasury as Enrolled Agent
Licensed by SC Board of Accountancy as Accounting Practitioner

Web site: www.lorinbrowning.com
E-mail to: lorin@lorinbrowning.