IRS Statement – Withholding for 2018

Hi there,

Today is small business Friday and I know you have questions. The fact of the matter is that while we know what the tax bill does, we do not know how the IRS will implement it.

What we do know:

  1. IRS will issue withholding guidance in January
  2. Employers are encouraged to implement the changes to withholdings in February

Everyone should be getting into their tax planners by February.

HOLIDAY CUSTOMER SERVICE MISTAKES — AND HOW TO AVOID THEM

If you have not yet checked out Square’s Business Resource Center then you are missing out of some great advice. Here is one for the holidays.


Holiday Customer Service Mistakes — and How to Avoid Them

The holidays are a critical time for your business. So it’s important that your customer service is on point.
Unfortunately, when you’re crazed, it can be easy to let things fall through the cracks. That could translate to a negative online review, which can really affect your reputation.
To make sure that doesn’t happen to you, we’ve highlighted some common holiday customer service mistakes and how to avoid them.
You don’t have a strong online presence.
Often, customers search online before hitting the streets, or they follow up and purchase from your site after they’ve visited your brick-and-mortar shop in person.
That’s why it’s really important to make sure your website features your products in a navigable, shoppable way. Also, put store hours and the address front and center and include information about applicable sales and discounts.
This applies to social platforms as well. But don’t stop there. Every day, have someone on staff answers questions that customers or potential customers may have posted to Facebook or Twitter, or sent to the company email address.

Accept chip cards and Apple Pay everywhere.

Order the Square contactless and chip reader.
You have an old POS — and long lines.
By now, larger retailers are on board with chip card and mobile payment point-of-sale (POS) systems. Small businesses should follow suit — especially when it comes to adopting a POS that can take mobile payments like Apple Pay.
Mobile payments are the fastest way to pay, not to mention the most secure. And because customers say slow checkout lines are their top shopping pain point, having a speedy POS makes for a much better experience at your store.
You’re not timing your marketing campaigns right.
Since it’s such a busy time of year, the key is to use a email marekting service to send messages that anticipate customers’ questions and helps them solve common problems with holiday gift giving. The same goes for your social channels.
Be smart about the timing of these messages — you want to catch customers who get a head start on the holidays as well as those who wait until the last minute.
You’re running out of inventory.
We’ve all been that frustrated customer frantically searching store to store for that one hot gift that’s on everyone’s list. No one likes coming up empty handed, so do your homework before the holiday season begins to make sure you’re adequately stocked across both your brick-and-mortar and online sales channels.
To do this, look to your historical sales data to make inventory projections. It’s also a good idea to onboard software that syncs your brick-and-mortar and online store inventory in real time after each sale. Read more about how to manage holiday inventory.
You’re short-staffed.
The holidays are the time of year to ramp up staff and make sure that everyone on the floor is well versed in your product. Because everyone is short on time (and patience), you don’t want to put customers in the position of waiting around for a staffer to get their size from the back or not being available to answer questions.
A lack of staff often translates to a loss of business, so build the cost of staffing up for the holidays into your annual budget. Learn more about hiring for the holidays.
You have pushy salespeople.
Just as important as having enough employees on the floor is having the right kind of customer-facing employees. Sure, you want employees to close the deal, but customers are often turned off by pushiness. Employees should be helpful, educating customers about your products, but not pushy.
Superb customer service is paramount when running a business — especially during the holiday season. So make sure everything’s running smoothly.
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Free Resources

Happy Friday!

This week we are going to talk about SCORE. SCORE helps small business owners start, grow, and successfully exit their business ventures with free Business Mentors. It is a fanatic program that we highly recommend and they are FREE.

Ken Sethney is our local Kitsap Business Mentor and we have heard nothing but good things from those he has worked with.

They also offer free monthly seminars in Silverdale and Poulsbo. Check them out at https://kitsapscore.org/your-biz-academy/

Passthrough income under the New Tax Reform

Passthrough income: Under a new Sec. 4, a portion of business income distributed by a passthrough entity, such as a partnership, S corporation, or limited liability company, would be taxed at a maximum rate of 25%, instead of at ordinary individual income tax rates, effective for tax years after 2017. The rest of the business’s passthrough income would be treated as compensation and would be subject to ordinary individual tax rates.

Income from passive activities would be taxed entirely at the 25% rate.

Business owners receiving income from active business activities (including wages) would determine the amount of their business income eligible for the 25% rate by reference to the “capital percentage” of their net income from the activity. As a safe harbor, owners would be able to elect to apply a capital percentage of 30% to their business income—meaning 30% would be eligible for the 25% rate, and the other 70% would be taxed at ordinary income rates.

However, owners will also be allowed to make a facts-and-circumstances determination of their capital percentage if that will result in a capital percentage greater than 30%. The formula would be based on the federal short-term rate plus 7 percentage points multiplied by the owner’s capital investment in the business. An owner who chooses to use this formula would be required to use it for a five-year period.

Income subject to preferential rates, such as net capital gains and qualified dividend income, would be excluded from the determination of the owner’s capital percentage and would not be recharacterized as business income. Certain other investment income subject to ordinary income tax rates, such as short-term capital gains, would also be ineligible for recharacterization as business income.

To prevent owners from recharacterizing wages as business income, the capital percentage would be limited if actual wages or guaranteed payments exceed the owner’s otherwise applicable capital percentage.

For specified service activities, the applicable percentage of business income that would be eligible for the 25% rate would be zero. These activities are those defined in Sec. 1202(e)(3)(A) (any trade or business involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees), including investing, trading, or dealing in securities, partnership interests, or commodities.

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