Much like a road map, the structure and content of a business plan plots the path to success for your enterprise. It is a snapshot in time and projects outward for 3-5 years showing your obtainable goals, business maintenance to grow income. The business plan is flexible enough to incorporate sudden change and concrete enough to reach your destination.

Business Plan Elements

In a long business plan, there are nine essential elements. These should be helpful in the clarification of your objectives in the minds of those who will read it. They include:

1. Executive Summary
2. Market Analysis
3. Description of the Company
4. Management and the Organizational Plan
5. Sales and Marketing – online and offline
6. Products and/or Services – by your business and that of the competition
7. Request for Funding – describe your need and how the money will help business
8. Financial Information
9. Appendix

Although the Executive Summary appears first in the business plan, it should be the last thing you will write when the rest of the plan is complete. It sums up the business, mission, company profile and the ultimate goals. Your mission statement comes at the end of the executive summary and naturally leads to the first step of your plan: market analysis.

The market analysis, company profile, depth of management with organizational chart, marketing and sales follow as individual chapters in your business plan. Charts, graphs and images enhance the explanation and presentation of your company. This is also helpful to the preparation of your request for funds as well as the necessary financials of the business.

Financials and Taxes

Financials and taxes are easy to compile when the business is heading into the second year or beyond. Most funding for startups proves harder to figure without known revenue or expenses, which is why projected financial statements are important. Most lenders look for three years of income tax returns, if they are available. For startups, lenders may look for the last three years of personal income tax returns.

Financials include at the very least an income statement and balance sheet. You may choose or it may be requested to also include a statement of cash flows, and/or a breakdown of the sources and used of funding.

Projections

Projecting your business viability and its future endeavors could be the most difficult part of the structure and content of a business plan. Projections are reasonable outcomes using the current cash flow information. Calculate future profitability by analyzing present conditions and applying economic and inflationary impact measures to your target market.

Cash flow includes cost of business operations, investing profits and identifying additional financing. Lenders will look for where the money comes from, whether seasonality exists, and the nature/personality of its source. Cash inflow is the single most important projection.

Although some popular credits and deductions were set to phase out for Tax Year 2011, a few will remain through Tax Year 2012. Credits and deductions help to lower the tax due on reportable earnings and make a difference between owing more tax or receiving a refund.

Credits for Tax Year 2011

The tax credits that are effective for those filing a Tax Year 2011 income tax return include – but are not limited to – the following:

1. Lifetime Learning Credit covers courses or workshops taken after completion of secondary education. There is no
   requirement to pursue a degree or certificate to qualify for this credit of $2000 maximum.
2. American Opportunity Credit also relates to educational pursuits. The guidelines for this differ slightly from the
   Lifetime Learning Credit. This credit of $2500 maximum is for eligible students taking courses for a program
   leading to a degree or a certificate. A student must attend school at least 50% of one academic session in Tax Year 2011.
3. Child Care Credit and the Additional Child Care Credit allow a maximum of $1000 for each qualifying child, but can
   only apply if it reduces tax liability. Neither are available if there is no tax payment due.
4. Retirement Savings Contribution Credit may be available for contributions to a Traditional – not a Roth – Individual
   Retirement Arrangement (IRA). This depends upon the amount and its relationship to the contributor’s income.

Deductions for Tax Year 2011

Most deductions appear on the first page of Form 1040. These are the most popular – yet oftentimes overlooked:

1. IRA Contribution Deduction applies only to Traditional IRA and only if the contributor has no retirement coverage
   from an employer. Tax Year 2011 allows a maximum of $5000 up to age 50. Taxpayers over 50 may make a maximum
   contribution of $6000.
2. Student Loan Interest Deduction could reduce taxable income up to $2500 and is subject to income guidelines.
3. Itemized vs. Standard Deduction is a choice you make based upon your particular tax status as shown below.

Standard vs. Itemized Deductions

If you have sizable deductions and do not mind keeping and providing the records necessary, then it might be advantageous to itemize deductions such as these:

1. Either state and/or local income taxes or an annual sales tax assignment for goods purchased worldwide during the
   tax year.
2. Real estate taxes paid on any properties that you own.
3. Personal property taxes that you paid based on the value of your item. This usually applies to trailers, RVs, boats
   or vehicles that house or transport people and/or goods.
4. Home mortgage interest and/or points paid to finance or refinance a mortgage
5. Charitable contributions made in cash or in-kind [goods/services] should be supported by proof in the form of
   acknowledgement letters, receipts or canceled checks. You may not deduct anything if you received a benefit
   in return, even if the provider has non-profit status.
6. Employee Expenses must be paid out-of-pocket with NO reimbursement for them.
7. Tax Preparation Fees Paid
8. Miscellaneous Deductions

You must decide if the standard deduction is beneficial to your tax situation. The standard deduction increases for taxpayers who are 65 or above (or blind) and in certain situations, itemization lowers tax liability or raises a refund amount.

The alternative minimum tax (AMT) arrived on the scene at the dawn of the 1970s. Its purpose was to ensure high income earners paid their share of income tax. However, its intention and reality went far afield.

Intention vs. Reality

Some individuals have very high incomes and manage to pay little, if any, income tax on it. The intention of Congress was elimination of this inequity by making high incomes subject to a different tax treatment. An alternative minimum tax system with rules to calculate the administration and application of this special tax situation came into effect.

This was meant to resolve the differences in the tax system. However, reality made many more people subject to alternative minimum taxation than was the intention upon birth of this tax. Tax professionals, who deal with calculating the tax and applying it correctly, find it problematic. There are far too many rules in administration and application.

This system specifies that a US citizen with an income of $223,900 and higher must pay the alternative tax. Taxpayers who are subject to the alternative minimum tax will find that they lose some deductions and gain a number of other adjustments. The Internal Revenue Service (IRS) has an informational document (i6251) that takes the filer line-by-line through Form 6251, a filing requirement for these target taxpayers.

Where Problems Begin

Initially, the tax did not link to any geographic region, cost of living or inflationary trends. The result is that many middle class taxpayers found themselves under its cloud. The original purpose was to collect a tax from the wealthy, but annual changes constantly cause difficulty when identifying taxpayers subject to the upcoming alternative minimum tax.

A taxpayer might incur AMT liability one year, but not the next. It could happen if there was a big ticket item occurring during the tax year. On the other hand, it could kick in as the result of a bunch of small items such as the following culprits:

1. Standard vs. Itemized deductions
2. Treatment of personal exemptions
3. Claiming mortgage interest on second mortgages
4. High medical expenses
5. Eligibility for the various credits
6. An inordinate list of miscellaneous itemized deductions
7. Engaging in a high profile occupation with perks including incentive stock options
8. Earnings subject to tax, but housed within legitimate shelters
9. Long-term capital gains
10. Lots of interest that is tax-exempt

Current and Future Trends

Tax law changes occur annually and each year the AMT exemption amount increases. Tax year 2011 did change the affect of this tax on the taxpayer. Three exemption amounts became subject to increase:

1. Increase for single filer to $48,450
2. Increase for married filing joint or a qualified widow(er) to $74,450
3. Increase for married filing separate to $37,225

As the tax law changes are made for future filers, information for taxpayers will be available at the irs.gov website. More changes are sure to follow until the intention of this tax and the reality of its inception meet at the same place. Until then, the IRS is refering the public to www.irs.gov/form6251.

Recently, President Obama proposed lowering the corporate income tax rate from 35% to 28%. The following are some of the key points to the proposal.

Corporate Perks

This proposal indicates that manufacturers would be recipients of a 25% maximum income tax. Additionally, corporate aircraft, which make business life convenient for some, would not be able to be depreciated for income tax deduction purposes.

Corporations with revenues of $10 million or less would be able to minimize paperwork and labor intensive record keeping. They would be able to change to the cash method of reporting from the accrual method. Closing another loophole turned out to be counter-productive when the Treasury uncovered the change in the 15% dividend tax rate would rise to 40% or more.

Addressing the Loopholes

These loopholes would close under Obama’s proposal:

1. Using life insurance as tax shelters
2. Financing debt by writing off the interest as a deduction
3. Making the credits for the use of clean energy permanent

Tightening these somewhat hidden corporate perks could bring controversy to the table. Some multinational companies were hoping that revenue generated offshore would not be subject to tax in the United States. Rather, that income would remain taxable.

In fact, international income is currently subject to double taxation and faces the possibility that tighter scrutiny will re-enforce international income tax rules. Companies whose operations are stateside are not subject to this issue.

The Impact of Reform

Most business representatives were vocal about the tax reform proposal because it doesn’t cut deep enough for them. They argue that in order to encourage businesses to remain in the United States, worldwide income taxation must be subject to deeper alterations.

The plan calls for a minimum tax on revenue from foreign sources, but it does not eliminate the double tax situation. If corporations bring their overseas profit back to the USA, it appears they would still face a minimum tax on those earnings.

President Obama’s 2012 tax proposal rewards certain industries, but not all. Some will argue that his proposal also seems to neglect small businesses, which could grow and create jobs. The deductions that these small operations are dependent upon could diminish along with their incentive to prosper.

All of these previously mentioned features can be used by both small and large businesses. These last five features, however, are typically used more by larger companies.

1. Credit Card Transactions: The more time-consuming a data entry job is the more likely errors will occur during its accomplishment. Entering a credit card statement is one task that poses a greater than average risk of mistakes. With QuickBooks, credit card transactions can be imported directly and automatically matched-up with account numbers and vendors. This saves time both in data entry and later in balancing accounts.
• How: Access by going to BANKING menu, enter CREDIT CARD CHARGES, click DOWNLOAD CREDIT CARD CHARGES.
2. Letters and Envelopes: QuickBooks includes the mail-merge capacity and templates to generate letters to specific groups of customers for a variety of situations. This is an easy way of sending out late payment, out of stock, and other such notices to customers, as well as group mailings.

• How: Access via the COMPANY menu, PREPARE LETTERS AND ENVELOPES
1. Loan Manager: Unfortunately, at times companies have to rely on employees with minimum accounting experience to enter data into the system. One result of this is that businesses, particularly small ones, may improperly record loan payments. They do not separate loan payments into interest and principle according to an amortization schedule. The Loan Manager feature automatically separates payments into these components, thereby increasing accuracy by reducing mistakes and also saving time.

• How: Access via the BANKING menu, then LOAN MANAGER
1. Preventing Previous-Period Changes: When a discrepancy between entries in a previous accounting period and the present accounting period occurs, there is sometimes a desire to change the prior entry to conform to the present one. One quarrel with QuickBooks has been the ability to change past entries easily and without it being obvious. Now QuickBooks has developed a fix for this by adding a feature whereby a username or password can be assigned to each user, allowing only certain individuals to make changes after a closing date. The closing date moves forward monthly after financials have been reviewed and approved adjustments made.

• Use: Access via COMPANY menu, SET CLOSING DATE
1. Remote Access: QuickBooks offers a Web-based remote access tool allowing CPAs the ability to securely log into a client’s QuickBooks accounting system. The CPA only has access to QuickBooks and not other files on the client’s computers. CPAs can use this tool to review a client’s books, help accounting clerks clear up problems, or even train users.

• How: Go to Intuit.com There is a fee starting at $3.95 monthly

QuickBooks has made great contributions to the accounting world and is found in more than 4.5 million companies. It has been especially helpful to the small business; even the home based entrepreneur can send invoices, pay bills and keep records without hiring outside help. Yet as helpful as QuickBooks proves itself to be, many users, large and small alike, do not utilize the software to its full potential. Check the following list of 10 often overlooked QuickBooks items for unknown features you could be using.

1. Customize Templates:As helpful as it is to have templates, every business is different and needs not only different columns, but also varying quantities of columns. QuickBooks allows the user to alter or edit templates, such as those for purchase orders or for customer statements. Data fields for a name, an address and/or phone number can be incorporated. Columns for differing pay rates, or for regular occurring versus special orders, can also be used. Even text and images can be added to make the templates specific to the business’s unique needs.
   • How: Access the LISTS menu, go to TEMPLATES and right click. Choose EDIT TEMPLATE and click LAYOUT DESIGNER.
   • Useful Info: Additional templates are downloadable from the internet and there are colorful themes available for enhancing these.
2. Account Number Designation: In addition to using the 31 digit alphanumeric account names, QuickBooks also allows a seven-digit account number to be used as well. While this may seem like a redundant feature, however, it can be surprisingly helpful. By using only a 10 key data entry system for looking up accounts, information can be accessed much more quickly. For internal accounting it affords the option of having accounts appear in a logical order that they will be used in instead of their alphabetically based order.
• How: Access by EDIT, PREFERENCES, ACCOUNTING COMPANY PREFERENCES and check USE ACCOUNT NUMBERS.
3. Memorize Transactions: Each company deals with regularly repeating transactions. QuickBooks can memorize these transactions and recall them when appropriate. Billing for reoccurring services, and payments for reoccurring expenses can be automatically entered into the proper accounts at predetermined intervals, saving time and reducing the likelihood of mistakes.

• How: Type Ctrl + M.
• Useful Info: Transactions that are memorized will generate but not send or print electronic payments and paper checks.
1. Batch Invoicing: Beginning with QuickBooks 2011, a feature allowing for the creation of invoices to be dispatched to a selected group is available. Example: A large number of clients pay the same charge each month for the same service. One invoice is drawn up and can then be sent to that designated group.
   • How: Access via CUSTOMERS menu, choose CREATE BATCH INVOICES
   • Useful Info: Information included in a Customized Template can be used to create and find batches that will all receive the same invoices.
2. Intuit Data Protection: Beginning with QuickBooks 2011, QuickBooks comes with Intuit’s Data Protection service as an automated backup for data entered into it daily. Each day’s information is saved to a Web-based storage site and held for 45 days.
   • How: To use this automated service, it is necessary to go to intuit.com. Install the program then select FILE, BACKUP. Prices vary from $4.95 to $9.95 per month.

Americans who earn over six figures from a standard paycheck (W-2 income) can often expect to pay out half of their take home pay in the form of federal, state, and local taxes. The top tiers of income earners pay the majority of federal, state, and local taxes. Those taxes in turn, pay for social programs and assistance for lower income Americans who often do not pay into the system.

In addition to income tax, the U.S. government also taxes estates, capital gains, and even gifts. The prospect of protecting wealth from the tax man can be a daunting endeavor for wealthy parents who want to ensure that their children and immediate family is taken care of. With some help from changes implemented by the government, estate planning has become a bit easier.

Historically, a $5 million estate tax exemption is extremely generous. In 2001 for example, estates worth over $675,000 were taxed at a rate of 45 percent. Given the real estate boom of the 1990’s and 2000’s, more and more estates found themselves outside of this exempted bracket. An estate of $675,000 just isn’t what it used to be. Not being considered extremely wealthy, many estate executors and dependents with assets falling just outside of the exclusion range found that they were not able to plan effectively in order to preserve the assets being passed down. This created a situation where they were unable to avoid paying a high tax rate. Conversely, at the present exemption of $5 million, some careful estate planning can provide a great deal of shelter to assets that may have taken a lifetime to build and then pass on. A qualified estate planner can literally save an estate hundreds of thousands of dollars in taxes.

Estate taxes come into play once the owner of the assets has died. This makes it nearly impossible for the giver to ensure that their gift was properly allocated and received. But, there is another option. Rather than wait to pass on assets after death, gifts of cash and assets are allowed without being taxed up to a certain limit. For the years 2011 and 2012, gift tax exclusions of up to $5 million, similar to estate tax exclusions, are also at historic highs. The Bush tax cuts adjusted the exemption amount on gift taxes from $675,000 to $1 million in 2002. This allows wealthy individuals to pass on more of their wealth to their families while they are still alive.

No one knows if the higher exclusion amounts will hold up after 2012. The upward trend does seem to have some important implications. The higher the exclusions on estate taxes, the higher the likelihood is that the tax will ultimately be repealed.

A new year means inevitable changes to the tax code that will need to be learned by accountants and other tax professionals across the country. Although the changes may not be as comprehensive as those of past years, there are still many important revisions that need to be considered while filing taxes in 2012 and beyond.

As expected, inflation adjustments were made to a variety of credits, deductions and limits for 2012. For instance, the amount of the personal exemption has increased to $3,800, and the standard deductions taken by taxpayers who do not itemize have also increased. In addition, contribution limits for retirement plans such as 401(k)s have also been adjusted upwards for the new year.

However, not all areas of the tax code were affected by the inflation adjustments mentioned above; standard mileage rates for businesses looking to deduct the costs of their vehicles will remain at 55.5 cents a mile while the rate for medical and moving expenses will actually drop to 23 cents a mile.

There are also new requirements for disclosure of capital gains and losses from the selling of financial assets. This relates to the reporting of the cost basis of security transactions, which affects the amount of short-term and long-term capital gains and losses that are accrued by a holder of an asset. As for certain foreign assets, the IRS is now requiring increased disclosure through Form 8938.

Congress has recently enacted a new law that will provide large incentives to businesses hiring military veterans, especially those suffering from a disability. This is in the form of a tax credit that could be as high as $9,600 for the hiring of a former soldier who was disabled during an enlistment and has been unemployed for at least six months.

The IRS has also initiated the Voluntary Classification Settlement Program, which is of great importance to employers who have been classifying workers as contractors for the purposes of avoiding payroll taxes and other expenses. By participating in this program, employers can pay just 10 percent of the past payroll tax liability; in addition, they will avoid all interest and penalties that would normally be charged on late payment of taxes.

As well, there are a variety of other tax revisions that will take hold this year. The penalty for failing to meet due diligence requirements with respect to the Earned Income Tax Credit has increased to $500. The lifetime tax exemption on gifts and estates has increased to $5.12 million. Finally, the bonus depreciation allowance, originally designed to help businesses lower their expenses during the most recent recession, will decrease from 100 percent to 50 percent for qualifying assets during their first year of operation.

Everyone needs to have a good accounting system, whether he or she hires an accountant and/or tax attorney or he or she decides to maintain his or her own records. A good rule of thumb to follow during the year is, “If you spend money, write it down.” The average individual may not know whether something is deductible, but by writing down the amount of money spent and why the money was spent will document the expenditure and will help to serve as supportive documentation in the event that the money spent is a legitimate tax deduction.

Maintaining regular financial records, even if only performed on a monthly basis is much better than attempting to remember financial transactions the following year. Financial records that have been well maintained make tax preparations easier for the individual and his or her tax preparer.

There are many choices when it comes to tax preparation, including obtaining the tax forms and filling them out, purchasing tax software or hiring a professional tax preparer. Perhaps the greatest advantage of hiring a tax preparer is that the tax preparer is responsible for any errors in the actual tax preparation. However, the tax preparer is not liable in the event that the taxpayer misinforms the tax preparer with regards to amounts that are considered tax deductible.

One advantage of hiring a professional tax preparer is that he or she is usually an enrolled agent. This means that the preparer is able to go to any audits or hearings for the taxpayer in the event that there is a problem with the return. Another advantage of hiring a professional is that he or she is able to give the taxpayer advice concerning advance preparation for the coming tax year. Perhaps the taxpayer had too much or too little deducted from his or her paycheck. The tax professional is able to advise the taxpayer how to correct the situation so that the proper amount is deducted from his or her paycheck.

If using a professional tax preparer, it is important to keep him or her informed when any changes occur, such as marital status, number of dependents, change of address, etc. Contact information is especially important because if there is a problem with the taxpayer’s return, the IRS will usually contact the preparer if it does not have updated information regarding the taxpayer.

Whatever choice an individual makes regarding tax preparations, it is important to keep the original copies of all tax returns, including additional forms and supporting documents. If the taxpayer hires a professional tax preparer, the preparer will usually keep a digital copy of the individual’s tax forms, including the returns.

Along with records that are neat and orderly, the individual needs to categorize and label individual receipts and/or invoices, filing them in an orderly fashion. While receipts and invoices may not be necessary for income tax preparation, these items serve to verify the authenticity of expenses claimed by the individual in the event of an audit.

Some taxpayers are entitled to make a deduction for the use of a vehicle or vehicles that he or she used for various reasons. The professional tax preparer understands what deductions the IRS allows and the laws concerning such deductions. As with spending money, if the taxpayer thinks that he or she is entitled to a deduction for vehicle use he or she needs to write down the mileage and the purpose for using his or her vehicle.

It is important that the taxpayer receives a contribution statement from any charitable organization that he or she gives to, whether monetary or personal property. The taxpayer’s tax preparer can advise the individual whether or not he or she can actually deduct and charitable contributions. Typically, the individual who intends to claim a tax deduction has to itemize his or her deductions rather than taking a standard deduction that the IRS allows for everyone.

It is important for the taxpayer to make a list of all employers that he or she worked for in order to make sure that he or she receives every W-2s before submitting his or her tax paperwork to the professional tax preparer. In the event that the taxpayer had his or her own business, it is equally important to ensure that he or she received all of his or her 1099 forms as well.

The taxpayer can go to www.dmvnv.com and print out the amount in motor vehicle taxes that he or she paid during the previous year. In addition, the taxpayer can go to his or her county web site and obtain a printout of property taxes paid for the same tax year.

After carefully organizing a complete list of all income and expenses, the tax preparer is ready to make an appointment with his or her professional tax preparer. If the taxpayer is part of a partnership or S-Corporation that has a different tax filing date, he or she may have to file an extension in the event that he or she is expecting to receive a Schedule K-1.