Unlocking Business Success - Improving Growth

Improving Growth Requires Understanding Your Business And Market

“What is strategic consulting?” is one of the questions that we’re asked regularly. The short answer is that strategic consulting helps companies figure out how to improve their performance, become more efficient, and make smarter decisions more consistently. While every industry and company have their unique characteristics, there are huge similarities among almost all businesses that make much of the knowledge and skills transferable. How this work is done is somewhat more involved, but we can expand on this explanation to show how businesses can benefit from this service.

One of the first things potential clients are interested in is seeing how to improve growth. The first step here is understanding who is currently buying what and why. This can be more involved than it sounds: an analogy we’ve used in the past to ask what people are buying tools. Are they buying a drill or are they really buying the ability to make holes? Understanding what it is that customers get from a company’s offerings is the key to understanding how to expand sales. Sometimes it helps to better understand how to target customers that are more likely to want what a company is selling or, perhaps, the results that a company can provide. Other times it helps a company to develop a product or service that appeals more to a broader market or to provide increased value to a specific market.

The key to understanding these things is market research. This can include looking at the industry as a whole, identifying the segments, details about the buyers, determining who actually uses or benefits from the purchase, demographics of these groups, etc. Another important factor is identifying trends, both in the industry and outside of it. The sources for this information vary widely, ranging from publicly available reports to industry publications and shareholder information to proprietary data.

Once this market research has been collected, the company can use it to make better and more informed decisions. Instead of relying on assumptions and what might be outdated information, they can use more current data and actual details to improve their marketing to align more closely with what customers and clients want. This research can also refine their offerings such as adapting product features and options as well as  changing pricing to reflect the value provided to customers. In a larger sense, it also often impacts how a company budgets its money, allocates its staff and other resources, and ultimately manages its operations.

But growth is only one part of strategic consulting. In future installments, we’ll tackle other topics such as increasing efficiency and addressing risks.

- John Thrush

Tax Season Is Here - Part 6 - Business Tax Deductions to Benefit Employees - Employee Reimbursements

Reimbursing Employees for Using their Personal Technology Can Benefit Both Employers and Employees

As more businesses have adopted work from home policies, companies have found that more employees are using their personal vehicles, computers, phones, and Internet connections to conduct company business. In the past, companies would typically provide a company car or device in order to do company business; however, there are reasons why reimbursement makes more sense.

An advantage for employers is that this can reduce capital expenses, taxes, and even accounting costs. For instance, if a company purchases a company car to be used by an employee, there will usually be the cost to purchase the vehicle either outright or with a loan as well as all fuel and maintenance and insurance charges. These expenses will also end up needing to be tracked in the accounting system, especially in cases where depreciation must be included. Property taxes may have to be paid. Or the employer can reimburse the employee at the current IRS rate of $0.67/mile and take the tax deduction. While this does require that the employee document the miles driven, this can be done by keeping a basic mileage log or using an app.

This same concept has been extended to phones and other technology. The IRS addressed this in the Small Business Jobs Act of 2010, stating that “where employers reimburse employees for business use of their personal cell phones, tax-free treatment is available without burdensome recordkeeping requirements”. This opened up options for reimbursing employees for using personal devices without requiring a great deal of additional paperwork. Individual states have also passed laws requiring reimbursement for other necessary expenses. While it’s important to check the individual state laws, the general rule of thumb is that a written policy applied to all people working remotely in similar conditions be used.

There are options for reimbursement policies for phones. Companies can offer to pay the full bill, but that opens the door to a certain amount of risk. Another option is paying for the percentage of use that’s business vs. private, though that can be complicated to determine and take more time than it’s worth. What tends to work best is paying a fixed allowance per month for each employee which will cover a portion of both the services as well as use of their hardware. While this can be structured solely for phones, it can be extended to include a personal computer, Internet service, etc by setting the policy up as a technology allowance. A reasonable number for this could be between $30 - 100 depending on the type of work being done and the amount of use expected.

While there are arguments for this being beneficial to employers, this can also be beneficial to employees because these reimbursements for equipment or devices offset regular expenses that people typically have and making it easier for them to afford the same or possibly even better services or devices. Another advantage is that these reimbursements don’t count as taxable income for the employee, so they effectively increase their compensation without incurring additional taxes.

If you have any questions about implementing this type of policy or find out about other ways to benefit your employees while helping your business, reach out and let Brightleaf help your company!

- John Thrush

Tax Season Is Here - Part 5 - Business Tax Deductions - Education

Providing Education Benefits for Employees Can Attract Better Employees and Increase Their Value

In this competitive market, getting and retaining employees can be a challenge. Remaining competitive as an employer typically means increasing salaries; however, increasing salaries also means increased payroll taxes, both for the employer and employee. But there are ways to make your company more attractive to potential employees without incurring those additional taxes.

One way to provide additional benefits to employees that can also benefit the company is to provide educational benefits to help them in their current position or to help them advance further in the company or to advance their career. This can be in specific skills training or even tuition reimbursement at the employee’s school of choice. This allows the company to deduct up $5,250 per year per employee for their education. If an employee has any student loan debt, the company can choose to allocate that money towards those loans; however, “the option to use them to pay student loans is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.”

What this means is that, between 2024 and 2025, an employer could effectively increase an employee’s pay by $10,500 without either the employer or employee having to pay payroll taxes and without the employee having to pay additional income taxes. This can be a pretty great incentive to attract new employees or retain existing employees while also making the company more competitive!

- John Thrush

Tax Season Is Here - Part 4 - Due Dates for Tax Forms

The clock is ticking to file your tax forms!

January 29 was the official start date to start filing your taxes! You had everything ready ahead of time and submitted it, right? No? If not, then it may be helpful to know when your forms need to be filed. The following is a list of the deadlines due dates for filing the 2023 business and/or personal tax forms:

January 31, 2024 (Wednesday)

February 15, 2024 (Thursday)

March 15, 2024 (Friday)

This is the big day for many LLCs and S-Corporations as the annual return or an extension must be filed. If you’re like many business owners, you may not be ready to file your taxes yet, but you can request an extension with a Form 7004.

April 15, 2024 (Monday)

This is when tax filings for individuals are due, but also the day when sole proprietors and single member LLCs must file. If you filed or you’re filing an extension, you’ll still need to pay your estimated taxes by April 15 to avoid paying interest.

September 16, 2024 (Monday)

If you filed an extension earlier in the year, this is when Partnerships and S-Corporations must file or face pemalties and interest.

  • Form 1065 - Annual Tax Return for Partnerships (LLCs with multiple members, LLPs)

  • Form 1120-S - Annual Tax Return for S-Corporations

October 15, 2024 (Tuesday)

If you filed an extension earlier in the year, the time has come for Individuals, Sole Proprietors, and single member LLCs to file. If you miss this date, your return will be considered late by the IRS, which means penalties and interest will start to be added.

December 31 (Tuesday)

  • 401(k) contributions deadline for 2024

  • Charitable donations deadline for 2024

Hopefully you’ve got your accounts in good shape and are on track to file all of the required forms. If not, Brightleaf is happy to help you with your accounting and bookkeeping, get your numbers accurate, help you understand what you need to fine and with whom, and get you ready for your future plans!

- John Thrush