The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman. “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

For more information visit:  The Wall Street Journal.

More than 50 Respondents were asked how they anticipated their companies’ sales changing over the next six months. Over half (55%) foresaw their sales increasing by 10% to 30%. Only 10% estimated that sales would decrease by the same percentage range. Approximately 31% believe their sales levels will remain the same for this period.

When asked to forecast their companies’ capital spending over the next six months, 56% indicated they would see decreases of over 70%. Only 34% indicated they would increase their capital spending.

On the employment front, 46% of the businesses surveyed responded that they did not anticipate any changes in their companies’ employment levels over the next six months. However, 38% intend to hire one to three people in the same time period. Only 4% of respondents indicated they will decrease hiring by three to ten people.

“The waters appear calm and this is significant in terms of moving forward,” shares John Davis, Davis & Hodgdon’s managing partner. He continues, “These economic indicators, based on a sampling of thriving Vermont-based organizations doing business in- and out-of-state, show promise. Sales are projected to increase, employment is stable and businesses are still remaining prudent with capital spending somewhat decreasing. We also see that business owners are demanding the Governor address important issues like healthcare costs and improved broadband service. All of this bodes well for our state’s economic future. Compared to some other states, I believe we are in an enviable position to move forward.”

For complete results visit:  Economic Survey Reults

Currently, there are many different computerized accounting software programs available, such as QuickBooks, which help small business owners keep detailed records of their business operations.  No matter what system you decide to install, there are several key components that should be implemented. 

First, the system should be accurate.  A good system will separate items on the balance sheet as assets, liabilities, and equity.  Likewise, an income statement will separate items based on whether it is an income or expense item.  If you are unsure of the proper classification, it is recommended that you contact your accountant.  For example, classifying an item as a Research & Development cost (an expense), instead of Inventory (an asset), could have a substantial impact on your bottom line.

Second, the system should be current.  If you are paid by a customer in February, but do not record the payment until April, you will not have the most recent information available to make a reasonable decision.  Make recordkeeping a habit and update regularly.

Third, the system should be consistent.  Consistency allows you to compare your records from one period to another period, as well as with industry standards.  For example, a change in accounting policy, such as changing from a cash basis to an accrual basis affects the consistency of information.  While a change in accounting policy is sometimes necessary, it will affect your ability to compare information.

Jessica Taylor, Associate Accountant

Davis & Hodgdon Associates, CPAs

January 2012

Part I:  Key Areas of Recordkeeping for a Small Business

There are many elements that are recorded in a business, such as accounts receivable and accounts payable, however two elements that can have the greatest impact on a small business are inventory and payroll.  The following describes the importance of each to a small business and why accurate, updated recordkeeping is so essential.

Inventory:  While it is imperative to have enough inventory on hand to be able to deliver goods to customers, it is equally important to not have too much inventory.  An excess amount of inventory represents money that could be spent elsewhere, whether it is for paying suppliers or for purchasing equipment.  Additionally, if you have excess inventory, you are more likely to run into the problem of it becoming obsolete, thereby resulting in a loss of income.

Payroll:  For most small businesses, paying employees can be one of the largest expenses.  Additionally, payroll requires accurate recordkeeping, as there are taxes collected by the state and federal government, worker’s compensation laws, and wage/hour laws to abide to.  If records are not correct, the taxpayer may risk penalties from the IRS.

In our next blog post, we will talk about implementing a computerized recordkeeping system. 

Jessica Taylor, Associate Accountant

Davis & Hodgdon Associates, CPAs

January 2012

It is also helpful to keep detailed receipts and descriptions of your travel, as you also have the option of calculating the actual costs of vehicle usage, instead of the standard mileage rates.

Flexible spending account:  If you have a flexible spending account, you benefit from putting money into an account for medical expenses without being taxed.  However, many plans have a “use it or lose it by the end of the year” policy.  So, if you still have money in one of these accounts, try to schedule a dentist checkup or eye exam before the end of the year, instead of January.  You will be proactive about your health and not lose the money that you set aside earlier in the year.

Organize:  Tax season is just a few weeks away; start early and make a list of all relevant documents you will need to prepare your tax return.  Many documents, such as W-2’s and 1099’s may not be provided until the end of January.  However, it is a good idea to list all of the documents that you will need now, instead of waiting until March or April.

Have a happy and safe New Year!

Chronic conflict can hurt productivity. cause customers to leave and introduce talented employees to look for a more agreeable place to work.

But if managers jump in too quickly, they run the risk that employees will never learn to work through their differences on their own.  Instead, they may be all too willing to argue over differences of opinion, knowing that the boss will fix it.

At the other extreme, some managers hate dealing with conflict so much that they stick their heads in the sand and neglect to do anything about it.  But avoidance seldom solves entrenched conflicts, which are only likely to get worse if ignored.

The following are some guildelines for how to intervene when it gets to the point where it needs to be dealt with.

• Separate employees for a cooling off period
• Allow both employees to tell their stories
• Keep the discussion about specific, observable, job-relevant behaviors
• Paraphrase their positions, and validate both parties
• Bring a reality check to the discussion - reframe the problem so it is solvable
• Engage employees to come together and create a solution - hold each other accountable
• Plan to follow-up

For more information concerning this topic simply, search the web for Managing Conflict in the Workplace.