Welcome to the FreshBooks Tax Thursdays series! We know a lot of small businesses struggle with taxes, so we’re hoping to help make it a little easier by featuring advice from leading accounting professionals every second Thursday from January to April. Today we hear from Mariette Knoblauch on what to look for when you hire an accountant to help with the taxtime crunch.

Does this scene sound familiar: You look down at the pile of paperwork representing everything your business did last year, up at the screen with TurboTax, back at the pile and you begin to wonder if you might ever get through your taxes. Letting someone else try and make sense of it all can help but you don’t necessarily want to go to the first place you see. How do you find a good accountant to do your taxes? Here are some questions to ask if you have begun interviewing folks to straighten out your books:

Who should you ask for help?

First, look for how much of the alphabet they have after their name. CPA stands for certified public accountant and it means he or she has passed difficult tests to demonstrate their professional skill. Not all CPAs do taxes, though. You want to find one who specializes in taxes for small businesses, not a moonlighting auditor. This will typically be your most expensive option, and may be more than some people need.

What do those other letters stand for, can they help me?

An EA, or enrolled agent, has passed tests showing their tax knowledge. They are often former IRS employees, and like CPAs and attorneys can represent you before the IRS. This year the IRS is introducing a new designation, Registered Tax Return Preparer (RTRP). RTRPs will need to pass a competency test on tax preparation. For now tax preparers who are not CPAs or enrolled agents won’t have an RTRP yet, but they do need the most important letters of all – PTIN.

A PTIN, or Preparer Tax Identification Number, is required by the IRS in order to prepare tax returns for pay. Anyone you hire to do your taxes must have one. The IRS plans to make this information publicly available in time but for now the only search tool I’m aware of is from Teaspiller. Your tax preparer, whether they’re a CPA, an EA or unenrolled preparer, must sign your return with this number. Don’t do business with anyone who doesn’t have a PTIN, or won’t sign your return.

How do you test their know-how?

Letters alone don’t guarantee that someone is a good tax person for you. You want someone who also understands your business, is responsive and communicates well. Ask your colleagues who are in the same field for referrals. Are they on LinkedIn or other professional websites? Ask for an informational interview – most accountants will give you a half hour at no charge to talk in general about their qualifications and how they work.

It may seem more expensive to pay someone else to do your taxes but when you consider the time and hassle of trying to figure it out by yourself, and the money a professionally prepared tax return can save you in mistakes and penalties, a good tax accountant is worth the cost.

Mariette Knoblauch is a tax accountant in Seattle specializing in small businesses who use cloud accounting software. Her website is www.ballardbeancounters.com

P.S.: Find more FreshBooks Certified Beancounters on the brand new Fresh Map! 

You may have noticed an additional furry critter in Tuesday’s Leaflet. What? You didn’t? Go on, take another look!

February 2nd marks the official Groundhog Day, where Punxsutawney Phil (the most popular Groundhog) and Wiarton Willie (The Canadian Groundhog) emerge from their burrows and predict either 6 more weeks of Winter, or an early Spring.  Groundhog Day also happens to be one of our favorite Bill Murray movies, so we thought how better to celebrate this momentous occasion than a caption contest!

Here’s what to do, leave a comment below, tweet us, or comment on our Facebook post to tell us what Mr. Groundhog is actually thinking when he emerges from his burrow to see the sun.  Tomorrow we’ll pick the best caption and the winner will receive a copy of Groundhog Day on DVD and an Amazon.com gift card!

Congratulations to Brian Yurick with his caption “This is totally going as “overtime” on my timesheet!”. Thanks to all who submitted, we had a ton of fun reading all your captions

At FreshBooks we get to spend a lot of time admiring how thoughtful and talented our customers are. Case in point happened just the other day while sorting through email replies to our recent newsletter. I noticed that someone had set this message as their “out-of-office” auto-reply:

“I am currently trying to win the “Best Dad of the Year” award by taking my family on a ski trip to Austria. I will be in limited email contact. If this is urgent, please resend your request to my colleague Matt …”

Well heck, how lovely is that?! Skiing in Austria?? We all thought that he deserved to win the award he is trying for and had Etsy seller TwoPaperDollsShop send him a fine certificate. Congrats Pat for being a very generous Dad and treating your family to such a great adventure!

beautiful letterpress from etsy seller TwoPaperdollsShop

*this moment was not filmed in front of a live studio audience but if it had been, there would be wild, dramatic applause for Pat’s thoughtfulness*

Beep beep! We’ll be heading down to Austin, Texas in March for another great time at South By South West Interactive conference. Sign up for our special mailing list and get news of where you can hang out with us, hear about the fun surprises we’re planning, plus get all the details on grabbing a seat on our free (yep FREE!) airport shuttle to the Austin convention center on March 8th! Simply fill out the form right here  (we promise to only use your information for SXSW specific mailings). See ya at South By!

Ever wonder how other FreshBooks customers run a business and do what they love? Customer portraits connect you with your fellow FreshBooks peers to share guidance and inspiration.

Today, Lance Cardoza is the president and CEO of Business Street Media Group, a public relations and consulting company connecting businesses in central California. Lance and his company put together events such as 40 under 40 and Heroes In HealthCare. But just a few years ago, he was working in the professional wrestling industry. Learn how Lance went from the ring to the boardroom by diving into entrepreneurship and staying focused on his vision:

How did you come to own Business Street?

I was working in professional wrestling. I was into photography and the video end of it. I really enjoyed the media aspect. Well, full circle, I had a family and I went into commercial printing. Then I ended up buying Business Street and taking it to where it is today.

Business Street began as a magazine, but it had a terrible launch date: Sept. 11, 2001. You didn’t own the company at that point, but you were working with the proprietor. In your recollection, did the start date hurt the business?

Yes, in the first while. When the owner first printed it, he was devastated. He knew no one would be interested in something new, a business publication. We all felt it. The whole country was turned upside down. The first year was challenging, especially looking for advertisers. In the second year it started to pick up. He was one of my commercial printing clients, so I encouraged him to grow. I thought it was a great idea; it just needed some tweaking. It needed the mission statement to go from a paragraph to two simple words: “creating connections.”

You bought Business Street in 2004 and now it’s a website and public relations consultancy – not bad, considering when it started. What advice do you have for others faced with a difficult launch?

Don’t focus on the mainstream media. They get caught up in the bad news. Focus on what you’re doing with your clients and your product. Why are people interested or not interested? What are we not doing to make it work? What are we doing that is working?

What surprised you about working for yourself?

I thought being your own boss meant not having to answer to anybody. That’s not true. You answer to everybody. Learning that humbles you.

What do you like most about it?

It’s the excitement to create. It all falls on your shoulders to get things started… I figure any event can be done in 13 weeks. You need 13 weeks to promote it, run it, and organize it. If we get teams of people put in place, we’ll be fine.

Who inspires you?

I look to successful people who have learned how to use the media but not abuse the media. I would look at Donald Trump and Vince McMahon at WWE (World Wrestling Entertainment). Another big one would be Michael Gerber, who wrote the book The E-Myth. He was tackling the fact that 95 percent of businesses fail in the first year. Why did they fail? Because they lacked systems. He wrote about putting systems in place to grow the business.

What would you like to see happen with your business?

I would like to see Business Street Media Group on the news side become a national company.

What advice do you have for small business owners just starting out?

Buy The E-Myth. I think everybody should read it before starting a business. What small business owners do when they begin is they’re working in the business, not on the business. In the end all they’ve done is create a job. They start businesses because they want to break away from the job, and they want to create. A lot of people don’t realize they fall into that trap.

Are you still in the professional wrestling industry?

I’m still a promoter today. I have an independent league, Lucha Xtreme… And I own a training center where we train professional wrestlers to go up to the big companies.

The world is full of inspiring, hard working people with great ideas. At FreshBooks we are lucky enough to meet them every day when they call in with a question about their account or billing.  We’ve noticed that the more time folks have to spend outside of running a business, the more time they have to invest in awesome projects.

Recently I had the pleasure of chatting with FreshBooks customer Monica Ponsky. We struck up a conversation about the fantastic not-for-profit organization called MedWish International that Monica helped create with her husband, Dr. Lee Ponsky. I was so blown away by the work they’re doing I had to share their story. We asked the founders to tell us more about the organization and while this is a story about the non-profit world, they offered advice that can apply to anyone trying to make a great idea get traction in a world with lots of competition:

How did MedWish get started?

In 1993, we founded MedWish International with the goal to save lives and conserve our environment. In partnership with hospitals, medical clinics, and private practices throughout Northeast Ohio, MedWish takes excess surplus medical supplies and sends them overseas to promote health and save lives in less developed countries. Monica also plans the annual benefit, Band Aid Bash, which raises over $230,000 each year to support our mission.

What are the essential ingredients for making a great idea come to life?

Two things: dedication and passion. MedWish is an idea that started just like most entrepreneurial endeavors (i.e.: in a parent’s garage) and has been successful enough to have now shipped supplies to 97 countries and sent 2.7 million pounds of surplus medical supplies. The organization has been around for 19 years, but really took off in 2005 when we hired the right Executive Director, who had a vision of building bigger partnerships and finding significant funders. We also spread the word about MedWish with everyone we know and meet, without fear or hesitation, because the cause speaks for itself.

What is the key to your success?

MedWish is the connector between America’s surplus medical supplies and the dire need for said supplies overseas.  For that reasons, we make sure to have excellent relationships with all our stakeholders.  Our network includes volunteers and an active board that pushes MedWish within the business and philanthropic communities. We have a generous group of donors, and we are always working to attract new funders interested in humanitarian relief, environmental conservation, and special needs. We have dedicated international partners, who arrange for the shipments and pay all the associated fees. And we have over 50 amazing local hospitals and clinics that call us whenever they have unneeded supplies. It’s important to keep all of these groups happy!

How do you maintain your purpose and passion?

We constantly receive pictures, stories, and even videos from our overseas recipients. Seeing these supplies in action, and learning about the lives that are saved, keep our passion and commitment strong.  We recently received a letter came in last week from a woman in Uganda whose life was saved by medical supplies. I can’t think of anything more powerful!

What have you learned from the people you are helping?

We’ve learned the incredible value of medical equipment and supplies, no longer deemed useful by the American healthcare industry, in saving lives around the world. We’ve learned about the ingenuity and spontaneity of overseas healthcare providers, as they struggle with a complete absence of supplies. And we’ve learned that we should never take anything for granted: that simple pair of latex exam gloves, that 20cent syringe, and that two-dollar pair of medical scissors…they are worth their weight in gold to those who need them.

This sounds great!  How can someone get involved?

We welcome volunteers and donors, so just visit our website for all kinds of opportunities.  If you have things like old crutches or wheelchairs etc., you can mail them to the MedWish warehouse for distribution overseas. We are always looking for worthy projects overseas to supply so suggestions are welcome, and volunteers come from around the US to work in our Cleveland warehouse.  And, of course, you can also help us by donation: for every $1 contributed, we can send $16 worth of supplies overseas.

Ever wonder how other FreshBooks customers run a business and do what they love? Customer portraits connect you with your fellow FreshBooks peers to share guidance and inspiration.

Chris Eustace is the owner of Eustace Consulting, which delivers Customer Relationship Systems, specifically SalesForce.com, to all different types of businesses. Chris started out with little more than $4,000 in his bank account and after almost 3 years, he has turned his company into a successful business with a team working with him. Hear from Chris on what it takes to build great, long-lasting relationships:

How did you know it was the right time to go out on your own?

I didn’t, I honestly didn’t. I had been laid off from a job before and was able to pick up a little bit of side consulting work. When I decided to quit my job, I said, ‘I don’t care if I have to go make subs or sandwiches. I just can’t do what I’m doing anymore. I’m not happy doing this.’ Then I said, ‘You know what I’m going to do? I’m going to pursue my passion, I’m going to go back to school for 3D animation, and I’m going to do a little bit of consulting on the side.’

So I started back in school with 3D animation while doing some consulting on the side. I was responding to Craigslist ads and things like that. I actually started using FreshBooks right off the bat. Sooner rather than later, I really started to get some traction, and I was like, ‘Wow. I don’t really have time for school anymore. I’m getting so excited and getting so busy with this stuff that this could actually become my career!’

At this point, I can’t imagine not having done this. It’s totally reshaped the way that I look at life and the way that I look at opportunities. I never really got that being in a 9:00 to 5:00 job. It was just like, ‘OK, I’m just going to my job. I don’t see how this is the land of opportunity.’ You look back and people said I was insane; I had a well-paid, 9:00 to 5:00 job. It was stable, but I was miserable and that’s not the way to live.

It was nice to pursue something while I was young and didn’t have a wife. I didn’t have a family. I just said, ‘You know what?’ I had $4,000 in the bank.I then thought, ‘I’m just going to try something else because I can’t do this anymore.’

Tell us a little bit about your business. Where did the idea came from and what you and your team do?

We’re a Salesforce.com consulting company with a primary focus on developing and deploying Salesforce.com for customers. We’re mostly focused in the New England area, but we do have some customers in California and Texas. We’ve been in business since April of 2009 and since that time, we’ve worked with about 130 to 135 different companies.

 I’ve been in CRM my whole career but had never worked with Salesforce until 2008. Once I saw Salesforce, I said, ‘I am never working with anything else. This is head and shoulders above anything else that I’ve ever seen.’ I have experience with, I would say, about eight or nine other CRM packages in-depth and in my opinion, Salesforce is the best.

From there, we’ve actually started to expand our footprint a little bit in that we’re not just doing Salesforce. Salesforce is always the core, but we’re expanding our scope and saying, ‘Wait, what do you do for email, what do you do for document storage?’ Because people are spending too much money on all these things when there are other more cost-effective solutions available.

For example, they can go to Google Apps for Business,which is cloud-based email, calendaring, contacts, and all the other features you would get with Microsoft Exchange.  All data is stored and hosted through Google, totally reliable, secure and saving companies significant amounts of money. And then, for document storage, we typically work with Dropbox or Box.net and work to migrate all of their data off old servers that they had previously had  to pay people to maintain.  We then move them up into the cloud and integrate everything into Salesforce.com.

What does a CRM do for a business you work with? And what is Salesforce?

CRM stands for customer relationship management. It encapsulates a lead all the way to a closed sale.If you choose to implement the service module, it has the whole service and support feature set where you can support your customer base, add trouble tickets, and populate and maintain a knowledgebase. With Salesforce, what we do is really look at how are you storing all your customer data. ‘What kind of analytics can you run?’  From storing customer data, tracking leads and opportunities, creating and maintaining Marketing Campaigns down to tracking internal activities going on with your sales department or any other department.

How did you learn sales?

It’s funny, I never really thought of myself as a good salesperson. But now I actually love selling. My favorite part of my job is going out getting new prospects, meeting companies, figuring out what their challenges are and then giving them solutions that are the best of breed and work for them.

I’ve always been good at public speaking; I’ve never had a problem with public speaking before. The thing that makes sales easy for me is that I 100 percent believe in the product we’re selling, and I know that this is the right choice. If they choose to go another way, I actually kind of feel bad for them because I know they’re going to revisit their decision of not going with Salesforce.com and I can guarantee that, if they get the adoption that they need, there’s no reason they would not be successful. Having the confidence in the product, myself and my team are the key things that played into that.

 What’s the biggest learning you have had since starting your own business?

I think the most important thing is developing good relationships with people. That’s what it really boils down to. We can get the work done and there’s 1,000 other people that can get the work done, too. But if you can develop and cultivate relationships, that’s where you’re going to be successful.

Really, knowing how to partner with the right people, choosing the right tools, and building the relationships and continuing to cultivate those relationships is the most important thing. Some of them turn into friendships and things like that. Building those relationships is the number one most important thing that I think I’ve learned from this.

How do you get leads? How do you find your new clients? Is it all from cultivating relationships?

We get leads in a variety of ways. People will find us just on Google as we’ve done some SEO on our website. They search in ‘Salesforce consulting Boston’ and we get some leads that way. We get leads from customer referrals, so when a customer has a good experience with us they refer us. Then, thirdly, and probably the biggest, is through our partner channels.  Building the relationships with the companies you partner with, gaining their trust and providing a great feedback-loop for them is critical.

We enjoy spending time with our channel partners as well- dinners, drinks, and meetings. They’re good people and they know that we do good work so they trust us and we trust them. We’ve really built off of that to provide them a feedback loop. As we’re working through a sales process or a project, they’re getting updated all the time through different automated processes that we’ve built.

What’s next for you? What does success look like?

Success for me? Honestly, I never went into this business to make money. I just said, ‘I can’t do what I’m doing anymore. What I want to do is have flexibility in my day and make my own schedule.’ Success, for me, is being happy in my day-to-day job. I kind of had the luxury that I’ve been very fortunate, monetarily, with what I’ve done, but that was never the end goal for me. The end goal was just for me to be happy day-to-day. I would like to continue this success in growing the business while  maintaining happiness for myself and the happiness of my employees.

I ask my team, ‘What can I do to make you happier?’ Because at the end of the day, you’re going to do the best work when you’re happy. What is it? Is it an iPad? New equipment? Exploring new areas that you don’t necessarily have experience with?

I also like to spread the wealth of the company so when we’re doing really well, everyone will benefit. After all, they are helping my company grow so let’s provide them with what they need and ensure that they know their value and that they are instrumental in growing this company.

Ultimately, it’s just staying happy, continuing to grow, and really doing a great job for our clients. I know it’s a little cliche, but it really is really how I feel.

What’s the wackiest thing you’ve ever done?

Chris' bobble-head version of himself!

This is a little bit of a tough one but it’s about one of my rep that’s given us the most business. There is actually a bit of a story behind this.

The story is that this one rep believed in us and liked the work that we were doing and we weren’t really known at the time. When we went out for drinks with these guys, they were telling the story about how this one rep would always refer to us in the meetings and nobody knew who we were. His coworker started teasing him and printing out pictures of me from Facebook and pinning them all over his cubicle, which I thought was strange, but I laughed it off. For Christmas, on top of the gift I gave him, I had a bobble-head doll of myself made, and I sent it to him. It says, ‘Eustace Consulting loves Salesforce.com,’ and it has to stay right on his desk so hopefully it will encourage people to ask questions about us.

Do you have anything else to share or anything else you want to include?

I would just tell people, especially when you’re in your 20’s. If you are young, pursue what you want to do because your 20’s should really be about experimenting, discovering what you do like and what you don’t like to do. Even if you are in a miserable job, just say, ‘OK. Well, I am learning. This is what I don’t like to do,’ and then take parts of that that you do like to do and try and explore. Don’t feel like you have to be doing this 9:00 to 5:00 or whatever because you don’t.

If they have the motivation and will power to start something on your own then really just go after something that you’re passionate about. You’re going to be way more successful with what you are passionate about rather than just trying to make it to the next Friday.”

Welcome to the FreshBooks Tax Thursdays series! We know a lot of small businesses struggle with taxes, so we’re hoping to help make it a little easier by featuring advice from leading accounting professionals every second Thursday from January to April. Today CPA Chad Shultz walks us through tax write-offs for small businesses in the US.

As an owner of a small business, staying aware of the day-to-day operations of the business is a priority. At this time of the year, however, an owner must also be considering tax strategies for the business and write-offs are key for helping reduce the amount of income tax you need to pay. In light of this, here are 7 essential things to know about writing-off expenses and some common mistakes to avoid:

1. Car Expenses

Using a vehicle for business is quite common; when filling out your return, you will need to calculate the cost of this expense using either the Actual Expense Method or Standard Mileage Deduction.

The Actual Expense Method allows the taxpayer to write off actual out-of-pocket costs plus depreciation if he or she owns the car. Examples of expenses include Depreciation, Licenses, Tires, Loan Interest, Tolls, Gas, Oil, Towing, Insurance, Parking Fees, Registration Fees, Lease Fees, Repairs and Garage Rent. Keep in mind that parking and traffic tickets are not deductible. Also, if the car is used for personal and business, then a percentage of use needs to be determined and the business percentage is what the owner uses for the business write-off.

If you opt for the Standard Mileage Deduction, then track the business mileage and multiply that the IRS rate (i.e., $ .555/mile – July 1-Dec. 31, 2011); the total is the deduction.
To track you might use a mileage log or a smartphone app. An example of a business mileage log includes: Date, Destination, Business Purpose, Odometer Start/Stop and # of Miles. Auto expenses are also tracked with the type and amount spent (i.e., toll).

2. Travel Expenses

Airfare is deductible but if the taxpayer uses frequent flier miles to purchase a particular ticket, the cost of the airfare cannot be deducted. The taxi from the airport to the hotel, as well as transportation costs to go to a customer, including bus and limo costs, lodging, and meals (food, drinks, tax and tip) qualify. Other deductible items include the reasonable cost of cleaning/laundry, tips to the taxi driver, meals, bellhop, telephone costs to your office, receiving a fax, and computer/cell phone rental. These are based on actual costs and not per diem travel rates.

3. Business Gifts

You can deduct up to $25 per person per year, so keep in mind that if the business owner purchases a $30 bottle of wine for a client, only $25 is deductible. Some people also get confused with “gifts” vs. entertainment. If you give someone a ticket that costs $20 to a ballgame as a gift, then you can deduct this. If, however, you code it as entertainment, it may be subject to the 50% rule, making it a $10 deduction.

Make sure receipts are kept for any of the gifts, expenses with notes, showing the date, the person the purchased meal/gift is for, purpose of meeting/gift, and any other pertinent information. Suggestion: scan their receipts, since most receipts are on thermal paper that fades.

4. Repairs

The cost to repair business equipment or property is deductible, but be sure you make the distinction between “repair” and capital items. For example, if you replace an air compressor in the business air conditioner, that is considered a repair vs. adding a new air conditioning unit, which is a capital item.

5. Rent

Rent expenses are deductible, along with other terms of a lease (i.e., property taxes.). Many make January rent payments in December. If the business is using cash basis, then it will be deducted with the current year. If the business uses accrual accounting, then it must be capitalized.

6. Advertising

Deductible advertising expenses include business cards, print/radio/TV ads, yellow page advertising, package design costs as part of advertising campaign, billboard rental fees and signs on the side of cars/trucks, and PR expenses, including fees, event fees and costs of press kits.

7. Small Expenses (that can add up)

Dues and Subscriptions: Dues for professional, business or civic organizations are deductible (i.e., American Bar Association, American Marketing Association), Chamber of Commerce and Rotary. However, athletic, sporting, airline or hotel membership costs are not, even though they are business oriented. Business and professional publication subscriptions are deductible.
Legal  and Professional Fees: These fees, which include legal, accounting and tax prep, and appraisal fees, are deductible.
Bank and Merchant Fees: Bank-related fees, such as monthly, ATM and online banking costs, as well as merchant service fees, including Pay Pal related costs, are deductible.
General Office Expenses: Office supplies, postage, books, cleaning/janitorial services, flowers and  plants, snacks and beverages, are all deductible.

For specific information about tax write-offs for your industry visit the IRS.gov Small Business website, where you’ll find information that IRS agents use for examining returns. Another resource is the IRS’ Self Employed Individuals Tax Center.

- Chad Shultz, CPA www.shultztax.com

This is a guest blog post that appeared on the RightSignature blog. RightSignature is an add-on service to FreshBooks that allows you to send invoices and estimates to clients for signature with just a few clicks.

It’s usually good news when a small business or freelancer lands a new customer. But the situation can quickly turn sour if you’re not careful about managing client expectations. Does the customer understand what they’re buying? Is there any chance that the client might think you’ll deliver one thing, when you planned to deliver something else? The risk exists if you don’t follow these five pieces of advice: use a contract, communicate, build a relationship, keep your word, and over deliver.

Use a Contract
By laying that groundwork at the beginning of the job, it’s much more likely that the customer will be happy with the finished product. In a contract you can lay out exactly the terms of the project – deadlines, who’s responsible for what, and of course the amount of money involved. It’s the first step in ensuring both you and your client understand what to expect. You can use FreshBooks to generate a detailed invoice, and then send it to the customer via RightSignature for legally binding electronic signature.

Communicate
Use your words! Keep your client informed as to project progress and issues (including potential solutions for the occasional problem). Many freelancers rely on email to connect with customers, using their email programs as veritable repositories of information, including details about when, exactly, the client agreed to push back the project’s deadline, for instance. In fact, email may be better than other forms of communication (texting and voice particularly) for permissions because it lets you go into detail, and people tend to save emails, so you can check back for verifications later.

Build a Relationship
But email certainly isn’t the only form of communication you should use. It can be somewhat cold and impersonal. Pick up the phone and speak to your customers every once in a while. That can help you build a relationship with your clients, and it helps remind them that you’re not just a distant service provider. You’re a person. That can help you smooth over mistakes (when they happen). After all, it isn’t so easy to write off a work relationship when there’s a personal connection as well.

Keep Your Word
Did you commit to participating in your customer’s conference calls? If so, do so. Did you agree to a deadline? If so, meet it. It’s particularly important that you should keep your word on small details, because if you can’t meet the little expectations, your client may conclude you’re incapable of meeting the larger needs involved in the job.

Over Deliver
Aim to go above and beyond the contract. Throw in extras – services, recommendations, support, follow-up – whatever will make your client take notice. If you do manage to over-achieve once in a while, your client could come to see you as someone she can count on as a valuable business partner, not just a vendor. That puts you in a different class of service provider, and it could translate into more business down the road.

If you’re a small business and receive funds via credit cards online, or other online payments from your clients, you can anticipate receiving a 1099-K this coming tax year. The 1099-K is the IRS’ latest tax form for small business, which is provided directly to the IRS from your online payment provider (such as PayPal). You will also be receiving a copy, so you can match it to your own record of online payments (always important to double check). Essentially, this form is a record of your revenue from your online payment provider that will be directly reported to the IRS. The form will look like this:

Since your payment processor will be reporting your revenue directly to the IRS, it will actually cut down on your paperwork. You will not need to report it in the other 1099 forms (make sure you don’t double-state your income, as that would mean more taxes.) The most important thing to do is to record all your expenses (write-offs and deductibles) and file your return quickly to ensure you do not over pay your taxes. Also, make sure to report your PayPal or other merchant fees as a separate expense, as they will not be included in the 1099-K.

Clarification update: The income on your 1099-K still needs to be included on your Schedule C, as per usual.

Essentials:

• Payment providers may ask you for your Tax ID Number (TIN), Social Security Number (SSN) or, if you have one, an Employer Identification Number (EIN). You can get an EIN here. An EIN is a great alternative and preferred by many people doing business online to protect their SSN number.
• Only businesses that do over $20,000 in online sales and 200 transactions will receive a 1099-K
• The form only reports your business name, address, tax id number and gross credit transaction (not deductible merchant fees).
• If you have multiple merchant accounts or PayPal accounts, one 1099-K will issued for the same SSN/TIN/EIN, following the policies above.

In short, you do not need to do anything, other than make sure you do no overstate your income in other tax forms, and be sure to deduct all your relevant expenses, especially your merchant/PayPal transaction fees.

If you need more information, as always, talk with your accountant/bookkeeper, as they’re the experts. And, there is always the IRS’ 1099-K instructions. PayPal also has written a FAQ.