Build Your Own Ecommerce Website!: Continuing

Showing posts with label Continuing. Show all posts

How to Ensure That Your Business Continues to Run in the Event of a PC Failure

Have you ever stopped to think what would happen to your business if your PC were to crash? Would you be able to continue to support your clients and/or generate income in the event of a computer failure?

If you run an online solo service business having a system in place that automatically creates a back-up of your PC's files and folders is essential. It's not just older PCs that are prone to glitches and complete system failures - it can happen to newer PCs too! Whatever age your PC and/or laptop is, you need to ensure that you have a system in place that will automatically back-up your critical files and folders should anything happen.

And to make the back-up process smoother, critical files and folder should ideally be stored in one place i.e. ALL files/folders relating to your business should be stored within the My Documents folder; downloaded programs should be stored in a downloaded programs folder; and any password and login data should be printed out as well as being stored within your My Documents folder.

So, what is the basic system you need? I recommend that you have two file back-up systems in place:

1. An external hard drive that you back-up to each day; and

2. An off-site back-up service, such as an online data back-up service, that backs up files automatically as soon as they've been updated.

Just stop and think for a minute how something like a hard drive failure would affect you and your business if you hadn't got a recent back-up of your work; not just your day-to-day work but all your software programs too?

I'll share a story with you about one of my clients who had some computer problems. Her laptop had died, and she said to me during one of our weekly check-in calls:

"I haven't backed up my desktop. So if this goes, as well as the laptop ... I'm sunk."

How would you feel if you found yourself sunk? If you don't have any back-up systems in place I suggest you take action now to avoid being in that same situation. Unfortunately I had an incident where my hard drive failed and needed to be replaced. Fortunately, I'd backed up all my critical work the day before on to CDs, but I still spent a lot of time recovering and downloading files and programs which I hadn't backed up. Lesson learned!

The system that I had been using involved backing up files and folders to several CDs i.e. one for clients, one for accounts, one for business etc. It was time-consuming and a bit of a fiddle; consequently I didn't backup as regularly as I should!

For a system (any system, not just back-up systems) to work it needs to be simple and easy to maintain, and once it's in place should run like clockwork.

As a result of the situation I was in I created some new backup policies. I needed a more reliable system - one that was simple and easy to maintain, and would run like clockwork once I'd set it up.

My back-up system now consists of:

1. An external hard drive that I back-up to at the end of each day;

2. An online back-up service that automatically backs up my files, offsite and that I can access from any PC with an internet connection if I need to.

In addition to having this back-up system in place I also have my desktop computer connected to an automatic battery back-up so that if the power suddenly goes out I don't lose the work I'm currently working on. I have four minutes to save and shut down the PC in the event of a power outage!

I recommend that you implement at least one of these back-up systems NOW! Both would be better. And get your desktop PC connected to an automatic battery back-up too!

Office organization expert, Tracey Lawton, teaches professional speakers, coaches, and authors how to operate an efficient, organized, and profitable business. Learn how to create an efficient and organized office in 7 EASY steps, and receive free how-to articles at http://www.OfficeOrganizationSuccess.com

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A Customer Support System to Handle Your Growing Site

Good customer service can make all the difference - especially in ecommerce where there is no face-to-face contact.

By offering excellent service you have the opportunity to turn happy customers into loyal customers. What's more, business studies have shown that happy customers tell 4 people about their positive experience. Unhappy customers on the other hand tell 10 people how unsatisfied they are with your company.

Do the math... If you are able to offer excellent service, your bottom line will thank you for it. But in ecommerce this is easier said then done. Customer support requests can be inundating and highly time-consuming for many growing businesses.

How do you offer excellent customer service that creates growth - without sacrificing your time and sanity? What is Customer Service?

You can't build a good e-business without solid customer service. This means responding to customer enquiries, dealing with lost packages, payment problems and returns - and finally answering questions from customers.

Good customer service is all about bringing customers back to your site and turning them into repeat buyers. You want to send them away happy and impressed enough to tell their friends - who may also become repeat customers - about your business.

The good news is that a customer service system that's fast, efficient and delivers excellent value to the customer can be set up with very minimal cost, technology and time.

You'll notice that few books on ecommerce deal with customer service.

After all - can customer service really boost sales and increase the bottom line? We believe it can and it should.

The key to good customer service is responsiveness. This doesn't just mean responding to your customers demands, try to anticipate them. Good customer service exceeds your customer's expectations.

A website with 100,000 subscribers and turnover of close to $1 million a year only needs ONE customer service rep working 20 hours a week if the proper systems are set up well.

2 Key Concepts of Online Customer Service

As mentioned earlier, the single most important aspect of online customer service is responsiveness. You can increase your responsiveness by focusing on its 2 key components: communication and interactivity.

1. Communication

Communication should be transparent and painless:

· Visibility: clearly display your contact information on your website. Provide easily accessible email links, phone numbers and feedback forms.

· Availability: Let your customers know that you'll be happy to help them.

· Email lists: these are powerful tools to provide your customers with relevant information, nurture the relationship and encourage further contact.

· Autoresponders: Autoresponders can automatically send your customers the appropriate information in response to a standard question. If a customer replies to an autoresponder they can receive an automated email with a link to the FAQ section on your website and the contact information of your support team.

2. Interactivity

Interactivity can help significantly in building a relationship with your customers. By showing a personal interest in your customer you will build trust and likeability.

Here are some tools you can use to encourage interactivity.

· Surveys: surveys allow you to not only show your customers that you value their opinion but also gather valuable feedback in the process.

· Incentives: reward your customers for interacting with you. These could be discounts for filled out feedback forms, prizes for creative slogans, bonuses for repeat purchases, you name it.

Good customer service can make all the difference. The trick is to offer the best possible service in the least time-consuming way.

Remember that one happy customer could lead to a lot of additional sales over the years through repeat purchases and referrals. It would be a waste not to use this existing resource to the full extent. But while offering great service - you need to pay attention to automation and efficiency so you can free up time to focus on growing your business.

Bjorn Brands is a successful entrepreneur who transitioned from having his own building company to a great online business. Check out his site and see for yourself how his FREE course can help you do the same. http://www.moneyacces.com
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The Future Of Ecommerce Sales Is Promising…But Is Yours?

Copyright © 2008 WebCart

There is no question that over time, ecommerce sales have continued to rise as more and more people turn to the internet for their shopping. It's much easier to take a quick commute to your computer, surf the net for a short while, and purchase what you are looking for than it is to go out to a store for the same thing. Because of this, the future of ecommerce sales is looking bright.

The online market is growing at a level far above that of the retail market, which is making anyone with the need to make money turn to the internet. The problem is you aren't the only one in the world with the idea to start an online business. With millions of people turning to the internet to try and strike gold with ecommerce sales, the competition has become ever so high online.

Anyone can start up an online business with the plan of making a large income. However, because the competition is so steep, people don't realize the effort that is required to make it in the internet business. If you have aspirations of becoming another statistic of someone successfully starting up a business online, you have to be willing to put in the effort to reach out to the public.

Without a doubt, the statistics are in favor of those going into ecommerce sales. In the fourth quarter of 2005, US retail ecommerce sales totaled $26.5 billion. That was an increase of 27.5% just from the third quarter of 2005. So as you can see, more and more people are shopping online creating the possibility for success in an online business.

With the high competition online, it is essential that you have two things to make it in ecommerce sales; a well thought out plan and a quality marketing campaign. If you create a website without planning out who your target market is, how you will advertise, and how you can keep in contact with customers, you are setting yourself up for failure.

The more in-depth your plan is to begin with, the better your chances will be of succeeding. There is nobody saying you have to stick with your plan throughout your business's existence, but it will help you develop into a money-making site. The marketing campaign is the same way. If nobody knows about your business, how do you expect to make money? The more thought out your marketing campaign is, the better chance you have of generating a higher traffic volume.

Despite the high competition in the internet industry, the future of ecommerce sales is bright. As more and more people turn to the internet for their shopping, the availability and need for more online businesses will continue to increase throughout time.

Michael Moshkovich is a web developer and internet marketer who has written over 50 articles on SEO, shopping cart software and PPC marketing.To find out more information about WebCart's seo friendly shopping cart software visit our website.
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Top 11 Information Marketing Business Mistakes to Avoid

`If you've tried your hand at building an Internet-based business but haven't yet reached the success you want, find out these 11 deadly mistakes and how to avoid them.

Mistake #1 - Not Treating What You Do as a Business

The difference between a hobby and a business is that a hobby doesn't make you money - it costs you money.

If you're serious about starting a building a profitable online business approach seriously and focus on generating revenue.

Treat your online business as if you would any regular business.

Mistake #2 - Being Distracted by Too Many Good Ideas

You can light up a room with a light bulb, but you can cut through steel with a laser beam. The same is true with your effort and ideas.

Too many Internet-Entrepreneur-Wanna-Bes lack the will power to stay focused. Chasing too many ideas at the same time often leaves them exhausted, frustrated, and with little results to show for their hard work.

The key to success is to select one business idea and to develop it completely before moving on to another project.

Mistake #3 - Not Selecting a Specific Niche

Perhaps the biggest mistake of all is trying to be everything to everyone. You can't - so stop!

It's very counter-intuitive to focus on a smaller slice of the market and most people are afraid to do it. But when you do, your business will grow faster, and you'll more financially successful in less time.

Mistake #4 - Falling in Love With the Wrong Product Idea

Even the most experienced entrepreneurs fall into this trap from time to time and develop products without doing any research. Before you devote any serious amount of time and effort to developing your new ideas make sure there is a demand for the type of product, information, or service you want to launch.

If you need help with selecting an ideal niche market for your business and finding out which products you should develop first, take a look at this fast track training program.

Mistake #5 - Falling for the "Get Rich Quick" Scheme!

Remember the old adage "if something is too good to be true..."? It's alive and well on the Internet.

Countless people buy into the idea of making millions online overnight. Sadly, they buy into programs hyped up with empty promises only to find themselves "out of cash and out of luck" a short while later.

Be aware of spammers, illegal money-winning scams, and buying "ready to go businesses" that are "hot but will sell for cheap"!

Before you fork over your money investigate if those hot businesses have ever made a dime for their current owner.

Doing your homework will save you valuable time, money and many sleepless nights!

Mistake #6 - Going Into It, Instead of Growing Into It

While the Internet makes it easier to reach your potential clients, you're still building a business - and that takes time. Don't tell your boss you're quitting today because you started this hot new online business last night and you'll be "rolling in dough in no time flat!"

First make sure your business idea works and is profitable.

That's one of the advantages of Internet Business - you can start small and step-it-up as your business starts getting sales and generating profits.

Just be sure you can consistently replace your current income before jumping ship and telling your boss to "beat it"!

Mistake #7 - Being a Copy-Cat!

Quickly - what is the most popular business on the Internet? You guessed it - it's how to make money on the online!

It seems that everyone who has bought a course on making money online is credible enough to teach this subject a week or two later!

Don't fall for the allure of easy money - because it's only a perception. In reality your chances of having a successful online business are much greater when you are different from the pack.

Mistake #8 - Wasting Time and Money on Developing Pretty but Useless Websites

A bad idea is a bad idea - no matter how pretty you dress it up. Many people waste precious startup dollars on expensive but needless graphic design work, pretty logos, and complex web design.

In reality, many businesses can be simple and inexpensive to get off the ground. In fact, a simple site with little or no graphics will often make more money than one with all the latest bells and whistles flashing all over the page.

Think what is the core concept of your business. Outline it on a single sheet of paper, then implement it fast in it's simplest form. You can always give it a makeover and make it prettier if it's successful and profitable.

Mistake #9 - Not Building Relationship with Clients

"Even though you don't know me from Adam, I want you to take out your wallet and give me $20 - in exchange I'll make you the King of the Universe!" What!? You don't want to give me your $20? What a surprise!

Most people think about starting a business online in terms of getting a quick sale - with no prior relationship with their potential clients at all.

In reality, you'll be more successful when you make your first goal to collect contact information from potential clients and follow up with them on regular basis.

It's much easier to "sell something for FREE" than trying to convince people to give you money at first.

Make it your goal to prove your credibility online and make your business all about relationships with prospects and clients you'll build a thriving online empire.

Mistake #10 - Calling It "QUITS" Too Soon!

If your new online venture isn't making money at first don't walk away from it too soon. Many entrepreneurs have multiple "failures" in their background - which in reality are lessons in what didn't work.

Evaluate your ideas and get help with gaining a new perspective on what you're doing. With some new ideas you might find a new way to position your business differently and make it profitable.

Or maybe you simply need to give it more time to gain the traction and momentum you want.

Mistake #11 - Being too cheap!

While it's a good habit to be thrifty with your dollars, don't confuse saving money with being cheap. Remember the price you're paying for things isn't always expressed in money. It's also the time, effort, and lost opportunities you can't take advantage off because you lack the know-how or are busy doing low-level tasks.

Smart online entrepreneurs continually invest in their education. They buy marketing training programs, time-saving software tools, and systems that allow them to grow businesses faster with less effort.

The best news is getting good basic training in how to start your own information marketing business doesn't have to be expensive.

The author, Adam Urbanski, Founder and President of Marketing Mentors, teaches professionals and business owners proven strategies to leverage their know-how into low-cost, high-profit information products and programs. For a four-hour fast track training go to his website at http://www.infoprofitfasttrack.com/
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Make Your Website More Mobi-Friendly

Copyright © 2008 Jim Edwards

Ok! Tis the season to make startling predictions about where the web will head this year and what rates your attention in the world of ecommerce.

I'll say I've seen some great predictions by others this year, including some of my friends who say the "newbie" market and the Asian markets will explode this year.

However, I want to talk about something that most of the "geek" set take for granted, but none of us fully understand the impact of just yet: mobile surfing.

No, I'm not talking about hauling your laptop around to find the nearest free hotspot, I'm talking about the tens-of-millions (if not hundreds-of-millions) of cell phones, iPods and other mobile devices built to surf the Web while on the go.

With so much surfing power now in the hands (literally) of millions of people, anyone with an online business can no longer ignore the importance of this growing audience.

So what caused this great epiphany about the rights of the mobile surfing masses? Simple!

I got an iPod Touch for my birthday (the iPhone without the phone part) this past month and realized I could surf the Web through any available wireless network, order music, and watch YouTube videos without my computer.

Sure, everyone in my family carries a cell phone, but the power of this mobile Internet access didn't come home to me fully until I was sitting in my easy chair laughing at an online video downloaded directly to my iPod.

In my opinion, there's an expanding world of mobile users out there that most online business owners (myself included) neglect.

However, the great news is that you can start catering to the mobile market now more easily than ever.

The following tips should help anyone who sells online (or wants to sell online) make their sites more "mobile-friendly":

- If your website depends on surfers seeing your layout at a certain browser size, consider creating a mobile-friendly version of your site and put a link at the top that says "Mobile Users Click Here".

- Keep your html code simple and avoid using numerous graphics or depending on a fixed width to display text properly.

- Use a single table to display text and graphics so the mobile device's browser can "squish" your site horizontally to make it fit on the small screen.

- Keep navigation on your mobile-friendly site down to two or three links at the top to minimize choices and cut down on load times.

- Since mobile devices load web pages in chunks, put your most important information toward the top of the page so you don't force surfers to scroll too much.

- Test your site on at least one mobile device to see how it looks.

- Test your site on the Opera Browser (one of the most popular mobile browsers). Download it free from www.Opera.com/download/, pull up your site in the browser, hit SHIFT+F11, and preview how your site looks to a mobile user.

By the way, anyone who understands web design realizes that I just described how to build a site for the Web back in 1996!

If you wan to hit the emerging mobile surfing market, the first step is to realize they exist.

The second step is simply to make a few allowances in your design to allow them access to your site's information.

The final step is to keep your eye on this emerging user-base and look for opportunities to serve them.

Jim Edwards is a syndicated newspaper columnist and the creator of an amazing course that will teach you step-by-step and click-by-click..."A Quick and Easy Way For YOU to Painlessly Set Up Your OWN Moneymaking 'Mini' Websites... Without Being a Computer Geek, Buying Expensive Software, or Paying Outrageous Fees To A Webmaster!"

Click Here => http://www.MiniSiteCreator.com
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Help Your Employees Build Their "Confidence Muscles"

Copyright © 2008 Pat Brill

Have you found when managing your employees that they bring different levels of self-confidence to their work? We know that the more confidence an individual possesses the more efficient and productive they can be in meeting their goals. If you view your role in managing employees as a mutual working relationship, then you would want to be part of nourishing their confidence.

I would suggest the following important points to use as a guide in providing support and guidance in increasing your employees "confidence muscles."

-Listen for your employee's current level of confidence.
It may change given the specific project they are working on. Each person brings their personal beliefs about their capabilities to the job. As you monitor their level of performance, you can observe how they handle different situations. In managing employees, you have so many opportunities to be part of their success.

-Accentuate the Positive
If there is one booster that increases an employee's confidence it's focusing on their knowledge, skills or past contributions. Managing employees by their strengths build their confidence and in turn, adds more to the overall success of the department. Encourage your employees to acknowledge their contributions to the team. Try to use the 80-20 rule...spend 80% of your time with an employee addressing their strengths and 20% helping them handle any issues that are hampering their performance. Why...because you receive the most value from their strengths.

-Set clear direction and expectations.
The clearer team members are about what they need to do, the more confident they will be in implementing their work.

-Train
Give employees the chance to succeed by providing training. Even if you hire talent with experience, they still need to learn.

-Plan
Help your employees create and stay focused on their goals. Their planning skills should cover yearly, quarterly, monthly and daily. Each day they need to stay focus on what is important and not get swayed by interruptions and reactivity.

-Be Proactive
Encourage your team members to be active in increasing their level of confidence. Some ways are to take on new projects, reading business or industry information, and CDs or lectures on self-confidence.

-Recognition
Take the time to recognize an employee who has done excellent work. This spot acknowledgement adds to the employee's confidence and they will continue to perform. Don't assume they know that their work was great...tell them.

-Encourage your employees to take risks...either by making suggestions or trying something different.

-Follow up on a regular basis with your employees. It would be great if you could meet monthly, but at least on a quarterly basis.

Final Thought

Start the whole process over by listening. Your ability to listen will boost your own level of confidence as well as the confidence of your employees.

Pat Brill is the author of the blog "Managing Employees" http://www.ManagingEmployees.net . You can reach her at pat@TheInfoCrowd.com.
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"Dealing with people is probably the biggest problem you face, especially if you are in business. Yes, and that is also true if you are a housewife, architect or engineer."
~ Dale Carnegie
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The #1 Hiring Mistake You Better Not Make...

When I first started out in this business, my hiring practices were a little haphazard, to say the least. I met a person, and if they had been referred by someone I knew, that was good enough for me. I hired them.

After getting burned a few times, I am still learning how to (and how not to) hire people. Overall I have gotten a lot better at hiring the right people for the job the first time out.

A great many CEOs like to have a long, drawn-out employee interview and selection process, and that's fine. I've found it's best if all potential new employees are interviewed at least three times, by three different executives in our company. After each interview, each executive submits his or her own thoughts and perceptions on the candidate.

Some companies have much, much longer interview and selection processes that include live case studies (like Google), with days and days of interviews. There was a time when I thought they were crazy and just wasting time - but now I think they are brilliant.

But there's one aspect of hiring that is often overlooked. Hiring is not just about checking someone's competency level. It's about seeing if someone "fits" your company. Just because someone is good at what they do doesn't mean that they will be a great employee in your organization.

Here's the #1 mistake you can make when hiring someone: You hire them because they have a great talent, great skills, great everything...but you pay no attention to how well that person will fit within the existing corporate culture.

You see, every office has a particular atmosphere. Every company has a certain "mood" and "attitude." It's often hard to put your finger on what that mood or attitude is, and it's virtually impossible to quantify. But believe me, it's there - and it should be an important factor in any hiring decision.

So no matter how wonderful the candidate is, the question you MUST ask is "Will this new employee fit nicely into the status quo? Will they mesh with us and our corporate culture?"

If an office is populated with a very competitive, sales-driven group of people, then an easygoing, laid-back person won't be the right fit for that office - even if they are incredible at selling and have proven it time and again. The high-key atmosphere would almost certainly cause stress, and a laid-back person would soon be ready to climb the walls!

The opposite is true in my office. All of us are very laid back, sometimes even goofy. We like to have fun, and you almost have to have a good sense of humor to be in the room with us! Someone who was by nature a serious type would be a really bad fit. In fact, I recently had to let go of a lady who was smart and competent, but so grimly serious that she scared all of us to death!

True Story: Why I Didn't Even Interview the Best Salesman in the Industry!

Just a few weeks ago I found myself seated at a table with one of the best of the best salesmen in our entire industry. His sales feats are legendary. His Rolodex is eye-popping, everyone knows him, and everyone is already very accustomed to buying from him. On the surface, he is the PERFECT salesman.

I actually had a chance to interview him - possibly even snap him up for our company. But I didn't.

The minute we sat down and started talking, I realized that this super salesman was just not a good fit for our company. I could just tell that he would make all our team conference calls more tense, the whole office more tense, and just make everyone feel more reserved (including me). His style was simply counter to our corporate culture.

He would undoubtedly make lots of sales, but he would also make me and the rest of our team a lot less happy with what we do...and we ARE happy with what we do!

I had a nice chat with the super salesman without ever asking one typical interview question at all. One great salesman is not worth ruining the WORKING dynamics of the rest of the team.

So the next time you are thinking about hiring someone, remember that personality is a key element. You should ask yourself, "How would this person get along with my team? Does this person fit?" Sometimes your answers will be a surprise even to you!

The Mystery CEO is a young entrepreneur who started a company now doing close to $2 Million a year right in his DORM room! Now he lets you watch over his shoulders as he learns more about entrepreneurship. You can even listen-in when he interviews CEOs who manage $100 Million+ companies! Read his entrepreneurship blog right away for all the entrepreneurship training you'll ever need! http://www.MysteryCEO.com

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How Should Your LLC be Taxed?

The Limited Liability Company (LLC) is a terrific tax entity. The number one reason is its flexibility. Specifically, an LLC can be taxed as:

- a sole proprietorship

- a partnership

- a C corporation

- an S corporation

Do you know how your LLC is taxed?

If your LLC did not make an election, then it is taxed as the default classification. The default classifications are:

If your LLC has one member (owner), then it is disregarded for tax purposes. This means that all the LLC activity is reported by the owner and the LLC files no separate federal tax return.

*Important note: Some states require disregarded LLCs to file a state tax return.

If your LLC has more than one member, then it is taxed as a partnership and files a partnership tax return.

*Special rule: If you and your spouse are the only owners and you live in a community property state, then you can choose which of the two classifications you want to use.

If your LLC made an election, then your LLC is taxed as a C corporation or an S corporation.

Do you need to make an election for your LLC to be taxed as a C corporation or an S corporation?

This election is typically recommended for operating businesses that are profitable. This election is typically not recommended for LLCs that hold investments, such as stock or real estate. LLCs that hold investments are typically best left in their default classification.

When should your LLC make the election to be taxed as a C corporation or an S corporation?

Once you have determined your LLC needs to make the election, you then need to consider the rules of when the election can be made:

*General rule: The election can take effect up to 75 days prior to the date the election is filed and up to 12 months after the election is filed.

Example: An LLC files its election to be taxed as a corporation on October 15th. The effective date for the tax election can be as early as August 2nd (75 days prior to October 15th) or as late as October 15th of the following year or any date in between.

*Special rule: For newly formed LLCs, in most cases, the LLC can file the election as late the original due date of the first corporate tax return and the election is effective as of the first day of the LLC.

Example: An LLC is formed on October 1, 2007. The LLC files its election to be taxed as a corporation by March 15, 2008 which is the due date of the first corporate tax return. The effective date of the election can be as early as October 1, 2007.

Understanding the fundamentals of entities, particularly LLCs, is a key part of building a wildly successful tax strategy.

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on such strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information, please visit http://www.provisionwealth.com
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IRS Ramps Up Audits

Are IRS audits really on the rise? YES!

Here are a few highlights from the IRS's audit activities in 2007:

For the first time since 1998, the percentage of individual tax return audits was higher than one percent. Audits of S corporations and partnerships increased. 1 out of 11 millionaires faced an audit in 2007.

What is triggering this increase in audits?

The IRS is under great pressure from Congress to show results in closing the $300 billion tax gap, the difference between what taxpayers owe and what they pay. The IRS reported that enforcement and examination revenue totaled more than $55 billion in 2007, up from roughly $45 billion in 2006.

Audits of Individual Tax Returns:

Audits of all individuals across all income levels increased in 2007. The IRS reported that the total number of individual returns audited in 2007 was 1.38 million compared to 1.29 million in 2006.

Audits of "High Income" Individuals:

The IRS considers "high income" individuals to be those who have "Total Positive Income" (TPI) of $100,000 or more. Generally, TPI is calculated by using only positive income values from specific income fields on the tax return and treats losses as zero. This is important for those with real estate losses!

Example:

You file a return showing wages of $80,000, interest of $10,000, business income of $40,000, and a $35,000 loss from rental real estate. Your net income is then $95,000. However, your TPI is $130,000, so your return is considered a high income tax return by the IRS.

The IRS audited 293,188 of these returns in 2007, up nearly 14 percent from 2006.

The IRS also audited more individuals with incomes above $200,000 in 2007 than in 2006. Audits of individuals with incomes over $200,000 reached 113,105 returns, reflecting an increase of nearly 30 percent from 2006!

Audits of Millionaires:

Audits of individuals with incomes of $1 million or more increased 84 percent from 2006 to 2007. More than 30,000 millionaires were audited in 2007 compared to 17,000 in 2006.

Audits of Businesses:

The IRS took special interest in two popular business entities: S corporations and partnerships. Audits of both entities were up in 2007 compared to 2006 by roughly 25 percent.

With the tax gap as large as it is, the IRS is likely to keep up this new pace. Are you prepared?

Three (3) Things You Can Do To Be Prepared For An Audit

The number of IRS audits increased in 2007. See my recent article "IRS Ramps Up Audits" to read more about what is causing this increase and who is targeted. What can you do to be prepared?

#1 Build a defense for your rental real estate losses.

While the IRS has not specifically targeted returns that deduct rental real estate losses, if you are selected for audit, your rental real estate losses will be questioned. If you claimed real estate professional status, the IRS will ask you to prove that you qualify. If you claimed the $25,000 loss exception, you will be asked to prove that you meet the "active" threshold.

Here's what you can do:

First, make sure you clearly understand the rules for taking your rental real estate losses. You can deduct rental real estate losses to reduce you taxes but the rules are very specific. Knowing these rules inside and out will increase your chances that your audit will result in no adjustments to your rental real estate losses.

Second, document your real estate activities. Proper documentation is the number one defense you have. The IRS wants to see not only the number of hours but also the activity you were doing and for which of your properties or businesses. Need help? I'm here to help you!

#2 Clean Up Your S Corporation

The number of S corporation audits jumped in 2007. The IRS is looking at specific items; here are a few of those items you need to be aware of:

- Your salary -

How much did you receive as salary and when did you receive it? As an owner, if your salary is too little, you could be in trouble. But from a tax planning standpoint, if your salary is too much you will be overpaying your taxes! There is a balancing point to master here.

The timing of when you receive your salary is important as well. Big lump sum payments made once or twice don't look like salary and could be drawn into question.

- Your distributions -

How much did you receive as distributions and when did you receive them? Smaller distribution amounts that are paid more frequently than quarterly don't look like distributions. These amounts will be scrutinized!

Here's what you can do:

Your #1 defense is documentation. How did you come up with your salary amount and your distribution amount? How did you determine when you would pay your salary and when distributions would be made? Once you have this documented, you need to make sure what your S corporation is paying is reasonable. So, take another look at your salary and distributions and ask yourself if it makes sense for a business to pay these amounts.

Not sure what your S corporation should be doing? Then you are in the majority, that's why the IRS is having a field day with these audits! I can help walk you through the exact steps you need to take to determine your salary amount, your distribution amount and how to document both so you are ready for an IRS audit.

#3 Support Your Expenses

There are certain expenses the IRS will always look at in an audit. These expenses are travel, meals and entertainment.

The #1 thing you can do is to make sure you can support these expenses. The IRS will want to see the who, what, when, where and why of each of these expenses. Who was there, what was the business purpose, when was it, where was it and why was this an ordinary or necessary expense for your business.

Not sure if your documentation will pass an IRS audit? I can help!

By now, you realize the key to surviving an audit without any adjustments is proper documentation. If you are among the many who do not document as you should, it's not too late! Even if your documentation has not been ideal in the past, make a new start right now! Understand what you need to document and then on a daily, weekly or monthly basis, make sure your documentation for that day, week or monthly is in order. Once you have the hang of it, go back and start to document what you didn't in the past. Remember, the IRS can audit a return 3 years after it has been filed (and 6 years if the tax return filed was considerably incorrect).

Business Start-Up Costs

When you launch your business and incur expenses before your business is "open for business," then you have start-up costs. Start-up costs are not deductible until your business begins. Your business begins when it is first open for business - meaning it is ready to service customers.

First, make sure you actually have a business. Here are nine (9) factors to determine if you really own and operate a business:

1. You carry on the activity in a businesslike manner.

2. The time and effort you put into the activity indicates that you intend to make it profitable.

3. You depend on income from the activity for your livelihood.

4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business).

5. You change your methods of operation in an attempt to improve profitability.

6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business.

7. You were successful in making a profit in similar activities in the past.

8. The activity makes a profit in some years, and how much profit it makes.

9. You can expect to make a future profit from the appreciation of the assets used in the activity.

It's also important to remember that when they begin, most new businesses lose money. In fact, the average business will lose money for the first three years. You will want to make sure you can take advantage of those losses by offsetting them against your other income. If that happens, you can roll the loss forward into the future until you start making money. This is referred to as a net operating loss.

What are start-up costs? Planning to get the most out of any new business venture begins with making sure you get the greatest possible tax advantages for your investigation costs, start-up expenses, and other organization costs. These include costs such as advertising, salaries and wages of employees-in-training, travel and other expenses of lining up customers, suppliers, and distributors, and fees paid for consultants and professional services.

How are start-up costs deducted? You may assume that all of these start-up expenses are deductible as business expenses in the year you pay them, but that is not the case. Such expenses are not considered to be business expenses because they are not incurred in a business that has actually started. Instead these start-up costs have special rules.

A taxpayer may elect to deduct up to $5,000 of start-up costs in the tax year that the business opens for business. The catch, however, is that the $5,000 amount must be reduced by the amount of start-up expenditures that exceed $50,000. If an election is made, start-up expenses that are not deductible in the year the business opens for business as a result of the phase-out must be ratably amortized over 180 months (15-years) beginning in the month that the business opened for business.

Who can deduct start-up costs? Another complication with start-up costs is that they are deductible or amortizable only by the person who incurs them. If your new business is going to be a sole proprietorship, that won't be a problem. However, if the venture is to be a corporation, you can't personally deduct the costs you incur before incorporation. Those costs are part of your investment in the corporation's stock, which is not a great tax position. This can be avoided through proper planning. For example, you may want to contribute the funds to the corporation and let the corporation incur the expenses so that it can deduct or amortize them.

Are any expenses excluded from start-up costs? It's also important to know that some expenses are treated more favorably than the regular start-up costs we have been talking about, and some less favorably. Start-up costs for interest, taxes, and research costs usually can be deducted in the year paid. The cost of tangible property purchased for use in the business can be recovered by way of accelerated depreciation deductions over various periods, depending upon the type of asset, but generally faster than if considered under the general start-up cost umbrella.

Expansion costs are not start-up costs. If you are expanding an existing business, rather than starting a new one, you may be able to deduct the expansion costs currently.

Important note about start-up costs An election must be made on the business tax return to properly claim start-up costs. Be sure to discuss this with your tax preparer.

Warmest Regards,

Tom

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on these strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information, visit http://www.provisionwealth.com.
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10 Management Tips for Managing Difficult People

"When managing difficult people, if it isn't written down, it's as if it didn't happen." Colleen Kettenhofen

Many managers and supervisors are promoted to management positions based on their hard skills. Yet few of them have had training in the area of managing people. Especially managing difficult people. In conducting seminars on managing people, one challenge I hear managers and supervisors face nowadays is how to manage a difficult employee. You can't control them, but you can control their environment in the hopes of coaching the employee to better performance.

Here are 10 Management Tips for Managing Difficult People:

1. Document, document, document.
As far as the courts are concerned, if it isn't written down it's as if it didn't happen. Even if you have a prospective employee sign a form saying they know they can be terminated at any time, without cause, and without warning or reason. You never want to terminate without proper documentation. Terminating an employee without cause, reason, or prior warning, can make it easier for the difficult person to win a wrongful termination lawsuit.

2. Document training and coaching.
Any type of training you provide for your difficult employee is considered coaching. In managing difficult people, many managers assume the documentation is to build a case for termination. It is not! It's really to show everything you did to try and salvage the difficult employee. This includes any and all training. Whether you trained the employee, someone else trained them, or you sent them to a seminar to be coached to better performance.

3. Avoid the word "attitude".
In managing difficult people, why would you want to avoid saying something like, "Pat, I don't like your attitude?" Because it's too subjective. It's not specific enough.

4. Focus instead on specific behaviors or the quality of their work.
For example, what should you do if every time you delegate a special project to the difficult person, they fold their arms, exhale loudly, roll their eyes, and sarcastically mutter under their breath, "Okay, whatever?!" You would want to say in a low controlled tone something like, "Pat, every time I delegate a special project to you, the arms are folded, you're rolling your eyes, muttering under your breath, 'Okay, whatever.' What seems to be the cause of this?" Notice I listed specific behaviors. So focus on facts.

5. Be objective, not subjective.
As mentioned, when managing difficult people, be objective by mentioning specific behaviors, or specific declines in the quality of their work. For example, when documenting the employee's "attitude," you might document the following: "Every time I delegated a special project to Pat so-and-so, he/she would fold their arms, exhale loudly, roll their eyes, and mutter under their breath, "Okay, whatever!" Now, if this were ever read by a jury, or your Human Resources department if you have one, or your manager, they would have a clear picture of this person's attitude.

"When managing difficult people, it's imperative that you make their goals and objectives measurable, specific, quantifiable, and in writing for accountability."

6. Provide specific examples of the behavior or quality of work you want.
Put it in writing for accountability. When managing difficult people, it's imperative that as their manager or supervisor, you're making their goals and objectives clear. For example, if they're doing clerical work, they are to, "Correct and proofread all required reports for the quality control department." Or if they're in customer service, and example of a measurable, quantifiable, specific goal would be that they are to, "Respond to all customer complaints within 48 hours of receiving them." If they're in manufacturing, they are to, "Produce 35% more wingbats by December 15 of this year. " You get the idea.

7. Be aware of how you present yourself.
When managing difficult people, remember, you are their role model. Be aware of your eye contact. Typically look at the person for two to five seconds. You don't want to stare at them bug eyed! But you also don't want to avoid looking at them because you'll come across as too passive, too wishy-washy. They'll sense you're fearful of confrontation.

Having lots of eye contact can be difficult for some people because in some cultures, children are brought up that it's disrespectful to have eye contact with their elders. It can be difficult to unlearn these habits. Also, watch your tone of voice. Use a low controlled tone. Be aware of your body language, too. Study after study shows that fully 93% of what people notice and believe about you in face-to-face communication is based on your tone and body language.

8. Be very clear and concise in spelling out the consequences of what could happen if they don't improve.
For example, if this is a verbal warning, you might say to the employee, "You know our policy here, and right now this is a verbal warning. As it says in our handbook, if there isn't sustainable and maintained improvement including and beyond the next thirty days, it could result in further disciplinary action. Or, it could even result in termination." In managing difficult people, one of the golden rules is you don't want the employee to ever be able to say that they "weren't warned." Or, "I didn't know. You didn't tell me that."

9. Get at the root cause of what is causing the employee to be difficult in the first place.
For example, do they simply not like their job? Would they rather be in a different department? Are there personal issues going on with the difficult person that you need to know about? While it's not your business to know what they do outside of work, it is your business if it's something that's affecting their work performance.

You can simply say to the difficult person, "Is everything okay? Is there anything going on that I need to know about? Because this drop in performance just doesn't seem like you. As your manager/supervisor I want to see you succeed. And I've noticed a real decline in the quality of your work, for example...." Then, give very specific examples. Remember, be objective not subjective. Focus on facts. Attack the problem not the difficult person. Attack the behavior not the person.

In managing difficult people, a lot of this is common-sense. Yet, as mentioned earlier, most managers, supervisors and team leaders are promoted to leadership positions based on the fact that they were doing a great job. But that doesn't mean they know how to instinctively manage difficult people.

10. In managing difficult people, have follow up performance-related meetings with the difficult employee.
For two reasons: First, it's what the courts want to see. Second, it does the employee a great disservice if they make a big turn-around and you don't acknowledge it. Have a date and a time in writing for when you and the difficult person are going to meet again. And do meet! According to research one of the main reasons employee improvement plans fail is lack of follow-up on the part of the manager.

"When managing difficult people, most of us know what to do. We just don't always 'do' with what we know." Colleen Kettenhofen

Colleen Kettenhofen is a Phoenix, Arizona speaker,author and workplace expert. She is co-author of The Masters of Success, featured on NBC's Today Show. For free video clips, articles, e-newsletter visit http://www.colleenspeaks.com/ Colleen is available for keynotes, breakout sessions and seminars by calling (800)323-0683. colleen@colleenspeaks.com http://www.colleenspeaks.com/

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