What is a Return on Investment (ROI) and Why Does it Matter?

ROIThe ultimate success of a small business can be measured using a number of factors – the amount of sales it generates, the size of its customer base, or even the satisfaction level of the business owner behind it. However, one of the biggest measuring sticks that is commonly used in the business world revolves around what’s known as a return on investment (ROI).

The Basics on ROI

Commonly abbreviated as ROI, a return on investment is basically the overall outcome of an investment into something by an investor. Generally speaking, these are financial or capital investments in which an investor puts a certain amount of money toward a business idea or current startup company in hopes of attaining profitability from it. An ROI that is considered high or above-average means that the gains tied to an investment weigh higher than the cost of the investment – if these two factors were put on a scale. In essence, ROI compares capital invested with profits. This type of data is often measured and compared on a per-period basis, such as every 6 months or every year. But it’s certainly worth keeping up with this financial information as regularly as possible.

While an ROI typically refers to the investment into a small business or other entity, it can also refer to any money put into something. An example might be if an entrepreneur spends $100 on a Facebook ad campaign. If this marketing strategy brings on several new customers who buy from the company, the ROI will likely be fairly high on this relatively small investment.

How to Maximize Your ROI

The key to maximizing a return on investment is to limit an investment and get as much out of it you can in the form of a return. This is obviously easier said than done. But it’s all about making wise decisions with your money, such as investing in new equipment, marketing, and a retail store for a new small business that you believe you’ll be able to recoup the money on in the future. Weigh your startup and ongoing costs, make solid profit projections, and ensure every penny you are putting out is going toward something meaningful. If it’s not, the chances of maximizing your ROI will be reduced.

ROI: Not Just for Small Business Owners

Not only should small business owners be aware of ROI, but also outside investors should have a decent handle on this concept and how it applies to each set of unique circumstances. Angel investors are often brought on to fund startups by injecting capital into enterprises that they feel could make them some money via an equity ownership stake in a small business. On another front, entrepreneurs who turn to crowdfunding should realize that any investors browsing these sites are looking for opportunities to achieve a high ROI by funding the most financially promising ventures out there.

To learn more about the financial aspects involved in business ownership, and for all of your small business tax and accounting needs, contact the experts at 1800Accountant today. Visit www.1800accountant.com or call 1-800-222-6868 for details.

Can You Write Off Storage Costs on Your Tax Return?

The IRS does allow storage expenses to be deducted for both individuals and small business owners in certain cases.

The IRS does allow storage expenses to be deducted for both individuals and small business owners in certain cases.

Whether you are a packrat with tons of Porcelain dolls piling up in your home, or you simply need a temporary place to keep your belongings during a move, storage units are used by both individuals and small business owners for numerous reasons. Keeping items in them over time can be costly. So does the IRS allow taxpayers to write off these storage costs on their returns as a tax deduction and alleviate the financial burden just a bit? 1800Accountant offers the following explanation on deducting storage costs.

Deducting Storage Costs for Individuals

As part of the moving expenses deduction, the IRS does let you claim unreimbursed moving expenses as a tax write-off. This money you spend should represent the costs you incur when moving household items and other personal belongings from your old home to a new one. IRS rules say that such a move must be related to work in order to qualify. For example, you may need to relocate to a new place to start your dream job. The expenses that you can write off to complete this move include rental costs for keeping items in a storage facility, along with the insurance fees you incur to maintain the safety of your assets. But like most other tax deductions, there is a limit to the amount you’re allowed to claim as a deduction. You can only write off the costs of renting out storage space for up to 30 total days if you cannot move into your new home immediately after leaving your old residence.

Deducting Storage Costs for a Small Business

Operating a small business is no cheap endeavor. It will more than likely take a big bite out of your budget, unless you’re fortunate enough to receive capital from a wealthy investor. Storage costs are often a big part of a business budget, and these expenses can be ongoing in many instances due to long-term storage requirements for certain various enterprises. Generally speaking, storage costs are tax deductible as part of a company’s overall business expenses. Many business owners keep their inventory in a storage unit or warehouse that they do not own themselves and may be off-site from a business location, such as a retail store. This inventory could be anything, from books to bicycles to handmade crafts. On the other hand, an individual could have an online store through Amazon or eBay where they knit their own clothing and sell it virtually. This entrepreneur might need some extra storage space they don’t have in their home for the products they offer. The key is that inventory must be directly associated with a business in order for business owners to deduct the costs of keeping these items in storage.

It’s critical for any individuals or financially-strapped entrepreneurs to take full advantage of the storage deduction if they are eligible for it. The cost of renting out storage space can be quite high, especially if you maintain it for a long time. So at least enjoy the opportunity to save on your taxes on these costs with regard to these storage expenses. It’s also worth exploring other tax deductions you’re eligible for. These may include the home office deduction, the vehicle deduction, writing off startup costs, and claiming meals and entertainment as a deductible business expense.

To learn more about other IRS tax deductions you can claim to reduce the amount you give to Uncle Sam each year, check out www.1800accountant.com or call 1-800-222-6868 today.

4 Reasons Small Business Owners Should Have Partnerships

When a small business teams up with other companies that are highly successful, it can gain lots of momentum to help in its efforts to prosper. This is very similar to a solid marriage when both individuals support each other. 1800Accountant offers up the following 4 reasons why small business owners should establish partnerships:

1. It opens the door to a world of potential customers.

Agreeing to a partnership with a separate business enterprise can lead to a fantastic source of leads and customers for your small business. In lots of partnerships, a business owner will refer his or her clients to partners who have the ability to offer them other relevant services. Let’s say Tess’ Web Design Company can only provide specific web design services for small business owners. But because Tess partners with Greg’s Tech Team, LLC, she can refer her clients over to Greg for additional computer tech or IT support, which is something she doesn’t offer through her web design firm. Establishing such a partnership is an excellent way of seeing mutual benefits for both companies involved since they can refer clients to one another based on which company a client does business with initially.

2. It increases the credibility of your company.

Establishing credibility in the eyes of others is a very challenging yet critical aspect of being an entrepreneur. When you arrange partnerships with other well-known companies or organizations, your credibility level can literally skyrocket in a fairly short timeframe. When potential customers, investors, and industry leaders see that you’ve established professional relationships with other businesses, they will be much more likely to perceive your small business as a more authoritative firm compared to others. This is particularly the case if you set up partnerships with long-established corporations that have name recognition. Getting to this point requires a lot of patience and persistence, but it can pay off for you tremendously down the road. It’s all about building credibility and trust among everyone in a specific business industry.

3. It’s a wise marketing strategy for several reasons.

Establishing partnerships with relevant firms isn’t necessarily a marketing strategy like running online ads on Facebook. But building these professional relationships can result in increased visibility for your small business through unique marketing tactics. Partnerships frequently open the door to opportunities for cross-promotion and other strategies that can be mutually beneficial to two business enterprises. The referral of customers to a partner company is one obvious way to do this. Two companies can each promote their partners online on their websites, social media pages, and through content marketing strategies like guest blogging. This is simply an additional technique to get the word out about a small business without spending traditional advertising dollars. But don’t forget that a partnership can require some exchange of money in certain cases.

4. It moves you closer to more opportunities.

Overall, there is a good amount of opportunity that can result from developing relationships with outside companies. A professional partnership can literally lead you down a path to so many things that you have never even pondered when thinking about your company. Partnerships tend to be the ultimate result of networking, and everyone knows how powerful networking really is. You just never know where a solid relationship with another business could lead you to in the future. At the very least, it can get the ball rolling on some exciting initiatives.

1800Accountant is here to assist you with all of your small business accounting and development needs. To form your business entity today and start your path to establishing partnerships with other companies, call 1-800-222-6868 or check out www.1800accountant.com.

5 Important Traits of Successful Small Business Owners

As humans, we are all unique beings. Our personalities and perspectives are shaped by our life experiences. When it comes to discussing successful small business owners, though, there are a few common threads among them, even if they take completely different approaches to running their businesses. The following 5 traits are extremely beneficial to have for the purposes of operating a prosperous enterprise:

1. Self-motivation

Getting to the point of being a highly successful small business owner takes plenty of blood, sweat, tears, and even the occasional sleepless night. Throughout this challenging process, your level of self-motivation must be hovering at a very high level. This is critical during the startup phase of a brand new business and the ongoing process of effectively maintaining it over time. You have to believe in yourself, sell yourself well to others, and wake up each day with a drive to do your best. This may sound cliché to some, but being self-motivated is a trait that the majority of successful business owners have.

2. Having great problem-solving skills

Unexpected problems pop up occasionally in the business world, no matter how hard you try to prevent them. That is why you must have the patience to face them head-on and find solutions to them sooner than later. Some issues are much easier than others to resolve, so you’ve got to be prepared and willing to think a little creatively. Avoid getting frustrated by problems if you can. Others will have a whole lot more respect and admiration for you. From resolving an issue among employees to figuring out how to fix a smartphone, you should be motivated to solve any problem at any time – and do it effectively. If you can’t, at least know who to go to for help.

3. Setting goals for yourself and attaining them

Small business owners who can focus on achieving goals they set for themselves are much more likely to have a fulfilling experience with their work. If you set reasonable goals for tasks to accomplish regularly, you will be able to complete them in a manner that produces a better outcome. Reward yourself for getting difficult things done as well. Financial goals are also a big part of small business ownership, so shoot for the big bucks, but be reasonable about it at the same time.

4. Being open-minded

Being open-minded about things is a definite must when overseeing a business enterprise. You will be interacting with all kinds of people and personalities. Because of this, you’ll be presented with a wide range of perspectives. Some will make lots of sense, while others will baffle you. Take each one into consideration when decision-making duties come into play. You have to realize that just because you think something might work well, getting input from others can provide you with a more balanced approach. Never take criticism personally, either, and take outrageous remarks with a grain of salt. It’s also important to be open-minded about learning how to do new things, including adopting new technologies, learning a little about IRS business tax topics, and other things that you may have limited experience with.

5. Being a solid planner who always thinks toward the future

Are you a planner who utilizes a calendar to schedule lots of tasks for the future? If so, there is a very good probability you will succeed at being a small business owner. Being able to plan ahead can make your life less stressful. It’s not easy to predict the future, but it is worth at least thinking ahead, which you can do through preparation. Consider what your next step may be, whether it’s making a phone call to a possible new partner, sending an important e-mail to a customer, or meeting with a potential manufacturer for your product. Do what you must to make these experiences worthwhile for all parties involved.

1800Accountant is here for all of your small business accounting and consulting needs to help you achieve startup success. To learn more, call 1-800-222-6868 or check out www.1800accountant.com.