Archive for May 2010

7 Tips for Starting a Fast Food Business – It’s not Just Fries, Subs and Pizza Anymore!

May 27, 2010

The take-out and fast food industry in the U.S. continue to boom, despite related health risks. Yet perceptions about what constitutes fast food are changing. According to a recent study by food industry consulting firm Technomic “Consumers are expanding their definition of fast food*”:

“Consumers’ perception of fast food is no longer confined to quick-service, drive-thru restaurants and convenience stores. Instead, a dual concept has emerged, consisting of traditional fast food, and of “food fast” served quickly with a greater emphasis on flavor, quality and ambiance. (The)… idea of places offering “fast food” has expanded…to include fast-casual restaurants such as Panera and full-service restaurants offering carryout and curbside service.”

What does this perception-shift mean for entrepreneurs? More opportunity but also more competition!

Starting a restaurant (fast food, food fast or fast-casual) is a hugely popular entrepreneurial dream, yet the reality is far from dreamy. The restaurant business in notoriously tough – Gordon Ramsay would be out of a job if it weren’t – but where there is a will there is often a way.

While vision and ingenuity are key to any start-up ambition, turning that ambition into success requires research, planning, capital (not always as much as you think), business acumen, and perseverance.

So how do these all tie together? Here are some tips that can help entrepreneurs start, operate and grow their fast food or take-out business successfully and within the law.

Research, Research, Research

Because the fast food business is so competitive, it’s vital that you do your research. Start by talking to someone who has done this before. Business networking events (such as those operated by Small Business Development Centers, SCORE and local Chambers of Commerce) offer a great venue for picking the brains of fellow business people. Try to find out what works, what doesn’t, and what they would do differently. If you are aware of restaurants that have failed, try to identify why (online community forums are a great way of gauging market need and customer opinion about local food service businesses).

Knowing what works and what doesn’t will help you to define your target market and the niche opportunity that you can justifiably build a strong business case for going after.  Whether it’s specializing in authentic Chicago hot dogs or freshly made cup cakes – focus on providing a unique and quality product – don’t try to be all things to all people.

Above all, take your time. Try to objectively determine what price points your customers will tolerate. What is the competition? Do the local demographics support your venture (now and in the future)?

Likewise, research potential locations. While city locations may attract walk-in traffic, many suburban locations offer a higher concentration of lucrative “family-oriented” fast-food opportunities. Get more advice and tips from Business.gov on choosing a business location.

And for more market research tips check out Business.gov’s Market Research Guide which includes free access to demographics and consumer data.

Consider Starting Small

You may dream of gleaming marble counters, a top notch kitchen, and a prime downtown location, but starting small can often be the best first step into fast food restaurant ownership. Not only will it give you a view of the basic fundamentals that apply to the business, but it also requires less capital and therefore less risk.

Small sandwich shops or food concession stands can provide a taste of the food service business with minimal overhead. Alternatively, fast-food franchises might be an option worth considering for entrepreneurs who are not quite ready to make the leap into full business ownership.

These articles provide insight into some of the options for starting small:

How to Start a Food Concession Business: An Entrepreneur’s Checklist – Part 1 (the basics of getting started) and Part 2 (covers regulatory requirements, finding a location and equipment)

Going Beyond the Hype, Managing the Risk and Finding the Right Franchise Opportunity for You – Helps you assess whether you are ready to be a franchise owner, the types of opportunities available, and more.

Opening a Restaurant Franchise – Your Essential Checklist – This article sifts through some of the best articles, resources and tools to provide an A-Z checklist about how to start a restaurant franchise and make it a success.

Build a Business Plan

A business plan doesn’t have to be an overly formalized document, but going through the process of building and constantly tweaking your plan will help you match the strengths of your business to the opportunities the market presents.   It can also help you better deal with threats as they emerge.

A business plan is also essential when it comes to communicating with others – such as customers, partners, and investors – if you want any of these to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.

Drawing from industry experts, Business.gov offers small businesses tips and advice on writing a business plan.

Seeking Investment

Not all businesses need investors to get started, particularly if you start small. However, there are a range of options from very small microloans that can help smaller fast food outlets get started, to more comprehensive small business loans such as the popular SBA 7(a) and 504 loan programs.

If you are seeking investment, plan it out. Use your business plan as the basis of a loan proposal or investment plan. Investors and lenders will want to know everything about your business idea or venture. Also, be realistic about how much money you need.   You can save lots of capital just by buying local produce and purchasing surplus equipment.

Read more about the ins and outs of finding and applying for a loan or other capital on Business.gov’s Small Business Loans and Grants Guide.

Take Care of the Regulatory Steps Involved in Starting a Business

Whatever your business type, you must take care of the fundamental regulatory and legal steps involved in starting a business. Read 10 Steps to Starting a Business from Business.gov to make sure you take care of all these requirements – from registering your business, getting a license or permit, to being a responsible employer, and so on.

Running a Restaurant within the Law!

From labor laws to food safety laws and new regulations such as no smoking laws, understanding and achieving compliance with legal and regulatory requirements can have a big effect on the success of a restaurant operation.

Read “Operating a Restaurant within the Law: A 101 in Compliance Part 1” and “Part 2” for guidance on the laws that apply to minimum wage, tips, overtime, youth labor, immigration, food safety and taxes.

Gustavo A. Viera, CPA

CPA in Miami since 1983

www.vieracpa.com

Make Sure Your Business Information Stays Secret with Non-Disclosure Agreements

May 27, 2010

Many businesses have information they want to remain confidential. But from time to time, information must be shared with outsiders –  for example if you hire an independent contractor or enter into a joint venture with another business. In these cases, businesses use a non-disclosure agreement to protect their information.

What is a non-disclosure agreement?

A non-disclosure agreement (NDA) is a legal contract between several parties that establishes the confidentiality of shared knowledge or materials and restricts third party access. In lay terms, business associates use non-disclosure agreements to make sure neither party is allowed to speak about or divulge covered aspects of the agreement to anyone else.

When is a non-disclosure agreement appropriate for small businesses?

Non-disclosure agreements are generally used when two or more businesses or individuals chose to conduct some sort of business together or must share confidential information. In these cases it’s important to make sure all privilege information is only shared with the appropriate people.

Are there different types of non-disclosure agreements?

There are several different types of non-disclosure agreements.

In cases where one party discloses information to another party, a unilateral agreement is made. In these “one-way” agreements, the receiving party must guarantee that they will protect all knowledge and information they are privileged to in there business operations.  Unilateral agreements commonly are used when a businesses owner prepares to sell his business, and must disclose financial records to potential buyers.

In cases where multiple parties are divulging knowledge or materials to one another, a mutual agreement is made. These agreements require all parties involved to protect the knowledge and information entrusted with them per the agreement. Mutual agreements are commonly made when businesses enter into some sort of joint venture.

What type of information can non-disclosure agreements cover?

Non-disclosure agreements are generally simple, straight-forward documents, several pages in length.

Non-disclosure agreements can cover any information, knowledge, or materials that are not publically or typically known. Generally, NDAs  cover only information that is directly divulged from the involved parties, and do not prevent the sharing of information that was discovered from some outside means – even if that information would have otherwise been covered by the agreement.  For example, if Business A and Business B enter into a mutual non-disclosure agreement and Business A discovers information about a particular product from Business C, than information is no longer considered confidential – regardless of it’s relation to Business B or the original agreement.

What information is required in a non-disclosure agreement?

A standard NDA includes the sensitive information to be disclosed, terms of the agreement – including the time period of the agreement’s legitimacy; exceptions, consequences and waivers that affect the agreement; and any other information vital to the agreement’s relevancy – and the signatures of all parties involved.

Non-disclosure agreement templates are widely available on the Internet.  The following resources offer sample NDAs:

SCORE’s Sample Non-Disclosure Agreement

Harvard Business School’s Sample Non-Disclosure Agreement*

SBA Non-Disclosure Agreement

Gustavo A. Viera, CPA

CPA in Miami since 1983

www.vieracpa.com

IRS Seeking Applications for Volunteer Tax Assistance Program Grants

May 27, 2010

The Internal Revenue Service will soon begin accepting applications for the Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grant programs, which will allow some organizations to apply for annual funding for up to three years.

Applications will be accepted June 1, 2010, through July 9, 2010. Previous grant recipients will have the option to apply for up to three years of annual funding, which would reduce the amount of paperwork they must complete over a three-year period. This annual funding will also help recipients with budget planning.

The 2011 application packages and guidelines will be available on the IRS website by June 1, 2010.   More information about the TCE and VITA grants is available inPublication 4680, TCE & VITA Grant Programs.

The IRS in 2010 awarded 24 TCE grantees $6.1 million and 147 VITA grantees $7.44 million. Through mid May, the two grant programs filed more than 2.1 million returns at almost 9,000 sites nationwide.

The TCE program was established in 1978 to provide tax counseling and return preparation to persons age 60 or older and to give training and technical assistance to the volunteers who provide free federal income tax assistance within elderly communities across the nation.

The VITA Grant program was established in 2007 to supplement the VITA program, which was created in 1969.  VITA provides underserved communities with free tax filing assistance.  The grant program enables VITA to extend services to underserved populations in hardest-to-reach urban and non-urban areas, to increase the capacity of targeted taxpayers to file returns electronically, to enhance training of volunteers and to improve the accuracy rate of returns prepared at VITA sites.

Gustavo A. Viera, CPA

CPA in Miami since 1983

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What if You Didn’t Pay Your Credit Cards? What Then?

May 26, 2010

Let me start by saying that I’m not advocating that you don’t pay your debts, that’s a personal decision. But why even think such a thought? From a personal perspective it stems from anger.

I’m angry with Congress and the President for passing laws that have no teeth and do not help individuals or small business. I’m angry at Wall Street for raping the American Public while lining their pockets with millions. I’m angry at major banks and Fanny Mae for creating a real estate bubble that created negative equity in my home. I’m angry at banks for slashing my available credit down to the bone and raising my interest rates to the maximum allowed by law. Ah, it’s the law… I see?

In there lies the problem, Wall Street, Banks, major corporations are all in bed with Congress and our elected officials. Of course it’s legal to charge outrageous interest rates, IT’S THE LAW! Of course it’s legal for Wall Street to invest your money in risky derivatives. Haven’t you heard, Wall Street is the new Las Vegas and they play with your money not their own. Of course major banks took TARP money and did not lend a dime to the public, why should they? The American Recovery Act was supposed to help millions refinance their homes. The problem was it had no teeth, a mere suggestion to banks to help, thats all. The banks took our tax money, cleaned the toxic assets off their books and refinanced a handful of mortgages and then paid themselves millions in bonuses for a job well done. I saw it coming, is Congress blind?

Back to my original thought, why pay my bills? If I stop paying my creditors, what are they going to do to me? Ruin a little number called a FICO score? That damn number did not even exist fifty years ago. They hold Americans hostage and in debt with the fear your precious FICO score my drop.

So let it drop! I’m keeping my cash and you Mr. Banker can eat the debt and ruin my FICO score. Who wins, you or me? Mr. Banker loses his money, gets his revenge by “reporting me to the Big Bad  “CREDIT BUREAU” and ruining my credit. Who cares, the whole world is in debt crisis and the only thing that’s going to matter in the short-term future is “HOW MUCH CASH DO YOU HAVE”?

I implore you Mr. President and members of Congress, the term “To Big to Fail” needs to be replaced by “Don’t Let Americans Fail”. So far, you’ve failed us miserably.
Gustavo A. Viera, CPA

Next Year’s Taxes – Plan Ahead and Save

May 26, 2010

Estimated Taxes

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

Who Must Pay Estimated Tax

If you had a tax liability for 2008, you may have to pay estimated tax for 2009.

General Rule

You must pay estimated tax for 2009 if both of the following apply.

You expect to owe at least $1,000 in tax for 2009 after subtracting your withholding and credits.

You expect your withholding and credits to be less than the smaller of;

90% of the tax to be shown on your 2009 tax return, or

100% of the tax shown on your 2008 tax return. Your 2008 tax return must cover all 12 months.

Sole proprietors, partners, and S corporation shareholders – You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. For additional information, refer to Publication 505, Tax Withholding and Estimated Tax.

Corporations – You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Use Form 1120-W, Estimated Tax for Corporations (PDF), to figure the estimated tax. You must deposit the payments. For additional information, refer to Publication 542, Corporations.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings.  To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.

Estimated tax not required

You do not have to pay estimated tax for 2009 if you meet all three of the following conditions.

You have no tax liability for 2008

You were a US citizen or resident for the whole year

Your 2008 tax year covered a 12 month period

You had no tax liability for 2008 if your total tax was zero or you did not have to file an income tax return.  For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring your 2009 estimated tax, it may be helpful to use your income, deductions, and credits for 2008 as a starting point. Use your 2008 federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter.  If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated taxes for the next quarter.  You want to estimate your income as close as you can to avoid penalties.

You must make adjustments both for changes in your own situation and for recent changes in the tax law

When To Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

Using the EFTPS system is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using Electronic Federal Tax Payment System (EFTPS). If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you have paid enough in by the end of the quarter.  Using EFTPS, you can access a history of your payments, so you know how much and when you made your estimated tax payments.

Gustavo A. Viera, CPA

CPA in Miami since 1983

Don’t Wait for Your IRS Refund!

May 26, 2010

IRS Withholding Calculator

If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new  Form W-4,Employee’s Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form.

Who Can Benefit From The Withholding Calculator?

  • Employees who would like to change their withholding to reduce their tax refund or their balance due;
  • Employees who may need to increase their withholding due to the Making Work Pay provision in the American Recovery and Reinvestment Act of 2009, that caused changes to the federal income tax withholding tables and may result in too little tax being withheld;
  • Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
  • Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.

CAUTION: If you will be subject to alternative minimum tax, self-employment tax, or other taxes; or if any of your current jobs will end before the end of the year, you will probably achieve more accurate withholding by following the instructions in Publication 919How Do I Adjust My Tax Withholding?

Tips For Using This Program

  • Have your most recent pay stubs handy.
  • Have your most recent income tax return handy.
  • Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.

To Change Your Withholding:

  1. Use your results from this calculator to help you complete a new Form W-4Employee’s Withholding Allowance Certificate.
  2. Submit the completed Form to your employer.

Continue to the Withholding Calculator


Gustavo A. Viera, CPA

CPA in Miami since 1983

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Obtaining Tax-Exempt Status

May 25, 2010

Churches and religious organizations, like many other charitable organizations, qualify for exemption from federal income tax under IRC section 501(c)(3) and are generally eligible to receive tax-deductible contributions . To qualify for tax-exempt status, such an organization must meet the following requirements (covered in greater detail throughout this publication):

■ the organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes,

■ net earnings may not inure to the benefit of any private individual or shareholder,

■ no substantial part of its activity may be attempting to influence legislation,

■ the organization may not intervene in political campaigns, and

■ the organization’s purposes and activities may not be illegal or violate fundamental public policy .

Recognition of Tax-Exempt Status

Automatic Exemption for Churches

Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS .

Although there is no requirement to do so, many churches seek recognition of tax-exempt status from the IRS because such recognition assures church leaders, members, and contributors that the church is recog- nized as exempt and qualifies for related tax benefits . For example, contributors to a church that has been recognized as tax exempt would know that their contri- butions generally are tax-deductible .

Church Exemption Through a Central/Parent Organization

A church with a parent organization may wish to contact the parent to see if it has a group ruling . If the parent holds a group ruling, then the IRS may already recognize the church as tax exempt . Under the group exemption process, the parent organization becomes the holder of a group ruling that identifies other affiliated churches or other affiliated organizations . A church is recognized as tax exempt if it is included in a list provided by the parent organization . If the church or other affiliated organi- zation is included on such a list, it does not need to take further action to obtain recognition of tax-exempt status .

An organization that is not covered under a group ruling should contact its parent organization to see if it is eligible to be included in the parent’s application for the group ruling . For general information on the group exemption process, see Publication 4573, Group Exemptions, and Revenue Procedure 80-27, 1980-1 C .B . 677 .

Religious Organizations

Unlike churches, religious organizations that wish to be tax exempt generally must apply to the IRS for tax-exempt status unless their gross receipts do not normally exceed $5,000 annually .

Applying for Tax-Exempt Status

Employer Identification Number (EIN)

Every tax-exempt organization, including a church, should have an employer identification number (EIN), whether or not the organization has any employees . There are many instances in which an EIN is necessary . For example, a church needs an EIN when it opens a bank account, in order to be listed as a subordinate in a group ruling, or if it files returns with the IRS (e .g ., Forms W-2, 1099, 990-T)

An organization may obtain an EIN by filing Form S-4, Application for Employer Identification Number, in accordance with the instructions . If the organization is submitting IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code

Application Form

Organizations, including churches and religious organizations, applying for recognition as tax exempt under IRC section 501(c)(3) must use Form 1023 .

IRS Approval of Exemption Application

If the application for tax-exempt status is approved, the IRS will notify the organization of its status, any requirement to file an annual information return, and its eligibility to receive deductible contributions . The IRS does not assign a special number or other identification as evidence of an organization’s tax-exempt status .

Public Listing of

A religious organization must submit its application within 27 months from the end of the month in which the organization is formed in order to be considered tax exempt and qualified to receive deductible contribu- tions as of the date the organization was formed . On the other hand, a church may obtain recognition of exemption from the date of its formation as a church, even though that date may be prior to 27 months from the end of the month in which its application is submitted .

Cost for applying for exemption. The IRS is required to collect a non-refundable fee from any organization seeking a determination of tax-exempt status under IRC section 501(c)(3) . Although churches are not required by law to file an application for exemption, if they choose to do so voluntarily, they are required to pay the fee for determination. The fee must be submitted with Form 1023; otherwise, the application will be returned to the submitter . Fees change periodically . The most recent user fee can be found at the Exempt Organizations (EO) Web site under the IRS Tax Exempt and Government Entities division via www .irs .gov/eo (key word “user fee”) or by calling EO Customer Account Services toll-free at (877) 829-5500 .

Tax-Exempt Organizations

The IRS lists organizations that are qualified to receive tax-deductible contributions in IRS Publication 78, Cumulative List of Organizations Described in Section 170(c) of the Internal Revenue Code of 1986 . This publication is sold to the public through the Superintendent of Documents, U .S . Government Printing Office, Washington, DC . Publication 78 can also be downloaded from the IRS Web site at www .irs .gov . Note that not every organization that is eligible to receive tax-deductible contributions is listed in Publication 78 . For example, churches that have not applied for recognition of tax- exempt status are not included in the publication . Only the parent organization in a group ruling is included by name in Publication 78

Gustavo A. Viera, CPA

CPA in Miami since 1983

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