Starting a firm? Plan ahead
Dear Karen: I was laid off this fall from an aerospace company. I want to launch a business selling purses and accessories at home parties. What advice would you give me?
Answer: Research the industry, your product segment and your local market. Having good fashion sense and friends who will host parties may get you started but won’t sustain long-term success.
Live within your means and grow prudently, said serial entrepreneur James F. Geiger, chief executive of Cbeyond, an Atlanta communications firm. “Focus on what you do well and on building strong customer experiences,” he said.
While it is tempting to branch out beyond his company’s core product line, Geiger said, he focuses on his proven market. “We ended up building a small but tremendously loyal following while other companies around us went under,” he said.
Are worker gifts tax-deductible?
Dear Karen: You recently discussed gifts for employees. Are those gifts tax-deductible?
Answer: As with any tax question, it depends on what’s being given and to whom, said Steve Sahlein, co-president of the American Institute of Professional Bookkeepers.
Traditional holiday gifts, including fruit baskets, hams, turkeys, wine, flowers and entertainment tickets, such as for a show or sporting event, generally are not taxable to employees and fully deductible to the employer as a business expense.
Likewise, the cost of a party for your employees, as long as it is purely social and happens only occasionally, is fully deductible to your business, Sahlein said.
Gift certificates, cash gifts and non-cash prizes, however, are considered wages and subject to payroll tax withholding, Sahlein said.
Giving while not breaking the bank
Dear Karen: What meaningful gifts can I give employees while our company is on a budget this year?
Answer: David E. Colburn, chief executive of Smart Online of Durham, N.C., has brainstormed a “recession-proof” holiday gift list, topped by time off.
“Employers should offer half-day schedules to employees during the holiday season. If employees offer to double their workload during their shift and receive a full day’s pay, everyone wins,” he said.
Coupons or savings cards that will help your employees with holiday bills are another possibility, or take it one step further and actually pay one bill for each employee -- mortgages obviously excluded. Perhaps you could partner with another business owner to provide gifts for each other’s employees, such as a car tune-up or one load of dry cleaning. A local spa might give you a corporate discount, perhaps on a low-volume weekday.
Other ideas on Colburn’s list include filling gift baskets with personal essentials that you buy in bulk or hosting a meal at the office, catered by a favorite local lunch spot. One more creative thought: Offer to give employees a ride to and from work occasionally. “Nothing says holiday spirit better than the boss making rounds to pick up his employees and ensure a safe trip to work. It’s a great way to get to know everyone, too,” he said.
