The Cash Flow Story In A Tiny Texas Town

Watching cash flow through a community is interesting. This story landed in my email box — the result of viral movement of an interesting story. I don’t know who the original author is, but I would love to. If you know, please share. But in the meantime, enjoy!

It’s a slow day in the little Texas town of Port O’Connor. The sun is beating down, and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich tourist from back east is driving through. He stops at the motel and lays a $100 bill on the desk and says he wants to inspect the rooms upstairs in order to pick one to spend the night.

As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local mechanic, who has also been facing hard times and has had to offer his “services” on credit.

The mechanic rushes to the hotel and pays off his room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter.

At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything.

However, the whole town is now out of debt and looks to the future with a lot more optimism.

What do you think? Is this how it works? Share your thoughts by leaving a comment below.

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Use Social Networking URLs Not Icons In Printed Marketing Materials

It’s a really good idea to include your social networking url address (like www.twitter.com/deniseoberry) in your printed marketing materials so your customers can find you online.

Along with those urls, you can also use the social network icons to give your marketing piece a bit more visual appeal. But don’t use the icons by themselves. Your customers will have to work to hard to find you and will more than likely forget after they’ve left your business. [Read more...]

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Your End of Year Bookkeeping Checklist

Okay, so the holidays are over and it’s time to start thinking (and preparing!) for ending the year on a high note. Here’s an end of the year bookkeeping checklist from outright.com.

Record Transactions: Make sure you’ve recorded all the transactions from your credit cards, bank accounts and receipts. And don’t forget to check your online accounts, like PayPal, eBay and Freshbooks. Record every expense and dollar received for your business, no matter how insignificant or questionable. It’s better to have everything written down and recorded so you’ll be able to make the most from deductions—because if you don’t record it, it doesn’t exist.

Double Check: Make sure you aren’t missing any income or expense transactions—it’s worth it to take the time to double check. Make sure you have a digital copy of receipts from any online transactions, whether they’re sales or outsourcing work to contractors or websites, so you have a record of all your transactions.

Proper Categorization: Here’s where it gets a bit tricky, but well worth the time in the end. Make sure all of your income and expenses have been properly categorized. Categorizing your income (for the most part all “Sales”) is not nearly as critical as those deductible expenses. The Schedule C categories can be confusing but they make the difference; mileage under “Car and Truck Expenses” is deductible while “Other Expenses” are not. Web services such as Outright.com can do most of the categorization for you; but when in doubt, ask a professional or hire a bookkeeper.

Don’t Forget Mileage: Any work-related travel can count towards deductions. Make sure you’ve recorded all the time you’ve spent in the car going to and from work-related sites—you can deduct $0.55 per mile for these trips! Your daily commute doesn’t qualify but regardless, for many, the deduction adds up to thousands.

Complete Your W-9’s: To properly file a 1099 for any contract or freelance work you hired, you must have accurate taxpayer identification, in the form of an IRS form W-9. Now is the time to request the W-9 form from your contractors as 1099’s are due January 31.

Pay Your Estimated Taxes: To avoid penalties when taxes are due on April 15th, be sure you’ve paid enough in estimated taxes for the year. Final federal tax payments are due by January 15th. The fourth installment of your 2009 estimated taxes should bring you up to at least 90% of what your final total taxes are for the year. If that’s still too confusing, pay the same amount as you actually owed from last year. Here’s how: Work with the IRS.

Triple Check Profit and Loss: Finally you should look at your profit and loss statement for the entire year. If you can’t easily get one from your bookkeeping software, find another. Do the numbers seem reasonable compared to how your income and expense totaled in prior years? Yes, we’re effectively triple checking your income and those expenses. Search your pockets for receipts, don’t neglect that credit card that was cancelled because creditors are so stingy, and keep in mind that payment from your brother for some consulting.

Outright.com is the free online platform that manages all business finances, tracks income and expenses, and automates tax preparation. The company tracks over $1B in income from self-employed and micro-business transactions. They’re kicking off tax-time with their new W-9 automation to help get businesses organized for the months ahead.

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