“Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators,” says Carl Schramm, president and CEO of Kauffman.

Whether you’re looking to turn an entrepreneurial dream into reality or re-evaluate and expand an existing business, a smart business plan can make all the difference. Writing a business plan is the first step in turning an idea into a thriving business, starting a new division of an existing company, or simply breathing new life into one that may need a push to get through a tough time. Not only does writing out your idea force you to think more clearly about what you want to do, it gives the people you work with a defined road map as well. An effective plan provides the navigation chart that you’ll use to get where you want to go.

Sample business plans, available at Business.com, are one great resource. Here are five tips on writing a great business plan from Steven Peterson, Peter Jaret and Barbara Schenck, co-authors of the just-published third edition of Business Plans Kit For Dummies:

1. Take your time and get it right. It’s tempting to rush through the planning process in your excitement to get a new or re-worked business venture underway. Don’t. The time you spend on planning at the outset will save you far more time later on once you are up and running. And as you will find, your time will be even more precious once your plan is in action.
2. Don’t skimp on research. A good business plan should be based on more than just your own great ideas. An effective plan depends on a complete and accurate understanding of your market, your customers, your financial situation and your business environment. Through research you’ll learn new things and it may even change your plan altogether.
3. Involve the right people. If you’re a current business owner trying to re-energize your business, the ultimate success of your plan depends on the dedication and motivation of your team. You can’t do it all on your own. Involving your team in the planning process will be a great source of insight for you as you decide what will work and what won’t.
4. Temper blue-sky fantasies with clear goals and solid timelines. Most Americans are starting businesses at a faster pace than ever before, reports the Kauffman Foundation, a think tank for entrepreneurship. According to Kauffman’s latest survey of U.S. entrepreneurial activity, the number of new businesses created since the recession started in 2007 has increased every year, to record levels.

business plans (or re-plans!) start with an idea: a dream to do something new, exciting or different. During those initial planning stages, you have big ideas, lofty goals, and the possibilities seem endless. It’s easy to get lost in the “someday” of it all and forget that in the beginning, you have to make actual progress toward sustainable results. In other words, make sure your plan includes measurable outcomes and feet-to-the-fire timelines. In addition to making things easier (and more likely to get done), it will keep you motivated during tough times. Seeing goals being met and things being crossed off your to-do list helps keep you moving forward.
5. Write a plan that people will read. Don’t get carried away with big words and fancy formulas. A business plan works only if people use it, so you need to create a plan that is concise, complete, and readable. Don’t weight it down with jargon, buzzwords, unfamiliar terminology, or overly-lofty goals. Inevitably, the only person that will impress is you. It will be much more impressive if you can construct a plan that people are interested in and that motivates them to want to be involved.

If you’re a small employer with a health insurance plan and pay at least half of employee premiums, you might qualify for a new health care tax credit worth thousands or even tens of thousands of dollars for 2010. Or if you don’t yet have a plan, here’s incentive to get in the game.

Example: An auto repair shop with 10 employees whose earnings average $25,000 can get what amounts to a 35% “rebate” on its health insurance premiums. Based on typical costs, that would be a credit of $24,500 this year, according to IRS estimates. Not bad. And that’s a credit – which directly lowers your tax dollar-for-dollar – not merely a deduction. It’s the closest thing to free money that Uncle Sam offers (well, unless you’re General Motors).

Here’s what you need to know…

Employers with fewer than 25 full-time equivalent (FTE) employees with wages averaging under $50,000 may qualify for the credit. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, employers that have more than 25 individual workers may also qualify if some workers are part-time. For eligible businesses the credit could provide a welcome boost. Here are the four key health care credit eligibility standards:

1) Your business provides and pays for health coverage. To clear the first hurdle, you must cover at least half of the cost of health care coverage for your employees.

2) Your business is small. You cannot have more than the equivalent of 25 full-time workers. Eight half-time employees count as four “full-time equivalent” (FTE) workers. Thus, an employer with fewer than 50 half-time workers can still qualify.

3) Your wages aren’t too generous. A qualifying employer must pay average annual wages below $50,000 to get even a partial credit. For the full credit, the average must be under $25,000.

4) Both taxable (for-profit) and tax-exempt (non-profit) firms qualify.

You can use Business.com’s handy Small Business Healthcare Tax Credit Calculator to see if your business will qualify for the credit.

The credit is worth up to 35 percent of your premium costs in 2010 (25 percent for non-profits). In 2014 that jumps to 50 percent (35 percent for non-profits). A ruling just issued by the IRS also confirms that the credit applies to premiums you pay for dental and vision coverage. And your business can still qualify for the federal credit even if you receive a separate state credit.

Businesses with 10 or fewer workers and average annual wages less than $25,000 will qualify for the full credit. The credit starts to phase out as you move above those limits. Businesses with average payrolls over $50,000 will not qualify for the credit at all.

Also be aware that if your business pays only a portion of health insurance premiums, with employees paying the rest, you can only count the premiums you pay when calculating the credit.

Another example: Downtown Diner, a restaurant with 40 part-time employees (the equivalent of 20 full-time workers), pays total wages of $500,000, or an average of $25,000 per full-time equivalent worker. Health insurance premiums paid by the business this year total $240,000, and the business would qualify for a 2010 credit $28,000, after applying “phase-out” provisions.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.

Next Steps

* See if your business qualifies for the new credit with Business.com’s handy Small Business Healthcare Tax Credit Calculator.
* Learn more about health insurance and find health insurance vendors for your small business in the Health Insurance section of Business.com.

If your business reimburses employees for out-of-pocket expenses (yourself included), you need a process to track and record those costs and make timely, accurate payments. But for many people, expense report filing ranks somewhere between going to the dentist and doing your taxes.

Several web-based services are out to ease the pain with easy-to-use, low-cost systems that make the expense reporting process as quick and easy as possible for small business owners. Choices include Expensify, Concur Breeze and ExpensePoint.

Concur Breeze (concurbreeze.com) is the small business version of the online expense management service that Concur has been offering bigger businesses since the 1990s. It’s an all-in-one gig that lets you manage your entire business expense process online.

Expensify (expensify.com), which defines itself as “Expense reports that don’t suck,” can completely eliminate paper. For example, the system can import expense info directly from your credit card accounts (via nightly updates).

You can also import expenses via text message (to log cash outlays, for example), email your receipts or use your app-equipped smart phone to record expenses on the go. You can download the Expensify app at the Intuit Workplace App Center, Google Apps Marketplace and Salesforce AppExchange.

You can even snap a picture of receipts with your camera phone and send that to your file. Once all of your info is there, you can quickly assemble the expenses on the website. All of your imported, uploaded and logged business expenses are stored digitally and available 24/7. Working offline? Reports can also be saved as PDFs for review. Or to conduct a deeper dive into the numbers you can export all expenses into Excel to develop metrics for growth, monitor overall spending and build forecasts.

As you receive a new expense report, export it to QuickBooks (online or desktop versions) and attach it to a corresponding employee account. Expensify displays a list of accounts and lets you choose which employee submitted the report for reimbursement. With all expenses attached to an account in QuickBooks, pick the account to pay from and reimburse all work through QuickBooks. Simply select the employee or account to compensate and click “Write Check.”

Most web-based systems also let you reimburse employees or contractors online, directly to their bank accounts. And you can use the Expensify application in SalesForce to link expenses directly to customer accounts.

Submitting reports is free with both Concur Breeze and Expensify. But there’s a monthly fee to use the approval and reimbursement features of around $5 for each unique report submitter, with the first two free.

Other Benefits of Online Tracking

In addition to expense report basics, online services can also help you calculate business-related mileage, track time and convert currencies.

Managing expenses online can also help sole-proprietors keep business and personal expenses separate. For example, when you import a credit card into your online account, all expenses will be presented to you in an easy to manipulate format. Just remove all personal expenses from the list and leave only work-related spending. With a trimmed list of charges, add them to a report and find out what your operating costs are.

This can help you keep on top of your business. And with a service such as Expensify, you can create and submit expense reports to yourself for free, for as long as you want.

Managing expenses online can also help you make the most of business tax deductions and save time doing your taxes. Once your information has been imported the systems let you organize and group all expenses into various tax reporting categories. Whether you then prepare taxes yourself or take it to a tax pro, an organized list of expenses lessens time spent and helps keep more money in your own pocket.

Washington lawmakers have done their thing again, stitching together a patchwork of small business tax changes that aim to nudge business owners toward spending and hiring. This one’s called the Small Business Jobs Act of 2010 (SBJA) and it’s a wide-ranging mashup of tax incentives and other changes you need to know about. Here’s the bullet-point rundown of the top 11 changes in the new law. We’ll provide a detailed description of each item from top tax experts at CBIZ in a series of posts starting now:

1. Extends bonus depreciation
2. Extends and doubles Section 179 expensing
3. Provides for 100 percent gain exclusion for qualified small business stock
4. Relaxes the S corporation built-in gain conversion rules
5. Allows five-year carry-backs of the general business credit for qualified taxpayers
6. Removes cell phones from the listed property rules
7. Enhances the deduction for start-up expenses
8. Provides retroactive Code Sec. 6707A penalty relief
9. Allows a self-employment income tax deduction for 2010 health care expenses
10. Increases failure-to-file penalties on information returns
11. Establishes a new information reporting rule for rental property expense payments

The Return of Bonus Depreciation

A highly-popular provision allowing first-year, 50% “bonus depreciation“ that expired in 2009 is back. The SBJA reinstates bonus depreciation for most property through 2010, and for certain longer-lived property and specific types of transportation property through 2011. Eligible property generally includes these three items:

1. new depreciable property with a recovery period of 20 years or less;
2. computer software, and;
3. qualified leasehold improvements.

The new law also extends the $8,000 increase in luxury auto depreciation limits on property eligible for bonus depreciation.

With only a few months left in the year, tax experts at CBIZ question how much additional investment this provision will create. But for business owners who’ve already made eligible investments during 2010, its a windfall. (Also note that Congress failed to extend the provision allowing corporations to utilize accumulated research and development or minimum tax credits in lieu of claiming bonus depreciation.)

Contractors using the “percentage-of-completion” accounting method generally must include any bonus depreciation taken when calculating the percentage of completion. To ease this burden for qualifying property placed in service in 2010, however, no bonus depreciation factors into the cost. Qualifying property generally is new depreciable property with a recovery period of 7 years or less.

Our next post on changes made by the Small Business Jobs Act of 2010 will explain the extension and doubling of Section 179 expensing.

The Small Business Jobs Act of 2010 (SBJA), signed into law in September, adds or renews several attractive tax incentives for small business, and makes other important tax changes (including beefed up penalties) you need to know about. This is the last in our three-part series explaining key provisions of the SBJA with tax experts from CBIZ.
100% Exclusion of Gain on Sale of Qualified Small Business Stock: Historically, 50 percent of the gain from the sale of qualified small business stock held at least five years could be excluded from income, but remained subject to the alternative minimum tax. The remaining 50 percent of such gain was taxed at 28 percent. The exclusion percentage increased from 50 percent to 75 percent for qualified small business stock acquired after February 17, 2009 and before 2011.

SBJA increases the exclusion from 75 percent to 100 percent for qualified small business stock acquired after the enactment date and before 2011. In addition, there is no alternative minimum tax imposed on any gains eligible for the 100 percent exclusion.

While the 100 percent exclusion is a significant tax benefit, taxpayers must act quickly because they only have until the end of the year to acquire the qualifying stock. The stock must be original issue stock in a C corporation held by a non-corporate investor, the gross assets of the corporation may not exceed $50 million at the time of issue, and the corporation must actively conduct a trade or business.

Shortened Built-in Gain holding period for S Corporations: Historically, an S corporation that had converted from a C corporation generally was required to pay built-in gains tax on any assets disposed of within the first ten years of converting to S corporation status. This preserved the C Corporation “double taxation” model for appreciated assets held at the time of conversion. In 2009 and 2010, an S corporation could sell built-in gain property without paying a corporate level tax as long as the corporation had held the property for seven years. The new law reduces the holding period on these assets in 2011 from seven years to five years. This means that C corporations that filed Subchapter S elections effective for the 2006 tax year (or earlier) can sell built-in gain property without paying the built-in gains corporate level tax.

Startup Expense Deduction Increased: Generally, taxpayers may deduct up to only $5,000 of startup expenditures, subject to a phase-out threshold of $50,000, and the remainder must be amortized over 180 months. The new law increases the maximum deduction to $10,000 and the phase-out threshold to $60,000. This provision only applies to startup expenditures incurred in the 2010 tax year.

Self-employment Tax Break on Health Insurance: Individuals subject to self-employment tax may not deduct health insurance for purposes of computing net earnings subject to self-employment tax. For the 2010 tax year only, taxpayers will be allowed to reduce their net self-employment income by the cost of their health insurance.

Cell Phones No Longer Listed Property: Under prior law, cell phones (and similar telecommunications devices) were considered “listed property,” and thus were subject to strict substantiation requirements for the business use of the property. Recognizing that employer-provided cell phones are now commonplace, the new law removes cell phones from the definition of listed property leaving it open for the IRS to determine that the personal use of cell phones provided primarily for business purposes constitutes a de minimis or working condition fringe benefit that can be provided tax free to employees.

Increased Information Reporting: The health care reform act imposed onerous new reporting requirements on taxpayers beginning in 2012 by requiring 1099 reporting on all payments of $600 or more for both goods and services, and extended the reporting to corporations. While there is broad support in Congress to scale back or even repeal that provision, in the meantime Congress has piled it on by imposing even more information reporting requirements on taxpayers. Taxpayers who receive rental real estate income, traditionally exempted from the reporting requirements, will now be required to report payments of $600 or more to a service provider beginning in 2011. Individuals who only receive a minimal amount of rental income (as defined by the Treasury Department) will be exempt from these requirements.

Penalties: Congress increased the penalties that apply to the failure to file correct information returns (e.g., Form 1099 or Schedule K-1). The increases apply to both the penalties applicable to each such failure ($100 up from $50 unless corrected immediately), and to the maximum annual limitation ($1,500,000 up from $250,000 unless corrected immediately).

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