Wyoming Entrepreneur Blog

Federal Government Spending

By Brett Housholder, Interim Program Manager, Wyoming Entrepreneur PTAC     

Government contracting can certainly be an effective way to increase sales and supplement your business, but some business owners assume the federal government doesn’t buy what they sell. However, it might surprise you to find out just how large and diverse the pool of government procured goods and services really is.

But smart business owners aren’t going to enter a new market without evidence that there’s an opportunity. Fortunately, there are resources available that enable us to actually determine what the federal government buys, how much it buys, and what types of companies it buys from. There are two very basic resources that can be utilized to find this information:

• USA Spending (www.usaspending.gov) – This website can be used to perform a very quick search by keywords. Simply type in a keyword phrase and view the results on the following page. You will also have a map you can use to click on individual states. Below the map, you’ll also find a list of past awarded contracts with the names of the companies that received them. This gives you some outstanding competitive intelligence. If you know who is receiving contracts, you can do some research on them to compare your strengths and weaknesses. You can also use other search criteria on the right side of the results page to narrow it down even further (by government agency, for example).

• Federal Procurement Data System (https://www.fpds.gov/) – This website requires a log-in (free) and offers similar search features as USA Spending and offers yet another resource for determining what sort of government market exists for your products or services. 

While the numbers on these websites can’t be considered definitive proof of your potential success in the world of government contracting – ultimate business success will always depend on reliable goods and services, after all – they can be a great way to test the waters to get an idea of what and how much the federal government actually buys, especially on a state-by-state basis.

What Are Your Tax Obligations As A Small Business?

When you are self-employed, it typically means you work for yourself, as an independent contractor, and you own your own independent business.  Here are a few key points that the IRS would like you to know about self-employment and self-employment taxes:   

1. Self-employment income can include pay that you receive for full- or part-time work you do for a variety of customers.  This could include income you earn in addition to your regular job, out of your home or from a separate location.

2. Self-employed individuals must file a Schedule C, Profit or Loss from Business, or a Schedule C-EZ, Net Profit from Business, with their Form 1040.  These forms are used to calculate your net earnings from the business.

3. When you file these forms, you can deduct the business expenses or costs that you paid to run your trade or business.  You can deduct most business expenses in full, but some costs may need to be allocated between personal and business use.  They might even need to be ’capitalized.’  This means you can deduct only a portion of the expense each year over a period of years.  Expenses can only be deducted for costs that are both ordinary and necessary.  An ordinary expense is one that is common and accepted in your industry.  A necessary expense is one that is helpful and appropriate for your particular trade or business.

4. Since you are self-employed, you will generally have to pay self-employment tax as well as income tax on the earnings from the business.  Self-employment tax includes both Social Security and Medicare taxes.  You compute this tax on based on the net income or profits from your business using a Schedule SE, Self-Employment Tax form.

5. If you are self-employed you may also have to make estimated tax payments. People make estimated tax payments to pre-pay the taxes on income that has not been subject to employer withholding, like wages.  If you do not make estimated tax payments, you may have to pay an underpayment penalty when you file your income tax return if you have underestimated your potential tax liability by too much and you did not pay in enough taxes during the year.  Estimated tax payments are made with Form 1040-ES, Estimated Tax Payment voucher.

For more information, visit the Small Business and Self-Employed Tax Center on the IRS website at www.IRS.gov.  There are many IRS publications there that will help you and they are also available by calling 800-TAX-FORM (800-829-3676).  Check out these publications and the instructions for the forms mentioned above:

•    Publication 334, Tax Guide for Small Business
•    Publication 535, Business Expenses
•    Publication 505, Tax Withholding and Estimated Tax

Successful Business Acquisition

This blog post was written by Leonard Holler, Wyoming Entrepreneur SBDC regional director.

Leonard Holler, Wyoming Entrepreneur SBDC

Some statistics say that nearly two-thirds of purchased businesses fail. Here are some strategies that might assist you in making your business acquisition more successful.

1) Have a plan for acquiring the business. I mean - understand why you want to buy a particular business so that your plans will guide your decisions during the process, you can better communicate with employees and vendors, as well as measure your progress. There should be a solid strategic reason for your purchase. Like - their strength or position in the market, protected intellectual property, growth potential of the market, economies of scale, the lifecycle of the business.

2) Develop criteria for your selection of a target business or company. Once you have developed the criteria, you can enlist others to look for viable candidates. You should include revenue and cash flow parameters (size of business), preferred industry sector, location, and investment preference. Then seek out your preferred targets at different venues – trade shows, industry association meetings, searchable databases or with your contacts in the industry.

3) With your plan in place and your search criteria identified, you need to take a good close look at yourself and your team to assess the talent within your own organization. You will need their leadership to assist in the negotiation, integration, and management of the new acquisition. Outside professionals should be considered, such as, your accountant, attorney, insurance broker, banker, and valuation specialist to assist with advising you in this decision. They will help make up part of an acquisition team, besides you and your key staff.

4) After you have identified a target company by gathering sufficient information and evaluating it among other possible candidates, you need to determine that they are willing to sell. If they are, show them that you have an interest in the form of a non-binding offer. Once the offer has been accepted, complete some due diligence on the company to verify the information they provided, in order to make your offer, and then evaluate your return potential. This would include developing projections based your research of the industry and local market. Additional inquiries should be made regarding legal issues involving intellectual property, contracts, agreements, leases, employee status, and anything else that might impact the performance of the new acquisition.

5) If you are satisfied with the due diligence, a binding Letter of Intent to purchase the company should be made with some funds changing hands. Once its accepted, a purchase agreement will be drawn up which includes issues, both large and small, that have been negotiated along the way. Negotiation of the purchase agreement is like a balancing act between you and the target company. Even though each deal is different and following these points is no predictor of success, your chances of a successful business acquisition can be enhanced by considering them.

It's That Time Again

Way back when before I worked for a non-profit, I disliked taking surveys. What is it about surveys? Probably there are many reasons: 

•    Time- anything beyond 5-8 minutes is probably not going to get a response.
•    Privacy-why do they need this information and what are they going to do with it?
•    Repercussions-if I don’t respond in a positive manner will there be a consequence?
•    What’s in it for me? Sometimes there are incentives to complete surveys (i.e. coupons, money, free products, etc.) and sometimes it is just out of the goodness of your heart.

I think surveys have been overdone in the past and that could be another reason for our hesitation.  I recently read the average response rate for surveys is 10-15%; seems pretty dismal. This makes our job to receive needed information very challenging.

So here it is-It is that time again , when we and all SBDC's send out the annual Chrisman survey. We randomly select a certain number of clients who have received five or more hours of counseling from one or more of our team of advisors and market researchers. 

We are genuinely interested in your response. There are several questions pertaining to the quality of service you received from Wyoming Entrepreneur SBDC, MRC & PTAC. If you were happy with our service, tell us! If we can improve our service, tell us that too.

There are also several questions pertaining to your business statistics; also known as impacts. We want to know if our counseling services provided positive impact for your business.  All responses are anonymous and will be kept strictly confidential.  All responses are compiled and analyzed by a third party researcher. The best news, it should take only about five minutes to complete!

Through the years I have been involved in several surveys and understand the angst of the person being surveyed, but also compassion for the surveyor.  Funders, stakeholders and the general public want to know what is the ROI or return on investment with the money received. Thus, gathering impact and performance feedback is valuable information for us.

So, if you were one of the lucky recipients to receive a survey and you have already completed it and mailed it back, Thank You! If you haven’t completed the survey, please take five minutes. We appreciate your time and effort!