6 Secrets Tax Pros Won’t Share

My name is Joseph Anthony, and I’m a tax pro. I do tax returns for individuals and small businesses in my home city of Portland, Ore., and all over the country.

More than half of you will pay someone like me to prepare your tax returns this year, according to statistics from the IRS. I also talk to other tax professionals from around the country. Because I do what they do, we talk shop and share insights. They tell me things they won’t tell you, including stuff that could help you deal with your own tax pro and maybe even save you money, if only you knew.

Here are six things you’ve probably never been told by a tax pro:

1. That first meeting? You’ll probably get charged less if you’ve got your stuff together. Most tax pros charge based on some combination of hourly rates, complexity of the tax return and the so-called “hassle factor.”Having information dribble in — one form this week, a couple of necessary numbers next week — increases the hassle factor, and the amount the tax pro is going to want to charge. As one tax pro said, “I wish there was a nice way I could tell clients to wait until they think they’ve got all their information and not both sending me part of it now and part later. I cannot complete the puzzle until they give me all the pieces.”Another tax pro was more direct. “Every time I open up a client’s file to add another form or another piece of information, the cost of preparing the return goes up,” he said. “I charge for my time. How else can it be?”

2. The early bird gets more attention. It’s human nature. Early in the tax season, tax pros feel like they have more time. This doesn’t necessarily mean you’re going to get a “better” return — a good tax pro should go through the same questions and process regardless of when the return is done. But you have to figure that if your return is being worked on early in the tax season, a little more time (including time talking with you) is going to go into it than would otherwise be the case. If I had to use a tax pro, I would see him or her in mid-February. Each tax office has its own “crunch” period, but for most the worst weeks fall somewhere between March 15 and April 15. Interestingly, Tax Day itself, April 15, often is not that bad a day. Many tax professionals, including myself, leave that day open for any last-second calls and clients picking up their returns. All the returns that are going out will have been finished by the 13th or 14th of the month.

3. We don’t like last-second rush jobs. And you shouldn’t, either. I want to do a good job for all of my clients. If someone I’ve never talked to before calls me on April 12, saying he needs to file by April 15, I’m probably going to refer him to someone else. I don’t want to take on a new client that close to the deadline and potentially take time from my existing clients. Many of my peers feel the same way about those last-second rush jobs. However, read on to No. 4.

4. Extensions are fine by us. Many taxpayers worry that they’re going to have trouble with the IRS if they file an extension. I’ve never seen any evidence of that. In fact, extensions are the perfect solution for the taxpayer who would otherwise be a “rush job.” It’s way better to file an extension and send in an accurate return later than it is to rush to meet the April 15 deadline and later discover things you missed that require you to amend the return. With the extra time afforded by an extension, we can go over a client’s tax situation after April 15 and make sure we’ve gotten all the documentation and asked all the questions that could help trim their tax bill. Individuals can get an extra four months to send in their return by filing Form 4868 by April 15.

5. Don’t ask us to help you cheat. We don’t want to do it. We can’t do it. And in a legal proceeding, we may even have to testify that you wanted us to help you evade the law. (Tax professionals maintain the confidentiality of their client’s information, but we generally do not have the same kind of attorney-client privilege that lawyers enjoy.)”One client wrote me a letter telling me they were going to have some income that they would not be declaring,” remembers one tax pro. Yikes. There’s a lot a good tax pro can do to help you pay no more in taxes than you are legally required to pay. There’s nothing a good tax pro can do to help you cheat. If that’s the kind of “help” you want, you should just do your own returns.

6. The person preparing your taxes may make less than a fast-food worker. I was in a cab one day and started talking with the driver. It turned out that he had more than one profession. His other job: working during the tax season for one of the big tax return chains. For this part-time, seasonal work, he made about $9 an hour — pretty low, to my mind, for someone doing work so closely related to your financial life. But he wasn’t a certified public accountant or an enrolled agent — professionals recognized as specialists. And he didn’t have to have any formal training beyond the coursework offered by the company that hired him. Firms may have more highly trained or experienced people reviewing the work of low-paid assistants. If you want to know, you’ll have to ask.


7 Good Reasons to Call a Lawyer

For many small-business owners, contacting an attorney is akin to opening a faucet — everything gushes out but little comes back in return, short of a hefty water bill.

OK, so this analogy is a little trite. It’s also horribly inaccurate. Legal advice and guidance in varied forms is absolutely central to any small business. You will get a bill, yes. But using an attorney doesn’t have to be a burdensome financial drain.

Here are seven signs that suggest your business may benefit from the involvement of an attorney:

1. You’re starting a business. Far too many businesspeople get their operations up and running before contacting an attorney for legal guidance. Don’t make the same mistake. Before the very first dime of income shows up on your ledger, hook up with an attorney to review business structure, legal ramifications and other elements designed to protect your business and help it flourish. “It’s essential that an attorney become involved before you start,” notes attorney John Ventura, author of “The Everyday Law Kit for Dummies.” “An attorney isn’t someone you go to just when you’re in some sort of trouble.”

2. Check your contracts. It may be a pleasant afterthought to a bygone era, but these days it’s rarely a wise idea to conduct business with a smile and a handshake. That means it’s imperative for an attorney to review every contract you use in your business, both with customers as well as suppliers — or draw up suitable contracts if none are in place.

“We’ve become so litigious as a society that it’s critical that you have contracts that protect all your business relationships,” Ventura says.

3. Review your exit strategy. It may sound macabre, but it’s also a good idea to have an attorney construct and regularly review a suitable exit plan should your business go under, no matter how well things may be steaming along now. For instance, an experienced bankruptcy attorney can help identify — and protect — property and other items that, should the worse happen, are exempt from bankruptcy proceedings. “You’re always at risk, so planning a suitable exit strategy is absolutely essential,” Ventura says. “You should know your bankruptcy options, ways you can protect your assets and simply lessen the overall blow of failure.”

4. Check your debt collection. As money becomes tight in a dicey economy, it can become more difficult to collect funds owed you. An experienced attorney can advise you on suitable collection methodology and resources. That way, you can avoid becoming entangled in any legal action against an overzealous collection agency. “Cash flow is king, so when that gets slow, you get aggressive,” Ventura says. “But you have to be careful in using some collection agencies — if they step over the line, that can always get back to you.”

5. Begin to draw on your wealth. Enough stories about ways to avoid disaster. An experienced estate attorney also is essential in setting up programs to fund retirement from the proceeds derived from the business. Here is something that, as Ventura notes, many small-business people tend to put off until the very final moment. “Most entrepreneurs don’t even start thinking about their retirement until they’re well in their fifties. If you’re doing well, an estate attorney can help you start taking the wealth out of the business to fund your retirement.”

6. Keep the business going after you retire. Few small-business people want to see their businesses close for good once they retire. A key area a solid business attorney can address is succession — establishing procedures and step-by-step guidelines to hand off ownership of even a small portion of your business to someone else. An attorney not only can strategize on ways to keep the business alive and flourishing, but can also possibly help you determine an ancillary source of income from the business to round out your retirement funding.

7. Resolve a business dispute. Yes, this is an obvious reason to get a lawyer. Merely hiring an attorney will show you mean business, and may end up getting you the results you desire. A lawyer also may be able to help you avoid lengthy and costly court action. Moreover, a lawyer can help you avoid — by working on your own — turning what might be a bad situation for your business into something worse.

In seeking out an attorney, here are two important tips.

Get a specialist when you need one. Law is no different from scads of other professions. We live in an age of specificity, so be certain to establish relationships with attorneys who have training and experience in defined areas. Not only does that provide you with the best possible guidance, but it can also serve as a system of checks and balances. For instance, an estate attorney may point out a problem in your retirement planning that, say, a general practitioner might overlook.

Don’t fear the cost. No one’s about to claim that getting solid legal advice is dirt cheap. But it need not be as prohibitively expensive as you might fear. For one thing, Ventura urges entrepreneurs to delineate what sort of legal advice will be an ongoing requirement and what can be addressed on an as-needed basis — that can save on retainer fees right there. And, adds Ventura, don’t be gun-shy about dickering over price. Some attorneys may be willing to cut rates for a guaranteed amount of work, while others may gladly set up payment plans for particularly expensive bills. “I think the days when an attorney simply charged by the hour have gone by the board,” Ventura says. “Shop around and get a quote for fees. And, once you find someone you like, clear the air and get the subject of money out of the way.”

7 Ways to Look Good to a Lender

Even as interest rates remain at attractive levels, many people looking to start or expand a business venture are having trouble getting a loan.

Banks may be pushing great deals on home-equity credit lines and other loan offerings, but they also are being extremely selective about who they lend to.

Now more than ever, you must engender the trust and confidence of your lender.

There’s no magic bullet that you can fire to bag yourself a trophy loan. But there are some guidelines that can put you on the right path to your quarry.

Here are seven dos and don’ts when applying for a business loan.

1. Even if you’re not organized, look organized. Yes, it’s especially hard when you’re trying to grow a business and changing your company’s internal systems to meet that growth. But this is when looking sharp is even more important.”I think the thing that will really impress a banker and get him excited about a borrower is a well-organized package,” says Bob Bifolco, executive vice president with Progress Bank in Blue Bell, Pa. What Bifolco likes to see: Three years of tax returns, an interim financial statement, listings of receivables and payables, insurance records that show what equipment the company owns and the assets’ possible replacement value and a cash-flow statement for the past year.”You bring in a package like that and the banker is likely to immediately deem you as a sophisticated prospect who is running the business in a sound financial manner,” Bifolco says.

2. Clean up your “a/r” and your “a/p.” That’s accountant-speak for accounts receivable and accounts payable. The problem is pretty simple: Lenders don’t like it when they see a business waiting for lots of money to come in (accounts receivable).”If somebody is getting paid in 90 days but has to pay his vendors in 30 days, we feel like he has a problem,” says Merv Shorr, senior vice president with Banco Popular North America. Old accounts receivable aren’t just an indicator of slow-paying clients — they also can be a red flag for nonpaying accounts. Lenders may want to see a reserve for bad debts to reflect potential uncollectible bills.

3. Your assets: Know that lenders care about what they are worth now. “Bankers are going to want to tie up more assets than the loan is worth whenever possible,” says Dana Barfield, a financial planner in Richardson, Texas, who specializes in planning for businesses with up to $80 million in revenues. So lenders will look at your assets not in terms of what you paid for them, but rather in terms of what they could be sold for if the business is ever to be liquidated. Overall, this is going to favor the manufacturer with a brand-new production line over the information services business with rapidly depreciating computer equipment. You can’t do much about this, but be aware and plan accordingly.

4. Improve your loan-to-value ratio. Desirable loan-to-value ratios vary by industry. Leasing companies, for example, tend to have higher acceptable loan-to-value ratios. Bifolco says that, in general, he likes to see loan-to-value ratios of 3-to-1 or less; Shorr suggests that 4-to-1 is a winner. But there isn’t a strict bar for this ratio. “What I’m looking for is a snapshot that will tell me if this company can make it through a few rainy days, through a couple of recessions,” Bifolco says. “Not being overleveraged is part of that.”

5. Remember that lenders want interest payments plus. It’s not unusual for people looking to borrow money to consider themselves good risks if they can show that they can service the debt — that is, produce enough monthly cash to pay the interest on the loan. But that’s not enough for lenders these days. Most of them want to see that you can generate enough cash to not only service the debt but also to pay back principal. So instead of just interest coverage, you have to think about — and be able to show — how the business will have total debt coverage.

6. Yes, they want you , but not too much. A business that has a track record of borrowing and repaying always has a leg up on getting a new loan. But lenders don’t like to see debt servicing consuming too much income. Debt-to-income ratios of less than 40% are preferred. That means if you are making $10,000 in profits monthly, not more than $4,000 of that should be getting siphoned off for debt servicing.”In general, we really don’t like debt-to-income ratios of 50% or more,” says Melissa Hammit, commercial credit analyst for Woodforest National Bank in Woodlands, Texas.

7. Personal credit dings? Hold back a bit. Lenders say that good personal credit can help with a business loan, especially since many small-business borrowers have to guarantee the loan personally. The reverse is also true: Some dings on your record could hurt you. So try to hold off on applying for a business loan if you’ve recently missed some payments or had other credit problems. Going more than a full year with a clean personal credit record can make a difference when signing that business loan application.

Protect Your Good Name with a Trademark

2. You may not have to go global to require a global trademark.

Major corporations — or anyone doing business globally — will have to be concerned about protecting their trademark not just in the United States, but anywhere they do business. With the Internet, it’s more possible than ever to earn money globally. Unfortunately, it’s also more possible than ever to get ripped off globally. But Radack says that many small businesses in the U.S. don’t have to try to rush out and establish worldwide trademarks. “If you’re a GM or a Ford or a Microsoft, then yes, of course you have to do this,” he says. “But what I tell my small-business clients is that if you start to sell in foreign countries, then at that point, yes, you do need to register in those countries.”

One of the biggest problems for small businesses selling in other countries is the relationship with their foreign distributor. “It’s not unusual that if you have a distributor in another country and relationship with that distributor goes south, the distributor may register your trademark,” Radack says. “The distributor can wind up with the right to your trademark in that country.”

3. It’s not hard to get started. As of 2004, it costs $335 to apply for a national trademark with the United States Patent and Trademark Office. Lawyers may charge $1,500 to $2,500 or more to handle the process. They point out that the research involved in clearing a trademark and even the process of filling out the trademark forms is not as simple as it may first appear. With what’s potentially at stake, a lawyer may be a good investment. You can start learning about the process yourself by going to Patent and Trademark Office Web site.

“Little guys, small businesses can go there,” Groetken says. “There’s a free searchable database to search trademarks, there’s information to help you do some basic research and learn more about what a trademark is and what is involved in establishing or protecting it. It doesn’t hurt to take the time to check it out and then hire someone.”

Lending to Your Business? Do it Right

Where does your business go when it needs a loan? For many small businesses, the answer is…right back to the owner.

If you have to lend money to your business, do it the right way. There are potential tax benefits for loans to your own business. There also are financial potholes that you could hit if you don’t do things properly.

Here are five things to consider.

1. Making and guaranteeing loans are different. Guaranteeing a loan the company takes is not the same as making a loan to the company yourself. If the company takes out a loan, that does not increase your basis. For owners of S corporations, that means you cannot take into consideration the loan when calculating any pass-through of losses from the business to your personal return.For example, if you own a company in which you have $5,000 in equity and for which you have guaranteed a $10,000 loan, only $5,000 of company losses could be passed through to your current personal tax return. If you had made the loan directly to the company, your basis would have increased to $15,000, and any losses up to that amount could pass through to your personal return.”It goes back to the concept for S corporations that losses cannot exceed the sum of the shareholder’s basis in the stock and any direct debt the shareholder has in the corporation,” says Los Angeles tax attorney Thomas Henning, a partner in the firm of Allen Matkins Leck Gamble & Mallory LLP.

2. Initial investments usually aren’t loans. If you’re just in the process of starting a business, don’t try to say that the money you’ve initially put into your corporation is a loan rather than a purchase of stock. That’s a no-no. You have to actually put money into a company for the stock purchase involved in a startup, and that money cannot be repaid to you as if it had been borrowed. You can lend money to the corporation once it is established.

3. Document all your loans. This may sound obvious, but you don’t want to make a loan just by writing a check to the company. You have to document what you’re doing properly as being a loan from you to the corporation. You’ll need to draw up a promissory note and specify a rate of interest on the loan and terms of repayment. You should also keep proper track of repayments of loan principal and interest. Failing to charge interest on the loan can result in a terrible double-whammy. One, you could have interest “imputed” to you — that is, the IRS could say you have to pay tax on money you should have received. Two, if your business is a C corporation that is losing money, the additional interest deductions simply will be added to the corporation’s retained losses. In short, no current tax benefit for the payments made.

4. Watch your ratios. Proper documentation may also help you avoid having the loan re-characterized by the government as something else, such as an additional equity contribution. While from a tax standpoint it can make more sense to loan money to your business than to invest additional funds, there may be limits on how much you can actually lend. Some business advisors suggest not having a debt-to-equity ratio of more than, say, 3-to-1.”The problem is that if the IRS feels your debt-to-equity ratio is excessive, they may say that the debt is really disguised equity,” Henning says. “If that’s the case, then those payments the company is making that you think are loan repayments could wind up being characterized as you giving yourself a dividend.”That can make a huge difference in your taxes. Only the interest on loan repayments is taxable, but all of a dividend would be subject to tax. Additionally, a corporation could deduct as a business expense the interest charged on a loan. But if the money being paid out is a dividend instead, none of it would be deductible by the corporation.

5. There’s no such thing as a simple loan. You also may have to deal with passive-loss rules and other issues when you lend money to your business. As with any complicated financial or business dealings, it makes sense to consult with your tax pro or attorney and other professional advisers before moving forward.

How to Get the Best Airfare

Believe it or not, there really is a best day of the week to make your best deal on an airline ticket, and it’s neither Monday nor Friday. It’s Wednesday! And there’s even a best time on Wednesday to buy that ticket.

People who don’t travel a lot for business sometimes envy those of us who do. Why, I don’t know, since business travel is hardly glamorous. And these days it’s getting worse. That said, for many of us, traveling for business is a fact of life. In these days of soaring fuel cost, the cost of travel is skyrocketing as well. As a new entrepreneur, I’ve had to balance the need to travel with the importance of watching our company’s budget.

The good news is there are ways to spend less, especially on air travel. Here’s what I’ve found in trying to cut my own travel costs.

First, you may have to break your old habits. Do you have a favorite airline that doesn’t necessarily offer the flight schedules you need now? It’s more important than ever to join the frequent flyer club of every airline you may possibly fly. Signing up is free and you’ll be able to accrue miles, which eventually can be used for free upgrades or even flights. If you travel a lot on one or two airlines, you might fly enough miles to become a premium-level flyer. Every airline calls a premium level something different, but for most, the first premium level generally kicks in at 25,000 annual miles flown. Next up is usually 50,000 and then there’s the exalted 100,000 mile level.

The other advantage of being at a premium level is those flyers are exempt from the baggage charges most airlines now charge. But there’s also a downside to sticking to one or two favorite airlines-you make be overpaying for fares. I am a platinum-for-life flyer on American Airlines (that means I’ve flown over two million lifetime miles there). I used to almost blindly book on American, since I just kept accumulating miles. That’s not the case anymore. When I’m ready to book a flight, I go online and search for the best fare. There are several sites that can help you do that-on some, like Orbitz.com, Expedia.com or Travelocity.com, you book through the site. On others, like Kayak.com (a favorite of mine), they present the best deals, tell you where they are and allow you to immediately book a flight online.

Airlines are changing rules and offers constantly these days. Many companies are back to offering lower fares for flights booked 21 days in advance and for those dreaded Saturday night stayovers – two things not very popular for business travelers.

A tip often cited by travel experts is to check out regional airports, where flights may be cheaper. The downside is you likely aren’t going to fly non-stop. And make sure you figure in the added cost of ground transportation (if any) to the price of the cheaper fare, to make sure the overall cost is still cheaper. Also, you have to compare (luckily most travel sites and the airline sites themselves make comparisons easy). Flying out of my local airport, John Wayne in Orange County, CA often costs far more than if I make the schlep up to Los Angeles and fly out of LAX.

Other smart tips are:

For the best fares, book your flight on a Wednesday-and never on a weekend. (I don’t really understand why this is important, but several travel experts offered this same advice).

Connecting flights are usually cheaper than flying non-stop. Of course it adds hours to your travel day. If you are connecting, it’s now recommended you leave one hour and 45 minutes between connections.

Don’t book the last flight of the day. Stuff happens and if it happens to this flight, you’ll be spending the night in the airport.

Make sure you check all airline fares and schedules. Recently I’ve gotten good deals flying JetBlue and Virgin America. (And, at the moment anyway, those airlines, along with Southwest, Continental and Delta aren’t charging for the first piece of checked luggage).

Check with the experts. Peter Greenberg is the travel editor on the Today Show and has a great Web site. Check it out at http://www.petergreenberg.com .

These are just a few tips I’ve found. I’m certain you all have your own favorites. E-mail them to me at rieva@smbconnects.com and I’ll share them at a later date. Or if it’s too much for you, remember time is money and find yourself a good travel agent.

Balancing Business Travel with Your Life: 5 Tips

It might be an exaggeration to say that salesman-turned-fishing guide Norm Weston experienced a career epiphany two decades ago. But then, how else do you describe the lure of Southwest Florida’s back country, where the saltwater flats teem with redfish, snook and trout? And how else to characterize the way in which he brought his career into balance?

“I was on a business trip to Miami,” he recalls. “I was a field engineer selling machine parts, and I went to see a customer on a Friday to discuss a possible contract.” The sales pitch turned into a fishing trip off Sanibel Island the next day, where he came to a sudden realization that he was in the wrong line of work. “I had to become a fishing guide,” he says. An increasing number people who travel for a living are concluding that their lives are out of balance. More than half of all business travelers say the time they spent with family has been significantly reduced as a result of being on the road, compared with 39% in 2001, according to a 2004 survey by Company Barclaycard, a British credit-card company. And more than one-third said social time spent with friends suffered through the demands of traveling for their company, compared with 28% in 2001.

How do you hit the “reset” button on your career? If you feel you’re on the road too much, here are five steps toward positive change.

1. Tap the brakes before you get into an accident. Years of heavy travel will take a toll on most people. If you can think of your career as a car ride, remember to hit the brakes every now and then. That means taking breaks from traveling. I just read over some e-mails from an old friend who always seemed to be on the road, visiting a new place, checking out a new restaurant. His insights into business travel were consistently brilliant because he traveled so frequently. But his frequent dispatches from the road ended abruptly late last year with a note from his wife saying that he had died, largely due to the stress of traveling so much. My friend had overdone it. I miss him, and I wish I’d been able to write this column five years ago to warn him.

2. Use the tools you have to set a reasonable pace. This is a struggle for any business traveler — even the ones who have achieved a better balance. I find that Microsoft Outlook’s Calendar function is a good tool. It allows you to identify the most important appointments and it prompts you when they’re due. While that’s far more efficient than writing everything down on a memo pad, it is possible to have too much of a good thing (I like to call it Calendar overload) where every little “to-do” item starts popping up on your screen, frequently interrupting your concentration. I like Franklin Planner for Outlook (www.franklincover/fpo) which lets you to further prioritize your appointments. It also integrates nicely with Outlook. A caution: Technology alone won’t put your life back into balance. But it can help.

3. Ask yourself: Do I really need to be there in person? A lot of business meetings can be accomplished virtually, with the help of Web conferencing software such as Microsoft Office Live Meeting, as I pointed out in a recent column. The use of “virtual meeting” technologies experienced an uptick after 9/11, as companies cut back on business travel. But even now, as corporate travel heats up again, there are still plenty of smart reasons to pick Web-based meeting applications over an in-person meeting. Not the least of these is the fact that you eliminate the stress of traveling (which, according to a Microsoft survey of road warriors, is even more stressful than visiting the dentist).

4. Remember: Garbage in, ugh, garbage out. When you spend time on the road, you tend to eat food you normally wouldn’t (and in quantities you wouldn’t) drink things you wouldn’t, and get insufficient sleep. Whoa. That alone is enough to knock your life out of balance. If you don’t take care of yourself, you could end up like Richard Larssen, who is now a retired seismologist in Palm Bay, Fla. In 1987, on a trip to northeastern Brazil, Larssen was infected with dengue fever, a mosquito-borne viral disease for which there is no vaccination. “I wasn’t feeling well. I was tired, had a slight headache, and a bit of an upset stomach,” he recalls. “I thought it was due to the rigors of travel.” So Larssen stopped in a cafe and had a cold beer. Big mistake. He spent the next three weeks in his hotel, where he lost 20 pounds before regaining his health.

5. Don’t forget your friends, family and loved ones. It’s possible to burn the figurative candle at both ends to have a successful business. But the whole exercise seems rather pointless if you alienate everyone around you in the process. Don’t think of your colleagues and relatives as obstacles standing in the way of your success — tethering you to the office when you should be out on the road drumming up business. Think of them instead as your support group. They’ll be there when you need them.

Are some of these tips just a little too New Age-y for you? Perhaps they are. But consider the story of Brian Talbot, who might have benefited from some of these strategies 13 years ago. He was driving himself hard as an up-and-coming executive in the accounting department of a retail-goods importer in Stamford, Conn., when he discovered that his career was out of whack.

One day, he found himself late for a flight to Los Angeles and “rushed, rushed, rushed,” to make it to the gate on time. “All of a sudden I couldn’t stand up, and just fell to the ground,” he remembers. “The next thing I knew I was being awakened in a hospital bed.” It turns out that he’d had a brain aneurysm — a condition that eventually prompted him to leave his high-stress job and become a nightclub DJ.

Is bringing your career into balance an all-or-nothing proposition? Not necessarily. I met Weston, the fishing guide, a few years ago on a trip to Southwest Florida. We spent the day in the back country catching and releasing some of the most magnificent fish I’ve ever seen. Weston hadn’t gone Luddite, as you might expect. He was one of the first fishing guides in his area to take bookings through a Web site back in the mid-1990s.

But for a former engineer hawking machine parts, I think it’s safe to say Weston had finally achieved the balance he sought. Even if most of his business trips now are slow boat rides into Florida’s Pine Island Sound.

I really can’t think of a better place to be.

10 No-Nos for Smart Business Travelers

These two facts are driving the travel industry crazy, and should be concerning you, too: Business travel is on the rise…but companies are spending less money on their trips. How can that be? Easy. Business customers, like consumers, are demanding more for less. A 2004 Smith Barney study found that 68% of corporate travel managers said they expected their company’s 2005 travel budgets to exceed spending in 2004 by an average of 5%. But 37% of the responding companies also said they are redoubling their efforts to save money — among other things, by buying advance-purchase fares instead of more costly last-minute airline tickets. Translation: Your competitors are getting out there and making contact with customers — maybe your customers — and they’re not losing their shirt on it the way businesses were in the late 1990s, when buying overpriced business travel airfares and booking astronomical hotel rates was a standard practice.

The moral here: You should be showing the same determination to cut travel costs for your business. Here are traps to avoid that will help you save money on your next business trip. If you have a corporate travel policy, consider incorporating some of these suggestions — they’ll help stretch your travel dollar further.

1. Don’t pay full fare for your airline ticket. Never, ever, ever shell out the walk-up fare — that’s the unrestricted, full-fare coach class price — for an airline ticket. In the past, before low-fare carriers such as JetBlue and Independence Air rose to prominence, business travelers had no choice but to pay what an airline demanded. Not anymore. Switch your preferred carrier to a low-fare airline now. Estimated savings: 60-80% off airfare.

2. Don’t become a serious frequent-flier mileage collector. Loyalty points are the crack cocaine of the travel industry, so advising you to be a “casual” user is somewhat naïve. If at all possible, you should stop collecting rewards points now. But the system is what it is, and unless you want to find yourself overpaying for your airline tickets, hotel rooms or rental cars — and even taking unnecessary trips in order to qualify for elite status — pay no attention to the points that may be collecting in your portfolio. If you do, you could become a mileage addict. (Remember, there are close to 10 trillion unredeemed frequent-flier miles out there). Estimated savings: varies by amount of travel.

3. Don’t pay the rack rate for your hotel room. Hotels want you to pay the sticker price for a room (of course, they do). But do you go to a car dealer and pay asking price? No way. Logging on to the Internet can really pay off, particularly if you’re using one of the so-called “opaque” Web sites such as Priceline or Hotwire. (You pick the class of hotel, but not the specific property — and you don’t collect points.) But the savings can be terrific: Better than a traditional online agency, and better even than a hotel Web site, with its “best rate” guarantee. Estimated savings: about 40% off your hotel bill.

4. Don’t accept the key to your minibar. You know that the snacks and drinks in your minibar are marked up several hundred percent. You know that the moment you open the refrigerator, an alarm is probably going off somewhere in the hotel manager’s office (actually, in all seriousness, many minibars automatically charge your room if an item in it is simply moved). Solution: When the front-desk worker offers you a key, turn it down. Tell your employees they’ll never be reimbursed for anything from the rip-off minibar. Estimated savings: can be as high as $20 a day or more.

5. Don’t rent anything other than a matchbox car. Don’t worry; you won’t end up actually driving a subcompact car. The cheapo vehicles are the first to run out, and when they do, the car rental company is contractually obligated to put you in the next-highest class of car at no additional charge. However, if you rent a full-size vehicle, you’ll just end up paying a premium for something you would have either gotten for free or at a vastly reduced rate. (Rental agents will haggle with you over upgrade costs, but they’re usually empowered to give it to you free for the asking.) Estimated savings: up to $40 a day.

6. Don’t tip just because you feel guilty. Airport skycaps, waiters and hotel employees often leave you with the impression that you must subsidize their substandard wages, and that if you don’t, you’re being a tightwad. Truth is, they’ve chosen to work in the service profession and you don’t have to tip them unless they’ve performed quality service that’s tip-pable. A gratuity is earned, and you don’t have to walk around handing out money like candy while you’re away on business. Estimated savings: depends on the length of your trip.

7. Don’t buy the optional car rental insurance. Car-rental employees like to pressure you to buy their own insurance. They show you pictures of damaged cars and they tell you your insurance policy may not cover your rental if you’re in an accident. I’m not saying these employees are wrong. But you have to be smart. Find out what’s covered under your policy (normally, your credit card takes care of almost everything). And remember: These policies often account for a hefty portion of a car-rental company’s profits. So while these add-on insurance policies can be useful for you, they’re even more useful to the rental company. Specifically, its bottom line. Estimated savings: about $20 a day.

8. Don’t order room service or laundry. Both are woefully overpriced. Room service bills come with a service charge of between 10% and 15% (“for your convenience”). And you could buy new clothes cheaper than you could have your laundry cleaned. Talk about a rip-off. Instead, eat in a restaurant and visit a Laundromat. Some hotels have laundry facilities on premises that are far less expensive. Estimated savings: between $5 and $10 a day.

9. Don’t use a hotel phone. Don’t even think about picking up the in-room phone unless it’s ringing. Instead, use your cellular phone. Why? Hotels mark up the phone bill by 100% or more. Oh, and that “deal” with free local calls? Check the fine print, because sometimes, calls of more than 20 minutes — even local ones — get billed at a different rate. Estimated savings: about $5 a day.

10. Don’t pay for anything that you can get for free. That includes, but isn’t limited to, hotel shuttle buses (much better than a pricey cab), breakfast (many hotels offer complimentary meals), dinner (check out the concierge floor, where hors d’oeuvres are on the house) and entertainment (the in-flight TV is free on JetBlue and Song). Only the tourists pay, because they don’t know any better. Estimated savings: depends on length of trip.

Cut Prices in a Sluggish Economy? No Way

Q: This economy is really starting to affect my business. Business is down. People around here seem to be staying at home and not shopping. I’m thinking of cutting prices to bring people in. What do you think?

A: Don’t do it. Seriously, cutting prices seems to be the first thing entrepreneurs think about when the economy heads into a downturn. The reasoning is that this is the only way to combat the fact that consumers, clients and businesses are spending less. Generally, however, this is not a smart strategy. It sends a bad message to your customers-they’ll likely think you’ve been overcharging them all along. Or that you’re desperate, which will make them wonder if your business is about to go under and if they should start doing business elsewhere.

If you cut prices, your customers may sit around, waiting for you to discount once (or twice) again before actually buying. Another danger is once the recession ends, your clients may object to your newly raised prices. You also don’t want to start a price war with your competitors where all players are likely to suffer. And finally, unless you cut your costs as well, cutting your prices will just lead to lowered profitability. And that’s a formula for disaster.

So what should you do? First, focus on value. Why do your customers do business with you? Do they come to you for discount prices, personalized customer service, cutting-edge offerings, products they can’t find elsewhere, convenience, innovative thinking or what? If you’re known, like Walmart, as a low-price leader in your city or industry, then you do need to maintain that mantle and cutting prices might be the best solution for you. If lower prices are not your value proposition, then move on.

Is there an added value component of your business that you can offer customers that won’t cost you much? If you own a retail business, could you have a service like free gift wrapping? A restaurant might offer a discounted appetizer or beverage with the purchase of two meals. An accountant might throw in a free financial assessment, while a marketing company could add a discount to a service to clients who purchase a whole package. A seminar, webinar or workshop could have broad appeal to all types of customers and clients.

Another possibility is to bundle some of your offerings (this works best for service entrepreneurs) and offer tiered packages priced accordingly. Think airline loyalty programs. Those who purchase the platinum package get more choices than those buyers who opt for the gold or silver packages. Or you could simply offer customers a discount in exchange for a long-term contractual commitment. You also might consider adding a new line or service offering-one that you can charge a little less for. It should be different enough from what you already sell, so you don’t cannibalize existing sales.

In times like these, it’s especially important to hang on to your current customers. So make sure whatever discounts you offer to new clients, you extend something equivalent to your existing customer base. Or provide incentives for contract extensions.

A recent survey from TNS Retail Forward said that consumers have changed their shopping habits in order to save money on gas. Over 25% of people have increased their online shopping, so if you don’t have a Web site, start building one immediately.

Before you resort to lowering prices, look for other areas in your business where you can shore up your financial situation. Are you current on collecting your receivables? In times like these, all businesses need a solid collection strategy. You might offer small discounts for timely payments. Check your budget often and look for other inefficiencies. Is your phone plan the best? Can you cut back on travel? Negotiate a better deal on rent? Hire interns or part-timers? Are you using energy-efficient lighting and equipment?

If you lower your prices, you’re going to have less money to reinvest in your business. You want to make sure you have enough cash flowing in to retain your good workers, keep your insurance coverages, pay the bills, build a cash reserve, update your technology, continue to innovate and not stay awake every night awash in fear.

And like I advised several months back, you want to make sure you have enough cash to maintain (or maybe even increase) your marketing budget. Smart entrepreneurs take advantage of recessions and try to do more than survive. If you hold tight to your pricing strategy and do more to increase your customers’ experiences, you can actually thrive.

The Insurance Basics: Property, Liability and People

Most people are familiar with the “everyday insurance” triad: automobile, home and life. Unfortunately, that familiarity often doesn’t extend to the multifaceted fourth leg of the insurance chair for many: business insurance. If you run a small business, what you don’t know about business insurance can hurt you. The terminology used by the insurance industry often is overwhelming, but basically there are three types of insurance for your business: property, liability and people. Here’s a look at all three.

Property: covers building losses

Basic property insurance covers your business against unforeseen losses due to fire, lightning, vandalism and other mishaps. Optional coverage can also be obtained (at additional cost) to cover against less likely events such as earthquakes and floods.

Property policies essentially fall into two groups. A “named-peril” policy will cover certain losses resulting only from causes that the policy identifies. An “all-risk policy” covers any type of loss except for those specified in the policy. The difference is important — one policy specifies what it will cover, while the other identifies losses that it won’t. So pay close attention to these details. Once you decide what sort of protection you need, think about what items you will need to cover. This checklist is not comprehensive, but it contains items worth considering:

  • Buildings, whether owned or leased
  • Inventory and supplies
  • Machinery and boilers
  • Office equipment, including furniture, computers, printers and fax machines
  • Valuable accounting and other paper records
  • Automobiles, trucks and construction equipment
  • Intangible property such as trademarks

Since it’s a good idea to buy insurance based on replacement value, it’s necessary to take stock of your business and list the items that you have, along with their replacement values. Make sure you look beyond the obvious, such as notebook PCs and signs not attached to a building. Once you have the list, decide exactly what items are worth insuring and make sure they are covered by the policy.

Liability: gives you legal protection

Liability insurance provides coverage in case your business is sued for something it did — or didn’t do — that resulted in property damage or injury to someone. This type of claim is common these days, given the extensive number of lawyers offering contingency fees for their services (if they don’t win, you don’t pay).

One classic example is someone who slips and falls on your premises and sues for the loss of income (and possibly medical problems) while they were unable to work. Liability insurance covers the cost of damages awarded to the injured party, as well as the costs associated with your defense in a lawsuit. Consider these guidelines to determine the amount of coverage. One way is to use a recent liability settlement in an industry related to yours as a guide. Another option is to base coverage on your business’s total assets. Check with your trade association and your insurance broker before making final decisions.

Many insurance companies offer broad coverage in a single policy by combining property and liability insurance coverage into a business owner’s policy. Unfortunately, it may not be adequate is some cases. For example, it may suffice for a two-person computer consulting firm, while a restaurant with a lot of customer traffic may need more extensive liability coverage.

Note, too, that liability coverage will not protect you against claims for nonperformance of a contract. That’s covered by professional liability or “errors and omissions” insurance. If you’re in the engineering consulting business, for instance, you’ll want to look into this. (Check out techinsurance.com for an explanation of the coverages in this area.)

Wrongful termination of employees, sexual harassment and race or gender based lawsuits are generally covered by employment practices liability insurance.

People: health and workers’ comp

A health plan covering the medical and dental needs of your workers is optional. Workers’ compensation insurance, on the other hand, is state-mandated coverage for injuries and illnesses that are job-related, and required by employers in every state except Texas. A workers’ compensation policy may pay medical, disability income, rehabilitation and also death benefits.

It’s important that you check with your state’s labor department for its definition of “employee.” It can include a full-time, 40-hour-a-week person as well as someone who works only a few hours a week.

Choosing an insurance agent or broker

It’s never wrong to admit that you may need help in selecting the best insurance coverage for your business. That can come from either an insurance agent or a broker. An insurance agent represents an insurance company and sells only products from that firm. A broker, on the other hand, represents more than one company and is free to suggest any number of solutions.

When selecting an agent or broker, The National Federation of Independent Business recommends that you not limit your search to the phone book or onlinedirectories. Ask for referrals from other business owners, particularly those with insurance needs comparable to yours.

Make sure the agent you choose has professional accreditation, such as the CPCU (Certified Property and Casualty Underwriter) or CIC (Certified Insurance Counselor).