Yes, it’s tax time again. As a self-employed business owner, it’s important for me to have a handle on my business and know what is deductible and what isn’t. Invariably at any quilt show when I talk about taxes, someone will tell me they have an accountant. “Terrific,” I say. “But what does she know about your business in particular?” You go to an accountant because she knows taxes. She can be very knowledgeable about small businesses, but she cannot know the nuances of every type of small business. She works with what you give her. That’s why it’s important for you to do your own research, understand tax strategies and keep track of deductions to which you are entitled. Here are some tips for maximizing those deductions.

1. Keep better track of your mileage. I’ve read that when you estimate, you actually underestimate. I use the Quilt Engagement Calendar in conjunction with the trip meter in my car. I set the meter to zero at the start of my trip and then enter the mileage in the calendar at the end, along with a notation as to the purpose of the trip. The IRS doesn’t care how you track your mileage, just that you have written logs. You can also track your public transportation costs in the same log.

2. Group your errands. The IRS allows business owners to deduct business mileage. For 2009, the rate was 55 cents per mile. (For 2010, the rate is 50 cents.) If you have personal errands, do them at the same time as your business errands.

3. Use the per diem rates for meals. The IRS has established per diem, or by the day, allowances for meals that self-employed individuals can use. At your option you can use either the per diem or actual costs, depending on which gives you the greater deduction. I find that in most cases, the per diem is better. Remember, that you can only deduct 50% of the per diem or actual meal costs. For per diem rates, refer to IRS Publication 1542, Per Diem Rates.

4. If you operate as a sole proprietorship, consider hiring your children aged 18 and under. You can get a deduction for their wages (up to $5,700 in 2009), and in most cases your children do not have to pay taxes on the wages. Details: IRS Publication 15, “Circular E, Employer’s Tax Guide.

5. Don’t forget about  professional publications and dues. All the quilt and many other magazines that you buy are deducible if you use them in your business. Your IAPQ dues are also deductible.

6. And, if your books weren’t up-to-date or you are a shoebox records filer, vow to be better in 2010.

For more information, you can refer to IRS Publication 334, Tax Guide for Small Business. Also recommended is 422 Tax Deductions for Businesses and Self-Employed Individuals by Bernard Kamaroff, CPA, which you can find on the PQ Marketplace page of our web site. You can find your discount code on your IAPQ Members Page.

The International Association of Professional Quilters offers resources and networking opportunities for you to create a success from your quilting business. Learn about all the benefits of IAPQ membership here.

We are about to start a New Year. I’m excited about some of the things I have planned. I’m working with a coach to expand the business, and I have some new business programs planned for later in the year. As I look ahead, I can see that I have a lot to accomplish, and I need to stay focused to do that. A lot of you know one of my favorite planning resources is Your Best Year Yet by Jinny Ditzler, and following her process helps me focus. You can read some of the questions she asks on a previous blog post.

I wanted to share three and a half tips to keep in mind as you start the New Year.

1. Set time for yourself in your calendar. I’m sure I’m not the only one who doesn’t take enough time for her or himself. This fall I had knee surgery and was sidelined from my yoga class. I plan to get back in class this winter. And, I want to also set aside time each afternoon for a little self care. It’s important to find a little time here and there to care for ourselves. We’ll feel happier and stronger inside and this will in turn make us happier and stronger business people. One good reference on self care is The Art of Extreme Self Care by Cheryl Richardson.

2. Remember to allow adequate time for marketing. For many, the production is the fun part and the marketing takes a back seat. I’ve had more than one person tell me that she spends two to four times as many hours marketing herself and her product as she does producing the product. Marketing is an ongoing process; you are always marketing. I love this quote from actress Carrie Fisher, “There is no point at which you can say, “Well, I’m successful now. I might as well take a nap.” This keeps me focused on marketing my product.

3. Keep on top of your financials. I know, most people do not enjoy bookkeeping, and if you can hire someone to take it over, that’s great. But watch your numbers. You need to know what’s coming in and what’s going out. What is your ROI (return on investment) for your activities? Your business can’t grow if you aren’t aware of the financials.

3.5 Remember why you got into business. For many of us, it was our love of quilting or fiber arts and wanting to share our gifts with other quilters. Sure, we work hard at it, and we are rewarded. When times get tough, step back and remember what got you in the business. Maybe use some of that self-care time to make something for yourself. Another quote I like is from Thomas A. Edison. “I never did a day’s work in my life. It was all fun.”

The International Association of Professional Quilters offers resources and networking opportunities for you to create a success from your quilting business. Learn about all the benefits of IAPQ membership here.

Everyday brings more news of problems in the economy, and we’ve all been touched by this in someway. In the Winter issue of The Professional Quilter, financial writer David Nagle, wrote an article about surviving, and even thriving, in a down economy. Here’s an excerpt from his article.

Late last year our government officials and most economists concluded something we have known for some while – that our economy is in recession, and it appears to be headed for a prolonged period of contraction. Some of your businesses may be challenged in some way by the economic downturn. It’s important to maintain your composure, stay positive and focus on what is important to your business. While it is important for you to stay realistic about the state of the economy as it may affect you, I suggest you try to tune out the doom, gloom and naysaying that pervades our TV, Internet and newspaper medias.

First, assess how you react when the economy negatively affects your business? Do you:

• Remain optimistic, disregard the impact, assume it will improve, stay the course?
• Heed the bad news, assume the worst, panic, shut down (jump out windows)?
• Try anything, aimlessly run in circles, not knowing what to do?
• Procrastinate, hide from the issues, hope they go away?
• Find a shrink or visit yours more frequently, read self-improvement books?
• Meditate, do yoga, chant, pray more, become more spiritual?
• Increase consumption of your favorite substances (alcohol, nicotine, pain killers)?
• Combinations of the above?

Just to let you know, the list comes directly from my own personal experiences in past economic recessions (1973, 1980, 1990 and 2001). Each option has its pros and cons. If we reflect on our experiences from past recessions, hopefully we can put together a lessons-learned guide for handling the current economic situation. Each of our perspectives on handling an economic downturn will be different depending on our personalities, the unique characteristics of our businesses and our niche in the market. Since the success of our businesses is dependent on our customers, staying closely tuned to their needs will enhance our chance of survival.

My suggestions for weathering the current economic storm include the following:

• Determine and pursue your unique market niche, products and services,
• Assess customers’ needs,
• Develop a business plan,
• Plan your business finances,
• Streamline processes/cut costs/improve products and services,
• Improve skill sets and capabilities,
• Take care of ourselves (our most precious resources).

You can read more of the specifics of David’s suggestions in his article in Issue 106 of The Professional Quilter. If your subscription is not current and you need to renew, or you want to start a new subscription, here’s a link to our order page.