The Difference Between Managing And Directing

managingLet me tell you a tale of business.

A small businesses starts out as a one man show, just a guy who “bought himself a job.” Let’s call our guy Bob. Bob’s got no one to manage and nothing to direct. Just do the work; go home; repeat.

And then it happens: Bob succeeds. Bob’s business starts getting busy, really busy. It’s a nice problem to have but it’s a problem all the same.

Bob realizes something has to give. So he hires Mark. Now Bob is no idiot. He makes sure that Mark is the kind of guy who can handle himself. As a result, things get busier yet.

Feeling he is now getting pretty good at this hiring thing, Bob brings on Jim. Jim is no slouch either, so everything is going to be great. Except it’s not. There are conflicts and details are being overlooked. Customers aren’t as satisfied as they once were. In short, hiring Jim has lead to more headaches.

It’s not that Jim was a bad hire. It’s just that the dynamic has changed. There didn’t used to be any need for coordination. Resources didn’t need to shared. There was nobody to step on anyone else’s toes. Bob realizes that he needs to start managing.

Managing is a completely new skill set for Bob. Bob may be great at what he does but that doesn’t guarantee that he is great at passing on his skills, either with training or documentation. He always did things intuitively but now he has to consciously create systems. But it’s Bob’s company so he sucks it up and starts to learn.

Mark and Jim put up with Bob in his new role as a neophyte manager. It seems like there is a bunch of unnecessary overhead and regulation. Bob’s occasional indecision is disruptive. But hey, it’s a job. Bob’s a good guy, they reason. He’ll figure it out. In our story, he does.

Bob the Worker Has Morphed Into Bob the Manager

Bob has now learned how to go from worker to manager so as the business continues to expand, he starts grooming Mark and Jim for more responsibility. After all, he reasons:

“I was able to step up, so can they.”

Mark and Jim have an easier time of it than Bob. Since Bob laid the groundwork, they just need to learn how he has been doing everything. Bob feels a sense of relief that he finally has some help in shouldering all the management responsibility. Everything will be wine and roses from here on out, he figures.

Except. . .

Mark and Jim still seem to need to be managed. So he tells them how to do their jobs on a daily basis. He assigns tasks like he always used to. Mark and Jim don’t feel comfortable making decisions in this arrangement. So they are always going to Bob for approval on matters big and small. Bob is getting more and more frustrated because he feels like he is doing three jobs, his own and Mark’s and Jim’s.

Bob realizes that the problem isn’t Mark and Jim. Bob’s problem is Bob. He knows he needs to let Mark and Jim do their jobs. He gave them more responsibility but what he failed to give them along with it was authority. Now Bob gets scared. Giving away responsibility seemed okay, but authority What if they make a mistake

Let’s Stop Our Story for a Moment

Do you see what is happening here Bob got good at what his business does before our story began. He learned how to manage as our story unfolded. But if this story is going to continue, Bob has another learning curve to master: learning to direct.

Management has to do with tasks. It is about how to do things, when to do things, and who does those things. It is about delegation, all surrounding the accomplishment of tasks.

You can manage schedules. You can manage materials. You can even manage workers. But it turns out you cannot manage managers.

The reason you can’t manage managers is because the minute you do, they stop being managers themselves. Lots of companies call some of their employees managers. But when you examine how things work operationally, you see that they are not truly managing. The issue is usually not a failure on the part of these would-be managers. No, the problem is they are not allowed to manage.

Bonafide management has two key characteristics: responsibility and authority.

Responsibility can be imposed and it must also be accepted. This usually happens without much fuss. But authority is a different matter. People can be rather stingy about handing out authority. If you want a manager to succeed, it is a necessity that they receive enough authority to carry out their responsibilities. When management fails, it can often be attributed to the lack of adequate authority.

Let’s say that a manager is giving the requisite amount of authority to do their job. So what is their boss supposed to do The new job of their boss is to direct. How does that differ from managing

Directing has to do with outcomes. It is about defining results, setting time tables, and providing resources. It is about communicating and mentoring, all surrounding the accomplishment of goals.

A good manager gets workers to do things right. A good director gets managers to do the right things.

It’s not really any harder to direct than to manage but it does require a different mindset. Most managers who rise to become directors could direct. The question is, will they Will they stay in that comfortable place of managing or will they make the hard choice to delegate authority and then support their managers

Bob is at that crossroads. He has had to step up before. How will his story continue Will Bob rise to this new challenge and become the kind of director that every manager hopes for Or will he neuter Mark and Jim and never really cede to them the control they will need to step into their new roles

You are Bob

It is up to you to write your own ending. Of course, it never ends. Business is of an ongoing nature. So do what needs doing, manage what needs managing, and direct what needs directing.

Businessmen Photo via Shutterstock




Become a Marketing Powerhouse With Vocus All-in-One Marketing Suite

Online marketing can be a difficult area for many business owners due to the fact it is a vast field which requires constant attention to ensure everything is functioning properly.  From social networks, email campaigns, and traditional search management, ensuring everything is working smoothly can be a full-time job at times. Fortunately, the leading marketing firm Vocus is now offering an all-in-one marketing suite for small business owners which integrates social, search, publicity, and email, all in one application to streamline the business owners marketing workflow.

In terms of social signals, the Vocus suite allows businesses to pinpoint social media users looking for products similar to what is offered by their company and then allow the company to directly engage the lead. Vocus provides customers with a powerful social media management panel within the suite, which allows tracking of metrics such as word clouds, influential tweeters, tone of the conversations surrounding a brand, and much more. All these features are accessible from a simple to use interface.

Email marketing is another crucial area for virtually all business owners to get solid returns. According to Vocus, in 2011 the average return on investment (ROI) for email was $40.56 for every $1 spent on email marketing. In 2012, email accounted for over $60 billion in sales. Although the market is filled with many tools claiming to offer email marketing services, the marketing suite by Vocus provides an effective way for users to manage subscriptions, target and segment lists, amplify messages, create professionally designed emails, and set up auto-responders while tracking their success.

A crucial  area which the Vocus marketing suite assists with is local marketing. By helping to streamline getting businesses listed on all major local business listing sites from a central location ensures that businesses are visible and  are able to keep the information accurate since Vocus provides control from a single location rather than the usual scenario of a business paying a firm to scour the internet for listing sites and then update the information accordingly.

Finally, Vocus provides customers with the ability to promote their press releases to a network of over 30,000 journalists so when a company launches a new product or service, they are instantly able to get the word out to existing customers and  journalists covering the beats pertaining to the companies offering.

Aside from all these features being packaged in a central website, Vocus also provides users with mobile capabilities allowing them to manage their marketing campaigns while on the go. Does this offering mean that you no longer need to retain a marketing firm to handle your companies marketing efforts Overall the service is very promising and is worth a shot, however as every business is different the decision must be made on an individual basis.



Vormetric launches new Vault certificate and key solution

Vormetric has launched a storage solution for the protection and management of digital certificates, encryption keys and password files.

According to the company, the Vormetric Vault is FIPS 140-2 certified and is integrated with the Vormetric Data Security Manager, which provides centralised key and policy management and can be clustered for high availability.

Vormetric Vault automatically notifies IT staff when vaulted objects are about to expire and require renewal, to prevent application downtime from expiring certificates, the company said.

Ashvin Kamaraju, vice president of product development for Vormetric, said: “Even the strongest form of encryption cannot protect data if the keys are stolen, and expired certificates can make data inaccessible, leading to frustration and costly downtime.

“Vormetric Vault mitigates the risk of stolen encryption keys or expired certificates in one automated, easy-to-use solution that takes the guess work out of managing and securing large numbers of these objects.”



Java security lead admits problems in platform and need to improve communications

After a widely reported zero-day vulnerability affecting Java and another rumoured to be trading for $5,000, Oracle has admitted that there has been a "relative silence on the issue" around Java security.

Reza Rahman, technology evangelist at Oracle, said in a blog that there has been a veritable media firestorm around the recent Java vulnerability.

In a recent recording of a conference call, Milton Smith, security lead for Java, said that the priorities were "to get Java fixed up and to communicate our efforts widely". He said: “We really cannot have one without the other, no amount of talking or smoothing over is going to make anyone happy or do anything for us.

“We have to fix Java, and we have been doing that, and there are some things that are visible to the public as far as the number of changes and CPUs, as well as some security changes we added. A lot of the things that we are looking into are in relation to Java in the browser, as that is where we have seen most of the weaknesses.”

Speaking about ‘the communication plan', Smith said that there are plans but it needs to let engineers and its audiences know what is going on. “It is often frustrating for us to get a message out, so after we hit all the approvals, often understanding how to get a message out is challenging,” he said.

“I know communications has been a big concern for everybody and even internally, we understand that when we need to communicate and are open it is better received for us.”

Rahman said: “Hopefully it comes as some relief that Oracle is now starting to openly speak up on the issue.

“We can expect this to be the tip of the iceberg of what will be done on the Java security and communication fronts.”

Andrew Storms, director of security operations at nCircle, said: “Oracle's public admission that they have a security problem with the Java browser plug-in is a step forward. It's good to finally see Oracle acknowledge the seriousness of the situation. Unfortunately, we needed this admission a year ago before its customers started losing trust in Java security. Now Oracle has a very steep credibility hill to climb.

“The content in the Java security discussion was pretty lacklustre. You've got to wonder what role the Oracle press team has had in the company's response to all the security criticism they've had lately. I felt bad for the people representing Oracle on this call because they didn't sound well prepared. They didn't sound like they have a clear idea of what to do, what to say or even exactly who they were speaking to.”



3 Reasons To Fire Your Web Developer and Build Your Own Website. 4 Reasons You Need A Web Developer.

Wix website service

Wix website service

Last week I used Wix.com , a “do it yourself” (DIY) web development service to build a website.

I’ve used these DIY type of web services a few times in the past but was always dissatisfied with how complicated they were or how they were TOO simple.

The other problem I noticed is that the templates they offered were lacking - not looking to good (or modern) at all.

Wix.com is different and is one of the best web development services I’ve really played with.

Hat’s off to Jimdo, Intuit Website Builder, GoDaddy, Network Solutions and others who also have web building services.

So here’s what I realized as I was using Wix.com to build a web site.

  1. For basic and simple web sites a web developer is not needed
  2. What you need for today’s web sites, is a smart professional with an eye for good layout
  3. You don’t need a web developer who is simply adding plain vanilla WordPress widgets to your blog - you or your staff can do this

So you might then ask, what do I need a web developer for

You need a web developer for their expertise. Here’s the things a web developer (or online agency) should be hired for:

  1. Ensure your web site is optimized for search engines
  2. Once you outgrow a “simple” web site, a good web developer can customize your web site (menus, colors, navigation, speed)
  3. Your web developer can serve as a consultant to help you ensure you reach your online goals (sales clicks track)
  4. Make your web site LOOK good. Sometimes it takes a professional web designer to make a web site that looks great. You can only do so much yourself.

So if you’re paying lots of money for a web developer who is a glorified typist - save your money and fire your web developer. However, if you want to leverage your web site (and other online content) to GROW YOUR BUSINESS (video, ecommerce, social media and more) a web developer can help tremendously.



7 Reasons You Should Switch to Google Apps

google appsLate last year, Google Apps for Business eliminated its free version.

The reason

Many business users tended to outgrow the basic version too quickly and personal users were left waiting on updated features that had to become business ready before launching.  But even with the new price tag, Google remains a viable option for small business.

Below, I outline the top reasons your business needs to be on Google Apps:

1. The Cloud

2012 was the year of the cloud and 2013 is carrying the momentum. With that momentum, businesses see the opportunity that Google Apps presents. In fact, according to International Data Corporation analyst Melissa Webster, Google will gain momentum this year because there’ll be a lot of collaboration and content in the clouds.

Just to be clear, however, Microsoft does offer an updated set of Office Web Apps, accessible to individual users from their SkyDrive accounts, and to business users through Office 365 and SharePoint. Though the Microsoft Apps show promise, the Google Business Apps have a tad bit more functionality.

2. Price

Google Apps is less expensive than Microsoft Office 365. Whereas, Google costs only $50 each user per year while Office 365 costs $72 per user per year. It even has more features added since Google started offering the application to the public. Office 365 charges more if a user adds other options.

3. Google+

Google+ has been slowly making a name for itself. Though, it’s no where near Facebook, it’s nothing to sneeze at either. As of October 2012, the site attracted 105 million users compared to 65.3 million in October 2011, a 60.9% increase.

The main features small businesses can use to get the best out of Google+ is Integrated Google Hangouts.

Google + hangout for Google Aps

Google plus hangout

4. Google Voice

Through 2013, all domestic calls made through Gmail will be free. It’s becoming a tradition just like at the end of 2011 and 2010.

Google voice for Google Apps

Google Voice has already had video chat integrated into the service; this competes with video calls made through Skype, Yahoo Messenger, Windows Live Messenger, and other chat services. Adding free local and low-price international calls will be attractive to users who can easily launch a voice call from within Gmail if video isn’t an option.

5. Google Apps Vault

Vault is an easy-to-use and cost-effective solution for managing information critical to business and preserving important data. It helps in reducing the costs of litigation, regulatory investigation and compliance actions.

Since businesses of all size need to be prepared for the unexpected-using Vault to manage, archive and preserve your data is a big help. Litigation costs can really take a toll on a business and even minor lawsuits can run up to many thousands of dollars. Vault adds archiving, e-discovery, and information governance.

This service is optional and is an additional $5/user/month.

6. Google Consumer Survey

Now I have to say that this is NOT part of Google Apps per se, but it’s too useful to NOT include. Google takes free online surveys, that you can create through Google docs, and brings it one step further. With Consumer Surveys, site owners create online surveys to be shared with Google’s publisher network and pay as little as $.10 per response. To target a specific demographic, it would be $.50 per response.

Google Consumer Survey

With the data, Google will provide charts summarizing responses, insights and highlight interesting differences, which can be segmented by age, gender, location, etc.

7. Google Maps Coordinate

Again, like Google consumer survey, this is not part of Google Apps. But it’s useful so I had to include it. If your business has workers on the go, Google Maps Coordinate combines the power of Google’s mapping technologies with modern smartphones to help you improve communication with employees in the field.

The idea is that if you can visualize where your employees are at, you can better deploy them. Employees, in turn, can update the status of their jobs and watch for new assignments via the mobile app.This is extremely relevant as IDC estimates that there will be more than 1.3 billion mobile workers by 2015 (37.2% of the total workforce).

Can you understand why I had to include it

What are additional reasons can you think of to switch over to Google Apps




Small Business Events Roundup: InfusionCon, GROWCO, Crowdopolis NYC + More - January 28

Welcome to this week’s roundup of events, conferences and webinars for growing companies and entrepreneurs, brought to you every other week by Small Business Trends and Smallbiztechnology.com.

Get a jump on the new year and register for one or more of these great conferences, webinars and seminars in 2013.

If you are organizing a great event that small businesses should know about or just attending one, please let me know about it.

******

2013 Women Entreprenuers’ Small Business Boot Camp
February 7-9, 2013, Scottsdale, AZ

Join ASBA and Women Entrepreneurs Small Business Boot Camp to soak up the knowledge and experience of fantastically successful local business experts who will share relevant, valuable tricks, tips and tools to help your business grow and make money.

Crowdopolis New York 2013
February 27-28, 2013, New York City

Learn how Fortune 500 Corporations are using crowdsourcing to out-innovate, out-process, & out-engage their competition. Companies like GE, Microsoft, Walmart, eBay & many others.

Produced by the leading voices in crowdsourcing, David Bratvold and Daily Crowdsource, Crowdoplis was created to show both corporate leaders and small businesses that crowdsourcing is replacing outsourcing to translate millions of words in mere minutes, invent products that sell out before any costs are incurred, and create national award winning TV commercials for $20.


SMX West
March 11-13, 2013, San Jose, CA

The landscape of search and search engine marketing changes constantly.
To keep up, stay ahead, grow your business, and get more (and better) traffic to your site, you need the right help.
Search Marketing Expo is a conference that offers more than 50 cutting-edge sessions (as well as invaluable networking opportunities) covering the search marketing strategies and tactics you’ll need to thrive in 2013 and beyond.
Whether you are a beginner or a search marketing expert, whether you work at (or with) an agency or manage search marketing in-house, SMX West has programming to fit your needs.

InfusionCon 2013
March 27-29, 3013, Scottsdale AZ

InfusionCon is a must-attend event for all Infusionsoft customers. There are a variety of sessions geared towards business owners, marketing and sales strategists, developers, administrators and more. Session topics cover a diverse range of topics relevant to small businesses, including Infusionsoft training, marketing strategy, social media, company culture, business management, automation, branding, copywriting, affiliate marketing and more.

Social Media Marketing World
April 7-9, 2013, San Diego, CA

Join 1,000 fellow marketers at the mega-conference designed to inspire and empower you with social media marketing ideasâ€"brought to you by Social Media Examiner.

Inc. GROWCO
April 11-12, 2013, New Orleans

Inc. created GROWCO, a three-day conference, for business leaders who want brass tacks advice to achieve the next level of growth. GROWCO speakers include founders and CEOs of fast-growing companies, icons in the business community, and authors of definitive business tomes. Learn how to develop a vision, manage a team, create a brand, get the most for your marketing dollar, connect with customers, close deals, and find capital.

2013 Black Enterprise Entrepreneurs Conference + Expo
May 15-18, 2013, Columbus OH

The Black Enterprise Entrepreneurs Conference + Expo attracts more than 1,200 attendees annually. Entrepreneurs from all over the country come together to take in everything the conference has to offerâ€"from informative sessions, high-powered speakers, networking opportunities, to essential tools for emerging and established entrepreneurs. As the country’s premier business conference and networking event for African American entrepreneurs, corporate executives, and professionals, The Black Enterprise Entrepreneurs Conference is the only venue where leaders of the nation’s largest black-owned businesses gather at one place, one time, and with one purpose.

Web.com Small Business Forum
Various locations and dates in 2013 including:
Lafayette, LA March 21, 2013
Midland, TX April 11, 2013
Valdosta, GA April 25, 2013 … and more

Web.com will be traveling to cities near you during 2013, in partnership with SCORE, for 2-hour sessions designed to help local small businesses learn how to successfully market their businesses online. Various dates and cities during the year. Sessions are free.

The Small Business Expo
May 16 - New York
June 20 - Dallas
October 17 - Boston
November 7 - Los Angeles
January 16, 2014 - Miami

Small Business Expo is the largest nation-wide B2B tradeshow, conference & networking event for Small Business Owners. Business Owners browse & meet in our huge exhibition hall filled with exhibitors showcasing valuable products & services to help their businesses grow, attend small business workshops, seminars & meet-ups, network with other small business owners & entrepreneurs in the cyber lounge & speed networking areas, & watch exciting product demos.

Internet Week New York
May 20-27, 2013

Since 2008, Internet Week has taken place all over the city, thanks to our many partners hosting diverse events in different locations.The result is a critical mass of web-focused events that raises the profile of NYC’s industry as a whole, as well as the partners who participate.

2013 Black Enterprise Entrepreneurs Conference + Expo
May 15-18, 2013, Columbus OH

The Black Enterprise Entrepreneurs Conference + Expo attracts more than 1,200 attendees annually. Entrepreneurs from all over the country come together to take in everything the conference has to offerâ€"from informative sessions, high-powered speakers, networking opportunities, to essential tools for emerging and established entrepreneurs. As the country’s premier business conference and networking event for African American entrepreneurs, corporate executives, and professionals, The Black Enterprise Entrepreneurs Conference is the only venue where leaders of the nation’s largest black-owned businesses gather at one place, one time, and with one purpose.

Internet Week New York
May 20-27, 2013

Since 2008, Internet Week has taken place all over the city, thanks to our many partners hosting diverse events in different locations.The result is a critical mass of web-focused events that raises the profile of NYC’s industry as a whole, as well as the partners who participate.

To find more small business events, contests and awards, visit our Small Business Events Calendar.

If you are putting on a small business contest, award or competition, and want to get the word out to the community, please submit it through our Events & Contests Submission Form. (We do not charge a fee to be included in this listing â€" it is completely free to list your event.) Only events of interest to small business people, freelancers and entrepreneurs will be considered and included.



9 Small Business Marketing Practices Making a Big Splash in 2013

What newer, technology-fueled small business marketing practice do you think is going to make the most buzz in 2013 and why

The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

1. Photos

With visual platforms like Instagram and Pinterest getting so much attention, businesses are going to want to know how to use these to connect with their audiences in more sophisticated ways. This means that marketers will begin posting ‘how to’s', hosting webinars, and selling packages to help them with demand for better brand imaging.

- Caitlin McCabe, Real Bullets Branding

2. Metric-Based ESPs

Metric-based email service providers have really started to come into their own and have become much easier to implement as of late. I’m not talking about just sending emails, I’m talking about sending an email based off of actions your users take. So if they haven’t been visiting your site for a week you can email them saying, “Hey come back!”

- Liam Martin, Staff.com

3. Data-Driven Markteting

2013 will be looked at as the year that marketing became less about the anachronistic “Mad Men” creative types and will instead be driven by the “Math Men” who relentlessly optimize their messaging. Much the way Billy Beane’s stats driven culture change the way baseball operates, you can see the roots of similar transformation in marketing all around.

- Erik Severinghaus, SimpleRelevance

4. Gamification

Forget search engines, social marketing, and paid advertisements. It’s now all about how to influence consumer behavior through game mechanics. Gamification leads to more loyal customers, more customer referrals, and positive brand association, which are current challenges that many brands face. I expect 2013 to be the year Gamficiation consultants become the new “it” title on LinkedIn.

- Jun Loayza, Passport Peru

5. Localized Content

When we think “localized” content today, we think global websites that customize their offerings for each country or market. What marketers will be doing soon is refining that same process for more specific geographic regions. For example, businesses will not only create landing pages for their advertising campaigns, but may deploy IP logic to serve up different versions for each city and state.

- Logan Lenz, Endagon

6. Hypertargeting

Hypertargeting is here, and it’s here to stay. While the Romney campaigns ‘Orca’ system didn’t make the big splash they hoped it would â€" others are faring much better. Companies like Gil Elbaz’ Factual are a testament to this- serving up rich, accurate data to thousands of business eager to understand their customers better.

- Nanxi Liu, Enplug

7. Things That Can Be Meme-fied

Major brands will successfully release ads and images with the express purpose of remixes, memes, and more coming from them. It’s an increasing lack of control â€" but, for the right product/campaign, lack of control can lead to enormous reach.

- Derek Flanzraich, Greatist

8. Personalization

Personalization, the practice of tailoring messaging and choices to consumers based on their unique characteristics or purchase histories, is going to be the shining star of marketing in 2013. Not only does personalization promise higher ROI on advertising spends, now more than ever, there are also new technologies that marketers can deploy for personalizing emails, sites and in-store experiences.

- Doreen Bloch, Poshly Inc.

9. Mobile Tools for Small Biz

I’m anticipating an explosion of mobile tools, especially brandable and customizable mobile apps, to help connect and provide selling opportunities to the digital communities and blog readers of small businesses and independent entrepreneurs in 2013. But whether its big or small biz, mobile will remain a major focus of marketing and business innovation throughout 2013 and beyond.

- Dave Ursillo, The Literati Writers



Small Business Owner: The IRS Says You Are Tax Cheat

tax cheatSmall business does a lot for America, accounting for roughly half of private sector GDP and employment.

Their economic contributions probably account for part of the reason that small business is our country’s most trusted group. A recent Pew Foundation survey revealed that 71 percent of Americans held a positive view of small business, 8 percentage points higher than churches and religious organizations and 10 percentage points higher than colleges and universities.

But small business owners aren’t saints. They are also America’s top tax cheats, according to Internal Revenue Service (IRS) taxpayer advocate Nina Olson. Not all of them, of course, but, on average, small business owners are much more likely than other Americans to underpay their taxes.

Their cheating is substantial. The IRS reported that the United States Treasury faced a tax gap - the amount it was owed less what it was paid - of $385 billion in 2006, the most recent year data are available. The largest chunk of this gap - $122 billion - is unreported business income on individual income tax returns.

But just as we shouldn’t look at the Pew Foundation survey and think that more trustworthy people become small business owners than politicians, bankers, ministers or college professors, we shouldn’t look at the IRS figures and conclude that dishonest types start companies. Small business owners aren’t less honest than the rest of us. They are just better able to get away with cheating on their taxes.

People don’t under report their wages because their employers report their earnings to the IRS. Knowing that, the IRS knows what’s in your paycheck keeps most people from lying about the amount they are paid. Therefore, only 1 percent of wages go unreported.

By contrast, the IRS has no idea how much cash sole proprietors are taking in. That’s why the IRS estimates that a whopping 56 percent of sole proprietors’ cash receipts are not disclosed to the tax authorities.

The IRS doesn’t think checking up on most small businesses is worth their time. While they regularly audit giant corporations like Apple or General Motors, coming through the records of a bunch of tiny companies doesn’t yield enough unpaid taxes to justify the costs.

A small business owner earning $155,000 per year faces an average tax rate of 20.5 percent, the nonpartisan Tax Foundation tells us. If the IRS catches the business owner under reporting income by 25 percent, that yields only $7,800 in lost income. Therefore, it’s not surprising that the IRS audits only 1 percent of taxpayers earning less than $200,000 per year, but 12 percent of those earning more than $1 million.

Moreover, the IRS knows that a chunk of small business under reporting isn’t deliberate. It comes from the difficulty of figuring out what one actually owes. Fear of punishment might motivate small business owners not to purposefully misstate their income, but it does little to help them calculate the right numbers under a maddeningly complex tax code.

Finally, our elected officials inadvertently preserve small business tax cheating when they try to avoid burdening small business owners with costly tax reporting requirements. The IRS and many tax experts explain that small business owners would reduce under reporting if third parties provided the IRS with more information. But Congress has repeatedly voted down third party reporting requirements for small businesses as too burdensome.

Whatever the combination of causes, a recent New York Times article summed up the outcome succinctly. The best way to cheat on your taxes is to “run your own company. More specifically… be the sole proprietor of a Schedule C business.”

Hiding Money Photo via Shutterstock




Small Business Owner: The IRS Says You Are Tax Cheat

tax cheatSmall business does a lot for America, accounting for roughly half of private sector GDP and employment.

Their economic contributions probably account for part of the reason that small business is our country’s most trusted group. A recent Pew Foundation survey revealed that 71 percent of Americans held a positive view of small business, 8 percentage points higher than churches and religious organizations and 10 percentage points higher than colleges and universities.

But small business owners aren’t saints. They are also America’s top tax cheats, according to Internal Revenue Service (IRS) taxpayer advocate Nina Olson. Not all of them, of course, but, on average, small business owners are much more likely than other Americans to underpay their taxes.

Their cheating is substantial. The IRS reported that the United States Treasury faced a tax gap - the amount it was owed less what it was paid - of $385 billion in 2006, the most recent year data are available. The largest chunk of this gap - $122 billion - is unreported business income on individual income tax returns.

But just as we shouldn’t look at the Pew Foundation survey and think that more trustworthy people become small business owners than politicians, bankers, ministers or college professors, we shouldn’t look at the IRS figures and conclude that dishonest types start companies. Small business owners aren’t less honest than the rest of us. They are just better able to get away with cheating on their taxes.

People don’t under report their wages because their employers report their earnings to the IRS. Knowing that, the IRS knows what’s in your paycheck keeps most people from lying about the amount they are paid. Therefore, only 1 percent of wages go unreported.

By contrast, the IRS has no idea how much cash sole proprietors are taking in. That’s why the IRS estimates that a whopping 56 percent of sole proprietors’ cash receipts are not disclosed to the tax authorities.

The IRS doesn’t think checking up on most small businesses is worth their time. While they regularly audit giant corporations like Apple or General Motors, coming through the records of a bunch of tiny companies doesn’t yield enough unpaid taxes to justify the costs.

A small business owner earning $155,000 per year faces an average tax rate of 20.5 percent, the nonpartisan Tax Foundation tells us. If the IRS catches the business owner under reporting income by 25 percent, that yields only $7,800 in lost income. Therefore, it’s not surprising that the IRS audits only 1 percent of taxpayers earning less than $200,000 per year, but 12 percent of those earning more than $1 million.

Moreover, the IRS knows that a chunk of small business under reporting isn’t deliberate. It comes from the difficulty of figuring out what one actually owes. Fear of punishment might motivate small business owners not to purposefully misstate their income, but it does little to help them calculate the right numbers under a maddeningly complex tax code.

Finally, our elected officials inadvertently preserve small business tax cheating when they try to avoid burdening small business owners with costly tax reporting requirements. The IRS and many tax experts explain that small business owners would reduce under reporting if third parties provided the IRS with more information. But Congress has repeatedly voted down third party reporting requirements for small businesses as too burdensome.

Whatever the combination of causes, a recent New York Times article summed up the outcome succinctly. The best way to cheat on your taxes is to “run your own company. More specifically… be the sole proprietor of a Schedule C business.”

Hiding Money Photo via Shutterstock




Anonymous launches \'Operation Last Resort\', with hits on US government websites

In a further protest over the death of Aaron Schwartz, Anonymous hit the websites of the US Department of Justice and Sentencing Commission at the weekend, with a threat to leak sensitive information.

Under the title ‘Operation Last Resort', Anonymous said that it has prepared content that it would like to share with the world, with keys and details posted on Pastebin.

A video was placed on the front page of the websites, saying that when Swartz killed himself two weeks ago, "a line was crossed".

Its video message read: “Anonymous immediately convened an emergency council to discuss our response to this tragedy. After much heavy-hearted discussion, the decision was upheld to engage the United States Department of Justice and its associated executive branches in a game of a similar nature, a game in which the only winning move is not to play.

“With Aaron's death we can wait no longer. The time has come to show the United States Department of Justice and its affiliates the true meaning of infiltration. The time has come to give this system a taste of its own medicine. The time has come for them to feel the helplessness and fear that comes with being forced into a game where the odds are stacked against them.

“Through this website and various others that will remain unnamed, we have been conducting our own infiltration. We did not restrict ourselves like the FBI to one high-profile compromise. We are far more ambitious, and far more capable. Over the last two weeks we have wound down this operation, removed all traces of leakware from the compromised systems, and taken down the injection apparatus used to detect and exploit vulnerable machines.”

It warned that an AES-256 encrypted file has been quietly distributed to numerous mirrors over the last few days, and is available for download.

Jim Walter, manager of the McAfee Threat Intelligence Service for the Office of the CTO, said: “This release is the referred-to ‘warhead'-specifically ‘Warhead-US-DOJ-LEA-2013.AEE256'. The ‘trigger key' referred to in the video is the decryption key for the content. Anonymous also indicated that it will, at some interval, release heavily redacted previews of the decrypted content. As of this writing, these have not emerged. We have, however, seen some fake decryption keys making the rounds.”

Richard McFeely, executive assistant director of the criminal, cyber, response and services branch at the FBI, said in a statement that "we were aware as soon as it happened and are handling it as a criminal investigation. We are always concerned when someone illegally accesses another person's or government agency's network".



UK joins World Economic Forum cyber resilience initiative

The UK has joined the World Economic Forum's ‘Partnering for Cyber Resilience initiative'.

At the event in Davos, Switzerland, foreign secretary William Hague UK signed the country up to the initiative that aims to build secure, resilient digital networks and raise awareness and understanding of cyber issues across the world. Launched last year, the initiative has attracted signatures of over 70 companies and government bodies from 15 sectors and 25 countries.

Hague said: “We hope that signing the ‘Principles on Cyber Resilience' will encourage business leaders all over the world to lead the way in creating shared principles for a resilient and thriving internet.

“The internet has a critical role to play as an engine and facilitator of economic growth, cyber space must be secure and reliable so that it is trusted as a medium for doing business but at the same time free and open to evolve and innovate naturally.”

Alan Marcus, senior director for information and communication technology industries at the World Economic Forum, said: “The UK government has been a leading voice in the cyber debate in recent years. It recognises that cyber resilience is a shared challenge for all parts of society. In 2013, we will work with the UK and our other signatories to continue to drive leadership awareness and understanding, and support multi-stakeholder collaboration across the globe.”

Jolyon Barker, managing director of global technology, media and telecommunications at Deloitte Touche Tohmatsu, the sole knowledge advisor to the World Economic Forum on the Partnering for Cyber Resilience initiative, said: “Trust in the digital world is essential for innovation and growth in all industries and sectors, and no one organisation can resolve cyber security alone.

“In our hyper-connected world it is critical now, more than ever, for leaders in business and government to collaborate, share views and commit to jointly finding solutions to defend against cyber risks - a threat that crosses geographical boundaries and industries.

“Widespread adoption can raise business standards and contribute toward the shared common goal of achieving economic stability and prosperity through strengthened cyber resilience. We call on other leaders in business and government to join the forum and its signatories as we move towards a more secure and resilient online society.”



UK joins World Economic Forum cyber resilience initiative

The UK has joined the World Economic Forum's ‘Partnering for Cyber Resilience initiative'.

At the event in Davos, Switzerland, foreign secretary William Hague UK signed the country up to the initiative that aims to build secure, resilient digital networks and raise awareness and understanding of cyber issues across the world. Launched last year, the initiative has attracted signatures of over 70 companies and government bodies from 15 sectors and 25 countries.

Hague said: “We hope that signing the ‘Principles on Cyber Resilience' will encourage business leaders all over the world to lead the way in creating shared principles for a resilient and thriving internet.

“The internet has a critical role to play as an engine and facilitator of economic growth, cyber space must be secure and reliable so that it is trusted as a medium for doing business but at the same time free and open to evolve and innovate naturally.”

Alan Marcus, senior director for information and communication technology industries at the World Economic Forum, said: “The UK government has been a leading voice in the cyber debate in recent years. It recognises that cyber resilience is a shared challenge for all parts of society. In 2013, we will work with the UK and our other signatories to continue to drive leadership awareness and understanding, and support multi-stakeholder collaboration across the globe.”

Jolyon Barker, managing director of global technology, media and telecommunications at Deloitte Touche Tohmatsu, the sole knowledge advisor to the World Economic Forum on the Partnering for Cyber Resilience initiative, said: “Trust in the digital world is essential for innovation and growth in all industries and sectors, and no one organisation can resolve cyber security alone.

“In our hyper-connected world it is critical now, more than ever, for leaders in business and government to collaborate, share views and commit to jointly finding solutions to defend against cyber risks - a threat that crosses geographical boundaries and industries.

“Widespread adoption can raise business standards and contribute toward the shared common goal of achieving economic stability and prosperity through strengthened cyber resilience. We call on other leaders in business and government to join the forum and its signatories as we move towards a more secure and resilient online society.”