In November of this year, Nevada residents will go to polls to vote; included on the ballot, as question No. 3, is the “Education Initiative” – also called a margin tax. This tax will add a 2-per-cent margin tax on all businesses with over $1-million in revenue in Nevada. Although the topic has been discussed a lot over the past few months, it is still gaining strength – and will until the tax is either dropped, or passed.
According to the Americas for Tax Reform website (www.atr.org), this tax would, in effect, make Nevada’s business tax rate the highest in the West, and almost double the amount of California’s tax rate. The same website says these taxes will affect the everyday person, in the form of higher groceries, electricity and health care, as those businesses try to relieve the tax burden by passing it along to the consumer.
It seems those to be hardest hit with this tax will be those who run their business at a loss; just because a company pulls in $1-million of revenue doesn’t mean they do not have $1.5-million of expenses. Start-ups are especially at risk, as it usually takes a few years for such a company to run in the black. If you are a start-up, or a company that does normally run at a loss, there are some things you can do if the tax goes through.
The first thing is to analyze your balance sheet to figure out where the bulk of your money is going. Is it our labor force? Are you spending a lot of money on advertising? What about the overhead if you have a bricks-and-mortar business?
If it’s your employees that are causing your cash bleed, the simplest way is to either lay off some employees, or cut down their hours. Try and trim as much “fat” as possible – if you don’t need an executive vice-president of marketing, than take out that role. The leaner a company is, the better it runs.
Advertising can be a key point in your marketing strategy, but only if that advertising actually works. Are you spending thousands on newspaper ads, but never getting any traction? Try using social media, as the cost to run Facebook or Twitter campaigns is more in the time spent than actual cold-hard cash.
Are you spending a lot of your hard-earned revenue on rent, heat and keeping the lights on? If you can get away with it, a virtual business, or one that’s run from home, can have essentially no overhead. Of course, companies that must have a storefront would be exempt from this.
Even if you are only thinking about starting your own company, and don’t plan on making your first million any time soon, a streamlined business will make more money, so the above steps and tips can help pretty much anyone. A business that only uses the necessities, and uses them to the best of their ability, will be more successful in the long run.