How to fix an error on your individual income tax return

Does this sound familiar?

• You filed the return.
• You cashed the refund check, or you wrote out the check for the taxes you owed.
• When you were filing all of your tax paperwork you discovered you left something off of your return, or you received a notice from the IRS.
• You panicked.

Good news. There is no need to panic. File an amended return. If your CPA completed your return, call your CPA and ask him or her to amend the return. If your return is simple, you can probably do it yourself.

What you will need
Whether you prepare the amended return yourself or send it to your CPA, you will need a few things before you can get started.

• A copy of your return and instructions for the forms. (If you need prior year forms and instructions, you can call 1-800-TAX-FORM (1-800-829-3676). You can also download them from http://www.irs.gov/.
• Form 1040X and instructions (Do not simply re-file a new 1040, 1040A, or 1040EZ!)
• Any additional supporting documents
• Any letters or notices you received from the IRS

How to get started
The first step is to organize your documents. It is a good idea to group your documents into categories such as income, deductions, or credits. You’ll want to separate out documents that go with specific schedules. Once you have done that review the original instructions for the forms you filed. This should help you be certain that you understand the changes that you want to make.

The 1040X is a multi-purpose form. Taxpayers have many reasons for amending returns. This means that you may not need to complete all of the lines on the form. Be sure to check the instructions.

The simplest way to make your changes is to make notes in the margins of your original return. Once you have made all of your changes and reviewed them, you can enter the changes onto the Form 1040X. If you use tax software, be careful to follow the directions provided by the software company. Typically you will make a copy of the original file and modify the copy instead of working on the original. The software will also have an option to prepare an amended return.

Once you file the amended return, file it and all of your supporting documents with your other important papers. If you have a CPA, you may also want to send a copy of the amended return to him or her to keep in your files.

Deadlines
File Form 1040X only after you have filed your original return. It is important to realize that the interest and penalty clock rarely stops ticking. If your changes result in a higher tax liability, then you should file an amended return and pay the tax as soon as you possibly can so that you can avoid additional penalties.

If your changes result in a lower tax liability, then you may be due a refund. Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after you paid the tax, whichever is later. There are some exceptions to this time limit for people who are unable to manage their own affairs. Check with your CPA or review Publication 556 Examination of Returns, Appeal Rights, and Claims for Refund

Small business help from the IRS

Did you know that the IRS offers free online presentations and webinars? Check out the IRS Video Portal for

• Archived versions of live panel discussions
• Archived webinars
• Video clips
• Audio archives of tax practitioner phone forums

The portal offers a wealth of material for individuals, small businesses and tax practitioners.

Click on the Small Business tab, and you will find a list of topics. The list below describes some of the material available in the various areas.

• Business Expenses: Includes a summary of the 2009 law change affecting net operating losses and a video on home office deductions.
• Business Income
• Changing Your Business
• Disaster Information
• Employers: Information about payroll, hiring family members, required taxes, and similar topics.
• Filing/Paying Taxes
• Forms:
• Post-Filing Issues: If you have questions after filing, this is a place to learn about letters and notices, examinations, collections, offers in compromise, and other topics.
• Resources
• Retirement Plans: This section contains information about retirement plans for small businesses. The topics include funding and benefit restrictions, SEPS, and more.
• Scams & Fraud: This includes several overviews that can help keep you from being a victim of a scam or a fraud.
• Small Biz Workshop: "The Virtual Small Business Tax Workshop is composed of nine interactive lessons designed to help new small business owners learn their tax rights and responsibilities."
• Starting a Business: Includes a variety of videos on topics such as record keeping and Schedule C requirements.

Is free Wi-Fi a good thing?

Have you noticed all of the signs advertising free Wi-Fi lately? Bookstores, fast-food chains, coffee houses, restaurants, and oil change shops are among the places offering free access to the Internet. I suppose this is evidence that the world is becoming more connected, and there is little doubt that people who feel a need to be connected 24/7 are comforted by ubiquitous wireless access, but is it a good thing? Is it good for your business?
Before answering those two questions, ask yourself two other important questions.

• Does adding Wi-Fi increase your value to your customers?
• Does adding Wi-Fi contribute to your bottom line?

Adding value

Whether Wi-Fi adds value is not a simple a question. Consider the many coffee shops and restaurants that have added Wi-Fi hotspots. The access is not secure, and it is often slow. Even so, customers that use their computers see value in having Internet access. However, what about the other customers? Does a room full of people typing away on computers or using mobile devices provide the atmosphere that they seek? Do they resent not being able to find a place to sit and enjoy their visit because the tables are full of people who have long since finished their coffee but are still working on their computers? This is probably not a problem at fast-food establishments because customers value speed and because other cues such as decorating schemes and uncomfortable furniture encourages them not to dawdle.

What about other types of businesses? Do you run a business that requires people to wait? Unlike restaurant patrons, customers waiting for an oil change may not expect comfortable ambiance. (The coffee in most car repair waiting rooms is hardly drinkable.) Adding Wi-Fi might help customers turn down time into productive time.

The key is to understand your customers and your market.

The bottom line
It does not cost much to set up a Wi-Fi hotspot. Monthly Internet access charges, even for high volume business use, could be under $100. Wireless routers are also not expensive. If providing a hotspot increases sales, then it is probably a good idea. In the last example above, a car repair shop, it might be reasonable to assume that customers would come to the shop instead of a competitor's because of the hotspot. It is easy to see how the adding a hotspot increases customers' perceived value and how that could lead to increased profits.

Restaurants or coffee shops are different though. Most of these businesses depend on a constant flow of customers purchasing at least a minimum amount of something. Adding a hotspot encourages customers to linger. This means that tables do not turn over as quickly. If keeping tables occupied increased sales, that would be fine, but that is usually not the case. In addition, customers that are turned away or have to wait a long time are not likely to be satisfied customers. In this case, adding Wi-Fi might reduce sales.

The bigger picture
The topic of this post was Wi-Fi, but it could just as easily have been about any number of business decisions. Here is an example using the auto industry.

Should a luxury car company introduce a smaller economy car? Cadillac introduced the Cimarron, which Time Magazine named one of The 50 Worst Cars of All Time. BMW introduced the Mini Cooper to much acclaim. What was the difference? BMW understood its market and introduced a sporty car with an interesting history. It leveraged the brand and extended the product line. BMW added value and incrased the bottom line. Cadillac stuck a label on a moderately popular Chevy and decided that charging a high price would make it a luxury car. This damaged the Cadillac brand, decreased customer value, and hurt the bottom line.

What this all really means
Finding new ways to meet customer needs is always a good idea. Creativity and innovation are good things, and businesses that are always looking for ways to meet customer needs are probably going to be successful. Before they can do that though, they must understand their business and their customer. They've also got to ask themselves two questions.

• Does this increase your value to customers?
• Does this contribute to the bottom line?

Book Review: Let My People Go Surfing: The Education of a Reluctant Businessman

Let My People Go Surfing: The Education of a Reluctant Businessman
By Yvon Chouinard

Yvon Choinard is the founder and moving force behind Patagonia. This book is his story. Most people come to think of business books as "how to" books. We learned how to manage in The One Minute Manager. We learned how to evaluate business in, The Balanced Scorecard, and we learned how to emulate success with, In Search of Excellence. We could even learn to Swim with the Sharks Without Being Eaten Alive. For those interested in the people behind the businesses, there are plenty of biographies. Business people looking for advice from the past are even exploring books such as The Art of War and The Prince.

Let My People Go Surfing: The Education of a Reluctant Businessman does not fit neatly into any of those molds. The book is part biography and Choinard's life is fascinating. As a child, he moved from Quebec to Southern California. He spoke little English, and the family had little money. The narrative includes interesting stories about childhood challenges, and in time we learn how he became a climber. Choinard did not really start out to build a business. He started out trying to develop better climbing gear and trying to support his hobby. He sold his equipment out of the trunk of his car!

The book is a story about building a business. Choinard talks about the challenges of growing a business. Some of the challenges were formidable. The equipment his company produced was designed for specific uses by people that knew what the equipment was and how to use it. Even so, that did not prevent product liability lawsuits, and Choinard writes about his legal difficulties. The approach is forthright, and he candidly talks about the challenges he faced and how he went about addressing them. He spends as much time describing decisions that did not work out as he does those that did.

The book is also a story about business philosophy. Choinard and Patagonia operate according to a set of core beliefs. Their customer focused, highest quality, product driven practices are derived from these beliefs. The three general guidelines Patagonia has for promotion demonstrate this.

1. Our charter is to inspire and education rather than promote.
2. We would rather earn credibility than buy it. The best resources for us are the word-of-mouth recommendation from a friend or favorable comments in the press
3. We advertise only as a last resort.

Patagonia demonstrates that it is possible to be successful and to also embrace "social responsibility." The company emphasizes renewable resources and sustainability. It works hard to understand and meet employee needs. For example, Patagonia was one of the first employers to offer employer sponsored day care. One of the reasons for this is that Patagonia also recognizes that its employees are its greatest resource.

If you are looking for some new ideas about business, and you want something other than the usual business book. Check out Let My People Go Surfing: The Education of a Reluctant Businessman.