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The SBC Small Business Newsletter

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March 21, 2002

Table of Contents

 

Welcome

Quote of the Week

Administrative Stuff

Staff Editorial - The Hidden Cost of Internet Taxation
Marketing Tip of the Week

Guest Article -  5 Internet Myths Still Floating Around
Parting Comments

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Welcome

Thank you for subscribing to the Peak Small Business Newsletter! We take our obligation to provide you with useful information very seriously. As a result, we always welcome your input on articles or other information you would like to see presented here.

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If you have suggestions for future content, or have issues that you would like to see specifically addressed, please send an email to let us know. Our staff articles are focused directly on issues raised by you, our readers. We want to give you what you want to see!
 


Quote of the Week

Whoever values peace of mind and the health of the soul will
live the best of all possible lives.

- Marcus Aurelius

 


Administrative Stuff

FREE EXPOSURE FOR YOUR BUSINESS!

We want to give you an opportunity to gain free exposure for
your business! We are asking each of you to send us an email
and tell us about yourself and your business. We have added a
section to this newsletter where we spotlight your websites or
businesses so our other subscribers can get to know you and
possibly do business with you. This week we feature the first
three businesses that responded. We hope many more of you will
respond in the coming weeks. This is FREE EXPOSURE to THOUSANDS
of people! THIS IS VALUABLE so please act TODAY!

Just send your email to mailto:mybiz@peakconsultinginc.com with
"Info on my business" in the subject line.


Staff Editorial

The Hidden Cost of Internet Taxation

by: Cary Christian

I don't know how many of you have been following the status of Internet taxation. Most small business people are too concerned with running their business and making a profit and tend to ignore these arguments. While that is perfectly understandable, it could also be a costly mistake.

A LITTLE BACKGROUND

Internet taxation would really be nothing more than the imposition of sales tax on sales over the Internet. "No big deal," some of you will say.

After all, sales taxes do not really affect a business that adversely, do they? You become a collection agent for the government. Your competitors are collection agents, too, so they have no advantage over you. Consumers expect it and do not normally factor it into their purchase decisions. So it's more red tape but not really an additional cost.

Not exactly. Let's step back a moment and look at our macro tax situation in the U.S. for an example. The United States actually has a low tax rate in comparison to the rest of the world. But when people look at the rate of taxation in the U.S. they generally only look at the income tax rates. Yes, you pay federal income, state income, local income and social security taxes and those rates are not that bad.

But one-half or more of every dollar you spend on gasoline represents federal, state and local tax on gasoline. Half (or more) of the price of cigarettes and liquor is tax. Take a look at your telephone and electric bills. More taxes. Pay tolls to use any of the roadways in and out of your city? More taxes.

Then there are permits and licenses when you are born, when you start a business, when you own a house, when you get married, when you sign up for garbage collection, and when you die. (I probably missed a couple of hundred other examples of permits and licenses there).

And, of course, there is the sales tax on almost everything you buy. Additionally, taxes are a cost of doing business so everything you buy has already been marked up to reflect the tax burdens on the businesses producing the products you buy!

I did a study on the real cost of taxation to the average American a few years ago. I don't have the final numbers in front of me, but suffice it to say that the real rate of taxation of U.S. citizens is at least double what the average person thinks it is. And it's no better, and often worse, in other parts of the world.

The worst part is that most of these "hidden" taxes are regressive in nature, meaning they tax the poor at a disproportionately higher rate than the wealthy.

State and local governments are facing lost tax revenues because more and more people are purchasing tax-free on the Internet. That is why Internet taxation is an issue in the first place. But I believe people everywhere deserve the break.  Let us have something in life that is tax free.

But that is still not the issue I want to address. All of the above sounds bad, but we haven't even scratched the surface!

THE REAL PROBLEM

If you have never worked with multi-state or multi-national sales tax issues before, you probably don't know how technically challenging and difficult they can be. States fight all the time over who has the right to assess sales taxes on particular transactions. The only problem is they don't fight each other; they levy the tax on you and YOU have to fight each state involved individually or end up paying tax on the same transactions in multiple jurisdictions. And, of course, since you probably only collected and paid the tax to one state, you'll owe substantial penalties and interest in the others.

The Internet taxation moratorium was extended for another two years on November 28, 2001. Hopefully, this will provide enough time to simplify the administration of Internet taxation before it becomes a reality. If it doesn't, every small business that sells on the Internet will need to make sure it has two things:

1. Sophisticated and impeccable accounting systems to accurately track sales tax liabilities and provide documentation for audit (money), and

2. Access to top-notch lawyers and accountants to guide them through the mine fields of state sales tax audits (more money).

Make no mistake about it, a sales tax audit can put a small business OUT of business PERMANENTLY.

Small businesses need to use the two years provided by the moratorium to become educated on the issues and involved in their resolution. Getting a permanent moratorium is most likely not going to happen. Getting some sane laws on the books ought to be possible. Together, our voices can be heard. We need to lend our voices to those who are calling for reasonable and simplified solutions before it is too late.


Copyright (c) 2002


Marketing Tip of the Week

If you would like to add posting to safelists to your marketing arsenal but are hesitant to pay $5 to $20 per list to join a bunch of them as a pro member, try this:

Find ten or so smaller lists that allow you to post every day even as a free member. If you get in early enough you'll get in for free and the lists will grow over time. Try a couple of the lists that include links in the emails you receive that give you sending credits. You'll be able to easily click up enough credits to send every day and some of these lists are substantial.

Then, find 14 lists that only allow free members to post once per week. Make sure these are bigger lists. Posting once per week can actually be an advantage because people won't get bored if you use similar ads all the time.

Every day you post to the ones that allow you to post daily and to two of the lists that allow you to post once per week. This should give you a substantial number of postings daily for free.

Remember our tips in prior letters about posting to safelists.  Make your headline catchy and your message short and teasing.  Don't try to sell. Just get them to your website. You'll do much better promoting something free posting to these lists.  Make that "something free" a sales tool also, like a viral traffic ebook or membership in a free downline building program.
 


Guest Article

5 Internet Myths Still Floating Around

By Terry Dean
 

You would think that some of the old Internet myths would just die off with the growth of Internet commerce, but some of them just won't die. Even though you can't ignore the growth of online commerce, businesses still believe some of the exact same myths that were started years ago.

Let's put an end to some of them here and now...

Myth #1: No one is making money online.

This myth has been around as long as the Internet as existed.  The truth is that a lot of companies are earning incredible profits online. Some of them even become extremely profitable within 6 months of being online.

An independent study has reported that 30% of Internet businesses are currently earning money. This is an extremely large number considering the fact that the Internet as a whole is still in it's infancy. Wait to see what kind of results are going to be produced in the coming years and decades of e-commerce.

Myth #2: If you build it, they will come.

This is opposite of the first myth. You have one side who believes no one can make money online while the other side believes all you have to do is a set up a web site and rack in the dough. This concept may have been a good basis for a movie, but it is completely inadequate for Internet marketing.

If you just sling together any old site and put it up on the web, you are going to quickly turn into one of the people who believe the first myth about the Internet. Marketing online is no different than any other type of marketing in this area. You have to plan your business, design good marketing materials, build relationships with customers, and learn how to sell more to your existing customers.

If you build a well designed, well thought out site and promote it, they will come. If you just build it, it will just sit there.

Myth #3: You need fancy graphics to catch your customer's interest.

Fancy graphics are not essential for online sales. If your graphics are so detailed that they take too long to load, they will even cost you sales. Most people are still connected to their Internet using basic modems and graphic intensive sites often take too long to load for most people's attention span.

This is not to say that you can just use cheap graphics. Use quality well designed graphics on your site, but keep them to a minimum. The key to online sales is showing your customers the benefits of your product or service. It is not in just having a gorgeous web site with dozens of pictures.

Myth #4: Internet consumers are so sophisticated that ad copy doesn't matter anymore.

Yes, Internet consumers do see through the hype that many people try to push off as ad copywriting. This does not mean that you can just put together string of words and a couple of pictures and hope people buy from you. If you want to have customers constantly purchasing products and services from you, you have to write ad copy which shows them the BENEFITS of your product or service.

The key to ad writing is to show your benefits, not just your features. You can't just tell people a bit about your product.  You need to let them know exactly what it will do for them. You need to help them get as exited about your product or service as you are. Ad copy does make a difference online.

If you don't currently have a headline on your web site, get one immediately. Ninety-five percent of web sites you visit won't have one, but yours can. Then, list multiple benefits your visitors will receive for staying at your site. If you don't let them know what they will get out of your site immediately, then they will leave your site as quick as they entered.

Myth #5: You can find anything and everything online for Free.

A lot of people think that they can get everything they need in their business for free online. This just isn't the case. The old saying," You get what you pay for" does apply to the Internet as well.

For example, free web hosts will end up costing you money in the long run. People don't look at sites that are hosted for free in the same light they do ones which have their own domain name. Whether it is true or not, free web hosts don't give the same sense of stability to the consumer that your own domain name would. Plus, you will often experience a host of other problems.

This concept will apply itself to many other areas as well.  Many software programs out there will help you automate your online business, but they do cost money. Many information products will help you build a better business, but they do cost money. Always look at everything you do online with this purpose in mind. Will the product, service, ad, web hosting, etc. cost you or make you money in the long run?

-------------------------

Terry Dean, a 5 year veteran of Internet marketing, will Take You By The Hand and Show You Exact Results of All the Internet Marketing Techniques he tests and Uses Every Single Month Click here to Find Out More:
http://www.peakconsultinginc.com/nbt.htm


Parting Comments

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