Tag Archives: Internal Revenue Service

About 2088 days ago Computer Security

The Urge to Purge: When to Dump Data

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Does your company have a data deletion and retention policy? If not, it’s time to create one, experts say. In today’s business climate, every keystroke you make on your computer can leave a trace on disks and tapes. Even if you think you’ve deleted it, forensic experts or others may be able to resurrect it. And if your company houses such personal information as client credit-card numbers, healthcare data, or proprietary government information, the more careful you must be. The bottom line? You need to safeguard your business from a potential lawsuit. New “safe harbor” rules Under new e-discovery rules, companies following consistent data-deletion policies won’t be held liable for no longer having certain records in their possession. The new “safe harbor” rules, adopted in December 2006, amend the Federal Rules of Civil Procedure. Similar rules are recognized by the National Institute of Standards and Technology (NIST) and other international standards-making bodies. “U.S. and international standards require the regular deletion of sensitive data,” explains Peter Adler, a data and privacy lawyer who heads Alexandria, Va.-based InfoCounsel LLC. “You won’t be sanctioned if you’ve deleted the data.” Nonetheless, companies are reluctant to take this step. “Most companies don’t have formal policies in place,” notes Brian Babineau, senior analyst with the Milford, Mass.-based Enterprise Strategy Group. A big reason? “Most [corporate] attorneys are reluctant to get rid of anything important, and don’t want their clients to look as if they are hiding something by deleting it,” Babineau says. How often you should dump data But having a policy, and following it, could protect your company. How often should you delete or overwrite certain data? It depends what kind of data it is, experts say. If it’s e-mail, companies may wish to delete frequently. “The Washington, D.C. [city] government just implemented an every-90-day destruction of e-mail rule,” notes Adler. Some companies delete e-mail as often as every 30 days, he says. But for other data, companies may opt to purge it every three to every seven years.  “We are seeing companies on a three-year cycle, who are just retiring a desktop computer after three years and destroying everything on it,” notes Babineau. Not all data can follow a set cycle. For example, the U.S. Internal Revenue Service advises individuals and businesses to keep basic tax records for at least three years, and basic employment tax records for four years. But there are exceptions to these basics, and the onus is on the filer to follow the rules. Deletion options What’s the best deletion solution for your business? It may ultimately depend on the sensitivity of the data your company stores. First, you must determine how many copies of the data you have, and where it’s housed, by using indexing and search software, notes Babineau. Once you’ve identified what needs to be deleted, here are a few options: Wiping/Overwriting: This technique literally overwrites a hard drive with gobbledygook so it can’t be read. For smaller companies, a good wiping is probably all that’s needed, says Jesse Lindmar, computer forensics division director of Miles Technologies, a Moorestown, N.J. computer consulting firm. With smaller companies, where cost is an issue, “there is no need to physically destroy devices that can be reused,” Lindmar says.  The U.S. Department of Defense standard wipe constitutes seven sequential overwrites, Lindmar notes. “The data is not coming back unless you have unlimited time, resources and/or access to high-level laboratory equipment.” Lindmar recommends wiping software such as Intelligent Computer Solutions Inc.’s WipeMaSSter, Active@KillDisk, Jetico BCWipe and WipeDrive. Degaussing: Degaussing involves running a hard drive through enough electric and magnetic energy to fry it so it can’t be read, explains InfoCounsel’s Adler. While the hard drive can be used again, Adler warns that degaussing “is only as good as the organization who does it,” and doesn’t always foil data recovery. Destroying: Actually shredding and disposing of the hard drive. “It’s so inexpensive to do this,” notes Elizabeth Wilmot, president of Capitol Heights, Maryland-based DataKillers. DataKillers will destroy 10 hard drives for $15.50 per hard drive, and notes that replacing hard drives has never been cheaper. “If you have it, it can become fodder for a lawsuit,” she says. “If in doubt, shred it.” While developing a data retention/deletion policy is complex — and likely to involve records management as well — it is a necessary evil, experts say. “It’s best to err on the side of being protected,” says Wilmot.

About 2300 days ago PCs, Laptops, and Notebooks

Making the Upgrade: When to Switch Hardware

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New computing technology is released literally every day. Computers, like cars, become outdated seemingly as soon as you close the deal. Massive upgrades of new computers or other hardware may be cost-effective for large organizations that can take advantage of bulk discounts. But small and mid-size businesses usually don’t qualify for those reductions and so the purchase of new hardware needs to be decided on a case-by case basis, taking into consideration wear and tear, business needs, and your ability to write off new equipment. “You should only upgrade for one reason: When your PC or software no longer does what you want it to do,” advises Andy Rathbone, author of the book Upgrading & Fixing PCs for Dummies. “Software doesn’t wear out — unlike tires or shoes. Instead, the PC’s the weak spot, and most businesses upgrade when a new PC costs less than repairing the old one.” Here’s what you need to consider before upgrading your systems. Don’t believe the hype Vendors, advertisements, and even colleagues can push for fancy, unnecessary upgrades. “In the past, people fell for the hype and upgraded simply because they didn’t want to be left behind,” Rathbone says. That made have some sense in the past, when computing power grew so quickly that upgrading could save a business time and money. Today, however, businesses are realizing that they don’t need to upgrade every year, or even every few years. Of course, tech-dependent companies will do more upgrades than, say, an accounting firm. “Still using word processors and spreadsheets? Then you’ll be fine with PCs from the late ’90s,” Rathbone says. “If your business runs on specialized software — custom sales point software, for instance — you can keep your software package alive by replacing parts on an older PC for years.” Focus on security, not age Assuming your business computers are still humming, the primary concern should be on whether they can run the operating system and application software your business needs. Software updates can provide new virus protection, improved functionality and extended warranties. “If you’re using Windows 95, it is unsupported and is insecure,” says Gary Chen, small and medium business strategies analyst at the Yankee Group, of Boston. “The general lifespan is around three to five years — five on the long side — but most small businesses will try to get the most out of it.” If your computers can handle a software upgrade, that may buy you a few more years of service. “Most software comes with a discounted upgrade version: If you own the previous version, you can buy the newer version at a cheaper price,” Rathbone says. Windows, Quicken and many major programs offer deep discounts. Be sure to download the free, incremental upgrades regularly offered online. Hold off on computer upgrades until necessary Unfortunately, computer distributors aren’t as liberal with upgrade discounts — at least with small businesses. “For 25 or less computers, there are no trade-in programs,” Chen says. “With a large enterprise, you’d have that agreement with a large vendor like IBM. IBM has an asset recovery division. It is not a trade-in, but like ‘These are the assets and we’ll give you some money for them.” That doesn’t mean smaller enterprises don’t have other, less direct options. For instance, computers can be donated for tax breaks. Eco-conscious companies can also work with manufacturers to safely dispose of equipment. “Older PCs, particularly their monitors, are now hazardous waste in many states, and it’s illegal to toss them in the trash,” Rathbone says. Experts recommend the following programs: Dell,

About 3396 days ago Computer Security

Hassle-Free Expensing

Like a drafty farmhouse in winter, a company can lose profits through a hundred cracks and crevices. And few things are leakier than expense reports. Although employee reimbursements are mostly related to travel and entertainment — airline tickets, gas, restaurant meals and such — they can also cover purchases of other items, from a pack of legal pads to an emergency car towing. One of the few things that every business owner will agree on is that they add up fast. The Aberdeen Group, a Boston-based research and consulting group, reported recently that “employee-initiated expenses can account for one in five operational dollars a company spends.” If you’re like most entrepreneurs, your gut says at least some of this money is squandered, either on expenditures of dubious necessity or on goods and services that could have been acquired more cheaply with a purchase order. But like the department store pioneer John Wanamaker who observed that “Half my advertising is wasted, I just don’t know which half,” you haven’t a clue what to do about it. Don’t give up! The answer lies with — you guessed it — technology. More than half a dozen companies, including Gelco, PayService.com, OneMindConnect and Microsoft Business Solutions, sell or rent software to rein in employee expenses and let more money flow to the bottom line. Tighter enforcement of spending rules is only part of the story. By eliminating one of the more inefficient and aggravating rituals of corporate life — hoarding receipts and writing numbers in tiny boxes — these systems can easily halve the time spent on creating and processing expense reports. Employees can get reimbursed twice as fast so they have less to complain about. Tidy and easily accessible records keep IRS auditors happy. And the computerized data can be endlessly sliced and diced to spot inefficiencies and strike better deals with vendors. And the cost — as little as $5 per month per employee for a Web-based hosted solution — won’t eat your savings. That’s about as close as you’re likely to get to a free lunch. Expense management is more than electronic forms. It involves four discrete activities: Reporting is the process of capturing transaction data, putting it into report form and obtaining management approvals. Typically, an employee uses a desktop, laptop or handheld computer to fill out the form online. In some cases, employees record expenses as they occur. A few systems even detect when a company credit card is swiped, be it at a hotel, restaurant or office supply store and fill in the blanks automatically. Once a report is filed, the system automatically reviews it, comparing it against travel policies, business rules, and spending limits, then emails department heads requesting online approval. Payment and reimbursement. Approved reports are automatically channelled into the accounts payable system, which makes a direct payment to the company credit issuer or electronically transfers money to the employee’s bank account — often within three days. Compliance is a second, closer look at the approved and paid report to insure that items are properly documented. Original receipts may be scanned and stored so that they can be easily produced in an audit. Analysis involves consolidating and sorting data and looking for useful patterns in products purchased, routes traveled and establishments frequented. This information can help spot wasteful practices and strengthen your hand when negotiating with airlines, hotels, car-rental agencies. An important consideration is how well the solution you choose interfaces with your company’s accounting system. OneMindConnect’s Expensable, for example, is designed to work well with Intuit’s Quick Books. Microsoft expense-reporting solutions work well as standalones and fit seamlessly into other Microsoft products. eExpense, a browser-based application typically accessed through a intranet running Microsoft Business Portal, works perfectly well on its own, but it is also designed to function as a module for the Microsoft Business Solutions for Human Resource Management Self Service Suite. It can also interact with versions of Microsoft’s Great Plains accounting system. Microsoft also markets a Time and Expense component for another popular application, Microsoft Business Solutions Project Accounting – Solomon. Employee-initiated expenses can add up fast, but getting a handle on them can be just as quick. The right software can better manage and streamline the process, while helping you spot inefficiencies that are draining profits from your business.

About 3702 days ago Mobility Tips and Tricks

2003 Tech Buying Guide: Laptops Set the Stage

2003 Tech Buying Guide Market Report Businesses are sinking their thinning tech dollars into desktop and PC replacement first and foremost. Laptops are enjoying particularly brisk sales, with the number of units shipped during the third quarter of 2002 increasing 18% over third-quarter 2001 figures, according to market researchers at International Data Corp. Prices continue to fall. A well-equipped, businessworthy laptop such as the Toshiba shown below has a street price of about $1,500 — a 50% reduction from three years ago. Despite this favorable turn of events, you need to account for this technology expense. While PCs which meet certain IRS guidelines can be written off in one year, a computer is generally depreciated over a five-year period — longer than its likely lifespan, especially when discussing laptops. When allocating dollars, figure on a three- to four-year lifespan, says Keith Waryas, an IDC research manager. He says this is more typical for small- to medium-size businesses. For business users, the principal dilemma remains portability versus functionality: “There are tradeoffs. Ultraportables [typically 4 pounds or less] are superlightweight, but don’t have any drives,” says Waryas. STAY THE COURSE Toshiba’s Satellite 2435-S255 [$1,700 base price; shop toshiba.com] comes with a 2.4GHz Pentium 4 CPU, 15-inch display, and combo DVD/CD drive — this provides your shop with more than adequate insurance against obsolescence for at least two years. MORE SEXY THAN SMART? Sure, the Apple PowerBook G4′s [$3,299 and up; www.apple.com] 17-inch display is the largest in notebook history, and its keyboard is backlit. But forget using it comfortably in coach. Think of it as a superior desktop PC alternative for the casual traveler. 51% of Inc.com poll respondents figure they’ll keep their laptops “up to two years.”*

About 4371 days ago Setting Up a Website

4 Fatal Errors of Web Writing

We’ve logged lots of online hours searching for sites that illustrate the Web writing principles in our new course: Writing for the Web. After checking out hundreds of sites, we found those that fail often do so because they have writing and content problems. We’ve developed a list of four fatal errors that prevent a site from helping users find information quickly and easily. Avoiding these fatal errors will take you a long way toward making your site user-friendly. Shoveling Print Online “We’ve already got the print brochure, annual report and product catalog. Why rewrite?” Because print materials usually don’t work online. Reading on screen is slower and information is harder to absorb. On-screen readers scan rather than read word for word. Web writers need to write text that is scannable, text that helps users find key words and concepts quickly. To write scannable text, think short and write shorter, whether sentences, lines of text, paragraphs or pages. Use heads and subheads instead of introductory paragraphs. Use bulleted text instead of full sentences. Use white space to keep the page looking light. Use hypertext links. Links enable you to keep text short while providing additional information to accommodate readers who want more. Writing Like A Bureaucrat Online readers expect a personal, upbeat tone in Web writing. They find bureaucratic writing so offensive and out-of-place that they simply ignore the message it’s trying to convey. To avoid bureaucratic language, turn the tone down a notch. Search out and destroy jargon. Write in the active voice — “We will customize the curriculum for your company,” — rather than the passive voice — “The curriculum will be customized for your company.” Active voice, which emphasizes the doer of the action, is naturally less bureaucratic. Take a look at the tone of the Peace Corps and IRS Web sites. If the IRS can write in plain English, anyone can! Making a Mission Impossible “Who are these people? What do they do?” Some Web sites make it impossible to figure out who or what the host organization is. Remember that users get to your site from somewhere else in cyberspace. The link or search engine that sent them to you probably did not explain who you are. Visitors might have missed entirely your home page where you spelled out your mission. Orient your visitor by writing useful signposts throughout your site. Make sure each page includes your tag line or a short, descriptive mission statement. Burying the Lead Web users are busy and impatient. They want the bottom line up front, on the first screen. You can’t count on your visitors scrolling through several screens of background to get to the information they need. Recently, we worked with a client who was writing Web content. She wanted to present background information before she made her main point. We pulled her text up on screen to show her how deeply she’d buried her message: A reader would have to read two screens before getting to the main point — the program’s accomplishments. She rewrote, putting her main message on the first screen and linking to the background information. Copyright © 1995-2001 Pinnacle WebWorkz Inc. All rights reserved. Do not duplicate or redistribute in any form.

About 4371 days ago Setting Up a Website

4 Fatal Errors of Web Writing

We’ve logged lots of online hours searching for sites that illustrate the Web writing principles in our new course: Writing for the Web. After checking out hundreds of sites, we found those that fail often do so because they have writing and content problems. We’ve developed a list of four fatal errors that prevent a site from helping users find information quickly and easily. Avoiding these fatal errors will take you a long way toward making your site user-friendly. Shoveling Print Online “We’ve already got the print brochure, annual report and product catalog. Why rewrite?” Because print materials usually don’t work online. Reading on screen is slower and information is harder to absorb. On-screen readers scan rather than read word for word. Web writers need to write text that is scannable, text that helps users find key words and concepts quickly. To write scannable text, think short and write shorter, whether sentences, lines of text, paragraphs or pages. Use heads and subheads instead of introductory paragraphs. Use bulleted text instead of full sentences. Use white space to keep the page looking light. Use hypertext links. Links enable you to keep text short while providing additional information to accommodate readers who want more. Writing Like A Bureaucrat Online readers expect a personal, upbeat tone in Web writing. They find bureaucratic writing so offensive and out-of-place that they simply ignore the message it’s trying to convey. To avoid bureaucratic language, turn the tone down a notch. Search out and destroy jargon. Write in the active voice — “We will customize the curriculum for your company,” — rather than the passive voice — “The curriculum will be customized for your company.” Active voice, which emphasizes the doer of the action, is naturally less bureaucratic. Take a look at the tone of the Peace Corps and IRS Web sites. If the IRS can write in plain English, anyone can! Making a Mission Impossible “Who are these people? What do they do?” Some Web sites make it impossible to figure out who or what the host organization is. Remember that users get to your site from somewhere else in cyberspace. The link or search engine that sent them to you probably did not explain who you are. Visitors might have missed entirely your home page where you spelled out your mission. Orient your visitor by writing useful signposts throughout your site. Make sure each page includes your tag line or a short, descriptive mission statement. Burying the Lead Web users are busy and impatient. They want the bottom line up front, on the first screen. You can’t count on your visitors scrolling through several screens of background to get to the information they need. Recently, we worked with a client who was writing Web content. She wanted to present background information before she made her main point. We pulled her text up on screen to show her how deeply she’d buried her message: A reader would have to read two screens before getting to the main point — the program’s accomplishments. She rewrote, putting her main message on the first screen and linking to the background information. Copyright © 1995-2001 Pinnacle WebWorkz Inc. All rights reserved. Do not duplicate or redistribute in any form.

About 4463 days ago E-Commerce

A Helping Hand With Taxing Matters

Best of the Web Tax pointers are available from several online sites at no charge. Twelve CEOs assess what the advice is really worth Print neatly. That’s the kind of advice that the IRS considers a “dynamite” tax tip, Dave Barry once wrote in his Miami Herald column. “If you ask them a real tax question, such as how you can cheat,” Barry said, “they’re useless.” The IRS won’t tell you how to cheat, but it does attempt to mitigate the tax-filing (if not the tax-paying) ordeal by offering a helping hand, and now it does so online. In partnership with the Small Business Administration, the IRS makes tax information for business owners quickly and easily accessible on a Web site titled Small Business Corner ( www.irs.ustreas.gov/bus_info/sm_bus). The site offers the government’s latest intelligence on such things as its rules for business-expense deductions and what the tax agency considers the best record-keeping systems for small companies. If the IRS is the authoritative source of tax information, is there any reason to look elsewhere on the Net for tax expertise? Several privately owned sites say yes. Each site has its own spin, depending on what group it aims to attract — a general small-business audience or merely start-up entrepreneurs, for example. Like the IRS site, the private offerings are free. They contrast with the tax-prep sites, such as Intuit’s TurboTax or H&R Block’s TaxCut, which enable users to fill out their tax returns online for a fee. To determine which of the tax-advice sites were worthwhile, Inc. asked 12 small-business CEOs to evaluate seven of the most popular ones. Two of the sites belong to Big Five accounting firms: Deloitte & Touche’s Dtonline.com and Ernst & Young’s TaxCast.com. Individual accountants operate others, including TaxMama.com, which began as an online newsletter. Another site that was a newsletter before it evolved into an in-depth source of complex tax matters is TaxProphet.com. It has 40,000 users and registers about 300,000 hits a month, according to tax lawyer Robert L. Sommers, who runs it. Although the sites don’t charge user fees, some make money by selling ads posted alongside the tax advice. Others are marketing tools. For example, Sommers, who’s also a columnist for the San Francisco Examiner, says that TaxProphet.com brings in clients for his law practice — and generates ideas for his column. Sommers claims that even taxpayers who have the assistance of a certified public accountant can benefit from consulting the tax-code nuances laid out in TaxProphet.com. “At tax time, CPAs are working 18-hour days and may not have time to ponder the gray areas, like whether you need a W-4 for the Israeli teacher you employed or if a treaty with Israel makes that unnecessary,” he says. Traffic is heaviest on the sites in the run-up to the April 15 tax-filing deadline, but they post information for all seasons. One tip on TaxMama.com last fall, for instance, suggested that tax-payers consider charging business expenses to a credit card up until December 31, 2000. The charges are deductible on the 2000 return, even if they weren’t paid before year-end. If you’re perplexed by some tax wrinkle or want an update on lawful tax-avoidance schemes, which of the seven sites is your best bet? Here’s what our CEOs had to say. www.bankrate.com What it’s good for: A well-organized, clearly defined primer. “The entire site has a lot of value,” said one CEO. Bankrate.com contains a Calculations section, which is useful for computing gross profit margins and a variety of business ratios. Don’t waste your time if: You want a hard-core, business-oriented site or you’re a lender or you’re doing tax work for a financial institution. What our CEOs had to say: “It will make my favorites list,” commented one reviewer. A second panelist said, “This site is easy to navigate, easy on the eyes, and gives you a good, brief understanding of each topic.” What you ought to know: The site’s owner is Bankrate Inc. (formerly known as Bank Rate Monitor), based in North Palm Beach, Fla., a longtime publisher of financial information. Bankrate.com’s content now appears in the Money section of Usatoday.com. www.dtonline.com What it’s good for: A guide for personal financial planning. It also contains useful tidbits, including a schedule of gift- and estate-tax rates and a rundown of 10 “essential” practices for growing a company. Don’t waste your time if: You need access to tax schedules or links to other sites. What our CEOs had to say: “One visit was all it took” to sour one CEO on the site because he found it lacked forms that he could download. A fellow panelist, however, said the site was “very informative, especially for small businesses.” What you ought to know: Dtonline.com contains a weekly online missive, “Tax News & Views,” a Deloitte & Touche compilation of the latest tax news from Washington. www.irs.ustreas.gov/bus_info/sm_bus What it’s good for: Comprehensive tax information furnished by the IRS and tailored for small businesses, plus links to other useful tax-related sites, such as www.tax.gov (which covers the tax- and wage-reporting basics). Don’t waste your time if: You seek tax loopholes. What our CEOs had to say: “Excellent tax information for small businesses,” one panelist said. It’s great for “getting a handle on tax issues relating to a start-up,” said another. Still, one CEO disliked the site and said he couldn’t find valuable advice there. What you ought to know: The IRS also offers online sites not specifically devoted to small businesses, including www.irs.ustreas.gov, a guide for filing electronic tax returns. www.smbiz.com What it’s good for: News and tax tips are updated daily. It also has a host of useful links to other sites. Don’t waste your time if: You need answers to specific tax questions. What our CEOs had to say: They agreed that the site is valuable mostly as a “link farm,” in the words of one of them. They generally faulted its design as lacking pizzazz. What you ought to know: The genesis of the site is the Small Business Tax Review, a newsletter published since 1980 by the A/N Group, in Melville, N.Y., a provider of tax news and analyses for small businesses. www.taxcast.com What it’s good for: Tax-law summaries and a trove of tax documents mostly suited to accountants and financial planners. Don’t waste your time if: You want a fast, easy-to-understand tour through the tax landscape. One business owner said the site, though rich in complex information, was “too sterile” and “does not keep my interest.” What our CEOs had to say: They applauded its many links and other resources, but craved a more inviting format. “It’s very vanilla,” said one panelist. What you ought to know: Affiliated sites furnish many kinds of Ernst & Young tax help. One example is www.ey.com, a site well known for financial counseling for individuals and families. www.taxmama.com What it’s good for: A joyful and occasionally informative romp through the tax world for inexperienced businesspeople. This site’s “personal commentary and humor make it unintimidating,” said one CEO. Another recommended it only for tax filers with rudimentary questions. Don’t waste your time if: You’re looking for a highly professional format or need more than a casual presentation of everyday tax issues. What our CEOs had to say: This is a site “more geared toward the consumer than toward businesses,” said one CEO. Another echoed the assessment, saying, “It just doesn’t have the kind of information I need” as a business owner. However, a third CEO said that this is a “great site with good information.” What you ought to know: The site’s founder, Eva Rosenberg, holds the Enrolled Agent credential, which the U.S. Treasury Department issues to qualified accountants. Rosenberg claims to respond to every E-mail query she receives. www.taxprophet.com What it’s good for: Basic facts. The site’s a good do-it-yourself reference for those who are just starting a business and can’t afford an accountant. “If you know what you’re looking for,” one CEO said, “you can do full-text searches of a large tax-law database,” which will give you a heap of hits to sift through. You just need to have the time to do it. Don’t waste your time if: You want quick answers to your questions. What our CEOs had to say: It’s better to leave to an accountant the kind of time-consuming tax research that’s available on the site. “I don’t have the time to just browse,” one CEO said, and “it’s cheaper for me to call my accountant for a quick answer.” But for those with the stomach for truly in-depth tax research or an education in tax law, the site may be useful, according to another reviewer. What you ought to know: In the spirit of fulfilling Robert Sommers’s mission of educating its users about everything to do with taxes, the site posts advisories about tax scams on an online bulletin board. The bottom line For overall tax advice that’s accessible and relevant to small businesses, our CEOs favored the IRS site, Dtonline .com, and Bankrate.com. The reviewers singled out Bankrate.com for its supe- rior ease of navigation, and they appreciated TaxProphet.com’s extensive tax- research database. They lauded Smbiz.com for links to other tax-related sites. The panelists scorned TaxMama.com in many respects yet couldn’t help liking it for its sheer fun. Sara Trainor Callard is a freelance writer based in Quincy, Mass. The savvy entrepreneur’s guide to online tax advice Comments Would CEOs go back? What are the site’s pluses? CEOs’ quick take www.bankrate.com Yes. “The news section, which seems to be updated often.” “This is a worthwhile site to visit.” www.dtonline.com Maybe. “Clear and concise language.” “Very informative.” www.irs.ustreas.gov/ bus_info/sm_bus Maybe. “Quick and easy to explore.” “Would recommend for tax issues relating to start-ups and small businesses.” www.smbiz.com Probably not. “The links.” “Could use a redesign.” www.taxcast.com No. “A comprehensive listing of links.” “It was loaded with information but was a little overwhelming for the tax novice.” www.taxmama.com No. “Good basic information that’s well categorized.” The site can give you the basics for “general tax queries.” www.taxprophet.com Maybe. “Searches of a large tax-law database.” For extensive tax research without a CPA’s services, this is a “good reference.” Grades Ease of navigation Variety User- friendliness Technical reliability Average grade www.bankrate.com A- A- B B B+ www.dtonline.com B B B- A B www.irs.ustreas.gov/ bus_info/sm_bus A- B B A- B+ www.smbiz.com B- B C- A- B- www.taxcast.com B- C B B B- www.taxmama.com C C B C C www.taxprophet.com B- C B- A B- Our panelists John Auger, cofounder, Operations Associates Gary Barras, CEO, Integral Systems Henry L. Foster, CEO, Call Henry Dr. Jim Goodnight, CEO, SAS Kevin J. Goslin, CEO and cofounder, Construction Technology Group Tim Handley, CEO, Advantage Credit International Duncan Harrison, CEO, Alaskan Automotive Distributing Dean Hunt, president, Certified Associates James Matuszewski, CEO, FeelGood for Life George G. Mueller, CEO, Color Kinetics Victor Tsao, CEO, Linksys Ross Youngs, CEO, Univenture Please e-mail your comments to editors@inc.com.

About 4857 days ago E-Commerce

What Business Is Amazon.com Really In?

Unsolved Mystery By drawing attention to its appetite for expansion and red ink, America’s leading E-tailer has cleverly concealed its grand plan from public view. Until now By now, surely everyone knows that Amazon.com isn’t actually in the book business. Nor is it in the business of peddling videos or pet supplies. Software? Please. Auctions? Get real. Sure, the giant E-tailer provides those offerings, having serviced cybershoppers to the tune of an estimated $1.4 billion last year. But with losses that would bury multiple businesses (more than $550 million, accumulated over the past five years), it’s abundantly clear that Amazon isn’t even aiming to become a viable retail business. The challenge, then, is to define what it is. It’s unprofitable, of course, but that’s just the superficial answer. The tsunami of red ink, founder and CEO Jeff Bezos has long maintained, is part of the plan. On to the deeper question, then: What on earth is the plan? Theories abound. Internet analyst Evan I. Schwartz — whose 1997 book, Webonomics: Nine Essential Principles for Growing Your Business on the World Wide Web, ranked as a number one business best-seller on Amazon.com — insists that Bezos’s enterprise, with its investments in fledglings like Drugstore.com and Pets.com, is “becoming a venture-capital company, and this is how they’re going to become profitable.” For his part, James McQuivey, the astute research director at Forrester Research, in Cambridge, Mass., believes that Amazon.com’s broad positioning is its way of preparing for a surge of new on-line-shopping households, 11 million this year alone. “Until 2001,” he says, “I’m buying the argument that it has to lose money to make money.” But such pedestrian interpretations fail to match the measure of Bezos’s vision. He is, we’re convinced, after something grander. All the talk — of profitability or its absence, of endlessly expanding product lines or investment in new business areas — amounts to an elaborate distraction, one that Bezos has created to keep his grand plan concealed. And his smoke screen has worked beautifully. Until now. Come with us beyond the pithy sound bites. Join us as we slip behind the numbers. Examine the evidence we’ve gathered. Those brave enough to connect the dots will find themselves staring at possibilities so plainly convincing, they seem eerily familiar. To wit, five solid theories as to what Amazon.com is really up to. 1. Today the World, Tomorrow the Country What do Steve Forbes, H. Ross Perot, and even “The Donald” Trump have in common with Amazon’s Bezos? Like them, Bezos has at times seemed bent on world domination. And just as they have all toyed with turning high-profile business success into political power, Bezos will soon reveal his so-called business to be a platform for a slightly more focused ambition. He’s out to run the country. Sure, none of them has actually won an election, but it’s easy to see why. They’re all out of touch, relics of a bygone era when CEOs believed companies needed profits. Bezos brings a refreshingly modern vision with a platform that holds that prosperity is an attitude, a way you choose to operate regardless of the bottom line. Casting himself as a latter-day Perot, he plans to crank up the espresso machine, throw the flip charts into the Volvo, and ride a populist wave into the White House. “We’re going to be unprofitable for a long time. And that’s our strategy,” Bezos told Inc. in 1997. What debt-strapped citizen could resist clambering aboard that bandwagon? He’s got a brazen cockiness that’s quintessentially American — and an inscrutability that’s quintessentially electable. All that remains is a choice of running mate. He’s got options: go the traditional route to balance the ticket, tap Bill Gates, and vie for the predictable profitability vote; or follow the model of Jesse “The Governor” Ventura, defy the system, and capitalize on sheer popularity. To that end we understand Bezos has been pursuing someone even more skilled at wizardry than he is. Would someone please tell him that Harry Potter is fictional? 2. It’s for Prophet, Not for Profit One day soon, America will sprout a host of billboards featuring a stark white background with a lonely line of bold text stretching across it that asks: “Depressed about the lack of security in E-commerce? For books about consumer insecurity, click here.” In the bottom left corner will be a logo, bright blue with a swirl of soothing yellow-gold — Amazonetics. It’s simple. It’s beautiful. Amazon isn’t unprofitable — it’s evolving into a nonprofit. Any day now, it’ll be notifying the IRS to reclassify it as a not-for-profit, thereby exempting it from paying taxes. Like L. Ron Hubbard before him, Bezos will turn a seemingly secular publishing venture into a religion. In the case of science-fiction writer Hubbard, that transformation culminated in a book called Dianetics: The Modern Science of Mental Health. In Bezos’s case, it all started with a virtual-bookstore-cum-electronic-mall. “We’re trying to change the world and maybe improve it in a small way, and maybe even a little more than a small way,” Bezos told the New York Times last March. As founding principles go, it’s not much, but what it lacks in clarity, it makes up for in chutzpah. 3. The Ultimate Product Line: Potential Drink deep and don’t worry. There’s plenty to go around. Amazon.com is our Miracle Elixir, our oasis shimmering in the distance. It’s in the business of being a desirable idea, the embodiment of unlimited potential. It’s a hair-loss-treatment product suggesting that high school cheerleaders will suddenly find themselves unable to resist paunchy middle-aged men. Let myopic analysts clamor for Bezos to define Amazon. He knows that his company’s success lies in his singular ability to continue to conjure the possibilities of all that it might become. It’s the mandate we’ve handed him: to establish his company as the icon of all that Internet commerce could mean. Amazon will continue to work that way only as long as Bezos can energize the illusion by unfolding one possibility after another. So far, he shows no sign of letting up. Eric Von der Porten, manager of a hedge fund that is basing its investment on the belief that Amazon’s stock will fall, describes Bezos’s work as “pumping smoke and flashing lights, saying, ‘Look at all this cool stuff we’re doing. Just don’t look behind the curtain.” According to this theory, Amazon can expand indefinitely, beyond even the loose boundaries of the Web. If Bezos is as good as we adjudge him to be, don’t be surprised if you see Amazon buying a sports franchise — the Boston Red Sox, say. Or investing in Rogaine. 4. Taking the Middle Ground — and Dominating It Once a valued presence in the American economy, the middleman has lost ground lately, accelerated by the proliferation of buying opportunities on the Web. Every day another manifestation of that “middle” class gets squeezed: the auto dealer, the insurance salesperson, the stockbroker. But the nature of the competition is to consolidate. The winner, the ultimate middleman, would mediate transactions in a variety of areas. Develop a trusted brand and people will buy from you, no matter what you sell, the theory goes. From the beginning, Amazon touted its ability to act as an efficient intermediary in Internet-based transactions. The virtual store boasted of its lack of physical location, its disdain for retail space. You order from Amazon, and the company buys the item and sends it to you. “Their core competencies are ease of use and customer service,” notes author Schwartz, whose most recent book is titled Digital Darwinism: Seven Breakthrough Business Strategies for Surviving in the Cutthroat Web Economy. “They can expand into anything.” Bingo. Unlike other Web giants, Bezos ultimately aims to be the essential middleman not only in every E-commerce transaction but also in every human transaction. Best man at every wedding. Marriage counselor. Basketball referee. Midwife. And you thought portal sites were ambitious. 5. Seattle’s Best If we are correct in our thinking — and there’s no reason to believe we aren’t — Bezos has been carefully planning and executing this one from the day he started Amazon in 1995. First, create an enormous virtual bookstore that is the very model of self-promotion to prove that book sales alone can’t sustain any company of real heft. Second, branch out into other areas of on-line sales to reinforce the unfriendliness of the Internet to (profitable) commerce. Witness: In the second quarter of 1998, riding the buzz of its brand-new music store, Amazon registered operating losses of $18 million. By the second quarter of 1999, buoyed by expansion into videos and investments in Pets.com and Drugstore.com, that loss ballooned to $122 million. Third, stay in the book business long enough to change the market dynamic and plow all those pitifully puny stores under. With all that accomplished, things will really get interesting. Then you’ll see Bezos wearing dark glasses and a trench coat, skulking around Seattle with real estate agents and looking for the perfect piece of property. Then he’ll disappear. Vanish. Only the particularly savvy will discover, months later, in a small storefront in a lonely block in downtown Seattle, a quaint-looking shop called Bezos Books. The smartest of those sleuths will connect that shop with the man who used his grand vision not only to prove the futility of E-commerce but to establish himself as a bookseller, a devotee working tirelessly to get his product into the hands of book lovers. It’ll be a smash. And Bezos will have realized his ultimate dream — to reinvent the small independent bookstore. Ron MacLean, a freelance writer based in Jamaica Plain, Mass., now aspires to figure out what business Starbucks is really in.