The Internal Revenue Service is facing a massive backlog of 8 million paper business tax returns. That’s an increase of more than 3,000 percent compared to the same period in 2019 before the pandemic threw the world into disarray. Some cash-strapped companies rely on tax refunds to stay afloat. Given the IRS backlog, such companies may not get the needed funds in time.
Like many other organizations, the IRS took steps to protect employees during the COVID-19 pandemic. This slowed down tax return processing, especially for paper returns. While the IRS has tried to add staff, a tight labor market has impeded efforts.
Have problems? Need to talk with the IRS? In years past, contacting the IRS was relatively straightforward. The IRS provides help for people struggling to fill out their returns, and also contact points to settle issues. You could typically call and talk with a live representative.
Right now, however, the phones are ringing but are seldom answered. Compared to 2019, the IRS received four times as many calls from taxpayers looking for assistance in 2021. At one point, the IRS was receiving 1,500 calls per second. While statistics for business taxpayers aren’t readily available, just 3 percent of calls to the IRS’s 1040 line were answered.
Businesses and individuals that need to resolve issues with past tax returns are also struggling to contact the IRS. While they wait, interest may continue to accrue on past-due balances.
Besides processing taxes, the IRS has to remain on top of tax law changes, stimulus programs, and other measures. The government agency processed roughly 475 million Economic Impact Payments worth about $800 million during the pandemic. These stimulus payments likely propped up consumer spending. However, if consumers can’t get stimulus payments and refunds quickly, it may put a crimp on consumer spending, some observers say.
Small businesses find success on Etsy
Amazon dominates the online marketplace in the United States and many other countries, too. The online behemoth accounted for roughly 47 percent of American e-commerce in 2020. Yet Etsy is emerging as a promising alternative, especially for small businesses, and is now the second-largest online marketplace in the United States.
Rather than the generic mass-produced goods often found on Amazon, Etsy focuses on unique products, such as handmade arts and crafts. With Christmas approaching, shoppers can find handcrafted Christmas ornaments, custom printed driver’s licenses for Santa’s sleigh, and knitted blankets to keep warm while chestnuts roast on the open fire.
Shoppers can also order custom art and other products. For example, you can commission high-quality oil paintings, which may cost $300 or more. Those on a budget can order custom cartoon-style art for less than $10.
Etsy generated $1.7 billion in revenues in 2020 and $10.28 billion in merchandise sales volume. Much of the sales ended up in the bank accounts of small businesses.
As of 2019, more than 2.5 million sellers had found a home on Etsy. By 2020, total Etsy sellers topped 4.3 million. While 62 percent of Etsy sellers were based in the United States (2020), you could find Etsy entrepreneurs in 234 countries. PlannerKate1, a top Etsy seller, has drummed up more than $1.2 million in total sales.
Still, it’s not all good news for small businesses. For example, Etsy has drawn controversy with its off-site advertising campaigns. Etsy automatically advertised products, taking a 15 percent cut of sales. While smaller sellers could opt out, businesses generating more than $10,000 a year could not, but enjoyed a lower commission rate of 12 percent.
Book Review – Noise: A Flaw in Human Judgment
Ever wonder why people make bad decisions? If so, Noise: a Flaw in Human Judgment by Daniel Kahneman, Oliver Sibony, and Cass R. Sunstein should make your holiday gift wish list. The New York Times bestseller sheds light on how people make decisions.
More than that, this insightful book may also help you tune out the noise that interferes with judgment. This could reduce variability and help you make sound choices.
The authors argue that bad decisions often come down to noise clouding your judgment. They distinguish between systematic deviation or bias, and random scatter, AKA noise. Ultimately noise seems to do as much damage as bias.
The authors each impart their expertise. Daniel Kahneman has already won the Nobel Memorial Prize in Economic Sciences for his work on behavioral economics. Olivier Sibony teaches business strategy at HEC Paris and formerly worked as a partner at McKinsey. And Cass R. Sunstein is a distinguished legal scholar and behavioral economist currently teaching at Harvard.
The stakes certainly are high. Gartner has found that poor operational decisions alone can cost 3 percent of profits. Meanwhile, research suggests that the average adult makes roughly 35,000 “remotely conscious” decisions per day. Choosing between orange juice or coffee may not matter, but deciding which candidate to hire or which marketing campaign to focus on may ultimately determine your business’s success or failure.
4 ways local entrepreneurs uplift their communities
Global Entrepreneurship Week (GEW), which runs from November 8 to 14, is an annual event that aims to celebrate and empower entrepreneurs, innovators, and makers from around the world. It’s also the perfect opportunity to recognize the contributions that local entrepreneurs make to your community. Here are four good reasons to support local entrepreneurs this November.
1. They create jobs in the area
Local entrepreneurs create new and exciting job opportunities in the region where they live. This helps keep money in the community and strengthens the area’s economy.
2. They get involved in local events
Local entrepreneurs live and work in their communities. Consequently, they take pride in volunteering, making charitable donations, and participating in festivals to make their community the best it can be.
3. They shape neighborhoods
Local entrepreneurs play an important role in shaping the character and identity of their communities. The products and services they offer contribute to building meaningful relationships with tourists and locals alike.
4. They offer personalized service
Local entrepreneurs are tuned in to the needs of the people in their community. Therefore, when you shop locally, you can expect to get friendly, personalized service that you won’t find anywhere else.
This November, consider supporting the local entrepreneurs in your community.
Here’s why emotional marketing plays such a vital role during the holidays
The holiday season is fast approaching. Hot cocoa, warm fireplaces, kids smiling, time spent with loved ones — the holidays drum up a lot of warm and fuzzy feelings. And quite likely many of the feelings are due to savvy emotional marketing.
Emotional marketing targets our personal feelings and experiences. Using functional MRI scans, researchers found that that emotional response has a greater influence on intent to buy than ad content by a factor of 2-to-1 for print ads and 3-to-1 for TV ads.
Consulting firm Bain expects December sales alone this year to reach $800 billion, with companies will be competing fiercely for every dollar. Want to drive sales to your business? Be prepared to use emotional marketing.
Black Friday and Cyber Week sales illustrate the effects of time-limited promotions. Shoppers often line up outside stores before they open, and sometimes stampede to get the best deals. Psychologists note that shoppers suffer from anticipatory regret or the “fear of missing out.”
Adobe Analytics found that Cyber Week sales, which includes the days from Thanksgiving through Cyber Monday, topped $34 billion in 2020. Anticipatory regret helps explain the impulse, but that wasn’t the only psychological tactic at play.
Marketers also attempt to drive “shopping momentum.” Once you purchase one product at a store, you’re likely to purchase other products. A shopper might stop by your store for a particular item on sale. While there, the shopper may pick up other goods. This is why many retailers use loss leaders, or products sold at a loss, to drive in customers.
Limited supply may also increase already high demand. Back in 1996, shortages of Tickle-Me-Elmo dolls led to a shopping craze. This year, X-Box and Playstation game consoles may be hard to come by due to global chip shortages and high demand.
The quirky history of mascots and their impact on marketing
Many companies use mascots to engage with their audience and promote their brands. Turns out that lovable, quirky mascots are an effective marketing tool. Researchers have found that mascots can influence purchasing decisions and consumer intent.
Indeed, research suggests that brands with mascots are 37 percent more likely to increase market share than brands without and are also 30 percent more likely to increase profits.
Researchers at Cornell further found that consumers were 16 percent more likely to trust a cereal brand if on-box characters made direct eye contact. For this reason, the characters on kids’ cereal are often angled downward, while characters on adult cereal boxes stare straight ahead.
Mascots are especially effective with children. Mascots increase brand recognition and children prefer brands with mascots to brand without mascots. Children are also more likely to eat food, including fruit, if it’s endorsed by a mascot.
Quaker Oats Quaker Man is among the oldest mascots and has been around since 1877. Many early mascots were people, perhaps because it’s easy to dress someone up in a Quaker outfit.
Research has found that to this day, 21 percent of mascots are based on humans.
Animals are popular as well, with birds accounting for 19 percent and domesticated animals, including cows and cats, making up 16 percent. Vegetables make up just 2 percent. Still, by 1916, Mr. Peanut was repping Planters Peanuts. The part-human, part-vegetable Green Giant appeared in 1928, encouraging kids to eat their greens.
Ronald McDonald, perhaps the poster child for company mascots, first hit the stage in 1963. Then there’s McDonald’s purple Grimace. Some folks theorize that the giant purple blob is actually a walking, talking taste bud. McDonald’s, however, claims that “the best part about Grimace is that he means different things to different people.”
Businesses facing deluge of resignations
People with jobs want new jobs, and why not? They are lured by better positions, big sign-on bonuses, and higher salaries in the very loose job market.
But while companies are trading employees, applicants who aren’t in the job market are still scarce.
April saw a record-breaking 3.99 million people quit, followed by another 3.88 resignations in June and 3.98 million more in July.
Millions more may follow suit, primarily motivated by pay and benefits, according to one survey. The survey, conducted by ResumeBuilder.com, found that 40 percent of tech workers and 24 percent of employees at financial firms have either already quit or are planning to do so by 2022. About 18 percent of healthcare workers and 16 percent of employees in food and hospitality are also plotting their exits.
As one person posted on social media, “My hourly wage is the same but new employees are getting big sign-on bonuses.”
About 73 percent of business owners believe the labor market will tighten as extra unemployment benefits end.
But in the meantime, business is turning to automation, which suggests the open job market will collapse and jobs will be permanently lost. Roughly 75 percent of business owners are either investing in or considering automation, according to a survey by Pollfish. Of the business owners who have already automated, about 55 percent believe the shift will be permanent.
Of those business owners who can offshore their work, 71 percent have already done so.