Fred DeLuca is one of the two founders of Subway, the international sandwich chain that has seen phenomenal growth in the last two decades. This easy to read book chronicles some of the company's startup activities and is filled with anecdotes and case studies of other famous and not so well known entrepreneurs.

There are two audiences that I think can get a lot from this book. The first is people considering opening their own business. There is a tendency to think businesses require tens or hundreds of thousands of dollars in financing and thick business plans to get started. This book should put those misconceptions to rest if you have them.

I don't want to give the wrong impression. One of the biggest mistakes we see is undercapitalized businesses, and DeLuca himself devotes a whole chapter to the maxim "Never Run Out of Money." Still, there's more to a successful business than financing and, you'll have to understand that before you start out on your own.

The second group that should read this book is business owners envious of competitors who somehow, someway manage to be more successful with less financing, smaller product lines, inferior locations, etc. If you find yourself asking "how did they do that?" then this book will get you back to the basic ingredients of success that are often forgotten after expansion, relocation or a period of fast growth.

DeLuca outlines 15 lessons he thinks are essential to small business success. They are...

1. Earn a Few Pennies
2. Begin with an Idea
3. Think Like a Visionary
4. Keep the Faith
5. Ready, Fire, Aim!
6. Profit or Perish
7. Be Positive
8. Continuously Improve Your Business
9. Believe in Your People
10. Never Run out of Money
11. Attract New Customers Every Day
12. Be Persistent
13. Build a Brand Name
14. Opportunity Waits for No One
15. Take the First Bold Step

I have given this book to a few people that are starting or are thinking about starting their own business. I read it before I struck out on my own and it helped give me some peace of mind that I was thinking about the right things. There is something about DeLuca's story telling style that proves both instructive and inspirational.

Interestingly DeLuca's personality and the story of Subway are not exactly the best examples of sound business planning. The fifth rule in particular seems to apply to DeLuca and those who usually leap before they look probably won't stop long enough to read his book. In that sense there may be some disconnect between DeLuca's personality and that of his audience.

However, the book provides a great alternative framework for developing a business plan that I've used with a few people who don't relate well to the traditional analytical business planning approach. In that sense DeLuca's 15 lessons provide a great outline for turning someone's passion into a viable business that both customers and bankers can relate to.

Last month I talked a little about the difference between leasing and buying business vehicles. This month I’ll cover the two options IRS gives you to take tax deductions on business vehicles and what happens when you or your employees use personal vehicles for business use.

As it turns out buying or leasing is not the only decision you need to make. You also need to decide whether to deduct the actual expenses or take a deduction based on a mileage rate provide by IRS. For instance, if you choose to use the actual expenses method you will get tax deductions for depreciation, fuel, registration fees, maintenance, tolls, insurance, parking fees, garage rent, tires, etc. If you choose the standard mileage rate you will get a deduction equal to the number of business miles driven times 44.5 cents per mile (the rate for 2006).

It is easy enough to sit down with your CPA and run the numbers to estimate which method will provide the greatest deduction. When doing this it is important to consider deductions over the total life of the vehicle, not just the first year. For instance, a section 179 election (writing off a large portion of the vehicle’s cost in the first year) might be very attractive but it also eliminates the possibility of taking future deductions based on the mileage rate. As another example, it is possible to write off many times the original cost of the vehicle by using the standard mileage rate in high mileage situations.

Another consideration is the administrative work involved with tracking your deductions. To most people the standard rate seems much simpler, provided they keep track of their business and personal mileage. If you use this method you will not be able to deduct any actual expenses such as fuel, maintenance, registration, insurance, etc. This means you will need to record these expenses in such a way that they are easily identifiable. Your CPA will have to strip these expenses out and report them as non-deductible on your tax return.

All of the above is directed toward businesses that own vehicles within the business entity. The same rules apply if you use your personal vehicle for work and are not reimbursed by your employer. The one downside is that your expenses will be reported as unreimbursed employee business expenses on Form 2106 and will be subject to a 2.7% AGI floor. In layman’s terms this means the expenses will get lumped into a class of deductions that do you no good until they exceed 2.7% of your adjusted gross income.

If your employer does reimburse you then you will need to determine if it is under an accountable plan or a non-accountable plan. Accountable plans require employees to submit substantiation of expenses and return to the employer any advance in excess of the expenses incurred. Under an accountable plan the employee does not have to recognize the reimbursement as income (and therefore does not have to pay any tax on the amount).

Non-accountable plans are those that either do not require the employee to substantiate the expenses or do not require the employee to return any excess. Under these plans the entire amount of the payment to the employee is included in wages and the employee must pay tax on the amount. Employees then file Form 2106 to claim a deduction for their expenses and must substantiate them with adequate records as outlined by IRS. Under these plans employees are subject to the aforementioned AGI limit of 2.7%.

Developing a vehicle use strategy is important to both you and your employees. It is another one of those areas in which a little planning can not only simplify your life but also yield more favorable tax deductions.

In the last month we have had several clients express surprise regarding the new hire reporting law in Florida. This has nothing to do with taxes or accounting but it affects small business so we are often asked for clarification or direction when clients have questions.

Since 1996 every employer in Florida has been required to report new hires to the state. This information is used to track down dead beat parents who are not paying their court mandated child support payments. It is possible that if one of your employees is in this situation you will be contacted by the Department of Children and Families to initiate garnishment of the employee's wages for child support.

While reporting is mandatory it is not enforced very well and the New Hire Reporting Center’s efforts are not publicized or coordinated with other agencies that have more teeth (Florida Department of Revenue for instance). This isn’t necessarily bad because it allows the Center to take a more collaborative role with businesses and encourage them to ‘do the right thing’ for kids who may be dependent on a child support check that never comes.

Employers are required to report new hires within 20 days of hire. The information that must be included is the employers name, address and FEIN and the employee’s name, address, social security number and date of hire. This information can be filed electronically through the Center’s web site or it can be filed in paper with the office in Tallahassee.

If you are not in compliance with the new hire reporting law you should report any employees hired within the last 180 days and then continue to report new hires within the 20 day deadline. The Center’s web site mentioned above provides a lot of helpful information including frequently asked questions that cover most of the situations we have run into with clients.