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How to Buy Business Excess Inventory and Government Surplus Cheap

Small business owners by the millions, worldwide, are saving money and building entire businesses by purchasing excess commercial inventory and government surplus super cheap online.  You can buy in bulk by the truckload, pallet or small package.  The condition of the goods or other assets ranges widely from new in a box, to customer returns, closeouts, refurbished, used and salvage.  Major product categories include computers, electronics, tools, machinery, house wares, industrial equipment, vehicles, store fixtures, apparel and hundreds more.

As corporations and public sector agencies continue to focus on cost-reduction, they are turning more and more to leading online liquidators like Washington, DC-based Liquidity Services, Inc. (which operates among other sites) to move items quickly and effectively.  The result is an easy, one-stop place where small and local businesses can get incredible bargains on wholesale, surplus and salvage products and other assets in over 600 categories.  

Saving money is more popular than ever, and the marketplace for buying and selling excess inventory and surplus goods and equipment online is soaring. Publicly-traded Liquidity Services (LQDT), for example, has grown revenues at a compound annual rate of 27% since 2002 and just reported another big jump.  While there are still other sites offering similar services, (and its sister sites,, and others) has become the go-to place for millions of biz owners.  

How to Grab the Bargains:  To buy on you first need to register at the site for free.  Then browse for what you need and put in a bid.  New stuff arrives all the time, so many business owners check the site daily, set up “watch lists” or sign up for free email alerts.  Most auctions start at $100 with no reserve, letting bidders decide the final price. New auctions are added daily. Here are some buyers’ basics:

Five ways to find what you need:

  1. Home Page: Some of the best bargains are featured in Hot Deals. Or click on a category to browse that way.
  2. Search Box:  Use the search feature to find auctions by keyword, product category, location, lot size, condition, or shipping option.
  3. Advanced Search:  This feature lets you search by seller, auction ID/title and price.
  4. Email Alerts:  Weekly notices and/or occasional Special Alerts depending on what you sign up for.
  5. Search Agents:  These are product searches that you create based on specific criteria. If your automated search produces a match, you’ll receive an email. 

How Bidding Works

To place a bid, enter your maximum bid amount in the “Place Bid” box on any auction page and click submit.  After you provide shipping and credit card (or other payment) information, you’ll receive a “Confirm Bid” notice that you must click to complete the bid.  You will only need to submit shipping and payment info once per auction.  If you win an auction, you can still use other payment options you’ve designated in your account to make the purchase.

You can also set up automatic or “proxy” bidding.   It works like this:  Enter the highest amount you are willing to pay in the bid box.  The system will record your “maximum bid” amount and place a bid at the current LOWEST minimum bid. If another bidder outbids your lowest minimum bid, the system will automatically place another bid for you, putting you back on top. The proxy system will continue to make lowest minimum bids on your behalf until you are the winner of the auction or another bidder exceeds your established maximum.  

This Buyer FAQ has detailed answers to dozens of key questions on registration, binding merchandise, bidding, payment and shipping.  

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What 1099 Reporting Rule Repeal Means to Small Business

Okay, small business owners just dodged a bullet. Chalk one up for common sense. The insane expansion of 1099 reporting hidden in 2010’s massive health care reform bill is now toast. President Obama put a stake in its heart on April 14.

Expansion of mandatory IRS 1099 form filing would have required every small business to file such a form for business-to-business transactions totaling $600 or more over the course of a year.  While businesses already must file 1099s for payments to individuals and independent contractors, this provision represented a giant escalation of the IRS campaign to close the so-called “tax gap” by putting a further squeeze on small business owners. [Also see New SBA Study says IRS Small Biz Audit Crackdown is Bogus.]

The expanded rule would, for the first time, have included payments currently exempted from the provision, such as those to vendors for merchandise and similar items. What’s more, under the now-defunct rule, individuals owning as few as one rental property would have been considered a “business” and required to file 1099s.

Needless to say, the filing burden would have gone through the roof, as business owners would also have been forced to collect tax IDs from every person or business they paid money to. And if they couldn’t get it, they would have been required to withhold federal income taxes and send the money to Washington.  In general, it was nuts.

But a public outcry, and some deft lobbying by the National Federation of Independent Business (NFIB), brought lawmakers back (briefly, at least) to planet Earth long enough to repeal the 1099 reporting provision. “The 1099 provision was so illogical, and so burdensome, that it was quickly identified as a must-repeal not long after the health-care law was signed into law last spring,” says Dan Danner, president and CEO of the NFIB. “But it took Congress more than six months to get this simple job done. They lingered over it, savoring the repeal effort in a way that only a politician can.  The process was deliberately prolonged by casting multiple votes for symbolic bills before voting on a piece of legislation that actually guaranteed repeal.”

Copyright © 2000-2011 BizBest® Media Corp.  All Rights Reserved.

New SBA Study says IRS Small Biz Audit Crackdown is Bogus

Ten years ago, a landmark IRS report claimed that small business owners under-report income by $80-100 billion yearly and account for over half of the U.S. “tax gap” of owed by uncollected taxes.   As a result, small business owners have been subjected to increased audits and reporting requirements, including the controversial new 1099 rule.

But now for the truth:  A new study just released by the U.S. Small Business Administration (SBA) Office of Advocacy says the IRS crackdown on the backs of small biz has been bogus all along.  And that comes from independent research commissioned by the Feds themselves – not some anti-tax business group.

After reviewing 10-years’ worth of IRS small business audits related to the innocuously-named “National Research Program” (NRP), outside researchers found that a mere 1% of all issues examined resulted from intentional failures to report income properly. Yes you read that right – one percent. In other words, 99% of income underreporting is unintentional, and undoubtedly the result of a vast and utterly confusing array of tax rules and regulations.

And here’s the real gut punch for biz owners:  While small business was tagged as the tax cheating culprit, the new study says that large corporation tax gaps are scarcely being measured at all, and that the IRS has been using estimates dating back to the 1970s and 80s to calculate corporate noncompliance.  What’s more, says the new report released by SBA:  “The IRS focused its tax-gap study on individual tax returns, and on returns not subject to withholding or third party reporting, which skewed the study unfairly toward small business.”

Over the last five years, audits of returns typically filed by biz owners have soared, while those for corporations with $10 million or more in assets have actually dropped 13%.  These are figures reported by the SBA itself.

But which type of audit pays off the most for taxpayers – small biz or big corporation?  No contest.  According to the new whistle blowing report, the IRS collects an average of $9,350 per auditor hour spend examining big biz returns, but only $1,034 per auditor hour spend auditing small business.

The new study concludes with this:  Unlike large corporations, small businesses lack the resources and expertise to negotiate with the IRS.  Indeed, 71% represent themselves in audits. They are overwhelmed by the complexity of the tax code.  Only aggressive outreach and education designed to help small businesses understand their tax filing obligations will significantly reduce the tax gap attributed to them.

BizBest will email the full 54-page report in PDF, free of charge, to anyone interested. Email your request to, and be sure to include the email address you’d like the report sent to.

Copyright © 2000-2011 BizBest® Media Corp.  All Rights Reserved.

SBA 8a Business Development Program Overhaul FAQ

BizBest - Business Made BetterA BizBest® Special Report: 

On Feb 11, 2011, the SBA made sweeping changes to the 8(a) Business Development “federal contracting” program – its biggest overhaul since 1998, effective March 14, 2011.  The purpose of the 8(a) program is to help eligible small “disadvantaged” businesses compete for billions of dollars worth of federal contracts each year.

This program – and some of the changes – create new opportunities for small biz owners who can obtain 8(a) certification, as well as others who team up with a qualifying firm to pursue federal contracts. Here some tips, and a summary of key changes to the program below:

  • See if you qualify: 8(a) certification is for small firms that are socially and economically disadvantaged. To qualify, a firm can’t exceed a certain size limit, which varies by industry; has to be able to meet certain economic criteria; and show that it is socially disadvantaged, meaning minority-owned or disadvantaged.
  • Get your financial house is in order: The SBA requires documentation on all aspects of the business and its owners, so make sure your business is being run cleanly.
  • Inquire about other SBA certifications:  Even if you don’t qualify for this program, there are other small business certifications including Small Disadvantaged Business, Women-Owned Business, Service-disabled Veteran-Owned Business and HUBZone Business.
  • Partner with qualified biz owners: If you are new to government contracting, teaming up with another business can help you gain the experience and credibility. With various set-aside contracting programs for small businesses, partnering with an 8(a) or women-owned firm can help increase your chances of winning contracts.

FAQ on 8(a) changes:

Q. What Are the Some of the Changes to the Rules on Economic Disadvantage?

For the first time, this rule adds objective criteria to determine economic disadvantage based on personal income and total assets. With the rule change applicants to the program must demonstrate economic disadvantage based on the following criteria:

  • Adjusted Net Worth must not exceed $250,000 for initial eligibility or $750,000 for continuing eligibility.
  • Personal Income must not exceed $250,000 (averaged over three years) for initial eligibility or $350,000 for continuing eligibility.
  • Total Assets must not exceed $4 million for initial eligibility and $6 million for continued eligibility (allows for growth during the 9-year term).

IRA Accounts – excluded from net worth and total asset determinations

The rule clarifies SBA’s treatment of Subchapter S Corporations when determining economic disadvantage. SBA’s intent is to make the treatment of S Corporations consistent with that for C Corporations, and not penalize a firm because of the different tax structures. If the business can demonstrate that funds reported on the individual tax return were used to pay taxes or reinvested into the firm SBA will not count those funds as personal income. The Final Rule adds the same treatment for LLCs and Partnerships.

Q. What Are the Some of the Changes to the Rules on Joint Ventures?

The rule tightens the requirements for joint ventures (JV) to ensure that non-disadvantaged firms do not unduly benefit from the 8(a) BD program.

  • The JV agreement may be informal or formal (separate business structure) BUT must be in writing. Also, the JV may, but need not be populated (i.e., have its own separate employees).
  • The JV may not be awarded more than three contracts over 2-year period without a finding of general affiliation. The same two entities may form additional JVs and each may be awarded three contracts over two years.
  • Specific to the 8(a) BD program the 8(a) partner to the JV must perform at least 40% of the work performed by the JV. This change replaces the “significant portion” language of the previous regulations. The rule differentiates between populated and unpopulated joint ventures and applies different requirements.
  • Project Manager: For the unpopulated JV (or JV populated only with administrative personnel) an employee of 8(a) managing venturer must be project manager. For the JV Populated with individuals intended to perform contracts, the JV must demonstrate how performance of the contract is controlled by the 8(a) managing venture.
  • Performance of work: For the unpopulated JV (or JV populated only with administrative personnel) the amount of work done by all the partners will be aggregated and 8(a) partner must perform at least 40% of all work done by JV (includes all work done by non-8(a) partner and any of its affiliates at any subcontracting tier). For the JV Populated with individuals intended to perform contracts, the non-8(a) JV partner, or any of its affiliates, may not act subcontractor to JV or any subcontractor of the JV.

Q. Are There Reporting Requirements for Joint Ventures?

Yes, the rule introduces Performance of Work Reports. As part of the annual review the Participant must demonstrate how it is meeting the performance of work requirements for each 8(a) contract that is performing as a JV. At the completion of every 8(a) contract awarded to a JV, the Participant must explain how Performance of Work Requirements were met.

Q. What Are the Some of the Changes to the Rules Governing the Mentor/Protégé Program?

The changes to the rule specifically allow for non-profit Mentors and a Mentor can have up to 3 protégés at one time. A Protégé can have second Mentor, corresponding to an unrelated, secondary NAICS code. However, a firm cannot be both a Protégé and a Mentor at the same time.

The assistance to be provided by the Mentor must be tied to the Protégé’s SBA-approved business plan and the Mentor/Protégé Agreement must be approved by SBA before the firms can submit a joint venture offer on a procurement as a small business. In order to receive the exclusion from affiliation on any non-8(a) contracts, the agreement must comply with the 8(a) JV requirements (other than SBA approval).

  • The rule changes permit Mentor/Protégé joint ventures to be small for federal subcontracts (DOE).
  • The rule now prohibits SBA from approving a new Mentor/Protégé relationship within six months of the end of an 8(a) Participant’s program term.
  • The benefits derived from Mentor/Protégé relationship end once the protégé leaves the 8(a) BD program. In other words the exclusion from affiliation ends.
  • For the first time, the rule allows for a specific reconsideration process when a Mentor/Protégé Agreement is declined.

Q. Are There Consequences if the Mentor Fails to Provide the Agreed-Upon Assistance to the Protégé?

Yes. The changes require that the Mentor is notified and provided an opportunity to respond. If the Mentor fails to provide the agreed-upon assistance SBA may terminate the Mentor/Protégé Agreement. The Mentor is ineligible to participate for two years. SBA may recommend a stop work order for each contract the Mentor and Protégé are performing as a JV and where they have received the exclusion from affiliation. If a stop work order is authorized where the protégé can independently complete performance, SBA may authorize substitution of the protégé firm for the JV. Finally, a Mentor’s failure to provide the agreed-upon assistance may constitute grounds for Government-wide suspension or debarment.

Q. How Does SBA Define Primary NAICS Code?

Primary NAICS code means the six digit code having the same size standard (e.g., 541330 Engineering Services, $4.5M, is different from Military & Aerospace Equipment and Military Weapons, $27M).

Q. Are there Changes to the Rules on Early Graduation and Size for the Primary NAICS Code?

SBA may graduate a Participant where the firm exceeds the size standard corresponding to its primary NAICS code, as adjusted, for three successive program years. If the firm can demonstrate that through its growth and development its primary NAICS code is changing to a secondary NAICS code in its adjusted business plan, SBA will not early graduate the firm.

Q. Do the Rules Address Participants Owned by Individuals Called to Active Military Status?

Yes. The changes to the rule allow the disadvantaged individual owners of the 8(a) firm called to active military status to elect to be suspended from program participation so as not to lose any of the 9-year term in the program. The length of suspension time is added to program term when individual returns to control the firm. If one or more other disadvantaged individuals can continue to control the firm in absence, the firm may elect to continue to operate as an 8(a) firm.

Q. Are There Changes to the Rules on Excessive Withdrawals?

  • The final rule amends the definition of withdrawal and the amounts SBA will consider excessive, and thus a basis for possible termination or early graduation. SBA believes that the new definition of withdrawal better addresses the original legislative intent behind the prohibition against excessive withdrawals.
  • The final rule also clarifies that withdrawals that exceed the threshold amounts indentified in the regulations in the aggregate will be considered excessive.
  • The new definition for withdrawal excludes officers’ salaries; but SBA will count those salaries if it believes the firm is attempting to circumvent the regulations through the payment of salaries.
  • The withdrawal amounts will be in the aggregate and are as follows:
    • Firms with sales up to $1M, $250,000;
    • Firms with sales between $1M and $2M, $300,000;
    • Firms with sales exceeding $2M, $400,000.

These limits do not apply to tribes, ANCs, NHOs, CDCs where withdrawal is made for the benefit of the tribe/ANC/NHO/CDC or the native or shareholder community; however, it does apply to withdrawals that do not benefit the relevant entity or community. A large salary to a non-disadvantaged individual will be treated as an excessive withdrawal and SBA will look at the totality of circumstances in determining whether withdrawal is excessive.

Q. What Changes Were Made to the Rules That Apply to Applicant and Participant Representatives?

The compensation received by any packager, agent or representative of any 8(a) applicant or Participant for assisting in obtaining certification, 8(a) contracts or other assistance must be reasonable in light of services provided. The fee charged cannot be a percentage of gross contract value. For good cause, SBA may suspend a packager, agent or representative from assisting 8(a) applicants or Participants.

For further information contact: