Is the IRS coming for you? Plus, giving Amazon a run for its money, the future of your phone-wallet, and the rest of the day's news.
Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today.
Watch your backs, millionaires. Especially if you make more than $10 million a year. IRS audits of multimillionaires surged 73 percent last year, CNN reports. That means more than 18 percent of people in the highest income bracket got audited last year. What gives? According to Thomas Cooke, a professor of accounting and business law at Georgetown University, it's all about public perception. The crack down on millionaires is not only a way for the IRS to boost revenue, but also to improve its image among average taxpayers who think the IRS favors the wealthy, he says.
Can eBay Challenge Amazon? When it comes to e-commerce, Amazon has been the leading powerhouse, but eBay is looking to change that. The company will acquire GSI Commerce, an e-commerce service company, for $2.4 billion. John Donahoe, eBay's chief executive, said that the deal was made in response to the fact that a growing number of its retailers who were struggling to figure out how to deal with expanding commerce industry while still working with eBay. The Wall Street Journal reports that the acquisition will give eBay access to "an order-management, fulfillment, and shipping business that competes directly with Amazon's own fulfillment offering for merchants." The deal is also expected to increase eBay's free cash flow and its operating earnings compound growth.
Jack Dorsey: I conceived of Twitter at age eight. If you haven't founded the next great tech company by the time you've hit double digits, you may as well give up. In a video interview with The Economist, Jack Dorsey, the co-founder and CEO of Twitter (whom Wired notes is returning to lead his flock shortly) notes that while most of his peers were (presumably) playing with toy cars and grossing out girls, he was busy conceiving of what would eventually become an $8 billion megalith. Seriously. "With Twitter, it was an idea I had when I was eight years old and started developing when I was 14," he says. Dorsey makes Mark Zuckerberg seem like an old man for launching Facebook at age 20; Andrew Mason, who launched Groupon in his late 20's, might as well be a dinosaur.
The woman who rules the Web. Soraya Darabi is on a mission. Darabi, who founded Foodspotting, a food recommendation site and app, has quickly established herself as one of the emerging women in the tech scene, which, pretty much forever, has been dominated by men. In an interview with OPEN Forum, Darabi says her heroes include Caterina Fake of Flickr and Alexandra W. Wilson of Gilt, who, she says, "are paving—or bulldozing really—roads for young female entrepreneurs looking to build successful companies from scratch themselves."
Is this the future of mobile payments? Verifone, Intuit, and Square have created cheap, alternative solutions for small businesses to accept credit and debit payments. Now, Google is now looking to join the action. According to The Wall Street Journal, Google is teaming up with Mastercard and Citigroup to integrate technology in its Android mobile devices to allow customers to make purchases on their phones. The plan is to convert phones into mobile wallets; using near-field communications technology, customers can pay for items by waving their phones in front of a checkout counter. Early reports project the market value for mobile payments to reach $618 billion by 2016.
Business apps go social. Taking a page from Facebook and Twitter, a "growing number of technology giants and software start-ups are trying to make business applications more 'social,'" the Wall Street Journalreports. Want examples? Microsoft, IBM, and Cisco have each incorporated social features, such as status updates and life information feeds. Start-ups, too. Yammer, a business social-networking service, landed $25 million in venture funding in November.
No multiplication without division. Steven Shapiro at Open Forum suggests operating on a fractional reserve system when it comes to building your new business. However, unlike banks that attempt this model, it usually results in sound profits for small business owners. For example, if your business operates via a set of fixed costs, it makes more sense to spread the liabilities around. If you hire a speaker for an event, why pay a hefty flat fee for his service when you're unsure if the ticket sales for the event will justify his paycheck? Instead, you can proactively control costs by tying the speaker's fee to a percentage of the ticket sales. Likewise, a restaurant owner can partner with clients who charge for their services only when the restaurant is doing well. When starting a business, your best bet is to spread the risk around. There's no need to shoulder the entire burden of a business when you only need to handle a fraction of it.