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By DENNIS NISHI

Social networking can be a powerful tool for small businesses looking to grow. But for some start-ups, it’s more than that: Social networking is the basis for the business.

Take Brent Hieggelke and his wife. Three years ago, the couple decided to rent their vacation home in Mt. Hood, Ore., but worried about letting strangers on the property. That’s when Mr. Hieggelke decided to use social networking to screen tenants.

He created a Facebook app called Second Porch that keeps dealings between friends. Users post their property availability, and the listings stream in their friends’ news feeds. Friends can also make recommendations about prospective tenants and properties.

“Every person probably knows 10 people that have vacation homes and even more than that are interested in renting. That amounts to a lot of vetted choices,” says Mr. Hieggelke.

Within a year, Second Porch attracted more than $1 million in investment funding, which Mr. Hieggelke used to set up an independent website that worked with the app but offered more features. The site drew more than 16,000 listings—and caught the eye of another rental service, HomeAway, which acquired Second Porch five months ago.

Friends of Friends

Entrepreneurs who build their businesses and websites around social networking say it offers a big advantage: Customers get unusually engaged with the business, sharing favorite products and services with friends and often turning them into buyers, too. In the best cases, entrepreneurs say, customers see the business as a kind of social activity in itself, interacting with other customers and making recommendations that will stream on the Facebook news feeds of all of their friends.

James Yang

Yardsellr.com has built its entire business around its customers’ chats about products. The San Francisco start-up lets Facebook users sell products to people with similar interests. Members join groups, or “blocks,” representing their niche interests, from “Star Trek” collectibles to guitars to purses. When a member lists an item for sale, it shows up in the news feed of other people that have subscribed to those blocks and allows them to participate in ongoing conversations.

The comments on those listings “are where all the action happens,” says founder and Chief Executive Danny Leffel. “More than 100,000 followers regularly comment on products that they love, and that creates entertainment value that can also promote educated purchasing decisions.”

Members then follow links back to Yardsellr’s own site to make their purchases. The company makes money from a buyer’s fee and from optional marketing services available to sellers. The company is private, so Mr. Leffel won’t disclose any financials, but he does say that Yardsellr has 3.9 million members and is adding more than 20,000 new ones every day. Its parent, YellowDog Media Inc., recently launched a similar site called Style.ly that focuses on clothing.

Bringing It Back Home

Facebook won’t disclose how many companies are combining its core features with commerce. But a spokesperson says that more than 7 million apps and websites are integrated with the social network, allowing visitors to do things like share a site’s content with their Facebook friends. And most social-networking sites, including Linkedin, Twitter and even YouTube, offer similar abilities.

Small companies have never had this level of customer access or ability to track behavior, says Charlene Li, founder of Altimeter Group, an advisory firm in San Mateo, Calif. “You know their names, what they might like and so much more than you did before,” says Ms. Li. “That kind of knowledge can help you accelerate a new business because you understand what customers want and need.”

But companies need to tread carefully, she says. When businesses bring customers in so close, they need to forgo the hard sell—or else risk alienating those buyers and others in their networks. They also need to be extra responsive to requests and complaints across all social-media channels, especially if they are made in public forums.

That may mean having staff members dedicated to the job, Ms. Li says. Companies can’t simply hand the task off to “a junior person…who is snarky to customers.”

Mr. Nishi is a writer in Los Angeles. He can be reached at reports@wsj.com.

Despite the year-end cliffhanger on Capitol Hill, lawmakers made few surprising changes to the tax code for 2012.

But that doesn’t mean taxpayers won’t stumble into trouble, given the rise of electronic filing, expanded reporting requirements, computerized document matching—and old-fashioned human nature.

Common problems fall into two general categories. One involves flubs for which taxpayers must fork over interest and penalties—or get a smaller refund. The second category of pitfall includes major quagmires that require enormous of amounts of time, money and trouble to resolve.

Some of these tax disasters are self-inflicted, such as neglecting to open mail from the Internal Revenue Service. Others arise from ignorance of the law, such as filing a joint return with a tax cheat. One of the newest and worst tax nightmares, identity theft, can strike without warning.

MarketWatch’s Jim Jelter explains the meaning of Tax Freedom Day and why this year you’ll have to work five days more than last year to be able to pay your taxes. (Photo: Getty Images)

Some tax problems are much harder to solve than others, but what are the really awful ones? The worst of the worst? Laura Saunders reports. Photo: AP.

“Taxpayers who avoid the worst problems can count their blessings,” says David Lifson, an accountant with Crowe Horwath LLP in New York. “Some tax problems are much harder to fix than others.”

Here is a breakdown of the thorniest issues, along with ways to avoid them. For more last-minute tax tips, see the articles that follow.

• Taxpayer identity theft. According to the IRS and National Taxpayer Advocate Nina Olson, taxpayer identity theft is rising at an alarming rate. During last year’s filing season, the IRS issued 250,000 special numbers to victims to verify their identity. It already has issued 770,000 for this year.

While some thefts come from stolen wallets containing Social Security cards and the like, thieves also are filching Social Security numbers in sneakier ways, such as from health-care or financial databases. Often the taxpayer’s first sign that he or she is a victim of ID theft is a rejected “e-filed” return or an IRS letter saying its filters blocked a suspicious refund.

ID theft often is hard to prevent, although routine measures such as safeguarding information, ignoring suspicious emails and monitoring credit reports closely can help.

ID theft also is difficult to resolve. Ms. Olson, appointed by Congress to protect taxpayers’ interests, says the IRS has 21 units dealing with ID theft. Often victims must have multiple contacts with different IRS units.

An IRS spokeswoman said the agency is working to streamline the process, adding that most cases are resolved within six months. Some cases take longer, however. Mr. Lifson of Crowe Horwath says he has a client who has waited nine months for his 2011 refund of $18,000 from the IRS following an ID theft. The client also hasn’t resolved related issues with New York state.

The IRS and the New York State Department of Taxation and Finance don’t comment on individual taxpayer issues.

If you are a victim, contact the IRS’s Identity Protection Specialized Unit and fill out an affidavit. The toll-free number is 800-908-4490. Experts suggest acting soon. Don’t plan on a quick refund.

Daniel Moore, a CPA in Salem, Ohio, notes that ID theft victims who counted on applying 2012 refunds to 2013 estimated taxes probably won’t be able to. Mr. Lifson also recommends waiting to file the next tax return until the previous year’s problem has been resolved, by getting an extension if necessary.

• Failing to declare a foreign account. In its zeal to stem offshore cheating, Congress has imposed tough sanctions on taxpayers who don’t comply with rules on reporting foreign accounts.

One of the most important forms—the Foreign Bank Account Report—must be received by a separate Treasury Department office by June 30 each year. It’s required if the value of foreign accounts exceeds $10,000 during the calendar year. The penalties for not filing can surpass the value of the foreign accounts.

The IRS has a limited-amnesty program that spares offshore account owners from criminal prosecution if they confess, but the price is up to 50% or more of the total account, including legal and accounting fees, say experts.

• Not filing at all. This is a problem that never goes away. The normal three-year statute of limitations for many IRS challenges and audits starts when the return is filed—so people who don’t file can never rest easy. Meanwhile, interest and penalties can pile up. Taxpayers who were owed refunds can’t collect them after three years—and the refund can’t be applied to other years when tax was owed.

Still, some people simply don’t file. Jonathan Horn, a CPA in New York, says he prepared 14 years of federal returns for one foot-dragging client who needed to catch up, and 12 for another, plus multiple state returns.

• Not opening mail from the IRS. This is another problem that can mushroom, notes Ernst & Young tax specialist Greg Rosica. Taxpayers who ignore IRS notices—and they are always on paper, never emailed—could find themselves with liens on property records or levies on their bank accounts that can ruin credit scores and are difficult to resolve. Some tax experts say they always reply to IRS letters, even if it is merely to send a copy of a previous response.

If you are busy or moving—or worried about receiving mail—consider filing Form 2848 or 8821 with the IRS, which allows the agency to correspond with your tax representative.

• Signing a joint return with a tax cheat. The U.S. tax code holds each spouse who signs a joint return liable for all information in it. About 50,000 taxpayers a year apply to the IRS for “innocent spouse” relief under a special provision of the code, but only about half receive it.

A better move: If you doubt your spouse’s tax honesty, don’t sign a joint tax return. Instead, use the “married filing separately” status. Doing so can cost more because not all deductions and other benefits are allowed, but it severs joint liability and could save a world of trouble.

—Email: taxreport@wsj.com

A version of this article appeared March 30, 2013, on page B5 in the U.S. edition of The Wall Street Journal, with the headline: Last-Minute Tax Tips.

By ARI I. WEINBERG

How attractive is “free”? Some of the largest online brokers of exchange-traded funds are determined to find out.

Two have recently expanded the lineups of ETFs they offer without trading commissions, bringing their menus closer to the size of their competitors’.

In February, Charles Schwab Corp.

expanded its commission-free ETF menu to 105 funds, up from just its own 15 broad-based index offerings. A few weeks later, Fidelity Investments expanded its exclusive partnership with BlackRock Inc.

to offer 65 of BlackRock’s iShares ETFs commission-free, up from 30, in addition to Fidelity’s one ETF.

Both programs now challenge TD Ameritrade Holding Corp.

and Vanguard Group, whose commission-free ETF choices were already large and diverse. TD Ameritrade offers 101 funds and exchange-traded notes selected by researcher Morningstar Inc., and Vanguard features all 65 of its own ETFs.

The expanded offerings represent a push by securities firms and ETF sponsors to get investors and advisers to consider broadening their portfolios to include exposure to more indexes, more sectors and more asset classes in the name of diversification. Looking at the four firms above plus E*Trade Financial Corp.,

whose menu of 89 commission-free ETFs is heavy on narrowly targeted portfolios, 25% of today’s ETFs—holding more than half of the industry’s assets—are now available commission-free from at least one of the companies, according to research firm XTF Inc.

Mitchell Reiner of Capital Investment Advisors in Atlanta, who manages client portfolios on both the Schwab and Fidelity platforms, is pleased that some of the ETFs used by his firm have “fallen in to free” with the recent moves. Still, a zero commission “is not a decision factor” in choosing ETFs, he says. In looking at multiple ETFs that invest in a particular asset class, he says deciding factors include overall cost, the particular exposure offered and how well each fund tracks its benchmark index.

In some cases, a higher expense ratio or a wide spread between the bid and asked prices for a thinly traded fund—which can force an investor to buy or sell at less-than-favorable terms—can make a commission-free ETF more expensive than one with a small commission.

Investors should bear in mind that ETFs aren’t ideal for everyone and aren’t always cheaper, in total, than traditional index mutual funds. Unlike traditional funds, ETFs trade at market prices that can vary from the value of the underlying holdings.

The enhanced Fidelity menu includes all 10 of the iShares Core ETF series of stock and bond funds. But in commodities, Fidelity offers only four thinly traded ETFs of commodity-producer stocks commission-free, not any funds tied more closely to the prices of physical commodities. None of the Vanguard-sponsored commission-free ETFs offer that kind of more direct commodity exposure either.

While the expanded offering at Schwab offers several true commodity and currency funds, the aggregate average daily trading volume for exchange-traded products across the platform is considerably smaller than the volume for the funds at Vanguard, Fidelity and Ameritrade, according to XTF.

Investors inclined to short-term trading should also note that at Fidelity, E*Trade and Ameritrade, they will incur charges if they sell a commission-free ETF within a specified period. Vanguard doesn’t have a short-term trading fee but says that buying and selling the same commission-free Vanguard ETF on its platform more than 25 times in a 12-month period may result in purchase restrictions on that ETF for 60 days.

Mr. Weinberg is a writer in New York. Email him at reports@wsj.com.

A version of this article appeared May 6, 2013, on page R9 in the U.S. edition of The Wall Street Journal, with the headline: Companies Add to Lineups of ‘Free’ ETFs.

By RUTH SIMON

Lured by rock-bottom interest rates, a growing share of borrowers looking to refinance are opting for a 15-year mortgage instead of the traditional 30-year one.

Fifteen-year fixed-rate loans accounted for nearly one in five refinance applications in October, according to the Mortgage Bankers Association. That’s up from 9.1% a year earlier and 7.5% in October 2007. The October data are the most recent available.

The move to shorter-term loans comes as rates on these mortgages have dropped to near historical lows. Rates on 15-year fixed-rate conforming mortgages averaged 4.46% last week, according to HSH Associates in Pompton Plains, N.J., well below their recent high of 5.25% in mid-June. Rates on 30-year fixed-rate conforming loans averaged 4.99%, or about half a percentage point higher.

To be sure, 15-year loans have their disadvantages. Even with the low rates, monthly payments can be substantially higher because the loan must be paid off over a shorter term. Borrowers are locked into the higher payments for the life of the mortgage.

The higher payments make 15-year loans less popular with home buyers, accounting for less than 5% of purchase applications. “It’s entirely a refinance phenomenon,” says Jay Brinkmann, chief economist of the Mortgage Bankers Association.

Originations of 15-year mortgages at Wells Fargo

& Co. are up 55% through November from a year earlier. At J.P. Morgan Chase & Co., 15-year loans now account for 20% of refinances, up from 10% a year ago.

Many borrowers attracted to 15-year loans took out their previous mortgage six or seven years ago and would prefer to shorten the term of their mortgage rather than extend it, says Michael Menatian, a mortgage banker in West Hartford, Conn. Because they have already paid down some principal, the increase in payment isn’t as great as it would be if they were earlier in their mortgage, he adds.

Barry Halligan, a retired municipal employee who now works part-time as a consultant, opted for a 15-year fixed-rate loan when he refinanced his mortgage last month. His new one carries a rate of 4.375%, more than a full percentage point below the 5.5% rate he had been paying since he last refinanced in 2003. The new mortgage will raise his payments by $238 a month, but “there’s more going now to principal,” says Mr. Halligan, who lives in Rocky Hill, Conn.

Other borrowers see the 15-year mortgage as a good investment. Darryl Werner, a physician, is in the process of refinancing the 30-year, $188,000 mortgage he has on an investment property in Long Beach, Calif. The new loan, which carries a rate of 4.375%, will raise the monthly payments on his $188,000 mortgage by $294. “I could take the same money and put it in the bank and make 1%, or in the stock market and lose God knows what,” he says. “This way, it going to pay my loan down.”

Some experts take issue with the notion that paying your mortgage down early is a wise strategy. “Since rates are at all-time lows, there’s all the more reason not to take out a 15-year loan,” says Lou Barnes, a mortgage banker in Boulder, Colo. “Over the long term, rates of return on investments will be higher” than the after-tax cost of the borrowed money, he says.

Write to Ruth Simon at ruth.simon@wsj.com