April 30, 2007
Using your trust fund to finance your business, good or bad idea
Trust funds have all sorts of laws and regulations that they must follow, from both the state they are created in and the federal government. The most common type of trust fund is from inheritance money, parents set up a trust fund for their kids so that in case something happens to them the child will be provided for. Parents also set up trust funds so that their children can finance their education. You can also see trust funds that are set up by wealthy people for their children to get a certain amount at a certain age to do with as they see fit. Regardless of the situation that is set up trust funds is money that you have earned and put aside to provide for somebody in the future.
How a trust fund works is that you give a banking institution control over the money, which means they are the trustee, but you get to decide who the money is given to by assigning a beneficiary. When you are creating a trust you will need to create a document in writing the specifies how much money a person gets a year or if you want them to have a lump sum after reaching a certain age. You can also decide how that money should be spent you can put provisions in the trust that state it can only be spent on educational needs, to support your spouse or kids, etc. You can basically fine tune a trust to however you see fit by putting it down in writing. Your trust will be invested into stocks or bonds as you see fit so be sure to state where you want your money invested.
Continue reading "Using your trust fund to finance your business, good or bad idea"April 29, 2007
Giving contractors tips on taxes, good or bad idea
If you are not a tax professional or an accountant you should never give other people tax advice directly. This is because you are not licensed in that profession, would you want a lawyer giving you advice on what kind of surgery you need? But you can give suggestions to where contractors can go to get tax advice. For example you have a tax professional that you think very highly of, it would not be considered harmful to tell your contractors about the tax professional and how happy you are about his work. What you want to stay away from is professional advice, but if contractors have general questions about generic tax questions then you could probably offer advice on what you have done in similar situations, but you should always tell them to consult with a tax professional for expert advice.
Some topics that are safe to talk about that both you and contractors might share in common are:
Continue reading "Giving contractors tips on taxes, good or bad idea"April 28, 2007
Getting financing the non-traditional way
While most business owners know about the traditional methods of obtaining financing for their business, they might not be aware of some of the non-traditional methods. Let's take a look at some of the non-traditional methods you have to choose from.
Merchant cash advance and credit card receivables programs:
If your business is one that accepts credit cards for payments you can give yourself an option for non-traditional financing just for accepting credit cards. You might be able to qualify for a business cash advance with your credit card receivables. Because banks are a traditional way of financing they can be a poor choice to use when needing a cash advance, so you should look at non-traditional lenders when thinking about a cash advance. One thing to keep in mind is that getting cash advances is similar to getting a loan, but it is still not the same, you might have higher interest rates on cash advances so do not use it to borrow huge amounts of money.
April 26, 2007
Using an independent accountants, pros and cons
While hiring employees is great for some companies, using an independent account can also provide many benefits, but it still does carry some risks. Let's take a look at the pros and cons of using an independent accountant instead of an employee.
Advantages:
- Cost savings
o Federal tax withholding - with independent accountants employers do not have to withhold federal income tax which has to get paid to the IRS certain times of the year. With independent accountant the employer only needs to send in a 1099 to the IRS at the end of the tax year.
April 25, 2007
5 tips to handle getting sued
While not every gets sued it can happen to you in a business when you least expect it. For example somebody can slip and fall and claim that they were injured at your place of business or you can get sued for not paying a bill. The reasons can vary greatly but here are some tips so you know what you should do to handle getting sued.
Tip one:
If you are being sued you can try talking to the person or company who is suing you before your court date. Try to work out payment arrangements that you can stick to or try to pay off the debt in full. If you are not being sued for lack of payment you can try to work out a settlement arrangement before going to court. Even though the person who sued you went to court that does not mean that they are not open to discussing alternative arrangements. People usually use court as their final option, not as their first option. If the person is unwilling to settle with you directly try suggestion you go to mediation or other alternatives rather than going to court. Court can get expensive for both parties involved so seeking other solutions is in both of your best interests.
April 24, 2007
Using a finance tracker for your business
Finance trackers can be a great asset to any business. This provides you with an easy way to help keep track of all of your expenses, tax deductions, and income that your business is generating. You can buy business finance trackers for palm pilots and computers. This software is an easy way to keep all of your business records in one place. This is a huge advantage when tax time comes around. But this is not to say that you should not keep your receipts, credit card statements and other papers that you use for proof of your expenses.
Here are some common features for finance trackers.
- Keep track of numerous accounts - this feature allows you to keep track of expenses, incomes, bank accounts, credit cards, stocks, bonds, bank loans and it even has password management. All you have to do is enter the information into the correct category and you are on your way to keeping track of multiple accounts with the click of a mouse.
April 22, 2007
Finance for dummies
Finance is just a fancy term for how people manage their money and other assets. Here are a few steps to make managing your finances easy.
Step one:
Setting priorities. This is the most basic step to manage you finances, whether it is for your business or for your personal life, but it is also one the hardest steps to managing your finances. What you need to do is set goals that you want to achieve and then figure out which ones are the most important for you to achieve. Keep in mind that you might not be able to achieve all of your goals so buy choosing the most important ones you can focus more clearly on those goals.
April 21, 2007
How to ensure that you use the right federal tax forms
Knowing what forms you should use when filing your federal income taxes depends on what kind of business you have. Here are some general guidelines t follow to ensure that you are filing the right federal forms for your type of business.
Self-employed/sole owner:
To file your federal income taxes you will need to fill out a Form 1040 along with a Schedule C or Schedule CZ, this form is due on April 15th following the end of the tax year. You will also need to file a Schedule SE to file your self-employment tax; this form should be filed with your Form 1040. If you are paying estimated tax you will need to file a Form 1040-ES and this form is due on the 15th day of the 4th, 6th, and 9th month of the tax year, as well as the 15th of the first month following the tax year.
April 19, 2007
5 tips to ensure that you use the right tax forms
In order to ensure that you are using the right tax forms for your business you need to do some research. Using the right tax forms for your business also depends on what type of business you have. Certain businesses are required to file personal income tax forms to file their taxes for both business and personal dealings, while other businesses need to file forms that are strictly for businesses and must file their own personal return separately.
Tip one:
To ensure that you are using the right tax forms for state income taxes you first need to know if your state collects income taxes. After doing that research you need to do some research to find out the different tax forms and choose the one that is right for your business. To find out which tax forms are right for the state your business is conducted or incorporated in you can check with your State Tax Commission by mail or by phone or you can find this information on the State Tax Commissions website.
April 18, 2007
Mixing business and personal finance
Although most people know you should never mix your personal accounts with your business accounts, it seems to happen quite often. People seem to think that just because their business has earned the money, from all the hard work they have put in, it is okay to take out money to make up the difference in a purchase as long as they put the money back. But this is not true; there are many reasons why you should not mix your personal and business finances.
When you first start up a business it can be rather hard to separate your personal and business accounts because you are trying to get up and running. If you are using your own money to start the business you should take the money you have saved to start your business and immediately open up a business checking account so that you can keep track of your business expenses. If you have business credit cards you should also keep those separate from your personal credit cards. By keeping your accounts separate you are protecting both your personal and business interests.
Continue reading "Mixing business and personal finance"April 17, 2007
5 tips to get business financing with bad credit
People with bad credit are considered high risk lenders and not many banks or lenders want to take a chance on loaning people money with bad credit, regardless of if it's for a business. Most lenders who give business loans will also look at your personal credit score when determining if they are going to lend you credit. The good news is you can fiancé a business with bad credit, but the process is a bit more difficult. Here are some tips to help you get business financing with bad credit.
Tip one:
First you will need to separate your personal credit from your business credit. If your personal credit is bad then you do not want to have it tied into your business credit because you will never be able to get financing. To separate the two you are going to have to obtain a Tax ID number so that you can being building your business credit score. You will want to start off small and build your credit up slowly. Once you have a credit history for your business you can obtain better financing with lenders and secure larger loans, but do not over extend yourself.
April 15, 2007
What's the difference between common and preferred stock?
Many people do not know the difference between common and preferred stock, however, the differences are significant, so it is important to know them.
What are the differences between common and preferred stock?
First let's take a look at who usually gets what.
Most companies choose to issue common stock to founders and employees through the employee stock option program, and they offer preferred stock to investors.
April 14, 2007
What criteria do credit companies use to rate credit worthiness?
Knowing your credit score is important, as it is what determines if you can get loans, and the much needed funding to run your business. Your credit worthiness is what determines your score. So, if your score needs improving, or you want to have an idea of how credit worth you are, you need to know what criteria credit companies use to rate credit worthiness.
What criteria do credit companies use to rate credit worthiness?
The answer to this question is simply that there are a number items, or in other words, financial information, that is used to rate credit worthiness. And it will vary from credit company to credit company, however, there are a few that each company uses. The following are a few of the most widely used types of information used to rate credit worthiness:
April 13, 2007
What are generally accepted accounting principles?
What are generally accepted accounting principles?
By definition generally accepted accounting principles, or GAAP, are the accounting rules used to prepare financial statements for publicly traded companies. However, many private companies use these as well. The Generally Accepted Accounting Principles, are a set of specific accounting rules used to standardize the reporting of financial statements in the United States. This standardization can be very valuable to you as an investor, and helps put each publicly traded company on equal footing when it comes to financial reporting, thus differences are clear and easy to see and understand. Understanding GAAP can help you make better investing decisions.
It is important to note that the generally accepted accounting principles for the US as a whole are often different than those of local or state governments. Generally accepted accounting principles for local and state governments are usually under a different set of assumptions, principles, and constraints, which are determined by the Governmental Accounting Standards Board (GASB).
Continue reading "What are generally accepted accounting principles?"April 12, 2007
What are assets, liabilities and owners equity?
To understand a company's financial soundness you need to know what assets, liabilities, and owners' equity are.
Assets, liabilities and owners' equity are the three components that make up a company's balance sheet, and it is this balance sheet that gives you the little snap shot of how secure, or insecure the company is financially.
Generally when these terms are used they are done so in this equation: Assets = Liabilities + Owners' Equity
Continue reading "What are assets, liabilities and owners equity?"April 11, 2007
What's the difference between common and preferred stock?
Many people do not know the difference between common and preferred stock, however, the differences are significant, so it is important to know them.
What are the differences between common and preferred stock?
First let's take a look at who usually gets what.
Most companies choose to issue common stock to founders and employees through the employee stock option program, and they offer preferred stock to investors.
Just who the stock is issued to shows some of the underlying differences, now let's take a closer look:
April 10, 2007
What criteria do credit companies use to rate credit worthiness?
Knowing your credit score is important, as it is what determines if you can get loans, and the much needed funding to run your business. Your credit worthiness is what determines your score. So, if your score needs improving, or you want to have an idea of how credit worth you are, you need to know what criteria credit companies use to rate credit worthiness.
What criteria do credit companies use to rate credit worthiness?
The answer to this question is simply that there are a number items, or in other words, financial information, that is used to rate credit worthiness. And it will vary from credit company to credit company, however, there are a few that each company uses. The following are a few of the most widely used types of information used to rate credit worthiness:
April9, 2007
What are generally accepted accounting principles?
What are generally accepted accounting principles?
By definition generally accepted accounting principles, or GAAP, are the accounting rules used to prepare financial statements for publicly traded companies. However, many private companies use these as well. The Generally Accepted Accounting Principles, are a set of specific accounting rules used to standardize the reporting of financial statements in the United States. This standardization can be very valuable to you as an investor, and helps put each publicly traded company on equal footing when it comes to financial reporting, thus differences are clear and easy to see and understand. Understanding GAAP can help you make better investing decisions.
It is important to note that the generally accepted accounting principles for the US as a whole are often different than those of local or state governments. Generally accepted accounting principles for local and state governments are usually under a different set of assumptions, principles, and constraints, which are determined by the Governmental Accounting Standards Board (GASB).
April8, 2007
What are assets, liabilities and owners equity?
To understand a company's financial soundness you need to know what assets, liabilities, and owners' equity are.
Assets, liabilities and owners' equity are the three components that make up a company's balance sheet, and it is this balance sheet that gives you the little snap shot of how secure, or insecure the company is financially.
Continue reading "What are assets, liabilities and owners equity?"April7, 2007
Reasons to use Timesheet Software
Time sheet software is a great way to speed up and make the time sheet recording process more accurate and reliable. There are plenty of reasons to use timesheet software, and the specifics will be different for each company. However, the following are some general reasons to use timesheet software:
1. Accuracy: The cost of salaries, per hour workers, and billable hours really adds up fast for a small business, and you want to make sure you are getting your money's worth. For example, your salary employee, who is suppose to work 40 hours per week 9-5 Monday through Friday with an hour lunch break may actually be working 36 hours when you get right down to it. Say Monday they are 5 minutes late, take an hour ten at lunch, as they get back at the hour, but then have to use the bathroom, fill their water bottle, and call their wife. Then they cut out about 10 minutes early. Now that is normal, and does not seem like much time, but it adds up to 25 minutes, which 5 days a week is over 2 hours of work that they are being paid for and not doing. So, timesheet software is a great way to accurately determine how much work is actually being done.
Continue reading "Reasons to use Timesheet Software"Organizing Tips for Tax Time
Taxes can be a scary time for anyone, whether you are self employed, or an owner of small business, being organized for tax time can really relieve some of the stress.
The following are some great tips for being organized for tax time:
1. Start January 1st. Good tax organization is a year-round process, so keep records, receipts, and everything, and start day one.
April5, 2007
Leasing Business Equipment
When you start a business there are a lot of necessary items, from telephones, desks, and lamps, to heavy machinery, computers, and even dollies. So, you have the option to buy all of the business equipment needed, or lease it.
When should you do which? Well, that depends on your business. Leasing equipment can be a better option for business owners who have limited capital or who need equipment that must be upgraded every few years. For example, if you are in the business of graphic designing,you would need up to date computers with the newest versions of your software, as well as the highest technology printers, scanners, etc. So, leasing this equipment may be a financially savvy move as it means you can update your equipment every year without huge cost restraints. While purchasing equipment can be a better option for established businesses or for equipment that has a long usable life, it may not be smart for you. As every situation is unique, there is no one answer to whether or not you should lease or buy equipment.
Continue reading "Leasing Business Equipment"Is a business loan taxable income
One of the most difficult parts of starting or running a business is knowing all of the laws and rules you have to follow to keep it in good standing with the government, IRS, etc. One of the most difficult and daunting tasks for any business is understanding and interpreting business tax law.But, do not get too discouraged, even many tax professionals do not completely understand tax law, so as long as you do what you can, and seek some help when you get stuck, chances are you will be alright. However, let's discuss the frequent question of "Is a business loan taxable income?"
This is a legitimate question, and one that you certainly want to know, as if it is you need to pay your taxes on it so you don't get penalized and your business does not get seized, etc. But if it isn't, you will need to know so you do not pay taxes that are unneeded.
Continue reading "Is a business loan taxable income"April4, 2007
How to read a balance sheet
Knowing how to read a balance sheet is essential to making wise investment decisions, as well as knowing the financial stability of companies.
So what should a balance sheet tell you?
The balance sheet shows what a company owns and what it owes; if you use these two numbers, the difference shows you what the company is worth. A balance sheet is also known as a "statement of financial position", as it reveals a company's assets, liabilities and owners' equity (net worth). One thing to realize though is often this is not entirely accurate, as reality and what the paper says can have some discrepancies.
April3, 2007
How To Improve Your Business Credit Score
Your business credit score is important. Don't believe me? Ask any business owner who tried to get a business loan that had poor credit. A credit score of 700 or better is needed to be approved for business loans. Thus, if you do not have this credit score, you should make your goal to improve your credit, and start working towards that now!
Why? Your credit score should be taken seriously, as to lenders it is your financial snapshot, it shows your financial health at a given moment. So if your score is not where you want it to be, you better work to improve it.
Continue reading "How To Improve Your Business Credit Score"April2, 2007
Getting out of the shoebox - Bookkeeping basics
While keeping track of your business's finances may seem overwhelming, it's not that hard when you know the basics of accounting and bookkeeping. So throw out the old shoebox, and start booking right by learning some book keeping basics.
What is the point?
First and foremost it is important to understand why you do bookkeeping, what are your goals. Bookkeeping and accounting share two basic goals:
- To keep track of your income and expenses, which improves your chances of making a profit.
- To collect the financial information necessary for filing your various tax returns.
If you can keep these two basic goals in mind, your world of bookkeeping will become much easier. You will not get nearly as bogged down by the numbers, and think more of the overall picture. Don't get overwhelmed by the details of keeping your financial records, just stick to the basics.
What specifications are there?
Getting out of the shoebox - Bookkeeping basics
While keeping track of your business's finances may seem overwhelming, it's not that hard when you know the basics of accounting and bookkeeping. So throw out the old shoebox, and start booking right by learning some book keeping basics.
What is the point?
First and foremost it is important to understand why you do bookkeeping, what are your goals. Bookkeeping and accounting share two basic goals:
-
April1, 2007
Funding your Business with Loans vs. Equity Capital
Running a business takes money, and unfortunately in all businesses there are times when you might come up a little short, and need some funding or financing. There are two basic ways of funding or financing a business: debt and equity.
Let's take a closer look at these two options:
Basic Definitions:
Debt financing:
When you get a loan, that means you incur debt. Loans are debt financing; you borrow money and must pay it back, with interest, within a certain timeframe. This is one option for funding your business.