Article Contributed by Kendall SummerHawk

While a rosier global economic forecast may still be a few months away, smart entrepreneurs are taking control of their cash flow now, and wisely implementing simple strategies to increase how much they make and how much they keep.

Good news is, it’s surprisingly simple to take control of your cash flow right now. And, what’s really cool is that once you put these strategies into place, your business will thrive even during times like these, which positions your income to soar once the rest of the economy emerges from this cycle.

The trick is to take an active role in how you create the income you want, as opposed to sitting back and passively waiting for “your luck” or “things” to change. Creating more money flowing into your business has nothing to do with luck, and everything to do with knowing the right actions to take.

Which is why I’m sharing five simple tips to help you get a handle on your cash flow now, so you’re sitting pretty in the “money driver’s seat.” (These tips are excerpted from my Certified Money, Marketing and Soul™ Coach training program.

1. Where’s The Money Coming From?

Now is the time to take a look at how many income streams you have and discover where you have untapped opportunities to offer a wider selection of services. For example, if you offer 1-on-1 services and maybe the occasional teleclass, then now is the time to plan the launch of a new teleseminar series, a 6-month high-end program or begin to offer 1-day intensives. This will dramatically increase your cash flow with very little additional effort on your part.

2. Raise The Value — And Your Pricing — Of What You Already Offer

If you haven’t changed your services in a while then chances are you’re not only significantly undercharging, but you’re probably also giving away too much for too little. The first thing I do with my clients is help them redesign their current service offers so they’re offering greater value to their clients, at a much higher price. Everyone wins because your clients get a better package and you’re leveraging your time so you make more money in less time.

3. Start Tracking Your Income…Daily!

Every day I write down the total amount of money I’ve brought in. At first you may think you don’t have enough coming in to bother with this type of tracking. Trust me, by paying attention to money in this way, more of it will flow towards you, faster and faster. Every client I’ve coached to take this action has reported making more, faster!

4. Know What Your Money Bug-a-Boos Are

Money is a highly emotionally charged topic so you may have unfounded beliefs, old values or unsupportive behavior regarding money that no longer serve you. This is normal so don’t sweat it; just do something about it. For example, if you assume people won’t pay more for your services or you frequently offer discounts, this tells me your money bug-a-boo is being too quick to judge what your clients value.

I recommend checking out one of my programs or home study courses. These resources will help you make dramatic mindset, and behavior shifts, regarding money so you’re no longer held prisoner by the past.

5. Consider This Popular Way To Even-Out Your Monthly Cash Flow

My monthly income used to spike and dip like a roller coaster, until I added membership (continuity) programs to my business model. Once I did, I had steady, reliable money flowing in. Since then, I’ve redesigned my entire business to be 75% membership based. Every business has the opportunity to create a membership program of some sort.

There’s even a company that offers horse vitamins on a monthly, auto-ship basis (to the tune of several hundred million dollars per year!). So get creative or get coaching on how you too, can add continuity to your business.

Solving Cash Flow Issues Simply Means Being Creative

Keep your approach to solving your cash flow issues simple. Most of all, be willing to look at what is working, and what is not working so you can let go of old habits that are costing you too much in terms of your time and potential revenue. This may mean refocusing how you spend your time but the results will be well worth it!

About the Author
Kendall SummerHawk, the Million Dollar Marketing Coach, is an expert at helping women entrepreneurs at all levels design a business they love and charge what they're worth and get it. Kendall delivers simple ways entrepreneurs can design and price their services to quickly move away from 'dollars-for-hours work' and create more money, time, and freedom in their business. For free articles, free resources and to sign up for a free subscription to Kendall's Money, Marketing and Soul weekly articles visit www.kendallsummerhawk.com.

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"Business (B2B) credit is currently 1.5 times larger than commercial bank loans: and the spread between the two has grown by nearly $100 billion since the end of 2008." from the Credit Research Foundation's Sept. 2009 report, "Economic Impact on Business Credit & AR".

In a pure barter system there must exist a coincidence of wants and or desires before a trade takes place. This severely restricts and limits the opportunities for commerce.

Money is a medium of exchange with an established value that is accepted in return for goods and services. The dominant form of money is currency which is issued, controlled and limited by governments. An alternative to money is B2B (commercial) credit and no government printing presses or controls are required.

Credit allows for the value of a product or service to be assessed and for profitable sales to happen based on payment at some later date. Credit is an intermediary used in trade to avoid the inconvenience and inefficiencies of a pure barter system.

Credit terms, i.e. IOUs, like money are a medium of exchange.

Safeguards so as to protect the value of credit extended must exist just as governments must safeguard the value of the money they print. For example at the time of this article one ZWD is worth .00000003 of 1 USD, that means that it takes about 37,410,000 ZWD to purchase the same as $1.00 US.

While the supply of money is limited by how much of it governments print, credit is unlimited; in fact the more of it that is created/extended the greater is the demand created for products and services . Credit, properly understood and managed allows for the expanded movement of products and services and for economic growth and prosperity . Credit is a lubricant of commerce and greases the wheels of business.

Fear of loss and focus on risk management due to a lack of knowledge on the full profit potential and on how to properly manage this unlimited medium of exchange creates bottlenecks, i.e inefficiencies that hinder the fruitful expansion of trade .

The Profit System of B2B Credit and A/R Management provides a proven, understandable and useable philosophy and methodology for integrating a seller's specific knowledge regarding their "Product Value at Time of Sale", their potential customers' profile and past performance to allow for the expansion of profitable sales while remaining confident of payment.

The Profit Approach

Philosophy is the study of existence and truth and relies on a systematic approach and reasoned argument. So what is the truth or purpose for the use of B2B Credit in the selling of products or services?

To understand the purpose of B2B Credit we must first accept that behind the selling of products or services lies a profit motive, that is we need or desire to earn more than we expend in a business transaction. The actual process of extending credit must be driven, based on and support this desire to earn a profit.

Beyond the cost of the product or service being sold there are fixed business expenses and other transactional costs that must be taken into consideration to ensure that indeed a profit is earned on a sale made.

Fixed expenses are also known as fixed costs and as a rule do not vary with production. Some examples of fixed costs are rent, sometimes insurance, long term equipment costs. The ability or inability to take on more business without increasing fixed costs is a factor that must be considered in profitable credit sales.

Transactional costs are incurred in every economic exchange. These varying costs include the cost of products, of delivering a service, sales commissions , marketing costs, the effort of billing customers and of the taking of payments. It is important in B2B Credit sales to consider the transactional costs that might prove significant; so as to ensure that in fact the sale being made is a profitable sale.

In B2B Credit the costs start when a customer expresses a desire to buy based on payment at a later date. At this point of purchase efficiency dictates that the information required to help determine if and how credit will be extended to the customer must be gathered. Use of a traditional credit application that the potential customer fills out and which contains standard terms and conditions of sale contributes to delays and to a sales limiting mindset. A better tool for the gathering of customer information is a New Customer Information Form, which is completed by the selling agent and which contains an authorization to check a customer's credit to be signed by the customer.

Additional costs that go with selling on credit terms are the costs of the investigation of the customer, the evaluation of the customer's profile , i.e who the customer is and how the customer does business, and evaluating the seller's Product Value at Time of Sale. Terms and conditions of sale are then determined following the investigation of the customer past payment history and the evaluation of the customer's profile and the seller's Product Value at Time of Sale.

There is also the cost of carrying A/R (accounts receivable), i.e. the time value of money and of bad debt write offs or losses should the customer fail to pay.

Why Incur The Costs?

We have already stated that the underlying motive or purpose for an economic transaction is the need or desire to earn a profit. Specific to B2B credit sales, credit terms are extended because:

1) Required by the customer. The customer require time after the delivery of the purchased product or service to ensure that in fact what was desired was received. They also require time to process the bill for payment.

2) Downline sales by the customer. The customer company requires time after the delivery of the purchased product or service to add value to the product or service and to make downline sales to its own customers before it can pay. If a customer company is extending credit terms to its own customers it may require even more time in which to receive payment before it can pay upline suppliers.

3) Customary in the industry. Credit terms are routinely extended in the customer's industry by competitors and are expected.

The reason why the costs associated with the extension of credit are incurred is to capture profitable sales that would otherwise be lost.

Credit is primarily a function of sale and not of accounting.

If the management of a business believes that credit is an accounting function and all about risk management the end result will be the limiting of both short and long term sales and profitability.

DSO (days sales outstanding) and % bad debt, i.e. the % of approved credit dollars lost due to non-payment are and always have been measurement of risk. Use of risk performance measurements will result in the limiting of both short and long term sales and profitability. The old risk management approach to Credit Management limits profitability.

Two men look through prison bars, one sees the mud the other the stars.

The Profit System of B2B Credit Management

In the course of years of hands on work with companies across industry lines the copyrighted Profit System of B2B Credit Management has proven that Credit properly understood and applied can and will lead to more and larger new sales, to improved cash flow, controlled loses, greater repeat sales, elevated customer service levels and customer retention, and to the ability to identify areas of opportunity for improvement that can drive down costs of doing business for seller and customer alike.

The proven profit philosophy and set of methodologies that make up the Profit System of B2B Credit Management turns an area of business always thought of as a cost center, as a negative, a necessary evil and as the ugly step-child of accounting into a proactive profit center.

In Closing

Credit is essential in both short and long term sales and is also an investment in the lifespan of the customer relationship.

Credit allows for the value of a product or service to be assessed and for profitable sales to happen based on payment at some later date.

Properly understood and managed B2B Credit is an unlimited alternative to money and to the expanded movement of products and services and economic growth and prosperity.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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Article Contributed by Kendall SummerHawk

Did you know that HOW you design your client payment plans can make the difference between your prospective client saying, “Yes!” versus muttering, “Let me think about it?”

This applies to services, programs and even products offered on your Web site. So it’s wise to understand what works — and what doesn’t! — so you can make it easy for your prospective clients to say “yes” to you.

Now, the problem is, most Soul-preneurs™ feel uncertain as to how to design their payment plans. Many rely on the simple “order now and save XYZ amount” strategy. And while that’s a good one, in this economy that alone is not compelling enough to motivate people to hire you or invest in your info product.

Which is why my Platinum clients and I carefully design what payment plan strategy is going to work best for each of their service or info product launches. It’s just too important to leave to chance or not get expert help creating!

The good news is that I’ve spent years figuring out what works in the area of pricing and money. Here are three SIMPLE strategies that will instantly help you design a compelling offer your prospective clients will love to say “Yes!” to.

Pricing Plan Strategy #1: Offer a Valuable Incentive For Paying in Full

You’ll be surprised at how many clients will choose a full pay option in order to save big or qualify for a special high-value incentive.

For example, in my new 2009 Platinum Program the full pay option is generously rewarded with a special “preferred client” coaching day with me on the topic of pricing and money. This is in addition to a significant savings. Together, these create powerful reasons for new Platinum members to not only apply for the program but to choose the full payment option.

Pricing Plan Strategy #2: Create a Reason WHY a Client Should Say "Yes" to Your Offer Now... Instead of Later

Most Soul-preneurs™ mistakenly give their prospective clients far too long to make their investment decision. This backfires because human nature is such that the longer someone has to decide the more likely they are to talk themselves out of making a “yes” decision.

That’s a shame because that means that’s someone you’re not able to help. So keep your cut-off dates more immediate, then use your marketing to create energy, excitement and a reason for people to say “yes” to you within this shorter time frame.

Pricing Plan Strategy #3: Aim to Make Your Bonuses Total MORE Than the Original Service or Product Being Purchased

Like you, I’m NOT a fan of offering a hodgepodge array of bonuses that look like someone just cleaned out the back of their closet. Instead, design bonus products or services that have real value to your clients and that if purchased separately, total up to even more than the original item offered. Even better, offer at least one bonus that can’t be purchased separately, emphasizing its appeal as an “exclusive” available only to your clients when they invest in your program or product.

Think Creatively When It Comes To Your Pricing Plan Options

While there are many more pricing plan strategies you can use, these three will get you started quickly and help you feel more confident in launching your new programs and products. Remember that the easier you make it for your prospective clients to say “Yes!” the more you’ll be able make a positive difference for them while making more money!

About the Author
Kendall SummerHawk, the Million Dollar Marketing Coach, is an expert at helping women entrepreneurs at all levels design a business they loveand charge what they're worth and get it. Kendall delivers simple ways entrepreneurs can design and price their services to quickly move away from 'dollars-for-hours work' and create more money, time, and freedom in their business. For free articles, free resources and to sign up for a free subscription to Kendall's Money, Marketing and Soul weekly articles visit www.kendallsummerhawk.com.

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Merchant cash advance transactions are big business. In the past few years, the industry has grown from a few providers to what some predict will be an almost 10 billion dollar industry. Search engine results for “merchant cash advance” produce literally thousands of provider results. How do you wade through all of these providers to find the right one for your business? How do you get the best deal? Here’s a quick guide to a successful merchant cash advance transaction.

Only “merchants” can apply. A merchant is someone that owns and operates a business that performs credit card processing functions as a way to accept customer payments. Providers have different requirements regarding the length of time you need to be in business- many also require a certain sales volume for approval. Generally, you’ll need to have at least a few thousand dollars in credit card sales to qualify for a cash advance transaction.

You have to qualify. Cash advances have become a popular method of financing because the approval process is fast and easy. But be careful- just because you’re “approved” doesn’t mean you’ll be able to repay the advance according to the agreement. Many unscrupulous providers have been known to approve businesses they know won’t be able make repayments as scheduled in order to collect the fees and penalties associated with defaulting.

Service agreements set the terms. Once you’re approved for a business cash advance, the provider will send you a service agreement with all of the important information- your advance amount, the “safe” retrieval rate (based on your daily credit card sales volume), and advance fees should all be included in this agreement. Since a merchant advance isn’t a loan, it isn’t subject to lending or usury laws- providers can basically charge whatever they want for services, up to 50% or more of the advance amount in some cases. Be extremely wary of agreements with fees that kick in if sales volume drops below a certain amount (called daily minimum fees) or “balloon” repayment clauses that require payment in full if certain conditions are or are not met.

Repayment is taken from daily sales revenue. You begin repayment the day you receive your advance check, much like a traditional loan. Before you take out an advance, you need to make sure that your current sales volume is able to support the repayment structure specified in the agreement.

What happens next? If you repay your advance according to the agreement, everything is fine. Repayment is usually quick- you should have the advance balance paid off within several months of initiating the transaction. The service agreement governs potential defaults- most agreements contain some kind of a “balloon” repayment clause (see above) or give the provider the authority to place a lien on business equipment or property if you can’t pay back the advance. Providers have also been known withdraw money straight from a business checking account. Before you sign the service agreement, you need to make sure that you know exactly what will happen if you can’t repay the advance according to the terms.

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In a pure barter system there must exist a coincidence of wants and or desires before a trade takes place. This severely restricts and limits the opportunities for commerce .

Money is a medium of exchange with an established value that is accepted in return for goods and services. The dominant form of money is currency which is issued, controlled and limited by governments.

An alternative to money is credit and no government printing presses or controls are required. Credit allows for the value of a product or service to be assessed and for profitable sales to happen based on payment at some later date. Credit terms, i.e. IOUs, like money are a medium of exchange. Credit is an intermediary used in trade to avoid the inconvenience and
inefficiencies of a pure barter system.

Safeguards so as to protect the value of credit extended must exist just as governments must safeguard the value of the money they print. For example what is the value of a Zimbabwe Dollar (ZWD). At the time of this article one ZWD is worth .00000003 of 1 USD, that means that it takes about 37,410,000 ZWD to purchase the same as $1.00 US.

While the supply of money is limited by how much of it governments print, credit is unlimited; in fact the more of it that is created the greater is the demand created for products and services. Credit, properly understood and managed allows for the expanded movement of products and services and for economic growth and prosperity. Credit is a lubricant of commerce and greases the wheels of business.

In commercial or B2B Credit, fear of loss and lack of knowledge on the full profit potential and on how to properly manage this unlimited medium of exchange creates bottlenecks, i.e inefficiencies that hinder the fruitful expansion of trade . The Profit System of B2B Credit and A/R Management provides a proven, understandable and useable philosophy and methodology for integrating a seller's specific knowledge regarding their "Product Value at Time of Sale", their potential customers' profile and past performance to allow for the expansion of profitable sales while remaining confident of payment.

The Profit Approach

Philosophy is the study of existence and truth and relies on a systematic approach and reasoned argument. So what is the truth or purpose for the use of B2B Credit in the selling of products or services?

To understand the purpose of B2B Credit we must first accept that behind the selling of products or services lies a profit motive, that is we need or desire to earn more than we expend in a business transaction. The actual process of extending credit must be driven, based on and support this desire to earn a profit.

Beyond the cost of the product or service being sold there are fixed business expenses and transactional costs that must be taken into consideration to ensure that indeed a profit is earned on a sale made.

Fixed expenses are also known as fixed costs and as a rule do not vary with production. Some examples of fixed costs are rent, sometimes insurance, long term equipment costs. The ability or inability to take on more business without increasing fixed costs is a factor that must be considered in profitable credit sales.

Transactional costs are incurred in every economic exchange. These varying costs may include sales commissions , the energy and effort required to find potential customers, the effort of billing customers and of the taking of payments. In B2B Credit sales it is important to consider the transaction costs that might prove significant; so as to ensure that in fact
the sale being made is a profitable sale.

In B2B Credit the transactional costs start when a customer desires to buy based on payment at a later date. At this point of purchase efficiency dictates that the information required to help determine if and how credit will be extended to the customer must be gathered.

Use of a traditional credit application that the potential customer fills out, and which contains standard terms and conditions of sale, contributes to a sales limiting mindset.

A better tool for the gathering of customer information is a New Customer Information Form, which is completed by the selling agent and which contains an authorization to check a customer's credit to be signed by the customer. Terms and conditions of sale are to be determined following the investigation of the customer past payment history and the evaluation of the customer's profile and the seller's Product Value at Time of Sale.

Additional transactional costs that go with selling on credit terms are the costs of the investigation of the customer, the evaluation of the customer's profile, i.e who the customer is and how the customer does business, and evaluating the seller's Product Value at Time of Sale.

There is also the cost of carrying A/R (accounts receivable), i.e. the time value of money and of bad debt write offs or losses should the customer fail to pay.

Why Incur The Costs?

We have already stated that the underlying motive or purpose for an economic transaction is the need or desire to earn a profit.

Specific to B2B credit sales, credit terms are extended because:

1) Required by the customer. The customer require time after the delivery of the purchased product or service to ensure that in fact what was desired was received. They also require time to process the bill for payment.

2) Downline sales by the customer. The customer company requires time after the delivery of the purchased product or service to add value to the product or service and to make downline sales to its own customers before it can pay. If a customer company is extending credit terms to its own customers it may require even more time in which to receive payment before it can pay upline suppliers.

3) Customary in the industry. Credit terms are routinely extended in the customer's industry by competitors and are expected.

The reason why the costs associated with the extension of credit are incurred is to capture profitable sales that would otherwise be lost.

Credit is primarily a function of sale and not of accounting.

Old Risk Management Approach is Profit Limiting

If the management of a business believes that credit is an accounting function and all about risk management the end result will be the limiting of both short and long term sales and profitability.

DSO (days sales outstanding) and % bad debt, i.e. the % of approved credit dollars lost due to non-payment are and always have been measurement of risk. Use of risk performance measurements will result in the limiting of both short and long term sales and profitability.

Two men look through prison bars, one sees the mud the other the stars.

The Profit System of B2B Credit Management

In the course of years of hands on work with companies across industry lines the copyrighted Profit System of B2B Credit Management has proven that Credit properly understood and applied can and will lead to more and larger new sales, to improved cash flow, controlled loses, greater repeat sales, elevated customer service levels and customer retention, and to the ability
to identify areas of opportunity for improvement that can drive down costs of doing business for seller and customer alike.

The proven profit philosophy and set of methodologies that make up the Profit System of B2B Credit Management turns an area of business always thought of as a cost center, as a negative, a necessary evil and as the ugly step-child of accounting into a proactive profit center.

In Closing

Credit is essential in both short and long term sales and is also an investment in the customer relationship lifespan.

Credit allows for the value of a product or service to be assessed and for profitable sales to happen based on payment at some later date. Properly understood and managed B2B Credit is an unlimited alternative to money and to the expanded movement of products and services and economic growth and prosperity.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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Making the decision to sell a business is an extremely important one but many business owners do not realize just how important it is until it is their business. It is absolutely imperative that you take the time to consider your options before making a decision, regardless of whether you built the business from nothing or bought into it and made it your own. There are plenty of factors to consider but if you decide to sell your business, you should do your research before marketing your business for sale.

There are several tips that could help you when selling your business, and ten of them are outlined below. This information is essential so make sure that you adhere to the following points:

1. Plan Your Exit Strategy – Experts agree that you should always plan ahead when you want to sell the business, and begin to prepare at least three years in advance where possible. This allows you to prepare for the handover, both personally and regarding the business for sale. It will allow you to maximize profit and get your paperwork in order.

2. Prepare The Business – If you want to get a higher price when selling your business, you need to make sure that it is well prepared. Any outstanding issues should be solved, new policies and strategies implemented, and fulfilling training will get you up to 10% more on your business than would otherwise be possible.

3. Disregard Your Own Valuation – You are emotionally involved in your business so any price expectations you place on it would be emotionally affected. As such, you are likely to over inflate the price and no buyer will want to know how much you believe your business is worth. The only valuation that matters is that of a valuation specialist or qualified appraiser.

4. Protect Yourself – Have your attorney draw up a confidentiality agreement with no possible loopholes before you make any disclosures pertaining to the business. This will protect your business no matter what and ensure that you are not stung if any sale falls through.

5. Inform Your Shareholders – Shareholders and other individuals with an interest in the business, such as board members, could actually stop any sale of your business going through. Advising them in advance and taking steps to ensure that their influence is ultimately muted is essential. Failing to do so may leave you with your business in your name along with a huge bill for costs incurred by brokers, accountants, and attorneys.

6. Prepare Your Conditions – Many business owners wait until a bid is made on their businesses before preparing their own terms and this can hold up a potential sale. It may even be the cause for a sale falling through. Preparing your written terms and conditions before you put your business on the market will inform buyers before they place a bid. You will then be able to negotiate.

7. Consider Your Retirement – Selling a business may only be the start of your retirement but it could lead to problems in your personal life. You need to consider what you will do following the sale of your business for your own peace of mind and general health. Do not neglect this point. Although it may not sound important now, it will be following the sale.

8. Do Not Give Priority To Price – You should never look at the sale of your business in immediate financial terms. The bids offered may be distinguished as the highest monetary bid and the lower ones, but accepting the former may mean you lose out. Lower bids may have clauses by which you earn a percentage of profits for so many years or even retain shares, As such, the cash amount should be placed behind the content of the bid terms when you consider them.

9. Full Disclosure – No matter what the weaknesses are for your business, you should always make a full disclosure, including warranties, about the state of your business. Be sure to include “to the best of your knowledge” in your contracts, and qualify all disclosure made so you and your buyer know exactly where you stand.

10. Choose The Deal – Approving a deal structure is of paramount importance when selling your business. You need to ensure that you are completely happy with every aspect of the deal. For example, you may want to retain a certain aspect of technology from your business for your future interests so this should be qualified in the terms. You may also wish to keep certain business interests out of the sale. Whatever your decision, you should always act in your own best interests so only offer the deal that you feel comfortable with.

About the Author:

GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchise opportunities. Sell a business for free with no listing fees and zero commissions. We have all the top franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.

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Article Contributed by Ray Haiber

As a small Business Broker in Arizona one of the most common questions I receive from small business owners and entrepreneurs I meet is the following: How do I get a quick idea what my business might be worth? More often that not, most of these individuals are just looking for a rough “street valuation” to determine if they should sell now or sometime in the future. Although there are many unique factors to consider when valuing any individual business, and there are generally no definitive or concrete rules on what any particular existing business maybe worth at any given time, below are a few widely used quick business valuation methods that should give most small business owners an adequate starting point to help determine what their business might be worth in today’s market place.

Multiple of Seller’s Adjusted Net Cash Flow:

The most widely used method to value and determine an asking price for a small business is based on the adjustment or recasting of a business's most recent annual profit and loss statement. The goal in this process is to determine the true earning power of the business by adding back to the net profit all the non-essential or discretionary expenses not necessary to run the business to demonstrate a more realistic net cash flow for the owner.

Once this number is determined, the next step is to multiply it by a business category related multiple (service, retail, manufacturing, etc) that are widely used as rules of thumb by the business valuation and business brokerage community. For instance, in general terms small service related businesses are generally valued at a multiple of somewhere 2 to 2.5 times the Sellers annual adjusted net cash flow. Small manufacturing businesses generally receive higher multiples that can be in the 3 to 3.5 times range.

There are a variety of resources available to the public to find and research cash flow multiples that may be relevant or specific to your business. This includes well known guides such as the Business Reference Guide by Tom West, and business for sale directories such as BizBuySell.com that provide a data base of recent business sales and the multiples achieved. You may also want to visit fastbusinessvaluations.com which provides a free online business valuation calculator based on widely used industry related valuation multiples.

I would also recommend if you are considering selling your business to contact a local professional business broker in your area. He or she may be able to provide you with valuable information about recent sales in your market of similar businesses like yours, and the net cash flow multiple that they eventually sold at. You can find small business brokers in your area by visiting a directory like findabusinessbroker.com.

Industry Rules Of Thumb:

Another commonly used quick business valuation method is to use a general rule of thumb. A rule of thumb valuation basically consists of using a simple formula that estimates the value of a business through a set of established and very general business pricing guidelines. For example:

Auto Repair Shop: 35% of annual revenues

Full Service Gas Station: 2 to 3 times Sellers Adjusted net

Fast Food Business: 40% of annual revenues

Janitorial Service: 2 times Sellers Adjusted net

Motels: $20,000 per room

Keep in mind like all quick valuation methods “rules of thumb” are subject to the various unique characteristics of each target business being valued. Reference books like the aforementioned “Business Reference Guide” offer a comprehensive and excellent database of “rules of thumb’ by individual business category.

Market Comparables:

With the advent of the Internet, business owners now have the ability in most cases to view dozens (sometimes more) of real time listings of businesses very similar to their own on large online “business for sale” directories. Although it’s been my observation that many of these small businesses listed for sale tend to be overpriced, these directories such as bizbuysell.com still can provide a very useful source of free raw data, including rough comparables of both “for sale” and “sold” business listings. Keep in mind also that very few businesses will ultimately sell at there listed asking price, but if priced properly, (and the price can be supported with good financial records) many should ultimately sell with in 80% of their asking price.

Liquidation Value:

This is a relatively simple and fast way to value a small business by determining what the sale or liquidation of all the businesses’ hard assets (equipment, inventory, receivables) would generate in total proceeds on the open market after paying off any liabilities or debt associated with the business. Although a business liquidation valuation is a relatively straight for ward process, it does have significant draw backs as a valuation method because it does not take in to account the value of important factors such as goodwill, established customer/client base, future growth potential, and more.

Summary:

Keep in mind that even though all these valuation methods above offer either a quick and inexpensive way to get a rough idea of the value of most small businesses, or can be used as pricing guidelines when selling a business, at the end of the day a business is worth what some else is willing to pay for it.

About Author:
Ray Haiber has 10 years experience as a professional franchise opportunities sales consultant. Visit here to get a fast and

Where other businesses struggle, franchise businesses thrive. Wendy’s and McDonald’s are prime examples of successful franchise businesses, and also provide inspiration for those individuals who really want to form their own successful businesses in the future. With a brand behind you and a good idea of what does and does not sell, it is no wonder that you have chosen to consider a franchise.

There are two types of franchises out there. One is the good franchise that takes care of its franchisees, providing training and support throughout. The second type does nothing but take from the franchisee and pushes for profit. There is a third type of franchise and that is the one that will rip off franchisees, taking them for as much money as possible. The latter two are not worth the time, money and energy, whereas the former is extremely desirable.

As such, it is essential that you do your research and investigate a franchise thoroughly before signing a contract or paying out any money. The list of questions below may help you to find the better ones as the answers they will yield will give you enough information to make an informed decision:

1. Have you and your attorney analyzed the franchise agreement in detail and do you both completely agree with the details?

2. Are there any elements or step required of you that would break the law or be to the detriment of yourself or your country?

3. Do the provisions in the franchise agreement give you exclusive territory for the period of your contract? If not, what is the maximum number of franchises that may open in your area?

4. Is this franchisor connected in any way with any other franchise company handling similar products or services?

5. If you answered yes to the above question, what is your protection against the second franchising company?

6. If you decide to end the franchising contract for any reason, what are the provisions for you to pull out of the contract and how much would you have to pay to break the agreement?

7. Are you able to sell your franchise during or at the end of your contract? If you are legally allowed to do so, what are the repercussions related to compensation?

8. What time period represents the duration of your contract and how long has the franchisor actually been in full operation?

9. Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees?

10. Has the franchisor shown you any certified figures indicating exact net profits of one or more of its members, and have you personally checked the figures with these people?

11. Are you able to tap into franchisor assistance with training, PR, advertising, capital, credit or merchandising?

12. Are you offered assistance for finding the best location possible in your chosen area?

13. Does the franchising firm have solid financial input to ensure stability and the establishment of goals?

14. Does the franchisor have experienced management, trained in-depth?

15. Can the franchisor do anything above and beyond what you are capable of yourself?

16. Have investigations into your background been carried out and has the franchisor been assured that you are capable of making a profit?

17. Does the state in which you live in have franchising laws in place, and does the franchisor adhere to them completely?

18. How much equity capital will you need to purchase the franchise and operate it until your income equals your expenses?

It is extremely important to answer these questions fully and to your complete satisfaction. If this is the case then you may be extremely eager to become a franchisee. However, you should research all answers to get them verified in several places to ensure that your investment would be a wise one.

Purchasing a franchise can provide you with stability and profits in a short period of time but that is not to say that it is infallible. Less than 20% of all franchises fail so you need to ensure that you do not become a statistic. Information regarding specific franchising ideas can be found in the franchising directories, which are generally available at the local library. This will give you a little assistance to get started but you need to ensure that you are completely happy before committing.

About the Author:

GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchise opportunities. Sell a business for free with no listing fees and zero commissions. We have all the top franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.

Article Contributed by By Paul Hazen

In Raleigh, North Carolina, new homeowners John and Jennifer Hall made a smart decision: instead of choosing a risky mortgage scheme from a bank — a decision that has been catastrophic for so many of their contemporaries, the couple applied for a loan through the North Carolina State Employees’ Credit Union (NCSECU).

The couple did their homework, and concluded that it made better sense to work with a non-profit financial cooperative to purchase their first home. Aside from lower fees and closing costs, NCSECU did something the others didn't: a credit-union employee sat down with the couple to explain the pros and cons of the various mortgage options. Because credit union employees are non-commissioned, there was no pressure, enabling the couple to see the credit union as a trusted advisor.

"There are so many young folks who don't realize the advantage of going with a co-op," says John, who believes that all North Carolinians benefit from non-profit financial cooperatives that help to keep other financial institutions in check by ensuring citizens remain eligible for competitive rates and fees. "Being a member can make a tremendous difference in your financial life!"

You Belong

Are you frustrated with your bank? You may be tired of paying endless fees, high interest rates and receiving poor customer service. And in light of the current financial crisis, you may find yourself among those with good credit experiencing trouble getting a car or home loan, which is the result of tightened lending standards due to the banking industry’s own.

Fortunately, you have options.

Credit unions offer a fresh alternative to investor-owned banks while providing the same kinds of services. As a credit union member, you can open a checking or savings account, buy a certificate of deposit and get a loan. Some credit unions can even help invest for your retirement or offer financial planning courses before you buy your first home.

Credit unions are cooperative businesses, owned by members (depositors) who share something in common, such as where they work, live or worship. Because credit unions tend to be smaller and cater to a select group of people, you can expect a more personal relationship between the staff and the members.

Unlike commercial banks that generate profits for owners and outside shareholders, credit unions channel profits back to members in the form of lower fees, better interest rates and higher dividends. According to the American Banker/Gallup poll, credit unions consistently rank high among consumers for service and customer satisfaction every year since 1983.

Keep Your Money Safe

Credit unions have emerged as a safe haven for consumers. Because credit unions avoided the risky loans and exotic investments that brought down so many banks, they remain relatively untouched by the recent financial crisis, credit union members have peace of mind knowing their money is safe.

Credit unions are financially solid because they stick to conservative banking practices, such as requiring down payments and income verification on mortgage loans. While many banks were chasing ever more exotic ways to make money, credit unions stuck to the basics.

Some people are leery of putting their funds in the hands of a credit union because they believe the credit union isn’t FDIC insured. Nothing could be further from the truth. Like banks and savings institutions, credit unions deposits are insured up to $250,000 by the federal government, providing the same level of protection for investor assets as any federally insured banking institution.

Credit Unions Still Lending

Commercial banks have recently curtailed lending, even to people with good credit. The result is that many consumers are having trouble getting home and car loans due to tightened lending standards.

This is not the case with credit unions, which continue making loans available to people with good credit histories. In fact, credit unions are now experiencing higher loan volumes as consumers turn to them in greater numbers since the recent banking sector meltdown.

According to the Credit Union National Association (CUNA), credit unions made 36 percent more small business loans in the first half of 2008 than the same period in 2007, a reflection in part of the ability of credit unions to lend while banks horde cash.

Now, as conventional banks avoid lending even to credit worthy buyers, credit unions are poised to take a much larger share of the traditional lending business – including homes, cars and small business loans.

Join a Credit Union Today

Though once associated with trade unions, hospitals, universities and other large employee groups, credit unions are increasingly open to the general public within a given community. There are also “select employee groups” that offer credit union members to a network of affiliated businesses.

You'll find many reasons to join a credit union, including:

• Unlike many commercial banks, credit unions are still lending
• You have access to great products and services.
• Be heard. Your voice counts — your co-op truly cares what you think.
• You’ll be part of a values-based organization that puts people ahead of profit.
• Share in the financial success of the organization.
• Contribute to a thriving local economy.
• Invest in a business that is locally owned and democratically controlled.
• Be part of a strong and proud cooperative tradition.
• Help change the way business is conducted in America and around the world.

There are over 8,100 credit unions in the United States, which means that just about any consumer can find a credit union they are eligible to join, or by visiting www.thebetterchoice.coop.

About the Author
Paul Hazen is CEO of the National Cooperative Business Association (NCBA), the only cross-sector member association representing all cooperatives in the United States. To view a video showing why credit unions are the better choice and to find a credit union, visit http://www.thebetterchoice.coop

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For any individual looking to capitalize on franchising opportunities and owning a franchise business, there are several advantages to consider. Some of those you may be interested in are outlined below:

The Franchise Business Pros
· Having a brand behind you, whether it is locally or nationally famous, will save you a lot of time and money that would be needed to create your own brand or trademark. You will also attract customers immediately rather than having to advertise extensively.
· You will have an established business framework to work within, which dramatically reduces the risk associated with a startup business.
· You will already have tried and tested suppliers and services at your disposal, which will again save you the time and money associated with finding your own.
· You will receive ongoing support for sales and marketing throughout your franchise ownership. Franchisees often choose to tap into the help that is offered to them throughout their tenure via existing marketing and advertising assistance.
· Franchisees often get comprehensive financial assistance because banks are often more willing to lend money to well-known brands and names than business startups that are completely unknown to consumers. Franchisees may also have access to direct financial assistance from the franchisor.
· The risk of investing in a franchise is lower than it is for a regular business startup. An established concept is much more desirable because there is less risk.
· Continued development opportunities and research will be available. Franchisors tend to choose to tap into information concerning competition in the local area, seasonal goods, demand, and local attitudes.
· You will get business support from your franchisor, which will help to find you the best possible site and enable any construction work that needs to be done in addition to employee training and operational assistance.
· All business procedures and methods that you use will already be tried, tested, and proven to work.
· The quality and desirability of the franchisor products have been proven and come at a certain standard level that is well established.
· You will have the buying power of the franchisor and centralized purchasing at your fingertips, so costs may be reduced as a result of bulk buying savings that are handed down to the franchisee.

In addition to the pros of franchise businesses as outlined above, there are also others that you may want to consider. For example, expansion may come more easily with a franchise business and you may enhance your business interests with additional businesses, either within the franchise or outside of it. This is how dreams of riches become realities.

That is not to say that there are not cons and disadvantages associated with franchise businesses. A few of them are outlined below:

The Franchise Business Cons
· You may lose ultimate control of your business as a result of the established franchise standards that you have to run your business in accordance with. You may also find that you cannot implement your own ideas and initiatives.
· The level of royalties could be as much as 10% or more in select cases, which will of course affect your profits.
· You will have to pay an initial fee to buy into the franchise. It could be as little as $4,000 but may extend up to $50,000 so there is significant initial outlay.
· You will have to pay advertising fees to ensure that your business is recognized as existing in your current location. If the franchisor advertises poorly then your fees are wasted.
· You may have to buy a signage pack from your franchisor. Some franchisors insist on you buying their specific signage and so you may find it extremely expensive.
· If the franchisor gets into difficulties then so do you. As you effectively bear their name then you bear the brunt of a problem, including issues with suppliers.

In conclusion, although there are some disadvantages with having a franchise business, the positives far outweigh the negatives. The risks of failure are significantly reduced and so there are fewer problems than a brand new startup business. Of course, you should always ensure that the paperwork is in order, and you should complete your research and due diligence before committing because there are no guaranteed profits, and you would ultimately be responsible should the venture fail.

About the Author:

GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchises for sale. Sell your business for sale for free with no listing fees and zero commissions. We have 1000s of franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.

When a business registers for vat the vat rate should be added to all sales from the date of registration. The standard vat rate is 17.5 per cent of the sales value. The value added tax added to sales is known as the output tax.

Value added tax paid to suppliers on purchases is known as the input tax. When completing the vat form the amount paid to HMRC is the total output tax after deducting the input tax.

Vat on goods purchased up to three years prior to vat registration can be reclaimed against the output tax liability. A business can also claim vat paid on services incurred up to 6 months before vat registration.

To be able to claim vat paid before the vat registration a business must have kept vat accounting records of items bought and sold to enable the business to claim vat on those items still in stock at the time of the company became vat registered. The vat claim for goods and services incurred before registration should be made on the first vat form after vat registration. A good accounting software package to enable record keeping is useful for this purpose.

Claim Vat on Goods Purchased Prior to the Vat Registration

A business can vat input on purchases made by that business for up to three years prior to vat registration provided those goods are also available for resale either as stock, raw materials or work in progress at the date of the vat registration and do not relate to exempt items.

If the goods were bought by another business, for example, pre incorporation then the vat claim would not be allowed. The vat claim would also be disallowed if the goods purchased have already been sold. In the same context vat on items such as petrol, gas and electricity would also be disallowed if they have been consumed prior to vat registration.

The vat claim is restricted when goods are used for personal and business purposes. The restriction being the proportion those goods are used for non business purposes.

Claim Vat on Services Purchased Prior to the Vat Registration

A business can vat input on purchases made by that business for up six months prior to vat registration provided those services do not relate to exempt items or goods that have already been sold before vat registration.

The services must have been bought by the registered business and as with goods purchased only the business proportion may be claimed.

Vat Accounting Records

In order to claim vat on goods and services purchased prior to registration the business must have kept accounting records which include valid vat invoices and there should also be an audit trail through the accounting records to support the completion of the first vat return.

When the first vat return is submitted and contains a large refund it is not unusual for the HMRC vat office to inspect the vat accounting records before authorising a refund payment.

The vat accounting should also include detailed stock records to demonstrate the goods on which vat is being reclaimed existed at the time of registration and also show when goods have been disposed of after vat registration

Detailed vat accounting records must also be kept of any services on which the vat claim is based. Those records stating the date received, description and should be capable of supporting the fact those services had been or would be sold after the vat registration.

If the items being sold are exempt from vat then the value added input tax cannot be claimed. If part of the goods and services being sold are exempt then only the proportion not exempt may be claimed.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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It seems in like and oxymoron: “The Economy Is So Bad That Government Will Be Giving Away More Money”. You and I tighten our belts in hard times, but as we seen before, the government responds differently.

In 2007 the government gave out over $1.8 trillion in grants, direct payments and other monies. In 2008 that figure grew to close to $2 trillion, and that figure is not accounting for an extra $1.6 Billion in bailout money, stimulus packages and other extra goodies that congress added so far in 2008. So, this year Washington will almost double what they intended to spend at the beginning of the year. Next year it will be even bigger yet.

So don’t believe the headlines when government officials start complaining about budget cuts. Sure, some programs may be trimmed, changed or reevaluated, and there will be states that will have to trim due to balance budget laws, but above all the cries of “Poor Me Budget Cuts,” there will be more opportunities with government programs because:

During hard times less people will apply to programs because they’ll believe in the cry wolf headlines. Any normal person would believe that the government can’t give out money if it is going deeper in debt... and the economy is in deep trouble.

Many of these government programs are classified as "entitlements," which means that those who show up and maintain eligibility, are legally entitled to receive help, regardless of the government's debt level. These programs include Social Security, Medicare, Medicaid, federal employee and military retirement plans, unemployment compensation, food stamps, agricultural price support and hundreds of others.

Government program agencies may first cut back on overhead expenses. During past budget cuts I’ve seen agencies cut out their 800 number just to save a few bucks when in fact they were giving away more money than ever before. These agencies will do everything they can to trim down extraneous spending without drastically interrupting services offered.

Like many things in Washington, the idea of "Budget Cutting" is not exactly as clear as it may seem to everyday taxpayers. In many cases, officials' budgets are not actually undergoing drastic reductions; rather, they will simply see smaller increases than previously forecasted -- instead of 6% growth, perhaps only 4% will be realized.

As times get harder, watch for more legislators try to increase their popularity amongst voters by trying to increase current benefit programs or starting new ones that they say will ease people’s pain during hard times. With Wall Street getting $700 Billion to cover their hard times it is going to be an easier case to make to give to others in the country. What the heck is a couple billion more.

Matthew Lesko is a best-selling author, government money expert and business mentor. His website, MyAmericanBenefitsPlan.com, is an interactive, online resource that serves as a hub linking entrepreneurs and free-money-enthusiasts alike. Lesko's 30 years of researching government money programs and his extensive video talents are all going into the web service. Lesko holds free, online seminars on Wednesdays, live at UncleSamLive.com.

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Article Contributed by Satish Patel

Tax seems like a boogeyman giving nightmares to those businessmen who have zero accounting and tax background or knowledge to find their way out of this chaotic labyrinth.

The problem begins when small businesses wait till the very end to gather the required details and file returns. Rush job makes it difficult to approach your tax in a planned manner resulting in paying more than you actually need to.

There are many deductions which get generally ignored as they might seem insignificant or one is just not aware about benefits of such deductions. Below are list of 15 such deductions that every businessmen should know to get smart and save money which can be better utilized for your business growth:

I. Startup and Organizational Costs Deductions: When someone begins a start-up business, he or she often incurs expenses just to get the business up and running. As part of the American Jobs Creation Act, taxpayers can deduct up to $5,000 of start-up costs and $5,000 of organizational expenses incurred in the first year of their small business. Start-up expenses are the costs the business owner has for setting up an active trade or business. If these costs meet the following tests, they may be recovered through a process known as amortization:

The costs would be deductible if they were paid or incurred for an existing trade or business.

The costs must be paid or incurred before the small business begins operations.

Examples of costs that may qualify as start-up expenses include the following:

· A survey of potential markets.

· Analysis of available facilities, labor, supplies, etc.

· Advertisements for the opening of the business.

· Salaries and wages for trainee-employees and their instructors.

· Travel and other necessary costs for securing prospective distributors, suppliers, or customers.

· Salaries and fees for executives and consultants and for other professional services.

Start-up expenses do not include deductible interest, taxes, or research and experimental costs. Expenses not deductible within the first year can be amortized over 15 years. Business owner may be eligible to deduct some of their business startup costs up and organizational costs. Again there are limitations on this deductions and needs to be checked by professional tax advisor.

II. Home Office: A home office must be a separate room in business owner’s home to do business and accounting. Part of a living room or bedroom will not count. A percentage of utility Bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible. Find out the percentage by dividing the square footage of the office by the square footage of the entire house. Even if you don't take the home-office deduction, you can deduct the business supplies you buy. Hang onto those receipts, because these expenditures will offset your taxable business income.

III. Personal Assets used for Business Purpose: Business owners who use their personal computer for business purpose can claim deductions for depreciation on the fair market value of such assets. Check on maximum ceiling available to claim such a deduction. It varies case to case.

IV. Mileage or Vehicle: There are two ways to take a vehicle expense. One is to take the mileage basis use when picking up product, supplies, office supplies, meetings, handing out advertising or business cards, meals and entertaining clients, etc. The other way is to take the expense of using the vehicle: fuel, parts, mechanics, oil changes, etc. Along with taking expenses, one can also depreciate the vehicle.

V. Advertising & Promotion Cost: Business owners can claim deductions for costs involved in preparing Business cards, newspaper ads, information packets handed out, free samples, flyers, product testing, videos and CD's all can be claimed under business expenses. Money paid to hire temporary help with promotional activities like delivering flyers, product, stuffing envelopes or for even cleaning office and car, etc. can also be claimed under business expenses.

VI. Travel expenses related to business: Unreimbursed travel expenses are tax-deductible. The IRS recommends keeping a log of your expenses and receipts. Transportation, (such as airfare) lodging and even dry cleaning can be deducted, and half of any business meals. You also can deduct expenses for business associates traveling with you. You can't write off expenses for family members or friends if they accompany you, unless they are employees and are professionally involved in the business end of the trip, but it is fine to deduct your part of the trip if it is for business.

VII. Research and Experimental Costs: Costs of research and experimentation may be deductible if it is chosen not to list them as capital (long-term) expenses. There are many restrictions and qualifications relating to this deduction.

VIII. Disability Access Costs: In case improvements or remodeling has taken place for business facility to accommodate customers and employees, business becomes eligible for a deduction for these expenses.

IX. Carrying Charges: Carrying charges are fees and interest on property. Some carrying charges may be deductible if they are not capitalized.

X. Dues and Subscriptions: Dues to professional organizations and magazines that have to do with particular trade or business can be part of deductions.

XI. Educational Expenses: Classes or seminars that improve business can be claimed under deductions.

XII. Gifts: Gifts to clients and associates are deductible.

XIII. Laundry and Cleaning: This includes uniforms and Protective clothing and also owner’s clothing when they go out on touring for business purpose.

XIV. Communication expenses: Cell phone, long distance calls on home phone, extra phone lines into home for business, fax or Internet can be claimed as deductions.

XV. Retirement Plan Costs: As owner of a small-business and having recently established a retirement plan for the business, the business may be eligible to receive a non-refundable tax credit for expenses incurred to implement the plan. The tax credit may be claimed for a maximum period of three years for retirement plans established after 2001.

Items such as paper clips, bank charges, credit card charges and home office expense seem small and unimportant at the time, but multiply those little things over a year or two and then multiply it times 35% and it can add up to quite a bit of money that should be in your pocket rather than in the federal fund.

To learn all the ins and outs of the tax code and really start saving on your business taxes, get in touch with professional tax consultant who can guide you and give you tips to save money during this severe liquidity crisis. The above information is general in nature and it is advisable to contact a professional who will advice after thoroughly checking individual business type and requirements for tax savings and investments issues.

About the Author:
Satish Patel is the CEO/President of Analytix Solutions LLC, a leading provider of back office support services like Bookkeeping, Accounting & Tax preparation. He has more than two decades of experience in handling tax related issues for small to mid-sized firms including his several personal business ventures.

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‘Tis the season to show your loved ones how much you appreciate them. Typically, this display of affection includes a gift exchange where you purchase something they like and, if you’re lucky, they may do the same for you. This year, why not appreciate your loved ones and take care of yourself at the same time? By simply changing or enhancing the way you buy gifts, you can not only make your purchases but also rebuild your credit. Sound complicated? It’s easier than you might think.

The holiday season is the perfect time to repair bad credit. There are plenty of companies out there looking for your business. Even if you have poor credit, there are bad credit cards available for you to use as a stepping stone to better options. Bad credit cards provide the same benefits of plastic as cards for users with better credit, but they typically charge higher rates of interest if you carry a monthly balance. The simple solution to this challenge is to pay your balance monthly and avoid any interest charges. Every card is required to provide you with a grace period after a purchase so you have the opportunity to use your card interest free regardless of the stated rate on the card. The tricky part is to use the card wisely and not overspend. Once the outstanding balance is on your card, it may be very difficult to pay off, especially if you are living on a tight budget.

Since you are already in the holiday spirit of giving and rebuilding your credit, consider doing a little research in order to give yourself the best chance of success. Visit credit cards blog to find out what other cardholders are doing. Learning from the experiences of others is sometimes the best way to avoid making mistakes or falling into common pitfalls. Also, look at websites like creditcardflyers.com if you need another card resource. Sites like creditcardflyers.com provide a comprehensive way for you to research credit, find out what options are available to you, and apply for the best card. Resources like blogs and websites may be the best gifts you can give yourself this holiday season. As an informed credit user, you will be better prepared to use credit correctly, buy special gifts for your loved ones, and rebuild your damaged financial name. Finally, if your New Year’s resolution is to get more for your hard-earned dollars, consider applying for one of cash back credit cards. These cards not only help you make the same purchase as other credit cards or cash, but they also pay you cash back for every dollar spent. And while cash buys the things you need, cash back credit cards helps you buy the things you need and then helps you accumulate more dollars with money you already spent. These cards are gifts that certainly have the potential to keep on giving!

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I should not be providing this information, the government should.

I believe the IRS should include a book like this to every American when they send you your tax forms. That way every American would know how to get their tax money back, because even though I call this “free money,” it really isn’t free. This is money that you gave to the government to pay your taxes and now you can get it back.

Here are a few basics on Government Money Programs that everyone should know:

1) Only 12% of Gov't Money goes to the poor

Most Americans think that government money programs are for everyone else... for instance only the poor, minorities or friends of the president.

But, only 12% of Government Handouts go to the poor
And only 25% of Government Programs Have Income Requirements

The rich and famous, including Donald Trump, H. Ross Perot, Dick Cheney and George W. Bush, all made millions as private citizens with the help of government money programs. If they're eligible, you certainly should be too.

2) Only 20% of Free Money is called "Grants"

Most free money programs are not called “grants” by the government, they’re called “direct payments.” It is very easy for someone not to know all about government jargon, but just a little research can clear up quite a few misconceptions. Don't discourage yourself by focusing only on "grants" and dismissing the other 80%.

3) 50 Million people don't even know they're eligible

This is one of the most important points to keep in mind: The Government cannot and does not advertise programs that offer free money. But it's out there, lots of it. You just have to invest time finding the programs.

4) You can't make one phone call and just get a check in the mail

Getting government money is like looking for a job. When you knock on one door and ask about a job, and they tell you that you are not qualified, you don’t go home and wait for them to change their mind.

No Way. You would never hear back. You have to be persistent and go from one company to the next until you find a good fit.

5) Free Money keeps growing no matter who is sitting in the White House

We constantly hear about government budget cuts and that makes people believe that government money is going away or will soon be gone. But every year for the past 30 years the amount of free government money given out to individuals keeps growing. It keeps increasing no matter if it’s the republicans or the democrats who are in charge. With the new Obama administration especially, we will be seeing more offered to small business and entrepreneurs in the form of government money programs.

6) You certainly don't need a professional grant writer

Nine out of ten times you will not need help in filling out an application. Most free money programs to pay for your bills, education, health care, housing and even business require just a few pages of blanks to fill in.

If you have trouble filling out an application for money, don’t hire a consultant.  Go to the office that is handing out the money.  The are obligated to help you fill out your application and they are in the best position to know what should be included.

7) You can apply for as many programs as you like

Don’t worry about how many programs you can apply for,  If you see a program that you think might work for you, apply to it. Sure there are some programs that give money for specific reasons and if you get accepted from 2 separate places you will have to refuse one of the offers, but that's still a nice position to be in.

8) It doesn't always matter if it sounds like you don't qualify

Here's an example:  “All the money is given out by August 30th”: The end of the accounting year for most government agencies September 30, but the agency can start giving out more money beginning October 1, and you can be the first in line.

In all likelihood, you can wait another 30 days for your money.

9) Information can often times be out-of-date

Every day programs come and go. Every day people change their address, phone number and websites. It is just a fact that these things happen in our modern society.
But remember, if a listing leads you to a non-working number or website, it does not necessarily mean that the program is gone. Call the agency listed in the program description and ask.

10) Don't be intimidated by the idea that the applications are all long and confusing

Getting an application that is only one-page long is not unreasonable at all.  Many of the government programs that give our grants really don’t need a lot of financial information because unlike a bank they are not worried if you don’t pay the money back.  They don’t want it back.  It’s free money.

Matthew Lesko is a best-selling author, government money expert and business mentor. His website, MyAmericanBenefitsPlan.com, is an interactive, online resource that serves as a hub linking entrepreneurs and free-money-enthusiasts alike. Lesko's 30 years of researching government money programs and his extensive video talents are all going into the web service. Lesko holds free, online seminars on Wednesdays, live at UncleSamLive.com.

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UK tax codes are determined by HMRC, notified to employees and used by employers to calculate tax to be deducted from employee income. Inland Revenue tax codes explained as being made up of numbers or letters and usually both. When multiplied by 10 the number indicates the amount of tax free personal allowance the person is entitled to and the letter indicates the conditions which might be applicable to the UK tax code to enusre the correct Tax is calculated.

Virtually everyone in the UK is entitled to a personal allowance if they are resident in the UK which entitles them to tax free income, the amount of that tax free income being dependent on the size of the personal allowance according to the specific circumstances. Earnings above the tax free allowance are subject to the basic rate tax. The basic tax rate personal allowance was £5435 from 6 April 2008 and increased by £600 to £6,035 which effect from the first pay date after 7 September 2008. The original personal allowance tax code 543L being increased to new tax code 603L reflecting these changes to calculate tax at the new rate from 7 September 2008..

Basic rate tax for 2008 is 20 percent. For earnings above the higher income threshold which is £34.800 the basic rate tax increases to 40 per cent.

The personal allowance of people over 65 and up to 74 is £9,030 which is reduced if income exceeds £21,800 and people over 75 receive a personal allowance of £9,180 also reduced when income exceeds the £21,800 income threshold. The rate of tax allowance reduction is £1 for every £2 above the income threshold until the basic personal allowance is reached.

The number in the UK tax code is known as the prefix while the letter following that number is known as the suffix. Each suffix letter in the tax codes explained as a different meaning.

Letter L means eligible for the basic personal allowance and is also used for the emergency tax codes. Letter P is for people aged 65 to 74 and letter V for people aged 75 and over, while letter Y is also for people over 75 but who are eligible for the full personal allowance. A tax code with a suffix letter T indicates there may be issues that HMRC still need to review regarding the tax code and letter K indicates that the value of taxable benefits exceeds the personal allowance.

Where untaxed incomes, such as benefits, are received by the employee exceed the personal allowance a K code is issued by HMRC. The number following the letter K indicates the amount of benefits multiplied by 10 that are to be taxed in addition to the gross earnings received. This is achieved by adding the K code number multiplied by 10 to the gross earnings of the employee for income tax purposes.

Some Inland Revenue tax coding consists of just letters allowing the tax codes explained simply. The BR tax code means basic rate where the employee entire earnings are taxed at the basic tax rate. The BR tax code is often used when an employee has a second job and should also be applied by an employer who has not received a P45 or P46 for a new employee. The NT tax codes explained is that no tax is deducted from the employee so the basic rate tax does not apply..

HMRC are responsible for issuing tax codes and determine the Inland Revenue tax code by giving everyone the personal allowance, deducting any earnings where tax remains unpaid from the previous year and dividing the result by 10. Variations to this calculation are when other factors affect the tax code.

An emergency tax code is issued to calculate tax when the new tax code is not immediately available. That can occur when the employee does not have a P45 or completes a P46. The emergency tax code 543L is replaced with the new tax code 603L from 7 September 2008 which is the basic tax allowance but is also applied on a week one or month one basis. A week one or month one basis means the employer will calculate tax to be deducted for each pay period and not on a cumulative basis which in effect prevents tax refunds until a confirmed tax code is received to replace the emergency tax code..

It is important for employers to use the correct UK tax code in the PAYE system which is stated on the P45 an employee presents to the new employer when starting employment to deduct the correct rate of tax. If the new employee does not have a P45 for the current financial year then the employer should request the employee complete a P46. The P46 is sent to HMRC who then review the tax coding and issue an appropriate tax code for the employer to use.

The personal allowance usually changes each new tax year and the old Inland Revenue tax codes from the previous year can be used for the first few weeks of the year and replaced with the new tax code in week 7. The rate of tax deducted if the previous year personal tax allowance has been increased is common and the employee receives a tax refund when the new tax code is applied. When the new tax code is known from the start of the new tax year the tax coding can be applied from week one and as the correct tax has been deducted no refund is due.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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In order for a sole trader to be able to keep basic tax accounts certain conditions regarding the status of business accounts must be satisfied. Sales turnover should be under the vat threshold limit, a balance sheet not required, a business bank account not used and no employees employed. If the conditions are met then a simple income and expenditure statement is all that is required greatly simplifying the bookkeeping.

Self employed businesses are not required to maintain a balance sheet. If a balance sheet is maintained then to produce one the business needs to operate an accounting system based upon double entry bookkeeping and involving technical features such as debtors and creditors control accounts. Sole traders who do not need to produce a balance sheet can then maintain their basic accounting using single entry bookkeeping which is basically making lists of the financial transactions.

If a balance sheet is not produced the sole trader must keep a record of all capital expenditure items as part of the basic tax accounts to enable the capital allowances to be claimed each tax year. Receipts need to be retained as part of the basic accounts to enable the annual investment allowance to be claimed in the first year and writing down allowances in subsequent years.

More detailed financial records are required to be kept by the Sole Trader if they are vat registered. The vat threshold for the financial year starting April 2008 is £67,000. Part of the vat rules state that when a business is vat registered they should maintain an audit trail of transactions to support the vat return.

A sole trader does not have to operate a business bank account however if a business bank account is used then accounting records should be kept as the taxation authority, HMRC can ask to see details of the account. This inspection is to verify the transactions support the basic accounts produced. If a business bank account is not used then HMRC do not have a statutory right to view the sole trader personal bank account and that personal; account does not have to be a feature of the sole trader basic accounts.

When a sole trader has employees then as an employer a PAYE system is required which involves maintaining accurate wages records of employees, gross wages, income tax and national insurance deductions and net pay. Various PAYE records must also be maintained such as the working deductions sheet and also payslips must be issued to employees. The payroll records form part of the financial accounts of the sole trader who would actually be better called self employed if they have employees.

In the circumstances where a sole trader has no employees, is not vat registered and does not maintain a business bank account then formal accounts are not essential and a simple income and expenditure account statement can be produced. It is still essential that those sole trader basic accounts are supported with copies of invoices given to customers or records of amounts taken plus documentary evidence to support the payments made to suppliers.

On the sales side the basic accounting can consist of a list of the sales which when totalled produces the sales turnover of the business which is the income side of the income and expenditure statement. As not all sales may be received at the time of sale it is useful to keep a record of the date of the sale, the customer, amount and when and how much the customer has paid for credit control purposes.

Similar to the income side the expenditure can consist of a list of the amounts paid out to suppliers. It is advisable to perform a small amount of analysis of this expenditure as when reported on the self employed tax return the expenditure may need to be analysed according to the type of expense. All expenditure items claimed as business expenses should be supported with documentary evidence of that expense for basic tax purposes.

At the end of the financial year the sole trader income and expenditure account statement will state the total sales with the expenditure side being a list of all the expenditure by type of expense including any capital allowances claimed. Total the expenditure and deduct the total from the sales turnover to produce basic accounting record showing the net taxable profit.

A simple method of keeping the information to produce the income and expenditure account statement is to use an accounting spreadsheet with preset columns for sales and the expenditure types. The sole trader should also consider maintaining a separate list of the assets purchased as part of the basic tax accounts.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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HMRC enquire into approximately 75,000 self assessment tax return each year which often results in extra tax being payable because business turnover has been understated or non allowable business expenses have been claimed, resulting in interest and penalties on the extra tax for that year and sometimes previous years. Avoid extra taxes, interest and penalties with these top tax questions.

What is Business Turnover?
Sales turnover is the amount the business earns before deducting business expenses including receipts of any kind for goods sold or work done such as commission, tips, payments in kind, fees and insurance proceeds. The turnover to be included in your financial accounts is the date it was invoiced or earned and not the date it was received.

What is excluded from Business Turnover?
Sales turnover excludes sales of fixed assets such as premises, vehicles and plant and equipment. Also exclude business start up allowances which are entered separately on the self assessment tax return. Money introduced to the business is excluded being capital introduced and not sales turnover.

What business expenses are allowable?
All running costs incurred solely for the purpose of the business may be deducted as allowable business expenses for Tax purposes including goods bought for resale, employee wages, premises rent and overheads, administration costs, vehicle running costs. Interest on loans and overdrafts can be claimed as business expenses excluding the capital element of repayments. Higher business expense levels accurately recorded can keep taxable profit below the higher tax rate.

Can the cost of buying and repairing plant and machinery be claimed?
Repairs and maintenance costs are allowable business expenses. The purchase cost including improvements and replacement costs are not allowable business expenses, these costs being subject instead to capital allowances. Depreciation is not allowed and replaced by Capital Allowances for the purposes of calculating the tax payable.

What are Capital Allowances?
Capital allowances are designed to write off the cost of purchasing a fixed asset over the life of the asset rather than in the financial year in which it was purchased. Capital allowances on the majority of assets are based upon a higher rate of allowance in the year of purchase, First Year Allowance with the balance of the cost being written off at a lower rate, Writing Down Allowance. The full cost of any asset may be claimed as an expense in the year it is sold or scrapped less the total of accumulated capital allowances that have been claimed against taxable profits. Any sales proceeds over and above the written down value after Capital Allowances is added back to net profits and becomes taxable. Cars are subject to writing down allowances but not First Year Allowances unless they are classed as commercial vehicles. DIY Accounting has small business software templates that automate the calculation of capital tax allowances.

Can expenses incurred for both business and personal purposes be claimed?
No. HMRC only allow such expenses if the business expenses element of the cost can be separated from the personal element. If you claim the travelling expenses to buy business goods they can be claimed for tax purposes but would be disallowed if you also showed evidence of personal items being purchased on the same journey. Using your home phone is an allowable business expense if you claim specific identified business calls in which case you would also be able to claim a similar proportion of the rental cost.

Can vehicle costs be claimed when that vehicle is also used for personal use?
Vehicle running costs and expenses such as fuel, excise duty, insurance, repairs and breakdown membership may be claimed as business expenses if the vehicle is used solely for business purposes. Travel from home to work is not business use and disallowed. Vehicle running costs, and capital allowances on vehicles, are split between claimable costs and a disallowed cost depending on the proportion the vehicle is used for business and personal use. Parking fees for business purposes may be claimed, parking fines and penalties for motoring expenses are not claimable as business expenses for tax purposes. An alternative to claiming vehicle running costs and vehicle capital allowances would be to claim mileage allowances which at the time of writing are 40p for the first 10,000 miles and 25p per mile thereafter a feature of which the DIY Accounting small business software automates

Can Business trips be claimed?
Travelling expenses and modest lunch expenses may be claimed. Hotel and reasonable costs of subsistence may also be claimed. A subsistence allowance can be claimed if staying with friends or family as an alternative to an hotel. The cost of lunch may not be allowed when staying away overnight. Lunch with clients is regarded as entertainment and is not allowed. If you are accompanied on a business trip by family only your cost is allowable and specifically only if the trip was purely for business purposes. Expenses on combined business and personal trips are not allowed to be deducted as business expenses on tax returns.

Can home costs be claimed?
If part of your home is identifiable as solely for business purposes then running costs can be claimed. The cost allowed is the proportion of the total area of the home the business area occupies. For example, excluding shared facilities of kitchen and toilet if the home has three bedrooms, living and dining room and one bedroom is used solely as an office then 1/5 of home costs could be claimed. The costs to claim would be heat and light, insurance, general and water rates and mortgage interest excluding repayment amounts. Where mortgage interest is claimed the revenue might also claim as a capital gain the increase in value of that proportion of the home, such Capital Gains Tax being subject to tapering relief over time.

How do I treat business goods taken for my own use?
Any business goods taken for personal use should be added to sales at normal selling prices including items supplied to family and friends at less than normal prices. He cost of providing services for family and friends is not allowable as a business expense.

Can I deduct my salary or drawings as a business expense?
You cannot deduct your own wages, personal national insurance or drawings from the business as a business expense as these are distributions of the business income after net taxable profit has been calculated and not allowable expenses before tax..

Can I deduct my partners wages?
Yes partners wages can be deducted as a business expense although there are rules which would be applied in such circumstances to ensure the amount paid is both real and reasonable. The business would need to operate a PAYE scheme for that employee, deducting income tax and national insurance, the work carried out must be real not invented and the rate paid reasonable for the nature of the work and the time spent. Evidence may also be required that the amounts were actually physically paid to that partner, for example in the form of a cheque.

Should Tax Credits be included?
No these are excluded from business profits although the level of credit received may subsequently be changed in the light of the actual business profit earned compared with the amount declared when the Tax Credit was applied for. HMRC do check that the net taxable profit shown on the tax return is the same as that declared when the Tax Credit was claimed.

Can I claim expenditure incurred prior to trading commencing?
Yes business expenses incurred up to seven years prior to trading commencing can be claimed. The actual date of the expenditure should be recorded although all pre-trading expenditure is treated as having been incurred on the first day of trading.

Are pool cars taxable?
Company cars are taxable as a taxable benefit while pool cars are not taxable. To qualify as a pool car, private use should be incidental to business use, the vehicle should not normally be kept at the employee home and the vehicle must be available and used by more than one employee.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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Value added tax is the tax amount added to the value of goods and services by a vat registered business when sold or transferred. Vat is not charged by businesses that are not registered for vat. This guide covers the vat threshold, accounting for value added tax, registration and submitting the quarterly vat tax return online

When the sales turnover of a business reaches the vat threshold, currently 64,000 pounds per annum until reviewed in April 2008, then registration for vat is compulsory. If financially beneficial, businesses can register for vat prior to sales turnover reaching the vat threshold.

When a business registers for vat it becomes responsible for charging vat at the correct percentage on every sales invoice and transfer of goods and services and also maintaining accurate financial accounting records of the vat charged hat are subject to vat inspections. If the sales turnover has breached the vat threshold that business is liable for the vat on sales even if it has not charged the customer.

The vat charged to customers is called output tax and the vat on purchases is called input tax. When a business has registered for vat in addition to maintaining records of sales and input tax it must also keep accurate financial records of purchases and input tax in order to calculate the vat payment to be made. The amount of vat to be paid each quarter is the difference between the sales output tax and the purchases input tax and is paid quarterly to HMRC.

Specific types of business transactions are exempt from vat such as insurance and loans. If the business only supplies exempt items then the business cannot register for vat to reclaim the input tax paid on purchases.

Registering voluntarily for vat when the sales turnover is below the vat threshold is a financial planning decision that each small business should consider. There are both advantages and disadvantages to a voluntary registration and the timing of the registration may also be a feature to be taken into account.

The advantages include being able to reclaim the vat input on purchases which is otherwise lost as a financial cost to the business. However as a consequence of a voluntary vat registration that business would also have to charge vat on all its sales invoices.

If the business has mainly vat registered clients then charging vat would probably not affect sales volume and has the advantage of enhanced credibility within the business community in which it operates. Charging vat to non vat registered clients such as members of the public would increase the amount being charged and make the small business less competitive.

When a business moves from being non vat registered to being vat registered changes may have to be made to the bookkeeping records being maintained. Not normally a problem if accounting or bookkeeping software is being used provided the financial system employed can fulfil the enhanced requirements being vat registered.

The accounting requirements of being vat registered require the business to issue vat invoices which show the name and address of the business, the vat registration number, sales invoice date and the vat being charged. An accounting record must be kept of all sales invoices issued in a format that permits a subsequent audit check when the customs and excise visit to conduct an audit check of the vat records.

In relation to purchase invoices and reclaiming the vat input tax vat may only be reclaimed on those invoices for which the business has a vat purchase invoice. A valid vat purchase invoice contains the vat number of the supplier who issued the invoice. An accounting record must be kept of all purchase invoices showing the vat output tax being reclaimed.

Vat returns are normally required to be prepared on a quarterly basis and submitting to customs and excise before the end of the following month. If registered for the online service vat returns can be filed online. There are benefits to filing the tax return online in that many businesses may receive up to 7 days longer than normal to file the vat return if the vat payment is being made electronically.

There are penalties for failing to submit the vat tax return on time and interest may be charged on the outstanding amount. When a vat return is not submitted on time an assessment may be raised which has to be paid as a legal debt until such time as the return is submitted and the amount due corrected.

It is important to submit the vat return on time even if there is a problem paying the full amount. Failing to submit on time brings the business to the attention of the tax authority that is more likely to inspect and investigate persistent offenders. A business can be expected to receive an inspection every three years however in the worst case scenario of a delinquent vat registered business the customs and excise could inspect every quarter.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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Accounting software records the financial transactions of a business and provides financial control to achieve the profit and loss performance required. The correct choice is dependent upon the size of the business and degree of sophistication and financial control required.

Accounting software is a system of recording financial transactions on a computer across a full range of accounting options almost invariably dependent upon the size of business being catered for. Accounting software can vary from multi million pound solutions for major public companies to simple managed lists of income and expenses.

The requirements from accounting software are diverse with the most complex and comprehensive financial accounting packages incorporating financial reporting information and managed by teams of qualified accountants supported by accounts clerks, bookkeepers and substantial input from automated data sources. At the other end of the scale a self employed sole trader might use accounting software themselves and produce a set of financial accounts for the year in an afternoon.

Different accounting standards are required from accounting software dependent upon the fitness for purpose and client needs. Double entry bookkeeping automated through a database system and probably arranged in financial modules would normally be the choice of the majority of public companies. Single entry bookkeeping would not be an acceptable accounting solution for a limited company due to audit requirements and statutory obligations.

Single entry bookkeeping does however have its place in the market place for the smaller less complex businesses who maintain financial control through a close intimate knowledge of every financial transaction. The main objective of a sole trader is more likely to be the production of the tax accounts and complete the periodic and annual tax return forms.

The most sophisticated level of accounting software in the largest companies mirrors the accounting functions in those organisations with various financial modules for accounts receivable, accounts payable, stock control, general ledger and fixed assets. These accounting modules may also be integrated with non accounting functions such as production and dispatch functions and also divided into separate modules within the accounting function.

In larger companies the sales daybook and data entry of sales turnover would often be the responsibility of one department while the accounts receivable function might be split with a specialist credit control function within that accounting module. A further division may also include sales administration and customer records. Similarly the accounts payable function might be split between the purchasing department, accounts purchase invoice department and a legal function for overdue payments.

Accounting software for smaller companies and organisations is commonly a system of data entry of prime transactions which include sales income, purchase expenses and cash and bank transactions. The prime entry of these documents being to a database which automates the double entry accounting principles and produces both accounts receivable, accounts payable and general ledger databases.

Some accounting knowledge is usually required tom operate a database accounting software system and that financial knowledge is usually available within the company as most companies that use database accounting software also employ a bookkeeper or accounts clerks to input data and in slightly larger small companies also qualified accountants to manage the accounting function.

The need for accounting knowledge in a database system is partially to understand the data entry principles and the relevancy of the rules that need to be followed but essentially understanding of accounting principles is required to understand what is happening ton the information after input. And most important, a qualified accountant has the financial knowledge, training and experience to know what the system should be producing and how to query the database to retrieve that information.

In addition to inputting the prime income and expenditure details the most benefit of a database accounting system is the level of financial control the information it contains can provide the company management and financial directorship. The accounting function also has the security of producing trial balances, periodic profit and loss accounts, balance sheets and other financial and statements for tax and control purposes.

Accounting software packages requiring little or no accounting knowledge are available.

Small limited companies must obtain accounting software based upon double entry accounting principles as in addition to producing a profit and loss account and a trial balance to demonstrate accuracy and integrity of the financial records plus a balance sheet is required for reporting purposes. Accounting standards require the limited company to have a system of financial control and accounting software is an essential tool in achieving this.

Some accounting knowledge either from the management or outsourcing the bookkeeping services is usually required with even the simplest database accounting solutions eve3n if this requires the understanding of what accounts receivable ledgers, accounts payable ledger and control accounts mean.

There are other possibilities and those businesses with a minimum of accounting knowledge can consider spreadsheet based accounting software. Accounting software compiled from spreadsheets is less flexible and often does not have the range of options a database system has due to the lack of database queries available. These disadvantages of flexibility being compensated by the fact that all entries are visible, transparent and changes can be made more easily.

Financially at the sole trader and self employed end of the business spectrum then the requirements from accounting software may be completely different. Gone are the sophistications of control accounts, trial balances and many aspects of financial control. The most important aspect of self employed accounting software is often to produce a set of accounts for tax purposes.

Self employed small business that do not require a balance sheet can use accounting software based upon single entry bookkeeping rather than double entry and with the reduced requirement for financial control then less financial queries to the system are required. In these respects the simpler an accounting solution the better and in this market an accounting solution written on spreadsheets that can produce the net taxable profit would meet the requirements.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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Accounts are required each year for tax and financial control purposes with preset dates by which those accounting records must be submitted and penalties for failure to deliver on time.
While in the UK self employed business can use its own accounting period the tax position can become more complex if the accounts use a basis period rather than the standard financial tax year.

Self employed business in the UK is required to produce a set of financial accounts for a 12 month trading period. The format of the accounts is the personal decision of the proprietor and can be a full set of annual accounts including profit and loss account and balance sheet including using control accounts and cash and bank records and the self assessment tax return.

An appropriate accounting system for many self employed business would not be to prepare a full set of annual accounts but instead to prepare a simple income and expenditure account. Preparing an income and expenditure account allows a much simpler accounting or bookkeeping system where simple accounting software can be used.

The objective of any bookkeeping software being to maintain accurate financial records and produce the accounting records and totals required to complete the inland revenue self assessment tax return each year. Financial control is very important and the bookkeeping software should also produce regular financial statements showing the profit and loss of the business throughout the accounting trading periods.

The financial tax year varies depending upon which country business is conducted. In the US accounts are prepared during an accounting period from 1 January to 31 December each year. In the UK the standard financial year adopted by the inland revenue is from 6 April each year to the 5 April the following year.

In the UK tax rules are set for each financial year and by adopting the standard tax year a small business can benefit by preparing the financial accounts under a single set of tax rules and preparing the self assessment tax return accordingly. Adopting a different financial period involves straddling the official tax year and more than one set of tax rules might be applicable to the tax calculation resulting from the net profit being declared.

After choosing the April to April financial tax year accounts are required to be submitted by the submission deadline of 31 January the following year. Earlier submission is recommended as by submitting the final accounts and tax returns online by 31 October each year the inland revenue will calculate the income tax and national insurance payable.

When a self employed business has been in business for two or three years and has chosen a different 12 month accounting period to the financial tax year the 12 month tax is calculated according to a basis period. Up until that point the accounts may be subject to apportionment to calculate the tax due.

The basis period under which the business tax is calculated is the 12 month accounting period ending in the specific tax year. A business which has a 12 month trading period ending 31 December 2007 would be taxed under the basis period 2007 to 2008 being the basis period 6 April 2007 to 5 April 2008. The same rules apply if the accounting periods are shorter or longer than the standard 12 month period.

If the accounting date is changed by a sole trader the inland revenue are informed of the change on the self assessment tax return and the reasons for the change. If as a result the self assessment tax return arrives late the tax will be assessed on the previous basis period.

Changing an accounting date that overlaps two basis years results in the business being taxed twice for the same accounting profit as the business would be taxed under both basis years. The extra tax paid can be highly unwelcome but can be reclaimed at a later date through the self employed tax return.

The penalty for late submission of the self assessment tax return in the UK is 100 pounds and interest is also charged on any outstanding income tax and national insurance from the first day after submission was due.

Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.

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In general terms, the banking industry has turned its back on the small and midsize business owner. Statistically, banks reject 70% of all loan applications that pass over their desks. With the national mortgage crisis continuing to spiral out of control the entire banking industry is under immense pressure and it has tightened its stoic grip on lending standards. Just ask any business owner who is currently seeking financing from large prominent banks and small community institutions. Everyone will tell you that these establishments are simply not extending financing to small and midsize businesses. According to a recent New York Times article, a Wachovia banking executive was quoted as saying, “We’re saying NO to almost everybody” when it comes to small business loans. And frankly, if a business has little history, marginal credit, and no tangible assets they need not apply at all.

The major problem is that business owners are mentally programmed to go to banks when they need money. (After all, these owners have been putting their hard earned money into the banks and the banks have been making considerable profits from the deposits, so it only makes sense for the bank to grant the business owner a loan when it is needed.) However, when the bank rejects the request of the owner, the owner feels there are little or no alternatives for the funding of his business. But, there is an alternative to traditional bank financing and as an informed business owner it is imperative that you understand what options you have.

One of the best kept secrets in American small business is the idea of FACTORING. This financing medium provides an almost limitless source of working capital for growth and is a proven powerful financial source for small to midsize businesses. Factoring, in its purest form, is simply the process of buying the accounts receivable of a company. As a small business owner, it is not financially feasible to wait 30-90 days for payment. But, if we are marketing to large businesses and governmental agencies, these entities expect extended payment terms. If those terms are not granted, the small business owner will forfeit the sale. Factoring allows the small business owner to offer terms of payment and still receive the funds immediately, in essence receiving a net zero term on invoices. With a factoring relationship in place the small business owner can meet weekly payroll concerns, pay taxes and vendors in a timely manner, and purchase necessary materials.

One point that should be duly noted is that this method of commercial finance is NOT A LOAN. The factor actually purchases the invoices. A typical scenario works like this: A business needs working capital for some immediate purpose. The owner contacts a factoring company and a financial relationship is started. When the factor purchases the accounts receivable of the business, the factor directly advances 80% of the invoice face amount at the time of purchase. This means that if $100,000 in total invoices were submitted for factoring, then an initial working capital advance of $80,000 would be provided. The $20,000 balance that is not advanced is called the reserve. The reserve is used as a cushion against potential non-payments. When the reserve is distributed to the business owner, the factor will calculate and deduct any fees for services and additionally will chargeback any invoices that have aged beyond the factor’s normal holding period, generally 60-90 days. The factor’s fees can range anywhere from 1.5% - 3.5% for advances.

Factoring companies are the mirror image of banks. The most important feature is that factors are not lenders, which means that a factor can provide financial assistance to companies that are growing without the traditional restraints of conventional financing. There are no cumbersome applications, no loan committees, and no rigid formalized production. Factoring is quite the opposite. The application process is fast and straightforward. Most factors require only a two-page application and can have funds to the small business within days of approval.

Furthermore, a business owner may consider factoring as an alternative because the business qualifies based on sales, not on assets. If a business generates $1 million in annual sales, it is a valuable operation. However, if it only has $50,000 in hard assets, that business will not qualify for much of a loan. In factoring, the issue is the strength of the receivables being sold, not on the collateral of the business – which is a major criteria for banks.

Another feature of factoring is that since factoring is not a loan, your business will not incur further debt. This is important for startup businesses that want to become “bankable” in the future. With factoring, there is no compromise on your balance sheet, you simply sold an asset.

One last vital element of factoring is that this form of financing is one of the few alternatives for businesses in bankruptcy. Banks cannot be involved with companies in bankruptcy, because they are lenders. Factors are not lenders, they are purchasers.

Any business that invoices another business for goods or services will qualify for factoring. Usually, businesses that are in the startup or expansion mode are the ones that benefit from factoring. But, factoring is designed to meet the needs of any business that has little credit history, is undercapitalized, or lacks tangible assets.

Factoring, as a funding source, works best for businesses in the service sector industry. Businesses such as employment staffing, janitorial, commercial landscaping, advertising agencies, security services, and consulting are prime candidates. These are the businesses that have human resources, but no tangible “loan-able” assets such as real estate, equipment, inventory, buildings or other structures.

For companies for whom bank financing is not a viable option, factoring provides access to cash. Companies in financial need are able to retrieve working capital from their accounts receivable quickly, easily, and without acquiring more debt. Factoring has gained popularity since the mortgage fiasco has overwhelmed the banking industry. Since small to midsize businesses are routinely being denied loans by banks, the owners of these companies have no choice but to at least ask, “What is factoring?”

Now, you know.

If you would like more information about this topic, or to receive a free booklet of “When Banks Say NO!...a Small Business Guide to Factoring” , please visit our website at www.KeyWorldFinancial.com. To schedule an interview please contact Annlette Key at 1-877-539-4321, or email info@KeyWorldFinancial.com

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I bet just the very title of this article is enough to make you run for cover! Along with paper piles, budget and Cashflow is another area that can drive solo business owners over the edge! In your corporate days you would have had a bookkeeping/accounting department that took care of all of this for you – they paid the invoices, they tracked the receivables, they tracked the income, and they told you the bottom line!

Now that you’re running your own business you are also the Chief Financial Officer, and it can be very overwhelming. However, it needn’t be… let me share with you three simple steps that you can put in place to manage your budget and Cashflow.

What is a Cashflow projection?

One important area of your Financial Management System is that of a Cashflow projection. Put simply, a Cashflow projection shows whether your anticipated income will be able to cover your expected (projected) expenses and this report is very beneficial to you in your business.

It is an annual report and, if set up correctly, will show you how cash will flow through your business throughout the current financial year. I’ve been using a Cashflow report in my business for many years and find it invaluable. Just recently the chance to participate in a high-profile teleclass series came up, and because I have my systems in place, I knew straightaway that it was something I could take part in!

Step 1 – Create Your Cashflow Report

This is very easy to do using a spreadsheet. Create a column that lists all of your expenses, i.e. office supplies, legal & professional fees, membership, advertising etc. and a column for each month of the year. You will need to create formulae that will tell you your total income, total expenses, and subtracts the expenses from the income, and also carries forward any amounts from month-to-month. This is so you can see how your finances are ‘flowing’ throughout the year.

Step 2 – Input Your Data

Taking your financial data from your bookkeeping system input your actual income and expenses, and list any projected expenses in the appropriate row/column. Your Cashflow report will now show you at-a-glance any time periods for which you will need to be especially aware of. For example you may have a lot of expenses in one particular month so you’ll know that the previous month you’ll need to make sure that you have the funds kept back in your bank account to take care of those upcoming expenses.

It will also show you if you can afford to make an investment in your business, whether that’s signing up for a new service or membership club, taking out an advertisement, or buying new equipment.

Your Cashflow projection can also be used as a budget planner. You can plan out when annual memberships are due and put those in ahead of time. You can also add in an amount for when your taxes are due. This will provide you with a really good feel of how cash is flowing through your business, month after month, throughout the year, and you can also tell how much you can take off for owners draw, but still leave enough to cover the anticipated expenses.

Step 3 – Schedule In The Time

Now that you have your Cashflow report in place, it’s important that you update it regularly so that you can stay aware of how cash is flowing through your business, and take any actions necessary so that you have enough to cover all of your anticipated expenses.

I recommend scheduling in at least 30 minutes once a month to update this critical financial management report.

A Final Thought...

Having an annual Cashflow projection will provide you with all of the information you need so that you can keep on top of your business financially and know where you are.

If you have a bookkeeper taking care of all your financial records for you, ask them to prepare your monthly Cashflow report for you.

Online Business Manager & Virtual Assistant, Tracey Lawton, supports professional speakers, coaches, and authors to operate an efficient, organized, and profitable business. Learn how to create an efficient and organized office in 7 EASY steps, and receive free how-to articles at http://www.OfficeOrganizationSuccess.com.

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Article contributed by Luis O. Rodriguez

It has always been said that owning a home is the American dream. Millions of small business owners will argue, however, that owning one's own business is really the American dream.

While being your own boss offers its rewards, owning a business is not easy. Without a doubt, entrepreneurship has its obstacles which, if not navigated correctly, can keep the dream from being fulfilled. One of these obstacles can be the lack of access to financial resources.

Just as a credit card company will look at your credit score before extending you credit, business lenders rely on a similar credit scoring system to determine your ability to borrow money for your business. But until you've developed business credit history within the various business credit reporting agencies such as Dun & Bradstreet, Experian Business, and Business Credit USA, lenders will be reluctant to extend business credit to you. It is for this reason that your personal credit history and personal credit score is so important.

As a small business owner, there are usually three reasons why you need to borrow:

• The first and most common reason is to purchase assets such as inventory and would be repaid once the new inventory is converted into cash as inventory is sold to customers.
• The second reason is to replace or repay other types of credit such as money you may have borrowed from credit cards, unsecured lines of credit, or private investors.
• The third reason is to replace equity. If you wish to buy a partner's share in your business or need to repay monies borrowed to start your business and don't have the cash to do it, you may consider borrowing.

Again, if you have been in business for less than two years and have not established credit in your businesses name, then prospective lenders will review your personal credit worthiness and decide whether or not they will lend to you based on your personal credit history and personal credit score.

If you have not already done so, you should perform a "Credit Audit and Verification" on your personal credit file to ensure accuracy of your credit history as well as remove those inaccurate and negative items that you will find. In fact, a study conducted by the PIRG (Public Information Research Group) out of Washington, D.C., revealed the following;

• 25% of credit reports surveyed contained serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer.
• 54% of credit reports surveyed contained personal demographic information that was misspelled, long out dated, belonged to a stranger, or was otherwise incorrect.
• Almost 8% of the credit reports were missing major credit, loan, mortgage, or other consumer accounts that demonstrate the credit worthiness of the consumer.
• Altogether, 79% of the credit reports surveyed contained either serious errors or other mistakes of some kind.

All of these items work to suppress your credit score and when it comes to applying for unsecured lines of credit, business credit cards, and other loans that will ensure your business survival, the higher your credit score, the lower the interest rate you will pay. But even more
importantly, it may stop you from actually obtaining that approval that would continue to allow your business to grow and ensure its long term success.

The latest statistics from the Small Business Administration (SBA) show that two-thirds of
new employer establishments survive at least two years, and 44 percent survive at least four years. In short, a significant percentage of new business start-ups do fail. Again, if you have not established business credit, how do you keep your business afloat and possibly sinking
forever?

You need capital and in the beginning, that capital will be obtained by your personal credit history and your personal credit score. Having insufficient operating funds is a common mistake for many a failed business venture. Business owners underestimate how much money is needed and they are forced to close before they've had a fair chance to succeed.

For this reason, it is imperative to ascertain how much money your business will require to survive and you must take into consideration the fact that many businesses take, at the very least, a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs.

To this end, the attorneys at the National Association for Credit Responsibility and Advocacy (NACRA) can help. Through NACRA's "Credit Audit and Verification" process, we have realized a legal means for addressing flawed consumer credit reports. The difference of having an experienced consumer law attorney working for you through this process is invaluable and will make all the difference in your life, your business, and your financial future moving forward.

ABOUT THE AUTHOR
Luis O. Rodriguez is the Founder and President of the National Association for Credit Responsibility and Advocacy (NACRA), a consumer advocacy organization dedicated to helping consumers recover, rebuild, and then maintain their good credit and good name. He has been interviewed for many consumer articles and websites including Creditcards.com and CCHWallStreet.com.

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On average 25% of the Total Cost of Doing Business is tied to inefficiencies...the waste of time, energy or materials, and I've had many CEOs tell me that 25% is on the low end.

Nobel Prize winner Ronald Coase, of Coase's Law , says that there is friction/costs involved with being in business.There is the original friction or cost of finding suppliers, employees and customers. There's the on-going friction or transactional costs, and then there's the greatest friction of all...the friction of failure.

Prior to entering the training field in 1982 I had a real job as the corporate credit manager for a regional company based in Denver. My duties as the credit manager included the approval of new credit customers and the management (not collection) of past due A/R. I soon found that on average 70% plus of all past due customers had not paid on time due to "something going wrong somewhere." In the process of fixing things that had gone wrong I found that I could identify areas of opportunity for improvement throughout the entire supply chain thus driving down everyone’s cost of doing business.

The New Guy Only Thinks He Learned From the Old Guy Who Only Thinks He Learned From The Dead Guy:

It may not be so in all companies, but sometimes employees and business managers operate like automatons, they repeat how they do things over and over again until it becomes ingrained, and as with any habit thinking isn't required. . And all too often CEOs and top management are complicit if not directly responsible.

If you are a business manager pull out your job description, if you're a CEO pull out your managers' job descriptions and check to see if it/they say anything about "Constant Improvement".

A business manager not focused on improvement becomes an administrator at best and a bureaucrat at worst.

Before improvement/change for the better can take place two thing must happen; first there must be an acceptance or acknowledgment that a business doesn't have to be sick in order to improve, there is always room for improvement.

Then there must be a commitment made as to who will do what when...and the efforts must be tracked and measured.

Change always generates resistance, expect it in others and in yourself. Tell the affected employees of the changes to be made and then ask why the changes won't work...take notes for this will become a "to do" list.

Keep changes small so that people can succeed, but once they mastered a change introduce the next small change...no stress no change.

And of course pay people for doing what you want done...like thinking and coming up with improvements.

An old axiom says that "People respect (do) what is inspected (measured) not what is
expected" .

Can you imagine the chaos that would result if traffic cops were pulled off the roads? In much the same way business managers need to be told that a primary function of their job is to think, to always be looking for ways to save a step, a minute or a penny...and then they must be measured.

Over the years I found that this method for organizing and documenting the knowledge needed to do things as right as possible the first time... worked with any business function.

The Five Organizational Ps

Purpose: Every business function must have a clearly stated purpose which answers the question, "Why incur the costs that go with the function?"

Policies: Goal driven guidelines for each major component within the function.

Process: The step by step method for achieving the goals established by the policies.

People Requirements: The right people for the job based on the process.

Process Monitoring and Performance Measurements: Monitoring key steps in the process to ensure quality and measuring against the goals established by the policies.

If the established goals are not achieved either the process is wrong or you have the wrong guy in the job.

Financial profit is necessary for any business to stay in business and the best way to improve on profit is to do things as right as possible the first time. We will never achieve perfection because things keep changing and that's why Policies and Procedures are never done and we need to place a cover sheet on them that says "UNDER CONSTRUCTION".

One Size Does Not Fit All

Every person on the planet sees things differently, His Holiness, The Dalai Lama says that there are six and a half billion of us and six and a half billion versions of reality and if you're married you know what the Dalai Lama is talking about...it's the same with companies. Businesses are a collection of many different people, none of whom define the business but collectively they make up the business. And what works at one company may not work at another... every company and it's people are unique . The process for best business practices must be based on each company's understanding of what is... is.

In Closing

It was time to rotate the tires on the pick-up and for an oil change and lube, I knew it was time because of the sticker on the corner of the windshield. I've learned it's best to make an appointment rather than just show up at the tire place and have to wait if they're busy...guess what? ...no phone number on the sticker. This is a national tire chain and yet I had to wait and remember to look up their phone number when I got home. If I had been able to call them from the pick-up at the time I'd noticed the sticker I'd might have been able to get in sooner, and at my age they were lucky I didn't space it out altogether. I mentioned all this to the asst. manager when I was checking in and he got it at once...he pulled out a note pad and wrote it all down saying as he did so ,"This is one for corporate, we all use the same stickers." Good for him...now lets see if Big O corporate gets it.

When people are told that on-going improvements are desired and that they will be measured on coming up with them, they become different people.

They find that they are capable of thinking outside the established box and that it gives far more meaning to their work lives, than just a paycheck.

And it drives down the cost of doing business for everyone in the supply chain.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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When most small business owners think about taxes, they think about Federal income taxes. But there are other taxes that I want to let you know about, so you’re not surprised if you have to pay them.

The first is self-employment tax. If you’ve ever worked for someone else, you know that social security and Medicare taxes get deducted from your paycheck. When you’re self-employed, you don’t actually get a paycheck.

Here’s what happens if you’re a sole proprietor. Following the IRS rules and regulations for calculating income and expense, you report your results for the year on your personal 1040 by filling out Schedule C.

Then you take the net profit and put it on Schedule SE for self-employment tax. After a small deduction, you calculate 15.3 % as your self-employment tax. This is double the rate of 7.65 % that’s deducted from employee paychecks because as a sole proprietor you’re both the employer and the employee so you have to pay both parts.

You get to take half of the amount of self employment tax as a deduction from your income on the front of your 1040. This has the effect of reducing your taxable income.

The self employment tax itself goes on the back of the 1040 in the section called Other Taxes on the line that says self employment tax. For the 2006 filing year that was line 58. This tax gets added to your Federal income tax and any other taxes you owe and is paid when you file your 1040.

If you (and/or your spouse on a joint return) have had Federal income tax withheld during the year that adds up to more than your total taxes for the year (which includes self employment tax), you’ll still qualify for a refund.

If your business is operated as a corporation AND you’re active in your business, you should receive W-2 wages and you won’t be subject to self employment tax on your earnings. Distributions from S corporations are generally not subject to self employment taxes.

If your business is operated as a partnership, you might have some items of income that are subject to self employment tax and some that are not. These items will be reported to you on a schedule K-1 that is part of the business tax return.

Sales tax

Many States have sales taxes. If you sell products to customers, you’ll have to charge them sales tax and pay it to the State. In some cases, digital downloads are considered products as far as the sales tax rules are concerned and certain services might also subject to sales tax. In Indiana, where I live, the rules are put out by the Indiana Department of Revenue. There will be a similar agency in your state who you can contact to find out the rules.

Local Taxes

Some cities and school districts have local taxes that you might have to pay. Some of these depend on your type of business. There might be additional sales taxes, property taxes, innkeeper’s taxes, or food and beverage taxes. Check with the authorities in your area for details.

And then there’s the often dreaded Estimated Taxes

This is a subject that confuses many people.

First, let’s try to understand the reason that the estimated payment system exists. Our system of Federal taxes is a “pay as you go” system. When you think about it, that makes sense. The government needs money all year long to pay for various things.

When you work for someone else, taxes are withheld from your paycheck each pay period, so the government gets its money over the course of the year. If you’re a sole proprietor, this doesn’t happen, so you’re expected to make estimated payments.

As with many IRS rules, there are some exceptions, and some penalties if you don’t pay enough or pay on time. There are some cases where you might not be required to make estimated payments (and you won’t have a penalty if you don’t), but it would still make sense to make them anyway, to avoid having to pay a large amount on April 15th.

If you have another job in addition to your self-employment, you can increase your Federal withholding on that job to cover the amount of the estimated taxes that you would otherwise have to pay. And if you’re married and file a joint return and your spouse has wages from another job, he/she can have additional Federal withholding taken out to cover the estimated payments.

Or, you can make quarterly payments using Form 1040-ES. You can also sign up to make the payments on-line. You might also need to make estimated payments towards your State taxes.

Payroll

If you have employees, you’ll need to pay various Federal, State, and local payroll taxes. But we’ll have to save that conversation for another time.

The most important thing you need to understand is that it’s your responsibility to find out what taxes your business has to pay. And that the laws vary from place to place and by type of business.

A good source of information is an accountant who specializes in consulting with small businesses.

Sheryl Schuff, CPA, is a Certified Public Accountant, author, and consultant who teaches entrepreneurs how to get their businesses organized, keep good accounting records, and maximize their business tax deductions. She is President of Schuff & Associates, PC and has been in private practice for over 30 years. She recently started an information products company www.TaxesForSmallBusiness.com to provide individual training materials for small business owners.

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Whatever you believe is true...at least to you.

Averages, don't you love them? What mama ever said to her children that the goal in life
is to be "average"?

Lowly manager...Largest asset

Sometimes it's more but on "average" 40% of a business' assets are in the form of
accounts receivable...short term money due from the sale of a product or service. In direct
contrast to the size of the asset that they are responsible for creating and managing,
credit managers are most often lower echelon managers who are at the very least one
step removed from the corporate decision makers...and their paycheck reflect it.

Forget the traditional organization chart with branches that in turn branch off and so on.
Instead of organizational charts think of totem poles...the carved columns erected by
the Native Americans of the Pacific Coast.

Totem poles are representations of men and animals and of their relationship. Now
forget about corporate titles, initials after names, and the size of the paychecks earned
by different business managers; instead focus on their ability to influence profitability.
Where would credit managers sit on the totem pole; close to the top, in the middle,
at the bottom...if at all?

The Pay Back

When allowed, encouraged, and supported by "upper management"; credit managers
can and should seek to find ways to say yes to new profitable sales, to keep existing
credit customers current and buying and to identifying and communicating cost reducing
opportunities for improvement through out the entire business chain of suppliers,
sellers and customers.

A credit application can represent the successful result of marketing and sales efforts,
a customer wanting to buy, or a risk for non-payment...of loss if the customer fails to pay.
Corporate attitude will determine how performance is measured and if DSO (days
sales outstanding) and % bad debt are used the message to the credit manager is clear,
"be real careful who is approved for credit and if a credit customer fails to pay within
terms ..throw them on credit hold/stop". The end result of focusing on and measuring
for risk will be great DSO and bad debt numbers ...but at what cost/loss?

Instead of measuring for risk a company should measure for profit and if it does credit
approval becomes the process of finding a way(s) to say yes to profitable sales . The
profit measurement looks at the % of applied for dollars approved, or exceeded.
Measure for profit and past due A/R management (it's not collections) becomes the
"Completion of the Sale" with the goal being to keep credit customers current and
buying. With repeat sales often being the most profitable, companies should measure
for % of credit customers current...and buying. If the total credit line (never credit limit)
for all credit customers is $10,000,000...what % of the total line is being utilized?
...and are those customers with an unused line being encouraged to buy more?

A secondary goal of Completion of the Sale (past due A/R management) is the
early identification and control of the small % of past due that represent a potential
for loss...type two financial serious and type three avoiders.

The largest percentage of past due A/R are tied to something going wrong. On
"average" 70% or more of past dues are type two system related...something went
wrong somewhere. In the process of identifying, fixing and communicating those
things/processes that have gone wrong; the credit area can help drive down
everyone's costs. Constant improvement in how things are done provides a
payback far greater than more new sales, repeat sales, and improved cashflow
combined.

Numbers and results

Payment on account and expectation fulfillment are linked. If a customer orders
a green "whatever" and is shipped a blue "whatever" the seller shouldn't expect
to be paid. Employees are kind of like that; they tend to go with the flow , with the
expectation. If credit managers are low paid, if they are thought of as the "ugly
step-child of accounting" and if their performance is measured by DSO and bad
debt loss...not much is being asked nor is likely to be delivered. On the other hand
if a company measures for profit...for new sales, repeat sales and improved
efficiencies...cash flow and bad debt will take care of themselves.

Total Cost of Business

On "average" 25% or more of the total cost of doing business is tied to inefficiencies,
to things not being done as right as possible the first time. And not to be repetitious,
but the credit manager in a company is like the man following a parade with a shovel
...when something goes wrong the customer doesn't pay and in the process of fixing
things the credit manager interfaces with just about every aspect of business; and if
asked the credit manager can point out improvements that drive down everyone's cost
of doing business.

Summary

Whatever you believe is true and it's the same for companies...whatever they measure
for defines their thinking, their attitude.

The full profit potential of a business is influenced by its attitude toward the credit
function and to Credit's placement on the corporate totem pole.

And if your company still measures for DSO and % bad debt...your attitude is showing.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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This article is by our guest writer Sandra Hajda, a freelance journalist, publisher and avid investor. Sandra resides in Melbourne and can be contacted at hajdasandra@hotmail.com.

It’s increasingly recognised that shrewd investment is essential to achieving a high standard of living, especially after retirement. The web is awash with stories of middle income-earners (teachers, laborers and IT professionals) who have created extraordinary wealth by studying the markets.

The average investor can expect to live more comfortably (not everyone will rake it in like Rene Rivkin!). But financial terminology is prohibitive, to say the least: a minefield of jargon, abbreviations and subtle distinctions that may take years to master. Here’s our helpful introduction.

Bond Investing

A debt instrument. When you buy a bond you become a creditor- the idea is that someone uses your money to raise capital (for their business, say). The bond is a promise that you will be repaid with interest by a specific date (maturity). Popular index: Merrill Lynch Domestic Master.

High Yields

Feeling brave? Looking for high risks with high potential returns? Then you want high-yield bonds. High-yield is basically a rating: it means a bond is regarded as ‘risky’, with high probability of default (the bond equivalent of bankruptcy- you get zilch!). If there’s no default, the payout will be oh-so-sweet.

Money Market

The market for borrowers and lenders whose transactions are settled within thirteen months: your short terms investments. If you’ve ever invested in a Money Fund (particularly Repurchase Agreements), handled a Certificate of Deposit, or made a deposit in US dollars outside the United States, you’ve participated in the Money Market.

Investors

Anyone-or anything- that makes an investment; individuals make up only a tiny percentage of active investors. Venture Capital Funds, Investment Banks, businesses, Investment Trusts, Hedge Funds and Mutual Funds are all investors, and most are prepared to invest on your behalf.

Equity Funds

These funds invest in equities, better known as stocks. The goal is long-term growth. The Money Market can offer immediate liquidity, Government Bonds offer safety, and regular Bonds give maximum income, but Stock Funds give the highest probability of a big payout. If you’re willing to wait.

Market Timing

Market Timing is the strategy used to buy or sell; it allows you to profit or lose. Many sophisticated theories (such as Time Zone Arbitrage) have tried to predict the market, but most analysts regard investment simply as a form of gambling.

Investing for Beginners

First choose a good broker. Ask yourself: do I want someone selecting my investments? If so, use a Full Service Broker (eg. Morgan Stanley). They’ll set you up with a package of bonds and stocks. Feeling independent? Sign with a Discount Broker, watch the indices yourself and make the decisions.

Hedge Funds

A hedge fund attempts to offset losses by ‘hedging’ its investments; Short Selling is the major strategy used. The hedger sells an asset he doesn’t then own, hoping to purchase it later once the price has decreased. By ‘shorting’ hedgers can profit from price decreases as well as price rises!

Emerging Market

The markets of developing countries, including China, India, South Asia, Mexico, Latin America and some of Eastern Europe. Political events play a bigger role in influencing the markets in these countries; theoretically you could profit by reading the papers and selling assets quickly when you smell political upheaval.

Investing in Gold

Can be done by purchasing shares and derivatives or by literally owning bullion! The gold price is influenced by changes in sentiment, gold hoarding and the activities of the International Monetary Fund. Thought to preserve wealth in the face of inflation, but won’t offer the long-term returns that stocks do.

Now that you’ve done the groundwork those rambling financial articles won’t seem so daunting. Happy investing!

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Bankaholic: Entrepreneurs are the brave souls who make our economy go, or at least they were when our economy was actually going anywhere. Especially in this currently questionable financial climate, starting your own business is undeniably a dicey proposition. Start-ups go out of business all the time, often before they even have a chance to even really star up at all. The main culprit in the savage slaughter of these young establishments is the same perpetrator behind the bulk of our fiscal difficulties: Debt.

As an emerging entrepreneur, it is very easy to quickly accumulate debts that are substantial enough to kill your burgeoning business before it even gets off the ground. But it does not have to be that way. Take the time to examine your business workflow and you will likely discover a number of extraneous costs that can be eliminated to improve the health of your bottom line.

Here are eight common practices that lead to common results; learn to avoid them and you will be uncommonly successful.

1. Not sticking to the necessities.

As good a place to start as any, this is an all-encompassing, catch-all principle. Be a good bootstrapper by spending money only on what is absolutely necessary to operate your business.

2. Trying to do too much too soon.

If you jump the gun and attempt to launch too many projects at the same time, your limited capital will severely limit the time and budget that can be devoted to each distinct venture.

3. Not designing for scalability.

There is little worse than achieving initial success only to be undermined by your initial lack of vision and poor preparation. If your business design cannot be scaled up when you hit it big then you may be forced to absorb all sorts of unexpected expenses as you are attempting to redesign from scratch.

4. Failing to delegate.

Always remember, you’re the big idea man; don’t spend your time performing tasks that could be done just as well by a cheap hired hand.

5. Buying in bulk.

If you are starting a small business, don’t worry about having a year’s supply of copy paper on hand the first day that you hang up your shingle. You will have all sorts of expenses in the early stages of your start-up and you will need all of the ready cash you can keep your hands on.

6. Paying your bills late.

Whenever possible, meet your expenses with the cash that you have one hand. Rack up big bills on that shiny new business credit card and you could end up putting as much money towards accumulated interest and late fees as you are towards growing your business.

7. Throwing away your receipts.

It is difficult for many entrepreneurs to learn to separate their business expenses from their personal expenses, and this can end up costing a new business owner thousands of dollars in lost tax deductions. Be fastidious about saving your receipts and you will be in much better shape come tax time.

8. Failing to collect accounts receivable.

Sure you want to be the nice guy as you are starting your new business, but you need to make sure that you get paid as well. With the available tools for notifying clients of payments that are due, there is no excuse for not being on top of your accounts.

8 Easily Avoidable Causes of Business Debt [Bankaholic]

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Entrepreneur: Many financing efforts fail because of avoidable mistakes that are made in pitching potential lenders, structuring the agreement or managing the money once the deal is done.

Steering clear of these missteps can increase your chances of success, both in obtaining startup funds and keeping the money flowing. Be sure to avoid these blunders:

Half-baked business plans

There's nothing worse than going into a money meeting unprepared. If you haven't put the time and energy into writing a full-blown business plan complete with elements, such as a cogent business description, financial projections and a competitive market analysis, the people with the cash won't put the time into evaluating your proposal.

Focusing too much on the idea and too little on the management

It's not enough to convince potential backers that you've invented the next must-have gadget or can't-miss clothing store concept. You also need a team that can generate the revenues to repay a bank loan or provide an exit strategy for a VC or angel investor. Many business novices ignore the second part of the equation; that can doom their money quest. Showing that you have recruited a top-notch salesperson, a skilled marketer, an accountant with startup experience, other key personnel, and even outside experts like an attorney or business coach who can supply professional guidance is essential to finding a funding source.

Not asking for enough money

In a 2004 U.S. Bank study of reasons for small business failures, 79 percent cited "starting out with too little money" as one of the causes of their collapse. That's often because entrepreneurs who are wet behind the ears don't realize that they should calculate their borrowing needs based on their worst-case scenario instead of their best-case forecast. If you're underfunded, you won't have a cushion to tide you over in the event of slow initial sales or unexpected market conditions.

Having too many lenders or investors

One of the hazards of securing financing from multiple sources is managing too many relationships and expectations. It takes time away from your core business. These not-so-silent partners may have conflicting interests or demands and the consequences can be devastating. This is particularly true when you raise money from friends and family.

Failing to get the proper legal agreements

This is arguably more important than a prenuptial agreement for a couple with significant individual assets. Every lender or investor eventually will need his money back, and a legal document covering everything from the terms to the timing can avoid the kind of acrimony just described.

Poor cash flow management

Too many new business owners burn through their seed money too quickly and fail to reach cash flow-positive status in a timely manner. Some causal factors, such as late product deliveries and economic downturns may be beyond one's control, but the executive team is clearly at fault for others, such as unnecessary spending and overly optimistic expense/income forecasts. Financial sponsors don't take kindly to that sort of mismanagement. And if they turn off the tap, all of your hard work may go down the drain.

The 6 Biggest Mistakes in Raising Startup Capital [Entrepreneur]

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Businessknowhow: Why don't more people start their own business?

If you answered, "lack of funds" you're right on the money.

In various ways, money - getting enough to start the business and worry about not making enough money to replace the income and benefits from a full-time job - is one of the biggest deterrents to would-be business owners.

Nevertheless hundreds of thousands of individuals start businesses each year. How do they do it? Where do they get the money to get started? Here are ten solutions for startup funding for a micro-sized business. Some are nearly risk-free. Others involve significant financial risk and should be used with caution.

1 - Start part-time.
2 - Start the business from home.
3 - Get advance commitments for work.
4 - Get a part-time job.
5 - Live frugally.
6 - Use a credit card.
7 - Apply for a home equity line of credit.
8 - Apply for business loan.
9 - Ask Your Bank About an SBA-guaranteed loan.
10 - Borrow from family and friends.

Where to Get Money to Start a Business [Businessknowhow]

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BusinessKnowHow: Everyone has to decide for themselves what level of sacrifice and risk they're willing to undertake in order to enjoy the satisfactions of working independently. Knowing some strategies for managing the risk will allow you to make a well-informed decision.

Of the seven strategies included below, the first two suggest ways to gradually transition from salaried to solo, instead of diving off the edge. The second two are ways to stretch the dollar; and the final three are ideas for getting started without stopping.

1. Continue to draw a (reduced) salary.
Asking yourself why and how your company will profit from retaining your skills and experience for a transitional period can provide the basis for approaching your employer. Be sure to do your homework first, however, and be able to back up your request with a solid rationale.

2. Develop another income stream.
If you need to leave your present employment, is there a skill in your toolbag that you can resuscitate and put to work without a significant expenditure of time or energy? Is moonlighting or freelance work an option?

3. Reduce expenses.
Doing a careful analysis of your expenses and choosing what you can forego for awhile can often save thousands per year.

4. Borrow.
It isn't necessary to wait to borrow for start-up costs until you have a well-documented idea to submit for a business loan. Refinancing a home or taking a line of credit are relatively low-cost ways of generating capital. Depending on your credit rating, you can also get time-limited low-interest loans from credit card companies.

Get started on your new business idea while you're still employed. Several of the all-important first steps (below) can be started while standing in the grocery line or running on the treadmill. They involve asking yourself some questions and doing some informal research to get crystal clear about your idea. This can take weeks off your actual start-up time.

5. Identify your niche.
Think about the services you're uniquely qualified to provide, as well as the ones you most enjoy providing.

6. Create your marketing plan.
While what you need from a marketing plan will get more sophisticated as your business develops, for now it simply means answering the question, How is my business going to make money? What is the product or service you're going to sell? How will you describe it so people quickly recognize the value?

7. Manage fear!
For most people, anything involving money involves some level of fear. It's important to acknowledge to yourself and to others that you are taking a risk, and you've decided it's a risk you want to take. So consider the fear natural, and find ways to manage it.

7 Financial Strategies for Transitioning from Salaried to Solo [BusinessKnowHow]

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StartupJournal: For a young business, it can be alluring: Find an "angel" investor to swoop in and help fund your growing company. With millions of small businesses and only a few hundred organized angel groups, where do you begin?

WSJ.com spoke with Knox Massey, a longtime angel investor, about getting started. Mr. Massey, a former senior salesman at AOL, is executive director of Atlanta Technology Angels, a private angel group that invests up to $4 million each year in young technology-focused companies.

Here is Mr. Massey's advice on what a small-business owner should – and shouldn't – do when searching for angel funding.

* Research the investors
* Don't expect to get funding right away
* Network
* Treat your initial interactions as the first step in a long-term relationship
* Don't forget about your long-term plan
* Look at your investors as potential mentors.

Wooing Angel Investors: Some Do's and Don'ts [StartupJournal]

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Business Opportunities: Greg Ford, managing director, Sage accountants division comments, "The research confirms what we have believed for quite some time, in that accountants can't be bracketed into one stereotype. We are seeing the rise of a new breed of accountant, one for whom technology and an entrepreneurial spirit is extremely important in the running of the practice they work for or own. We feel that accountants should always be regarded in this manner, recognising that these new breed are looking for ways to help diversify their business."

Supporting the theory that accountants are aiming to diversify their business, a healthy proportion considered that technology is an important revenue opportunity. Nearly a third (28%) regard technology as a big source of potential income, whilst 52% acknowledge that it has certain benefits. Indeed 40% of accountants admitted that they regularly use online news sources and blogs for work purposes.

Zoe Walsh of TPH Accountants adds, "The accounting profession is becoming increasingly entrepreneurial, and the stereotype of an accountant is changing fast. Accountants are looking for more ways to diversify their offering, and are increasingly giving general business advice to those wanting to set-up in business as well as the traditional accounting services. As a result the skill-set of an accountant is changing, making them an important part of the business lifecycle."

There is a New Breed of Accountants [Business Opportunities]

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Mind Petals: Plan Heaven is a site focused on linking entrepreneurs with investors. Never used their service, but I think that it has some cool features than may be worth exploring.

For those of you aggressively pursuing investors and trying to raise some capital for your startup, spending the monthly $49 for the capability to share video presentation of your idea, a business plan, and the chance to go one on one with a Angel / VC might not be such a bad deal.

What I really like about this service is the “video” option. You and your team can record a video presentation of what you are doing with your startup and upload the video to the site. Plan Heaven will then update potential investors with your video and see who bites at the opportunity to learn more. Personally, if I shot a video for this, I wouldn’t release any proprietary information — just keep in short, simple, and give ‘em just enough for them to want to learn more.

Plan Heaven: Matching Entrepreneurs, Investors, and Resources [Mind Petals]

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About.com: When getting funded, the due diligence process can be excruciating for the business. But if you know what to expect, it will be far less painful. Venture capitalist Ziad Abdelnour of Blackhawk Partners recently sent the following letter out to his list explaining their due diligence process in more detail. While each investment group may have its own variations, this offers tremendous insight from an investor's perspective.

If you ask ten funded entrepreneurs what happened during the VC/private equity due diligence process, you will get ten different answers. Some will say they lost valuable months answering endless questions for groups that never produced a term sheet. Others may admit they gained valuable insights to their business.

I am uncertain when the due diligence process gathered so much mystique, but among entrepreneurs, there is still an urban "myth status" about what happens behind close doors.

We believe it shouldn't be a mystery.

Due Diligence Is No Mystery [About.com]

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