Category: Finance & Capital

Most small business owners don’t worry much about insurance. They insure their stock, their vehicles and maybe their building if they own it, but usually that is about it. Most small businesses are exempt from requirements to provide health insurance or life insurance. However, while avoiding such insurances will certainly be good in the short term, it can be devastating – even bankrupting – in the long run.

The point of insurance is that it is intended to mitigate risk by spreading out the expense over time. While certainly some companies and individuals have been “saved” by insurance when it pays out bills they could not possibly pay, most small businesses do not have such catastrophic problems. Instead, the insurance keeps them from paying large expenses outright by spreading that expense across a long series of small insurance payments.

It is therefore necessary to insure against the sorts of threats the business is most likely to encounter regularly, instead of the occasional rare threat that is encountered once or twice – if at all – over the business’s lifespan. A good example is auto insurance for a company that has company cars are delivery vans. It is inevitable that these vehicles will get into serious accidents, even if their drivers are very careful and never at fault. So purchasing a good and comprehensive insurance policy is a great way to do this.

Likewise, if your business does a lot of borrowing and repaying, you will want to get insurance bonds to cover your payment. Surety bonds are now commonplace and essential in modern financial transactions, since they prevent companies from defaulting on one another. Even though you will no doubt win in court if you are not at fault, insurance bonds can protect you from poorly run or inadequately financed companies. In today’s economic hard times, one bad deal far away from your company can set off a cascade of defaults, ultimately leaving you unpaid for your work or unable to secure necessary financing. Proper insurance can enable you to stop that cascade and protect your business.

Lastly, study after study shows that employee health insurance consistently pays for itself. While many businesses consider health insurance an unnecessary employee expense, especially when the employees are minimally trained, the expense inherent in training and replacing employees is still high. Therefore, providing every employee with health insurance keeps overall costs down, while enabling you to have more value in each employee. The employees also feel better cared for and are thus able and willing to work harder due to their better health.

Article contributed by Jenna Smith

Entrepreneurs and small business owners are forever trying to keep up with the unending alterations to tax requirements and paperwork.  Believe it or not, the IRS is feeling the strain as well.  Between 2001 and 2010, there were a total of 4,430 revisions to the U.S. tax code — that’s more than one change a day.  And everyone is struggling to keep up with the constant revision to the revenue rulebook.  These days, in an expensive effort to stay out of trouble, almost 90% of small business owners hire professionals to take care of their tax returns.

If you are unable to afford to hire a professional at this time, get ready to get up to your elbows in tax code.  Filing your own taxes is becoming akin to a full time job for entrepreneurs.  And the IRS is cracking down on small business owners, again.  In 2006, they audited almost 18,000 small business (those making less than $10 million).  Now, they are especially on the lookout for high dividend payments to owners and low salaries.  If at all possible, bring someone in to take the stress off your shoulders, and to help you pay the correct amount to the IRS.

Here are a few basics that every small business owner should adhere to: 

1. Hire a professional to do your taxes, or at least have someone look them over.

2. File tax returns on time, within twelve months on the end of your accounting period.

3. Explain and break down big numbers so no questions need to be asked.

4. Account for loan account transactions.

5. Distinguish correctly between personal and company spending.

6. Only take deductions that apply to you, best not to get too creative.

7. Keep receipts for all company purchases and write offs.

8. Claim tax credits wisely and sparingly.

9. Be organized before tax season — have everything ready in advance.

10. Disclose absolutely everything.

The best thing you can do to ensure an accurate tax return is to keep accurate records.  Organization is key.  Receipts need to be filed accordingly, not just kept in a huge manila envelope.  There is a device called Neat Receipts that allows you to scan receipts directly into a computer.  Then you can put them into separate folders, like travel or office supplies, to make life a bit easier if you ever do get audited.  And realize that often with entertainment receipts, the IRS wants to know who was present and what business was discussed.  They take special scrutiny with anything that could be deemed as fun.

The IRS will often contact business owners by mail before they do a full blown field audit.  Consider this a chance to prove yourself an organized and worthy business owner, and provide them with proof of anything they are curious about.  Oftentimes, if they receive sufficient documentation, an audit will never take place.  And if you have only recently started taking proper care of your business’s finances, consider this a way to keep the IRS from looking into past, and possibly less organized and meticulous, years taxes.

About the Author 

Samuel Guinen is a small business owner who likes blogging about, but not paying, taxes. He is a frequent contributor for the EllsworthLawGroup.

Article Contributed by Chris M

A typical dilemma today for young business owners is that they operate their new business with inadequate funding. These entrepreneurs believe that they will “get by.” The unfortunate reality is that most businesses cannot succeed under this premise because good customer service is generally the first sacrifice to be made in a tight budget. This is a fact for businesses just starting out as well as businesses that have been operational for years. Management will cut back employee hours and any extras that usually makeup enhancing customer experience. In order for any business to develop and expand with some form of success it will require all operations to run at maximum efficiency. A business does not have to cut back on important expenses during tough economic times if it acquires additional funding.

Business financing has started to become more easily accessible as numerous new private loan providers join the business funding industry. Despite the fact that banking institutions continuously refuse businesses access to funding, a large number of new private business loan companies are giving small businesses the working capital they need.

Many of these lenders provide you with business loans according to a business’ month to month gross income. This makes approving an application much easier so credit worthiness isn’t a major approval factor as it would be with most major banks. Business owners will not be subject to in depth credit checks so the application and financing process is also much faster. These types of business loans are called a merchant cash advance or an ACH business loan.

A merchant cash advance is a transaction between a lender and a merchant to acquire future credit card sales at a reduced price. The application process for this type of funding is usually very fast as there are no massive credit checks or document requirements. The amount of a merchant cash advance loan made available to a business owner can be as much as double the monthly gross income. The merchant cash advance as well as any extra fees are repaid with a portion of each credit card or debit card sale the moment it is generated via electronic payments from the processing company. For businesses that process credit and debit cards a merchant cash advance is a good resource for short term financing.

There are however a variety of small businesses today that collect their monthly gross revenues without the use of a credit card processing company. Manufacturing companies, construction companies, and a lot of small retail merchants only collect checks or cash as a payment option. A large number of online lending companies today offer ACH loans as an alternative financing solution for organizations that don’t feature credit cards as a type of payment. The loan company provides the business owner a bulk payment which is also an agreement to purchase a part of future gross sales at a discount. The payments to the lender are similar to a merchant cash advance whereas a portion of the revenues are deducted as they are deposited in the business account. An ACH loan is an excellent loan option for organizations that don’t utilize credit card processing.

In order to determine that you’ll be working with a reputable lender a business owner needs to view the lender’s web-based profile. Shield Funding or AdvanceMe are examples of a reputable lender with an ‘A’ rating and the both companies have been providing small businesses with funding for almost a decade. Whether you process credit cards or not, there are business loans available online today that can help you maintain the quality of your business through difficult economic times or the early development stages.

About the Author

Chris M writes for Shield Funding, a leading provider of business loans to many of the nation’s small to medium-sized businesses. Go to the website to learn about merchant cash advances, unsecured business loans, and several other important small business lending products.

Article Contributed by Samantha Peters

Starting a small business is an exciting time. With hard work, careful planning and dedication, small business owners can create a rewarding, and potentially lucrative, job that prepares them for the future. There are considerations that must be taken into account, however, and financing is near the top of the list.

Start-up Funding and Planning There is a substantially high up-front cost when starting most small businesses. Whether it is office space, equipment or computer systems for current and future employees, the cost required may be out of the reach of many. For those who do not have the funding available, banks may be able to offer a loan if the owner has collateral to put up and a solid credit history. Another option that is becoming popular is seed money. By asking family, friends and other contacts, a small business owner might be able to acquire the funding necessary to start offering their products and services.

Most who are starting a small business have considered the “big picture” financing requirements and have a basic plan to get started and begin turning a profit. The small details, however, are often not fully considered. By carefully planning and making conservative projections, a small business founder can plan his or her first few months or years of business. By keeping a realistic mindset about the initial and recurring costs, the small business owner can be confident that he or she is ready for any setbacks.

Day-to-Day Financing Paying bills, employees and suppliers can be an overwhelming task that many small business owners are not fully prepared for. The time required to do all of this work manually can be much greater than many expect, and new owners need to be spending their time ensuring that customer relations and other facets of the new business are handled appropriately. Fortunately, software and online services are available to help ease this task.

Merchant services are a collection of services that allow businesses to handle a variety of the tasks necessary to ensure smooth operations. Credit card processing, for example, was traditionally a hassle that new businesses had to carefully plan for; today, new, Internet-based companies allow a business to begin handling credit cards quickly and easily. Some merchant services providers also offer point-of-sale software and equipment that allows the business to have a storefront appearance on par with established businesses. Marketing services may be available as well.

Financial Logging and Analysis A new branch of software and online services is allowing businesses to automate many of the financial aspects of their businesses. Enterprise resource planning (ERP) software gives businesses a suite of tools through which they can handle many of the aspects of their businesses activities. Automatic accounting tools save considerable time during businesses hours and around tax time. These programs can also handle inventory management and plan necessary purchases. Customer relationship management (CRM) software stores information about customers and helps with marketing activities. If a business needs to provide technical support, CRM software has tools that can help.

All of these programs give small businesses valuable analytical tools. Early projections are almost always wrong in some ways. No matter how sound a business plan is, accounting for the small things that affect the bottom line is fraught with unknowns. Being able to instantly analyze ways to improve upon operations can save a business or lead to better profitability.

Entrepreneurship helps drive the economies of developed nations. Done properly, it can be one of the most rewarding career paths. At the end of the day, however, financing is the key that can lead to success or failure. With careful planning, flexibility and the right tools, a small business owner can greatly enhance his or her likelihood of success.

About the Author

This is a Guest Post written by Samantha Peters, an avid blogger who lives on the internet. She covers education and business topics at TheEducationUpdate.com but can write on anything from office chairs at sitbetter to political news.

Lots of businesses fail to be successful and end up going under, usually because of a lack of foresight and planning.  Rarely is it the case that a business thrives on chance alone, it takes lots of hard work, organisation and careful planning.

It is nearly inevitable that a business will take on debt or run the risk of debt, at some point,if it wants to be at the top of its game and ahead of the competition. Debt is not something to fear either it is a normal factor of economic growth. Managing the debt however is the tricky part and this is often where businesses fall down.

The important rule when dealing with debt is not to panic and make rash decisions but look for a way to deal with the debt quickly and correctly. Dealing with the debt quickly and correctly however is hard without a debt rescue plan in place. Remember, having a debt rescue plan is not a sign of failure, after all unforeseen circumstances happen all the time. From the biggest multi-national companies down to the small independent traders everyone is in the same boat.

Some business debts are easily taken care of and it does not have to be the case that a detailed solution is needed. In other cases cash flow may not match the expenditure of the business and an agreement with creditors must be sought. There are many facets to debt solution and knowing which one is the right one can be confusing. Yet debt rescue does not have to be complicated and something to be scared of looking into. This debt rescue solution tool from Cooper Matthews helps analyse the debt situation and give a summary of the next best action to take.

Organising debt quickly and efficiently will help get the business back on track. Business debt does not mean the end of the road, success can still be found.

Business Debt Rescue Solution Analyser Tool