Category: Finance & Capital

With the deadline for filing fast approaching, we felt it’d be useful to establish a list of tax tips and reminders for home-based businesses. In particular, those who started their businesses in 2011 have much to learn when it comes to the ins and outs of dealing with the IRS. Using your home as the site of an ongoing enterprise may seem like it requires diligent navigation of the tax code to avoid an audit, but the process is not nearly as complex as you may think. With half of American businesses located within the home, how could it be?

While it may be a little late to put some of the following to use for this tax season, these pointers should become engrained into the tax paying planning for your home-based business:

Time your startup expenses accordingly: Up to $10,000 in costs of enterprises that are losing money – mainly those just starting out – can be deducted as capital expenses. This can include just about everything that goes into establishing a home-based business, from advertising costs to supplies. Therefore, it’s wise to get all the necessary purchases bought and paid for prior to your small business getting up and running.

Fear not home-office deductions: Many folks starting out with a home-based business mistakenly believe that the IRS has a separate division of employees that analyze every move of entrepreneurs working at home to catch them double-dipping. But regulations for home-based business deductions have loosened in recent decades, and the IRS has a webpage that describes in detail what constitutes a home office deduction.

Keep track of mileage: You may think you won’t put more miles on your automobile for the sake of your business than the standard deduction accounts for, but you may be surprised when you add it up at the end of the year. Many miles mean big deductions, so keep track of how much you’re driving for your business from the get-go, even if you don’t expect to do much traveling.

Put the kids to work: Wages count as business expenses, and children can earn up to $5700 ever year and not pay taxes on their income. The result is simple: give your kids positions within your company, cut them checks, hand out W-2s, and enjoy the tax breaks as a result. If you’re going to be handing out allowances and using the help of your kids anyway, this strategy makes a lot of sense.

Stay organized on all levels: From receipts to invoices to mileage, you need to keep track of everything in order to minimize the surprises come tax time. But more importantly you need to consistently adhere to a realistic home business budget in order to not only prevent making poorly planned financial choices that may lead to major tax burdens later one, but to be better prepared in the event that such emergency debts to the government need to get paid.

Starting a home-based business is one of the most American of entrepreneurial experiences. But so is paying taxes. Giving Uncle Sam his correct cut is sure to keep you from hiding your assets in Edmonton self storage out of paranoia, as well as enable you to have as much money as possible to further invest into your enterprise. It’s one of the few aspects of starting a successful small-scale enterprise that’s easier said than done.

About the Author:

This Guest Post is written by Samantha Peters, an active blogger who enjoys writing about anything of interest to entrepreneurs and business start-ups.

As an entrepreneur it can be all too easy to focus on making money and re-investing in your business, and neglect the prudent measure of developing some savings. Saving accounts can be an essential back up when you experience cash flow problems, a challenge that your business will inevitably face at some point. If you have yet to think about opening additional saving accounts to act as reserve finance for your business the most important thing is to act now – and this process need not take up a lot of time. There are a range of saving accounts and other savings vehicles that are easily accessible through retail banking. Here we will take a snapshot of the options typically provided through retail banking by looking at the saving accounts provided by Santander, one of the major players in the market.

The Instant Access Account offered by Santander is in many ways an ideal option for the small business. The instant access descriptor could be viewed as applying in a couple of ways, as this account is managed online, and so easily accessible in a hurry. This account also offers instant access to the cash within, without incurring any penalties for withdrawal. At the time of writing, the interest rate of 3.1% on offer for the initial deal period of 12 months is not far off what more restrictive savings vehicles can offer. This all means that this type of account should be used as reserve for at least a portion of your savings, as the accessibility of the money is perfect for dealing with temporary cash flow problems.

If you expect to have significant cash to park in a savings account in the near future you can look to develop more growth on the balance by locking the money away in a bond. As is typical of the market, the Fixed Rate Bonds offered by Santander deliver superior interest when compared with the Instant Access option, provided of course that you sacrifice the ability to get your hands on the cash before the term of the bond ends. Fixed rate bonds therefore present a more long term saving strategy, delivering better growth the longer you agree to keep the cash locked away. On the flip side, the inflexibility of the deal means that fixed rate bonds are definitely not suitable as your sole savings vehicle, as you will not be able to access the money early – before the bond matures – to address cash flow problems without incurring a penalty that will pretty much wipe out any growth that has been achieved.

Those that are registered as ordinarily resident in the UK for tax purposes can also look at the tax free savings options provided by the range of ISAs (Individual Savings Accounts). This type of account was introduced by the UK government to encourage citizens to save, offering tax free growth on balances up to a specified annual limit. For more information on ISAs and who qualifies to open these accounts, try looking at: www.hmrc.gov.uk/isa/faqs.htm.

Business.com: Choosing the right business structure when starting a new business can be a confusing process. You will find that there are many structures to choose from when it comes to starting a company. At Business.com we strive to provide business owners with the information they need to make informed decisions for their business. This is why we have created an infographic to help you figure out the best Business Structure for your company.

Choosing a Business Structure [Business.com]

Article Contributed By Marty Higgins

The world of personal finance is extremely complex.  Just one look at the sheer number of investment options, retirement planning vehicles, types of life insurance, estate planning options and the tax implications of each of these elements and you’ll notice it’s hard not to feel overwhelmed.

So what’s a business owner to do?

You could try to learn everything there is to know about each individual aspect of your personal financial situation, and constantly work to keep up to date on those things, or you could seek help from a financial advisor so you can focus on growing your business.

Now, the problem is: Finding and choosing the right financial planner for you can be just as daunting. That’s why I created this guide and checklist of things to consider before you hire your next financial planner.

9 Things to Consider Before You Hire Your First or Next Financial Planner…

1.What Is Your Financial Advisor’s Experience?

You need to know how long your prospective financial advisor has been in practice and where he or she worked prior to the company that the advisor is currently with.

2. What Is Your Financial Advisor’s Professional Qualifications?

The term “Financial Advisor” can have more than a single meaning.  Ask any prospective advisor what types of certifications or registrations they have.  These might include the CFP, RFP, CPA/PFS, ChFC, and CWM.

3. What Financial Planning Services Does Your Prospective Financial Planner Offer?

You should ask the Financial Advisor what services they can offer you.  The available services will depend on precisely which certifications and licenses that individual has secured.  For example, in order to sell insurance, they may be required to have a license in your state.

4. What Are Your Prospective Financial Planner’s Philosophies or Views on Financial Planning?

Financial advisors are individual people.  While there will be some similarities in their educational backgrounds, as individuals they will bring different approaches to how they advise their clients. You can start out by asking the advisor what types of clients they like working with. Make sure it is individuals in a similar situation (e.g., at a similar stage in life, or in a comparable financial situation) as you?

5. Who Else From the Financial Advisor’s Company Will be Working With You?

Depending on the type of company the financial advisor works for, they may have other people on your account.  If the advisor will receive assistance from others in the same office, then you might want to meet with those other individuals, especially if they are going to providing assistance in a key area, such as tax or insurance planning.

Your financial advisor might also use the services of professionals outside their office, such as attorneys. Then ask your financial advisor for the names and contact details of those individuals, and check their backgrounds later.

6. Could Anyone Else Benefit From Your Financial Planner’s Advice?

There are situations where a financial advisor’s other business relationships or partnerships could affect their personal judgment with respect to your account, or otherwise act as a disincentive for the Advisor to act in your best interest.

For example, if your advisor has a relationship with other companies whereby the advisor receives a financial benefit by selling their mutual funds or insurance policies, then you should be aware of this.

7. Can You Get the Scope of Your Relationship in Writing?

Your financial advisor should be willing to sign a written agreement that sets forth the most significant terms of your professional relationship.  At a minimum, the agreement should set forth exactly how the financial advisor will be compensated, whether they will act as a fiduciary with respect to your account, and whether there are any actual or potential conflicts of interest with their other professional activities.

8. Is Your Financial Planner Registered As An Investment Adviser?

Ask whether either the Advisor individually, or his or her firm, is registered as an investment adviser (RIA).  This registration can either be made at with the state or federal authorities.  If the advisor is registered, then ask how they will inform you when they are acting as a sales agent of the firm, and when they will be acting as an investment adviser.

9. What are Potential Conflicts of Interest?

Regarding any brokerage account that you may open, ask the advisor to advise you of potential conflicts that they may have when recommending certain products.  Also ask how they will disclose those conflicts of interest prior to you purchasing the product (including disclosing any payments or incentives that the advisor may receive).

The answers to these questions should be a guide to whether you should hire a particular financial planner – or run away fast. For even more information on how to choose a financial planner that meets your family’s needs and goals – including more questions that you should be asking, I invite you to grab my Complete, FREE Consumer Awareness Guide at: http://www.chooseyourfinancialadvisor.com

About the Author:

During his 33+ years experience as a Certified Financial Planner, Family Wealth Management Expert Marty Higgins discovered that most business owners are risking their children’s chances of going to a good college, their own chance at a secure retirement and their ability to provide a strong legacy as they have no criteria for choosing a financial advisor. Now, grab his free special report at http://www.chooseyourfinancialadvisor.com & uncover the 16 questions that you should be asking.

 

Article Contributed by Gary Barzel

As stagnant or declining sales and the increasing costs on everything from commodities to healthcare have whittled away the profit margins of numerous small business owners, getting adequate financing to cover day-to-day operations has become more difficult. Banks and other commercial lenders in particular have been rather tightfisted these days with businesses that have taken a hit to their revenues and credit profile.

If your business has been struggling lately to come up with a sufficient cash flow, and your bank has not been so eager to help, you may want to consider one of the four following financing alternatives:

Accounts receivables factoring and financing.

Accounts receivables (AR) factoring and financing involve leveraging outstanding customer invoices in exchange for instant cash. With AR factoring, a business typically receives 70-90% of the total value of the receivable, the rate being dependent on the age of the account. The factor company then assumes responsibility for collecting the outstanding invoice. Upon full receipt of the payment from the customer, the factor company will return the remaining balance, minus a small processing fee. With AR financing, the business uses the invoices as collateral for financing, yet is still responsible for collecting payment from customers.

Merchant cash advance.

With a merchant or business cash advance, companies can leverage their future revenues to receive instant capital. In this case, the financing company purchases a portion of the business’ future revenues at a discount (the rate of which is generally based on the business’ sales history). The business then receives an instant lump sum of capital, while the financing company collects a fixed daily percentage of the business’ sales until the full agreed upon amount is paid off. Some cash advance companies will only work with credit card revenues, others offer financing on all future sales.

Peer-to-Peer (P2P) lending.

If your personal or business credit rating is 600 or higher, then you might want to consider a short-term microloan from a peer-to-peer lending platform, such as Lending Club or Prosper.com. With P2P lending, business owners submit a request for funding to the site including a short description of what the money will be used for as well as some of their current financial information. Individual investors then contribute small amounts of money until the desired loan amount has been reached.

Renting out your property or assets.

One final way to generate capital for your business is to rent out (or sublease if the property owner allows) any unused real estate or equipment. The rental is usually a short-term agreement that can last for a year, a few months, and even on a day-to-day basis. You should just make sure that you have a clear rental agreement in place and that renting out your business’ equipment or property is realistically doable.

In short, if you are looking for working capital for your business, your search does not have to begin and end with the bank.

About the Author
Gary Barzel is the manager of business development for Fastupfront. Fastupfront offers a working capital solution for merchants in need of business loan financing without the hassles associated with traditional bank loans.