Is there a tax advantage to forming an S-corp?...added 3-7-11
Answer by Roni Deutch - Courtesy of Entrepreneur.com
I like that you're thinking outside the box when it comes to how your income is taxed. This is an incredibly convoluted topic, and the potential benefits of forming an S corporation in this manner really dependent on the nitty-gritty details of your personal finances.
I really need to recommend you speak with a tax and finance expert. But, I can give you some basic information on how forming an S corporation might impact your taxes.
Let's start with the basics: S corporations are taxed in the pass-through method. Meaning, all income is passed through to each stakeholder and taxed at his or her own income tax rate. You may be able to enjoy the benefits of business deductions, which might help your tax situation. Or it might not do anything at all to help you.
Now, let's tackle the other issue, reducing your estate taxes via forming an S corporation. Here's the theory, you would be able to gift shares of a business to your loved ones, thereby reducing the amount of the business you own which would be taxed upon your death.
As I understand it, you are a non-employee doctor who is contracted to work in an emergency room. Once you die, the purpose of your S corporation business would cease to exist. Likewise, by splitting up shares right now, each person would get a portion of your income right now.
If you want to pass money on to your loved ones but avoid the estate tax, another way to do that would be to use gifts (you can give away up to $23,000 each year without incurring a gift tax) while you are still alive.
Roth IRAs may be a good option, or using another retirement savings option for self-employed people (such as a SIMPLE plan). Whole life insurance is a great way to pass money on to your heirs without incurring the estate tax. And remember, you can give as much money as you'd like to pay someone's medical bills or to pay for education.
Disclaimer: Please understand that I can only give some basic background information on the internet. All tax matters, especially matters as complex as this, should be discussed with a qualified professional who is intimately familiar with your specific situation.
I like that you're thinking outside the box when it comes to how your income is taxed. This is an incredibly convoluted topic, and the potential benefits of forming an S corporation in this manner really dependent on the nitty-gritty details of your personal finances.
I really need to recommend you speak with a tax and finance expert. But, I can give you some basic information on how forming an S corporation might impact your taxes.
Let's start with the basics: S corporations are taxed in the pass-through method. Meaning, all income is passed through to each stakeholder and taxed at his or her own income tax rate. You may be able to enjoy the benefits of business deductions, which might help your tax situation. Or it might not do anything at all to help you.
Now, let's tackle the other issue, reducing your estate taxes via forming an S corporation. Here's the theory, you would be able to gift shares of a business to your loved ones, thereby reducing the amount of the business you own which would be taxed upon your death.
As I understand it, you are a non-employee doctor who is contracted to work in an emergency room. Once you die, the purpose of your S corporation business would cease to exist. Likewise, by splitting up shares right now, each person would get a portion of your income right now.
If you want to pass money on to your loved ones but avoid the estate tax, another way to do that would be to use gifts (you can give away up to $23,000 each year without incurring a gift tax) while you are still alive.
Roth IRAs may be a good option, or using another retirement savings option for self-employed people (such as a SIMPLE plan). Whole life insurance is a great way to pass money on to your heirs without incurring the estate tax. And remember, you can give as much money as you'd like to pay someone's medical bills or to pay for education.
Disclaimer: Please understand that I can only give some basic background information on the internet. All tax matters, especially matters as complex as this, should be discussed with a qualified professional who is intimately familiar with your specific situation.
How Can I Advertise on a Budget?...added 3-2-11
Answer by Michael Kaleikini-Courtsey of Entrepreneur.com
I'm starting a talent-show business. What are some free or low-cost ways to advertise? I'm based in Chicago, if that helps.
The question isn't really about where you are, it's more about how much time you have to put into low- or no-cost strategies in marketing and promotion.
A small budget doesn't mean you will have no reachability. There are a number of ways you could do promotions now and into the future.
You may wish to network with local radio stations and begin relationships with them letting them know you are somehow serving the community. Figure out an angle for your story and make it positive for the community so that people will want to get behind your cause. Make sure your talent spreads the word to their networks. Word-of-mouth always helps. You never know what will happen or who will hear about it.
Consider writing a press release about the talent show. It costs nothing, and, if done properly, can get you noticed. These take a little bit of thinking and hardly any time to write up. If you have a really creative friend, ask him or her to help as well.
When you go out to promote the show, or any show for that matter, see who else in the area may want to affiliate with your show. Look at who's coming to your show, then start talking to local businesses to secure sponsorships. That will help with the cost of doing other types of marketing. There are other businesses that will support you if you show them that you have access to their market and can get their brand in front of that audience. I have a friend that does business-training seminars and his group gets sponsorships with companies such as Staples, and software companies. You can do it on a much smaller scale and be successful.
The goal is to get your expenses covered for the marketing expenses you may incur. The rest of it is word-of-mouth via friends associates and the networks of those coming to the show.
I'm starting a talent-show business. What are some free or low-cost ways to advertise? I'm based in Chicago, if that helps.
The question isn't really about where you are, it's more about how much time you have to put into low- or no-cost strategies in marketing and promotion.
A small budget doesn't mean you will have no reachability. There are a number of ways you could do promotions now and into the future.
You may wish to network with local radio stations and begin relationships with them letting them know you are somehow serving the community. Figure out an angle for your story and make it positive for the community so that people will want to get behind your cause. Make sure your talent spreads the word to their networks. Word-of-mouth always helps. You never know what will happen or who will hear about it.
Consider writing a press release about the talent show. It costs nothing, and, if done properly, can get you noticed. These take a little bit of thinking and hardly any time to write up. If you have a really creative friend, ask him or her to help as well.
When you go out to promote the show, or any show for that matter, see who else in the area may want to affiliate with your show. Look at who's coming to your show, then start talking to local businesses to secure sponsorships. That will help with the cost of doing other types of marketing. There are other businesses that will support you if you show them that you have access to their market and can get their brand in front of that audience. I have a friend that does business-training seminars and his group gets sponsorships with companies such as Staples, and software companies. You can do it on a much smaller scale and be successful.
The goal is to get your expenses covered for the marketing expenses you may incur. The rest of it is word-of-mouth via friends associates and the networks of those coming to the show.
Would I benefit from changing my LLC/sole proprietorship business to a corporation?...added 2-24-11
Answer by Tim Berry - Courtsey of Entrepreneur.com
I am not an attorney, so take this as the best guess of somebody who's been in business for a lot of years -- definitely not legal advice.
In my experience, the general idea that having the corporation takes your personal finance out of the mix is just a myth. Until your corporation has a large asset base and years of history, every time you want trade credit, you have to sign the personal guarantee. And, more important, every time you want commercial credit, as in a bank loan, you have to submit your personal financial statement and sign personal guarantees as well. I think what happens is that technically, legally, the corporation is a separate entity, not you; but the creditors don't buy that for a minute, so they insist that you show your personal finances and sign your personal guarantee.
There's a very powerful word that the lender can use to go straight through that would-be corporate shield: "no." And the know how to use it. I've owned a corporation for 22 years now, and it was only in the last few years that we managed to do anything significant in this area without the personal guarantee.
As for whether the corporate shield protects your personal assets, I can find lots of attorneys to say yes, they do -- but I'm still skeptical. My fear is that in a pinch the creditors would sue both your corporation and you as the person responsible for it, alleging fraud or misuse of funds or something like that. Maybe I'm just worrying over nothing, but I've never felt safe from responsibility because I was shielded by a corporation.
I don't blame you for being confused. These things are not that simple. Consult an attorney who you trust for further advice.
I am not an attorney, so take this as the best guess of somebody who's been in business for a lot of years -- definitely not legal advice.
In my experience, the general idea that having the corporation takes your personal finance out of the mix is just a myth. Until your corporation has a large asset base and years of history, every time you want trade credit, you have to sign the personal guarantee. And, more important, every time you want commercial credit, as in a bank loan, you have to submit your personal financial statement and sign personal guarantees as well. I think what happens is that technically, legally, the corporation is a separate entity, not you; but the creditors don't buy that for a minute, so they insist that you show your personal finances and sign your personal guarantee.
There's a very powerful word that the lender can use to go straight through that would-be corporate shield: "no." And the know how to use it. I've owned a corporation for 22 years now, and it was only in the last few years that we managed to do anything significant in this area without the personal guarantee.
As for whether the corporate shield protects your personal assets, I can find lots of attorneys to say yes, they do -- but I'm still skeptical. My fear is that in a pinch the creditors would sue both your corporation and you as the person responsible for it, alleging fraud or misuse of funds or something like that. Maybe I'm just worrying over nothing, but I've never felt safe from responsibility because I was shielded by a corporation.
I don't blame you for being confused. These things are not that simple. Consult an attorney who you trust for further advice.
What Are the Pros and Cons of Using Your LLC to Be a Member of Another LLC?...added 2-15-11
Answer by Nina Kaufman - Courtsey of Entreprenur.com
I am the sole owner of an LLC. I am entering another business venture -- a 50/50 ownership -- with a friend and we are forming a second LLC in an industry related to my first LLC. I am thinking about making my personal LLC the member of the joint LLC, instead of myself. What would be the advantages and disadvantages? I have heard there are advantages like another layer of legal protection, reducing the number of tax entities, etc, but I'd like to know more.Answer by Nina Kaufman
Having one entity own part of another has, as you noted, its pros and cons. On the plus side, you get an extra layer of liability protection. In addition, there may be tax advantages to having this income flow through your LLC rather than coming to you directly. The downsides include the bureaucracy of having more entities than may be necessary and possible complications should you choose to take on another business owner in your own LLC. Because the solution that's right for you depends on your personal tax situation and your ultimate goals for each of these businesses, make sure you speak to legal and accounting advisors regarding your specific situation.
I am the sole owner of an LLC. I am entering another business venture -- a 50/50 ownership -- with a friend and we are forming a second LLC in an industry related to my first LLC. I am thinking about making my personal LLC the member of the joint LLC, instead of myself. What would be the advantages and disadvantages? I have heard there are advantages like another layer of legal protection, reducing the number of tax entities, etc, but I'd like to know more.Answer by Nina Kaufman
Having one entity own part of another has, as you noted, its pros and cons. On the plus side, you get an extra layer of liability protection. In addition, there may be tax advantages to having this income flow through your LLC rather than coming to you directly. The downsides include the bureaucracy of having more entities than may be necessary and possible complications should you choose to take on another business owner in your own LLC. Because the solution that's right for you depends on your personal tax situation and your ultimate goals for each of these businesses, make sure you speak to legal and accounting advisors regarding your specific situation.
What skills make for a good negotiator?...added 2-3-11
Answer by Michael Kaleikini - Courstey of Entrepreneur.com
Here's a far-from-exhaustive list of the skills needed to be a generally good negotiator. The bottom line is you will need training on how to negotiate with institutions that have a bit of a "process" that can slow down your efforts to get the sale.
Negotiating a sale will likely get frustrating, so you'll need to keep your cool no matter what may happen.
Below is a list of the most agreed upon skills needed for quality negotiation:
1. Planning skills
2. Ability to think clearly under stress
3. General practical intelligence
4. Verbal ability
5. Product knowledge
6. Personal integrity
7. Ability to perceive and exploit power
Once you've figured out where to go for your training, make sure they are giving value for dollar. There are a lot organizations out there charging huge bucks and not giving the greatest guarantees, or giving the most effective training.
Here's a far-from-exhaustive list of the skills needed to be a generally good negotiator. The bottom line is you will need training on how to negotiate with institutions that have a bit of a "process" that can slow down your efforts to get the sale.
Negotiating a sale will likely get frustrating, so you'll need to keep your cool no matter what may happen.
Below is a list of the most agreed upon skills needed for quality negotiation:
1. Planning skills
2. Ability to think clearly under stress
3. General practical intelligence
4. Verbal ability
5. Product knowledge
6. Personal integrity
7. Ability to perceive and exploit power
Once you've figured out where to go for your training, make sure they are giving value for dollar. There are a lot organizations out there charging huge bucks and not giving the greatest guarantees, or giving the most effective training.
Should I Start a Business Despite Heavy Personal Debt?... added 1-31-11
Answer by Ryan Himmel - Courtsey of Entrepreneur.com
I want to start a new venture but have little money and a good amount of debt. Should I go for it? I'm young, don't have children, have a mediocre paying job, don't own a thing, and it would take me years to pay off my debts given my current job. I really don't want to be stuck in my current profession and am eager to start this venture before someone with a similar idea tests the waters. If this becomes a viable venture, it may be my ticket out of debt and a free-flowing and creative new venture and lifestyle.
The answer to your question really depends on your specific situation and how much research and preparation you have already done to determine the viability of the venture. If you simply just have an idea that you believe will work, but you lack the data or experience that would bear it out, then you are not ready to launch. There are many elements that go into starting a business and execution plays a significant role in the success or failure of the venture.
But if you have done a significant amount of market research, have a team in place, prospective customers, interested investors and experience, then the timing may be right even though you are carrying debt.
You should be as informed and prepared as possible to start this venture. Even if it doesn't work, you want to be able to say that you left nothing on the table and gave it your best shot by making the smartest decision at the time.
I hope you find this guidance helpful and good luck with your decision.
I want to start a new venture but have little money and a good amount of debt. Should I go for it? I'm young, don't have children, have a mediocre paying job, don't own a thing, and it would take me years to pay off my debts given my current job. I really don't want to be stuck in my current profession and am eager to start this venture before someone with a similar idea tests the waters. If this becomes a viable venture, it may be my ticket out of debt and a free-flowing and creative new venture and lifestyle.
The answer to your question really depends on your specific situation and how much research and preparation you have already done to determine the viability of the venture. If you simply just have an idea that you believe will work, but you lack the data or experience that would bear it out, then you are not ready to launch. There are many elements that go into starting a business and execution plays a significant role in the success or failure of the venture.
But if you have done a significant amount of market research, have a team in place, prospective customers, interested investors and experience, then the timing may be right even though you are carrying debt.
You should be as informed and prepared as possible to start this venture. Even if it doesn't work, you want to be able to say that you left nothing on the table and gave it your best shot by making the smartest decision at the time.
I hope you find this guidance helpful and good luck with your decision.
Does a loss on my corporate tax return also show up on my personal return?...added 1-24-11
Answer by Roni Deutch - Courtsey of Entrepreneur.com
My husband and I had a small business that shows a loss on the corporate return. We did not draw salaries or income from the company, but do have income from another employer on a W2.
Corporations are viewed as independent taxable entities. Therefore the loss would be reported on the business's Form 1120 U.S. Corporation Income Tax Return.
While turning a profit is the goal for every business, losses are increasingly common in this economy. In 2008 more than 3,700 publicly traded corporations reported losses, so you are in good company.
Fortunately for you, Congress extended the operating loss carry-back rules. Thus, if your business reported a profit in at least one of the last five years, you can use your 2009 loss to reduce the taxes you paid during more profitable times.
My husband and I had a small business that shows a loss on the corporate return. We did not draw salaries or income from the company, but do have income from another employer on a W2.
Corporations are viewed as independent taxable entities. Therefore the loss would be reported on the business's Form 1120 U.S. Corporation Income Tax Return.
While turning a profit is the goal for every business, losses are increasingly common in this economy. In 2008 more than 3,700 publicly traded corporations reported losses, so you are in good company.
Fortunately for you, Congress extended the operating loss carry-back rules. Thus, if your business reported a profit in at least one of the last five years, you can use your 2009 loss to reduce the taxes you paid during more profitable times.
How do I separate my business and personal taxes?...added 1-21-11
Answer by Roni Deutch - Courtsey of Entrepreneur.com
I am partial owner of my small business. If the business operates at a loss for the first year and we have about $30,000 in expenditures, how does that get calculated?
Congratulations on starting your own business. It is an exciting and incredibly rewarding experience. But it can be trying--so before I say anything else, I will caution you to consult not just a tax professional, but a professional bookkeeper or accountant.
S corporations--all small businesses in fact--must keep meticulous records of all income, expenses and investments, and that means getting some professional help.
Now that being said, I can give you a little guidance. First, you need to understand that S corporations are "pass through" entities. That means that all profits or losses are passed through to the shareholders. So, any profits or losses will be reported on your personal income tax returns using Schedule E, and any taxes due would be paid by you at your tax rate.
You mentioned that you are a partial owner of the S corporation. This means that any profits or losses and expenses are divided according to the ownership shares. If you own half of the S corporation, then half the profits, losses and expenses go to you. If you own a fifth of the shares, then one-fifth of the profits or losses go to you.
As for general accounting, you should keep your S corporation expenses and personal expenses separate. That means separate credit cards and separate bank accounts. When you need to purchase things for the business, use the business accounts. This is far cleaner than playing the expense reimbursement game.
However, since you've already incurred expenses, there are two things you can do: you can have the S corporation reimburse you, then the expense would be passed through and reported on Schedule E like any other corporate expense; or if you are also an employee of the S corporation you can deduct the expense on Schedule A as an un-reimbursed employee expenses, though you will only be able to deduct any amounts that exceed 2 percent of your adjusted gross income.
As you can see, the issues can get very complicated very quickly, and the IRS is notorious for auditing small businesses. So, not to sound too redundant, but the best word of advice I can give you is to seek out a qualified professional.
I am partial owner of my small business. If the business operates at a loss for the first year and we have about $30,000 in expenditures, how does that get calculated?
Congratulations on starting your own business. It is an exciting and incredibly rewarding experience. But it can be trying--so before I say anything else, I will caution you to consult not just a tax professional, but a professional bookkeeper or accountant.
S corporations--all small businesses in fact--must keep meticulous records of all income, expenses and investments, and that means getting some professional help.
Now that being said, I can give you a little guidance. First, you need to understand that S corporations are "pass through" entities. That means that all profits or losses are passed through to the shareholders. So, any profits or losses will be reported on your personal income tax returns using Schedule E, and any taxes due would be paid by you at your tax rate.
You mentioned that you are a partial owner of the S corporation. This means that any profits or losses and expenses are divided according to the ownership shares. If you own half of the S corporation, then half the profits, losses and expenses go to you. If you own a fifth of the shares, then one-fifth of the profits or losses go to you.
As for general accounting, you should keep your S corporation expenses and personal expenses separate. That means separate credit cards and separate bank accounts. When you need to purchase things for the business, use the business accounts. This is far cleaner than playing the expense reimbursement game.
However, since you've already incurred expenses, there are two things you can do: you can have the S corporation reimburse you, then the expense would be passed through and reported on Schedule E like any other corporate expense; or if you are also an employee of the S corporation you can deduct the expense on Schedule A as an un-reimbursed employee expenses, though you will only be able to deduct any amounts that exceed 2 percent of your adjusted gross income.
As you can see, the issues can get very complicated very quickly, and the IRS is notorious for auditing small businesses. So, not to sound too redundant, but the best word of advice I can give you is to seek out a qualified professional.
What makes for a successful entrepreneur?...added 1-19-11
Courtsey of Entreprenuer Magazine
Answer by Brad Sugars
That's a pretty open-ended question, but there are some general principles I can outline for you. First, you need a good vision for what you ultimately want your business to be, and that requires a certain amount of specificity and detail.
It's important to ask yourself these questions:
How big do you want your business to be, in terms of team, revenues and profits?
Does the industry or category you are entering support that vision?
Are you truly passionate and committed to your vision? Are you willing to do whatever it takes to achieve it?
Next, you need a product or service that people want to buy, and those people need to have the resources to actually buy it. Finally, you need to know the numbers for your venture.
How long will it take you to break-even?
How long before you start generating positive cash flow? Profit?
Do you have a systemized way to generate qualified leads?
How do you plan to get repeat business?
Do you know the pitfalls of discounting?
What's the "value" of added-value?
Are you willing to learn and be coached by people who actually know what they are doing in business, versus what you think you know about business?
Remember, more businesses fail from a lack of knowledge than a lack of capital. You can always make up for a lack of money with a good strategy, creative cashflow plans or good relationships with your vendors, suppliers and customers. But you can't make up for the lack of knowing how to make those things work to your advantage.
So be open to new ideas, work with a mentor or a coach and make sure the market is both willing and able to buy what you are selling. From there, it's just a matter of working toward your vision and your goals -- and having some fun along the way.
Answer by Brad Sugars
That's a pretty open-ended question, but there are some general principles I can outline for you. First, you need a good vision for what you ultimately want your business to be, and that requires a certain amount of specificity and detail.
It's important to ask yourself these questions:
How big do you want your business to be, in terms of team, revenues and profits?
Does the industry or category you are entering support that vision?
Are you truly passionate and committed to your vision? Are you willing to do whatever it takes to achieve it?
Next, you need a product or service that people want to buy, and those people need to have the resources to actually buy it. Finally, you need to know the numbers for your venture.
How long will it take you to break-even?
How long before you start generating positive cash flow? Profit?
Do you have a systemized way to generate qualified leads?
How do you plan to get repeat business?
Do you know the pitfalls of discounting?
What's the "value" of added-value?
Are you willing to learn and be coached by people who actually know what they are doing in business, versus what you think you know about business?
Remember, more businesses fail from a lack of knowledge than a lack of capital. You can always make up for a lack of money with a good strategy, creative cashflow plans or good relationships with your vendors, suppliers and customers. But you can't make up for the lack of knowing how to make those things work to your advantage.
So be open to new ideas, work with a mentor or a coach and make sure the market is both willing and able to buy what you are selling. From there, it's just a matter of working toward your vision and your goals -- and having some fun along the way.
What's the best way for a startup to handle taxes?...added 1-17-2011
Courtsey of Entreprenuer Magazine
Answer by Ryan Himmel
It is understandable for a startup to be cost conscious when it comes to expenses such as tax preparation. Entrepreneurs would rather use their limited capital towards spending that results in more revenue.
However, proper tax preparation is important for a host of reasons, one of them being mitigating audit risk. With that said, let's review some of the available tax preparation options.
CPA or Enrolled Agent
The tax preparation service provided by a reputable CPA or enrolled agent is likely the least risky method of filing your taxes. The cost can generally range from $250 to $600 per tax return which depends on the financial complexity of the business and the CPA or enrolled agent's experience level.
Since you are a startup company, it would be wise to negotiate with the tax preparer by explaining your situation. In some instances, tax preparers will charge a reduced fee in hopes that a company may become a long-term client.
Also -- and this is very important -- when choosing a tax preparer, make sure to do a thorough background check. Ask for referrals and go to the AICPA website to review CPA licensure status and the IRS to review the same for enrolled agents. You will be able to verify that the tax preparer is in fact a CPA or enrolled agent and if they have any disciplinary actions on their record.
Online Tax Software
The online tax software space continues to grow at a rapid pace as more and more individuals and small businesses are using it as their preferred method for filing taxes.
TurboTax for business is the most widely used tax preparation application on the market. The pricing is around $130 for just the federal tax return -- there would be an additional fee to file a state tax return.
TaxAct (Now Part of H&R Block) for business is considerably less at $40 for just the federal tax return. They both are easy to use but TurboTax has better functionality.
Online Tax Advice
The company I founded, BIDaWIZ.com, offers affordable and reliable tax advice online through our network of verified CPAs. The pricing is based on the complexity of the question and you can choose the CPA based on their credentials, fee and customer ratings. You can also message them throughout the process for follow-up questions or more clarity on the issue.
Do It Yourself
The final option is to process your tax return by yourself or in collaboration with your other business partners. I don't recommend this as the cost for filing improperly is significant.
Company Responsibilities
Whichever option you choose for your tax preparation, please be aware that your company is responsible for mistakes even if a CPA signed off on the tax return. With that said, please make sure that you double check the tax return for errors and mistakes.
Good luck with the venture and the tax preparation search.
Answer by Ryan Himmel
It is understandable for a startup to be cost conscious when it comes to expenses such as tax preparation. Entrepreneurs would rather use their limited capital towards spending that results in more revenue.
However, proper tax preparation is important for a host of reasons, one of them being mitigating audit risk. With that said, let's review some of the available tax preparation options.
CPA or Enrolled Agent
The tax preparation service provided by a reputable CPA or enrolled agent is likely the least risky method of filing your taxes. The cost can generally range from $250 to $600 per tax return which depends on the financial complexity of the business and the CPA or enrolled agent's experience level.
Since you are a startup company, it would be wise to negotiate with the tax preparer by explaining your situation. In some instances, tax preparers will charge a reduced fee in hopes that a company may become a long-term client.
Also -- and this is very important -- when choosing a tax preparer, make sure to do a thorough background check. Ask for referrals and go to the AICPA website to review CPA licensure status and the IRS to review the same for enrolled agents. You will be able to verify that the tax preparer is in fact a CPA or enrolled agent and if they have any disciplinary actions on their record.
Online Tax Software
The online tax software space continues to grow at a rapid pace as more and more individuals and small businesses are using it as their preferred method for filing taxes.
TurboTax for business is the most widely used tax preparation application on the market. The pricing is around $130 for just the federal tax return -- there would be an additional fee to file a state tax return.
TaxAct (Now Part of H&R Block) for business is considerably less at $40 for just the federal tax return. They both are easy to use but TurboTax has better functionality.
Online Tax Advice
The company I founded, BIDaWIZ.com, offers affordable and reliable tax advice online through our network of verified CPAs. The pricing is based on the complexity of the question and you can choose the CPA based on their credentials, fee and customer ratings. You can also message them throughout the process for follow-up questions or more clarity on the issue.
Do It Yourself
The final option is to process your tax return by yourself or in collaboration with your other business partners. I don't recommend this as the cost for filing improperly is significant.
Company Responsibilities
Whichever option you choose for your tax preparation, please be aware that your company is responsible for mistakes even if a CPA signed off on the tax return. With that said, please make sure that you double check the tax return for errors and mistakes.
Good luck with the venture and the tax preparation search.
How do I approach store owners about carrying my product?
Courtsey of Entreprenuer Magazine
Answer by Brad Sugars
What you really need to do is test and measure a number of different ways of getting to your potential customers. For you, I would say it's as simple as creating baskets for your target (from a targeted mailing list of say 10 to 50 different people) with a short note attached with your contact information.
Most will call to at least say thank you -- and that gives you the opportunity to start to build a rapport with them. If you can customize your product per their audience, let them know.
Can you add value (say with flowers, jewelry or even stuffed animals)? Be sure to mention that as well. If you don't hear back from the people you are targeting, you can follow-up with a phone call and start to build rapport that way.
Just make sure you are targeting the decision maker, and that what you are offering would be a good fit for their own base.
Know also you may be in competition with a current preferred vendor, in which case you'll have to find a way to make your product more attractive (better pricing without necessarily discounting but adding value, service, delivery, options, baskets, etc.).
Again, you simply won't know what works until you start testing approaches, figuring out what works, what doesn't, keeping your winning approaches and killing your losers.
You'll eventually find what works for you, and once you do, you can systemize that to branch out to larger targets, more effectively -- at lower costs. A simple sales letter down the line with your customers' testimonials may be the preferred method of contact, versus a higher-cost sample gift basket.
Remember to diligently track your responses and feedback, as that will be the key to honing in on the system that will eventually work best for you.
Answer by Brad Sugars
What you really need to do is test and measure a number of different ways of getting to your potential customers. For you, I would say it's as simple as creating baskets for your target (from a targeted mailing list of say 10 to 50 different people) with a short note attached with your contact information.
Most will call to at least say thank you -- and that gives you the opportunity to start to build a rapport with them. If you can customize your product per their audience, let them know.
Can you add value (say with flowers, jewelry or even stuffed animals)? Be sure to mention that as well. If you don't hear back from the people you are targeting, you can follow-up with a phone call and start to build rapport that way.
Just make sure you are targeting the decision maker, and that what you are offering would be a good fit for their own base.
Know also you may be in competition with a current preferred vendor, in which case you'll have to find a way to make your product more attractive (better pricing without necessarily discounting but adding value, service, delivery, options, baskets, etc.).
Again, you simply won't know what works until you start testing approaches, figuring out what works, what doesn't, keeping your winning approaches and killing your losers.
You'll eventually find what works for you, and once you do, you can systemize that to branch out to larger targets, more effectively -- at lower costs. A simple sales letter down the line with your customers' testimonials may be the preferred method of contact, versus a higher-cost sample gift basket.
Remember to diligently track your responses and feedback, as that will be the key to honing in on the system that will eventually work best for you.
Does the IRS accept scanned receipts for tax write-offs?
If so, can I destroy the original receipts?
Courtsey of Entrepreneur Magazine
Answer by Ryan Himmel
You sure can scan your receipts and throw away the originals. Most taxpayers don't realize it but the IRS has actually accepted scanned receipts as far back as 1997.
The rule that supports scanned receipts is called Revenue Proclamation 97-22. The rule states that scanned receipts are acceptable as long as they are identical to the originals and contain all of the accurate information that are included in the original receipts.
It is important though to have the scanned copies organized in a readily available manner in case of an IRS audit. Specifically, you must be able to index, store, preserve, retrieve and reproduce the records. This means that you should be able to produce a hard copy if requested by the IRS.
I would strongly suggest to move forward with only retaining scanned receipts as it saves space and conserves paper. However, make sure that you properly store and backup the data should you have a corrupt hard drive or some other issue preventing you from accessing the original data.
It would be wise to purchase an external hard-drive or flash memory card since they are inexpensive and protect you in case you need a backup.
Answer by Ryan Himmel
You sure can scan your receipts and throw away the originals. Most taxpayers don't realize it but the IRS has actually accepted scanned receipts as far back as 1997.
The rule that supports scanned receipts is called Revenue Proclamation 97-22. The rule states that scanned receipts are acceptable as long as they are identical to the originals and contain all of the accurate information that are included in the original receipts.
It is important though to have the scanned copies organized in a readily available manner in case of an IRS audit. Specifically, you must be able to index, store, preserve, retrieve and reproduce the records. This means that you should be able to produce a hard copy if requested by the IRS.
I would strongly suggest to move forward with only retaining scanned receipts as it saves space and conserves paper. However, make sure that you properly store and backup the data should you have a corrupt hard drive or some other issue preventing you from accessing the original data.
It would be wise to purchase an external hard-drive or flash memory card since they are inexpensive and protect you in case you need a backup.
How do I find market research for my business plan?
I am starting a doggy daycare, so I need to find the number of dogs in the area I want to open my business.
Courtesy of Entrepreneur Magazine
Answer by Ryan Himmel
A doggy daycare business sounds like a fun and fast growing venture. I performed preliminary market research online to get a sense of the opportunity and will share my findings with you below. Please note that when performing market research it is critical to use multiple sources to improve the reliability of the data in your financial model.
I first wanted to get a sense of the total available market (TAM) by finding out how many households own dogs in the US. According to the American Veterinary Medical Association (AVMA), in 2007, 37.2 percent or 43 million households own dogs in the United States. In addition, on average each household owns 1.7 dogs, so the total number of dogs in 2007 was 72 million.
Then, I visited the American Pet Products Association (APPA) to review a recent 2009/2010 survey. The data from the survey indicates that there are 45.6 million households owning dogs in the U.S. and 77.5 million total dogs. By using these two sources (AVMA and APPA), it is safe for us to conclude that 35 to 40 percent of households own dogs in the United States and the total number of dogs to households is 65 to 70 percent.
Now, let's move to doggy daycare annual spending. The same APPA survey indicates that $273 is spent annually ($20 to $25 monthly) for kennel boarding which is the largest component of doggy daycare services. It is also important to note that spending has grown about 5 to 7 percent each year for the past 10 years. This statistic is important when projecting growth in your financial model.
This market data above is very important as we can use it as the basis for our assumptions when we build the financial model. So, let's get to it. We don't know the total number of dogs in your area but we can figure out the population size and number of households in your area.
Let's assume that the population size of your city is 100,000. Let's then divide the total population by the number of people per household or 2.5 (source: U.S. census) which is 40,000 households. Then, let's take our "35 to 40 percent of households own dogs in the U.S." statistic and multiply that by the 40,000 households in your city.
We now estimate that 14,000 to 16,000 households own dogs. If we wanted to estimate the total number of dogs in your city, we could just multiply the 14,000 to 16,000 by the "1.7 dogs per household" market statistic which equals 24,000 to 27,000 estimated total dogs in your city.
Now to the fun part: total available annual sales. Since there are 24,000 to 27,000 dogs in your city, and the average annual expenses per dog for daycare are about $273 or $20 to $25 per month, we can estimate that the total available annual sales would be $6,500,000 to $7,300,000 or $540,000 to $610,000 per month.
Before you get too excited, let's point out a few factors that are very important to consider. First, the total available annual sales are for the entire market which means it includes your competitors. If there are four other doggy daycare centers in the city, then they will be taking a share of the pie. Secondly, our assumptions above are based on national statistics and may not be reflective of the market conditions in your specific city.
The fact of the matter is that you won't know how successful the business will be until you actually launch the company. Market research is important and an indicator of the business opportunity but it is by no means a guarantee of success.
I hope this was helpful. Good luck with the doggy daycare center.
Answer by Ryan Himmel
A doggy daycare business sounds like a fun and fast growing venture. I performed preliminary market research online to get a sense of the opportunity and will share my findings with you below. Please note that when performing market research it is critical to use multiple sources to improve the reliability of the data in your financial model.
I first wanted to get a sense of the total available market (TAM) by finding out how many households own dogs in the US. According to the American Veterinary Medical Association (AVMA), in 2007, 37.2 percent or 43 million households own dogs in the United States. In addition, on average each household owns 1.7 dogs, so the total number of dogs in 2007 was 72 million.
Then, I visited the American Pet Products Association (APPA) to review a recent 2009/2010 survey. The data from the survey indicates that there are 45.6 million households owning dogs in the U.S. and 77.5 million total dogs. By using these two sources (AVMA and APPA), it is safe for us to conclude that 35 to 40 percent of households own dogs in the United States and the total number of dogs to households is 65 to 70 percent.
Now, let's move to doggy daycare annual spending. The same APPA survey indicates that $273 is spent annually ($20 to $25 monthly) for kennel boarding which is the largest component of doggy daycare services. It is also important to note that spending has grown about 5 to 7 percent each year for the past 10 years. This statistic is important when projecting growth in your financial model.
This market data above is very important as we can use it as the basis for our assumptions when we build the financial model. So, let's get to it. We don't know the total number of dogs in your area but we can figure out the population size and number of households in your area.
Let's assume that the population size of your city is 100,000. Let's then divide the total population by the number of people per household or 2.5 (source: U.S. census) which is 40,000 households. Then, let's take our "35 to 40 percent of households own dogs in the U.S." statistic and multiply that by the 40,000 households in your city.
We now estimate that 14,000 to 16,000 households own dogs. If we wanted to estimate the total number of dogs in your city, we could just multiply the 14,000 to 16,000 by the "1.7 dogs per household" market statistic which equals 24,000 to 27,000 estimated total dogs in your city.
Now to the fun part: total available annual sales. Since there are 24,000 to 27,000 dogs in your city, and the average annual expenses per dog for daycare are about $273 or $20 to $25 per month, we can estimate that the total available annual sales would be $6,500,000 to $7,300,000 or $540,000 to $610,000 per month.
Before you get too excited, let's point out a few factors that are very important to consider. First, the total available annual sales are for the entire market which means it includes your competitors. If there are four other doggy daycare centers in the city, then they will be taking a share of the pie. Secondly, our assumptions above are based on national statistics and may not be reflective of the market conditions in your specific city.
The fact of the matter is that you won't know how successful the business will be until you actually launch the company. Market research is important and an indicator of the business opportunity but it is by no means a guarantee of success.
I hope this was helpful. Good luck with the doggy daycare center.
What happens if I need guidance on running my small business?
The U.S. Small Business Administration has plenty of advice, and you can find mentors with groups like SCORE (www.score.org).
Am I required to withhold taxes from my three employees?
Withholding taxes when you only have a few staffers seems rather irritating.
Withholding taxes may seem like a nuisance but if you have "employees" then you are responsible by law to withhold several federal, state, social security, medicare and possibly local taxes.
Please also keep in mind that prior to commencing operations and hiring "employees," you technically need an employer identification number which is commonly referred to as a EIN. You can visit the IRS website which details the necessary steps to obtain an EIN. You will also need to rely on the employee's Form W-4 to properly calculate the amount of withholding taxes taken out the employees' paychecks.
Employee or Contractor?
In addition, there is a significant distinction in an employer's tax reporting responsibilities for employees verses independent contractors. A business generally does not have to withhold or pay any federal taxes on payments to independent contractors. The rules for classifying a worker as an independent contractor are becoming enforced more and more by the IRS, so please review the rules below in classifying a worker appropriately.
If you answer yes to any of the questions below, then your workers are probably independent contractors:
1. Do they--rather than the employer--determine how the job is to be performed?
2. Are they paid by the job or project rather than an hourly wage or salary?
3. Are their services offered to the public and not just to one particular person, boss or business?
4. Do they use their own tools and equipment?
5. Do they determine the number of hours worked?
6. Do they have a contract stating that they will be paid as an independent contractor?
If the answer was no to the majority of the questions above then you will want to ask yourself these questions:
1. Do they have set hours of work?
2. Are they paid in regular amounts at set intervals, such as an hourly wage, weekly salary, etc.?
3. Do they work at your workplace or at home?
4. Can they be fired?
5. Do they receive training from you?
6. Do they have to follow specific instructions about how the work is to be done?
If you answered yes to the majority of these questions, they are likely classified as an employee.
Please also keep in mind that prior to commencing operations and hiring "employees," you technically need an employer identification number which is commonly referred to as a EIN. You can visit the IRS website which details the necessary steps to obtain an EIN. You will also need to rely on the employee's Form W-4 to properly calculate the amount of withholding taxes taken out the employees' paychecks.
Employee or Contractor?
In addition, there is a significant distinction in an employer's tax reporting responsibilities for employees verses independent contractors. A business generally does not have to withhold or pay any federal taxes on payments to independent contractors. The rules for classifying a worker as an independent contractor are becoming enforced more and more by the IRS, so please review the rules below in classifying a worker appropriately.
If you answer yes to any of the questions below, then your workers are probably independent contractors:
1. Do they--rather than the employer--determine how the job is to be performed?
2. Are they paid by the job or project rather than an hourly wage or salary?
3. Are their services offered to the public and not just to one particular person, boss or business?
4. Do they use their own tools and equipment?
5. Do they determine the number of hours worked?
6. Do they have a contract stating that they will be paid as an independent contractor?
If the answer was no to the majority of the questions above then you will want to ask yourself these questions:
1. Do they have set hours of work?
2. Are they paid in regular amounts at set intervals, such as an hourly wage, weekly salary, etc.?
3. Do they work at your workplace or at home?
4. Can they be fired?
5. Do they receive training from you?
6. Do they have to follow specific instructions about how the work is to be done?
If you answered yes to the majority of these questions, they are likely classified as an employee.
For bookkeeping, are discounts considered income or expenses? ...added 9-23-10
Firstly, nice job on offering discount incentives to encourage more customers to use your service. Often times, companies lose sight of the long-term benefits of offering discounted goods or services to new customers.
A company may experience a short-term negative impact to gross margins but if they can retain the new customers over the long-term, generally this cost will be recovered in more sales.
As for your bookkeeping question, I believe you are referring to "sales discounts," which are not recorded as expenses. Rather, sales discounts are contra accounts to revenue or a reduction of gross revenue to arrive at net sales. In simpler terms, it is really a price reduction as opposed to an added cost to running your business.
Also, it is best to categorize your discounts as specific as possible for tracking purposes. For instance, if you have more than one type of discount, you should add a discount item and then add sub-items for each type of discount such as "Labor Day Discount."
A company may experience a short-term negative impact to gross margins but if they can retain the new customers over the long-term, generally this cost will be recovered in more sales.
As for your bookkeeping question, I believe you are referring to "sales discounts," which are not recorded as expenses. Rather, sales discounts are contra accounts to revenue or a reduction of gross revenue to arrive at net sales. In simpler terms, it is really a price reduction as opposed to an added cost to running your business.
Also, it is best to categorize your discounts as specific as possible for tracking purposes. For instance, if you have more than one type of discount, you should add a discount item and then add sub-items for each type of discount such as "Labor Day Discount."
How do I create a proposal that is more effective as a tool in closing the deal? ...added 9-9-10
Proposals can make or break a sales deal; a well-written proposal can help cinch the deal. The proposal should absolutely be used as a selling tool. It is your opportunity to demonstrate that you truly understand your prospect's needs, you have listened intently and that you will provide a compelling solution.
Notice I used the word "compelling." Not only do you want your proposal to give your prospect details of the solution and pricing information, it is also your final chance before asking for the order to make a lasting impression on your prospect. So you want to be sure it's a good one.
There are 10 key elements to writing a proposal that will help you make a favorable final impression before closing the deal--and will help improve your close ratio as well.
Notice I used the word "compelling." Not only do you want your proposal to give your prospect details of the solution and pricing information, it is also your final chance before asking for the order to make a lasting impression on your prospect. So you want to be sure it's a good one.
There are 10 key elements to writing a proposal that will help you make a favorable final impression before closing the deal--and will help improve your close ratio as well.
- The header testimonial. This is a quote from an existing client who has used your products and services the same way you are now proposing that your prospect use them. The quote should include a statement that speaks to the results your solution has provided, as well as statistics to back it up. The quote should not be more than one or two sentences. The function of the header testimonial is to grab the attention of your prospect so he will read the rest of your proposal, and not just skip to the pricing/investment section, like many prospects tend to do.
- The opening statement. The opening statement should include a sincere thank-you to your prospect for the opportunity to present your proposal, as well as an enthusiastic statement from you regarding your interest in providing a solution that will meet the prospect's needs.
- The scope of work statement. This is a one- or two-sentence description of your understanding of the prospect's needs, and the solution you are proposing to address those needs.
- The scope of work detailed description is where you provide details of the project--including the solution itself--and any relevant scheduling details, including time frames and deadlines. This portion of the proposal also speaks to items the prospect will be responsible for, if any, to make the project a success. It is important to set expectations early so your prospect knows exactly what he is agreeing to upfront, before you close the deal.
- The project deliverables description. It should include the tangible items you will deliver as a part of your solution. The best way to present this portion of the proposal is to use bullet points to present clear, concise action items associated with your solution.
- The investment details. This is where you address the pricing details of your solution. Notice it is called the investment details section, not the pricing details section. This is done purposefully because the word "investment" indicates something of value in exchange for the money spent, or invested, in your solution. Stay away from words like "price" and "cost" as they suggest only that money will be spent, as opposed to an exchange of value.
Whether you choose to itemize your proposal is a personal choice. One nice aspect of an itemized proposal is that if the client balks at the total investment, you can ask the prospect which items to remove from the proposal in order to lower the price. In other words, you can come down on the price, but only with the understanding that the solution will be different than what you originally proposed.
If you're going to give a little, your prospect needs to give a little, too. Too often we drop the price of our solution in order to win the business. However, this can create the perception that you don't see the value in your own solution, as well as send a message to your prospect that you didn't start with your best price. Coming down on your price also sets a precedent, and your clients may come to expect it after you do it once.
- The return on investment statement. This is a section many salespeople miss. Maybe it's assumed the prospect will immediately see the return on her investment, without you explaining it, but that is unlikely. If you can, spell it out so the prospect has a clear understanding of how your solution will either save her money, make her money or save her time. If you can show a return on investment for your solution that makes sense, you will win the deal the majority of the time.
- The call-to-action statement. This is where you tell your prospect exactly what will happen next, such as, "I will contact you next Tuesday to review the proposal in detail and answer any questions you may have."
An even better approach is to have a commitment from your prospect before you submit the proposal for review. In other words, before you prepare the proposal, ask your prospect for a specific date and time you can review the proposal together, rather than just send it to him to review on his own. This will prevent you from losing the sale because you had no follow-up commitment from the prospect.
- The thank-you statement. It may seem obvious, but many people forget to thank their prospects for the opportunity. Just as important as the thank you is tying it to the results your solution will create for the prospect. Showing some enthusiasm for the project doesn't hurt, either.
- The footer testimonial. This is your final chance to leave the prospect with a quote or testimonial from a client who has experienced a favorable outcome as a result of your solution.
How can I get potential customers and existing clients involved and excited about my company? ...added 8-23-10
There are several ways a business owner can do this. It all depends on budget...
The big guys can take advantage of staffed marketers whose soul job is to hit the social networks and blogs. This is the easy way.
The more practical way for small to mid size companies is to do it yourself. With the advent of Web 2.0 the options have exploded. Finding your way through what is and is not effective is half the battle. To do this, call an expert. There are plenty of small businesses out there who are dedicated to this type of marketing. Find out from your local business owners who has a good reputation and who doesn't. You may find a small business in your area who specializes in this type of marketing.
Next...
Get dirty. You will either have to pay someone a small salary to take on your social networking needs or do it yourself. There are plenty of college kids out there who are perfectly capable of doing this for you. Just stay on top of them and check their work form time to time. You may also enjoy the relationship you formed with your consultant and they may offer these types of services. They will cost more but you will feel more confident that your campaigns are being run correctly.
The big guys can take advantage of staffed marketers whose soul job is to hit the social networks and blogs. This is the easy way.
The more practical way for small to mid size companies is to do it yourself. With the advent of Web 2.0 the options have exploded. Finding your way through what is and is not effective is half the battle. To do this, call an expert. There are plenty of small businesses out there who are dedicated to this type of marketing. Find out from your local business owners who has a good reputation and who doesn't. You may find a small business in your area who specializes in this type of marketing.
Next...
Get dirty. You will either have to pay someone a small salary to take on your social networking needs or do it yourself. There are plenty of college kids out there who are perfectly capable of doing this for you. Just stay on top of them and check their work form time to time. You may also enjoy the relationship you formed with your consultant and they may offer these types of services. They will cost more but you will feel more confident that your campaigns are being run correctly.
How do I analyze return on a marketing campaign? ...added 8-13-10
There is a very simple inexpensive solution to this problem-Google Analytics.
Like most Google products this is free, powerful and once you start using it, indispensable. Google also does a very good job in coaching you on the use of this product to analyze different portions of a campaign as well as whole campaigns themselves. Your webmaster should be able to integrate the tools into your website at little to no cost.
The power of separating differing links in your campaigns to gauge their effectiveness is invaluable. Imagine knowing how many click throughs you received from an image or a phrase in your electronic advertising. Also think of how powerful the information would be if you knew how effective the print advertising campaign you just ran was. How many people actually went to their computer and found your site after reading your ad. Where did they go from there? What pages did they read? How long did they stay on each page? All of these questions and more are answered by Google Analytics.
Give it a whirl!
Like most Google products this is free, powerful and once you start using it, indispensable. Google also does a very good job in coaching you on the use of this product to analyze different portions of a campaign as well as whole campaigns themselves. Your webmaster should be able to integrate the tools into your website at little to no cost.
The power of separating differing links in your campaigns to gauge their effectiveness is invaluable. Imagine knowing how many click throughs you received from an image or a phrase in your electronic advertising. Also think of how powerful the information would be if you knew how effective the print advertising campaign you just ran was. How many people actually went to their computer and found your site after reading your ad. Where did they go from there? What pages did they read? How long did they stay on each page? All of these questions and more are answered by Google Analytics.
Give it a whirl!
What's the best way to market my business with social media? ...added 7-30-10
We would recommend that you do some research on search activity both paid and organic. It's important to understand the benefits along with challenges of utilizing social media as a marketing tool.
While all of these endeavors can increase the profile of your business, you must be aware of the requirements or it can work against you. For instance, optimizing your website for organic search is a good way to increase ranking on search engines thus bringing more traffic to your site. But doing it incorrectly will result in a poor ranking.
Take a thoughtful approach to keywords and integrate them appropriately into your website content as well as the metatag information.
From a paid search perspective we suggest talking to agencies or attending seminars on the topic. Be sure to ask about case studies and how they could help your business directly.
When it comes to social media strategy, be sure you investigate this and understand that while it's free, it will require time and focus. While you will undoubtedly reach your core audience, you will need to keep a steady flow of content and contact while not being overtly self-serving.
If you could educate, entice and align with your audience, you will ultimately be better served through increased exposure.
While all of these endeavors can increase the profile of your business, you must be aware of the requirements or it can work against you. For instance, optimizing your website for organic search is a good way to increase ranking on search engines thus bringing more traffic to your site. But doing it incorrectly will result in a poor ranking.
Take a thoughtful approach to keywords and integrate them appropriately into your website content as well as the metatag information.
From a paid search perspective we suggest talking to agencies or attending seminars on the topic. Be sure to ask about case studies and how they could help your business directly.
When it comes to social media strategy, be sure you investigate this and understand that while it's free, it will require time and focus. While you will undoubtedly reach your core audience, you will need to keep a steady flow of content and contact while not being overtly self-serving.
If you could educate, entice and align with your audience, you will ultimately be better served through increased exposure.
How do I get funds to grow my existing business? ...added 7-10-10
Obtaining financing can be difficult but it is achievable if you put together the right plan.
Below, I've listed a few options for you to consider.
Option 1: Seek a Strategic Partnership
This can be a tough decision to make but it is an option worth exploring if you can find a company that compliments your business. If you can find a partner that has a strong balance sheet (i.e. cash) and a complimentary business model, perhaps you can form a partnership.
Option 2: Seek Financial Investors
If all you need is cash, then perhaps you can raise capital by partnering with an individual investor who will just provide funding and take an ownership position in the company. Again, you will have to give up some ownership, but you will also have the ability to grow with fresh capital.
Option 3: Seek Further Financing Options with Banks
You may have to go to several regional and community banks to find a lender with favorable terms but it is an option worth exploring. The Small Business Administration also sometimes offers attractive opportunities to obtain financing. In working with the bank, be as forthcoming as possible regarding your history and your needs. Your banker, in turn, will tell you exactly the information he or she needs to present your "best case" to the bank's credit committee. Use your past success as a way to market yourself which will help give the bank assurance.
Below, I've listed a few options for you to consider.
Option 1: Seek a Strategic Partnership
This can be a tough decision to make but it is an option worth exploring if you can find a company that compliments your business. If you can find a partner that has a strong balance sheet (i.e. cash) and a complimentary business model, perhaps you can form a partnership.
Option 2: Seek Financial Investors
If all you need is cash, then perhaps you can raise capital by partnering with an individual investor who will just provide funding and take an ownership position in the company. Again, you will have to give up some ownership, but you will also have the ability to grow with fresh capital.
Option 3: Seek Further Financing Options with Banks
You may have to go to several regional and community banks to find a lender with favorable terms but it is an option worth exploring. The Small Business Administration also sometimes offers attractive opportunities to obtain financing. In working with the bank, be as forthcoming as possible regarding your history and your needs. Your banker, in turn, will tell you exactly the information he or she needs to present your "best case" to the bank's credit committee. Use your past success as a way to market yourself which will help give the bank assurance.
How do I calculate taxes incurred on my business plan? ...added 7-5-10
Any business, from a sole proprietorship to a large corporation, can benefit from a well thought out business plan.
And smart thinking to consider taxes as you plan your business. How much you pay in taxes depends entirely on how much income and sales you generate.
Generally, you can estimate taxes based on 15 percent of your business income for employment taxes (like social security). For actual income taxes for your business income, that will depend upon which tax bracket you are in.
Remember, state income taxes may apply as well. I would highly recommend spending a little time and money meeting with a tax professional to get a good estimate of taxes owed. Sole proprietors often get into tax trouble because they do not understand what their tax obligations are.
In this case, an ounce of prevention is worth far more than a pound of cure.
And smart thinking to consider taxes as you plan your business. How much you pay in taxes depends entirely on how much income and sales you generate.
Generally, you can estimate taxes based on 15 percent of your business income for employment taxes (like social security). For actual income taxes for your business income, that will depend upon which tax bracket you are in.
Remember, state income taxes may apply as well. I would highly recommend spending a little time and money meeting with a tax professional to get a good estimate of taxes owed. Sole proprietors often get into tax trouble because they do not understand what their tax obligations are.
In this case, an ounce of prevention is worth far more than a pound of cure.
Is there anyone out there willing to help small business at little or no cost?
In fact there is!
Cash strapped entrepreneurs and small business owners now have a couple of places to go for the kind of specific answers and advice it usually costs big bucks to get from paid consultants.
Check out:
foundersspace.com &
score.org
Both sites are free and incredibly informative.
Cash strapped entrepreneurs and small business owners now have a couple of places to go for the kind of specific answers and advice it usually costs big bucks to get from paid consultants.
Check out:
foundersspace.com &
score.org
Both sites are free and incredibly informative.
