Are you aware of business plan competitions? If you’re an
entrepreneur, they’re an excellent opportunity to present your business
and compete for cash and in-kind prizes or, worst case, really good
feedback from serious business people. If you’re lucky enough to be
invited to judge, it’s a chance to spend a few days reviewing real-world
startups.
I’ve been judging business plan competitions for almost 20 years. As I
write this I’m looking forward to another season judging venture
competitions including the University of Texas’ Venture Labs Investment Competition, the Rice University Business Plan Competition, and the University of Oregon New Venture Championship.
Each of these three events pit grad-level business students from all
over the world against each other as they compete for cash and in-kind
prizes. They submit business plans, do business pitches and answer
detailed questions.
I find judging these competitions fun, interesting and for me a great
way to keep up with the evolution of high-level startups, business
planning and entrepreneurship education.
The University of Texas started this, as far as I know, with the
first “Moot Corp” in 1984. Moot Corp became Venture Labs Competition
three years ago. It’s the oldest and possibly most prestigious –
although Rice University is a serious rival. All of its entrants have
won other business plan competitions to get to that one.
The Rice University contest is the richest. Recent winners have won
cash prizes of hundreds of thousands of dollars and total prizes of more
than $1 million including in-kind services (like free rent, consulting,
legal work, etc.).
I’ve been judging the University of Oregon competition since 1997.
I’ll never forget arriving on a Thursday morning to discover, to my
horror, that I’d committed myself to all day Thursday, Friday and
Saturday. My horror changed to real interest as the teams began their
pitches. By Saturday I had enjoyed it so much I made sure to stay on the
list for the future years. And I’ve missed only one year since then.
One obvious change I’ve seen in this area is the tremendous growth in
the number of contests, the interest in contests, the prize money and
the seriousness of the startups that enter.
The most important change is an amazing increase in the viability of
the competing startups. The early Moot Corps were almost entirely
hypothetical business plans developed by students as academic exercises.
Nowadays most of the entrants in the major business plan competitions
are real companies with real prospects. Of the three I judge, a clear
majority of the startups that enter will eventually get financed and
launch. Both Rice and Texas track angel investments and venture capital
financing landed by former contestants in the hundreds of millions of
dollars. Winners almost always have viable products, believable
management teams, and credible growth prospects.
Another change is the length, style and content of the business plans
submitted. Today’s business plans are much shorter than they used to
be, as page limits have gone from 30-40 to 10-20. Judges have to read
plans and they want shorter, sharper and more summarized. And – sadly,
in my opinion – financial projections seem to be less rigorous.
Another development is that because of the continuing increase in
interest, there is now a good website dedicated entirely to listing
competitions, at www.bizplancompetitions.com.
You’ll be amazed at how many events they list. And I hope you find one
you can attend, enter or judge. If you have any interest in startups,
it’s a great experience.
Monday, March 31, 2014
Ten Helpful Tips for Farm Tax Returns
There are many tax benefits for people in the farming business. Farms include plantations, ranches, ranges and orchards. Farmers may raise livestock, poultry or fish, or grow fruits or vegetables.
Here are 10 things about farm income and expenses to help at tax time.
1. Crop insurance proceeds. Insurance payments from crop damage count as income. Generally, you should report these payments in the year you get them.
2. Deductible farm expenses. Farmers can deduct ordinary and necessary expenses they paid for their business. An ordinary expense is a common and accepted cost for that type of business. A necessary expense means a cost that is appropriate for that business.
3. Employees and hired help. You can deduct reasonable wages you paid to your farm’s full and part-time workers. You must withhold Social Security, Medicare and income taxes from their wages.
4. Sale of items purchased for resale. If you sold livestock or items that you bought for resale, you must report the sale. Your profit or loss is the difference between your selling price and your basis in the item. Basis is usually the cost of the item. Your cost may also include other amounts you paid such as sales tax and freight.
5. Repayment of loans. You can only deduct the interest you paid on a loan if the loan is used for your farming business. You can’t deduct interest you paid on a loan that you used for personal expenses.
6. Weather-related sales. Bad weather such as a drought or flood may force you to sell more livestock than you normally would in a year. If so, you may be able to delay reporting a gain from the sale of the extra animals.
7. Net operating losses. If your expenses are more than income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid in prior years. You may also be able to lower your tax in future years.
8. Farm income averaging. You may be able to average some or all of the current year's farm income by spreading it out over the past three years. This may lower your taxes if your farm income is high in the current year and low in one or more of the past three years.
9. Fuel and road use. You may be able to claim a tax credit or refund of excise taxes you paid on fuel used on your farm for farming purposes.
10. Farmers Tax Guide. For more details on this topic see Publication 225, Farmer’s Tax Guide. You can get it on IRS.gov or call the IRS at 800-TAX-FORM (800-829-3676) to have it mailed to you.
Additional IRS Resources:
Friday, March 28, 2014
IRS Warns of New Email Phishing Scheme Falsely Claiming to be from the Taxpayer Advocate Service
WASHINGTON —The Internal Revenue Service today warned consumers to be on the lookout for a new email phishing scam. The emails appear to be from the IRS Taxpayer Advocate Service and include a bogus case number.
The fake emails may include the following message: “Your reported 2013 income is flagged for review due to a document processing error. Your case has been forwarded to the Taxpayer Advocate Service for resolution assistance. To avoid delays processing your 2013 filing contact the Taxpayer Advocate Service for resolution assistance.”
Recipients are directed to click on links that supposedly provide information about the "advocate" assigned to their case or that let them "review reported income." The links lead to web pages that solicit personal information.
Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at phishing@irs.gov. For more information, visit the IRS's Report Phishing web page.
The Taxpayer Advocate Service is a legitimate IRS organization that helps taxpayers resolve federal tax issues that have not been resolved through the normal IRS channels. The IRS, including TAS, does not initiate contact with taxpayers by email, texting or any social media.
For more on scams to guard against see the "Dirty Dozen" list on IRS.gov.
Thursday, March 27, 2014
Regs on Reimbursed Meal and Entertainment Expenses Now Final
There are only slight changes in the proposed regs. Employees are not subject to the 50% reduction limit when their employer reimburses meal and entertainment expenses provided that the reimbursements are not treated as wages. Thus, the regs are aimed at the 50% limit induced under a reimbursement or similar agreement between parties other than employer and employee.
Effective date: The final regs are effective for expenses paid or incurred on or after Aug. 1, 2013, but can be applied to earlier expenses on which the statute of limitations has not expired.
General rule: The party that bears the expense generally is subject to the 50% limit. The party receiving the reimbursement treats the amount as tax free but cannot take a deduction. If the party bearing the expense includes the reimbursement in the receiving party's gross income, the recipient can deduct 100% (not just 50%) of the expense. This general rule can be changed by the parties' written agreement. Here's a review of how to determine which party is subject to the 50% limi in some cases:
Independent contractors (ICs). Generally, if your firm reimburses an IC for meal or entertainment expenses under a written agreement, your firm is subject to the 50% limit -- not the IC. But if the contract does not mention reimbursements, or if the IC fails to substantiate the time, place and business purpose of the expense, then the IC (not your firm) is subject to the limit. You can also stipulate in the agreement which party is responsible for expenses and which is subject to the limit.
When more than two parties are involved. When more than two parties are involved, the transaction should be treated as a series of two-party agreements, with each agreement separately determining who is subject to the deduction limit.
Example. LeaseCo reimburses employees for travel and meals each day the employee travels from home to a client company. LeaseCo's policy is to provide this daily reimbursement tax free, provided that employees substantiate the expenses (i.e., log the time, place and business purpose of the expense each day). LeaseCo's contract with client CorpCo states that CorpCo will reimburse LeaseCo for its employees' substantiated travel and meal expenses. The agreement does not identify which party is subject to the 50% limit.
LeaseCo employee Ed travels from home to CorpCo on 10 separate days. For each of these days, he substantiates his travel and meal expenses to LeaseCo, which sends copies of the substantiation to Corpco. Per the leasing agreement, CorpCo remits the amounts to LeaseCo along with the fee for Ed's services. LeaseCo, in turn, reimburses Ed 100% of his travel and meal expenses.
Result. Because the contract states that CorpCo must reimburse LeaseCo for Ed's substantiated travel and meal expenses, CorpCo is limited to the 50% deduction; LeaseCo can deduct 100% of ite reimbursement to Ed.
Recap: If a contract does not state which party gets the 50% v. 100% deduction, the parties' actions determine this. (T.D. 9625; 78 F.R. 46502-46504)
Effective date: The final regs are effective for expenses paid or incurred on or after Aug. 1, 2013, but can be applied to earlier expenses on which the statute of limitations has not expired.
General rule: The party that bears the expense generally is subject to the 50% limit. The party receiving the reimbursement treats the amount as tax free but cannot take a deduction. If the party bearing the expense includes the reimbursement in the receiving party's gross income, the recipient can deduct 100% (not just 50%) of the expense. This general rule can be changed by the parties' written agreement. Here's a review of how to determine which party is subject to the 50% limi in some cases:
Independent contractors (ICs). Generally, if your firm reimburses an IC for meal or entertainment expenses under a written agreement, your firm is subject to the 50% limit -- not the IC. But if the contract does not mention reimbursements, or if the IC fails to substantiate the time, place and business purpose of the expense, then the IC (not your firm) is subject to the limit. You can also stipulate in the agreement which party is responsible for expenses and which is subject to the limit.
When more than two parties are involved. When more than two parties are involved, the transaction should be treated as a series of two-party agreements, with each agreement separately determining who is subject to the deduction limit.
Example. LeaseCo reimburses employees for travel and meals each day the employee travels from home to a client company. LeaseCo's policy is to provide this daily reimbursement tax free, provided that employees substantiate the expenses (i.e., log the time, place and business purpose of the expense each day). LeaseCo's contract with client CorpCo states that CorpCo will reimburse LeaseCo for its employees' substantiated travel and meal expenses. The agreement does not identify which party is subject to the 50% limit.
LeaseCo employee Ed travels from home to CorpCo on 10 separate days. For each of these days, he substantiates his travel and meal expenses to LeaseCo, which sends copies of the substantiation to Corpco. Per the leasing agreement, CorpCo remits the amounts to LeaseCo along with the fee for Ed's services. LeaseCo, in turn, reimburses Ed 100% of his travel and meal expenses.
Result. Because the contract states that CorpCo must reimburse LeaseCo for Ed's substantiated travel and meal expenses, CorpCo is limited to the 50% deduction; LeaseCo can deduct 100% of ite reimbursement to Ed.
Recap: If a contract does not state which party gets the 50% v. 100% deduction, the parties' actions determine this. (T.D. 9625; 78 F.R. 46502-46504)
5 Payroll Tax Mistakes to Avoid
If you have at least one employee, you’re responsible for payroll
taxes. These include withholding federal (and, where appropriate, state)
income taxes and FICA tax from employees’ wages as well as paying the
employer share of FICA tax and federal and state unemployment taxes. The
responsibility is great and the penalties for missteps make it
essential that you do things right.
1. Misclassifying workers
Perhaps the hottest audit issue today is misclassifying workers. There’s incentive to treat workers as independent contractors rather than employees because payroll taxes and employee benefit costs are high; a company’s only tax responsibility for an independent is issuing a Form 1099-MISC if payments in the year are $600 or more.
You don’t have the freedom to select the label for the worker; classification depends on whether you have sufficient control over the worker. This essentially means having the right to say when, where, and how the work gets done. Having an independent contractor agreement is helpful in showing that you and the worker do not intend any employer-employee relationships, but it doesn’t bind the IRS, who is not a party to the agreement.
Find information about worker classification from the IRS. When in doubt, consult your tax advisor.
2. Not using an accountable plan for employee reimbursements
If you normally pay for travel, entertainment, tools or other business costs for employees, you’re wasting employment tax dollars if you don’t use an accountable plan. With this arrangement, you deduct the expenses but avoid all payroll taxes on reimbursements; employees do not have any income from reimbursements.
To be an accountable plan, the employer must formalize the arrangement and set reasonable times for action (the following times are reasonable to the IRS but you can adopt shorter time limits for action):
3. Failing to keep payroll records
You are required to maintain payroll records and have them available for IRS inspection. These include time sheets, expense accounts, copies of W-2s and other payroll records. Usually, you should keep information for at least four years.
You should also retain copies of Forms I-9
,
which shows an employee’s eligibility to work in the U.S. States may
also have certain hiring forms that should be retained (e.g., E-verify
forms). Details about retaining I-9s can be found at the U.S. Citizenship and Immigration Department.
4. Choosing to pay creditors before the IRS
When a business gets into a cash crush, it may be tempting to pay the landlord, vendor, or utility company before the IRS; don’t! As a business owner, you are a “responsible person” who remains 100% personally liable for “trust fund” taxes (amounts withheld from employees’ wages). This is so even if your business is incorporated or is a limited liability company.
Best strategy: Set aside cash to cover payroll taxes so you won’t use these funds for any other purpose. Find more information about the trust fund recovery penalty from the IRS.
5. Failing to monitor payroll company activities
Many small businesses use outside payroll companies to handle the job of figuring withholding as well as transferring funds to the U.S. Treasury to cover payroll taxes. However, some of these companies may not do their job, by error or intentionally. As an employer, even if you use an outside payroll company you remain responsible for payroll taxes.
Best protection: Monitor your tax account to see that funds are being deposited on time and in the correct amount. If deposits are made electronically using EFTPS.gov, you can easily see activities in your account.
Conclusion
Stay on top of your employer responsibilities to avoid any penalties or entanglements with the IRS, the Department of Labor, or your state’s agencies.
1. Misclassifying workers
Perhaps the hottest audit issue today is misclassifying workers. There’s incentive to treat workers as independent contractors rather than employees because payroll taxes and employee benefit costs are high; a company’s only tax responsibility for an independent is issuing a Form 1099-MISC if payments in the year are $600 or more.
You don’t have the freedom to select the label for the worker; classification depends on whether you have sufficient control over the worker. This essentially means having the right to say when, where, and how the work gets done. Having an independent contractor agreement is helpful in showing that you and the worker do not intend any employer-employee relationships, but it doesn’t bind the IRS, who is not a party to the agreement.
Find information about worker classification from the IRS. When in doubt, consult your tax advisor.
2. Not using an accountable plan for employee reimbursements
If you normally pay for travel, entertainment, tools or other business costs for employees, you’re wasting employment tax dollars if you don’t use an accountable plan. With this arrangement, you deduct the expenses but avoid all payroll taxes on reimbursements; employees do not have any income from reimbursements.
To be an accountable plan, the employer must formalize the arrangement and set reasonable times for action (the following times are reasonable to the IRS but you can adopt shorter time limits for action):
- The reimbursable expense must be business related.
- Advances cannot be made before 30 days of the expense.
- Employees must account for the expenses within 60 days of the expense.
- Employees must return excess reimbursements to the employer within 120 days of the expense.
3. Failing to keep payroll records
You are required to maintain payroll records and have them available for IRS inspection. These include time sheets, expense accounts, copies of W-2s and other payroll records. Usually, you should keep information for at least four years.
You should also retain copies of Forms I-9
,
which shows an employee’s eligibility to work in the U.S. States may
also have certain hiring forms that should be retained (e.g., E-verify
forms). Details about retaining I-9s can be found at the U.S. Citizenship and Immigration Department.4. Choosing to pay creditors before the IRS
When a business gets into a cash crush, it may be tempting to pay the landlord, vendor, or utility company before the IRS; don’t! As a business owner, you are a “responsible person” who remains 100% personally liable for “trust fund” taxes (amounts withheld from employees’ wages). This is so even if your business is incorporated or is a limited liability company.
Best strategy: Set aside cash to cover payroll taxes so you won’t use these funds for any other purpose. Find more information about the trust fund recovery penalty from the IRS.
5. Failing to monitor payroll company activities
Many small businesses use outside payroll companies to handle the job of figuring withholding as well as transferring funds to the U.S. Treasury to cover payroll taxes. However, some of these companies may not do their job, by error or intentionally. As an employer, even if you use an outside payroll company you remain responsible for payroll taxes.
Best protection: Monitor your tax account to see that funds are being deposited on time and in the correct amount. If deposits are made electronically using EFTPS.gov, you can easily see activities in your account.
Conclusion
Stay on top of your employer responsibilities to avoid any penalties or entanglements with the IRS, the Department of Labor, or your state’s agencies.
Is Bad Credit Stopping You from Getting Business Loans?
In a recent report,
over 63% of business owners attempting to find funding say they most
often targeted banks. Unfortunately, the success among these respondents
of actually getting a business loan was a low 27%.
However, recent news suggest small business owners considered creditworthy are discovering it to be easier to get business loans from traditional banks. This is good news for the economy since access to funding for small businesses is a part of job and economic growth.
Unfortunately, bad credit plagues a large percentage of small business owners as a result of the financial crisis several years back. The fact remains that it’s harder for smaller businesses – even with stellar credit ratings – to get traditional bank loans than it is for larger businesses.
Access to capital is the single largest roadblock most business owners face when growing their business. With a business loan, these businesses can hire new employees, purchase additional inventory, buy or upgrade equipment and increase their marketing efforts.
So what can a business owner do if bad credit is preventing them from getting a business loan?
The good news is there are alternative funding programs and solutions providing business owners the opportunity to obtain a business loan or line of credit regardless of having bad personal credit. Instead, other factors are taken into consideration such as bank deposit history, credit card sales, credit partners and other data sources.
Here are several factors that can get you a business loan regardless of having bad credit:
Bank deposits – A business with regular bank deposits can put its cash flow to work with revenue-based loans. This program is based on the deposits going into the business bank account on a monthly basis. Typically, a business can obtain a business loan equal to 10% of its annual gross deposits regardless of having bad credit. Another benefit of this program is the time it takes to get funded, which is approximately 7 business days.
Keep in mind the loan term can be as long as 18 months with this program, with rates slightly higher than a traditional bank rate. It requires no collateral, financials or tax returns. Repayments are made in small increments every day via ACH from the business bank account.
Credit card sales – This type of funding program, known as a merchant cash advance, provides businesses with upfront cash in exchange for a portion of future credit card sales. For businesses that have regular monthly credit card sales but struggle with bad personal credit, a merchant cash advance may be a viable option.
However, be very selective on what merchant cash advance provider you select. Some providers can cost as high as 38% while others can be as low as 12%. In addition, when it comes to repayment, the majority of merchant cash providers take a fixed percentage of your daily credit card receipt volume until the advance you took is paid back. Other business cash advance providers may offer a fixed monthly installment payment for its repayment method.
Credit Partner – Using a business partner(s) as a credit partner for obtaining lines of credit in the form of business credit cards can be a viable solution to overcome a personal credit challenge. A business partner who has strong credit scores is the best place to look. You may also want to consider someone who may be interested in participating in your business as a potential credit partner.
This method does bring risk to the credit partner because they are cosigning with the business to obtain funding. However, it’s important to note the type of unsecured business credit cards I am referring to will not appear on the personal credit reports of the cosigner unless they go into default.
There are many other types of funding programs that offer small business owners the opportunity to get business loans or access to cash without having perfect credit or subjecting themselves to all the rigorous analysis, cumbersome paperwork, lengthy process and aggravating timelines that comes with a traditional business loan.
However, recent news suggest small business owners considered creditworthy are discovering it to be easier to get business loans from traditional banks. This is good news for the economy since access to funding for small businesses is a part of job and economic growth.
Unfortunately, bad credit plagues a large percentage of small business owners as a result of the financial crisis several years back. The fact remains that it’s harder for smaller businesses – even with stellar credit ratings – to get traditional bank loans than it is for larger businesses.
Access to capital is the single largest roadblock most business owners face when growing their business. With a business loan, these businesses can hire new employees, purchase additional inventory, buy or upgrade equipment and increase their marketing efforts.
So what can a business owner do if bad credit is preventing them from getting a business loan?
The good news is there are alternative funding programs and solutions providing business owners the opportunity to obtain a business loan or line of credit regardless of having bad personal credit. Instead, other factors are taken into consideration such as bank deposit history, credit card sales, credit partners and other data sources.
Here are several factors that can get you a business loan regardless of having bad credit:
Bank deposits – A business with regular bank deposits can put its cash flow to work with revenue-based loans. This program is based on the deposits going into the business bank account on a monthly basis. Typically, a business can obtain a business loan equal to 10% of its annual gross deposits regardless of having bad credit. Another benefit of this program is the time it takes to get funded, which is approximately 7 business days.
Keep in mind the loan term can be as long as 18 months with this program, with rates slightly higher than a traditional bank rate. It requires no collateral, financials or tax returns. Repayments are made in small increments every day via ACH from the business bank account.
Credit card sales – This type of funding program, known as a merchant cash advance, provides businesses with upfront cash in exchange for a portion of future credit card sales. For businesses that have regular monthly credit card sales but struggle with bad personal credit, a merchant cash advance may be a viable option.
However, be very selective on what merchant cash advance provider you select. Some providers can cost as high as 38% while others can be as low as 12%. In addition, when it comes to repayment, the majority of merchant cash providers take a fixed percentage of your daily credit card receipt volume until the advance you took is paid back. Other business cash advance providers may offer a fixed monthly installment payment for its repayment method.
Credit Partner – Using a business partner(s) as a credit partner for obtaining lines of credit in the form of business credit cards can be a viable solution to overcome a personal credit challenge. A business partner who has strong credit scores is the best place to look. You may also want to consider someone who may be interested in participating in your business as a potential credit partner.
This method does bring risk to the credit partner because they are cosigning with the business to obtain funding. However, it’s important to note the type of unsecured business credit cards I am referring to will not appear on the personal credit reports of the cosigner unless they go into default.
There are many other types of funding programs that offer small business owners the opportunity to get business loans or access to cash without having perfect credit or subjecting themselves to all the rigorous analysis, cumbersome paperwork, lengthy process and aggravating timelines that comes with a traditional business loan.
10 Ways to Maximize Your Home Office for Productivity
If you run one of the 14+ million home-based small businesses in the United States, congratulations. You’ve got lower overhead, a shorter commute and the opportunity to be more productive than your office-based competitors.
Still, working from home isn’t all eating peanut butter out of the jar and wearing your fuzzy slippers. There are plenty of pitfalls that can distract you from getting your work done. Here we look at 10 ways to ensure you’re set up for success in your home office.
1. Carve Out a Workspace
Not every entrepreneur is fortunate enough to have a spare room to turn into an office. That’s okay. You can use part of a room separated by a curtain or even a closet. The point here is to ensure you have a dedicated space that is only for work.
2. Set Up Your Day
The more routines you have, the more you’ll get done. If you have small children at home with you while you work, plan to work when they nap or when they’re quiet; otherwise you won’t be productive. Plan out your work hours; they don’t have to be 9 to 5, but they should be fairly consistent. Also, consider your attire. Some people love working in pajamas or sweats. Other people (like me) get more done by getting dressed in “business casual” – for some reason getting dressed to be seen by the world makes me feel more professional, even if it’s just me.
3. Figure Out When You Work Best
Part of those routines you need to set up involve determining when you’re most productive. Some people are night owls, and some are early birds. Some need quiet time without phones and instant messages, so getting up early avoids that. You might need complete quiet in your home office. Whatever your needs, don’t fight against them.
4. Have an Ergonomic Set Up
You need a comfortable chair with good back support, a decent computer monitor you can easily see and a keyboard at the right height to avoid awkward pressure on arms and wrists. Don’t forget your eyes. Your computer should be at the right distance to see without strain; if necessary, see your eye doctor for “computer glasses” that are made for viewing a computer properly. Two monitors also can help productivity (less time spent jumping between applications), so if you can afford an extra monitor, by all means try it out.
5. Use Smart Tools
There are so many free or affordable software programs and apps for small businesses! Find the ones that help you do more. A few options:
6. Remove Distractions
It can be tempting to fold the laundry that’s in the middle of the floor, but pretend you’re at an office and ignore it. It’s important to designate certain hours for work, and certain hours for home life. Occasionally, it’s fine to take a break and run an errand, but don’t let it encourage you to procrastinate on a project.
7. Get Out of the House
Many people can’t bear being alone all the time in their home offices. Fortunately, we’ve become a mobile society, and you’ll always see plenty of people at your local coffee shop working on their laptops. Get a change of environment. Try working from a park or restaurant, if you can be productive there.
8. Find Support in Person or Online
It can be nice to meet other home-based entrepreneurs too. Find a local meetup of people like you or a local event where you can share your stories and find support in your small business endeavors. If you spend any time on Twitter or other social media sites, you’ll find plenty of folks who, like you, are working out of their homes. #HomeBiz is a great hashtag to follow to find content and conversations geared toward people like you.
9. Keep Learning
Find as many opportunities as you can to develop your business and industry knowledge. This can come in the form of online webinars, Twitter chats, in-person conferences, seminars, books, blogs and magazines.
10. Meet Regularly With Staff
If you have employees who also work from their homes, make a point to meet once a week or month so you reap the benefits of face-to-face time. While it’s completely possible to work virtually, nothing can make up for that in-person relationship-building time.
How to Buy an Existing Business
Are you ready to enter the business world but nervous about starting
from scratch? You may be considering buying an existing business, which
certainly has its perks when compared to establishing your own,
brand-new operation. But there’s still plenty to keep in mind, and
success isn’t guaranteed by simply writing a check and getting the keys.
Here are a few tips to help you do your due diligence as you explore buying a business.
Considering the pros and cons
There are many favorable aspects to buying an existing business such as an existing customer base, a team of employees and drastic reduction in startup costs. You may be able to jump start your cash flow immediately because of existing inventory and receivables.
But there are also some downsides to buying an existing business. Purchasing cost may be much higher than the cost of starting a new business exactly because the initial business concept, customer base, brand and other fundamental work has already been done. Also, be aware of hidden problems associated with the business (like debts the business is owed that you may not be able to collect).
Choosing a business
There are many different types of businesses to buy. To narrow down the list of potential businesses you might be considering, ask yourself:
Once you have found a business that you would like to buy, it is important to conduct a thorough, objective investigation and to determine a fair and equitable price for the sale of the business. You’ll want to examine information such as tax returns, financial statements, employee files, contracts, leases and any other important documents related to the business.
Buying a business
When you’ve decided to move forward with buying a business, the sales agreement is the key document you’ll need to finalize the purchase. This agreement defines everything that you intend to purchase including business assets, customer lists, intellectual property and goodwill. If you do not have a lawyer to help you draft the terms of the sale, you should at least have one review the agreement before you sign it.
Closing on a business
The closing is the final step in the process of buying a business. Once again, you should have legal counsel available to review all documentation necessary for the business transfer. This page details items you should address during your closing.
If you think buying an exiting business could be the right path for you, there’s a lot of information available to help you succeed, including this article from Entrepreneur.com and additional guidance from NOLO.com.
Considering the pros and cons
There are many favorable aspects to buying an existing business such as an existing customer base, a team of employees and drastic reduction in startup costs. You may be able to jump start your cash flow immediately because of existing inventory and receivables.
But there are also some downsides to buying an existing business. Purchasing cost may be much higher than the cost of starting a new business exactly because the initial business concept, customer base, brand and other fundamental work has already been done. Also, be aware of hidden problems associated with the business (like debts the business is owed that you may not be able to collect).
Choosing a business
There are many different types of businesses to buy. To narrow down the list of potential businesses you might be considering, ask yourself:
- What are my interests? If you have absolutely no idea what business you want to invest in, first eliminate businesses that are of no interest to you.
- What are my talents? Being honest about your skills and experience can help you eliminate unrealistic business ventures.
- What are my conditions for a business? Consider if a business has a condition that is unfavorable to you, such as location and time commitment.
Once you have found a business that you would like to buy, it is important to conduct a thorough, objective investigation and to determine a fair and equitable price for the sale of the business. You’ll want to examine information such as tax returns, financial statements, employee files, contracts, leases and any other important documents related to the business.
TIP: You should enlist a
qualified attorney to help review the legal and organizational documents
of the business you are planning to purchase. Also, an accountant can
help with a thorough evaluation of the financial condition of the
business.
When you’ve decided to move forward with buying a business, the sales agreement is the key document you’ll need to finalize the purchase. This agreement defines everything that you intend to purchase including business assets, customer lists, intellectual property and goodwill. If you do not have a lawyer to help you draft the terms of the sale, you should at least have one review the agreement before you sign it.
Closing on a business
The closing is the final step in the process of buying a business. Once again, you should have legal counsel available to review all documentation necessary for the business transfer. This page details items you should address during your closing.
If you think buying an exiting business could be the right path for you, there’s a lot of information available to help you succeed, including this article from Entrepreneur.com and additional guidance from NOLO.com.
IRS Reminds Taxpayers about Direct Deposit and Split Refunds
WASHINGTON — For 57 million Americans, the refund check is no longer in the mail; it’s already in the bank.
So far this year, the Internal Revenue Service has issued direct-deposit refunds valued at more than $170 billion, as a growing number of taxpayers are choosing the speed and convenience of direct deposit, rather than receiving a paper check. So far this year, almost 85 percent of all refunds have been directly deposited into taxpayers’ bank accounts.
Taxpayers can have their refunds directly deposited when they e-file or by including their account information on their paper tax return.
Banks, mutual funds, brokerage firms and credit unions are all eligible to receive direct deposits. Before making this choice, however, taxpayers should make sure the financial institution accepts direct deposits for the type of account chosen.
Taxpayers also have the option and flexibility of splitting refund deposits among two or three different accounts or financial institutions. For instance, a refund could be split between a savings account, a checking account or an Individual Retirement Arrangement (IRA). Taxpayers can split their refunds when they e-file or by filing Form 8888, Direct Deposit of Refund to More Than One Account.
A taxpayer's refund should only be deposited directly into accounts that are in the taxpayer's own name; the taxpayer's spouse's name or both if it's a joint account.
Those who choose direct deposit get their refunds at least a week sooner, and direct deposit eliminates the chance of a lost, stolen or undeliverable refund.
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