Five Things Every Business Owner Must Do
If you own or manage your own business, you're probably busy monitoring operations and dealing with everyday problems. But there are a few things that you should make time to do every year. These are important for your long-term business and personal success.
Smart business people learn to delegate work
As a business owner or manager, you may think that if you want things done "the right way," you have to do them yourself. But that isn't always the best approach at work, even if you firmly believe you're the best person for the job. There simply isn't enough time in the day - not if you have a business to run.
[block type="rounded" color="#FFF" background="#000000"]Going into business with a franchise[/block]
Have you ever wanted to be your own boss, but didn't want to start a business from scratch? If so, buying a franchise might be the right choice for you.
When you purchase a successful franchise,
The IRS has reacted to the complaints of the small business community and today issued Revenue Procedure 2015-20 outlining a simplified procedure for small businesses to comply with the final tangible property regulations. The simplified procedure is available beginning with the 2014 return taxpayers are filling out this tax season.
What will happen to your business if you die, retire, or become disabled? If you are the owner of a small business, you need a means for the transfer of that business in the event something happens to you. With a "buy-sell" agreement, you are able to plan for many contingencies over which you would otherwise have little control. A buy-sell agreement should establish a price for the business and the method of succession.
Does your business make use of your financial statements?
Many small business owners pay too little attention to their financial statements. This is due in part to not understanding just what the statements have to offer. In fact, many may not be able to tell you the difference between a Balance Sheet and an Income Statement.
Review your credit policies
There are many ways to make your business more profitable, and sound credit policies are high on the list. The current slowdown in the economy is a good reason to reexamine your company's policies. Keep the following items in mind as you review your policies.
Most entrepreneurs eventually think about selling their businesses, whether as a prelude to retirement or to pursue other activities. In doing so, they often underestimate the effort required for a satisfactory outcome and overestimate the value and salability of their enterprises. If you're contemplating selling, here are some common mistakes to avoid.
1. Overestimating the value of your business.
How well do you know your customers? Which ones are the most profitable? Which ones take most of your time? It's worth taking the time to find out. If your business is like most, the 80-20 rule applies. That is, 80% of your profits come from 20% of your customers.
If you can identify that top 20%, you can work hard to make sure this group remains satisfied customers.
Should you incorporate your business?
One of the first decisions you face as a new business owner is whether or not to incorporate the business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are not usually at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences.
A vital business document: the buy/sell agreement
Every business should give serious consideration to how the company would deal with the death, disability, or departure of one of the owners.
Like a will, a buy/sell agreement (also known as a business continuity contract) spells out how assets and other business interests will be distributed should an owner quit, become disabled, or die.
Thought Provoking Shorts - August 2014
How to go into business with your spouse and succeed...
Starting and running a business is rarely a safe or simple process, and doing so with one's spouse creates an additional layer of complexity. Whether that complexity will have a positive or negative effect depends on several factors. Here are some of the questions you need to discuss before going into business with your spouse.
* How well do you work together at home? If you cooperate and collaborate for domestic chores, you'll probably carry that pattern into your workplace. If you bicker constantly over how to do the laundry or maintain the yard, working together in business might be a risky option.
Will business growth bring more profits?
My business has not been growing but it seems as though I add more people and equipment without increasing my net profit. What am I doing wrong?
Answer: Let's see what happens in a typical company as the business grows. Suppose that a company is netting $50,000 on total sales of $1,000,000 (a 5% net profit). If this company has a 40% gross profit (on items sold), a $100,000 increase in sales should add $40,000 to the bottom line. I say "should" because the increase in sales may cause the need for more equipment, space, or inventory.
Is a business valuation useful? Yes!
For many business owners, a business appraisal or "valuation" can furnish vital planning information and help mitigate risk. Consider the following:
* Establishing a verifiable value for your business can show whether assets have appreciated at a reasonable rate. If not, the firm's strategy may need to be adjusted.
Is your business dependent on too few?
Many small business owners share one problem, especially in their early days. It's being over-reliant on a single customer or supplier for much of their business. If you're in that position, your business is operating with higher risk. Just as with investments, you don't want all your eggs in one basket. Your goal should be a well-diversified portfolio of customers and suppliers.
In this issue:
In the News:
For the month of April:
April 15th: Tax Returns Due
April 15th: 1st Quarter 2014 estimated tax payments due
appy tax filing month. To help celebrate, this month's newsletter includes a fun tax quiz. In addition, there are articles outlining state revenue department's new strategy of harassing out-of-state businesses to collect their sales/use tax for them and an article outlining the risks children can place on parents with their internet behavior.
Should you know of someone who may benefit from this information please feel free to forward this newsletter to them.
Keeping your company profitable when the economy slows down is a challenge for every business. You may be able to boost your bottom line with the following financial controls.
* Watch your customer credit. Use an accounts receivable aging report to flag past due accounts. Follow up with a customer immediately when you spot a delinquent bill. Don't extend any more credit until the customer brings the account up to date.
Health insurance tax credits are good medicine for small businesses
Small businesses may be missing out on an important new tax perk related to health insurance. And the stakes are even higher in 2014.
Deduct those start-up costs NOW!
If you started a new business venture in 2013, you may be in line for a special tax break for entrepreneurs.
DO THIS: Realize a fast write-off for "start-up costs." Normally, these business-related costs must be amortized over time, but you can take a current deduction for up to $5,000 of the qualified expenses.
