Selling your Business Requires Planning If you want to sell your business, you need to understand what is needed to get it ready for sale. The goal of a sale is to receive the most value (money) from the perspective buyer and therefore, the seller needs to make sure there is VALUE to purchase. Value is more than net income or cash flow. Value is the FUTURE. The buyer is buying the FUTURE. Listed below are the readiness issues in preparation to sell a business. Steady and predictable growth is the plan. The goal is to increase the transferability of the [...]
Beware of Misclassification of an Employee Treating employees as non-employees You will be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold them because you treat an employee as a nonemployee, including yourself if you are a corporate officer, and you may be liable for a trust fund recovery penalty. Refer to Publication 15, Circular E, Employer’s Tax Guide for details about the trust fund recovery penalty or Independent Contractor for more information on employee classification.
If you have been following my articles over the past few years, I hope you realize that I truly believe that one of the most important assets of a company are the human resources, which does not pop up on the balance sheet. But equally important are two other intangibles-creativity and innovation. It is very easy for companies to get into their comfort zone and forget about the world around them. It is much less work and effort to do what you have always done rather than challenge the status quo. I find this very common in most businesses-small and large. [...]
Sub-Chapter S Corporation First the organization must register with the Department of Revenue of the Secretary of the State or other agency identified within their state to file their Articles of Incorporation. Once they file these documents and receive verification back from the state, the business then files the IRS Form 2553 to elect the S Corporation status. S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at [...]
Seller-Financed Real Estate raises serious questions It is not uncommon for sellers to self-finance the real estate, both personal and business, that they want to sell. In many cases this may be the only way an owner can sell their property as many buyers cannot qualify for financing or the real estate will not satisfy the requirements of a lender. Also, buyers may not have the required funds for a down payment. So, how can the owner sell the property? They can carry the loan and self-finance the transaction. This means that the seller takes back a note (becomes the creditor) from the buyer to cover [...]
Budgeting-Why do it? Many companies are starting, planning, and completing their budget process for the upcoming year. Those that are not doing any of the above are simply flying by the seat of their pants, and hoping for the best. Lack of planning allows the unexpected to cause reactions vs. being proactive and looking ahead. Budgeting is typically viewed at as planning for the future. I take a different perspective and look at budgeting as managing the future. Budgeting is not a once a year process but a process that is used to monitor what is expected, comparing it, to what [...]
Employee or Contractor? 20 Factor IRS Test The IRS uses a 20-factor test to determine whether a person is an employee. In connection with this test, the IRS has stated the following: . . . 20 factors have been identified that indicate whether sufficient control is present to establish an employer-employee relationship. The degree of importance of each factor varies depending upon the occupation and the context in which the services are performed. It does not matter that the employer allows the employee freedom of action, so long as the employer has the right to control both the method and [...]
Is your product a commodity? As we think about the business that we are going to start or the new products/services we will be introducing into the market place, we should first evaluate where that business or product is positioned in the minds of the consumer. What is a commodity? A commodity is a product/service that the market place does not perceive has any differentiation. They are alike, and it does not make any difference which is chosen. It is the difference between a distinct brand and a generic. They all provide the same purpose and there is no difference in [...]
How to write a marketing plan In general, the Marketing Plan includes: Market Analysis Market Definition Customer Profile Competition Risk Sales Strategy Capital Requirements The Marketing Plan is the most important part of the business plan as it identifies if there is a need and if the entrepreneur wants to continue the business plan. It describes how a company will react and manage market conditions to generate sales. Its detail is: 1. The market definition and its opportunities Who are the customers What are the demographics and psychographics Prepare profiles of the potential customer Learn the lifestyle and priorities What is [...]
Small business does not have the resources that big business has so how do they operate? The owners of small businesses need to wear many hats and have multiple skill sets. From finance to accounting, from marketing to human resources, from operations to negotiations, the small business person needs to understand all the elements of doing business. This includes insurance needs and banking needs. Where and how does the small business person have the time to fulfill all these needs and functions?
Are consultants good for you? After consulting for many years and working with a great deal of small business owners and not-for-profit organizations from startups to mature companies, I have come to the conclusion that most companies and not-for-profit organizations hire consulting-coaching firms without specific expectations of results or outcomes. I try to understand the mentality of the decision makers of these firms. The typical consulting firm charges anywhere from one thousand dollars a day to one thousand five hundred dollars a day. I ask the clients I work with what is their expectation from spending this amount of money and [...]
THINKING ABOUT SAVING MONEY…. START PLANNING FOR YOUR TAXES NOW Neil Pastor Shnider, RPh, MBA, CPA The 2004 year is rapidly coming to an end. It’s not too early to start thinking about some tax tips to help reduce your tax bill to Uncle Sam. The best way to save money on taxes is through planning, education and having good advisors. Hear are some thoughts. Do you want to be a hero with your favorite charity? If so, contribute appreciated stock to the charity and you will not have to pay the capital gain tax as if you sold the stock, [...]
What is the real value of your company? It is interesting that when someone wants to know the value of a company the first thing they do is go to the balance sheet. This lists the assets (what you own), liabilities (what you owe) and the difference is the equity (your ownership part of the business). Of the assets, what the creditors do not own the stockholders, partners or individuals own. But is this the real story? Let’s look first at some public companies-those that sell on some sort of exchange. As an example we can take some very popular ones [...]
The federal, state and local governments have requirements and the regulations of doing business in the U.S. Obtaining the information and necessary rules is important to prevent the risk of penalties, interest and to reduce the risk of failure due to noncompliance. To start a business one only has to start doing business Under these terms the person would operate under their own social security number File a form schedule C (business tax return form) This schedule is then attached to the individual Federal Form 1040 The person will be responsible to pay what is called self-employment tax (SE) on the [...]
MARKETING: GETTING A BANG FOR YOUR BUCK? Most small businesses that I work with have very little understanding of marketing. Most think that marketing is advertising and of course this is not true. Advertising, or Promotion, is a component of marketing but there are many other components of marketing such as Sales Promotion, Product/services that you are delivering, the Price that you are charging, where you are distributing the deliverables such as the Placement of the Product/services and of course let us not forget the People that are representing the company. Notice we have just defined marketing from a 101 Marketing [...]