• 10 Steps to Starting a Business

    Starting a business seems like a daunting task. Don’t know where to start? Utilize the 10 steps to put your own name on the door!

    1. Write a Business Plan

    2. Get Business Assistance and Training

    3. Choose a Business Location (make sure to select a customer friendly address)

    4. Finance Your Business (Find a Lender who can help startups!)

    5. Determine the Legal Structure of Your Business (Sole Proprietorship, Partnership, LLC, Corporation, Privately Held)

    6. Register a Business Name (Doing Business As, DBA)

    7. Get a Tax Identification # (Dependent on state for IRS and State Revenue Agency)

    8. Register for State and Local Taxes (Register with state to obtain Tax ID #, Workers Compensation, Unemployment and Disability Insurance)

    9. Obtain Business Licenses and Permits

    10. Understand Employer Responsibilities (Learn legal steps to hire employees)

     

    Start-Up Resources:

    Equipment Leasing/ Equipment Financing – finance equipment or services needed for the business without purchasing all up front

    Working Capital – funding for any business expenses

    Merchant Services – credit card processing as additional payment options for customers

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  • Credit 101, What is your Fico Score Made up of

    FICO scores continue to serve as the first and most readily available indicator of credit risk. Therefore it is important to better understand what FICO scores look at. There are five categories that make up these scores:

    1. Payment History – 35%
    2. Amounts Owed – 30%
    3. Length of Credit History – 15%
    4. New Credit – 10%
    5. Types of Credit – 10%

    As you can see, the most influential portion of this score is the payment history. The payment history is reported by credit grantors, including open and closed accounts. It is important to remember that payment in full does not remove the payment history.

    Credit and collection accounts remain on the credit report for seven years plus 180 days from the date of the original delinquency and/or date of last activity. Courthouse records remain for seven years from the date filed. Bankruptcy chapters 7 and 11 remain for 10 years from the date filed.  While tax liens remain 10 years from the date filed as well, they could remain indefinitely if they go unpaid.

    It is up to each individual to make sure his/her credit report is accurate. According to the FACT Act amendments to the Fair Credit Reporting Act requires each of the credit bureaus to provide consumers, upon request, one free personal credit report on any 12 month period.

    Business credit is critical to the success of your business.  Often times business owners are not aware of the impact their personal credit has on their business.  Take action today by knowing what it being reported on your personal credit report.  We have listed some helpful links below to get you started.

    www.annualcreditreport.com

     

    • Website recommended for free annual credit reports.  You are allowed one free copy each year for each of the credit bureau companies.
    • It does not come with a credit score for free but you have the ability to purchase your score at the time of ordering your free report.
    • Each of the bureaus now allows you to dispute any items on your report online.  They make it very easy.

    www.ftc.gov

    • Federal Trade Commission has valuable information regarding all things credit related.   The best way to navigate the site is use the search engine in the top right corner and type what you are looking for (i.e. credit repair, identity theft, credit report, etc).
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  • How to Read a Balance Sheet: Working Capital

    Working capital is simply current assets minus current liabilities. It’s the best way to judge how much a company has in liquid assets to build its business, fund its growth, and produce shareholder value.

    If a company has ample positive working capital, it’s is in good shape, with plenty of cash on hand to pay for everything it might need to buy. But negative working capital means that the company’s current liabilities exceed its current assets, removing its ability to spend as aggressively as a working-capital-positive peer. All other things being equal, a company with positive working capital will always outperform a company without it.

    Working capital is the absolute lifeblood of a company. For most companies, acquiring working capital was 99% of the reason they went public in the first place, whether they wanted to build their businesses, fund acquisitions, or develop new products. Anything good that comes from a company springs from working capital. And if a company runs out of working capital, but still has bills to pay and products to develop, it’s got big problems.

    A key comparison

    You can discover some pretty cool things by comparing working capital to a company’s current market capitalization. Market cap equals the value of currently outstanding shares of stock, plus any long-term debt or preferred shares (a special form of debt). You add in those last two factors because anyone buying the company would not only have to pay the current market price, but also incur responsibility for all its debts.

    To compare the two metrics, divide working capital by market cap. Let’s use Joe’s Bar and Grill for another example. We know that Joe’s has $10 million in current assets and $5 million in current liabilities. If you also know that Joe’s Bar and Grill has no debt, and 1 million shares outstanding at $10 a pop, you can figure out the working capital-to-market capitalization ratio

    (Cuent assets – Current liabilities) / ((Shares outstanding * Share price) + Debt)

    Now let’s plug in those numbers from Joe’s:

    ($10 million – $5 million) / ((1 million * $10) + 0) = 0.5 = 50%

    All that math tells you that working capital backs up 50% of the market’s valuation of Joe’s Bar and Grill. Theoretically, if you liquidated Joe’s tomorrow, you’d get $0.50 on the dollar from working capital alone. This is a tremendous amount of money to have at your disposal, and a huge plus for Joe’s. Basically, if you see working capital-to-market cap ratios of 50% or higher, your company’s looking good.

    (For retailers and clothing manufacturers in particular, you might want to subtract inventories from working capital before you check that percentage, just to make sure the resulting number’s not too different.)

    Even though working capital is nifty, simply comparing a company’s cash hoard to its market capitalization can also be pretty enlightening. Simply divide the company’s cash and equivalents by its market capitalization. If 10% or more of your company’s capitalization is backed up with cold, hard cash, you know it has ample funds to keep itself going.

    By Motley Fool Staff

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  • Tax at a Glance – Section 179

    Essentially: Section 179 allows businesses to deduct the full purchase price of qualifying equipment & software purchased or financed during the tax year.

    2013 and 2012 Deduction Limit = $500,000

    -This is good on new & used equipment, as well as off-the-shelf software.

    2013 and 2012 Limit on equipment purchases = $2,000,000

    -This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced.

    Bonus Depreciation = 50%

    -This is taken after the $2 million limit in capital equipment purchases is reached. Note: Bonus Depreciation is available for new equipment only. Bonus Depreciation can also be taken by businesses that will have net operating losses in 2013.

    To figure out your own Tax Benefit, use the ILS Tax Calculator

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  • Do you have a LinkedIn account? Does your child?

    With the exception of child prodigies and spelling-bee champions, most professionals leave youthful accomplishments off their resumes. But LinkedIn’s decision to allow teenagers as young as 14 to create profiles on the site suggests that the online resume of the future may one day cover careers going all the way back to preschool (Crayons and paper cutting are already listed as skills on the site).

    “Smart, ambitious students are already thinking about their futures when they step foot into high school,” wrote Eric Heath, director of legal, global privacy and public policy at LinkedIn. Some 200 colleges have begun using the new “University Pages” on the site, where high-school students can learn more about faculty and alumni, and thousands more schools are expected to join over the next few weeks. LinkedIn members under 18 will have different default settings to limit publicly available information. Their birth year will be hidden, their profile photo will only be view-able to people they are connected to, and their public profile will not appear in search engines like Google.

    Some marketing experts wonder where it will all end. Larissa Faw, editor at trade publication Youth Markets Alert, says LinkedIn for kids could be a cultural milestone for social networking — albeit an absurd one: “I can see kids in first grade asking each other, ‘How many LinkedIn connections do you have? Is it enough to get me into second grade?’ and writing on their LinkedIn profiles, “I’m really good at putting together my blocks and coloring within the lines.”

    Teenagers are already avid users of social media, but experts say they don’t always use it wisely. Some 90% of 13- to 17-year-olds have used some form of social media, according to a study (Social Media, Social Life, How Teens View Their Digital Lives) by Common Sense Media, a San Francisco-based nonprofit advocacy group. But the stakes are higher for minors venturing into the predominantly adult world of LinkedIn, says Colby Zintl, vice president at Common Sense Media. “This is definitely not Chat Roulette,” she says. “This is a professional site, and their reputation has to be curated in a way that benefits them. Kids often self-reveal before they self-reflect. Kids on LinkedIn is a risky proposition.”

    Some psychologists also question the wisdom of letting minors join a site with 238 million adult members. “At 14 or 15, this has more to do with parents than kids,” says Kit Yarrow, a professor of psychology and marketing at Golden Gate University in San Francisco and co-author of “Gen Buy: How Teens, Tweens and Twenty-Somethings Are Revolutionizing Retail.” Parents should encourage their 14-year-old kids to have fun and live a carefree childhood, she says, “not use their kid’s success to bolster their own flagging egos.”

    Of course, that is not the only reason a parent might decide to let their child join LinkedIn. As LinkedIn spokeswoman Julie Inouye points out, some high school juniors think about their careers and will now be able to make more informed decisions about where to go to college. Dan Schawbel, author of “Promote Yourself: The New Rules For Career Success” and founder of marketing consultancy Millennial Branding, adds that high-school students are starting to focus on their careers early, to gather the recommendations and skills they’ll need when applying for college admission and internships. “It sets them up for future success,” he says.

    Unlike on sites such as Facebook, kids on LinkedIn will presumably be more eager to connect with adults. Grown-ups may not want to be pestered by thousands of inquisitive teenagers, though, particularly when they are busy networking themselves, says Faw. “I don’t think I would want to be spammed by dreamy teens who think reporting is simply interviewing Justin Bieber,” she says. Of course, LinkedIn isn’t the first to want to target the teen demographic with an estimated spending power of around $200 billion. Rocket21.com, a startup educational and career advice site for both tweens and teens, has adult professionals serve as mentors to members, answering questions and providing career guidance.

    By Quentin Fottrell

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