A part of the American Dream has always been opening and operating a private business, and for many years, it was the one way that was almost certain to get you ahead in life. Today, however, opening a business for yourself is fraught with financial peril. There are numerous difficulties in getting a business off the ground, not to mention ensuring that it is legal.
Once upon a time, all you had to do to open your own business was learn a trade, and then hang a sign outside your front door. This is where the phrase “hanging out your shingle” comes from, which is used today primarily with lawyers. It just isn't that easy today, even if you plan to do business from your home. The proper permits must be obtained, and the right taxes have to be paid.
The first consideration you have to look at when thinking about opening your own business is the largest and most fundamental. Do you have enough financial security to get started? You have to cover not just startup costs, but also your personal expenses during the period between starting the business and it's “catching on.” This is unfortunately the one aspect that many would-be entrepreneurs miss. Most professionals suggest that you either: A: have enough savings to cover at least 6 months of personal expenses as well as the startup costs of the business or B: Keep your day job until the business catches on. Obviously, this can be a bit tough, particularly if your dream business is positioned as a 9-5 retail store. If this is the case for you, then perhaps option “A” would be a better choice.
Once the finances are set to go, the easy part sets in. First, you'll need a business plan. These are really easier than they sound. In fact, there are templates available online that you simply fill out. Basically, a business plan lets creditors and your zoning department know what business you plan to engage in, who your intended customer base is, and your earnings forecast, or how much you believe you'll make in your first year. If you try to get a loan through the SBA, a business plan is a necessity.
Speaking of the Small Business Administration, the SBA website offers loads of information. What the SBA doesn't do is make loans. An SBA loan for small business is opened through a traditional bank after you apply to the SBA. You take the paperwork from the SBA to the bank of your choice, and then obtain a loan from the bank. The SBA simply guarantees part of the loan. Obviously, they don't guarantee the whole loan. If your broccoli cupcake business just doesn't pan out, you're going to be out some capital yourself.
So, you can shoulder the financial burden, but can you invest the time? Most small businesses are 80-hour per week affairs, at least until they get underway. Then, they tend to take up less of your time and energy. Plan to spend between 78 and 79 hours per week worrying about, taking care of, and seeing to the needs of your business, on average. Many entrepreneurs indicate that their fledgling businesses tend to take up practically every waking hour, and then the business even invades their dreams. Scary, huh?
Still, owning and operating your own business is an extremely gratifying experience, particularly if you find success. The only way you can go about it, though, is to give it a try.
Saturday, March 31, 2012
Friday, March 30, 2012
How To Ask For A Raise At Work
If there's one thing that all employees feel they deserve, it's a raise. Unfortunately, it's never easy to talk our bosses into tossing a few cents into the paycheck pot in addition to that oh-so-rare these days cost of living increase. Not only that, but many employees are under wage freezes until the economy gets itself back on track and companies start making money again. All is not lost, though. If you have a track record of dedication and hard work that sets you apart from your co-workers, there really is no good reason you shouldn't earn a few more dollars on every check. What you have to do is give them a reason to give it to you.
What Not to Do:
It's as easy to find yourself on the unemployment line as it is to get a raise if you employ underhanded tactics to get what you want. One typical example is threatening to quit. This tactic is utterly useless unless your skills are extremely hard to find and the employer desperately needs you to stay. Nine times out of ten, the manager you ask for your raise from will simply smile and tell you that you've got to do what's best for you. They know that there are tens of thousands of people standing in line behind you, many of whom haven't worked in months, if not years, who would be willing to do the job you do for less than you get paid to do it.
This tactic, even when it is successful, tends to put you on a hot seat. You're going to have to earn every cent you get for your raise the hard way, and the first time there's a company downsizing, guess who's name is going to pop up at the top of the list. Yep, that guy down in so-and-so's department who kicked up that fuss last season.
What You Should Do:
Earning a pay increase is easy, though, if you appeal to the company's business mindset. Begin by outlining all of your current responsibilities that you accomplish every day. Note of any additional responsibilities you have taken on without having been asked, and even those that you were asked to take on after you began working for your department. Have you added appreciably to the company? Made the work flow more smoothly?
Next, look at the national average wage for your position and compare it with your local salary averages. Are you grossly underpaid compared to your national contemporaries? This information is readily available on a number of websites, and it typically is updated frequently. In fact, there are a few websites that will actually show you what actual employees really make, including wages and benefits.
Keep in mind, though, that if you are paid more than the national average, and have a bit of a reputation around the company as a griper, you can count on getting the answer “we'll see if it's in the budget,” and a good hearty laugh from your boss after you depart the office. Employees who generally keep a positive attitude are far more likely to receive consideration. If you receive less than the national average, though, and your reputation within the company is as a go-getter who spends more time fixing problems than whining about them, you have an even shot at asking for higher compensation, and receiving it.
What Not to Do:
It's as easy to find yourself on the unemployment line as it is to get a raise if you employ underhanded tactics to get what you want. One typical example is threatening to quit. This tactic is utterly useless unless your skills are extremely hard to find and the employer desperately needs you to stay. Nine times out of ten, the manager you ask for your raise from will simply smile and tell you that you've got to do what's best for you. They know that there are tens of thousands of people standing in line behind you, many of whom haven't worked in months, if not years, who would be willing to do the job you do for less than you get paid to do it.
This tactic, even when it is successful, tends to put you on a hot seat. You're going to have to earn every cent you get for your raise the hard way, and the first time there's a company downsizing, guess who's name is going to pop up at the top of the list. Yep, that guy down in so-and-so's department who kicked up that fuss last season.
What You Should Do:
Earning a pay increase is easy, though, if you appeal to the company's business mindset. Begin by outlining all of your current responsibilities that you accomplish every day. Note of any additional responsibilities you have taken on without having been asked, and even those that you were asked to take on after you began working for your department. Have you added appreciably to the company? Made the work flow more smoothly?
Next, look at the national average wage for your position and compare it with your local salary averages. Are you grossly underpaid compared to your national contemporaries? This information is readily available on a number of websites, and it typically is updated frequently. In fact, there are a few websites that will actually show you what actual employees really make, including wages and benefits.
Keep in mind, though, that if you are paid more than the national average, and have a bit of a reputation around the company as a griper, you can count on getting the answer “we'll see if it's in the budget,” and a good hearty laugh from your boss after you depart the office. Employees who generally keep a positive attitude are far more likely to receive consideration. If you receive less than the national average, though, and your reputation within the company is as a go-getter who spends more time fixing problems than whining about them, you have an even shot at asking for higher compensation, and receiving it.
Saturday, March 24, 2012
The Penny: Necessary or Not?
With so much talk today about waste in government, it's relevant to look at the lowly penny, particularly with the number of politicians and conservative groups who believe that the penny has no relevance at all. They argue that millions of dollars could be saved by banishing the penny from our monetary system because it actually costs slightly more than a penny to produce a penny. What does this mean to you? Plenty. What do you do with your pennies? Every year, pennies are minted in the hundreds of billions, and what do these politicians and conservative groups say they do with their pennies? Most say that the little slip of copper and zinc is so useless that they throw them out. They get forgotten in car cup holders and unceremoniously dumped in wishing wells. It's little wonder that so many have to be minted every year, and you're the one who has to pay for it.
Banks order pennies from the federal mint based on the number that they have in stock to cover check cashing and other needs. The mint bases the number of pennies they mint on this demand. With less demand, there's less need to mint pennies, and thus, less expense. Over time, this translates to less need for the mint to collect tax dollars for creation of the penny, eventually saving you money. In an era when every little bit helps, this is a little bit that amounts to billions of dollars.
Finding their way to the garbage dump isn't the only way pennies fall out of circulation, though. Some people do throw them out, but others have more sinister things in mind. Prior to 1983, pennies had a much higher copper content that today's pennies do, which are primarily zinc with a copper/zinc coating to give them their distinctive coloration. These older pennies, which can still be found in circulation, are actually worth about twice their face value in copper scrap. This has led to the very criminal activity of collecting them, melting them, and selling them to scrap dealers.
Less criminal, but still responsible for removing billions of pre-1983 pennies from circulation for the same reason, is speculators who “hoard” collections of these copper pennies and trade them as commodities. Recently, one collector on the west coast was profiled who had hundreds of pounds of these copper cents stored in his basement in large barrels. For each of those pennies, as well as all of the melted pennies, another must be minted to take its place. If they remained in circulation, or if the new pennies at least, were left in circulation, rather than being stuffed away and forgotten, the mint would not have to produce nearly as many.
The best way to offset not only the damage to the economy and save some money yourself may just be to give your pennies to your toddler to put in their piggy bank. Not only will the pennies teach your child how to save, they'll also end up back in circulation as soon as your little one decides what kind of toy they want to buy with their savings. It's a win-win for everyone involved, and a better way to help the federal government save some coin, as well. Otherwise, the United States will likely soon be the next nation to do away with the penny all together, such as is the case with several European nations and Australia.
Banks order pennies from the federal mint based on the number that they have in stock to cover check cashing and other needs. The mint bases the number of pennies they mint on this demand. With less demand, there's less need to mint pennies, and thus, less expense. Over time, this translates to less need for the mint to collect tax dollars for creation of the penny, eventually saving you money. In an era when every little bit helps, this is a little bit that amounts to billions of dollars.
Finding their way to the garbage dump isn't the only way pennies fall out of circulation, though. Some people do throw them out, but others have more sinister things in mind. Prior to 1983, pennies had a much higher copper content that today's pennies do, which are primarily zinc with a copper/zinc coating to give them their distinctive coloration. These older pennies, which can still be found in circulation, are actually worth about twice their face value in copper scrap. This has led to the very criminal activity of collecting them, melting them, and selling them to scrap dealers.
Less criminal, but still responsible for removing billions of pre-1983 pennies from circulation for the same reason, is speculators who “hoard” collections of these copper pennies and trade them as commodities. Recently, one collector on the west coast was profiled who had hundreds of pounds of these copper cents stored in his basement in large barrels. For each of those pennies, as well as all of the melted pennies, another must be minted to take its place. If they remained in circulation, or if the new pennies at least, were left in circulation, rather than being stuffed away and forgotten, the mint would not have to produce nearly as many.
The best way to offset not only the damage to the economy and save some money yourself may just be to give your pennies to your toddler to put in their piggy bank. Not only will the pennies teach your child how to save, they'll also end up back in circulation as soon as your little one decides what kind of toy they want to buy with their savings. It's a win-win for everyone involved, and a better way to help the federal government save some coin, as well. Otherwise, the United States will likely soon be the next nation to do away with the penny all together, such as is the case with several European nations and Australia.
Friday, March 23, 2012
A Look at Dependents and Income Tax Withholding
Ahh, kids! Long known to parents everywhere as nature's little tax deductions, they are one of the IRS' biggest personal deductions, worth about $3,650 each as of 2010, and one of the most commonly claimed deductions on yearly tax returns. In fact, in a point of contention among conservatives and liberals, having enough kids and a low enough income can actually exempt an entire family from paying federal taxes.
When you're hired in at a job, you have to fill out W-2 information that lets the IRS know how many dependents you want to claim. You can change this amount any time during the year, but be warned: If you think you can sneak by the IRS with six dependents, you can't. All your dependents have to have social security numbers. If they don't, you're going to get audited, and you might find yourself with a stiff fine and time to think about what you did in a federal pen. It basically works like this: You get one point for each of your dependents. If you have two children and are married, you can take four “points.” This will reduce your tax payment so that you have more money on a weekly basis for things like diapers, food and entertainment, because when you file your taxes, you'll claim these deductions anyway and receive a check.
While you are entitled to claim yourself, your spouse and your kids, should you? There are at least two reasons that you should think twice about it and reduce your number of dependents, which increases the amount taken out of your check for taxes. Take a look at these two reasons and decide if additional withholding is right for you.
Reason #1: You like that the government cuts you a check in April
The federal government is one of the best savings accounts available, and with the low interest rates most banks today give you, you really aren't losing anything anyway. Think of it this way: If you have an extra $20 per paycheck floating around, are you more likely to put it in the bank, or spend it?
If you answered that you're more likely to spend it, then you're in good, but unfortunate company. Most Americans today would do the same, and numerous studies performed by both private banks and the government bear this out. When it comes in one lump sum, however, like a tax refund to the tune of say $520, are you more likely to toss some into your savings account, or even pay off some debts with it, or blow it on a new T.V.?
Reason #2: You receive a 1099-MISC for a business
Small businesses and individuals that receive a 1099-MISC form for their business activities do so for practically anything. Artists, writers, independent contractors and others can expect to send as much as 30% of their earnings to the government to cover social security and federal taxes. While there are deductions you can make from these taxes for investment purposes, most artists and writers have a hard time finding any deductions at all. This is when avoiding taking too many deductions through the year can be helpful. Rather than being stuck with a huge tax bill in the spring, you can offset the expense and reduce how much you have to pay for your estimated taxes. Sure, you end up paying out of your regular paycheck a bit, but the bite isn't quite as harsh at the end of the year.
When you're hired in at a job, you have to fill out W-2 information that lets the IRS know how many dependents you want to claim. You can change this amount any time during the year, but be warned: If you think you can sneak by the IRS with six dependents, you can't. All your dependents have to have social security numbers. If they don't, you're going to get audited, and you might find yourself with a stiff fine and time to think about what you did in a federal pen. It basically works like this: You get one point for each of your dependents. If you have two children and are married, you can take four “points.” This will reduce your tax payment so that you have more money on a weekly basis for things like diapers, food and entertainment, because when you file your taxes, you'll claim these deductions anyway and receive a check.
While you are entitled to claim yourself, your spouse and your kids, should you? There are at least two reasons that you should think twice about it and reduce your number of dependents, which increases the amount taken out of your check for taxes. Take a look at these two reasons and decide if additional withholding is right for you.
Reason #1: You like that the government cuts you a check in April
The federal government is one of the best savings accounts available, and with the low interest rates most banks today give you, you really aren't losing anything anyway. Think of it this way: If you have an extra $20 per paycheck floating around, are you more likely to put it in the bank, or spend it?
If you answered that you're more likely to spend it, then you're in good, but unfortunate company. Most Americans today would do the same, and numerous studies performed by both private banks and the government bear this out. When it comes in one lump sum, however, like a tax refund to the tune of say $520, are you more likely to toss some into your savings account, or even pay off some debts with it, or blow it on a new T.V.?
Reason #2: You receive a 1099-MISC for a business
Small businesses and individuals that receive a 1099-MISC form for their business activities do so for practically anything. Artists, writers, independent contractors and others can expect to send as much as 30% of their earnings to the government to cover social security and federal taxes. While there are deductions you can make from these taxes for investment purposes, most artists and writers have a hard time finding any deductions at all. This is when avoiding taking too many deductions through the year can be helpful. Rather than being stuck with a huge tax bill in the spring, you can offset the expense and reduce how much you have to pay for your estimated taxes. Sure, you end up paying out of your regular paycheck a bit, but the bite isn't quite as harsh at the end of the year.
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