Seven Secrets About Business Tax That Nobody Will Tell You

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As a business owner, your job is to make sure that your money goes as far as it can, and you can invest further money in your venture to continue growing. Nobody likes meeting the tax man, as they usually come around to find mistakes in our accounts or ask for more money. If you would like to know how to make the most out of your tax reliefs and get the best rates possible, read the below tips.

Business Trip Deductions

Not many business owners know that they can deduct their business trip expenses when submitting their taxation documents. How much you can claim will depend on the distance, your income, and other expenses, as well as your business type. You will need to check with your local tax office what the current rules, are, or get help with from a tax attorney and claim back your expenses to reduce your total payable tax bill. If you find recording and calculating your expenses too complicated, you might be able to take advantage of a cloud based accounting software that automatically works out your allowances.  

Meals

Most people assume that all meals are deductible as an expense, however, in reality, you can only claim back 50 percent. You can, however, include the cost of meals you paid for when you had a business dinner with a potential customer or partner. You should check the current regulations and make sure that you get the right format of receipt that can be submitted as a proof of purchase. You might need to prove that you were present at the location when the next tax account review is due.

Tax Reductions Depend On Your Books

You will need to have your accounts and books in order if you would like to make successful tax reduction claims. If you seem to be spending beyond your business profits, you might be questioned, and an audit is imminent. Make sure that you don’t show reckless spending on your books, and you have a good financial balance sheet before you start claiming tax reductions, or you might have to answer some serious questions by the tax man.

Tax Breaks and Credits Can Help You Out

In periods when your business is not doing so well, you can ask for tax breaks and tax credits. It is important that you check the small business tax regulations before you submit your application, and tick all the boxes to qualify. There are certain criteria for tax relief and credits that you need to satisfy, or your request will be declined. You can even get these tax credits and breaks if you don’t have to submit a federal income tax return. There are different forms of rebates, such as the American Opportunity Credit and the earned income tax credit.

Making Estimated Payments

In most cases, you cannot delay paying your taxes until after the tax year, and you will have to make estimated payments to the Inland Revenue Service. You cannot use the government’s money all year, therefore, you will be sent regular contribution bills. This law applies to landlords and self employed people, therefore, you must make sure you have a sound financial plan and a budget that covers the regular business tax contributions.

Return Deadlines

If you would like to minimize your taxes, the last thing you want to do is miss the filing deadlines. You will be surprised how fast the penalties and charges can build up, and increase your tax bill in just a few months. Even if you cannot pay your bill, you should submit your return on time. After your calculation is completed, you can pay with a credit card, or set up an IRS payment plan. If you don’t file your tax return, you will still be liable for the payments, and will be exempt from the statute of limitations, which mean that the IRS can chase you for the unpaid taxes forever

You Can Get Your Passport Seized

If you don’t pay your taxes on time, after a certain time, your passport can be seized or invalidated. Even if they allow you to travel, your bank account will not be safe from the IRS, and payments will be deducted whenever there is a positive balance. Make sure that you talk to the taxman and discuss your options, instead of burying your head in the sand.

Business taxes can be complicated, and challenging for most. If you are confused, or don’t trust your judgment, talk to a professional instead of ending up with huge fines and penalties.

Cash For Your Company: Getting Your Finances Right as a Bootstrapped Business

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When you’re starting up a business, money matters. As the old adage goes, you need to spend money to make money- but when you don’t have a whole lot of it to begin with you need to be careful. If you overspend and get into the red early on, you could go bust and it be game over for your business before you’ve even really started. Here are some things to consider when it comes to your finances.

Start on a Smaller Scale

Instead of throwing everything you have into your venture and hoping that it does well, why not start on a smaller scale? This way you can see that it actually works and let it expand and grow organically. You could start in a small office hiring just a couple of staff members and focusing on providing an excellent service to the customers you get. This way you’re not overstretched, and if you find you do well and are getting more custom than your small setup can handle, you can use profits to move to bigger premises and hire more people. That way you’re not sinking a load of cash into your business and losing the lot if doesn’t do as well as you thought. Renting equipment instead of buying is another good way to keep it small and avoid large upfront costs. Once you know your business is doing well, you can buy this equipment for yourself.

Outsource

You might be under the impression that outsourcing is something that larger businesses do, and maybe is something to consider later down the line. However it can be a lifesaver for smaller businesses. While you will pay for the services of a third party company, you’re able to reduce upfront costs as you don’t need to buy additional equipment or hire more staff. Recruiting and training can be expensive, if you hire a specialist company to deal with certain areas of your business then you don’t have to worry about this.

Attract Investors

If you have a great business idea but really need a cash injection to get started, one option would be to seek out an investor. Here you will be offered cash for a share in your business, and your investor will also act as a mentor in many cases. There’s a lot of competition for this kind of help so you will need to stand out. An interactive annual report with all of your figures, earnings and projections is a smart move. Be ready to answer any difficult questions and practice your pitch until it’s spot on.

Expect The Unexpected

No matter how well prepared you are in business, something could go wrong. For this reason it’s well worth having an emergency fund as a buffer that you can fall back on just in case. Anything from a burglary, a fire, a flood could occur, or a crucial piece of equipment to your businesses could stop working. Give yourself some funds to fall back on, and take out the right insurances too just in case.

4 Smart Money Moves For Small Business Owners

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Starting up your own company means becoming somewhat of a de-facto expert on a lot of things, including business financing. With limited resources available to most start-ups, making the right moves with your funds can be critical to the success or failure of your business.  Finances fluctuate all the time, so it’s important for you to budget and save to cushion the blow of a bad run. Downturns, bad months and delayed payments from clients can sink an unprepared business. Understanding basics like how to do a financial projection, find funding and how to raise your credit score are musts.

Overestimate Operating Costs

If you’re in the arena of project work like a lot of small businesses, then you’ll already know that results and timescales can vary hugely from client to client, and the possibility of going over budget is huge. Often, small agencies are the ones who end up temporarily footing the bill while clients dispute and argue internally over unforeseen changes, and this can be a huge problem. So it’s always better to budget slightly above your anticipated costs to create a cushion, or building in a non-negotiable contingency budget on an estimate to make sure you’re not left exposed.

Understand Your Unique Risks

Having a clear-eyed and realistic snapshot of your company finances at all times is essential in order to be able to make decisions and plan for the future. So be ahead of the game when it comes to knowing about changes in regulation at a national level that could affect what you do. The SWOT analysis shouldn’t just exist inside your business plan – monitoring threats and opportunities should be a part of regular operating procedure. Exposure to varying seasonal demand for your products or services is also vital to know where you stand with emergency planning and what business insurance cover you need. Figure out exactly how liquid your cash flow is and aim to save a portion to cover unforeseen expenditure.

Large Purchases Should Be Pre-Planned

You’d be surprised how ad-hoc the approach of a lot of small outfits is when it comes to those occasional, big-ticket purchases every business needs to make – the software upgrade, or piece of critical equipment, or perhaps renovations to an office or shop. These decisions must be carefully timed and the risk balanced with reward before each move is made.Data is absolutely your friend here – you need to know up to the minute budget figures and a reasonably accurate projected income to be able to know if it’s the right time to make investments.

Time Is Money

Never is this truer than when you work for yourself and run a tight ship –  your time needs to be fully factored into any budget planning, especially if you invoice directly for your time. If you’re losing time on things, you are also losing income and creative focus. Make sure that you under-promise to over deliver. Add a little extra time onto a project estimation for a client – bring it in ‘early’ and you’ll get a reputation as someone who can deliver, which may very well lead to more opportunities. If the time runs over, you haven’t lost anything as you’re still ‘on time’ with the client and you won’t have to navigate any awkward conversations about additional time to bill for.

Three Ways You Can Boost The January Pay Packet

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January, it’s always the same, isn’t it? People are struggling with what seems like a longer than usual wait for the paycheck to come in. You feel like you can’t do anything through fear of spending more after an over indulgent Christmas, you feel like your clothes are a little tighter because of a fun and tasty festive season, and well, January possibly isn’t everyone favorite month of the year. But, it doesn’t need to be this way. January can actually be a great opportunity to make some great changes to your life, not just by wholeheartedly embracing those new year’s resolutions, but also seeing it as a chance to wipe the slate clean and make some all-important decisions and changes that could affect the rest of the year. Now it all of a sudden sounds like the month of opportunity, doesn’t it? So I thought I would share with you three ways you can boost your january income, to help you feel just that little bit better about yourself. Who knows, these new habits could develop into a permanent part of your routine and help you throughout the rest of the year.

Look at your existing financial situation and make changes where possible

Your financial situation as it currently stands might actually be your problem and not the wait between paychecks, so now is the time to take on your bank statements and direct debits and truly work out what you can do to improve things. Often people have things leaving their account each month that they weren’t even aware of. Rogue gym membership, anyone? Understand what comes in and what goes out, and cancel what does not need to be leaving to instantly free up some cash. There are, of course, essential bills to pay, but you may be able to reduce some of those essentials like debt payments by considering debt relief programs or even taking matters into your own hands by consolidating debts such as credit cards into a simple loan repayment plan. Some of these actions alone could significantly bring your outgoings down, and help give your bank balance the boost it needs.

Declutter your home and sell any unwanted items

Whether it is just your bedroom or your whole home, I guarantee that there will be some things in your home that you no longer want or need, and this could be just stored in a cupboard somewhere or in storage. Don’t just keep things for the sake of it, why not sell them online on websites like eBay and make some money from your unwanted items? What you don’t need anymore doesn’t mean that someone else won’t find a use for it. Not only does it help you to start off the year decluttered and fresh, but you could boost your income in the process.

Make more use of your spare time

Finally, why not use your spare time more wisely and see it as a chance to make some extra money. Filling out online surveys and performing mystery shops can be a great little side hustle to earn some extra money and it can stop the boredom of January setting in for too long.

I hope that these three options give you some food for thought when it comes to boosting your income this month.

Credit Card Debt Isn’t Insurmountable!

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Now, it’s generally considered impolite conversation to discuss your finances with people. Never mind your debts. It’s not surprising, then, that so many of us feel completely isolated when it comes to discussing and dealing with credit card debts. Many of us actually assume that nobody else is in the same financial position as us. But believe it or not, most adults have some sort of credit card debt to their name. They just don’t tend to divulge this information to you. So it’s important that you don’t feel alone while trying to clear your own! That’s where we come in to help. We’re here to break the silence surrounding credit card debt and to let you know that while it may be an intimidating facet of your life to face, it is by no means insurmountable. Whether you have just a couple of hundred to pay off or figures are edging closer to four or five figure sums, you can surpass this and pay your dues off much sooner than you’d imagine. Here are a few tips and tricks that will help to make the process more simple for you.

Know What You Owe

When you find yourself in debt, it becomes extremely simple to bury your head in the sand and ignore what’s going on around you. So many of us ignore letters or reminders from our banks and other lenders. But this doesn’t help anyone! At the end of the day, the problems won’t go away. They will only get worse. So, you need to start out by getting to grips with your personal finances. Know exactly how much you owe out and who you owe each sum to. Sign into your online banking or check your statements. These will provide you with your balance. Total up all of the outstanding balances and then you can begin working out how to best deal with them.

Consolidate Your Debts

You’re likely to owe money to more than one source. This is problematic for several reasons. It’s difficult to remain organised and on top of your finances when you have multiple balances, passcodes, minimum repayments, and repayment dates. But there is a way to make life a little easier for yourself: you can consolidate your debts. This involves taking out one large loan and using the lump sum of money to clear all of your existing debts. While you will still owe the same amount out, it will be to one lender, such as Personalloan.co, with a consistent interest rate and a whole lot less information to remember.

Stick to Your Agreements

Somewhere that people often slip up with lending is repayments. You will be expected to make repayments, most likely on a monthly basis. However, if or when you miss this, you will accrue fees and fines as a penalty. So rather than wasting your money on this, make sure that everything is always done on time. Make a note in your calendar or set up a direct debit.

By following these three main steps you will eventually work your way out of debt!

6 Ways To Get Your Business Back To Black

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Starting up a new business is exciting, scary and liberating all at once. Throwing off the shackles of working for someone else and going it alone is a big deal and it takes a lot of research and a lot of preparation to be ready to start a business. The problem, is that lenders everywhere are really tightening their belts when it comes to business finance, so managing to get the funding to get the business idea of a lifetime off the ground is difficult. Companies are struggling to get the funding for everything from materials to health care insurance, and it’s a big reason why half of all new businesses fail in their first year. Money may make the world go around, but so many businesses aren’t going anywhere due to struggles with debt and trying to get their heads above water.

Bankruptcy is a popular option for small businesses that are failing, as it is an avenue that can save a company in the long run, but it comes at a hefty price. Read this article to learn about how much bankruptcy can cost a business, and not just financially. While bankruptcy is an option, it’s one that causes damage to both the business credit score and the credit score of the owner personally, so it should never be the first option that you use to dig yourself out of debt. Don’t worry though, you can avoid a similar result for your business. You don’t have to opt for bankruptcy as a way to salvage the company you have worked so hard to raise from the ground. We’ve got six ways you can steer your business away from the red seas of debt and back into the black.

Cut Costs & Free Your Cash

In a business, you can easily spot where it is that is putting you in debt. You can see exactly the areas that are pushing your business into the red, and attack those areas directly. If you have customers that aren’t paying you in a timely manner, your utilities and shipping costs are too high, or your business rent has slowly climbed over the time you have been there, you need to work out how to rectify these issues. Start ramping up collections efforts with customers and so a comparison on your utilities so that you are getting the best deal. Talk to your landlord about the rent and if there is no wiggle room on your rental amount, start looking around for cheaper premises. Sell your unwanted or unused office equipment for cash and scrap. There are a lot of ways you can cut costs in the office, you just have to find them.

Revisit Your Budget

When you find yourself in debt that is growing rather than reducing, it’s usually because the company budget is very much off. You have to look at the current financial situation of your business and build a new budget based on that. Previously, your budget has been all planning and guesswork, but you’re now in action and up and running, so you can now paint a more realistic picture of the budget you are working to. Pay off more than just the minimums on business credit card debts so that you aren’t adding more money in interest and charges through the year.

Prioritize Debts

When you are looking at the debts your business has accumulated, you need to work out where you pay the highest interest and tackle those first. If you want to tackle them altogether, you should look into how you can get an application for a debt consolidation loan approved. You can read it at DebtConsolidationLoans.com so that you can really learn the best way for your application to get the green light and get you out of debt. Paying off business debt isn’t always easy, and if you’ve guaranteed any of your debts, you need to get those paid off quickly so that your creditors don’t come for your assets.

Communicate

One of the best things that you can do to get your business back to black is to communicate with creditors. Believe it or not, the people that your business owes money to are not going to eat you! Talk about the hardship that your business is going through right now, and discuss the financial situation that you are in with great detail. Most of the time, your creditors will offer you a payment plan that you can stick to. If they don’t offer you one, then you can request one and you can even request a reduced amount to settle the debt entirely. You can negotiate so that you can settle the debt faster if they give you better terms to do so, but you don’t have to be demanding about it. The worst thing that you could do, though, is to get that coveted payment plan and then default, so stick to it.

Get Advice

It can be daunting to speak to and negotiate with creditors, so get the help of a credit counselling organization like these. They can liaise with you on the best course of action with your creditors for your business.

Debt Management

Professional debt management companies that work specifically with businesses can really help you to get the best deal on your debt repayments. They can negotiate with creditors on your behalf and sniff out any inefficiencies that could be keeping you up to your eyeballs in debt. Be careful though, as there are far too many debt management companies out there that scam businesses out of their money without helping them to pay off debts.

Getting your company out of debt isn’t always easy, but if you have a plan in place and you speak to the right people you can ensure that your company gets back its solvency without heading down the bankruptcy route. Take the chance with your company and help it to swim rather than sink – you won’t regret it.

How Credit Can Benefit Your Business

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Credit has come to be something that business owners look at with a sceptical eye. Many of us prefer a traditional approach to controlling our professional finances and will avoid spending money that we don’t have at all costs. But every now and then certain situations arise where credit could be extremely beneficial for your company. Here are a few situations where you might want to consider applying for credit and using it to your advantage.

Making the Most of Offers and Sales

Chances are that you use the same stockist or wholesaler for the raw materials that your company uses. Whether you specialise in clothing and customise plain wholesale tees and tote bags, or sell edible arrangements and source your ingredients from fruit wholesalers, there’s bound to be someone who you go to for the main components for your products. Every now and then these companies are likely to let large amounts of stock go at a much lower price than usual. They may be trying to clear out warehouse space, old stock ahead of the launch of new stock, or they might simply be having a sale. You want to capitalise on these kinds of situations, getting as much cheap stock in as you need to tide you over. But sometimes you won’t have enough cash on hand to make the most of flash sales. Nothing is more frustrating than having to fork out the standard price for a product knowing that it was on sale just a few days before. It’s situations like this when credit can be used to your advantage. If you have credit of some sort you can use this, then pay back the amount in full a few days down the line when it becomes available. Just remember to try to always make repayments in full, as this will help you to avoid hefty interest costs mounting up. If this sounds like something that you want to have ready and at hand for the future, apply for a credit card and ensure that the lender knows you intend to use it for business purposes. They may be able to offer you preferable interest rates, higher credit limits or other perks if they know that it will be used for large sums.

Rebranding

Sometimes you’ll notice that sales lull. Chances are that your brand no longer has the appeal that it used to. Consumers quickly become tired and want to see something new before they’re willing to part with their cash. This is where rebranding comes into play. You can rebrand your company, making it exciting and fresh again! When doing this, you’re likely to have low funds so credit can give you sufficient means to successfully rebrand your business and start profits rolling in again.

As you can see, credit can prove extremely profitable if used in the right way. Just remember to never take out a loan or credit on something that you are unlikely to be able to pay back. Always make sure to make repayments on time too. This will help you to avoid fees and fines which could prove troublesome in the future.

Put Yourself In The 10% By Coming Back From The Brink

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If you’re starting a business, you’re likely all too aware of the threat that 90% of startups fail. This is the figure we all fear when we decide to make a go of things. And, it’s what we keep in mind if our enterprise starts to struggle.

In truth, though, focusing on this figure isn’t helpful. In fact, you can rest easy that the businesses which do reach success ignore odds like these. The chances are that they had as many rough patches as everyone else. But, instead of lying down and accepting failure, they fought their way back from the brink. And, you can too, with the help of last-minute money making schemes like these.

Turn to investors

Investors have the ability to bring any startup back from the brink. All you need to do is convince them you have an idea worth investing in. Admittedly, this will be much tougher if you’re struggling. But, that doesn’t mean it’s impossible. Remember, investors know how tricky it can be to get started. They won’t hold initial struggles against you if they believe in what you do. All you need to do is find investors who seem like they would be interested, and perfect your pitch. Instead of dwelling on how your business is going at the moment, focus on where you imagine you could be. With a bit of luck, they’ll believe it enough to get behind you with financial backing.

Sell stocks and shares

You could also opt to sell stocks and shares to help boost your earnings. In some ways, this isn’t much different to selling to investors. It involves handing over a chunk of your company to others. For obvious reasons, many of us are hesitant to do this. But, there’s no denying that it’s a sure way to make money fast. By turning to companies like TD Ameritrade, you can soon see yourself back on secure financial footing. Bear in mind that, if you’re struggling, you may well have to sell stocks for low prices. But, this is a much better option than merely accepting defeat. While it may be the last choice, it still deserves a place on your list. Bear in mind that you should take the time to research the legalities before getting started.

Special offers for customers

If you want to keep things simple, you could always do some special offers on your services or products. Work out how low you could drop your prices, while still making a profit. Then, offer these discounted rates to first-time customers, or for a limited time. It may involve taking a small hit in earnings for a while, but this stands to boost your business. Plus, if those customers like your services, there’s more chance of them coming back for more later down the line. And, that’s not even considering the power of word of mouth and so on. You know how it goes; you hook them with low prices, then you reel them in.

Controlling Cash Flow In Your Start Up Business

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Starting up a business isn’t easy, but with so much to think about cash flow is one thing that can easily put to one side, while you focus on marketing and sales. But with no cash coming in or going out at the right time, you could be left with a huge problem when it comes to continuing to run your business. Which is why I thought I would share with you some of the ways you can control your cash flow as a start up.

Have a decent cash flow reports and money projections

It is vital to ensure that you make cash flow projections for the next year, the next six months, month or even within the next week to ensure that you are fully aware of what your current financial situation is when it comes to your business. As a small business you need to understand the projection isn’t set in stone, but it enables you to make changes or save when possible if you consider that certain times of the year may mean you are shorter on funds than at others. It is important to know what cash you will have, and for it to not be measured on how many sales you might make. It’s more about ensuring that you know where you stand, rather than predicting where you could be.

Improving money coming in

Sometimes you don’t get paid for sales instantly. This tends to be sales made not to the general public purchasing on your website and making a payment straight away, this is normally as a trade sale where you need to offer a thirty-day payment window for invoices to be completed. One initial step is to ensure you invoice correctly and using the Quickbooks invoice template could be a great way to make sure you do everything right and include the right information. Many businesses will then wait until the opportune time for them to pay the invoice.

Be careful with your outgoings

It is just as important to ensure that you are also careful with your outgoings and the invoices that you may need to pay yourself as a business. This means that when you have your outgoings to consider then you need to make the most of the payment obligations you have to your advantage. It might also be a good idea to discuss your business financial situation with creditors so that they are fully aware of when they are likely to receive funds. This extends respect and also helps them to manage the cash flow within their business.

Making sure you survive the shortfall

Finally, you need to ensure that you manage any shortfall you have. A quick way to do this is to go back to the first step and be aware of your cash flow projections. Being aware of the shortfall ahead of time enables you to make sure that you cover expenses due and that you have the time to rectify the shortfall as quickly as possible.

I hope these tips help you to control your cash flow as a start up business.

6 Fundraising Tips for Your New Business

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Every emergent business needs a source of capital. Regardless of the nature of your business idea, this capital has to come from somewhere. Fortunately, there are plenty of places to find funding for an early-stage company.

For guidance specific to your company’s needs and growth trajectory, you’ll of course want to speak with a seasoned business coach, accountant or financial advisor before proceeding. However, these six tips to generate or secure funding for your nascent company are broadly applicable and can definitely give you a leg up regardless of your near-term objectives and overarching vision.

1. Tap Liquid Savings

Although roughly half of Americans live paycheck to paycheck, the other half have at least some financial breathing room.

If you’re part of the second camp, look to your personal savings as a source of startup financing. This is a great way to show future investors that you believe in your business idea. The fact that you’ve personally invested in your company before seeking external funding sources is a vote of confidence for many angel investors and venture capitalists.

2. Stay Lean for Longer

As an entrepreneur, it’s always in your best interest to carefully watch the bottom line. Successful business owners use every available tactic to control costs and remain lean, stretching their startup resources farther.

“As a young entrepreneur, staying lean was very important to me,” says entrepreneur George Otte. “My approach to business allowed me to grow on my own terms and strengthened my enterprise during its critical early years.”

By following in Otte’s footsteps, you can wait longer to seek external funding. When the time finally does come to pitch investors on your idea, you’ll be in a stronger financial position.

3. Borrow Against Home or Retirement Equity

If you have substantial equity in your home or a sizable balance in a tax-advantaged retirement account, you can borrow startup capital at lower rates than those afforded by unsecured loans, credit cards, and traditional lenders such as banks.

Contrary to popular belief, borrowing from a retirement account is possible while preserving your scheme’s tax advantages.

“There are provisions in the Employee Retirement Income Security Act and IRS tax codes that enable people to invest retirement savings in a business if they are active employees in the company,” says business expert Erik Sherman.

In other words, as long as you play a day to day role in your startup’s operations, you can borrow from your retirement savings without incurring a tax penalty.

4. Seek Support from Your Friends and Family

Friends and family members are great sources of “patient capital.” In other words, they may be willing to wait years or even decades to realize returns on their investments. “Patient capital” is the first source of external funding sought by many entrepreneurs.

5. Run a Crowdfunding Campaign

If you have a novel idea that you think consumers will really love, build a crowdfunding campaign around it. Crowdfunding allows you to raise money at relatively low cost without giving away equity in your company or paying interest over time.

6. Apply for Grants and Prizes

No matter what your company does, it’s likely eligible for grants from industry associations, local government agencies, or entrepreneur-oriented nonprofits. It might also be a worthy contestant in startup competitions that promise cash prizes to winners and runners-up. Even if you don’t win, you’ll learn a lot from mentors and fellow contestants.

Making Your Money Go Further

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Managing your finances isn’t always an easy task. The older you get, the costlier life seems to get. Still, it’s not your salary that matters; it’s what you do with that salary. Making your money go further is the theme of this article and anybody can do it with just a little planning and foresight. Here are some pieces of advice to help with your personal finances.

Manage your income and expenditures better.

The first step towards making your money go further is to manage it better in the first place. Whether you earn a lot or a little, making your money go further is about organizing your finances so that you’re not being wasteful. You need to make a budget so that you can monitor your expenditures in line with your income. You need to set aside enough of your earnings to cover the necessities such as rent, petrol, food, and all other bills; you shouldn’t be struggling to pay for those things because you’ve splashed out on luxuries.

And when it comes to your disposable income, you shouldn’t burn through it all. Making your money go further is about being strict with your spending habits and trying to save at least some of your earnings every month. If you’ve got debts or other bills looming over you but you can’t make the payments then you might want to look into bad credit loans. Whilst you may not have the best credit score if you’ve been a little careless with your finances in the past, there are options for you if you’re a homeowner. At the end of the day, it’s about owning an asset which proves to lenders that you’re financially trustworthy.

Supplement your income.

Another way to make your money go further is to look for additional streams of income outside of your job. Online surveys and reviews are a great way to earn a bit of money on the side. You could spend a few minutes every evening or every weekend answering a few questions about a certain brand you use, watching a short advert, or taking daily polls. Whilst not all sites offer hard cash, many offer gift cards, vouchers, and entry into contests for more prizes. For a few minutes work here and there, you could really earn some decent rewards for your effort; going to your favorite shops with gift cards and vouchers will save you having to spend any of your actual money, so there’s always a monetary reward for doing online surveys in some sense.

You could also do some research on the property market. Investing in real estate is a great way to bring in an additional source of income, whether you rent out a property to tenants to bring in a monthly stream of revenue or buy a property simply to sell it at a higher price. It’s an industry well worth checking out because you should be making smart investments in order to secure your finances for the future. It’s better to spread out your money rather than putting all your eggs in one basket.

What All Entrepreneurs Need to Know About Debt

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Yes, there are angel investors and venture capitalists; yes, there’s always bootstrapping; but the truth is, you probably can’t start your startup without accruing debt. You need capital to get your business up and running, and loans of one type or another are the fastest, most reliable way of acquiring money to fund your dreams — especially at the beginning of your entrepreneurial career, when you don’t have any small business credit to attract deep-pocketed investors.

But here’s the thing: Debt isn’t always bad — but it isn’t always good, either. Before you begin your startup, you should learn a thing or two about what debt is, what it isn’t, and what you should do about it.

First, a Discussion of Different Debt Definitions

Some of the most famous personal finance gurus make millions on messages that debt is the ultimate evil. They say that borrowing money should be a last resort, even if it is for large, necessary purchases like homes and businesses. As a result, most people experience terror at the idea of taking any kind of loan and feel anxiety and guilt at the prospect of maintaining debt.

However, borrowing money isn’t a complete definition of debt. Rather, according to the true accounting definition, you only have debt if you owe more than you own — if your liabilities are greater than your assets. Making loan payments doesn’t make you in debt; however, incurring liabilities when you lack sufficient assets does make you in debt.

Still, you should know the difference between consumptive and productive liabilities. Consumptive liabilities are those that do nothing to increase your wealth. Often, personal credit card debt falls into this category because goods purchased on credit are rarely put to profitable use. Conversely, productive liabilities help you build wealth. Some examples of typically positive, productive liabilities are: mortgages, education loans, small business loans, and business lines of credit. When you are building a business, you would do well to avoid the former while accruing a practical amount of the latter. Then, you should be able to stay out of debt while generating sufficient capital for your startup.

Next, an Explanation of Debt Monitoring Tactics

The security of your business depends on you maintaining productive liabilities and reducing (or eliminating) consumptive liabilities — but when you apply for loans or look for investors, all liabilities

Cash Ratio. This tells you how much cash you have available — and how much of your income is tied to liabilities. First, calculate the amount of cash you have on hand, which might also include cash equivalents like highly liquid investment securities. Next, add together your current liabilities. Then, divide your cash by your liabilities. The higher the number, the healthier your finances.

Debt Service Coverage Ratio. A debt service calculator will determine whether you are capable of producing enough cash to cover your debts. Most often, debt service is used to determine your ability to obtain more liabilities for your business. First, calculate your net operating income, which is your net income plus amortization and depreciation of assets plus interest expenses plus non-cash items. Next, calculate your debt service, which is your principal plus your interest payments plus any lease payments. Then, divide the first number by the second. Again, you should be looking for a large number, closer to one.

Debt-to-Asset Ratio. This calculates the percentage of your assets that were paid for with borrowed money. It can indicate financial leverage, measure solvency, and determine financial distress. First, add together your current liabilities and long-term debt; next, add together current assets and net fixed assets. Then, divide your liability total by your asset total to obtain the percentage. A large number isn’t necessarily bad, but it isn’t good, either. You should determine the optimal ratio for your business.

Debt-to-Equity Ratio. This tells you how much of your business you own, and how much belongs to others. First, add together your liabilities; next, calculate your equity, or how much money you have invested in your company. Then, divide your liabilities by your equity. If the number you produce is large, that means a large proportion of your business is owned by outside sources, like banks.

 

How to Choose the Right Loan for Your Small Business

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As a small business owner, or an entrepreneur about to launch a startup, you will know what its like working with a small budget. However, did you know that money problems are the second most common reason behind business failure?

While SMEs and startups do not necessarily need huge funds to thrive and grow, if your business begins to experience negative cash flow, it could be the beginning of the end.

When your business needs a cash injection, you may be tempted to apply for a Market Invoice business loan. A loan can help your business thrive but with so many what might seem complication options to choose from, you may be unsure where to start.

To help you apply for the right loan, here are some things to consider about borrowing for your small business.

Secured and Unsecured

There are two types of loans: secured and unsecured. The former is secured using business assets, which ensures that should you fail to make repayments, the lender can recover losses by selling your assets. This could include business cars, property or equipment. The latter involves no collateral but does often require a longer trading history by way of guarantee.

It is important to note that the type of loan you will be able to secure will depend upon your company’s history, trading time and credit history.

Research the Criteria

When applying for a business loan, your company will usually have to meet a certain set of criteria. For an SME, many lenders will ask to see two years trading records, turnover and profits, as well as your credit history.

For startups, the required criteria are usually more basic and may include permanent UK residence and less than two years trading.

Tip: After ensuring that your business meets the conditions, make sure you have all documentation required to make the application process quicker and smoother.

Fixed and Flexible

In addition to secured and unsecured, you can choose between fixed and flexible loans. Fixed loans have fixed payments. As such, when you agree to the loan, you agree to pay the same fixed sum every month until the debt has been cleared. Flexible loan repayments, on the other hand, differ depending on interest rates.

Both types of loans have their benefits, as fixed allow you to predict and allow for expenditure, while flexible loans could save you money if interest rates drop.

 Purpose of the Loan

Before applying, it is important to think about why the loan is needed. Think carefully about how long you need the loan, how much money you need to borrow, how quickly you need the money and what you can secure the loan against.

Considering these questions will help you to determine what type of loan is best for your business.

There are a range of business loans available on the market, with some aimed at SMEs and others tailored for startups with no-to-little trading history. Before applying, do some research, think carefully about what type of lending is suitable for your business and take your time, to make sure you select the right loan.

 

The Black Mark: Personal Finance Problems Which Could Stop Your Startup

For the most, it’s essential to keep your personal life and your startup separate. Business and pleasure don’t mix well. A scandal at this stage could spell curtains. So, the chances are that you keep your personal life out of the office. It’s usually the best route to take.

But, such separation life isn’t always possible. Entrepreneurs can’t escape the fact that who they are is linked to what they’re doing. Your personal background could have a massive impact on your success or lack thereof. For example, a bad personal meeting with a future business associate could scupper a deal. Equally, a bad credit rating could halt progress before you even get going. And, that’s what we’re going to look at here.

You may assume that personal finances wouldn’t have anything to do with your enterprise. But, think again. Here’s how your own money problems could cost your startup.

Failure to get a loan/backing

Let’s not beat around the bush; no startup can get off the ground without money. You’ll have a hard time convincing anyone your business is worth investing in if you’re drowning in debt yourself. Not to mention that yet another loan could lead to more trouble. Even if you manage to get a loan against the business instead of your name, it’s unlikely you’ll meet the repayments. As such, your company could end up filing for bankruptcy before you even start.

Lack of faith from the business world

Nothing stays secret for long in the business world. If you’re drowning in debt, the businesses in your circle will soon know about it. And, once they do, you’ll have a hard time getting a deal from any of them. Why would they trade with an entrepreneur who can’t handle money? That would be financial suicide. If your company goes bust, they lose money. It’s as simple as that. Instead, you’ll find that all those businesses turn their backs on you. And, when they do, you’ll soon find yourself in trouble.

Is there anything you can do?

Luckily, there’s plenty you can do to get the situation under control. You want to develop a way to clear your debts as soon as possible. The faster you’re clear, the sooner you can enter the business world on stable footing. Many would choose to turn to debt consolidation to tackle the issue swiftly. But, that might not be the best plan for you. After all, every penny counts when you’re starting out. You can’t afford insane interest rates right now. Instead, consider the debt relief programs offered by companies like the Bank of America. This way, you can develop a plan to clear debts in a realistic time frame.

It’s also worth being completely open about your situation. Speak about how you’re dealing with the issue. As mentioned above, these things have a way of coming out in the end. So, beat the gossip by sharing your story. You could even become an inspirational figure for other entrepreneurs out there.