We have been warned against it. We have taught our children not to fall into it. Yet we are all guilty of it. Procrastination……. In fact I have procrastinated in writing this piece for at least three days. There are many reasons for procrastination. Some causes are fear of failure, lack of interest, lack of motivation, or lack of skill set. You can pick your poison according to your situation. The one area procrastination is the most devastating is in your finances. We as Americans have heard a resounding and reoccurring rhetoric that we have until the retirement to figure out how to fund, well retirement. The notion of a far and distant retirement age has caused many to put off efforts to implement a plan to fund their future. Another fallacy that is often taught is that simple little investments into a 401k savings alone will snowball into enough money to retire wealthy. In fact only about 31% of Americans participate in a 401k program. Of that 31% the average contribute less than 10% of their annual salary.
We Simpletons not only like to keep things simple but also honest and practical. The truth is in order to retire wealthy you need a plan, you will also need to actively manage that plan, and you will need to start TODAY! Because we believe building wealth is not about the destination but about the journey! This journey is one that will teach you about triumph and failure, desires vs. needs, and most importantly the true value of a dollar. The value of a dollar has little to do with how many you have of it, but rather how much you do with it. Enough with the philosophical banter lets finish this off with some practical advice on how you can start your journey to wealth today! We have put together a simple checklist of items to help you get on the right foot. Have a question about a step? Give us a call, leave us a note, or heck go ahead and swing by our office. We are passionate about helping people just like you achieve their full financial potential!
- Basic Wealth Builder’s Checklist
- Budget Plan
- Pay Off Debt
- Speak With Financial Advisor
- Diversify Portfolio
- Stick With The Plan
Every entrepreneur knows that one of the most difficult resource to obtain is the one your need the most, capital. Clearing the financing obstacle becomes more challenging with the inability to obtain a traditional business loan. The Small Business Association, has long been an advocate of startups and small business, however access to this type of funding has become increasingly more competitive, and sometimes funds are unavailable. So what options are available to get your great idea off the paper and in action? Because we are fans of business, especially new startups, we have come up with 5 alternative financing solutions to the traditional loan.
- Product Pre-Sale
You have a fantastic product, one that you are sure will sell like hotcakes the minute it leaves production. Why not sell it ahead of time. Selling your product before it launches is often overlooked as a means of securing financing. If your product is the perfect solution to your client’s problem, most will be willing to secure their portion ahead of time. Discounting the price can make the option more enticing.
If your business has a scientific or research focus government grants may be available. The Small Business Association (SBA) offers grants through their Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. Recipients are required to meet federal R&D goals and have high commercialization potential.
Acquiring investors is one of the most cost effective ways of obtaining capital. One of the pros are everyone shares in the profit once the business is successful. The down side is depending on your agreement, you may have to give up a portion of ownership interest or even pay investors back if you are unsuccessful. It is recommended that you speak with an attorney and your CPA if you plan to go this route.
- Invoice Advances/ Factoring
If you don’t like the idea of debt, invoice advances or factoring may be the solutions. Factoring services will front you the money on outstanding invoices. You will then pay the money back once the customer has settled their bills. This provides consistent cash flow. The factoring company will usually only provide a portion of your total receivable value. You will required to remit the total value of the receivable upon collection. The difference represents their fee.
- Crowd Funding
Thanks to the internet startups can now look to the innumerable amount of people surfing the web each day. If finding Mr. Moneybags investor is proving to be a task, there are many crowdfunding websites that allow businesses to pool small investments from many investors. These websites often have an equity based model in which you will give up a portion of your ownership interest in your business. Others allow you to exchange product for investment.
There are many options available when it comes to business financing. When considering your options be sure to be realistic about your financing needs and weigh out pros and cons of each options. Your CPA is a good resource in helping you understand how each option impacts your future goals and your overall financial picture. Looking for an entrepreneurial CPA to help your business grow? Call us today to schedule a free consultation.
Owning a business is rewarding and demanding. It is well understood the role small business plays in the current economy. The majority of new job creation is a result of small business. Uncle Sam understands this point, which is why tax regulation is written with some benefit to small business. Operating a business can be expensive, but with proper planning we can help you alleviate the tax burden.
One of the first tax implicating decisions a business owner will make is that of entity structure. Choosing whether to organize as a corporation, S-corp, LLC, or partnership can have significant impact on how the government will tax you. It is very important that you seek the counsel of a CPA or Attorney before deciding on an entity structure. After deciding on the entity structure, here are several tips to consider in saving on your tax bill.
Although the Affordable Care Act is not without controversy, one benefit it does render is the ability to save you money on your tax obligation. Business with 50 or more employees are required to provide health insurance. On the flip side if your business has 25 or fewer employees that earn less than $50K per anuam, you can claim 50% of what you paid to insure your employees. Are you the only employee in your business? Even better, you can deduct the premiums for medical, dental, and long-term car for yourself, your partner, and your dependents.
Any courses taken or books read to be more proficient on your job could be tax deductible. The catch is the course must be consistent with your line of work. This rule applies to all employees of your company, as long as the company paid for the employee to attend course.
Just because you are a small business does not mean you cannot save for retirement while saving on your tax bill. For single member organizations consider setting up your own 401K. Have employees? You can take advantage of setting up Simple IRAs or SEP IRAs. What is the benefit to you? For a 401K you your contributions up to $18K in 2015 and 25% of your net income as a tax deferral. For your employer sponsored plan, you can deduct every dollar you contribute. To can even deduct up to $500 just for setting up the plan!
These are just a few examples of how Uncle Sam is lending a hand to small business. There are many more tax breaks for items such as purchasing capital assets, lease build outs, and even entertaining potential clients. Your CPA can help you create a tax plan that is effective year round and will ensure that you are taking advantages of every tax break available to your business.
So you want to be a millionaire? Who doesn’t? Everyone has a goal of becoming a millionaire in retirement, but what about today? Wouldn’t it be better to attain that kind of wealth before you reach your golden years? What kind of opportunity would be afforded to you? What dreams could be fulfilled? But is it possible to become a millionaire without being a tech genius or starting the next internet mega company? With proper planning and diligence a regular Joe can become the next Joe Millionaire! Here are some rules to follow on your quest for millionaire status.
- Take advantage of Free Money
If you’ve heard it once you have heard it a thousand times, if your employer offers a 401K with a match contribution take advantage of it. Matching contributions is free money which does not have a current tax implication. You want to make sure your contributions max out your employer’s matching commitment. For example if your employer is willing to match 10% of the first 20% you contribute. Make sure you are contributing at least 20%. Practicing this simple rule provides you with more dollars to invest which increases your future returns, which will reduce the time to your million dollar goal.
- Create a budget and stick to it!!!
This is another basic concept that is often overlooked. Just as a business will not know its profitability without comparing results to a budget, individuals cannot know their actual amount of discretionary income unless a proper budget is in place. Understanding how you are spending every dollar is one of the fundamental steps to financial security. Create a budget that ensures that you have at least 20% of total income available for savings. If this is not yet possible, make it a goal and save as much as possible in the meantime. Finally a budget is not beneficial unless it is strictly adhered to. Creating the discipline of sticking to a budget will produce behaviors that will lead to profitable financial decisions.
- Live Below Your Means
Another fundamental concept in amassing wealth is living on less than you earn. Going back to my business example. Business cannot grow without investment in new resources such as capital, people, and new product research. If a business spends every penny it earns, it is deemed to be unprofitable. Unprofitable businesses eventually fail. The same can be said about your personal finance. As mentioned in the prior step, having money available for savings and investing requires you to live on less that you are making. Creating a budget will help you identify excess costs in your lifestyle. Re-allocating your cost savings to an investment vehicle will shorten your path to millionaire status.
- Pay off your debt!!!
We have all heard the term “Net Worth”, but what does it mean? Your net worth is simply the total amount of your assets less your obligations. Another term for obligations is debt! Debt decreases your net worth and is sure to put a wrinkle in your million dollar plan. As you create your budget, make sure to include a plan to pay off your debt. Consistent debt reduction combine with a saving plan results in a positive impact to your net worth. Once you have eliminated your debt obligation, every dollar saved is direct impact to your million dollar goal.
- Keep a close eye on your Investments
Now that we have tackled the other issues the final step in your millionaire quest is a solid investment plan. Creating a solid investment plan is the vehicle to reaching your goal. We have all been taught the power of compounding interest, this can only be enacted through actual investment. If you are new to investing, your first step is to speak with your CPA or financial advisor to understand your options. Together you will come up with an investment plan tailored to your specific needs, depending on your timeline and risk tolerance. Finally once you have a plan in place, makes sure you are doing quarterly reviews with your advisors to ensure the plan still makes sense.
Your CPA can assist you in every step of your million dollar conquest. Contact us today and let’s begin the journey together.
Hello Simpletons. Let me be the first to welcome you to a platform for awesome people who believe that financial independence is not only possible but absolutely attainable to the average Joe or as we like to say, the average Simpleton. Who are we calling a Simpletons? A Simpleton is someone who believes that the path to financial freedom is not only for MBAs and Wall Street types, but for anyone who is willing to work hard and follow simple proven methods of success. If that describes you, well then it is my honor to induct you into the ever increasing club of Simpletons. We believe in taking our financial future into our own hands. Simple Cents is a platform to share ideas that will help move you closer to your financial goals. We promise to leave out all that hard to understand financial jargon, and provide you with practical, straight forward, easy to understand information that will empower you to take control of your portfolio.