Throughout America , in rural towns and large cities, companies come and go with clockwork frequency. That specialty store with the ragged sign and lousy service? It's been replaced by a funky restaurant that serves great linguini. Yesterday's bicycle shop is today's bakery. It's no wonder. Creating a company that can survive even a few years is not an easy feat.
If you recently lost your job or have always dreamed about being your own boss, you may be contemplating a new business venture. Before launching a small business, increase your chances of success by answering a few simple questions.
1. Is there a market for my product or service? Test your target demographic. This can be as simple as putting together focus groups who will provide honest feedback. You might also attend trade shows to network with others in similar markets. Consider reviewing census figures for your area. For example, are you planning to sell baby clothes when most people in your target area are empty nesters?
2. How much money will I need? You'll want to review sales revenue and expense forecasts for the first year of planned operations. By the way, don't count on friends, relatives, or bankers to bail you out if cash flow doesn't meet expectations. A basic rule is that the company should have enough cash to survive - without tapping loans, credit cards, or lines of credit - for at least a year. For many people, that means starting the business while keeping their day job.
3. Do I have a business plan? A detailed business plan will help you think through all aspects of your company's start-up phase. It defines what you're selling. It lays out marketing strategies, start-up capital requirements, overhead expenses, expected cash flow, and plans for business growth. It should include a summary of your experience in that product or service.
4. Are my books in order? Whether you keep your own records or hire someone else to perform this important task, you should know whether your business is profitable on a monthly basis. That means tracking all expenses, including payroll costs and inventory. A sales-only focus has doomed many small businesses to failure.
5. How should the business be structured? Sole proprietors are liable for the business debts, taxes, and legal costs of their companies. You might want to consider setting up your firm as a corporation or limited liability company. Analyze this important decision at the outset so that you understand your options.
6. Should I set up a website? Whether or not you plan to use the Internet for sales, you can't ignore the potential value of an online presence. It might create a higher degree of visibility for your small business and enable you to advertise your main selling points to the general public. A website also gives the opportunity to promote your activities or offer special incentives.
Starting a small business is not for the faint of heart. For guidance in getting off to a good start, give us a call. Fall River #: 508-679-6079 New Bedford #: 508-999-0020
Tuesday, October 6, 2009
New Business: Our workforce is changing
Things are changing on the job front. Here are a few workforce numbers reported recently.* If the trend reported in June 2009 continues, women will soon make up the majority of the nation's workforce. In June 2009 women held 49.83% of the country's 132 million jobs. This will be the first time in history that women constitute a majority on the job front.
* The Labor Department reports that in the first five months of 2009, 5.3% or some 7.6 million workers held more than one job.
* According to the Pew Research Center , the U.S. workforce is getting older. By 2016, 22.7% of the workforce will be aged 55 and older. Reasons cited include the effect of the current economic downturn on retirement savings and the extra years young people remain in school instead of joining the workforce.
* The Bureau of Labor Statistics reports that between 2000 and 2008, the number of workers aged 65 to 69 rose 25%. Workers in the 70 to 74 age group increased 32%, those in the 75 to 79 age group increased 38%, and those 80 and older increased 67%. It's clear that as people live longer, their attitudes toward retirement are changing.
Wednesday, September 30, 2009
Mortgage debt relief: Answers to frequently asked questions
To compound the financial woes resulting from a foreclosure or other mortgage restructuring for your home, the IRS generally imposes tax when debt is cancelled. In other words, you're taxed on the amount forgiven by the lender as if you actually received it as income. However, Congress provided some relief to homeowners under the "Mortgage Forgiveness Debt Relief Act of 2007."
Here are the answers to several common questions in this area.
* What relief does the recent law provide? Generally, it excludes tax on cancellation-of-debt income realized from a foreclosure, short sale, or other mortgage restructuring. This tax break only applies to debt used to buy, build, or improve your principal residence. It isn't available for vacation homes or investment property.
* Is there a limit? Yes. The exclusion can cover the tax due on up to $2 million of forgiven debt ($1 million if you're married and file separate tax returns). Any excess is taxable under the general rules.
* How does the exclusion affect your basis in the home? You must reduce your basis (the amount used to determine taxable gain or loss from a home sale) by the amount of cancelled debt excluded from taxable income. For example, if a loan restructuring results in cancellation of $50,000 of debt on a home with a basis of $450,000, your basis is reduced to $400,000. This could increase your taxable gain when you sell the home, although the first $250,000 of gain ($500,000 for joint filers) may still be sheltered by the home sale exclusion.
* How do I know how much debt is excluded? Your lender will send you Form 1099-C (Cancellation of Debt) showing the amount of debt forgiven and the fair market value of property given up through foreclosure. It also sends the IRS a copy of the form. The IRS encourages homeowners to check this information carefully.
* What is a short sale? Instead of foreclosing on a home, a lender may allow you to sell it for less than the mortgage amount and take the proceeds in full satisfaction of the debt. For instance, let's say you still have a mortgage of $250,000 on your home, but the home's value has dropped to $225,000. Assuming the bank agrees to a short sale and you incur $15,000 in selling expenses, you turn over the remaining $210,000 to the bank. The $40,000 difference, which will be reported on Form 1099-C, qualifies for the tax exclusion on cancellation-of-debt income.
* Is this tax relief permanent? No. Initially, the tax exclusion only applied to debt forgiven in 2007, 2008, or 2009. But the economic stimulus law passed last year - the "Emergency Economic Stabilization Act of 2008" - extended this tax break for three years through 2012.
This is just a brief overview of the new mortgage debt relief available to homeowners. Call us if you have questions pertaining to your situation.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020
Here are the answers to several common questions in this area.
* What relief does the recent law provide? Generally, it excludes tax on cancellation-of-debt income realized from a foreclosure, short sale, or other mortgage restructuring. This tax break only applies to debt used to buy, build, or improve your principal residence. It isn't available for vacation homes or investment property.
* Is there a limit? Yes. The exclusion can cover the tax due on up to $2 million of forgiven debt ($1 million if you're married and file separate tax returns). Any excess is taxable under the general rules.
* How does the exclusion affect your basis in the home? You must reduce your basis (the amount used to determine taxable gain or loss from a home sale) by the amount of cancelled debt excluded from taxable income. For example, if a loan restructuring results in cancellation of $50,000 of debt on a home with a basis of $450,000, your basis is reduced to $400,000. This could increase your taxable gain when you sell the home, although the first $250,000 of gain ($500,000 for joint filers) may still be sheltered by the home sale exclusion.
* How do I know how much debt is excluded? Your lender will send you Form 1099-C (Cancellation of Debt) showing the amount of debt forgiven and the fair market value of property given up through foreclosure. It also sends the IRS a copy of the form. The IRS encourages homeowners to check this information carefully.
* What is a short sale? Instead of foreclosing on a home, a lender may allow you to sell it for less than the mortgage amount and take the proceeds in full satisfaction of the debt. For instance, let's say you still have a mortgage of $250,000 on your home, but the home's value has dropped to $225,000. Assuming the bank agrees to a short sale and you incur $15,000 in selling expenses, you turn over the remaining $210,000 to the bank. The $40,000 difference, which will be reported on Form 1099-C, qualifies for the tax exclusion on cancellation-of-debt income.
* Is this tax relief permanent? No. Initially, the tax exclusion only applied to debt forgiven in 2007, 2008, or 2009. But the economic stimulus law passed last year - the "Emergency Economic Stabilization Act of 2008" - extended this tax break for three years through 2012.
This is just a brief overview of the new mortgage debt relief available to homeowners. Call us if you have questions pertaining to your situation.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020
Tuesday, September 29, 2009
What's New in Taxes: A new vehicle could bring tax savings
If you're thinking of buying a new car, truck, motorcycle, or motor home this year, you might benefit from a tax break included in the "Recovery Act of 2009." Here are the details.* You can deduct state and local sales taxes paid on up to $49,500 of the purchase price of a qualifying vehicle.
* Qualifying vehicles generally include new (not used) cars, light trucks, motorcycles, and motor homes purchased after February 16, 2009, and before January 1, 2010.
* The deduction can be claimed on your 2009 tax return regardless of whether or not you itemize other deductions.
* The deduction phases out for single taxpayers with income between $125,000 and $135,000. For joint filers, the phase-out range is $250,000 to $260,000.
For more information or planning assistance, give us a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020
Major Tax Deadlines For October 2009
* October 1 - Generally, the deadline for self-employeds and small businesses to establish a SIMPLE retirement plan for 2009.* October 15 - Deadline for filing 2008 individual tax returns on automatic extension of the April 15 filing deadline.
* October 15 - If you converted a regular IRA to a Roth IRA in 2008 and now want to switch back to a regular IRA, you have until October 15, 2009, to do so without penalty.
NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.
Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.
* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.
* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.
For more information on tax deadlines that apply to you or your business, contact our office.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020
Wednesday, September 23, 2009
Take a Break
Millions, Billions, Trillions: Just how much money is it?
The recent stimulus law provided about $800 billion dollars in an effort to get the U.S. economy back on track. The proposed 2010 federal budget hit the $3.5 trillion mark.
Just how much money is that? Most people have a hard time envisioning such astronomical amounts. Here's a visual that might help.
$1,000,000 - If you laid one million one-dollar bills end-to-end, you would have a path 95 miles long.
$1,000,000,000 - A billion one-dollar bills laid end-to-end would go around the earth almost four times. (The earth is about 25,000 miles around.)
$1,000,000,000,000 - A trillion one-dollar bills laid end-to-end would go around the earth 3,800 times. So a $3.5 trillion federal budget would wrap the world 13,000 times in one-dollar bills. And that, fellow taxpayers, is a lot of money.
The recent stimulus law provided about $800 billion dollars in an effort to get the U.S. economy back on track. The proposed 2010 federal budget hit the $3.5 trillion mark.
Just how much money is that? Most people have a hard time envisioning such astronomical amounts. Here's a visual that might help.
$1,000,000 - If you laid one million one-dollar bills end-to-end, you would have a path 95 miles long.
$1,000,000,000 - A billion one-dollar bills laid end-to-end would go around the earth almost four times. (The earth is about 25,000 miles around.)
$1,000,000,000,000 - A trillion one-dollar bills laid end-to-end would go around the earth 3,800 times. So a $3.5 trillion federal budget would wrap the world 13,000 times in one-dollar bills. And that, fellow taxpayers, is a lot of money.
Monday, September 21, 2009
As things change, update your beneficiaries
Although life's only certainties may be death and taxes, we rarely enjoy planning for them. But without planning, your assets can go to unintended recipients - including the government.
* Only the first step. Naming your beneficiaries is only the first step. It's just as important to periodically review the beneficiaries designated by your will, insurance policies, investment accounts, retirement plans, and similar documents. Examine each document carefully, because some assets may pass to the beneficiaries named in the governing document, regardless of the terms of your will.
Example: You name your husband as sole beneficiary of your life insurance policy and your 401(k) plan. After a few years, you divorce and remarry. You remove your ex-husband from your will and name your new husband as the insurance beneficiary, but you forget about the 401(k) plan. The result: When you die, your ex-husband probably will inherit the plan assets.
Events that might require changing beneficiaries include marriage, birth, divorce, death of a beneficiary, increases or decreases in your wealth, changes in tax law, or simple changes of heart. Even in the absence of a triggering event, it's wise to review your designations regularly. A beneficiary may have fallen out of favor. A once-needy beneficiary may have become wealthy, enabling you to divert your assets elsewhere. Ongoing changes to estate tax law may mandate different approaches to beneficiary selection.
* Where to start. When reviewing your beneficiary designations, start by listing the relevant documents. In addition to your will, personal life insurance, and active retirement plan, include employer-provided life insurance and life insurance associated with services such as credit cards, medical plans, and trade associations. You'll also need to look at stock purchase plans, stock option plans, and similar benefit programs.
If you haven't reviewed your beneficiary designations lately, think about doing it soon. For assistance in your review, give us and your attorney a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020
* Only the first step. Naming your beneficiaries is only the first step. It's just as important to periodically review the beneficiaries designated by your will, insurance policies, investment accounts, retirement plans, and similar documents. Examine each document carefully, because some assets may pass to the beneficiaries named in the governing document, regardless of the terms of your will.
Example: You name your husband as sole beneficiary of your life insurance policy and your 401(k) plan. After a few years, you divorce and remarry. You remove your ex-husband from your will and name your new husband as the insurance beneficiary, but you forget about the 401(k) plan. The result: When you die, your ex-husband probably will inherit the plan assets.
Events that might require changing beneficiaries include marriage, birth, divorce, death of a beneficiary, increases or decreases in your wealth, changes in tax law, or simple changes of heart. Even in the absence of a triggering event, it's wise to review your designations regularly. A beneficiary may have fallen out of favor. A once-needy beneficiary may have become wealthy, enabling you to divert your assets elsewhere. Ongoing changes to estate tax law may mandate different approaches to beneficiary selection.
* Where to start. When reviewing your beneficiary designations, start by listing the relevant documents. In addition to your will, personal life insurance, and active retirement plan, include employer-provided life insurance and life insurance associated with services such as credit cards, medical plans, and trade associations. You'll also need to look at stock purchase plans, stock option plans, and similar benefit programs.
If you haven't reviewed your beneficiary designations lately, think about doing it soon. For assistance in your review, give us and your attorney a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020
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