163 Million Reasons Why Small Business Owners Should Be Mad

If you hadn’t noticed that 5 o’clock shadow looming over your shoulder, it’s the payroll tax cut that is set to expire beginning January 1st, 2013.   For the last 18 months, most of us have received a nice little holiday bonus from the U.S. Government.  We have all been paying only 4.2% into Social Security rather than the normal 6.2% into Social Security.   The Social Security wage base was $110,100 here in 2012 which meant that the upper end of tax payers got a roughly $2,200 pay raise.    The program was designed by this administration with the average wage earner in mind.   For someone earning $50,000 a year this tax break represented roughly $20 a week more in their paychecks.    And who noticed at the end of the day . . . nobody! For those of you who don’t fully understand how Social Security gets funded, here is a quick math lesson.   In most tax years (the last couple not ...

Read More →

10 Mistakes That Entrepreneurs Can Make

There are 10 Mistakes that Entrepreneurs make that can prohibit them from creating a very successful business.  By learning how to avoid these mistakes you can get your business started up quickly, draw top line revenue, and be able to create a very profitable entity for yourself.  So here are the 10 mistakes that business owners and entrepreneurs make. Mistake #1 – Undercapitalization –There are many businesses out there that simply don’t think about how they are going to growth the business from a financial point of view.   Do you have the right lines of credit?  Are you going to equity out part of the company?  Or, are you going to try to fund your growth through the cash flow each month knowing you may sacrifice your own pay?  Have I assessed the appropriate pro forma analysis to figure out my real profit and loss in the business?  Should I lease or buy equipment? Essentially, what is the best way ...

Read More →

How Much Should I Set Aside For Estimated Taxes?

This is your first year in business and it has just dawned on you that there is nothing coming out of your paycheck.     You know that you have got to pay taxes somewhere along the way, but you have been spending the paychecks like 100% of it is net income to you.    This frequently happens to people the first year that they get in business as it can be very confusing on how to estimate your income taxes so you don’t run into hot water come tax time.  I’m often asked by small business owners and individual 1099 earners about the best way to plan for estimated taxes, so here are some tips that should help you manage this in the best way possible. As a business owner, you have a litany of options on how to set up your business.   You can choose to stay as a sole proprietor, set up an LLC, set up an S-Corporation, or choose ...

Read More →

Why Mark Cuban Will Beat You In Arm Wrestling

I have to admit it.   I am a Mark Cuban fan.   Whatever you may think about him personally he has successfully demonstrated over the years that he can make just about any new business venture successful.  From the billion dollar sale many years ago of his company broadcast.com to taking the Dallas Mavericks to an NBA title.    In addition, he gets a piece of the action for every single new entrepreneur that presents (that’s right not even ones that he buys a piece of for himself) on the popular television show Shark Tank.    He has an abrasive personality and makes no apologies for getting the very best out of himself and those that are part of his successful organizations.    Generally, I see three big mistakes new entrepreneurs make when they begin a new business venture.    Mark Cuban will beat you in an arm wrestling match because he knows how to avoid these mistakes and make just about anything he does ...

Read More →

4 Tax Law Changes We Need To Make Permanent

With the presidential election beginning to heat up in America over the next several months, we are all going to hear a lot about income taxes.  We all know that with thousands of pages of tax code, it is impossible for the average citizen to really understand all of the different ways they can save money in taxes.  There are many tax law changes set to take effect in 2013.   If I had the opportunity to set the wheels in motion to make some tax law changes that would be permanent and easy to understand, here are four of them that I would recommend we change to become permanent. 1. Social Security Taxation –   From the day you begin working and earning waged income, 6.2% of your paycheck (the last couple of years 4.2%) goes toward your future social security benefits.    This is also known as your Federal Insurance Contributions Act (FICA) tax.     You only see the 6.2% that comes ...

Read More →

I’m a Freelancer – Should I Set Up a Corporation?

If you are starting a business as a freelancer, you have a choice of the legal type of business structure (entity) that you choose. There are advantages and disadvantages among becoming a Subchapter S Corporation, a C Corporation, a Limited Liability Corporation, a Sole Proprietor, or a Partnership. Since there are both legal and tax implications attached to each type, it is best to get your lawyer, financial advisor, and/or accountant involved in the decision making process. Most people want to pay a little tax as possible, and incur the least amount of paperwork overhead when running their own business. In this article we will detail the facts that you need to consider, along with their consequences, so you can have a good starting point of reference when you meet with your legal and tax professionals. About Being A Sole Proprietor This type of entity will happen de facto if you choose no other form of entity for your business. ...

Read More →

5 Tax Mistakes Business Owners Make

Part of putting together an effective tax management strategy is gaining an understanding of what you can and cannot deduct from your tax return.   I see business owners that make mistakes every single day.  Every CPA or accountant seems to have a slightly different slant on the tax code, but here are a few that may be able to help you increase your bottom line as you grow your business. Wrong Entity Structure – If you are getting into business for the first time, it’s really important to sit down with someone qualified to discuss entity structure.    The reality is that you can set up your business as a sole proprietor, partnership, limited liability Corporation, S-Corporation, C-Corporation, or having multiple structures depending on how many businesses and whether real estate you own will be involved with the business.   Since these entities all work slightly different, a huge tax mistake I see owners make is having the wrong structure for the ...

Read More →