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Friday, March 29, 2019

What You Need to Know About Operating a Home-Based Business

Operating a home-based business can result in reduced stress and lower expenses. By combining your home and office into a single location, you can roll out of bed, make breakfast and a cup of coffee, and then walk across the hall to your office to get on with the day – no more commuting to and from work. If you have a family, a home-based business can mean more time with your kids and significant other. In addition to lower stress and more family time, a home-based business can also provide a financial benefit. By combining your home and your office, you’re eliminating the additional cost of leasing office space. Despite the many benefits, home-based businesses aren’t for everyone. For those who believe they will benefit from a home-based business, this post will provide an overview of what you need to know.


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Friday, March 15, 2019

Characteristics (and Red Flags) to Look for When Buying a Business

According to Merriam-Webster, an entrepreneur is “one who organizes, manages, and assumes the risks of a business or enterprise.” Being an entrepreneur means taking financial risk for economic profit, it doesn’t mean building a completely new business. For those with an entrepreneurial spirit who don’t have the latest and greatest idea for an app or new technology, acquiring and improving an existing business is just as entrepreneurial as starting a new company. When buying a business, there are several characteristics that you need to look for, as well as a few red flags.


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Friday, March 1, 2019

The Value of Goodwill and Your Brand

When valuing a business, there are two primary assets that are considered. These are tangible assets and intangible assets. Tangible assets are physical assets such as real estate, equipment, inventory, etc. Conversely, intangible assets are not physical in nature and include intellectual property, brand recognition, and goodwill. Despite being intangible assets, brand recognition and goodwill are intrinsically tied to the value of a business.

Brand recognition is the value of someone recognizing your brand. A brand may include certain characteristics of the goods, logos, slogans, etc. For example, the Chevrolet badge is commonly referred to as the “bowtie” and carries with it certain preconceptions. Similarly, Ford’s emblem is known as the “blue oval.” For anyone who is a truck enthusiast, they will know that aside from styling differences, they may discount the value of a vehicle based on the brand. The primary issue with brand value is in the name itself – the value of the brand. Identifying what a brand is worth is a mix of psychology, sociology, economics, and field research. Interbrand publishes an annual “Most Valuable Global Brands” list which uses three key elements to create a complex valuation: financial forecasting of the future revenue associated with the brand, the role of the brand as a percentage of overall revenue, and brand strength which includes metrics such as awareness and loyalty.

For 2018, the five most valuable brands are:

  1. Apple
  2. Google
  3. Amazon
  4. Microsoft
  5. Coca Cola

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Wednesday, February 27, 2019

Considerations When Selling Your Business

Finding yourself in a position to sell your business is a monumental achievement. Establishing a business is hard work, and preparing to sell your business is no different. There are many reasons to sell your business: you may be looking to retire, take a less involved role, resolve an ownership dispute, or perhaps your business is now struggling and you are looking for a buyer to try to turn it around. Regardless of the reason that you’re selling, there are some key considerations that you need to be aware of.

Establishing a Strong Team

Selling a small business has many moving parts that will be discussed further below. As a result, it is essential that you establish a strong team to help you through the sale. The three team members that you will want to identify early on are an attorney well-versed in the sale of a company, an appraiser who can accurately value the business, and potentially a broker who will work hard to identify potential buyers. Your choice on these team members, and whether to include all three, will depend upon the complexity of the business and its potential valuation.


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Friday, February 15, 2019

Selling Your Business

The majority of businesses in the United States are small businesses. To understand the impact that small business has, consider the fact that small business generates nearly 60% of all new jobs within the United States. Amazon, Walmart, and other big companies often stand out with their massive revenues and employment numbers, but at the end of the day, the primary drivers behind the economy are small business.

If you have a family business or personal business that you’ve built up, you are likely one of these economic drivers. For many families and individuals, the business becomes an identity. Family businesses in particular are susceptible to acting as an identity for that family. Thus, for many small business owners planning for retirement, the question of what to do with the small business is a major stressor. For a family business, the transfer of control and ownership from one generation to the next can be incredibly complicated and strenuous. If it’s not a family business, then the question is primarily how to effectuate the sale and estate planning repercussions. The following sections will give an overview of general considerations for family-owned businesses and then general concerns relating to the sale of a business.


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Friday, February 1, 2019

4 Reasons Everyone Needs an Estate Plan

Many people are under the misconception that estate plans are only necessary for those with substantial wealth. In fact, estate plans are important for everyone who wants to plan for the future. For those unfamiliar with the concept, an estate plan coordinates the distribution of your assets upon your death. Without an estate plan, your estate (assets) will go through the probate system, regardless of how much or how little you have. There are many reasons that everyone needs an estate plan, but the top reasons are:


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Friday, January 18, 2019

Removing a Trustee

Trustees are responsible for administering a trust for the benefit of the beneficiaries. In some instances, multiple trustees may administer a trust as co-trustees. Occasionally, issues arise causing the beneficiaries of a trust or the co-trustees to pursue removal of a trustee. These issues could be general unhappiness with trust accounting or failure of the trustee or co-trustee to provide information when requested. In short, the grantor (creator) of the trust, co-trustees, the trust beneficiaries,  and the  probate court have the ability to remove a trustee

Reasons a Trustee Can Be Removed

The reasons for removal of a trustee depend upon the trust documents and applicable state law. Generally, a trustee can be removed for:


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Friday, January 11, 2019

An Overview of Debt Collection for Small Business

For many small businesses, getting the sale is just the first step in the process. Many small businesses rely on extending credit to the purchasers in business to business transactions. As a business with many transactions, purchasing on credit from a seller can be ideal as processes are streamlined: purchase as necessary and then making payments within a set period of time. Given the thin cash reserves for many small businesses, having the flexibility to pay at a later date is necessary due to periodic cash flows. All in all, this system of seller-financed credit (the seller not requiring payment at the time of the sale) allows small businesses to flourish.

However, despite the agreement to pay, the purchaser may not always make good on the agreement, and as the seller providing the purchaser’s credit, you may be stuck with attempting to collect on that debt. The failure of the debtor to pay the bill can result from a few possibilities. First, the debtor could have simply forgotten to pay the bill in an administrative oversight. Second, the debtor could be illiquid or have insufficient cash on hand to pay the bill. Third, the debtor could be refusing to pay due to an issue such as nonconformity of goods (the goods received weren’t what they ordered). Finally, the debtor could be refusing to pay in bad faith in hope that you as the creditor will not attempt to collect on the debt, or would be willing to collect at a reduced amount. Regardless of which of the above is the case, you need to act to resolve the outstanding debt.


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Friday, January 4, 2019

An Overview of Retirement Plan Options

Retirement planning is essential given ever-increasing life expectancies in the United States. Unfortunately, many Americans fail to save adequate amounts to make it through retirement. Often, individuals believe that they will be fine on Social Security. However, Social Security is only designed to compensate for 40% of your income; Social Security is designed to be an income supplement rather than a sole income source. To make matters worse, workers tend to overestimate how late into their life they will be able to work. Inadequate savings and an inability to work produce an exceptionally stressful retirement. Remember, it’s never too late to start saving.

401(k) Plans

401(k) plans are employer-sponsored retirement plans that offer tax advantages to investing. When investing through a 401(k) plan, you will declare how much of your paycheck you would like to contribute to the 401(k). The employer will then contribute the designated amount before taxes to your 401(k) account. The contributions made to your 401(k) account are non-taxable meaning that your taxable income is decreased by the amount contributed. As of 2018, the maximum amount that a taxpayer can contribute to a 401(k) account is $18,500. The tax advantages of the 401(k) plan mean that if the taxpayer earns $80,000 annually in salary and contributes $10,000 to his or her 401(k) plan, then the taxpayer’s taxable income for that year would be decreased to $70,000. When the taxpayer begins to withdraw from the 401(k) account, those withdrawals will be treated as taxable income.

However, money contributed to a 401(k) plan may not be withdrawn before the age of 59.5 without incurring a penalty unless certain exceptions apply. Unfortunately, not all employers offer 401(k) plans. If your employer doesn’t offer a 401(k) program, make sure to take advantage of other retirement plan options such as a Traditional IRA or a Roth IRA.


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Wednesday, December 19, 2018

Who Benefits from an IRA Inheritance Trust?

Trying to unravel all the ins and outs of the estate planning process can make your head spin. Most people associate wills with estate planning, but there are so many more legal tools that can be put in place to help plan for the future health and financial well being of you and your family. An IRA inheritance trust is one such valuable legal tool that may be beneficial to you and your loved ones. Find out of an IRA inheritance trust should become part of your estate plan.

The majority of the time, the money held in an IRA account will be distributed to the person you list on the beneficiary designation form. This is one of the forms you will fill out when you open or amend an IRA account. Not many people are actually aware that you do not necessarily have to name an individual as the account beneficiary. You may list a trust as the beneficiary. This trust is what is referred to as an IRA inheritance trust.

When considering whether or not to utilize an IRA inheritance trust, you really need to think about who would benefit from establishing such a trust. This means considering who would be the designated beneficiary of the IRA proceeds. An IRA inheritance trust can be very beneficial if you are considering designating an IRA beneficiary who may:


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Monday, December 10, 2018

The Basics of Powers of Attorney

A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.

What is a Power of Attorney?

A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.

A power of attorney gives someone else, who does not have to be an attorney, the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf either generally or if certain conditions are met.

You must complete a document to give this power to someone else. This document may need to be notarized or go through another type of authentication process.


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