Where to get money for a growing business

The following sequence of events is common to many new and expanding businesses.

The Short-Term Squeeze

You start your business with a limited amount of capital and an abundance of good ideas and ambition. The sales activity has been adequate to produce a net profit. Your inventory is about twice as large as you intended. Your accounts payable are past due to the point where some creditors want to ship C.O.D. only. To keep your creditors happy, you have been overdrawing your checking account to the dissatisfaction of your banker. You have a short-term note past due at the bank.

These are all symptoms of a very common business ailment -too much short-term debt.

This type of cash squeeze can be avoided if you confine your company’s growth to that which can be handled from retained earnings. If thecash retained in the business from last year’s profits is $25,000 and inventory grows by twice that amount, somebody (you, your banker, or a new partner) has to fund the expansion that cannot be funded by the retained earnings.

Long-Term Funding

If you can’t provide additional capital and you don’t want a partner, you need to look for long-term funding from one of the following sources:

• Funds from Owner- Studies indicate that as much as 60% of all small business funding comes directly from the owner or his/her immediate family. Outside of your immediate family or friends, you may find funding from other private parties or from financial institutions.

• Private Lenders- There are some problems with outside private lenders. First, they are few and far between. Second, they generally demand a higher rate of interest and/or want to own a percentage of the business.

• Financial Institutions- The main problem in using financial institutions for small businesses is that banks are not in the “risk” business. Although you may be very optimistic about your company’s future and have a glowing cash flow projection, the banker is not likely to rely on it for loan purposes. You may have adequate collateral in terms of inventory, real estate, etc., but if the banker feels that you will not have adequate after-tax net profits to service a loan, he/she is not likely to lend you money. Bankers do not want to liquidate your assets in satisfaction of their loan.

• Small Business Administration- If financing is not otherwise available on reasonable terms, the Small Business Administration may be available to assist with its various loan programs.

• Money Brokers- There are “money brokers” who advertise in various newspapers and business publications. Many of these brokers want to be paid in advance to locate possible lenders for you. Be very cautious of any broker and ask for references and credentials. Any proposal by such brokers should be reviewed by both your attorney and your accountant before you sign anything.

If you would like more information on the business funding options available in your situation, please feel free to call: https://www.bas-pc.com/contact-us/

Year-End Tax ways for Businesses | Bookkeeping services NJ

Year-End Tax ways for Businesses

Gift shares of stock to relations UN agency area unit during a low-income tax bracket before declaring a dividend, as a part of a bigger commitment to shift possession of the business to younger relations.

The house owners of pass-through entities, like S firms and partnerships, have the financial gain taxed on their personal tax returns. The secret is to:

Have enough basis to deduct losses. The loss of pass-thru entities area unit deductible solely to the extent the owner has a basis within the entity. A basis is formed by finance within the entity or creating a loan to that.

If you're coming up with this year to deduct your losses, check to check if your basis is up to absorb the losses. If it’s determined your basis isn't up to deduct the losses you'll correct true by creating a loan to your company by year-end.

Adjust personal tax payments to pay business tax. The tax on business financial gain from a pass-through entity should be paid by the owner either through income tax payments or payroll withholdings. it's necessary for business house owners to estimate what proportion financial gain they'll be receiving from the business so as to not be subject to penalties and interest charges for underpayment of their taxes.

You can avoid penalties and interest charges by having additional taxes withheld from your wages before year-end. Taxes withheld from wages is treated as if it had been equally withheld throughout the year.

Write down the inventory. If your company has inventory that has declined in the price you'll deduct the decline in price. as an example, document a reduced value|value} for the inventory by creating an authentic provide to sell a number of it at a down price among thirty days of year-end.

Set-up deductible retirement accounts. Most company retirement plans, together with 401(k) plans, should be got wind of by New Year's Eve to receive deductible contributions for 2014. other forms of plans may be got wind of when year-end, however, create your selection among all potential choices before then.

Bad debts. These become deductible only if they lose all their price and by firms UN agency use the accounting system accounting. Review your assets for uncollectable accounts.

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Use financial information to increase your business profits

Most successful business managers use financial statements and other special reports to generate higher profits. If you haven’t been using all the financial tools available to you, here are some ideas to get you started.

There is no need to feel intimidated by financial statements. If your company’s record system is properly designed, you should be getting regular financial reports that are easy to understand. In addition to the traditional balance sheet and income statement, you should get special reports and ratios specific to your industry.You will be able to use this past performance information to help you create higher profits for your company.

Accurate financial reports compared with industry standards and with your company’s past performance will also serve as an early warning system of problems or opportunities which need your attention.

How do you get the best financial information at the least cost? To begin with, there are three basic levels of financial statements: compiled statements, reviewed statements, and audited statements.The type of report you need may be specified by your banker or by an absentee owner. An owner who lives out of the area may require a higher level of report than one who works closely with the business.

• Compiled statements Compiled statements are management’s information put in the form of financial statements. The accountant is making no assurances as to the accuracy of the information in those statements. Because of the limited involvement by the accountant, this is the least expensive level of statements.

• Reviewed statements Reviewed statements require more involvement by the accountant than is required for compilations, but less than is required for audited financial statements. The accountant needs to obtain a general understanding of the business’s organization. There will be little or no verification of specific figures on the financial statements. Reviewed statements are often required by lenders and owners who do not require a full audit.

• Audited statements Audited statements are the highest level of financial statements. Accountants must spend whatever time is necessary to allow them to express an opinion as to the accuracy of the numbers on those statements. Because of the time involved, audited statements are the most expensive financial statements. Unless an audit is required by outsiders, reviewed or compiled statements should do nicely for your company.

Do not hesitate to ask for assistance to leverage your financial information to enhance the profitability of your business. Get in contact with our team here: https://www.bas-pc.com/appointment-center/

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Balance Out Tax Time - 4 Summer Tax Tips from the IRS

Because it is late spring, it doesn't imply that you ought to hold any considerations about one year from now's assessment form. The decisions made during the time can and will influence how a lot of cash you return from the IRS or the amount you should pay. An expansive discount sounds welcoming, yet not to the detriment of a battling spending plan throughout the most recent a year.

4 Tips to Balance Your Tax Obligations

Evaluated Tax – Help with Liabilities - The IRS utilizes assessed duties to help citizens who will owe cash come charge time. On the off chance that you acquire salary that isn't exhausted (independent work, lease, intrigue or profits) and you hope to owe $1,000 or more to the IRS, you may need to make good on assessed government obligations quarterly consistently. The IRS gives a worksheet (Form 1040-ES) to enable citizens to figure their assessed expense. Paying this sum quarterly will help spending liabilities during the time as opposed to leaving a citizen to concoct a substantial aggregate of money come April. On the off chance that you win cash that does not have charges taken out at the purpose of trade, converse with your CPA about regardless of whether you fit the bill for assessed charge.

New Job – Employee's Withholding Allowance Certificate – This testament, otherwise called a W-4, is rounded out toward the beginning of another activity. The HR division will have workers round out the structure preceding their first check. This structure decides how much government pay charge is to be retained each payroll interval. On the off chance that you are ever uncertain the amount to guarantee, the IRS gives a valuable adding machine specifically on their site, IRS.com, to help decide the most ideal approach to round out the structure. Open Accounting administrations will likewise respond to any inquiries with respect to charge readiness and W-4 claims.

Modify W-4 According to Life Changes – As life changes, so do impose commitments. The W-4 is rounded out when initially utilized, yet isn't an unchangeable reality. Contact the HR division to refresh the structure when life changes. Instances of such changes are marriage, birth of a tyke, or purchasing another home. On the off chance that you need more cash available to you come check time, you can build the measure of wards asserted on the W-4. Citizens who have bigger liabilities come charge time may utilize the structures to build the retention sum. This move will make out more duties each payroll interval to help balance the final product.

Change of Circumstance – Associated with the Premium Tax Credit – For those citizens who have procured medical coverage through the Health Insurance Marketplace, the top notch charge credit is made accessible to help make protection premiums progressively reasonable. The pay based capability credit utilizes individual data to help gauge the measure of credit accessible to every citizen. It is basic for qualified beneficiaries to report changes in conditions (for example changes in pay or family measure). Announcing changes will keep up the correct measure of credit issued. Getting excessively or too little will influence the measure of expense discount or risk due.
Business Account Systems works with customers all year to help plan for assessment season. It is imperative to consider the expense impacts of life changes whenever of the year. Get our office and discover progressively about our expense administrations and arranging help that will work to set aside extra cash or increment an assessment discount. Open Accountants are an incredible venture for private companies and individual duties.

Call Business Accounting Systems today!

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Tax strategies for homeowners | Tax preparation Services NJ

Be aware that important tax consequences are often associated with some fairly common events involving your home. Here are some handy things to know.

Home purchase. When purchasing a home, you may pay a portion of the mortgage interest in advance. This loan origination fee, or “points,” is a percentage of the total amount borrowed.
If points are paid for a principal residence, you generally can deduct the full amount in the year paid, even if the points were paid by the seller. One caution: you must reduce your home’s tax basis (cost) by the amount of seller-paid points.

Of course, one of the greatest tax benefits of home ownership kicks in during the early years of the mortgage, when most of your payments go toward tax-deductible interest.

IRA withdrawals. The tax law allows penalty-free IRA withdrawals, up to a lifetime limit of $10,000 for the purchase of a first home for you or members of your family. Withdrawals from Roth IRAs for qualifying first-home expenses can be both penalty-and tax-free after the Roth is five years old.

Refinancing.What happens if you refinance? If you pay points, the general rule requires that you prorate deduction over the life of the loan. But if some of the refinance proceeds go toward home improvements, you may be able to take a current deduction for the portion of the points related to those improvements.

Improvements. If you take out a loan to make substantial improvements to your principal residence, and the loan is secured by that property, the interest is generally deductible. Remodeling often increases the value of your property. Remodeling costs also increase the property’s basis, potentially reducing capital gains tax if a future sale is partially or fully taxable.

Other home improvement costs generally are not deductible, but if you upgrade your home for medical reasons -say, to add a wheelchair ramp or stair lift -you may be able to deduct a portion of the cost as a medical expense.

Home office. The home office deduction can be another tax break of home ownership. If you use part of your home regularly and exclusively as a principal place of business, you may be able to deduct costs associated with that part.

Home sale. When you sell a home that you have owned and used as your principal residence for at least two of the five years before the sale, you can generally exclude from taxation up to $250,000 of profit if you’re single and up to $500,000 if you’re married filing jointly. Profits in excess of those amounts are subject to regular capital gains rates and rules.

The definition of “principal residence” includes not only the conventional single family house, but also such homes as house trailers, mobile homes, houseboats, condominiums, cooperative apartments, and duplexes.

Selling at a loss. Unfortunately, if you sell your home for less than you paid for it, you may not take a tax deduction for your loss.

Taxes often come into play for homeowners, and it’s important to be aware of potential benefits and pitfalls. To learn more, schedule time with one of our tax experts here.

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Don’t Overlook Valuable Tax Credits | Tax Preparation in New Jersey

Tax credits are one of the most powerful ways to lower your income taxes. A tax credit reduces your tax bill dollar for dollar. A tax deduction, on the other hand, only reduces your taxable income, so your benefit is determined by your tax bracket.

For example, a tax deduction of $1,000 will lower your tax bill by $320 if you are in the 32% tax bracket. A $1,000 tax credit will lower your tax bill by $1,000.

Here are some of the most common tax credits; most are subject to income limits.

Child credit. Taxpayers who have dependent children under age 17 may be eligible for a child tax credit of $2,000 per child.

Dependent care credit. Expenses paid for the care of dependent children under 13 and certain other dependents may qualify for a tax credit.

Education credits. Qualified college and vocational school expenses for eligible students may qualify for a credit. Under the American Opportunity Tax Credit, up to $2,500 per student can be claimed for tuition and fees paid during four years of post-secondary education. Under the Lifetime Learning Credit, up to $2,000 per family is available for post-secondary education expenses and for education expenses to acquire or improve job skills.

Earned income credit. This credit is intended for low-income taxpayers. The size of the credit depends on the amount of your earned income (wages and self-employment income), investment income, and your filing status. Qualifying children can increase the credit.

Business credits. There are a number of credits available to businesses. They include the research credit the work opportunity credit, the disabled access credit, and the low-income housing credit.
Don’t overlook valuable credits that could reduce your taxes. For details on the credits for which you might qualify, contact our team for a review of your situation

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