Money, Debt and Taxes

I came across an article today that I really wish I had written. In just a few paragraphs Siu Ling Hui sums up the first steps every new business owner must do to provide a strong financial foundations for their business.
She says in her article, Building a Sound Financial Foundation for Your Internet Business ,

I have seen many young fast growing businesses falling over because they didn’t have sound financial management practices in place. Ironically, it is when rapid business growth happens that the financial cracks emerge.

read the rest of the article

In her article she recommends three must dos:

1. Hire a good accountant or bookkeeper before you earn your first dollar.

I cannot stress this enough. Too many new business owners make costly mistakes because they just didn’t know. A good accountant will help you through the maze of government regulation and provide advice that will help your business be more profitable. Almost without exception a good accountant will save you money.

2. Separate your business and personal finances.

You must have a separate checking account and separate credit card for business. Doing so is more professional and will give you clarity in your finances. Also, if your business is ever audited, your personal finances will not be included in the audit.

3. Manage cash flow.

Cash is king. Cash is the lifeblood of your business. Without cash or available credit your business cannot function. Good cash flow planning will allow you to plan for the ups and downs in your business and insure that you will be able to sail through the inevitable downturns in your business.

These three simple steps will insure that your business has a strong financial foundation and go a long ways towards insuring the success of your business.

Today’s guest post is compliments of Anya.

The Federal Trade Commission consistently put forth a sincere effort to secure the consumers’ interests and thwart the deceptive and unethical business practices. It offers consumers the assistance to detect, cease and evade fraudulent debt relief agencies and which help to avoid debt settlement scam. Recently, the FTC has issued an enforcement policy statement on a new FTC rule in order to protect consumer’s interests by dissuading debt relief firms from collecting up-front fees. In its statement, the FTC proclaims that while most companies that sell debt relief services over telephone are strictly forbidden from charging fees before settling or reducing a consumer’s credit card or other unsecured debt. On the flip side, this will certainly adjourn the enforcement of the new rule for tax debt relief services for a while.

The ban on advance fees introduces few changes in the existing FTC Telemarketing sales rule. Few tax debt relief companies have accused that they are baffled by this new rule and expressed uncertainty whether the rule applied to them or not. Question arises whether all tax debts will be regarded “unsecured,” and will come under this new rule. The FTC currently is taking this matter into account and the FTC representative states “services that represent, directly or by implication, to renegotiate settle, or alter the terms of obligation between a person and a taxing entity (tax debt relief services).”

The enforcement policy however makes it crystal clear that tax debt relief services must comply with the FTC’s Telemarketing Sales Rule and exception may take place during the enforcement deferral period, only for the debt relief amendments. It also intends to remind providers that they must act in accordance with with the FTC Act, which has been working constantly for banning unfair and deceptive practices.

All valuable and explanatory information regarding this new rule are now available in FAQ section of the agency’s website http://www.ftc.gov/ . In order to assist businesses to determine whether they are covered by this new rule and discuss how fees may now be collected or to guide a consumer regarding the intricacies of the new act, browse through the enforcement policy statement on FTC new debt relief rule. If you are a consumer restore your peace of mind and attain financial freedom with this new act.

A home equity line of credit can be a smart choice for many borrowers. As opposed to other types of borrowing, a HELOC generally carries a lower interest rate than a credit card or an unsecured loan, and for most people, the interest on a home equity line of credit is tax deductible. The biggest downside, is that if you default on your loan, you could lose your house.

To qualify for a home equity line of credit you need to have equity in your home and the income to pay the loan back. It helps to have a decent credit rating to keep your interest rates down.

Especially in today’s market, the hardest qualification for most people will be finding the equity in their home. As a rule of thumb, most lenders will want your total debt against your home to be no more than 80% of your home’s value. That is including the home equity line of credit.

If you don’t have enough equity in your home there are just two ways to change that. One is to pay down your mortgage and reduce the debt against your home, the other is to increase the value of your home.

If you are looking at taking out a home equity line of credit, you probably don’t want to spend the money to pay down your debt. That leaves increasing the value of your home as the only option to increasing the amount of equity in your home. While you can’t do anything to improve the housing market, you can make improvements and repairs to your home that would increase its value.

You need to show the banks that you have the income to repay your home equity line of credit. If your income is too low, consider paying off credit cards and other debts to make room for the HELOC.

A home equity line of credit is a good option for many people. With it’s low interest rates and favorable tax status it may be worth the time and effort to increase your equity and your ability to pay.