Minute by minute

my thoughts on making the most out of all of life's minutes…


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Word up Wednesday – The P Words

Have you ever noticed that many higher positions in a company all start with the letter P?

Take a look:

President: Top executive responsible for a firm’s overall operations and performance. He or she is the leader of the firm, serves as the main link between the board of directors (the board) and the firm’s various parts or levels, and is held solely responsible for the firm’s success or failure. One of the major duties of a President is to maintain and implement corporate policy, as established by the board. Also called CEO (Chief Executive Officer) or managing director, he or she may also be the chairman (or chairperson) of the board.

Principal: “One of the primary persons” — either the owner, proprietor, sole shareholder, director, president, managing partner and the like.

 

Partner: Individual who joins with other individuals (partners) in an arrangement (partnership) where gains and losses, risks and rewards, are shared among the partners.

 

Proprietor: Sole owner, or one of the owners.

 

Do you run your own small business?   What is your title?

Have a great Wednesday!

~Amy

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Word Up Wednesdays – Sole Proprietorship v. Corporation

Rock On!  You are a small business owner!  Now let me ask you a question – what type of business do you have?

I don’t mean – what does your business do, or what product do you sell or what service do you  offer.

I am asking –

Are you a Sole Proprietor or a Corporation? 

There are some very distinct differences between how your business is filed with the US Treasury and the Secretary of State.  The biggest differences are those between a Sole Proprietorship and a Corporation.

The important thing to remember  – A Corporation is a separate entity.  This means it files taxes separately, has shareholders and will protect your personal assets in most cases.

It is my philosophy that any business regardless of size or age can be a corporation.  But whether or not your business should become a corporation should be decided based on recommendations from your CPA and your attorney.

Here are a couple of things to consider:

Corporations:

  • Shareholders are not responsible for corporate debt.
  • Corporations can offer self-employment tax savings.
  • Corporations offer protection of personal assets.
  • There is more of a cost associated with setting up a Corp and you will be required to do certain things annually such as conduct a Shareholder’s meeting.

Sole-Proprietor (SP)

  • SP’s offer easier start-up abilities and simple tax filing.
  • An SP is a bit easier to operate and make changes instead of dealing with shareholders.

What sort of businesses should be incorporated?   Like I said above, this should be based on the recommendations of your CPA and attorney.  But here are a couple of examples to consider:

  • If you own a small hair salon I would highly recommend becoming incorporated.  Imagine if someone tripped and fell in your parking lot of your building.   Someone could easily sue for medical expenses, lost wages, etc.  If you are not incorporated – they can draw money from your personal assets – meaning your home, savings and retirement funds.  By setting up the business as a corporation – they will only be able to go after the business assets.
  • Maybe you offer house cleaning services in your client homes.  What if you accidentally clean a stain in the carpet with a cleaner that ruins not only the carpet but also the sub-flooring.  Most likely your insurance will cover this damage, but if you aren’t insured or are under-insured, the client could come after your personal assets to pay for the damages if you are not incorporated.
  • Assuming you are paying yourself a salary (which you should be as a small business owner) one way to help save costs is by being incorporated.  Your CPA can tell you which sort of Corporation would be best for your situation.

It is very easy to just put off the decision of whether or not to become incorporated, maybe because you don’t really understand this whole thing.  Or maybe because you believe you will always be diligent and not have any accidents.

The latter line of thinking – while optimistic, is very dangerous.  Accidents happen and sometimes they happen despite our best intentions.

If you are unsure or you really don’t understand the whole Corporation -v- Sole Proprietor – – a call into your CPA or attorney will help answer this question.  Fifteen minutes on the phone with either of them can save you tons of time and money in the long run.

I’m available to bounce ideas around if you are uncertain of what sort of business entity you should be.  I can offer examples of potential situations which might make your decision easier to make.  Shoot me an email and let’s talk about it (there is no charge for this service).  amy@amymunns.com

Happy Wednesday ~ amy

PS  – I realize that this is a day late – but I didn’t want to skip this week’s edition to Word Up Wednesday. Thanks


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Word Up Wednesday – Budgets

Welcome to my first installment of Word Up Wednesday – where I take a common business term and define it and show examples of how to implement this word in your small business.  And as in many cases, many business terms can help while managing your home, so I’ll offer examples for personal use as well

Budgets!

Budget – (n) – An estimate of the income and expenditures for a future period of time, usually one year.

At the beginning of any year, there is always lots of talk about budgets.  We need to work on the budget.  We need to balance the budget.

A balanced budget is that simple – income balances expenditures.  If your expenses are greater than your income, you need to find ways to cut expenses or increase income.

Small Business Application – every business, big or small, corporation or sole proprietor, many employees or just one (you) should have a budget.  Items that should be considered on the budget are:

Operating expenses, overhead expenses, insurance, subscriptions, taxes, payroll, continuing education, and savings.   All income needs to be projected as well.

Personal Application – every family should have a family budget.  Items to include in the household budget are:

Rent or mortgage, utilities, insurance, vacations, gifts, investments.

The important and difficult part of the budget is predicting realistically.  It is always best to err on the side of caution by not over or under inflating expected income or expenses.  Using last year’s figures or averaging out figures over a few years are good ways to predict.

There are many tools and templates that are available (many free) online to help set up a budget.  I also offer help in setting up a budget for either your small business or your household.

Today’s Question – Is there an item that you always forget to include in your budget?

Happy Wednesday!

~Amy