If you are looking to make any type of energy saving improvements such as installing new windows, doors, furnace, etc. You may want to accelerate your purchase of these items during 2007.
The residential energy credit expires at the end of 2007. To date, there is no indication that the credit will be extended.
To see what all qualifies for the credit, click here for IRS guidance.
Wednesday, October 31, 2007
Friday, October 19, 2007
Business Tip #13 - Character
Keeping in line with the five "c's" of credit. This week's "c" is character.
How does a bank measure "character"? Especially, in the context of a business loan.
First, nearly all small businesses require the personal guarantee of the owner(s). Why? Because a business owner might be the best indicator of what's going on inside the business. As I used to tell customers "If you're not willing to stand behind your business, why should I?"
Other things, that banks look at to assess character are personal credit bureaus, Dunn and Bradstreet reports, and your personal financial statement.
When I was a banker, I always thought it was important to evaluate the lifestyle of the owner of the business. In my mind, if an owner is someone who takes all the earnings of the company to fund retirement plans and savings, it says something entirely different than an owner that needs cash to fund trips to Vegas, cars and jewelry.
How does a bank measure "character"? Especially, in the context of a business loan.
First, nearly all small businesses require the personal guarantee of the owner(s). Why? Because a business owner might be the best indicator of what's going on inside the business. As I used to tell customers "If you're not willing to stand behind your business, why should I?"
Other things, that banks look at to assess character are personal credit bureaus, Dunn and Bradstreet reports, and your personal financial statement.
When I was a banker, I always thought it was important to evaluate the lifestyle of the owner of the business. In my mind, if an owner is someone who takes all the earnings of the company to fund retirement plans and savings, it says something entirely different than an owner that needs cash to fund trips to Vegas, cars and jewelry.
Monday, October 15, 2007
Personal Financial Tip # 14 - Identity theft
If you're like me, you're probably already know that you should never disclose personal data on solicited emails. However, a latest scam involving the IRS makes it worth repeating.
There is a current scam where the IRS will direct deposit $80 for completion and submission of a customer service survey. The IRS has information related to the scam on it's website.
Do not fall for it.
Once a scammer, gets your bank account information, it's all she rode.
As a reminder, never send vital personal data (names, addresses, social security numbers, bank account information) to an unsolicited emailer.
No business will ask for this information via email. Even if they do, it's a bad personal practice. So Just Say No.
There is a current scam where the IRS will direct deposit $80 for completion and submission of a customer service survey. The IRS has information related to the scam on it's website.
Do not fall for it.
Once a scammer, gets your bank account information, it's all she rode.
As a reminder, never send vital personal data (names, addresses, social security numbers, bank account information) to an unsolicited emailer.
No business will ask for this information via email. Even if they do, it's a bad personal practice. So Just Say No.
Friday, October 12, 2007
Business Tip #12 - Collateral
A few weeks ago I outlined the five c's of bank credit. One of those "c's" is collateral.
The bank will consider all the following business assets as collateral.
Accounts receivable - banks may loan factor anywhere between 50-75% of outstanding receivables for a collateral base. A great depends on the quality of the receivables such as age, quality of customers, industry, etc.
Inventory - banks may advance anywhere from 25 - 50% on inventory values. Again much depends on the quality of the inventory. Is the inventory commodity in nature? Is it easily subject to theft and/or spoilage?
Real Estate - In general, most banks will advance up to 80% of the value of real estate. Again, the marketability of the real estate is important. Does the real estate have wide spread appeal and/or market. What is the real estate market doing in general?
As I inform clients, most banks will not lend strictly on asset values without corresponding cash flow. It's almost a chicken/egg game.
As an example. Assume you have inventory "worth" 100,000 retail value. A bank would be hesitant to loan up to the $100,000 value. Why? Because if you cannot turn around your inventory to pay off the bank, the bank isn't going to be able to do it either.
So it's important to realize that the turn of assets into cash is what the bank tries to evaluate. If you cannot turn your business assets into the cash that will be used to pay back the bank, your collateral will have little value to the bank since they will have a hard time liquidating your collateral to cover any debt balances.
The bank will consider all the following business assets as collateral.
Accounts receivable - banks may loan factor anywhere between 50-75% of outstanding receivables for a collateral base. A great depends on the quality of the receivables such as age, quality of customers, industry, etc.
Inventory - banks may advance anywhere from 25 - 50% on inventory values. Again much depends on the quality of the inventory. Is the inventory commodity in nature? Is it easily subject to theft and/or spoilage?
Real Estate - In general, most banks will advance up to 80% of the value of real estate. Again, the marketability of the real estate is important. Does the real estate have wide spread appeal and/or market. What is the real estate market doing in general?
As I inform clients, most banks will not lend strictly on asset values without corresponding cash flow. It's almost a chicken/egg game.
As an example. Assume you have inventory "worth" 100,000 retail value. A bank would be hesitant to loan up to the $100,000 value. Why? Because if you cannot turn around your inventory to pay off the bank, the bank isn't going to be able to do it either.
So it's important to realize that the turn of assets into cash is what the bank tries to evaluate. If you cannot turn your business assets into the cash that will be used to pay back the bank, your collateral will have little value to the bank since they will have a hard time liquidating your collateral to cover any debt balances.
Monday, October 8, 2007
Personal Financial Tip # 13 - Security sales
It's getting to that time of the year that you want to review your investment portfolio (if you haven't done so to date).
Questions you want to ask yourself about your portfolio.
1) Has my personal life situation changed? If so, should my portfolio change as a result.
2) Are the investments I'm in still consistent with life objectives?
3) Do I have adequate diversification with my portfolio?
4) What are the tax implications in rearranging my portfolio?
Please note. The fourth question, while important, is really not part of your investment strategy.
As I always recommend to clients. If you are unhappy with an investment or believe that it's at it's high, you need to sell without regard to the tax implication.
For instance, If I purchase a security for $10,000 and it's now worth $15,000 and I believe it's reached it's high. I'm selling and I'll pay the taxes.
On the flip side, if I purchase the same security for $10,000 and it drops to $8,000 and I do not
like the long term potential of the security. Again, I'm selling without regard to the loss involved.
So now's the time to review your portfolio with an adviser and rearrange it to your personal financial objectives.
Questions you want to ask yourself about your portfolio.
1) Has my personal life situation changed? If so, should my portfolio change as a result.
2) Are the investments I'm in still consistent with life objectives?
3) Do I have adequate diversification with my portfolio?
4) What are the tax implications in rearranging my portfolio?
Please note. The fourth question, while important, is really not part of your investment strategy.
As I always recommend to clients. If you are unhappy with an investment or believe that it's at it's high, you need to sell without regard to the tax implication.
For instance, If I purchase a security for $10,000 and it's now worth $15,000 and I believe it's reached it's high. I'm selling and I'll pay the taxes.
On the flip side, if I purchase the same security for $10,000 and it drops to $8,000 and I do not
like the long term potential of the security. Again, I'm selling without regard to the loss involved.
So now's the time to review your portfolio with an adviser and rearrange it to your personal financial objectives.
Friday, October 5, 2007
Business Tip 11 - Consistency
If you follow this blog with any regularity, you'll notice that I haven't posted in a while and for that I apologize.
But there is a lesson in my omissions, the lesson being consistency.
Customers, prospects and vendors always evaluate your business based on expectations. As long as you deliver according to their expectations, your business associates will always have a favorable experience with your company.
So if you were a regular reader of the blog, you were probably struck by the lack of consistency with the posts. Especially in light of the fact that nothing was communicated with you as the reader.
So this week's advice is to provide a level of service with your customers, prospects and vendors that is consistent with their expectations. If you don't know what their expectations are, ask.
It will go a long way in establishing your business as a "can do" operation.
But there is a lesson in my omissions, the lesson being consistency.
Customers, prospects and vendors always evaluate your business based on expectations. As long as you deliver according to their expectations, your business associates will always have a favorable experience with your company.
So if you were a regular reader of the blog, you were probably struck by the lack of consistency with the posts. Especially in light of the fact that nothing was communicated with you as the reader.
So this week's advice is to provide a level of service with your customers, prospects and vendors that is consistent with their expectations. If you don't know what their expectations are, ask.
It will go a long way in establishing your business as a "can do" operation.
Tuesday, October 2, 2007
Wednesday's tax tip - Volume 10
If you use your automobile for business purposes, you can deduct the business use of the automobile against your income.
You can use one of two methods of determining your deduction; Actual v. the mileage reimbursement rate.
If you use actual expenses, you need to maintain records of all your expenses related to auto usage; this includes gas, repairs, oil changes, depreciation, interest, car washes, etc...
You then deduct the business percentage of those expenses. For instance if you use you car 15% of the time for business purposes and your expenses amount to ten thousand dollars, you can deduct $1,500 against your business income.
Under the mileage reimbursement rate plan, assume you drive 1500 miles for business purposes. Under the current rate of .485/mile, your deduction would be $728.
Items to keep in mind,
1) You must maintain a log of your mileage related to your car under either scenario.
2) Once you use actual expenses for an automobile, you must use actual expenses for the life of that automobile.
3) There are depreciation limitations related to luxury automobiles. Check with a tax adviser to know the limits.
In my experience, I find the mileage reimbursement rate to be the easier of the two methods and usually provides for the maximum deduction. You do not need to keep a shoe box full of gas receipts and the rate for most cars is fairly generous.
You can use one of two methods of determining your deduction; Actual v. the mileage reimbursement rate.
If you use actual expenses, you need to maintain records of all your expenses related to auto usage; this includes gas, repairs, oil changes, depreciation, interest, car washes, etc...
You then deduct the business percentage of those expenses. For instance if you use you car 15% of the time for business purposes and your expenses amount to ten thousand dollars, you can deduct $1,500 against your business income.
Under the mileage reimbursement rate plan, assume you drive 1500 miles for business purposes. Under the current rate of .485/mile, your deduction would be $728.
Items to keep in mind,
1) You must maintain a log of your mileage related to your car under either scenario.
2) Once you use actual expenses for an automobile, you must use actual expenses for the life of that automobile.
3) There are depreciation limitations related to luxury automobiles. Check with a tax adviser to know the limits.
In my experience, I find the mileage reimbursement rate to be the easier of the two methods and usually provides for the maximum deduction. You do not need to keep a shoe box full of gas receipts and the rate for most cars is fairly generous.
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