small business

What You Need to Know About Trump’s Proposed Changes to Required Minimum Distributions

September 6, 2018 By Amanda Stewart 8 Comments

Early retirement planning is the smart way to make your retired life better. Retirement savings are extremely important. Millions of Americans use IRAs and 401(k)s to save up for their golden years. These tax-deferred accounts provide a tax break now. The agreement is that they’ll pay taxes on it in retirement. Once you begin to withdraw from your IRA or 401(k), there is a required minimum distribution. You must adhere to the distribution to avoid paying a hefty penalty.

For years, people have looked at these laws as unfair. After all, many people save their entire lives to be able to retire comfortably just to be hit with fines. However, President Trump has signed an executive order that will lead to a change in these rules. The new change is mainly loosening the requirements for minimum distributions.

About Required Minimum Distributions

Required minimum distributions (RMD) are put into place to limit the tax benefits retirement savers are able to receive. RMD rules state you must begin taking withdrawals from retirement account the year you turn 70 1/2. Account holders must calculate the amount they have to take out each year, regardless of whether they need it or not. For many people, this has increased the likelihood of running out of money during retirement.

President Trump Calls for Changes

Last week the president signed an executive order calling for the Department of Labor and Department of Treasury to consider two things. First, he wants to raise the age when people are required to start taking the RMD. Second, Trump would like to find a way to make it easier for small businesses to offer retirement plans for employees.

He has given the Department of Treasury six months to consider pushing back the age because many Americans are outliving their retirement. The current average life expectancy in the U.S. is 78 1/2. Additionally, he has given the Labor Department six months to consider easing regulations that would allow small businesses to offer retirement plans. This would give the opportunity to save for retirement to more than 42 million employees in the U.S.

Financial advisors helping retirees are hopeful that the order will lead to more relaxed RMD rules or, even better, the removal of the rules altogether. However, even if the executive order pans out, it could take years for the rules to change. It also isn’t clear whether a simple rule change can be done without congressional approval.

Either way, if you have an IRA or 401(k) that you don’t need to tap into right away, these changes could make a huge difference in your financial plan for retirement. For many, it would mean having more security than ever.

Readers, what do you think about President Trump’s proposal?

How to Mix Investing and Small-Business Ownership

March 10, 2017 By Alexa Mason Leave a Comment

Small-business owners hardly have time for a side hustle. Even after the five-year mark ― by which point most small ventures have stabilized and become somewhat profitable ― business owners usually spend upwards of 60 hours every week trying to achieve their business goals. However, unless their startup caught the eye of venture capitalists, business owners rarely live lavishly; many earn hardly enough to feel comfortable, especially in the first decade of operation. Fortunately, there is a way for small-business owners to generate some extra income: investing.

Though investing has a reputation for being risky, it is hardly more financially dangerous than starting a business. Plus, investment requires relatively little time compared to the potential for profits. Still, there is a right way and a wrong way to mix investing and business ownership; this guide will help you learn the difference.

First, Normalize Your Biz’s Cash Flow

Before you can devote even some of your attention to other money-making endeavors, your business should be somewhat self-sustaining ― which means you should wait a few years after starting your business to better understand the ebb and flow of your sales. Then, you should strive to stabilize your cash flow, making your business as predictable as possible while you learn the basics of investing. There are several methods for managing your cash flow:

Collecting your receivables more regularly. You could become more diligent about following up with clients, or you could use a service like accounts receivable financing or factoring to regulate your incoming owed cash.
Tightening clients’ credit requirements. You should start being stricter with credit terms and limits, so you can be certain that clients using credit will soon pay you what’s due.
Increasing sales and providing discounts. The more sales you have, the more cash you have coming in. Sales events and discounts are a good way to bring back past clients and encourage new ones to make purchases.

Once your small business’s income is relatively steady, you can begin learning the ins and outs of investment.

Align Your Investments With Your Biz’s Goals

One smart strategy for investing as a small-business owner is to use your investments to enhance your small business’s success. Therefore, as you begin making investment plans, you should revisit your business plan, goals, and other aspects of your business that might impact where you put your money, like debts and financing. Then, you can dedicate your money to investments that will help your business succeed.

It is important to mention that you should never take money from your business to use for alternative investments. If you do so and an investment goes bad, your business will suffer. The success of your business should always come first.

Start With Small Stocks

If you aren’t familiar with the stock market ― and few small-business owners are ― you should consider cutting your investment teeth on penny stocks. Sold for less than a $5 each, penny stocks are worth so little that their volatility is hardly impactful, but you can use these low-value stocks to learn market patterns before moving onto riskier investments. You can trade penny stocks through nearly any online broker.

Learn About Mutual Funds

After you have passed the penny stock test, you can start learning about mutual funds. A mutual fund is an investment program created by combining several stocks into one package. Typically, mutual funds are diversified to reduce the likely risk incurred in investing. Ultimately, there is a low risk of losing money from a mutual fund, which makes them ideal for beginner investors like you. As with penny stocks, you can watch your mutual funds’ growth and the market’s change without worrying about losing all your money.

Various fund managers will create their own mutual funds, so you will have different fund options depending on which broker you use. Many funds are created by lumping together certain types of stocks, so you can spend some time learning about your fund options before investing.

Never Leverage

Leveraged investing is a method by which some investors manage to increase their profits by using borrowed money. There are several ways to leverage your investments, but if you are smart, you won’t bother. While leveraging does potentially earn you more money, it also amplifies your losses, which means you could end up owing more money than you started with, putting your personal finances and your business at risk.

Be Patient With Your Investments

Hastiness is an investor’s greatest enemy. As with building a business, investments require time to grow big and profitable. Especially while you learn the ropes of investing, you should avoid thinking of investing as a get-rich-quick scheme and start thinking of it as an interesting, lucrative long game.

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Facebook Testing ‘Buy’ Button for Small Businesses So You Never Leave Their Site

July 19, 2014 By Jeffrey Strain Leave a Comment

Facebook is testing a new buy button to help small business with ecommerce

Great news out of Facebook if you own a small to medium-sized business. The company is in the process of testing a new “Buy” button which allows the business to embed the button to either their page posts or within Facebook ads run on the site.

The call-to-action button appears in users’ feeds, and it will allow the user to shop and purchase directly from Facebook instead of having to click through to the retailer’s website. The elimination of several clicks and having to go to a new website should increase conversions for the businesses, while keeping users longer and more engaged on the Facebook website; a win-win for both.

The new services was test-launched with the aim at helping small and medium-sized businesses improve their ecommerce, something that many have had trouble doing on their own. While the current test is small, this new platform has the potential to greatly help small businesses market and sell their products on Facebook. It also should make it easier for consumers to purchase items they see and want on the website.

With the new system, when the customer sees something they want to purchase, they can click the “Buy”button, which will encourage them to immediately make the purchase without ever leaving the Facebook page. They will be required to give a debit card or credit card for the transaction, and this will be handled by a third-party processor. Facebook won’t be privy to this card information unless the user opts-in to have their credit card information saved on the site for future purchases. The processor will only share information with the company selling the product needed to fulfill the order, such as the customer’s address, but not the credit card information. Facebook announced in a blog post, “We’ve built this feature with privacy in mind.”

The new feature is currently available at no cost to businesses with no plans to monetize it on the merchant end anytime in the near future. The test hopes to determine how those using Facebook react to the call-to-action, and how successful this is at driving sales to these smaller businesses though the ecommerce platform.

One of the benefits of this new strategy for Facebook is that it will keep users on Facebook pages. Since the consumer doesn’t need to leave to another site to make the purchase, they will remain on the Facebook website. The company hopes this new purchase system will help encourage users to stay on the website for longer periods.

(Photo courtesy of Maria Elena)

Ten Inexpensive Ways to Promote Your Small Business

March 6, 2008 By Shannon Christman 4 Comments

Big companies pay big bucks for advertising because they know it works. If you have a small business — whether a hobby business that earns you a little mad money or a full-fledged company that employs several people — you know advertising works, too. But you might not have enough money to advertise in the typical way. For those who want to promote their businesses without spending a lot, alternative means of advertising can still be effective:

Print up flyers. You might not feel comfortable sticking them under windshield wipers, but you can post them on bulletin boards at grocery stores, post offices, community centers, and other public buildings. Get permission and post your flyer (or business card, if that’s the convention) on every board you can find.

Design a clever business card that can double as an ad. Hand out cards to everyone you know, even those who don’t need your services, and ask them to pass the cards along to friends.

Hand out coupons for free or discounted products/services at community events, school fairs/functions, and other (non-competing) businesses. Alternately, create a carnival game for a fair booth and make sure the prizes have your business name on them.

Look for local online bulletin boards/groups where you can advertise your business. I know of at least two in my area that allow people to advertise their business services for free — one is specifically a work-related group; one is a yard sale group that includes services among its sale items.

Buy a classified ad, which is usually less expensive than a regular ad. Don’t neglect free community newspapers, which often have loyal readers and fewer advertisers competing for their attention. Post the same ad at Craigslist.org.

Send out press releases to announce any of your company’s achievements or special events (such as open houses or celebrity appearances). True, press releases are considered public relations, not advertising, but they can help make your business name better known to potential customers.

Sponsor a youth sports team, a community theater production, or other non-profit organization. Whether you donate cash, products, or services, your business name generally will appear on the team’s t-shirts, in the show’s playbill, or in the non-profit’s newsletters and website. This method works especially well if you can show an sample of your work as part of the donation — for example, a landscaper may do some work around a non-profit’s building in exchange for putting a small sign in the ground: “Landscaped by Grow Where You’re Planted, 555-1234.”

Put an advertisement on your car, especially if you have an unusual car. One interior decorator in our area drives a pink Volkswagen Beetle with her company’s name painted on the side. I have never seen her advertising anywhere else, but I know the name just from seeing her car. When you are out and about, park in the most conspicuous spot you can find. Aim to get closer to the road, not closer to the store.

Pay your friends and family to put up yard signs advertising your business. (Be sure the zoning laws allow it first.)

Offer a free sample of your product or service to someone influential in the community and ask that person to spread the word if they’re satisfied with your work. Word of mouth is often the most effective form of advertising.

The cost of these forms of advertising, like those of the more expensive types, varies from location to location. As you get to know your community, you will be able to judge whether the results will be worth the expense. Follow the lead of other local businesses that have built good reputations, but try some unusual promotions, too.

Remember that it’s okay to start small. If you are a local company, most advertising outside your area will be wasted, anyway. You really don’t need a Superbowl ad or product placement in the next blockbuster to bring in enough customers to keep you busy — at least not until your business (and your advertising budget) outgrows its “small” label.

Image courtesy of thingspondered

Ten Cons of Working for a Small Business

June 13, 2007 By Amy L. Fontinelle 9 Comments

One of the biggest financial decisions that we make in life is the decision of where we want to work. There are both pros and cons to working for a big business and working for a small business. While I’ve said that I think working for a small business can be surprisingly beneficial, it can also have many undeniable drawbacks. It’s important to know both the good and the bad before you commit to any workplace situation, especially to one where you’re going to be spending the majority of your days. Below are some of the cons that come when working as a team member of a small business.

Lower pay

Many small businesses simply do not have the resources that large companies do. While you may get more experience, you’ll often get paid less than you would doing the exact same work for a larger company. When there’s less money to work with and no human resources department around to figure out how to set up a small business 401k or dental insurance, you’re also unlikely to get as many benefits as a large company could offer.

Fewer vacation days

Small businesses have fewer employees, which means that there are fewer people around to pick up the slack when you’re gone. This translates to bosses that are reluctant to let you take a real vacation. Of course, this happens in large companies, too. If vacation days are important to you and you’re looking at working for a small business, make sure to pick a boss who values his vacation time as much as you do and will want you to stay home and recover when you’re sick.

Increased workload

There is a lot of work involved just to operate a business, including payroll, taxes, business insurance, and business licenses, and these things alone can take up a lot of time. On top of that, the business’s actual work needs to get done. With more work and fewer employees to spread it around to, any increase in workload will frequently fall on you and you alone.

Less opportunity to meet new people

Large companies can be great places for making new friends. If you don’t really click with the people in your department, you can always find some people in accounting to have lunch with instead. If your company only has five employees and you don’t get along with them, you’re out of luck. Working for a small company can be lonely at times, too — there will be days when everyone is out except you.

Less job security

In the age of Enron, this one is questionable, but let me put it this way: if your company has one boss and five employees (none of whom have any ownership of the company) and your boss suddenly dies in a car accident, there goes your job. At a large company, someone would be next in line to take over your boss’s role, the the company and your job would remain intact.

Increased likelihood of menial tasks

Small business often do not have cleaning staff, suppliers, or dedicated receptionists. If you think that taking out the trash, doing the dishes, answering phones, opening mail, and making trips to Office Depot shouldn’t be in the job description of someone with your credentials, a small business environment may not suit you. You may be able to avoid this issue if the business has multiple employees and your skills and experience automatically place you high in the ranks.

Limited mobility

Particularly in well-established small companies and extremely small companies, job titles may be well-filled or beyond your reach. If the only job titles in your company are President and Assistant, there isn’t a lot of room to get promoted.

8. More blame when things go wrong: Since you’re likely to have greater responsibility in a small business setting, you’re also more likely to be the one who gets blamed when things go wrong. If you work for a small company, you’ll need to be extra diligent about not making mistakes or be convincing enough to successfully blame your errors on potted plants.

Fewer resources

Small business usually can’t afford the kind of top-of-the-line software and equipment that bigger companies can. They can’t get volume discounts on these purchases and are operating on a smaller overall budget. You’re also unlikely to get invited to a lavish company holiday party in a fancy art museum — the resources just aren’t there. In my experience, smaller companies seem to be more focused on work product and less focused on impressive perks.

Lack of name recognition

: In many fields, it doesn’t matter if anyone has ever heard of your company or not, but in some fields, working for a company with a big name can be the key to your future success (McKinsey, anyone?).

Now that you are familiar with some of the most important pros and cons of working for a small business, you’ll be well-equipped to decide if this option is for you the next time you’re searching for a job.

Ten Pros of Working for a Small Business

June 11, 2007 By Amy L. Fontinelle 7 Comments

When you talk with most people, they seem to want to work for a large company and often overlook the possibility of working as part of a small business. Working for a small business can be substantially different from working from a medium sized or large business in ways that many people don’t realize. There are a large number of positive aspects to working in a small business that many people may not realize. Personally, I have worked for several small businesses and think it’s an interesting and highly beneficial experience that everyone should have at least once. Here are a number of reason that I believe this.

Ability to learn about all parts of the business operation

In a large company, each person is likely to have a specific role, like bookkeeping, payroll, tax preparation, or management. In a small business, a single person will generally need to take on multiple roles. If you haven’t figured out where your interests lie yet, this can be a great way to explore multiple job titles without having to change jobs or to get hired for a position that you haven’t yet mastered. Also, when it’s time to move on to your next job, you’ll be able to market yourself for a larger number of positions. If the company you want to work for is hiring a bookkeeper, you can say you are a bookkeeper, and if they’re looking for an HR person, you can say you are an HR person. If you think you’d like to run your own business one day, you’ll also benefit from being able to observe firsthand just how much work is involved.

Ability to learn directly from the CEO

In a large company, you may never interact with the head honcho, but in a small business, you’re more likely to interact with them frequently or even work directly for them. If you have any interest in running your own business in the future, particularly in the same field, the things you can learn from this person will really be invaluable.

More responsibility

This can be good or bad, depending on what you’re looking for in a job, but when you work for a small company, there will be times when decision-making tasks will fall on you whether they are supposed to or not and whether you want them to or not. You’ll quickly learn to handle the stress of decision-making and how to make the decisions that your boss wants you to make. A high level of responsibility looks good on resumes and builds character.

Less office drama

Statistically speaking, the fewer people you work with, the less likely you are to encounter gossips and drama queens. On the other hand, if you do have one in your small office, you’ll have to deal with them a lot more often (but at least they’ll have fewer people to talk about).

Less red tape and more flexibility

To some extent, this benefit will depend on your boss’s personality, but the reason large companies often have so much red tape is because with so many employees, there need to be standardized procedures to make sure that work is streamlined and employees receive fair and equal treatment. Of course, we all know that the systems at large companies, especially government agencies, are often flawed in ways that make them incredibly inefficient. At a small business, if you need a new computer, you tell your boss and she either says, “Okay, I’ll order one for you;” “Okay, order one that’s under $1200;” or “No.” If your request is approved, you go online, order your new computer, and it arrives in as little as a day. At a large company, you have track down someone in IT, then they have to get approval from someone else, who has to get approval from someone else who will stall for six weeks, then another department has to do the ordering, and finally IT has to set up your new computer for you even if you know how to do it yourself.

Easier upgrades

Along those lines, in the large companies that I’ve worked for, they’ve often used very outdated software because of the great difficulty and expense involved in updating so many systems. At a small company, it’s much easier to switch to the newest program or version because only a few people will need to make the switch. This concept also applies to non-computer issues. If you can find a fix to current inefficiencies, such as payroll solutions, it will be much easier to implement in a small business than in a large one, which means you’re more likely to get approval to put your plan into action. If you like to do things your way, a small business setting can facilitate that. As an added bonus, you’ll be more effective in improving your company and more likely to get a raise.

Decreased workload

In some cases, when you work for a small business, there will be fewer people giving you assignments, which means that you may be less likely to be overworked. If you value being able to go home at the same time every day and/or don’t handle stress well, a small business environment can be a great asset to your mental health.

More casual atmosphere

I’ve never worked for a small business that asked me to dress up. Small businesses are more likely to be located in homes, meaning that the company doesn’t need to worry as much about projecting a certain image to neighboring businesses and probably won’t have clients over very often, if ever (I’ve found that small businesses like to project the image that they’re much larger than they are, and inviting a client to your one bedroom apartment destroys that image). When working in a non-traditional office setting, you’ll probably be able to wear jeans to work. You’re also more likely to be able to take breaks when you need them, eat snacks whenever you’re hungry, and listen to music while you work.

Getting noticed/getting credit for your work

Even if your boss is so busy that she doesn’t seem to be aware of many of your contributions to the company on a day-to-day basis, you’ll have a much better chance of getting credit for your work when you’re not competing with 100 other employees who also want the boss’s attention. When you are more closely involved with your boss, it can be easier to justify raises and promotions because the person who can give you these things will have plenty of firsthand knowledge of what you’ve done for the company.

Ability to work independently

Are you one of those people who thinks that the best way to get something done and done right is to do it all by yourself? In a small company, you’re more likely to work on tasks alone. You can also take full credit for your successes when you’re the only person working on an assignment.

While most people probably think that working for a large company that offers lots of benefits and upward mobility is the best way to advance your career, I’ve found that working for a small business can have many benefits that will be just as helpful to you, if not more, in both the short and long term.

While there are some great pros to working at a small business, also realize that there are a number of cons to working for a small buiness, too.

(Photo courtesy of Angela Radulescu)