|
| |
| |
|
FINANCE |
| How to Categorize Small Equipment Purchases |
| |
Business property depreciation is one area that creates an incredible amount of confusion among otherwise savvy business owners. Entrepreneurs typically see tangible item purchases in one of two ways: Some believe the cost of any business item is a regular expense. Others think
everything is a fixed asset. But, in fact, it depends on the situation.
This confusion results from a lack of understanding about the difference between capitalized costs and expenses. Ordinarily (but not always), an item with a useful life of more than one year is not deducted as an expense. Rather, these purchases are fixed assets presented on the business balance sheet.
The company has simply traded one asset - cash in the bank - for equipment, which is another asset. Similarly, a financed acquisition of equipment has traded borrowed money (a liability on the company's books) for the purchased asset. Either way, profit is not affected because the equipment cost is not an expense - at least, not immediately. The cost is expensed over time as depreciation.
Depreciation
To determine the correct amount of annual depreciation, your accountant will expect you to categorize your purchases as capitalized fixed assets instead of expenses. To know how to categorize requires an understanding of the IRS de minimis safe harbor rule.
In general, this provision permits you to expense purchases of up to $2,500 per item. Small equipment under this limit is treated as an expense for office supplies, not as an outlay for a fixed asset. And that's an important - and potentially rewarding - difference. |
|
|
|
|
| |
|
INVESTING |
|
| Small Investors Can Invest in Startups: But Should They? |
| |
For angels investing at a time when Apple and other startup stars were launched, the profits could be heavenly.
As Daniel Eran Dilger writes in
Apple Insider, "Apple's initial public offering on December 12, 1980, sold 4.6 million shares at $22 each...instantly creating 300 millionaires."
But not many were members of the public, who were generally excluded from these opportunities.
No longer. The U.S. Securities and Exchange Commission recently approved a rule change in the groundbreaking Jumpstart Our Business Startups Act (JOBS) Act of 2012. "Title III," as it's called, approved new equity crowdfunding rules for investors, effective May 16, 2016.
According to Julia Greenberg in Wired online magazine, "What that means is that startups or small businesses looking for investors can go through brokers or online platforms to find them-and those investors can now be, well, anyone."
Meanwhile, other countries are following suit.
Six Canadian provinces are coordinating to give small investors a crack at startups-rules are being eased for companies looking to raise money from investors through online crowdfunding platforms, meaning equity crowdfunding will be open to all investors.
But there is one proviso: a limit on investing via crowdfunding is based on the individual investor's net worth.
Just as well. Startup investing isn't foolproof; it's pretty much a case of "buyer beware." Wired's Greenberg quotes researcher Richard Swart, of the University of California, who said, "Even if you're truly invested in investing in a startup, the odds are against you. It's the law of startups-mathematically the most likely exit for a startup is failure." |
|
| |
|
HOT BIZ TRENDS |
|
|
Reports on Print's Demise Have Been Greatly Exaggerated |
 |
The advent of digital books in 2010 was a big story, and with it came predictions of disaster for print and paper books. Traditional publishers saw the incursion of the technology as the end of an era.
Who would choose to physically lug books around when thousands can be stored on a feather-light electronic gizmo?
E-books are cheaper, their font size is adjustable, and they can be downloaded whenever and wherever-even at home in pajamas. Sales of digital books soared.
In 2011, global bookseller Borders declared bankruptcy, confirming print publishers' worst fears. E-books were gaining traction; print was doomed.
But according to Alexandra Alter in the New York Times, "The digital apocalypse never arrived, or at least not on schedule. While analysts once predicted that e-books would overtake print by 2015, digital sales have instead slowed sharply."
Adds Alter, "Now, there are signs that some e-book adopters are returning to print, or becoming hybrid readers..."
Stats appear to support Alter's point: e-book sales declined in the first quarter of 2015, while sales of paperbacks increased.
This trend toward "spurning the technology" is driven by powerful demographics, notes Hollie Shaw in the Financial Times. According to Shaw, retiring boomers and millennials tried e-books and are now unplugging.
It seems many people prefer print-at least some of the time. To paraphrase Mark Twain, reports on the death of print have been greatly exaggerated.
Now, book lovers have a choice: they can go high - or low-tech or both - a boon to publishers and readers alike. |
|
| |
|
FINANCE |
|
| Spending Plan: Let the Numbers Do the Talking |
| |
Successful entrepreneurs know that financial forecasts are crucial for a business of any size. The long shadow of failure awaits the enterprise that has not properly budgeted for upcoming circumstances.
When presented with the task of budgeting, many people react as if they've been asked to tackle a grizzly bear. But those who let reason win out over fear soon see that a budget is a tool they're acquiring, not a burden they're enduring.
Committing
Using weak budgeting techniques may get the job done quickly, but doesn't really deliver any value. For example, it's best not to waste time creating a budget that simply takes actual numbers from last year, then adds a fixed percentage adjustment and a few guesses to certain spending categories. Instead, your budget should establish the actual spending necessary to operate at peak output; remember, you can always reduce it in the future if sales don't sustain it.
Guessing about spending doesn't produce enough information for planning in an efficient way, and the result is cash management problems. Knowing how much your business can afford to spend is a real necessity.
Starting details
You can establish a sound budget, and assess your actual spending, by calculating the cost of each type of item in the quantity required to sustain revenue. These details then flow into a master budget where the broken-out expenditures are combined into summary categories.
If your business has only a few types of expenditures, that should make your budgeting task simple, but don't make the mistake of going directly to the summary figures and missing the necessary interim step of figuring out the per-item costs.
Even if your business is entirely service oriented - with no purchases of inventory or parts - some of your spending still fluctuates according to sales. Among the possibilities: ever - changing costs for travel or supplies.
A budget that aligns with expectations identifies how much you must spend - and when - to achieve your sales goal.
Accurate budgeting allows you to understand where the money is going. For instance, should you need to reduce expenditures when revenue falls short of the goal, the budget presents breakdown line items to show you what items you can do without. Likewise, if you intentionally spend less on a single item, accurate budgeting quantifies the result of your action, showing you the commensurate reduction in sales revenue.
Summarizing
The master budget summarizes each expense line item. You don't identify adjustments in these main categories; this summary gives you an overall picture of what to expect each month for the upcoming year, offering you a cohesive perspective on outlays of funds per month.
You can certainly tackle a budget yourself; however, another method is to get started with some professional help. These two methods aren't mutually exclusive - once the budget spreadsheet is put together, updating it as ongoing events unfold is easy. Change one number in the line - item breakdown and the master figures are instantly updated.
The result: you stay informed and prepared throughout the year by letting the numbers do the talking.
|
|
|
|
|
|
| |
| |
Gold Gerstein Group
505 Pleasant Valley Avenue
Moorestown NJ 08057
856-727-0100 Office
856-727-0772 Fax |
| |
| www.g3cpa.com |
| |
| info@g3cpa.com
|
| |
 |
| |
|
|
|
| How to Win Big in Today's Economy |
|
| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
|
| Find out how by requesting my free report "How to Win Big in Today's
Economy" by replying to this email." |
|
| Just reply to this email and I'll send it right out to you. |
| |
|
| Share This Newsletter |
| |
 %SOCIALSHARE-GPLUS%  |
|
| Click here to forward this email to a friend |
|
| Click here to see a web copy of this newsletter |
|
|
| Quick Quiz |
| |
Each month I'll give you a new question.
Just reply to this email for the answer.
What does the word "Canada" mean? |
| |
|
| Worth Reading |
|
Smart Workers Seek Out Advice, Study Suggests
By Phyllis Korkki |
| |
|
International New York Times
Many workers think asking for advice is a sign of incompetence. In reality, those who seek advice are seen as more competent than those who don't, according to a study by Alison Wood Brooks, an assistant professor at Harvard Business School, and her fellow researchers. People are generally flattered when asked to share their wisdom; it doesn't even matter whether you actually use it.
Stop Making Excuses and Be a Starter
By Robert Herjavec
LinkedIn
Every small business started with someone's courageous decision to become his or her own boss, and this courage is worth celebrating, according to entrepreneur Robert Herjavec. There are lots of excuses not to go for it, including timing, inexperience, and fear, but as Herjavec says, "When you fall into the trap of making excuses, you limit yourself from going after your dreams."
|
|
|
LINKS YOU CAN
USE
This Month: Entrepreneurs and the Law |
|
Handshakes don't cut it. In all things legal, you need to be sure; it's key to your business success. Discover what legal info you need to know with the following resources for entrepreneurs.
How to Hire an Attorney
A good attorney is an entrepreneur's best friend. If you don't have one already, get one. How do you choose a lawyer?
Commercial Lease Basics
Your business may require rental space. Don't sign on the bottom line until you know what you're getting into. Check out these basics of commercial leases.
5 Ways to Use Arbitration
Arbitration, or judge and jury? Some businesses are opting for arbitration clauses with consumers. Which is right for your business? Get the pros and cons here.
|
|
|
| Wisdom Quotes |
| Quotes on...Work |
| |
|
Choose a job you love, and you will never have to work a day in your life.
Confucius
Nothing ever comes to one, that is worth having, except as a result of hard work.
Booker T. Washington
The only place success comes before work is in the dictionary.
Vince Lombardi
Nothing will work unless you do.
Maya Angelou
Out of clutter, find simplicity.
Albert Einstein
Opportunity is missed by most people because it is dressed in overalls and looks like work.
Thomas A. Edison
Working hard and working smart sometimes can be two different things.
Byron Dorgan
|
|
|
|
|
|
|
|
