Month: December 2012

The Financial Truth about Flipping Houses

During my recent vacation, I had the chance to watch one of those reality shows about flipping real estate.  These two partners in Texas bought a house, fixed it up, and then sold the house.  The show illustrated that they made $52,000 from the deal.  Really?  I have yet to see a deal like that...

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The Sole Proprietorship – The Basics

Of the four business entity types, the sole proprietorship is by far the most flexible and easiest to manage.  There are very few drawbacks.  In the world of business, the key is to maximize profit with the least amount of risk.  Each of these two elements is addressed as it relates to 1) decision making,...

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The Franchise Relationship

Business Trusts

A franchise relationship is a partnership between two parties.  The primary party is the Franchiser.  This entity owns a master group of similar business selling/providing the same product or service.  The Franchiser sells a ‘Right’ to his name and his conditions in exchange for a royalty fee.  The second party is the Franchisee.  This business entity...

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FUTA – An Explanation to the Federal Unemployment Tax Act

Federal Unemployment Tax Act or FUTA for short is a part of the Internal Revenue Code and is an employer tax on wages paid to employees.  It is used to fund unemployment benefits.  The tax is paid on the first $7,000 of wages paid to every employee.  It is reported via Form 940 https://businessecon.org/resources/ . ...

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Who is Your Customer?

boy playing baseball

You would think this is a simple question with an easy answer.   But for most folks, they can’t identify their customer.  It seems elusive or undefinable.  If you are in business, you need to answer this one question.  You need to know.  When you know, then you can orient your business to that one single …

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How to Start a Non-Profit Organization: Step 1 – Form a Brain Trust

brain trust

Before you do anything towards starting a non-profit organization, you need to form a brain trust.  This is a group of friends that will add their thoughts to your idea and provide you with a platform to begin the process.  Their ideas, questions, suggestions, misgivings, and other thoughts expand your thinking beyond a simple idea...

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Form 941 – The Basics

form 941

Form 941 is the employer’s quarterly federal tax return.  It reports how much federal income taxes were withheld; Social Security taxes and Medicare taxes that are due and how much was paid in deposits to the Internal Revenue Service.  The report is filed every three months for each of the four calendar quarters.  If you...

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What is a Contract?

shoveling snow

Article 1 of the Uniform Commercial Code copyrighted by the American Law Institute is considered the primary source for the definition of a contract.  All of the 50 states have incorporated all or most of the definition of this code as statue.  A contract is defined as a legal obligation between two or more parties. ...

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Small Business Tax Depreciation – Section 179

irs book

The Internal Revenue Service sets the depreciation allowance based on the Code as promulgated by Congress.  The most commonly referenced section is 179.  This is a form of accelerated depreciation allowing the small business owner the opportunity to take a large expense deduction and reduce their tax obligation immediately.  The maximum allowed deduction is $500,000. ...

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Use Phase Accounting in Construction – Part II (Trades)

The most effective form of a financial feedback loop in residential construction is phase accounting.  Phase accounting is a subset of cost accounting and generates accurate information in the world of new home and residential additions for small contractors building up to 20 houses per year. There are five remaining phases to cover in this...

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