Month: March 2013

How Much is a Fair Profit? Part III of V – Risk

A third factor in determining a fair profit percentage is risk.  Risk is divided into two types.  The first is insurable and the second is uninsurable risks.  Insurable risks are mitigated and have very little to no effect on the profit formula due to transferring the risk to a third party known as the insurance underwriter.  Uninsurable risks are non-transferable and therefore the profit must be adjusted to compensate for this type of risk.

Why You Should Incorporate Your Business

Incorporate

As a small business grows, there comes a time when the owner(s) should consider incorporating the business.  A corporation is a separate entity recognized by the state of domicile for the business.  It is as if a new life is created.  The state acknowledges the existence of this entity and therefore grants limited legal rights similar to those rights possessed by the citizens of that state. 

What is an Audit?

An audit is defined as a methodical examination.  Audits are grouped into two principal sets – financial and organizational compliance (usually related to licensure).  For the small business entrepreneur, it is almost unheard of for them to have an organizational compliance audit.

Form 1041 – Income Tax Return for Estates

Form 1041

When an individual passes away, his/her will or trust identifies a representative to administer his/her estate.  This representative is referred to as the executor (male) or executrix (female) and is generally approved or assigned by the local circuit court.  The Internal Revenue Service tasks this representative to file a final personal return and information returns until the estate is completely transferred to the heirs.

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