Aaron Silverman's Blog

In today’s, November 2008, financial market, the average person would not think about starting a business. The media is blasting the economy day in and day out. Some of it is well deserved; however, the financial world is not coming to an end – people are still conducting business; businesses are still conducting business.

Today’s economy will weed out businesses for several reasons ranging from bad timing to bad management/business models, but the thing to remember is money is still exchanging hand and goods and services are still being provided.

The key to remember starting or running a business in today’s economy is proper planning. If a small business can survive this economy, the business is in position to be very profitable during a strong economy.

Here few tips for starting and/or maintaining a business in today’s market:

Build a solid foundation.
This tip includes the entire planning phase of a business. A solid foundation will enable your business to handle growth and build a core business that can survive downturns in the economy.

Know your market.
Almost anyone can make money in a good economy, but it is the tough markets that show how strong a business is. The more you understand your market the better you are able to provide a high quality of goods and/or service to your customers.

Do not over extend on credit.
Money is needed to start, maintain and grow a business. Credit is a vital business tool; however, credit can be a double edged sword. It is needed to run your business, but too much of it can ruin your business when business slows down. There are financing options for your company to obtain money based on your company’s business. It enables your company to grow it’s available credit as business grows.

Visit www.approvedline.com with the following login information:
Username: ownerb44116
Password: g7owhl

Let Cash Flow not business volume should determine your business’s growth.
In October’s article, I discussed how Cash Flow is king in the business world. Cash Flow and business volume are not necessarily related. Business keeps you busy, but Cash Flow pays the bills and puts money in your pocket. If your business outgrows your Cash Flow, your business might be in severe trouble.

The above website shows how you can use your business growth to grow your Cash Flow proportionally.

Adapt as necessary.
Today’s market is tough, but it is not impossible. The better you manage the first four items the better your business will be able to adapt to market conditions.

An old investment adage states money is made doing the opposite of the majority. A vast majority of people are taking (many have already taken) their money off the table, so now is the time to put your money to work for you.

Aaron
Contact me at www.aaronsilverman.com

The government and IRS give businesses more tax breaks than individual tax filers. The government does this to promote businesses to grow which in turn grows the economy. The question is how can you, an individual, benefit from this?

I need to insert a disclaimer here; I am not a tax attorney or CPA. You need to consult with your tax attorney and/or CPA to verify and setup a business and take advantage of the tax laws.

Before I get into the how, I will discuss the why you need to own a business. The main tax break a business receives is how it pays for expenses. A business pays for expenses before taxes; whereas, you pay expenses after taxes.

Here is what it looks like:

Individual Income per month: $2,000
Taxes per Month at 25%: $500
Amount Left after Taxes: $1,500
Expenses per Month: $1,000
Amount Left in Individual’s Pocket after Expenses and Taxes: $500

Business Income per month: $2,000
Expenses per Month: $1,000
Amount Left after Expenses: $1,000
Taxes per Month at 25%: $250
Amount Left in Business’s Pocket after Expenses and Taxes: $750

On an income of $2,000 a month, a business keeps an extra $250 a month! That is 50% more than the Individual. 50% more just by paying expenses before taxes!!!!

This is only one of the many tax advantages to owning a business, but can you already see the benefit and power of owning a business?

The type of business you have will dictate the expenses you can write-off; however, here is a list of common expenses that you currently pay that your business could pay pre-tax (again, you need to discuss this with your tax attorney or CPA to determine what your business can pay for).

- Cell Phone
- Car
- Car Maintenance
- Gas
- Internet Connection
- Cable TV
- Computers
- TV / DVD Players
- Lunch/Dinner/Entertaining Clients
- Business Trips (aka vacations)
- Health Insurance
- Part of your Mortgage/Rent (Home Office)
- Part of your Electric Bill (Home Office)
- Part of your Water Bill (Home Office)
- And the list goes on

Do you see how everyday expenses add up quickly and how owning a business could save you money?

Aaron
Contact me at www.aaronsilverman.com