Small Business Banking
The global ‘Credit Crunch’ is having an impact on many businesses and it is now as important as ever that businesses manage funds as efficiently as possible.
Managing money has always been a major responsibility for businesses of all sizes, but it is of even greater importance for smaller companies with limited finances, as they often do not have the surplus funds needed to grow without borrowing.
The lack of credit in the markets at the moment has meant that companies of all sizes need to take a good look at their business banking arrangements in order to ensure that they are making the most of their funds. Rather than seeing the credit crunch as a barrier to profit and growth, it can be an opportunity for companies of all sizes to re-examine their business model in order to find savings and to look at areas where they can reduce costs in order to find additional money to fund their plans, without the need to borrow.
Perhaps the first place that a company should look for savings is in their banking arrangements. Many of the high street banks have a number of fees that apply every time you pay in a cheque or deposit money in your account. Overdrafts can also be a significant cost due to interest charges. By switching to a bank that offers a free business current account to customers, it is possible to save a decent amount of money each month that can be used elsewhere.
Another area that all businesses should look at is the way in which their customers pay. Many small businesses do not have sufficient time to chase invoices, or give their clients 90 days in which to pay for goods or services. Where possible, try to get clients to pay more quickly – that way you will have the money in your account earning interest as soon as possible.
When you have identified savings within your business, and implemented the changes necessary to your structure to get the most out of every pound of revenue, you should think about what to do with the additional cash you have in your operation.
The best thing to do with spare funds is to open a special business deposit account that will pay you interest on your savings. This way, rather than simply having the money lying around doing nothing, you can earn interest on it that can be used for bills and other costs. With an instant access savings account, you can put the money in as soon as you receive it, and then simply transfer it into your current account as required – that way all of your spare cash can be working for you.
One of the main things that you need to consider when choosing a business bank to suit the needs of your business is the ease with which you will be able to contact them and manage the day to day running of your accounts. While most banks now offer the ability to access money and accounts online, it is important to be sure that they also offer a dedicated business manager that you can talk to when you need additional help or advice.
3 Ways To Get Approved For a Business Credit Card
If you run your own business–whether it’s a retail store, direct sales, hobby shop or freelance consulting–chances are you’ve thought about getting a business credit card. It’s probably a good idea, since it makes it easy for you to separate your business expenses from your home expenses, a task that helps keep your paperwork organized and simplifies things at tax time. When you’re ready to apply for a business card, follow this checklist:
1. Choose a card
Some cards offer special deals, financing or rewards for small business owners. For example, some rebate cards offer you a percentage back on everything you buy at a certain store, like a warehouse store or online store. Other cards offer cash rebates when you spend at supermarkets, gas stations or home improvement stores. If you travel often, a frequent flier or travel rewards card might get you the best and biggest bonuses. Choosing the right reward card–depending on the type of business you operate and the expenses you incur–can mean extra money in your pocket all year long.
2. Gather up paperwork
You’ll need basic information about your company’s financial situation, including the name of your business, the tax identification number, the business address, the number of years you’ve been an owner, the number of employees, the nature of the business, the business’ average annual income, and the amount in the business’ checking account. You’ll also need to know the legal entity of your business, such as whether it’s a sole proprietorship, a corporation, a partnership, a non-profit, etc.
3. Fill out the application
You can find applications for almost all business credit cards online, although in most cases you can also call and apply over the phone (a good idea if you have any questions). Depending on your credit rating, you may have to provide extra documentation of your business’ current financial status, so be prepared to mail or fax information if requested. After you fill out the application, approval can take anywhere from thirty seconds to a month.
To find business credit cards online, do an Internet search or check the websites of major credit card companies.
Small Business Tax Tips – I Received Form 1099-MISC – Now What?
Did you receive a Form 1099-MISC and aren’t sure what it means and/or what to do with it? This article will answer that question. Form 1099-MISC is one of the most common tax forms in the world of the self-employed. And it’s most common use is to report income made by sole proprietors who have performed services for other businesses. By “sole proprietor” I’m referring to self-employed people such as independent contractors, consultants or free-lancers who are in business for themselves but do not run their business as a corporation, partnership or multi-owner limited liability company.
If you fit that description of a self-employed person and performed services for another business, and that business paid you at least $600 during the year, the other business is required to send you a Form 1099-MISC by January 31 of the following year. The January 31, 2009 due date happens to fall on a Saturday, so the deadline for issuing 2008 1099′s is automatically extended to the next business day of Monday, February 2, 2009. So you may have already received a Form 1099-MISC for 2008. If not, you could still get one soon.
If and when you get the 1099, take a look at Box 7, “Nonemployee compensation.” This is the place on the form that your annual income from this other business will be reported. And this is the income that you must be sure to include on your Schedule C, because not only did you receive that 1099, but so did the IRS. In effect, then, the 1099-MISC serves the same function for the self-employed as a W-2 does for the employee – it tells you and the IRS how much income you made from one particular source.
Now that you know the basic purpose of the 1099-MISC, you probably have some questions, such as:
1. What do I do if I don’t receive a 1099 from a business, when I know I performed services and received over $600 for the year? Whether or not you received a 1099, you are required to report all income.
2. What do I do if I don’t receive a 1099 because I made less than $600? Sorry to sound like a broken record, but you are required to report any income you made, whether or not you received a 1099. Even if you made less than $600, just because you didn’t get a 1099 does not excuse you from reporting the income.
Not getting a 1099 does not mean you don’t have to report the income. If you made it, you’re supposed to report it on your Schedule C. That’s the law. And if you don’t report all your income, you are part of the underground economy. (Shame on you!)
3. What do I do if the amount of income reported on the 1099 is incorrect? You should contact the business who issued the 1099 to resolved the discrepancy. If they made a mistake, they must issue a corrected 1099 to both you and the IRS. To be safe, you should wait until you receive the corrected 1099 before filing your tax return. You want to be sure that the 1099 amount agrees with your Schedule C income amount. If there is a difference between the total income on all your 1099′s and the amount of income on your Schedule C, the IRS will eventually catch it and send you a letter demanding an explanation. Not good.
4. What do I do if I receive a 1099 after I filed my return? If you included the 1099 income on your return, do nothing, because you did report the income and there should be no problem. But if you didn’t report the 1099 income on your return, you must amend your return to include the previously unreported income. This will result in additional tax you must pay, plus the possibility of late payment penalties and interest, depending on how much additional tax you owe and whether you pay it late.