16 Ways Small Businesses Can Save Money

When considering whether or not to pursue a career as an entrepreneur, you must consider choosing getting a steady paycheck versus starting your own company with possibly no salary or medical benefits that can be costly.

If you are considering becoming an entrepreneur save enough money to cover your living expenses for at least 12 months to carry you while your business is growing.

Some advantages of being an entrepreneur are:  flexibility, creativity, full ownership and being your own boss. Some disadvantages of being an entrepreneur are:  losing a steady paycheck, losing medical benefits, falling in a different tax structure, increased stress and you can’t blame anyone else if you make a bad decision.

Working as a small business owner requires long hours, dedication, persistence, patience and sacrifice. Research conducted by the Forum of Private Business (FPB) stated that 82% of business owners have seen an increase in the cost of raw materials since last year.  

In addition, 74% reported that increases have inhibited their growth expectations and 45% stated that their profitability has been impacted.  Running your own business has many expenses that are not considered when working for someone else.  Here are 16 ways to save money running your small business.

1. Start at Home. Start your business in your home.  Once you have generated a steady profit for at least a year or more then you can consider leasing office space.
2. Sales. Hire virtual assistants, sales or marketing entrepreneurs just starting out or break down large projects into smaller tasks and save money by hiring a resource for each task.
3. Barter. Barter services by visiting the barternews.com site for listings by state.
4. Shop around. Comparison shop to find the best deal on goods and services.
5. Buy used. Visit used-furniture stores, Craigslist or eBay to find used furniture, furnishing and office equipment.
6. Link with Others. Include your advertising materials in mailings, promotional advertising for events, gift bags, coupon mailers or newsletters to save money on advertising.
7. Joint Ventures. Share advertising and promotional costs with nearby businesses.
8. Ask for help. Ask existing customers for referrals and offer a referral fee.
9. Local Ads. Purchase ads on local cable television, radio stations or newspapers.
10. Paid Events. Give a seminar, workshop or class at a local college to generate additional income.
11. Offer Online. Offer your products online using sites like MSN, Yahoo, eBay, Craigslist, social media or shopping product sites like PayPal or We Pay to sell products and services.
12. Promote Yourself. Pass out your business cards to everyone you meet to promote your business.
13. Buy recycled. Buy recycled printer or copier paper, pencils, printer or fax ink and florescent light bulbs to save money.

14. Insurance. Buy adequate insurance to protect your business from losses and potential legal action.

15. Get free help. Hire interns at www.interns.com to assist with tasks and in exchange give college credit.
16. Hire your kids. Hire your kids who have to be at least 14 years old and have them pay their own taxes.

How Student Loan Changes Will Affect You

President Obama asked Congress to extend low student loan interest rates for another year. If Congress cannot come to an agreement and pass the bill, student loan interest rates for subsidized government Stafford loans will double increasing from 3.4 to 6.8% on July 1, 2012. However, the increase will only affect undergraduate students who are issued government loans after July 1, 2012.  Interest rates for existing loans will not be affected.  

The interest rate for subsidized loans which are based on economic need is fixed for the life of the loan.  You are not charged interest while you’re in school at least half-time and during grace periods and deferment.  However, a six-month grace period on interest charged on federal subsidized student loans has been suspended which will cause interest to accrue the day after a student graduates from college from July 1, 2012 through June 30, 2014. 

The interest rate for subsidized loans is fixed at 6.8% for graduate and professional degree students and will not be affected.  The interest rate for unsubsidized student loans is 6.8% and will not be affected.  Interest accrues on unsubsidized loans from the time it is disbursed. You can pay the interest while you are in school and during grace periods, deferment or forbearance, or you can allow the interest to accrue.  

For military service employees, the interest rate on loans obtained before entering military service may be capped at 6% during your military service. However, you need to contact your loan servicer to request this benefit. Interest is not charged for loans disbursed after October 1, 2008 for up to 60 months, while serving on active duty, serving in a hostile area, performing qualifying National Guard duty during a war or an emergency. 

Private loans may initially offer a low interest rate similar to a balance transfer credit card, but the interest rate is variable and can increase at any time. The Georgetown University Center on Education predicts that by 2018, approximately 63% of all jobs will require some graduate school education.

Consider going to a cheaper college and create a budget for the lifestyle you want to have when you graduate college.  Determine if you will be able to afford to make the minimum loan payments before applying for the student loans.  Unexpected events occur frequently and it is best to plan ahead instead of waiting until the last minute or being blindsided by an unexpected expense.

How the Pell Grant Changes Will Affect You

Congress is reviewing a budget proposal for 2013 that includes changes to federal Pell Grants. College tuition increases 3 times the rate of inflation making it more difficult each year for students to attend college.


As of July 1, 2012, students who did not receive a high school diploma or GED but demonstrated their ability to attend college will no longer be eligible for a Pell grant. This change will affect approximately 65,000 students according to the Association of Community College Trustees. Only students with a high school diploma or GED will be eligible for Pell Grants.

The change also affects low-income families. The maximum income for low-income families has been reduced from $32,000 to $23,000 which will affect approximately 12,000 students starting July 1, 2012.

Students who previously received the minimum Pell Grant award or 5-10% of the maximum Pell Grant amount will no longer be eligible to receive the grant.

Under the Pell Grant full-time students can use the grant for up to 18 semesters. Starting July 1, 2012, the grant can only be used for full-time students up to 12 semesters.

Since this is an election year, write Congress to voice your concerns and push for increased financial aid for college students.

8 Ways to Apply Your Tax Refund

It’s that time again - time to get back your tax refund. If you haven’t filed yet, what are waiting for?  We all could use some extra money.  Unfortunately, for many Americans in this economy getting a tax refund means it will be spent as soon as you get it.  If you are struggling to pay bills or need to get out of debt your tax refund can be a lifesaver. 

We have been conditioned to believe that it is great to get a tax refund when we file taxes.  The best way to get your tax refund is to increase your tax withholdings and get your money back during the year.  Pay yourself instead of paying the IRS.  Getting a tax refund gives the government free money which is put into a high interest account.  The government keeps the interest and gives the money back to you during tax season.

If you are not very disciplined and don’t manage your money wisely avoid getting a tax refund and adjust your tax withholdings during the year. In some cases getting a tax refund can cause taxpayers to be worse off than they were before they got the refund because they spend the money frivolously and go deeper into debt.  Don't make that mistake.  Use your tax refund wisely and improve your financial situation.  Here are 8 ways to apply your tax refund.

1. Pay down debt.  Pay collection accounts, judgments, liens, and any other late accounts, then pay down credit card balances to 20% or less of the credit limit, then pay any other debts.
2. Create an emergency fund.  Create a savings account to cover bills for 9-12 months.
3. Invest. Start a retirement account.  If you don’t have a retirement account with your employer sign up immediately.  You can also start you own individual retirement account (IRA) in addition to your employer account.
4. Save.  Save for your children's college education. If you haven't already done so start saving for your children's college education.  College tuition increases at 3 times the rate of inflation.    
5. Wealth. Purchase a home. Now is a great time to buy a home.  Use your tax refund to put towards down payment and closing costs.
6. Increase job skills. Take a class or go back to school to enhance your skills at work. This can increase your chances of staying employed or help you find a job.
7. Repairs.  If your home needs major repairs use your tax refund to fix them.
8. Give. Make a tax deductible donation which you can write off on your taxes next year.

The Buffett Rule Why the 1 Percent Should Pay

Yes, I support the Buffet Rule.  The 99% pay most of the taxes in the country.  Many low-to-middle income families pay too much in taxes.  The 99% pay taxes based on their earnings and assets therefore the 1% should be required to follow the same guidelines.

The Buffett Rule is named after investor Warren Buffett who stated in 2011 that he opposed rich people paying less in federal taxes, as a portion of income, than the middle class, and voiced his support for increasing income taxes on the wealthy. 

The Buffett Rule is a tax plan that was proposed in 2011 by President Obama. The tax plan would apply a minimum tax rate of 30% on individuals making more than a million dollars a year to ensure that they do not pay a smaller percentage of income in taxes than non-wealthy Americans.  If enacted, the rule change would result in approximately $36.7 billion per year in additional tax revenue and would help to slightly reduce the country’s deficit.

Some of the reasons for the disparity in taxing wealthy Americans are due to the fact that revenue from long-term capital gains is taxed at a maximum rate of 15%, tax breaks for corporations and the wealthy such as estate taxes, tax deferred investments and off-shore investments.

Senator Harry Reid stated “7,000 millionaires paid no federal income taxes in 2011” and approximately 250,000 taxpayers file income taxes with adjusted gross income of $1 million or more. According to the Tax Policy Center by 2015, approximately 2,000 – 3,000 taxpayers with an adjusted gross income of more than $1 million would pay a tax of 15% or less. Here are 6 ways to make the 1% pay.

1. Call.  Call your local television and radio stations and newspapers and demand additional coverage on taxpayers who paid less in taxes than the 99%. 
2. Write. Write and call your local congressman and other city and state politicians to request that the wealthy pay more in taxes.
3. Pay.  Make sure you pay your taxes.  The lack of taxes paid also contributes to the country’s deficit.  Paying taxes owed helps to generate revenue and helps to slightly reduce the deficit.
4. Plan for the future.  If the economy continues to improve at a slow pace, this will affect many government agencies who will continue to raise costs on city services.  Reduce your spending by 30-50% to save money and ensure you can for the increasing costs of city services and fees.
5. Vote. Voice your concerns about issues that affect you or affect your community, family or friends.  Voice your concerns by voting at primary and general elections.  Your vote does count. Don’t complain if you don’t vote.
6. Don’t forget. Many times taxpayers voice their concern about an issue for a week or two and then forget about it.  If this is an issue you feel strongly about voice your concern until you see a change or at least until the next presidential election.

9 Ways to Protect Your Money

Whether you retire, get an inheritance, get a bonus, life insurance proceeds, get proceeds from a divorce settlement or win the lottery, have children, siblings or work a 9-5 you need to protect your money. Basically, no matter how much money you have you need to protect it.

It is important to protect your money because it provides many benefits: provides security for you, your family and your heirs; makes funeral preparations easier, reduces tax liability, prevents the government from taking you to probate court and reduces estate taxes.  

Life is full of surprises but minimize surprises to your family by protecting your money and making your wishes known.  Here are some instances when you need to protect your money:  if you own a business, if you are single, if you have children, if you get married, if your spouse has a lot of debt or bad spending habits or if you get divorced or are planning a divorce.  Here are 9 ways to protect your money.

1. Get a prenup.  If you have things of value or are concerned if you get divorced your spouse will get half of your assets consider getting a prenup.
2. Stay informed.  Call your mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect your mortgage.
3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts.  Open additional accounts at others banks and keep the balances below $100,000.
4. Plan.  Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank goes bankrupt and you need to access money quickly.
5. Insurance. Buy auto, health, homeowners, life, disability and long-term care insurance. At a minimum have adequate auto, health, homeowners and life insurance.
6. Backup. Make copies of all of your financial statements, bank cards and legal paperwork and store in a waterproof fire proof safe in your home and store a second copy at a secure location away from your home.
7. Review. Review paperwork yearly to ensure beneficiary information is up-to-date.  Add statements in the will and/or trust in the event an unexpected death to ensure your wishes are included in all legal documents.
8. Estate Planning. Create a will, living trust, tax deferred investments, etc. to protect your money and reduce tax liability.
9. Know the laws. Know the laws in your state regarding estates and protect your money.

Last Minute Tax Tips

Even though the deadline for filing taxes has passed, many taxpayers have not filed their taxes. If you are getting a refund you have to file within 3 years from the current tax year but you do not need to file an extension. After that, the penalty for not filing your taxes is forfeiture of your tax refund.

If you don’t file and you are getting a refund will receive a letter from the IRS reminding you to file your tax return, especially if W-2 or 1099 forms were reported to the IRS by your employer.  If you owe taxes and don’t file you will get a letter from the IRS reminding you to pay.

To determine if you have to file taxes 3 things are considered:  your filing status, your age and your income.  Once you reach a certain income level, the law requires you to file. Older individuals and blind individuals must determine if they need to file a Form 1040.

Children file when taxes when: they earned income as a salary, wages or tips or earned a taxable scholarship or fellowship grant; or earned income from investment interest or dividends, capital gains, unemployment benefits and some distribution of a trust fund.

For 2011, if you are under 65: single and earned $9,500, head of household and earned $12,200, married filing jointly and earned $19,000, widow/widower and earned $15,300 or married filing separately and earned $3,700, sold your home or are self-employed you have to file taxes. For more information review the 2011 IRS Publication 17.

Here are 3 tips if you can’t pay your taxes:

1. You can setup an installment agreement and pay the amount owed in 3 years. 
2. Request an extension and request the maximum extension time of 6 months.
3. Request an Offer in Compromise.  An offer in compromise allows you to settle your tax debt for less than the full amount if you meet certain requirements.

Here are 4 ways to file your taxes for free:

1. Free Software.  If your adjusted gross income is $57,000 or less you can use free tax software such as:  Turbo Tax, Free TaxAct, Tax Slayer or H&R Block’s Free File.
2. Use Free Forms.  Anyone can use free file fillable forms from freefilefillableforms.com.  The site provides online versions of paper federal tax forms.
3. File Electronically. Efile (electronically) your tax return for free by using direct deposit or pay your taxes online for free.
4. Paper forms.  Use paper tax forms to file your taxes and mail them to the IRS.  The only cost is postage.

 Legal action can be taken against you by the IRS if you owe taxes and don’t pay: it will be reported on your credit report, you can receive a tax lien, garnishment, judgment, lose your property at a tax auction or other means. Therefore, it is best file your taxes every year.

I Won A Windfall Now What

If you have watched the news you heard that 3 people won the lottery for a total of $613 million dollars a few weeks ago. Everyone thinks to themselves, wow I wish that was me. I said the same thing; the only problem is I don’t play the lottery.

 Another name for winning the lottery is getting a windfall. A windfall could also be: getting an inheritance or life insurance settlement, winning a court case or settlement of a legal matter, getting a bonus or pay raise, receiving back taxes, stock options, or any other good fortune.

When you have a new experience or are suddenly thrust into a new situation – family, finances, health, employment, you must seek advice. If the case of receiving millions, you may have experience in your current job but you don’t have experience being a millionaire.

When you start a job you get training, ask questions, read book, and gain knowledge to learn the skills you need to master your job. The same thing is required if you get a windfall. Read books on how to effectively manage money from those who do it well – Bill Gates, Warren Buffet, Oprah Winfrey, Paul Allen (co-founder of Microsoft), Mark Zuckerberg and Larry Ellison to name a few. Here are 16 tips to help you handle managing a windfall.

1. Consult an accountant, lawyer and financial advisor to develop a plan to get advice on how to maximize tax deductions, set aside money to pay taxes at the end of the year, protect your money, how to grow your money while enjoying your money.
2. Create a safety net. If possible, set aside a portion of money enough to cover your monthly expenses and bills for one year.
3. Avoid lavish or unnecessary spending such as buying sneakers for all the children in the neighborhood or buying your family members all new cars.
4. If you loan a friend or relative money make it official by having a lawyer create a contact on the terms of the loan, loan amount, when and how the loan should be paid back.
5. If you wish to give money to a friend or relative consult a lawyer and accountant to document the gift and ensure that the money is properly accounted for on your taxes.
6. Consider purchasing an item that will appreciate over time such as an investment property.
7. Pay off all debt. If the only debt you have is your mortgage consult a financial advisor to discuss the advantages and disadvantages of paying off your mortgage early.
8. Contribute more to your retirement account if your balance is not on target to meet your retirement goal.
9. Setup estate planning including a will and living trust.
10. Set aside money for your children’s or grandchildren’s college education.
11. Perform standard home repairs, avoid lavish repairs such as adding marble floors, etc. which will not add enough value to your home to recoup the costs of making the upgrades.
12. Donate a portion of your money to charity to help those less fortunate which also serves as a write-off on your taxes.
13. Make it difficult to access your money such as putting a portion in an online account or account in another city or state to reduce the temptation to spend the money.
14. Diversify. Don’t put all of your money in one area, diversify to minimize losses.
15. Set Financial Goals. Set financial goals with target dates on how to grow and spend your money.
16. Review your account yearly to make any necessary adjustments and to ensure that your money continues to grow.

Do You Save

Are you s aver? Don’t feel bad. Many Americans today don't have a savings account. I have been a saver for years but it takes practice and discipline. Your savings account is your safety net if case you get sick or lose your job you can use your savings to hold you for a few months until you can find a new job.

You should have enough in your savings account to pay your bills and monthly expenses for at least 9 to 12 months. Money should be readily accessible and stored in a checking or savings account, preferably a high interest savings account such as Emigrant Direct or ING or a money market account where you can make money while saving money.

You can start by contributing small amounts to until you are able to contribute more even if it is just $5 a week. Once you are able to contribute more do so. Make several short-term goals.

Once you have reached your first goal start developing some long-term goals such as planning for retirement or paying for your children’s college education. A great site to learn about retirement planning is the Morningstar.com investing tutoring.

A savings account will ensure that you are on the road to becoming financially secure and will prevent you from going into debt when an unexpected expense arises. You may not know what the future holds but if you prepare your finances now, it will ease the burden of what tomorrow holds. Here are 17 tips to save money.

1. Pack your lunch for work every day. Buy drinks from the grocery store and skip the Starbucks.
2. Reduce spending by 30-50%.
3. Use direct deposit to send your paycheck directly to your bank.
4. If you get a raise, save most of the money received from the raise or use a portion of it to pay down debt.
5. Buy what you can on sale, use coupons or shop at a wholesale store such as Sam’s Club or Costco.
6. Buy whole foods, such as vegetables, grains, beans and fruits, instead of processed foods.
7. Check your local health food store or farmer’s market to buy grains, seeds, nuts, spices and legumes, in bulk.
8. Carpool or use public transportation.
9. Cancel your cable service or cell phone service or get the cheapest plan possible.
10. Use your cell phone to make long distance calls.
11. Shop around with various banks to find a checking account with no monthly fees.
12. Downgrade or downsize, buy a cheaper car or move into a smaller home.
13. Buy energy efficient appliances, ceiling fans, programmable thermostats, fluorescent light bulbs and lamps, or hot water insulator jackets.
14. Donate items not being used to a charity and write off on your taxes.
15. Rent movies instead of going to the movie theater.
16. Turn the lights out when you are not in a room for 20 minutes or more.
17. Turn the heat and/or air conditioner off when you are not at home or set at a low energy saving temperature.