Wednesday, April 16, 2014

Business or Hobby?

Many people will venture into a hobby while working a full or part time job(s). They learn the skills needed for their hobby and begin talking to their friends and family that give them the support to keep going with their hobby. Then that is when individual may think, I can turn this hobby into a business. So lets review is it a Hobby or a Business:
Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit. In order to make this determination, taxpayers should consider the following factors:
  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Does the taxpayer depend on income from the activity?
  • If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
  • Has the taxpayer changed methods of operation to improve profitability?
  • Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
  • Has the taxpayer made a profit in similar activities in the past?
  • Does the activity make a profit in some years?
  • Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?
     
    If you want to learn more about is it a Business or Hobby be sure to follow up with the IRS at this link:   http://www.irs.gov/uac/Business-or-Hobby%3F-Answer-Has-Implications-for-Deductions

Tuesday, April 15, 2014

Week8: The Profit Review(Season Finale)

 Watch tonight's season finale preview(13 minutes) by clicking on the link:
https://www.youtube.com/watch?v=c59pZOalbqc&feature=youtu.be
Key Pie Lime Company

Who wants a slice of this company? We see another partnership between boyfriend and girlfriend. I can't wait to learn more about each of the owners. We can see that working for the male owner that he has a short fuse and wants things to be done when and how he wants them completed. In the preview, we did not learn much about the girlfriend, but that she is running the other location.

2nd Location-Im confused why they make the pies in the other facility and ship from this facility. Again, the efficiency is low. If they are lacking space in the other facility, having this location still does not seem to be ideal. We will have to wait until tonight to see why they opened this location.

Recipe-Nothing seems original in this pie business. The crust is pre-made and the filling is not original or fresh ingredients. Not one of their products in their store is made by them. They are carrying a high percentage of products that deal with key lime, but at what price did they buy the products. We see they are making little  money from the products.

Tuesday, April 8, 2014

Week 7: The Profit Preview

Tonight Marcus visits Amazing Grapes.

Absentee Owners
We can see that the co-owners are highly absent from there business. Their 17 employees are keeping the business doors open.  It is amazing that one business owner is a consultant. He should set an example. Other issues that are possible with absentee owners is that employees may be stealing from the business.
Layout of the Business
We can see that they have multiple businesses going on under one roof. They are a wine store and a restaurant. This requires a lot of work on both owners. Having retail space near a restaurant can be beneficial because if they enjoyed something at the restaurant that you specifically made(wine, dressing, sauce) then it may help selling it in a retail area. The area doesn't have to be too big, but it can bring in more money and keep your business logo in front of the customer.


To preview tonight's episode
http://youtu.be/azrxaKgyyC8 

Monday, April 7, 2014

Taxes are Due Next Week

Many of you are probably wondering where you should go for additional information about tax season. Well it is important to use these resources all year long. We identify a couple places to find tax information.
  • www.sba.gov: The Small Business Administration 
  • www.irs.gov Businesses/Small-Businesses-&-Self-Employed
In addition you check with your local or your own financial advisor and financial planner. 

Thursday, April 3, 2014

Learn the Difference between Debt and Equity Financing


15 minute video explaining debt versus equity financing.

Many people are trying for investor money versus banking loans. Yes you might be currently challenged at banks either they may be not interested in  lending money for your type of business or that possibly the business owners have little collateral or low credit scores.

A business owner maybe you are currently challenged with your current bank said they do not have the funds to lend to you. One suggestion is do not just stop at one bank or financial institution. Shop at least 3 banks if they are lending for you type of business. If you have poor credit scores, do not just give up. How about working on improving your credit score. Take control of your personal finance issues early so you can be ready for when you need additional money for growing your business.

Most business owners are turned down from a bank want to resort to equity, but it is not for everyone. If you want to see an example of equity financing going wrong, watch the video below. Another challenge to equity financing is that you could end up paying additional attorney fees. Do you have the money for an attorney to review and explain the agreement? Also, when you sell or buy out the investor, you make want to meet with your own attorney as well a certified public accountant. Equity can look sweet deal at the beginning, but how well do you all work together and making decisions will be more challenging from the other investors. Be prepared, do your work ahead of time and ask the hard questions to professionals as well as any investor. 
 However, you should evaluate whether equity financing is a better choice. 

The televisions show, The Profit,Season 2 Episode 206 Sweet Pete's is an example when an investor and business owners did not work together.  http://www.cnbc.com/live-tv/the-profit