How to Choose The Right Business Loan
Sometimes, your company needs a hand getting by when the market changes or unexpected costs arise.
During this situations, a business needs a bigger boost to push it to a new operating leve. In both instances, short- and long-term business loans are helpful. Learn more about these two loan options and the best time to apply for one.
Short-term loan basics
As the name implies, short-term business loans don’t stay on the books for long.
According to Rosemary Peavler in an article for The Balance Small Business, these loans usually last less than a year, with some terms as short as 90 days.
These smaller loans are great for businesses that need to build up inventory for busy times.
For instance, a retail shop might apply for a short-term loan to buy Christmas inventory in the fall so they’re ready when the holiday season strikes.
A manufacturing business that needs to pay for supplies before production begins might also use a short-term loan to help them get moving and bring money in.
Long-term loan basics
While short-term loans are for quick infusions of cash, long-term loans are for much bigger projects. According to NerdWallet, these loans are best suited for a business making a major investment or expanding.
Long-term loans have more options, with some of them having terms up to 10 years.
While a business (and its owner, depending on its structure) needs to be in good order to qualify for either a short- or long-term loan, long-term loans are much harder to qualify for. The benefits of a longer loan period include lower interest rates and smaller monthly payments.
Which one to choose?
Choosing between short-term and long-term loans is fairly simple, as it depends on how quickly your business can pay back what you owe.
If the money from a loan is more of a bandage solution until you get more capital, a short-term loan is probably the right choice.
However, if your business needs a lot of cash to pay for something that might not produce income for a while, a long-term loan is a better option.
Another thing your business should consider when looking at short-term and long-term loans is which one you qualify for and how expensive it is to borrow that money.
If your business is NEW!
If you are a start-up businesses you may qualify for a short-term loan more easily than long-term loan. The funds might be enough to get you going, but the higher interest rates might make repayment harder than looking for other sources of cash.
If your business is long-standing
If your business qualifies for a loan with a longer term and is comfortable committing to payments spread over several years, the interest rate — or cost to borrow money — tends to be lower.
Choosing the right small-business loan is difficult, especially if an enterprise qualifies for different types. If there is any question about which term is best, consult your financial or business advisor.
4 Business Management Skills You Need to Remember
Do you remember the time your business started making profit?
The time you realized all your hard work had finally paid off. We are here to remind you of this moment because there are key business management skills you need to maintain and never forget as your business flourishes.
1. Learn to listen to expert advice
The thing about owning your business is that you learn a lot and it becomes more difficult to listen to experts. This “know-it-all” syndrome can severely deter you from achieving your long-term business goals. Listen to the experts because they can see your business from a neutral perspective. They can tell you when something is working and when something needs to improve. Surround yourself with experts you trust. They may not always tell you what you want to hear, but they will advise you on what is best.
2. Separate your business finances and your personal finances.
Managing your finances properly is essential to keep things running smoothly. Make sure you are budgeting separately, saving separately and spending adequately. Make sure, you have a “salary” for yourself and pay yourself first. A huge common mistake is to reinvest all your earnings into the business you are running. Although, that might be great for a short-term investment strategy, it does not account for your personal financial well-being. You have to anticipate you will not be running your business forever, for this reason you need to have your own personal savings.
3. Learn the tax deductions that apply to you
Make sure you have a “Tax” expert look over your business finances and make sure you are paying as little taxes as required to. Most small businesses qualify for a 20% “Pass-through deduction. The deduction is generally available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. Additionally, some business might be able to claim their vehicles. If this is you, get some information about how to get Free Gap Insurance and take advantage of BSCU perks.
4. Stay Liquid and plan accordingly
Bad times happen to everyone, make sure you are prepared for them. Make sure you keep at least 6 months of liquid reserves at all times. Make sure you are also set with the proper protections and have a plan set up for emergency. Ask yourself the following; Do you have disability, health insurance and life insurance set up? If not, time to make adjustments.
We hope this helps!
6 Smart Financial Choices You Should be Making
The world is a revolving door of bills, savings, spending and decisions. When we talk about financial wellness, we don’t usually talk about millions. We talk about living within your means. This means you have to make financial choices that will benefit you. For example:
- Create an emergency fund
Every single one of you, regardless of how much you make should have an emergency fund. Unfortunately, more than 50 million Americans forget about this very important financial choice.
This very important aspect of savings will help you take care of unexpected life events that will require you to spend money. The last thing you want when an emergency arises is stress about money. This fund will help you get to your next step easier.
- Embrace minimalism
Do not spend money on things you don’t need. Yes, you may treat yourself once in a while but if you are going out every weekend or changing your house décor every 2 months; STOP!
Take a step back, breathe and ask yourself “Can you live without this?” If the answer is yes, then put your credit card/cash back. We cannot stress this enough; you must live within your means. Once you start doing this, you can actually start achieving other goals like traveling, saving for a home and go on a shopping spree without having a huge financial strain.
- Make your money accrue interest
Growing up I heard everyone older than me say that financial stability came along when you figured out a way to make your money make own its money. CD’s and Money Market Accounts are the perfect way to make your money accrue interest by just letting it sit. It is also the perfect way to get disciplined with your savings. CD’s and Money market accounts are also a guaranteed way to make money because they do not rely on the stock market to grow. You just need patience.
- Change your insurance
We briefly mentioned changing your insurance on our “How to Make a proper Budget” blog. The internet has made research easy. Changing your insurance is research you should be making. See how you can take advantage of discounts, promos and benefits that can help you reduce the cost of your insurance.
- Save money on gas
Gas is one of those little things that makes a difference. If you live anywhere in Florida, you are spending money on gas. A way you can start saving on gas is buying or switching into a smaller car. This may not be possible if you are a parent or have a big family, but if this is not something you need…CHANGE IT!
- Find ways to make extra money
Making a little extra money is smart- especially when you want to treat yourself a bit more. You can use APPs and websites like eBay, Offer Up and Facebook to sell gently used items. You can open a separate Savings Account to add the little extra money you are making. The extra dollars can help you pay for a plane ticket and help you pay for a vacation. It can also make it easier to grow your Emergency Fund.
Try to follow these tips to help you make better financial choices. It is the little changes that make a difference in your financial well-being.
How to create a proper budget
Budgeting is the little plan in 2019 that will keep you financially organized and stress-free. However, to make an accurate budget you must have a clear picture of what your goals are.
For example, aside from paying bills this year, you will also like to travel and buy a home. Both are achievable but will take some discipline in your part.
Before you start, go through find ways to reduce your bills.
Reduce Your Bills
We can thank the internet for making research and price comparison a lot easier. Basically, your first job is to review how to lower your main bills. You should try to reduce your car insurance, phone bill and internet payment. Take around 2 to 3 days to make accurate research and try not to fall for hidden fees.
Second, make a list of any additional expenses you have. These expenses are your wants. They will probably include coffee trips, friend dinners, splurge shopping and any expense you simply do not need to do. Minimalism is key when it comes to sticking your budget. After you have written these out find a way to cut them by 80%. Start making coffee at home and have a home-made breakfast with your friends instead.
Your budget will be divided in 3 parts. Your goals, emergency fund and everyday living.
Set aside 5% of your income after taxes and make this number your emergency fund goal. You will not touch this money unless you absolutely need too.
Then write down every expense you have. Starting with your groceries and ending with your favorite leisure expense.
If your end result shows more income than expenses, you are off to a good start. This means you can prioritize this excess to areas of your budget such as traveling and retiring. If you are showing a higher expense column than income, it means some changes will have to be made.
Make adjustments to expenses.
If you have accurately identified and listed all of your expenses, the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense or savings goal.
If you’re in a situation where expenses are higher than income, you should look at your “wants” to find areas to cut. Since these expenses are typically non-essential, it should be easy to shave a few dollars in a few areas to bring you closer to your income.
Review Your Budget Monthly
It’s important to review your budget on a regular basis to make sure you’re staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.
Most importantly, keep yourself organize. A budget only works if you are willing to follow it and put in the work.
How to ensure that your business taxes are filed safely
How to ensure that your business taxes are filed safely
As a business owner, your number one priority is safeguarding the interests of your enterprise, which is why you should take extra precaution to ensure that your information is protected when filing your business taxes. These tips will ensure that your returns are filed safely, and your information remains uncompromised.
Practical protection
Tax returns require sensitive information pertaining to your business as well as personal details which make them attractive to hackers and identity thieves.
Since the Internal Revenue Service requires you to keep your tax filings and supporting documents for a minimum of three years and a maximum of seven years. The agency advises that you keep all paper documents locked safely away.
A locked drawer or cabinet are good options, but your best bet may very well be a hidden, fireproof safe.
When working with a tax professional, take the time to vet their credentials before you hand over any sensitive documents. If you choose to file on your own via tax software, make sure that your computer is equipped with up-to-date anti-virus and anti-malware software and that you are protected by a firewall.
If you store your documents on your computer for record-keeping purposes or for electronic filing, the IRS recommends installing software designed to encrypt your files and backup drives to prevent important information from being stolen.
Once you’re ready to cycle out older tax documents, the IRS advises that you shred any paper documents thoroughly to prevent identity theft. For electronically stored documents, you will need to wipe your drives before selling or disposing of an old computer or external drive.
Delivery methods
Before you send off or hand over physical tax paperwork, The Balance’s William Perez and Beverly Bird advise that you make a detailed list of everything you’re sending and make copies of every document. You can scan and save the documents as PDFs on your computer. To get an extra layer of protection get add secondary copies to a flash drive or an external hard drive.
Having readily available backup copies will reduce the stress that occurs if something should go missing en route to your accountant or to the government.
If possible, Perez and Bird suggest hand-delivering your documents to your accountant or professional tax preparer, as this serves as the best option to ensure the safe filing of your documents.
If your accountant is too far to reach in person, it’s suggested that you spring for delivery or signature confirmation and that you maintain your tracking information to monitor your documents’ progress. Additionally, Try not to use email.
Never send sensitive details within the body of an email and ensure that all documents are encrypted and password-protected.
Your tax paperwork is too important to the health of your business. By taking the proper precautions, you can better ensure its success and stability without having to worry as much.
5 Money Saving Tricks for this Holiday Season
The Holiday season is upon us and this could either mean you are overly excited about the celebrations or you’re overly stressed out about money. Granted, you can also be both, excited and stressed out. This is normal during this time and we are here to offer you some guidance.
How can you save your money and spend wisely this holiday season?
Make a Budget
It should be no surprise to you that a budget is the smartest way to keep track of your money. You should keep one year-round but you should also have a separate one during the holiday season.
When you create your holiday budget, be smart and avoid setting yourself up for failure. Do not set a budget that is unrealistically low or one that is way too high. Also, think about cutting back in other areas. Can you avoid brunch Sundays with your friends for a month? Or even little things like buying coffee every morning?
Make a list of gifts that you absolutely need to get and another list of gifts you can make yourself. Getting a beautiful printed picture in a cute affordable frame can be just as nice as a $50 bottle of wine. After all, it is the thought that counts.
Make a Potluck
Getting your friends and family together to celebrate is always a beautiful tradition. However, if you are the host, it can be a very expensive one too. Deviate from the all-or-nothing thinking and ask your friends to help you with side dishes and dessert for your celebration. Not only will a potluck save you money, it will also save you precious needed time.
Get Flying Deals and Discounts
If you’re planning on taking a nice trip out of town, search for discounts. Gone are the days where travel agents had the only good flight packages. Now you have a million ways to get discounted fly tickets, car rentals and hotels. In fact, you can even get some travel benefits with your BSCU credit card.
Here is a trick: When you search for flights online, make sure to check at different times of the day. Believe it or not, some flights can get very cheap when you purchase them at odd hours like 2:00am.
Have Will-Power and Know When You Need to Stop
When your list is finished and you’ve checked it twice, it’s time to stop shopping. Know when you’re finished, and avoid stopping by the mall “just to see what they have” – this can lead to making poorly planned purchases and blowing your budget.
Most people get the itch to shop a few days before Christmas, if this is you, then leave some shopping you NEED for the last days. This way, you will still feel like you are getting something but you are not just “checking things out.”
Time to Use Coupons.
If this isn’t typically you, that is okay but during this time you’ll be wise to utilize coupons. You can get coupons online, via email, through a newspaper and you can even buy a cheap coupon book at the mall. The point is you have choices. Do not buy that $25 dress when you can get it for $15. Be smart because every dollar adds up.
Finally, remember to enjoy this time with your family and if you have to spend, spend wisely. We hope this helps.
How to make your savings grow with a Money Market account?
Money market accounts can provide a safe, productive way to store your money
A money market account is an account that typically comes with a higher interest rate than other savings accounts. If investing in stocks and bonds is not something that appeals to you, but you would still like to make your money grow safely, opening a money market account could be the right move. There are still some factors that you should consider before committing to your decision.
Higher interest
The main appeal of money market accounts is that they typically offer higher interest rates than savings accounts, though this is not always true on a case-by-case basis. Investing deposits for money market accounts are held in government securities, commercial paper and certificates of deposit, returning higher yields than you would normally get from a savings account.
MMAs also provided the added bonus of security comparable to that of a traditional savings account. According to NerdWallet’s Margarette Burnette, these accounts are backed by the Federal Deposit Insurance Corporation and National Credit Union Administration for up to $250,000.
Minimum balance
Compared to a regular savings account, which may have a minimum balance requirement, a money market account is likely to require an even greater minimum daily balance as well as a higher minimum deposit requirement when you want to put money into the account. The minimum requirement may also be based on a tiered system. With more money in the account, you can benefit from higher interest rates. If you are under your minimum requirements, you could be hit with expensive maintenance fees. Because of this, it is best to open an MMA if you are sure that you will be able to maintain its conditions and reap the full benefits of using it for saving.
Should you open a money market account?
Money market accounts are a great alternative to the traditional savings account that provide benefits similar to that of a checking account should you need to make the occasional withdrawal. Check out our Money Market options. It’s possible they offer even more fruitful ways to store your money, or equally fruitful options that have fewer limitations.[/vc_column_text][/vc_column][/vc_row]
4 Essentials Every Young Entrepreneur Should Know
No matter how old you are, the entrepreneurship bug can bite you and give you the itch to start a business. If you have been working for some time, you probably have some experience in the industry you’re launching into and have spent time in the business world. However, if you’re younger, there is more for you to learn. Here are some financial tips that will help you start off on the right foot.
- Keep it separate
Almost every resource about business finance declares loudly and often that you need to keep business and personal funds separate. It’s easy to think that you’ll make sure to track things and know what money belongs to whom, but when everything mixes together it can be tempting to dip into business funds for personal use. At BSCU we have a low cost Business Checking product that may help you keep things on budget and organized.
Besides that possibility, Dmitriy Fomichenko of NerdWallet points out that if the IRS comes calling for an audit, you’ll need proof of business expenses and income. That is much easier when the money isn’t in the same place. If your business is a corporation, you’re actually required by law to maintain a separate account for your business.
2. File your taxes
Speaking of the IRS, it’s imperative that you remember to pay your taxes. This might seem like an obvious tip, but your taxes get more complicated when you own a company. Project Eve points out that you might be so wrapped up in day-to-day operations that you forget about taxes, or you might not have the right information to file correctly and meet quarterly deadlines. If you don’t have an accountant for your business already, it’s important that you seek the advice of a tax professional now to avoid penalties (or jail time) later.
3. Start a retirement plan
When you first start your business, more money will be going out than in. But when funds do start to come back and you have enough to cut yourself a paycheck, Yoav Vilner of Entrepreneur says it’s important to also start a retirement fund. If another company employed you, retirement plans would probably be part of your intake paperwork and someone else would take care of it. When you’re working on your own, that task falls to you. No matter how much you think you’ll love your business, you will thank yourself in the future for saving now so you can ride off into the sunset later.
4. Get ready for emergencies
You probably insured your business when you opened up, but don’t forget about yourself. NerdWallet points out that, as an entrepreneur, any serious illness of injury can put that source of income in jeopardy. Make sure that you purchase disability insurance to cover you in case the worst should happen. While you’re at it, consider buying business overhead expense insurance. If you have to take an extensive leave of absence and that temporarily closes your business, this policy will cover certain business costs like rent, employee salaries or taxes until you’re back on your feet.
If you’re young, driven and ready to start a business, we wish you the best of luck. Just make sure to look both ways before you make a major decision, and consider consulting a financial adviser.
How to Start a Small Business with Little Capital
Becoming a business owner doesn’t have to require huge capital investment
If you’ve ever dreamt of owning your own business, you probably stopped dreaming the second you considered how much money it would take to make your dream come true. You can dream big and start small, however, by starting up a business that doesn’t require an exorbitant amount of capital up front. The following are just some of the avenues you can take to make your dream of being a business owner a reality.
Get creative
If you count painting or handicrafts among your biggest passions, you have the potential to turn your hobby into a successful business. According to Jayson DeMers, Founder and CEO of AudienceBoom and VIP Contributor for Entrepreneur, selling your paintings, artwork and crafts on eBay, Amazon and Etsy allows you to reach a wider customer base without having to invest capital in a website. If you want to market your products without having to pay for placement, you can start up dedicated accounts on social media platforms like Twitter and Facebook to show off your goods and offer exclusive discounts.
Cook up some cash
Cooking can be an incredibly rewarding experience. It allows you not only to control what you put into your body, but it also provides a creative outlet and rewards experimentation with new things. If you find that your kitchen creations are consistent crowd-pleasers, you might be able to parlay that skill into a small enterprise. Susan Ward, owner of information technology consulting firm Cypress Technologies, writes for The Balance Small Business that gluten-free and artisanal foods are two of the top small-business ventures you can start without a lot of capital up front.
If you can’t afford a retail space stocked with high-end equipment and appliances, you can simply utilize your home kitchen to create your product. Apart from selling your product via social media, you can start by selling your goods at a local farmers market. Once you begin to build a bit of buzz, you can reach out to local grocery stores and restaurants to see if they’ll begin selling your products and incorporating them into dishes.
Selling yourself
If you are in possession of a certain skillset or talent that you think can drive a small-business endeavor, you might be able to put it to use without having to pay the typical small-business startup cost. Jackie Zimmerman, writing for NerdWallet, says that your expertise can be the seed from which a thriving business can grow.
If you consider yourself an expert in some academic field or another, Zimmerman recommends plying your skills as a consultant or private tutor. If you hit upon a formula or approach that works, you can use the positive results seen by students as a proof of concept and begin marketing yourself with testimonials to back up what you’re selling.
Ward suggests that taking care of seniors is a small-business opportunity that can both help keep you financially solvent and provide a meaningful service to people in need. Ward cites the affluence of the baby-boom generation and an American Association of Retired Persons survey that found 90 percent of seniors wanting to live independently as evidence of in-home care being both profitable and important. Ward notes that there are low-cost franchise opportunities available for those interested in providing senior care.
These are just some of the small-business options that can be brought to fruition without a ton of money up front. If you have a particular skill or field that you would like to turn into a business of your own, consider all of your options and be creative wherever possible
4 Reasons to Open a Savings Account for Your Business
When you were a child, your parents opened your first savings account. As you grew and came into bills of your own, you opened a checking account to have better access to your money. Now, as the owner of a business, you’ve probably opened a business checking account so that you can pay your suppliers and separate enterprise money from your personal accounts. If you really want your business to be as sound as possible, consider going one step further and opening a business savings account.
1. Prepare for tax time
If you have spent time as an employee of an established business, you know that the usual automatic withholding of taxes can be extremely helpful every time that tax season rolls around. As a small-business owner, you are the one responsible for knowing how much money you owe in taxes and paying that amount to the federal, state and local governments on time. A business savings account can be a great place to store or hold the money you know you will need for tax payments. Not only will you yield some interest from setting the money aside, but you will ensure that you or your partners don’t spend it on a business investment instead.
2. Save for a rainy day
When you’re managing your personal funds, your savings account more than likely holds the money you are keeping in case of an emergency, such as a loss of job or a medical crisis. A business can use a savings account for the same thing. Amanda Cameron of Patriot Software advises that a savings account is a great buffer to cover unexpected costs that might otherwise severely hinder or even cripple your business. As liquid assets, you can access funds quickly to fix any problems, such as broken equipment or an accident, to make sure that any work stoppage lasts the shortest time possible.
3. Earn interest
Interest rates are finally going up in the United States, which means that savings accounts might once again start earning meaningful interest. Regardless of how much interest your money accrues, the team at the Money Supermarket Financial Group points out that you will almost certainly earn a more competitive rate of interest with a savings account than in a checking account. Whether you intend to use the money in the account for a rainy day or just have it there for safe keeping, keeping it in a savings account ensures that your money is working for you.
4. Stay organized
Just like an individual can have more than one savings account, a business can also have multiple accounts. While it might seem confusing to maintain separate accounts, it is a very basic way to make sure that all of your money will be used for its intended purpose. Keeping your equipment funds in an account apart from the emergency money will help ensure that you don’t accidentally overspend in an emergency and not be able to pay for upgrades your tools need to stay competitive. This ensures more stability, even if it comes at the cost of added account maintenance.
Consider talking to an associate at your bank or your financial advisor for the best advice for taking your business savings to the next level. A business savings account is by and large a sound decision, but there may be options available to you that work better for your business’s needs.