Taking Your Business To The Next Level
Starting your business is a big deal. Once you’ve decided to start the business, it’s important to consider early on ways to grow and manage your business that is legally compliant, efficient, and profitable. Check out how to create a solid foundation and save on your taxes!
7 Tips For Creating A Winning Business Plan
Far too many aspiring entrepreneurs jumpstart their businesses without taking the time to properly plan. Just as a builder uses a blueprint to ensure a new construction project will be structurally sound, a carefully researched and well-thought-out business plan allows you to determine whether or not your business concept will actually succeed and make money.
A solid business plan can not only serve as a roadmap to guide your company’s progress, but it can also give you an opportunity to test the validity of your business model, research the market, understand your competition, and avoid potential pitfalls. And if you are applying for a loan or seeking investors, a business plan is a must-have to demonstrate that you’ve fully vetted your business’ financial feasibility.
1. Communicate Your Company's Purpose And Vision
Your company’s purpose and vision will serve as your organization’s compass for making future decisions at all levels, and provide a framework for how you market and run your operation.
2. Identify Your Competition
When creating your plan, it’s vital that you understand who your competitors are and how your company is different—and better than them. How do you plan to set yourself apart from other companies? Is there enough market share to support your business in your chosen market? Keep in mind that your competition isn’t always another business—it might be a completely new technology that renders your new business obsolete.
3. Outline Your Business Model
Outlining your business model is necessary even if you don’t plan to raise startup capital. The process of developing financial projections, including an estimate of start-up costs, a break-even analysis, a profit-and-loss forecast, and a cash-flow projection, will help you decide if your business is worth starting, or if you need to rethink your concept.
Putting Your Kids On The Payroll Can Benefit Your Business AND Help You Save Big Money On Your Taxes
Paying your children—whether they’re tweens, teens, or young adults—to work for your company is one of the greatest advantages of running a family business. By hiring your kids, you can help them develop a strong work ethic, give them experience managing money, and jumpstart their ability to save for their future, all while keeping more wealth in your family.
In return, you get employees who have a built-in sense of commitment, teamwork, loyalty, and you may even end up with a long-term succession plan. This sense of dedication is why so many business owners like to claim that their team is “just like family.”
On top of those benefits, hiring your kids also comes with some significant tax-saving benefits as well. And with the passage of the Tax Cuts and Jobs Act (TCJA), those tax benefits are now even greater than ever before. That said, if you do hire your kids, make sure they do legitimate work and you pay them reasonable wages, or you may attract unwanted attention from the IRS. More on this below.
1. Their First $12,550 Worth of Earnings Are Tax-Free
The TCJA nearly doubled the standard deduction, which increased from $6,300 to $12,550 starting in 2018. This means your children will pay zero federal income tax on anything they earn up to $12,550. This tax break alone can save you thousands each year and applies to both minors and those kids over age 18.
2. Payroll Tax Exemption
If your business is a sole proprietorship, a husband-wife partnership, a single-member LLC taxed as a sole proprietorship, or an LLC taxed as a husband-wife partnership, you might not be required to withhold or pay any Social Security and Medicare tax (FICA) or federal unemployment tax (FUTA) on your kid’s wages.
3. Work-Arounds For Corporations
If your business is set up as an S or C corporation, you don’t qualify for the payroll tax exemption, which means you can still pay your child through your corporation, but you’ll have to withhold taxes from their pay, and they’ll have to file a tax return to get a refund. However, there are ways to get around this restriction by using some creative—yet 100% legal—tax strategies.