Saturday, October 6, 2018
Friday, October 5, 2018
5 Tips (and 4 Warnings) for Starting Your Own Business While Holding Down a Job
It’s the age-old dilemma: How are you supposed to start your own business (a full-time job itself) while holding down another job already? It’s hard to take that leap of faith knowing that if you leave your current job, you may struggle to pay your bills until your business starts bringing in enough income.
It’s also hard sometimes to find the time and energy to do the responsible things while also following your passion. As an entrepreneur myself, I’m passionate about encouraging others to take the leap. Here are 5 tips (and 4 warnings) that will help give you some direction and much-needed focus. They can help spark the motivation and practical organization you need to make progress towards owning your own successful business.
Identify your MISSION and COMMIT to it
Why do you want to start your own business? Write down ALL the reasons – personal, professional, financial, and anything else you can think of. Keep these reasons handy to motivate you on tough days (and there will be plenty of tough days). These are your motivators.
Then, from your motivators, create your mission and vision for your business. Your mission should be your purpose. What does your business help you do for people? What do you want to create from your business? Your vision is how you carry out your mission. For example, maybe collaboration is really important to you. Write it into your vision. Perhaps having the latest technology will play an important role. Maybe it has to do with how you relate to and treat your clients. Decide what’s important to you about HOW you’ll do business and write it into your vision.
Finally, COMMIT. Commit to making your mission happen. Committing will strengthen your resolve to make it happen. Your vision and your motivators will provide the guidance to make it happen.
Do market research to establish a need for your business – and to differentiate yourself
How will your local market react to another tax business? Is there a need in your area? Is there a niche you can specialize in? For example, I once knew a woman who specialized in helping people with at-home daycare businesses prepare their taxes. Many people I’ve known focus on helping small business owners with their specific tax needs. Perhaps you want to focus on individuals and families. Do some market research to find out what kind of tax services people are looking for and use that information to guide how you’ll tailor your tax business.
To be clear, specializing in one area of tax preparation doesn’t mean you have to exclude others. If you work primarily with small businesses, that doesn’t mean you can’t help families with their tax forms. However, having a specialty or two can help differentiate you in your market.
Assess what you are good at (realistically) and what you need help with
Know your strengths and weaknesses. You may think you don’t have the money or the favors to call in to get help with certain aspects of your business. However, how much more will it cost you if it takes you two to three times as long to complete a task or if you do it wrong? Be realistic about where you need help and then find a way to get it. (And get creative! If cash is short, barter services with local business contacts.)
Build your own strategy and timeline
Now that you have assessed your strengths and weaknesses and have a mission and a vision to guide your way, it’s time to create a strategy – a sort of step-by-step road map that you can refer to as you build your business.
Build your road map by outlining specific, attainable goals that you want to knock out. Then, work backwards from the goal. For example, if your goal is to set up an office where you can see clients, go back and create a mini-timeline and directions for attaining that goal. (Example: 1. Run cost-benefit analysis to see if office space is worth it. 2. Secure financing and set budget. 3. Explore real estate options. Etc. all the way through closing.) That way, if you get a little off course somehow, you’ll have your list to anchor you and remind you what the next steps should be.
Your timeline will be a mix of short-term and long-term goals with long-term goals being broken down into smaller, attainable chunks. Some goals will be a one-time or infrequent activity, such as securing and renewing your business license. Other goals will be recurring. For example, you might set a weekly goal for yourself to complete X hours of coursework or to make X numbers of phone calls to clients and prospects.
Having short-term goals in your timeline along with long-term ones will help you see the progress you’re making and keep you from getting discouraged. At the same time, completing the short-term goals will support your long-term goals.
Get serious about time management
Since time and energy are going to be your two most precious resources as you ramp up your own business, you’ll need to get serious about how you manage both.
Sleep. What is the minimum amount of sleep you need to function well? Some people have to have a full eight hours of sleep. Are you one of them? Or, could you scale it back to seven, maybe six and a half, or even six hours, in order to maximize your waking hours and devote a little extra time to your new business? I’m not saying skip sleep. Do NOT do that. However, what I suggest doing, at least temporarily, is figure out what your magic minimum amount of sleep is. That way, you can still rest your body and your brain and gain an extra hour or so for the extra work of starting a business. Then, and this is very important, stick to that schedule. Don’t get four hours of sleep one night only to crash and sleep for ten the next night. You’ve gained nothing. Find the right schedule for you and stick to it.
Give your most productive hours to your new business. You may have come across a popular saying, “Give your passion project the best part of your day.” If you’re a night owl, stay up late and spend time building your business. If you come home from work wiped out, go to bed early and then get up early so you’re fresh and ready to devote quality time to your business road map and actions. Find the schedule that works best for you, so you can go at your project with a fresh, alert, motivated mind.
Evaluate your current time commitments. Make a list of what you’re already committed to doing. How much time do you devote to each? Are you able to shift any time away from these activities and apply them to your new business activities?
4 Warnings
As motivated as you may feel about having an action plan for getting your new business started, remember the importance of balance and keep these four points in mind.
- Don’t let starting your business interfere with your current, income-generating job. Not only will you put your job and income at risk before you’re ready to leave them behind – it’s disrespectful and unethical.
- Remind yourself that the sacrifices you make now will pay off in the future when you have more free time and more income stability.
- Limit contact with people who are negative about your new endeavor.
- Limiting contact with negative people doesn’t mean avoiding honest feedback. Find people who can really challenge your ideas and give you honest, objective observations. Friends and family are great, but if they’re afraid of hurting your feelings, they may not tell you what they’re really thinking. Seek out objective critiques to make sure you’re not way off base with any of your goals or your strategy.
Want more advice on getting your tax business off the ground and being successful? Check out CEO Chuck McCabe’s Guide to Start and Grow Your Own Tax Business – a great read with a ton of advice from his decades of experience.
source https://www.theincometaxschool.com/blog/starting-your-own-business-while-holding-down-a-job/
Thursday, October 4, 2018
Wednesday, October 3, 2018
Tuesday, October 2, 2018
Monday, October 1, 2018
Student loan repayment help soon could be part of more companies' benefit packages
October's here! In addition to making some general fourth quarter tax moves, this month is when many employees get to reassess and choose coming-year workplace benefits, many of which also offer tax advantages. And tax-free help paying off student debt could soon be part of those packages.
Millennials have overtaken Baby Boomers as the largest generation in the U.S. labor force. That's why today's employers are trying to figure out exactly what these younger workers want.
The traditional worker wishes still apply. All employees want decent pay, regular raises and promotion possibilities. But today's twenty- and mid-thirty-somethings want more, and different, workplace benefits, including on-the-job flexibility, organizational transparency and help in paying off their massive student loans.
It looks like the Internal Revenue Service soon could help companies provide their workers that college debt assistance.
One company gets official OK: In August, the IRS issued a private letter ruling that allowed a company to tie its benefit plan's 401(k) contributions to student loan repayments.
Some companies have provided their workers a direct student loan benefit. But that workplace assistance in reducing college debt has been considered by the IRS as taxable income to the employees.
This letter ruling, however, allows the requesting (and redacted in the document) company to put equivalent pretax funds tied to employees' student loan payments into those worker's 401(k) accounts.
Under the letter ruling specifics, the employer would make a 401(k) contribution on a worker's behalf if the worker was making a student loan payment of at least 2 percent of the worker's salary for a given pay period. The company contribution would be made regardless of an employee's contribution to a 401(k).
This essentially sanctions company reimbursement via pretax money in a retirement plan of the amounts that an employee paid on his/her own toward college debt.
More 401(k)/student loan plans on the way? Some companies have already set up similar student loan arrangements even before the IRS announced its position on this particular case, according to Employee Benefit News (EBN).
And more could soon follow.
At least one employer organization is urging the IRS to broaden the letter ruling's 401(k)/student loan repayment option to all qualified plans.
Explicit tax agency action is needed since letter rulings are specific to the requesting entity and the IRS always notes in its decisions that they are "directed only to the taxpayer requesting it." Still letter rulings give others in similar situations and the tax world in general an idea of the IRS' thinking on the tax topic.
That's why the ERISA Industry Committee (ERIC) wrote the IRS soon after the tax agency's private letter ruling was made public.
ERIC, which lobbies on behalf of large employers on health, retirement and compensation matters, wants the IRS to issue a revenue ruling that would broaden the reach of the letter ruling to all sponsors of 401(k) plans that want to make similar student loan repayment contributions.
In the letter, Will Hansen, ERIC's senior vice president for retirement polity, told the IRS:
"Many employers recognize the burden that student loan debt can have on their workers' ability to save for retirement and would like to help these workers. However, while we believe that current law allows employers to make contributions to their retirement plans on behalf of workers who repay student loan debt, the IRS has yet to clearly articulate that such contributions will not affect the tax-qualified status of an employer’s retirement plan. The recently issued PLR [private letter ruling] is a significant step in this direction, but we believe that more employers would be encouraged to implement programs similar to the one described in the PLR if the IRS would issue a revenue ruling or other guidance of general applicability on this issue."
Student loan and other workplace perks: Even before the letter ruling, EBN notes that the number of companies adding student loan perks to their benefits package was growing.
Still, only 4 percent of employers currently offer their employees some form of assistance or incentive to repay student loans, according to the Society for Human Resource Management.
That could change if the IRS follows ERIC's urging. If it does, it would add yet another tax-favored worker benefit to the mix.
In addition to 401(k) plans, which show up in benefits packages as either a traditional tax-deferred defined contribution plan or tax-free Roth 401(k) account, many employees benefit tax-wise from such employer-provided fringe benefits as:
- assistance in taking even more classes once you're on the job,
- health care coverage, including high-deductible medical insurance plans for which you can establish a health savings account (HSA), and
- child care and medical flexible spending accounts (FSAs).
Regardless of what benefits your company offers, shop carefully during your annual open enrollment season that, for many, starts this month. My earlier post suggesting 5 things to consider in choosing workplace benefits can help.
Other tax actions to consider during the month that effectively ushers in fall include filing your 2017 return if you got an extension, preparing for the seemingly never-ending hurricane season and, once you're finished with last year's taxes, brush up on how the new tax law will affect your 2018 taxes.
You can find more about these and other October Tax Moves under the bright red heading of the same name in the ol' blog's right column. Check them out once you've taken care of open season benefits enrollment.
You also might find these items of interest:
- 8 ways the new tax law does — and doesn't — affect paying school costs
- Tapping retirement accounts early is a dangerous trend among young savers
- Millennials' participation in tax-favored workplace retirement plans improves, but still lags other generations
source http://www.dontmesswithtaxes.com/2018/10/student-loan-repayment-help-soon-could-be-part-of-more-workplaces-benefits-packages.html