December was so busy that I didn’t write a single post for this blog emphasizing the fact that it really is a hobby for me and when life gets busy, the hobbies have to take a back seat.
Why was it so busy? Well, things finally got moving on the legal front with purchasing a business and lots of things had to be done before my wife, family, and me left on vacation from December 19th to the 30th. We hustled for the two weeks before leaving and could do absolutely nothing while away due to lack of internet access. Now we are continuing to finalize things and hope to have things in order and running smoothly over the next few weeks.
Items we have had to deal with:
- Negotiating and dealing with bank on the final loan documents through the lawyer. Hopefully these will be signed in the next day or two despite having hoped for 1/2.
- Finalizing the LLC Operating Agreement. Got final draft yesterday and running through the few members. Should not be a problem.
- Getting Federal and State Tax ID numbers. This is done along with the certificate to collect sales tax. Now we just need to go through the process of filing at the end of each month.
- Working on getting health insurance for employees. Somewhat of a cluster. Getting short term monthly policies while working out the details of a more permanent solution. The insurance broker was a little slow in getting it together.
- Getting leases for production equipment. This was a little tough given the circumstances. We have the majority of equipment, but no official lease yet. In process but more of a formality.
- Meet tomorrow to go through payroll process. And the good news is we will collect enough money to meet payroll this week.
- Getting credit card machine and ability to run cards on site and direct deposit.
- Host of other little decisions involving vendors, credit apps, website, etc.
Needless to say, it has been quite busy. The polar vortex and foot of snow has slowed some things down, but all should work out by the end of the week when the weather will warm up. Obviously, I will know a lot more by the end of the month and have a real good sense of business at the end of the first quarter.
The good news is that I suspect it will ultimately be worth it, but I still want to maintain a healthy skepticism.
Bottom line for me is: No time for new year’s resolutions, I have a business to run.
I am not sure how much of this should be made available for public knowledge, but my wife and I will be owning a business in the near future. We are purchasing the assets of a business in an Article 9 sale and have learned or will soon be learning many aspects of owning and running a small business such as:
- Negotiating with a bank
- Completing an Article 9 sale
- Forming an LLC
- Getting a Federal tax identification number
- Collecting and paying sales tax
- Hiring and firing employees
- Meeting vendors
- Plus tons of other stuff that would be overwhelming to list right now
Our goals for this week will be to form the LLC with the help of an attorney since there are some legal issues involved, get the tax ID numbers and start the sales tax application.
In the meantime, we are shopping for business checking accounts, a line of credit, and figuring out how the system works to collect via credit or debit cards.
Now my wife and I have some experience with most of these issues, but it ends up occurring at an entirely new level. I have formed 2 LLC’s in the past which are still active. But it is just my wife and I with some real estate so there are no major legal issues between us. Getting tax numbers was easy as well.
But sales tax adds another whole dimension as does dealing with multiple customers and vendors. I am looking forward to the knowledge and challenge, but it will be quite a lot of work so I am not sure how I feel about all of this leading into the holidays with everything else that needs to get done.
Of course, there is also the concerns that this whole thing might not make a profit or even support itself. We will know more about that over the next several months.
Anyway, I have several emails that I need to write related to all this so we can keep this moving this week.
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401ks, like most other things concerning finance is a boring subject, but you have to know more about this boring topic because it concerns you. A 401k is something that you can use and you should know about it because it is for your benefit that it was created.
Overcoming the Boredom
You have to overcome the boredom that you feel whenever you are studying financial matters especially when it deals with 401k because it concerns your future. The first thing that you need to know is what a 401k is in the first place. A 401k refers to a tax-deferred retirement plan. The term 401k refers to the part of the legislation that was enacted which made this kind of plan a possibility. Under this type of plan you do not have to pay taxes for the amount that you contribute towards it. Taxation would be put off until the time that you use it or when you retire.
How a Tax Deferred Retirement Plan Works
If you are receiving $30,000 on a yearly income and the amount of taxes that you have to pay is valued at $6,000 then that leaves you with $24,000 that you can use. If you contribute $2,000 of your total income to your 401k then only $28,000 would be taxed then. This means that you put more in your savings. Employers usually match a portion of the amount that you contribute towards your 401k. Sometimes the employers add 50% of the total contribution of the employees. This means that the more you contribute to your 401k the faster it grows.
Investing Your 401k
You might have the option of choosing how the money in your 401k can be invested. You can choose to invest it in the stock market. There are various stocks that you can choose from and they all vary in risk potential. You can choose to be safe and invest in food companies or those that are engaged in infrastructure projects. You can choose to be daring and go for the bigger returns but higher risks of computer and hi-tech companies. Planning for your retirement? Figure out how much super you need to retire at Suncorps superannuation site.
You should learn to diversify when it comes to your investments. You should invest in some products that are high risk and some that are relatively safe. That way you can minimize your losses and still take advantage of any trend in the market.
When it Becomes Taxable
Your 401k will become taxable when you use it during your retirement. The rates that would be followed then are those that are in effect in the market.
Do You Have a Good 401k Plan?
Do you think that that you have a good 401k plan? There are several things that you can use in determining whether you have a good plan or not. The first thing is whether it is compliance with government regulations. Is it following what the law says? How are the investments for the plan doing? You know that your money could all end up as nothing if it is invested in the wrong companies.
Discussing a 401k plan might be a boring topic but there would come a time when you would wish that you paid more attention to it.
The preceding was a guest post.