One way we lose our assets is through confiscatory levels of government taxation.  They force us to give them money for things that they are not authorized to handle, and they turn around and give the money from one group of citizens to another group.  (Cash for Clunkers is a good example, there are thousands more…)

This 5 minute and 37 slide presentation from the Tax Foundation is quick and to the point…

The march to have the top 10% of American citizensd pay the entire cost of government is well underway.  Please take 5 minutes and watch this…

http://www.taxfoundation.org/research/show/25206.html

One way to protect your assets is to assist fiscally conservative, smaller government candidates to get elected to local, state and Congressional races.  And make sure that you get like-minded businessmen and -women out to vote in EVERY election. 

Rob

I think that everyone should own some gold and silver as part of their personal assets. 

These precious metals are not likely to provide massive gains or losses like a stock could- that isn’t their purpose.  The purpose is to preserve their value with respect to other things.

At the turn of the century, you could purchase a fine men’s suit for the price of an ounce of gold (about $35) and the same is true today (about $1000). Gold holds its value while dollars and euros are just paper.

Having some of your portfolio in gold and silver is just a common sense thing to do in my opinion. Diversify.

The easiest way to purchase gold is American Gold Eagles, and the easiest way to purchase silver is either Silver Eagles or pre-1965 circulated quarters and dimes. Click the links for more info on Silver and Gold…

This is a major no-no for corporate financial record keeping.  It can hurt you in so many ways. 

First, what is co-mingling?

Co-mingling of assets involves the owner using business resources for personal purposes, or the business using the owner’s personal resources for business purposes.

First things first.  You need to have separate bank accounts for your corporation and for yourself personally.  This is an absolute must.

In the next few days, we’ll discuss several scenarios of co-mingling…

A quick tip related to Personal Asset Protection…

If you are married or in a long term relationship with joint finances, then the person who handles the finances for the household should take the time while they are healthy and able, to write out a simple list of all bank accounts and retirement accounts that you have with the names of the institutions and the account numbers.   Also,  a list of all insurance policies.

Put the page in a place that is obvious and tell your loved one that it is there, and maybe at the same time give them a ten minute description of the filing system, (video tape this if you want).

Every year  update the list or keep it updated through the year. (I do it between Christmas and New Years)

God Forbid, if anything happens to you, then at least your family will have some clarity on these issues as they deal with other issues.  And that is a gift that you can give them in a few minutes if you plan ahead of time.

Rob

Let me tell you how it will be;
There’s one for you, nineteen for me.
‘Cause I’m the taxman,
Yeah, I’m the taxman.

Should five per cent appear too small,
Be thankful I don‘t take it all.
‘Cause I’m the taxman,
Yeah, I’m the taxman.  – The Beatles

 As Tax Day arrives here in the United States, the amount of taxes you pay can be greatly affected by how you have chosen to setup your business.

One of my core beliefs is that we owe it to ourselves (and our businesses) to pay the lowest legal amount of taxes. This is an area that we are going to explore in more depth over the next four days leading up to April 15.  How to legally pay less taxes…

I hope that you all have an awesome Easter Sunday…

Rob

First, a reminder… Don’t forget to organize all your “C” files today (as described in the Alphabet Strategy post a few days ago).   Now on to our next letter…

Dec 3.  “C” is for Cashflow

In any business Cash is King… the cause of most business failures is running out of cash.

For big companies that have large staffs of financial people to stay on top of cashflow, this can get to be a complicated subject, but for our small business purposes we can simplify this…

Cashflow in the timing of your income and expenses over time.  In a nutshell, cashflow is your bank balance projected into the future.  If you have an accounting system and you enter in future income (receivables) and future expenses (payables) on the dates that you expect to see the money or pay the money, then you will have a rudimentary idea if you have cash flow problems in the future.

I use Intuit’s Quicken program for keeping up with this.  Everything up to today is my actual bank account transactions and balance.  It  includes any other bank accounts like credit cards, lines of credit etc.  But there is more than just past transactions and reconciled amounts.

Future Banking…

There are entries in my Quicken account for the next twelve months into the future as well. 

For all income that is due to my business in the future, I have a planned deposit shown on the day that I expect to receive the money.  As things happen to change either the date that I expect to receive the money, or the amount, I change them in the Quicken account.  This also gives me a quick heads-up every month of what I expect to be paid in the near future so I can start asking about it and checking to make sure there are no surprises.

For all expenses that I know about, I have a planned withdrawal from that account on the day that the money is going to be due.  I put my Payroll expenses (salaries and taxes) into the account for the next twelve months. I also know what my approximate monthly expenses are, so I have a placeholder entry on the 3^rd of every month that shows just as Monthly Expenses and it is for the average amount of our expenses. 

Action tip for those reading this: Figure out a good estimate of exactly what your expenses are per month and keep up with this in a spreadsheet. You might be surprised at what you learn.  Question each expense at least once a year to see if there are ways to reduce it.  Even a little thing like changing your cell phone plan to one that is $60 a month cheaper saves $720 a year.  And bundling your phone, DSL, etc could save 10%… be on the lookout for potential savings…

Having all the future income and expenses in this account allows me to project my cash balance into the future as far as I want.  Note: I do not enter forecasted income amounts only those I know are real income.   This keeps me from fooling myself with rosy projections of income that may or may not happen.   This allows me to look and see where any shortfalls in cash are going to occur, how deep they are and how long they are likely to last.

If there is a major cash crunch at some future time, I can start doing everything possible to generate new income before the crunch occurs, or to speed up some receivables to earlier dates, or to reduce short-term expenses, or to defer some payables into the future.  If you can see into the future 6-12 months it is a lot easier to take small steps now to avert the cash crunch.  If you wait till it is too late, then you need to take much more severe actions.

One other thing… we have a business credit line attached to our account, and we use this for one purpose only.  If we have a temporary cash crunch, we can take money out of the credit line on a short-term basis to cover the required shortfall.  Whenever I access the credit line, I also put the payable into the account at the earliest time when the cash will be available to pay back the short-term loan.  Usually this is within 15-30 days tops, sometimes it is only for a day or two.

In changing times, it is important to have an accurate picture of our Cashflow projected into the future.  It allows you to manage this vital resource, and it allows you to concentrate on other things knowing that this issue is taken care of…

Tomorrow, we will move to “D” and we will be discussing your “Desk”…

While you are preparing for the Holidays and planning for the future…here’s something to add to your “grocery list”…

If you are married or in a long term relationship with joint finances, then the person who handles the finances for the household should take the time, while they are healthy and able, to write out a simple list of all bank accounts and retirement accounts that you have with the names of the institutions and the account numbers.  

Also,  a list of all insurance policies.

Put the page in a place that is obvious and tell your loved one that it is there, and maybe at the same time give them a ten minute description of the filing system, (video tape this if you want).

Every year  update the list or keep it updated through the year. (I do it between Christmas and New Years)

God Forbid, if anything happens to you, then at least your family will have some clarity on these issues as they deal with other issues.  And that is a gift that you can give them in a few minutes if you plan ahead of time.

And, get a Will as well following the information provided by the Do It Yourself Lawyer…

Seize the Day,

Rob Northrup

Is Your Corporation Protecting You?

Sales, Marketing and Persuasion Expert, Dave Lakhani, who is the Author of a number of great books including Power of An Hour, has put up a blog post today that I think is required reading for small business owners in the current “New Economy” or US 2.0 as I have started calling it… 

In this article, Dave gives Business Owners a number of things that they should be asking themselves to maximize their opportunities in the uncertain times ahead. 

The Recession is real…It’s not the end of the world, but preparation is wise… 

Napoleon Hill, in his classic Think And Grow Rich, talks about the need for Accurate Thinking.  One needs to consider reality—be it good, bad, or indifferent—when making decisions.  Read Dave’s blog post and get ready for a good healthy dose of reality…Here’s the link…

The Recession and Small Business…

Have an Accurate Thinking day!

Rob Northrup…

Is Your Corporation Protecting Your Assets?