Steps to Take Before Selling a Business

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If you’re considering selling your business sometime soon, then you should take a step back to think about things. You want to make sure that you’re doing everything right before you sell your business so that you can get the most out of it. Take a look at the following steps to take before selling a business. You’ll be able to feel prepared for what is to come and you’ll have an easier time putting yourself in an advantageous position. 

Learn How to Price Your Business 

Learning how to price your business is the first thing that you need to do. You need to consider many factors such as the value of your assets, the potential for future business earnings, and the value of certain intangible business assets. The value of your brand that you have built needs to be considered when pricing things out. Take the time to assess the true value of your business so that you can get the most out of it. 

Understand the Selling Process 

Selling a business isn’t something that just happens one day. It’s actually a process that can take a long time and it’s quite involved. Look into the process and understand what it entails. It might take months for a business sale to go through and you’ll likely want to hire legal professionals to help you with everything. 

Hire the Best Advisors

Hiring the best advisors can make selling your business a much easier prospect. You will be able to get the help of experts in law and you’ll also likely want to have tax professionals on hand. This is a complicated process and you need to navigate the waters carefully to ensure that you don’t make any tiny mistakes. If you hire experienced professionals to help out, then things will go smoothly and you won’t have to be nearly as concerned. 

Prepare Your Employees

Your employees need to be told about your plans to sell the business. Inform your senior staff first and then they can help you to get the information to everyone else in the company. Being transparent about this process can keep employee morale high and you can ensure a smooth transition to the new ownership. 

Prepare Yourself

You have put a lot of yourself into your business and selling it might be a bit of an emotional journey. Some people struggle to come to terms with giving up a business that they put so much effort into. You should make sure that this is the right decision for you emotionally while considering the benefits of selling the business. If you want to go through with things after preparing yourself for what it means, then you’ll be ready to sell for sure. 

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The Importance of a Business Savings Account

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If your business doesn’t have a savings account, then that is a mistake. Many people don’t realize how important it is to have a business savings account. Read on to learn about some of the benefits of maintaining a savings account for your business. It will allow you to make an informed decision about what to do for your business. 

Saving for the Future

Saving for the future is smart and you don’t want to spend all of the money that you’re making. It is necessary to invest funds back into the business, but you should also be saving money in a savings account. You can save a certain amount of money each month so that you’ll have money to work with when you need to make changes in the future. The business market can shift suddenly, and it’s better to be prepared. 

Protecting Yourself

Having business savings can help to protect you in the event that something bad happens as well. Many companies wind up going under or struggling through tumultuous times due to not having savings. If you have savings, then that money could be used to keep things going if your business hits a rough patch. You’ll be thankful to have it if you’re ever in need. 

Savings Help to Give You Options

Having savings will help to give you options. You’ll be able to choose how to use that money to help your company moving forward. It might be possible to use the money to expand your business in a controlled fashion. You could use it as a cushion or you could save money up for a specific purpose. 

Giving Back to the Community

Many companies also choose to use their savings to help give back to the communities. Having the goodwill of the community is always going to be important. You could use these funds to help donate to local charities each year or you could hold certain charity events to help those who are less fortunate. Either way, it’ll be nice to have the money to use for purposes like this and it will reflect well on your business. 

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Ways Small Businesses Can Save Money

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Trying to save money as a small business might not always seem easy. You don’t want to cut corners, but it’s still going to be beneficial to be able to keep your costs low. There are a few ways that small businesses can save money that will make life a bit easier. Read on to get more information. 

Avoid Paying for Office Space

Office space is very costly and it might not be an effective way to use your funds. Many small businesses choose to work out of home offices instead of renting commercial spaces. Unless you’re operating a retail-oriented business, this is going to be a good way to save yourself some cash. You can keep the funds that you would be spending on rent and they can be used for other business expenses. 

Buying Secondhand Equipment

You might be able to get away with buying secondhand equipment as well. A brand new printer or fax machine might cost a lot of money, but buying something comparable that is second hand could save you a lot of cash. There might be many pieces of equipment that your business will need that will also be available on the secondhand market. Consider trying to look for a deal rather than going out to buy expensive new pieces of equipment. 

Make Use of Freelancers

Paying employees will be expensive and you might not have the money to maintain a full staff. It can be more cost-effective to hire freelancers to help out when you’re in need. This can save you a lot of money on your payroll while still allowing you to get the help that you need. There are many great freelancing websites that you can sign up for where you can find professionals who are looking for work. 

Spend Marketing Dollars Wisely

If you are going to be marketing your business, then you can spend your dollars wisely to get the most out of your money. You can make use of inexpensive marketing methods such as social media marketing. It’s also helpful to develop a rapport with customers and to rely on your customers to spread the good word about your business. If you can avoid paying for costly ad campaigns, then you should do so. 

Install a Smart Thermostat

Installing a smart thermostat will help you to save money on your energy bills. Energy bills can add up to quite a bit of spending each year and being able to cut that bill down substantially will be useful. A smart thermostat keeps you from wasting energy at the office. It’s a cost-effective way to save a bit of money each month. 

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Small Business Accounting Mistakes to Avoid

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Running your small business takes a lot of effort. If you’re handling your accounting by yourself, then it’s easy to let little mistakes slip through the cracks. Even so, it’s important to avoid mistakes like these because they can throw things off in severe ways. Take a look at the following small business accounting mistakes to avoid. 

Tracking Business Costs Improperly

If you make mistakes while tracking your business costs, then you are going to put your small business in a bad position. You want to make sure that you are accounting for all of your costs down to the last cent. Keeping accurate records of spending will prove to be imperative. You need to double-check things to make sure that you aren’t inputting things into your spreadsheets improperly. 

Mixing Business and Personal Accounts

As a business owner, you need to make sure that you keep your business and personal accounts separate. If you fail to do so, then things can get messy come tax season. It can complicate things when you are trying to get business loans as well since lenders will need to get a look at your cash flow to determine whether they can lend to you. Make sure that your personal accounts and your business accounts are kept separate. 

Billing Mismanagement

Billing mismanagement can harm your business substantially. Some businesses make mistakes when managing billing and they might wind up sending out invoices late. This can lead to delayed funds and you could wind up being late paying your own bills. A few mistakes with your management of billing could lead to costly repercussions for your small business. 

Not Planning for Taxes Ahead of Time

You need to plan for your taxes ahead of time to avoid being caught off guard. This is why it is highly recommended to simply hire professionals to take care of things. They can inform you of what needs to be done for tax purposes while also managing your books. If you are worried about making mistakes, then calling in professional accountants will alleviate those worries. 

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How to Know If Entrepreneurship Is Right for You

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Not everyone is going to be cut out for entrepreneurship. It can be a difficult path and you might not be sure if your business idea is good enough to move forward with. If you want to determine if entrepreneurship is a good path for you, then there are many things to consider. Keep reading to find the answers so that you can figure out if becoming an entrepreneur is a good idea in your situation. 

Does Your Business Idea Solve a Problem or Need?

Your business idea could be a good one, but it needs to solve a problem or a need. If there isn’t a demand for your type of business in your area, then you run the risk of failing even if you’re great at what you do. Make sure that your business idea makes sense and that it is filling some type of need in your area. You should also consider the competition and whether you think you can do things better than your potential competitors. 

Is Your Business Idea Profitable?

Of course, your business idea needs to be profitable for it to truly be able to take off. If you aren’t sure whether your business idea will make money, then it’s not going to be good to move forward. You need to do market research to see how your business will work in today’s market. Be sure of your decision before you start investing money in a new business. 

Why Do You Want to Start a Business?

Why you want to start a business is just as important as whether your business idea has potential. If you are starting a business purely because you want to get rich, then it might not be a good idea. Entrepreneurship can be risky and it also takes a long time to find great success in most situations. Make sure that you’re starting your business for the right reasons and that you have the necessary passion to keep on going when things get tough. 

Are You Prepared to Work Hard?

It’s also imperative to understand that being an entrepreneur takes a lot of effort. You have to work long hours and it can make it difficult to find enough time for your personal life. The first few years of launching a business will be especially busy. If you aren’t willing to put in the hard work and the long hours, then entrepreneurship is likely not for you. 

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Accounting Tips for SaaS Startups

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Software as a Service (SaaS) is a business model focused on the delivery of software. And like any business, it has needs in accounting to make that business model run efficiently. Knowing where to start with accounting for your SaaS startup can be a difficult thing to wrap your head around.

It doesn’t help that so few states actually have concrete positions on whether or not to tax SaaS or exempt it. Knowing the financials of your SaaS company is essential regardless. There are steps that you can take before calling in the professionals, but this aspect is essential no less.

Scale Your Tax Planning

Tax compliance is one of the most important aspects of any business. Non-compliance is usually a case of shoddy bookkeeping and it can be easily avoided. When growing your business especially, compliance can be an issue. Maybe you are compliant where your business originated, but are not when you expand across state lines.

Having a tax professional in your corner can help guide you towards proper tax planning. This can help you avoid any catastrophes that could seriously set your business back and get you into trouble with Uncle Sam.

Be Aware of Extras

Maybe your company sells complementary services to supplement a core product. In that case, be aware of what fees are being charged outside of that core product. Make certain to allocate revenue based on the estimated selling price of each of those services or a fee on a stand-alone basis. 

While there are many SaaS companies that have recognized the benefits involved with doing this, there are many more that have not. Understand everything that you are charging for when factoring in your revenue for accounting.

Be Aware of Changes

Because SaaS is still uncertain from a tax standpoint, it is imperative to be aware of any changes that may be made to tax codes. Pleading ignorance won’t do you any good; staying on top of regulations and codes will.

Small businesses cannot afford to be negligent with tax codes and developing regulations can help you stay on top of those changes.

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The Most Important Accounting Reports for Small Businesses

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Keeping detailed records is imperative for any business, let alone small businesses that can live and die on the smallest of factors. What you might not know is that there are many more benefits that small business accounting can bring to the table.

Having the right accounting reports at your disposal can be a huge deal when it comes to improving, growing, and expanding your business. Here are a few of the reports that can help your company stabilize and grow.

Profit and Loss

This is hands down the most important report that any business has. This is the report that shows a business how much money they are making (which is a completely gloss-over explanation). This includes details of where your money is coming from and where you are spending it.

Knowing where your money is coming from and where it is going is an absolute must for any business. This allows for refinements to be made and allows you to cut down on unnecessary spending. Know what is working well for your business and what isn’t so you can make the necessary adjustments. 

Balance Sheet

The balance sheet is right there with your P&L report as one of the most important reports that you need to have. Your balance sheet, to over-simplify, tells you what your company owes and has coming in. This includes basic assets like accounts receivables, bank accounts, and possibly an investment account.

Your balance sheet can also contain assets like computers, equipment, property, and any other physical and intangible property. This is your one-stop-shop for seeing what your business owns, what it owes, and where your liabilities are.

Revenue by Customer

While you should definitely be aware of who owes you money, you should also be aware of who is giving you the most money. Revenue reports are essential to see what you’re bringing in, but they can be even more helpful by letting you know what customer demographics to target.

This is, in essence, focusing on strengths in order to keep your business growing while you work on improving sales in other areas.

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Tips for Hiring an Accountant

It should go without saying, but every dollar can matter for business owners. Not knowing where your business stands on a monthly basis can be the death knell for your business as a whole. And while it might save you some money to do the bookkeeping yourself, it might also be holding you back.

That is why hiring an accountant may be imperative for your business—someone who can develop an intimate knowledge of your business and help you plan for those financial twists and turns that every company faces.

Here are a few things to look for when looking into a general accounting practice. 

Accounting and Record-Keeping 

These are some of the most basic principles of accounting. Business owners can typically manage their day-to-day records, but an accountant can help you set up your accounting systems and show you how to use them.

Having an efficient system in place allows you to evaluate profitability properly as well as modify pricing. Additionally, you can monitor your expenses, spot trends, track a budget, and reduce accounting fees that are required to produce tax returns and financial statements.

Tax Advice

Speaking of tax returns, having assistance when filing your taxes can make a massive difference for your business. Accountants can generally provide assistance when it comes to tax planning and tax compliance. The compliance aspect means obeying the tax laws while planning refers to reducing your tax burden.

Having a tax professional in your corner can save you some serious money come tax time and help you avoid overpaying or paying too much money in other areas.

Auditing

If you are looking to obtain a loan in the near future, having an auditing service to help you prepare financial statements can be a lifesaver. Not to mention the fact that if you face an actual audit, an accountant can help ensure that your company is as prepared as it can be to face that financial scrutiny.

Having a certified accountant on your side can make a world of difference for your small business.

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The Benefits of Keeping Updated Accounting Records

Accounting records might seem like a tedious and unnecessary thing, but they are actually essential for your business. Without those detailed records, any decision made regarding your business as a whole will just be a guess.

Guessing is simply not the way to run a business. There is far too much room for error, and when your company is on the small side, there is not much room for mistakes to be made. That is why keeping detailed, updated accounting records is essential for businesses of all sizes.

Refine Products and Services

One of the keys to running an efficient and successful business is to focus on what is going well and either tweak or cut out any underperforming services or products. Think about it: if you have a product or service that just is not working, why would you want to continue dumping money into it with no change?

Having up-to-date accounting records means you can focus on those underperforming aspects of your business. Perhaps there is room for change, or maybe it’s time to cut out that service or product entirely. Without detailed accounting records, you will be guessing at best, and that is something no business should do.

Save at Tax Time

If that wasn’t enough motivation, maybe this is: having messy accounting records can lead to real stresses at tax time. Unlike individuals, who file once per year, businesses have to pay estimated quarterly taxes.

Sure, you could pay based on last year’s tax rates, but if you have updated accounting books, you could possibly get a better estimate than you may have otherwise. Especially when you are a small business, any additional revenue can make all the difference.

If you are not paying attention to your books, you could be throwing away money at tax time that could be put towards growing your business. There are many more reasons why having updated and detailed accounting records are imperative to the health and success of any business, whether big or small.

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Guarantors for your business finance application

Business Finance, supported with a legal charge over a guarantors property.

A guarantor who offers a legal charge over their property is a potential means of securing business finance when your company is unable to provide security itself or is suffering financial circumstances that may discourage funders.

When someone agrees to act as a secured guarantor for your company , they commit to covering the repayments and liabilities to the funder if your company fails to keep up those payments or honour it’s obligations to the funder.

Sometimes acting as guarantor is a way for parents (or grandparents) to help their children start a business or buy an existing business.

If we fund a business in this way we will expect any guarantor to be a director and/or shareholder or that they will become a director or shareholder in the business to prove that they are connected and have an interest in the business.

Being a secured guarantor means signing a personal guarantee and also a legal charge on their property securing the liabilities of the company to the funder. The guarantor should take his/her own independent legal advice before agreeing to be a guarantor and before singing a legal charge on their property to ensure that they understand the risks involved should the company not pay and as their home may be repossessed if the company defaults and demand is made for payment under the guarantee.

One of the great benefits of a guarantor for young adults is that it lets the people you’re close to help you start in business or expand your business without having to lend you money themselves. That means that instead of dipping into their rainy-day fund or selling something important to them to help you out, your loved ones can agree to become a guarantor and help you borrow the money you need.

When might a business need to provide a secured guarantee from someone else?

  • A business owned by a non-homeowner or someone with very little equity in their property.
  • A business with a low income
  • A business with bad credit
  • Someone looking to buy a business that would ordinarily not have the opportunity to purchase a business as they have no security or collateral.
  • Someone that has a business who’s trading performance is not strong
  • A young person wanting to start in business
  • A start up

Who might be acceptable to a funder as a secured guarantor?

A guarantor generally needs the following:

  • To own their own property
  • To possess enough equity to satisfy the funder

What happens if my company misses a payment?

Missing a payment is never ideal, but with a secured guarantor it’s particularly important to be aware of what might happen if the payments aren’t met.

If your company falls behind on its finance payments, there are several things that could happen:

  • It is given more time to make the payments
  • It is charged a late payment and other contractual fees
  • The funder asks your guarantor to make the payment on behalf of your company.

If you continue to miss your payments and the finance agreement is terminated, further actions could include:

  • Your guarantors house could be repossessed and sold by the funder under the terms of the legal charge.
  • A Receiver might be appointed by the funder to receive any income from the guarantor’s property or exercise the funder’s rights under the legal charge which include taking possession of the property and selling it under the powers within the legal charge

Tips for getting a secured guarantor

  • Be open about your circumstances. Honesty is important in financial situations, so it’s vital to be open with your guarantor, or with the person you are promising to be guarantor for. All possible outcomes should be considered.
  • Use a solicitor. A guarantor is a big commitment and money matters can be complicated. The funder should recommend that you take independent legal advice

At Nationwide Corporate Finance we are excited and are fully supportive of your funding project and will do our very best to help you and approve your funding needs very quickly. However, with all this excitement please do not feel pressured to enter in to an agreement too quickly, take your time and proceed when you are ready especially as you and your friends or relatives will be asked to sign as guarantors and secure the finance against their personal properties so they will ultimately will be liable and those properties may have to be repossessed and sold if your business fails.

from Nationwide Corporate Finance https://www.nationwidefinance.co.uk/blog/2020/03/guarantors-for-your-business-finance-application/
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