Net Worth Statement – First Step in Financial Planning Process
Every financial planner will tell you that knowing your current net worth is the first fundamental step in the financial planning process. Taking stock of who you are and where you stand will help you to determine your financial goals and dreams and towards a realistic and practical financial plan.You need to put down in paper all your current assets and liabilities to complete your net worth statement. Your current assets will include your home, bank accounts, saving accounts, real estate investments, stocks, bonds, cars, and everything else that you possessed. Your liabilities will include the mortgage on your home, real estate loans, car loans and any other debts you may have.Why is this first step so important in financial planning? The two situations below will help to explain why carrying out this exercise is such an important aspect of the financial planning process:-1. If your net worth shows that you are technically a bankrupt.This probably implies that your outstanding debts on the house mortgage, real estate loans, car loans and any other debts have outstripped your assets. Hence, your first priority in seeking financial freedom is to seek ways to reduce and retire these debts through managing your budget which will include having to change and make adjustment to your lifestyle to reduce unnecessary expenses.2. If your net worth show that is positive.This will probably implies that you may have some spare funds for your investment planning, or in a enviable position to be able to commence generating a special fund for investment planning. This can be done through a well planned budget diligently carried out with the utmost discipline. Investment planning is one important aspect of financial planning which cannot be overlooked. Putting spare funds into fixed deposit accounts for the short may be fine but for the long term, low yielding financial instruments are not the wisest thing to do.Hence, knowing your current financial position is the first basic step in the financial planning exercise, imperative in your journey towards achieving financial planning. Listing your net worth statement in a spreadsheet will facilitate the monthly or yearly monitoring and tracking of your net worth.
What All Tax Provisions Are New for the Year 2011?
Most of us consider ourselves veterans when it comes to filing tax returns. But even veterans need to keep themselves updated on the current and latest provisions of the Internal Revenue Service department. Based on government policies of state of affair of the economy certain changes are prescribed in the tax provisions to maintain the equilibrium in real income of taxpayers. We all need to keep ourselves updated with these changes in order to take advantage of them and file correct income tax returns. Let us further study few main changes that would be applicable in year 2011.Change in provisions related to Income Tax Preparers: Each year hundreds and thousands of taxpayers use services of income tax preparers for preparing and filing their income tax returns. It is very important to control these preparers so that taxpayers can be assured of their ability to help them. For this in 2011 all the tax preparers must be registered under the new scheme of Internal Revenue Service (IRS) department and must obtain new TPINs. Only the preparers with new TPIN are authorized to file income tax returns on behalf of their clients. Also Tax preparers will only be authorized to file returns online. From 2011 onwards tax preparers cannot file paper returns.Obsolete Debt Indicator Discontinued: Debt indicator tool was primarily used for finding out the tax refunds. Now with majority of taxpayers using the e-file system to submit their tax returns the very purpose of Debt Indicator is defeated. While filing tax returns electronically you receive your tax refunds within 8-10 of processing your return by IRS, so there is actually no need for a Debt Indicator tool now. Year 2011 wishes good bye to Debt indicator.Extension of First Time Home Buyer Credit scheme: The credits under First time home buyer scheme can still be availed by eligible taxpayers. According to the new deadline of September 20th 2010 if you have finalized you biding contract for you home you can claim for credits while filing your return in year 2011.Introduction of New Tax Form: New Tax forms and statements are introduced in year 2011. Now if you have business purchases beyond $600 you will need to fill Form 1099. Also IRS has instructed all the companies involved in credit or debit card business to send year end statements to all its clients showing details of yearly transaction. This is done with a purpose to crack down on people those who do not report their full income.
Selling A Share of Your Business to an Employee
Selling a share of your business (or the entire business) to an employee is often overlooked as a strategy, yet it can be very beneficial for both the owner and employee. There are many different ways this can be achieved and different situations where it might be beneficial. It is also possible that the owner can negotiate a better price as the employee may not have the capacity to purchase the business without the owner’s added assistance.How does it Work?One of the reasons why this strategy is attractive is that you can tailor it to meet the requirements of the business, the owner and the employee. There are no fixed rules, work out what both parties need for the deal to be beneficial and it’s a negotiation process from there.The essential part of the transaction is that the owner will be entitled to receive a payment in return for giving the employee ownership or part ownership of the business.The following variations can exist
If the employee does not have the funds or the capacity to borrow the purchase price, then
the purchase price can be paid over a number of instalments
the owner can personally guarantee the loan (in the employee’s name) and a separate agreement which entitles the owner to retain ownership of the business sold if the guarantee is activated
If the employee does not have the capacity to establish their own business premises then the employee can pay a rent and administration fee to the owner
The employee may purchase only one income stream of the business (and the owner continues to operate and own the remainder of the business)
The employee may purchase a share of the entire business (which could be Stage one of a number of stages to acquire the whole business)
What situations would it be beneficial?Some examples which would suit this strategy:1. The owner requires cash for personal reasons and financing is not an optionExamplePeter owns 3 toy stores which are trading very well. However Peter borrowed heavily to invest in an Aged Care Venture recommended by a friend. The Aged Care Venture has filed for bankruptcy and Peter is struggling to meet his debt obligations personally. The business operated an overdraft and the bank is not willing to lend any additional funds.Paul has been a store manager for 5 years, and has previously spoken with Peter about purchasing the business or part of the business, but Peter had declined as he felt he would sell the entire business when he plans to retire in 5 years.Peter and Paul negotiate for Paul to purchase 20% of the business for $50,000.2. The business is largely dependent on the owner and therefore difficult to sell to an “outside party”. However, through a staged process, the business and its value can be transferred from the owner to the employeeExampleNeville provides engineering consulting services to large mining companies. Almost all of the income is from 4 mining companies that he has consulted to for over 10 years. Daniel is a qualified engineer who has been an employee for 5 years assisting Neville on these contracts (the business also employs 1 engineering undergraduate and 1 administration staff member). Neville wishes to retire.It is unlikely that this business is saleable to anyone except Daniel. It is also likely that Daniel would not be awarded the contracts himself without Neville’s assistance.Daniel agrees to purchase the business effective immediately – the deal is
50% of the purchase price is paid now
50% of the purchase price is payable in 12 months if the mining companies agree to maintain the contracts after Neville’s departure
Neville agrees to continue in the business for 12 months and is paid a salary
3. The owner wishes to offload part of the business to allow another part of the business to grow OR an excellent employee will leave without being rewarded with ownership.ExampleAnnette owns a business that distributes cleaning products. The business has 3 distinct income streams
Wholesale of cleaning products to 3 large corporate clients. Annette has known these clients and has been distributing to them for 15 years. Profit on these products is high.
Retail of cleaning products to restaurants within a 200km radius. Carol is the manager who looks after this division, and whilst sales growth has been good, profit margins are lower as there are a number of competitors in this market.
Annette has developed an innovative cleaning product which is suitable for hospitals. This product has significant potential but Annette will have to invest a lot of time to commercialize, trial and distribute the product.
Carol works long hours and has done a great job with the retail division. Carol is enthusiastic about new products that could be sold through the retail network and has some other ideas to increase profits. Annette however does not have the time, nor the interest to invest money into this division, especially when the same time and money spent on the hospital product could produce much higher profit. Carol is frustrated at this lack of interest and is deciding whether she should approach a competitor to employ her. Carol has been repaying her university debt and does not have much money.Annette and Carol agree as follows
Carol will purchase the retail division for $200,000, payable immediately
Carol is unable to obtain finance for $200,000 by herself, so Annette agrees to personally guarantee the loan. They sign an additional agreement which states that if the personal guarantee is called upon then Annette will be entitled to retain the Retail business. The loan term is for 4 years.
Carol will pay a Rent and Administration charge to Annette of $2,000 per month for the use of the office, staff and equipment.
DISCLAIMER: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their circumstances. The author expressly disclaims all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything done by any such person in reliance, whether wholly or partially upon the whole or any part of the contents of this publication.
5 Empowering Tracks From Female Icons To Make You Feel Inspired
Sometimes we all need a little lift. Whether you’ve had a recent knock to your confidence, have been going through stress in your personal or professional life, or have always struggled with your self-esteem, music is an essential tool for lifting your spirits and making you feel better about yourself.
According to a study by Heriot-Watt University, the type of music you listen to not only influences your mood, but also your personality, with indie and rock/heavy metal fans reporting the lowest levels of self-esteem, while fans of jazz, blues, opera, classical, pop, rap and soul all reported high levels of self-confidence.
So if you’re having a ‘down day’, why not boost your spirits by listening to some powerful, uplifting tracks? Here are five perfect confidence boosters.
Britney Spears – Toxic
Britney’s own struggles with her mental health and conservatorship have made her an inspiration for many people across the world.
This classic song is timelessly sensual, and the heavy beats throughout make it impossible not to dance to. A welcome blast of nostalgia, this tune has filled dance floors across the globe with fans old and new.
The video features Britney as a female spy playing the sexy flight attendant, seducing her passenger before she makes her escape on a motorbike and breaks into a high-security facility guarded by a laser security system.
This track and video is a guaranteed way to feel invincible, and deserves a place on your playlist no matter your mood.
Kelis – Milkshake
A cheesy classic that is guaranteed to make you feel all warm and gooey inside, Kelis pumps up the heat in this 00’s RnB track. Underpinned by intricate drum beats and electric elements, Kelis’ self-confidence is infectious, and it’s hard not to find yourself smiling at the lyrics.
This track is a great way to get into a flirtatious mindset, making it a great choice before going on a date or heading out for the evening.
And if you’re staying in? It’s a great mood lift. But beware! You may find yourself craving a sweet treat.
Eve (ft. Gwen Stefani) – Let Me Blow Your Mind
This RnB classic will capture your attention with its assertive rhythm and powerful vocals from 00’s icons Eve and Gwen Stefani. Featuring a laid-back – yet self-assured – beat, and catchy guitar riff, this is a great track for driving, and its empowering feel is sure to help you feel motivated.
Got a job interview lined up, or thinking of asking for a raise? This anthemic number is a quick way to feel positive and more assertive.
The video features Eve and Gwen Stefani crashing an exclusive event on quad bikes, causing a stir among the privileged attendants, and shoving the performer off stage to perform their own music, before finally being arrested and taken to the station in a police van.
This ‘baddie’ track helps you to tap into the hidden ‘bold’ side of your personality, and lifts your mood while keeping you feeling calm and cool.
Fergie – MILF$
If you have kids, it can be difficult to feel sexy. When you’re running around cleaning the house, changing nappies, or up to your elbows in dishwater, you can easily forget your sensual side – leaving you feeling frumpy and lacking in confidence and motivation.
Thankfully, Fergie’s comeback track is a quick remedy to your low mood and lethargy.
Featuring attractive mothers dressed in curve-hugging latex and silky lingerie going about their daily life in a dreamy, colourful suburbia, this track is a quick way to transform your self-esteem and transport you to a world where you are not just a mother, but a goddess too.
Why not shake off the day and tap into your feminine energy with Fergie, your sexiest PJs, and a bottle of your favourite wine?
Marina And The Diamonds – How To Be A Heartbreaker
Low confidence after a breakup? You’re not alone. Having your heart broken can leave you feeling depressed, undesirable, and unmotivated. So flip the tables on your ex and become a heartbreaker with Marina’s catchy club classic.
This empowering dance track will make you want to move your body and get in touch with your bad girl side, with its heavy beat and pounding rhythms.
Plus, if your libido has suffered as a result of your low mood, take a sneaky peek at the video – it will get your blood pumping with its steamy shower shots and smoking hot male models.