With a growing, stronger economy, many small-business owners are looking for loans to expand their operations. An owner may need working capital to support the company’s growth, want to consolidate debts into one loan on more favorable terms, or purchase additional real estate and equipment. Regardless of why a small-business owner is looking for financing, lenders usually apply the same rules to assess the financial wherewithal of the business.
Financial institutions assess the quality of the potential loan by testing the “Five C’s” of credit. The “C’s” are: character, capacity, capital, conditions and collateral. As a business owner, here are the five areas to consider as you prepare to obtain financing and assess how you’re doing. Each is important.
Character typically shows a small-business owner’s willingness to repay the loan. Lenders collect three years of financial statements to see trends and behaviors that borrowers display. Typically, three years is a long enough period of time for a small business to encounter a hiccup, a difficulty, or other hard times. By looking at the borrower’s behavior during a difficulty, the lender will learn how the borrower reacted when he had his back up against the wall. Did he continue to pay the obligations? Did he short-sell his property or close a company or line of business? These can be indicators of the borrower’s character.
Capacity…(read the rest of the story)
Written by: aga merx
Originally published by Utah Valley Health and Wellness
Legend has it, Albert Einstein was once asked what the greatest invention of all time was. His answer? Compound interest. I am often asked when and how an individual can start investing. Those who follow these three simple rules will have the potential to improve their lives significantly.
Rule #1: For compound interest to be truly powerful, it must have the benefit of time. The more time, the better. Think of it like a snowball rolling down a hill. It starts out small and then gets bigger and bigger the longer it rolls.
For example, compare two investors who each put away $2,000 a year and earn 10% annually. The first investor starts at age 19 and puts away $2,000 per year for eight consecutive years and then holds it there. The second investor waits eight years and then invests $2,000 per year for the next 38 years. At the end of the 38 years, the first investor’s account will have grown to $941,054. The second investor’s account will be only $800,896. Because of the power of compound interest, the first investor avoids 38 years of payments and invests $60,000 less, but ends up with $140,158 more.
Small increases in rates of return make enormous differences over time. Everyone knows that a higher rate of return is better than a lower one. What most people don’t realize is that the benefit is exponential. A 15 percent rate of return is not merely three times more than a 5 percent rate of return. It can actually be anywhere from seven to seventy times more, depending on how long you invest. Start investing now.
Rule #2: You have to save money—and saving requires discipline…(read the rest of the story)
Written by: Dave Young
Originally published by Utah Valley Health and Wellness
1. Checklist of Applicable Docs and Information
Put this list together early. Find out what documents and information you will need for a complete tax filing, and make yourself a checklist. As you compile each document or piece of information, check it off your list, and when the list is completed, you can begin filing your taxes or send your completed set of documents to your CPA for filing. Though the exact documents you need will vary based on your specific situation, here are some general things you will need:
- Personal information, including name, date of birth, SSN, etc. for you, a spouse, and dependents you will be claiming
- Income documents (may include W-2, 1099, K-1, etc.)
- Expenses or deductions (charitable donations, business-related expenses, etc.)
- Any credits you know you qualify for, such as earned income credit or education credits
- Healthcare coverage forms (1095A, B, and/or C, depending on your situation, so consult with your CPA)
- How you want your refund applied (either direct deposit, or applied to your next return if you think you will owe)
It is also a good idea to decide early on whether or not you think you will need a tax extension. If you know you will be getting K-1s after the deadline it will be a good idea for you to file an extension.
2. Set of books
Quickbooks is a very common accounting software program that allows you to account for all your income and expenses. You can consider the cloud options that are available, since this allows you and your CPA to collaborate in real time. Another benefit of being on the cloud is you don’t have to send your CPA copies of your file backups. This will cut down the time it takes to get your taxes complete.
3. Saving receipts
You are required to…(read the rest of the story)
Originally published on Utah Valley Health and Wellness
Written by:Clyde Jones
The bond and stock markets have been stuck in a range for about the past 18 months. The Dow Jones Average keeps moving back and forth between 16,000 and 18,000. For investors, this can be very frustrating. It feels like you are running in place and making no progress.
It has been said that patience is the greatest virtue. We live in a world where it seems that patience has been forgotten. In our “instant everything” world people want it all, and they want it now. They don’t think in terms of paying the price or investing for the long-term. They act on a whim, rather than follow a long-term plan.
Mountain View High School in Orem has always had a very successful track team with several runners nationally ranked. I asked their coach why his runners are so successful. I thought he would tell me strategies that help make his athletes stronger and faster. Instead, he shared with me his secret that was completely different than I expected. He said that much of their success comes from learning to pace themselves. They must have the patience to wait for the perfect time to make their final move to win the race. Counterintuitively, even in running, a sport that is built around speed, exercising patience is critical to success.
Every autumn I spend some of my spare time hunting for big game animals. I focus my efforts on finding animals that have “record book” potential. In order to locate them, I backpack into places rarely traveled. Often I come back empty handed. In my quest to find trophies, I have traveled to some very dangerous parts of the world. In order to succeed, I often hunt differently than traditional hunters. While there are several factors that contribute to my success, I believe that extreme patience is the most significant.
Patience is also a key attribute for successful investors, but…(read the rest of the story)
Originally published on Utah Valley Health and Wellness
For many people, the hardest part of saving money is making the decision to go without something they want right now. In a study by the Brookings Institution, findings showed that Americans are largely living paycheck-to-paycheck. Surprisingly, sixty-six percent of Americans who are living paycheck-to-paycheck are considered middle class. The team involved in the study suggested that these people have a harder time weathering income shocks, such as illness or unexpected unemployment.
If you are one of these sixty-six percent, or if you feel you should do more to save money, there are some simple things you can do now to avoid the stress that comes with unexpected expenses. One way to make saving easier is to set up savings accounts and automatic transfers to save for these types of bills.
I had a coworker who recently did this and expressed how good it felt to be prepared and have the money when it was needed. “In the past when these kinds of bills came up, it caused a lot of stress because I had to figure out where to get the money, or it triggered austerity measures for the next month or two,” he said. “This time, paying the bills was a totally different experience because I had money set aside.”
You can do the same thing, or something similar. Here’s how:
First, consider a way you can cut back on your expenses so you can set up an automatic transfer to save a little each month for unexpected expenses. For example, if eating out costs your family $40, and eating in costs your family $20, you can eat out one less time per month, saving $20. Decide where you’ll cut back now, instead of on Thursday night at 6:00 p.m., when you might be more likely to spend more money on dinner…(read the rest of the story)
Originally published by Utah Valley Health and Wellness
Our experience and independent research both show that most investors do not follow a strategy. In other words, they do not have a disciplined, systematic process they follow to make investment decisions. Their portfolio of investments often represents a patchwork of uncorrelated ideas that were sold to them by various salesmen over their lifetime. What may have seemed like a good idea at the time no longer makes any sense.
Take for example the first three months of 2016. Markets have been in turmoil with the S&P 500 dropping -10.5% and the NASDAQ losing -14.8%. After hitting their lows for the year both indexes have recovered about 10% of their value, erasing much of their losses.
Without a strategy it’s difficult to capitalize when the market drops and recovers. Even worse, if you sold out during the drop, you are down 10-15%. This is why following a solid strategy is so important to your long-term success. To be clear, luck is not a strategy.
There are two steps to follow when making a long-term strategy:
Step 1- Properly select your risk tolerance.
Decide in advance how much risk you can subject your account to. For some investors this means… (read the rest of the story)
Originally published on Utah Valley Health and Wellness
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We use planning as a method to be successful and efficient in almost every aspect of our life. But do we plan for after our passing? Sorry to be the bearer of bad news, but we are all going to die. To properly plan for our death, we must ask ourselves several questions: How can I make sure my assets go to those whom I wish to have them? Who do I desire to make decisions on my behalf once I pass or if I become incapacitated? How do I make the distribution of my assets quick and efficient, while reducing my tax liability and the headache of probate?
As we move into spring, it’s the perfect time to “clean up” our affairs, along with our homes. Establishing a proper estate plan before your passing will be greatly appreciated by your family and loved ones.
What do I need in a proper estate plan?
Wills and Trusts
These two are essential to a proper estate plan. A will is a document that directs how your property and assets are distributed. You can be very specific in a will as to what and how much is given to any individual or entity. You may even attach certain conditions. You choose an executor to oversee the distribution of the assets. If you do not have a will, your assets will be…(read more)
Originally published on Utah Valley Health and Wellness