How Sole Proprietors can Depreciate Assets

Depreciating assets can be a good way to help reduce taxes for sole proprietors and helps lower the cost burden of buying new equipment for a business. The IRS allows different methods including the "Section 179" and the "Modified Accelerated Cost Recovery System." The maximum amount can change from year to year and ranges in the hundreds of thousands. The deduction gets reported on line 13 of IRS Schedule C along with other expenses on the form.

Complete article link: http://www.ehow.com/how_8324939_calculate-depreciation-schedule-c.html

Money Saving Tips for Purchasing an Energy Efficient Refrigerator

New replacement refrigerators can be purchased with energy efficiency in mind as each model of refrigerator has different features, model criteria and energy consumption that affect its energy use. Since the energy efficiency of refrigerators became regulated starting in 1993, energy star efficiency ratings have come into effect increasing the energy efficiency of these appliances even more. 

When buying an efficient refrigerator, first consider consulting energy star's 'refrigerator retirement savings calculator' to see how size and model of a new refrigerator can affect operating costs. Also, one should not only take into consideration the energy guide located on or near the refrigerator but other factors that can influence the cost savings of refrigerator use.

The following is a list of several items that can be planned for and/or adjusted on a refrigerator to enhance energy efficiency. Some of the factors affecting a refrigerator's energy consumption are listed below. Similar and other refrigerator energy efficiency buying tips are available at the American Council for an Energy Efficient Economy (ACEEE) website and the sources listed at the end of this article.

• Size of refrigerator 

• Energy consuming extras and refrigerator lighting

• Temperature controls 

• Factory established energy efficiency 

• Warranty on the refrigerator and energy star ratings 

• Location of condenser coils and coolant type

Size: Naturally larger refrigerators use more energy but hold more food. The larger a household the greater the chance a larger refrigerator and possibly even an additional freezer may be required. Keeping the size of a refrigerator optimal can help lower energy costs and add useful space to a kitchen.

Amenities: Extras like an ice machine, cold water dispenser and stylized handles and shapes can be fun and interesting but cost more. These amenities are not essential and may best excluded especially if a budget must be met. A simple refrigerator with a freezer will also make ice but one will have to store it in an internal ice bucket rather than use the ice maker dispenser. Refrigerator bulbs can also be either removed or replaced with a low wattage compact fluorescent light bulb to save electricity.

Temperature controls: Refrigerators have temperature controls for both the fridge and freezer sections. Understanding how the temperature controls work and adjusting them to the right levels can have a significant effect on energy consumption. Additionally, the external temperature around a refrigerator can also influence how hard the fridge has to work. For this reason, fridges and/or freezers in basements and rooms not exposed to direct sunlight may require less energy. The manual of a fridge should have instructions on the best use of a refrigerator.

Efficiency: This is the most important feature when selecting an energy efficient refrigerator as this can determine how consistently, and how much the fridge will save energy. The higer the energy efficiency rating or EER, the more energy efficient the fridge should be. The higher rating may also be costlier but could possibly be tax deductible in some countries and locations.

Warranty and expected lifespan: The longer the original buyer warranty lasts the better as these manufacturers warranties don't require additional purchase of extended warranty. If a fridge is a good fridge it may not need an extended warranty and repairs may be included with other warranties such as home owners warranties and home insurance policies. The longer a refrigerator is expected to last the better as this will prolong having to buy a new one after that and lower the distributed cost over time.

Coil location, type and cleanliness: The location of the condenser coils and the type of cooling system a refrigerator uses will affect how efficient the fridge is. Before purchasing a refrigerator studying the mechanics of a fridge, how coils work and why different fridge cooling units are more efficient than others may assist in purchasing a more energy efficient model. After buying a fridge, reading the fridge manual and keeping the condenser coils of a refrigerator dust free and with enough airflow can also enhance their efficiency. While the cost savings may be small at first, cumulatively the pennies may add up especially if used in conjunction with some of the other techniques in this article.

An energy efficient refrigerator depends on several variables including the product design, size, location, usage related aspects, lighting and other fixtures and the cooling system itself. Buying an energy efficient refrigerator may only become cost effective if one's pre-existing refrigerator is very old and cannot be replaced or repaired inexpensively i.e. if one has to put down the money for a new fridge considering energy efficiency may not be a bad idea. 

The time it takes for the cost savings of energy efficient refrigerators to add up varies with the model and usage and how closely some of the tips in this article are followed. Generally, the smaller and cheaper the fridge was at time of purchase in addition to the EER level, the less time it will take to recoup cost. After purchase maintenance and usage can also affect how much energy a refrigerator uses. Practicing some of the tips provided in this article and/or its sources may help improve household energy savings.

Sources:

http://www.aceee.org/consumerguide/refrigeration.htm
http://www.alcoa.com/makeanimpact/en/tips/tips.asp?cat_id=at_home_appliances
http://www.energystar.gov/index.cfm?fuseaction=refrig.calculator
http://www.horizonservicesinc.com/reference/tips-articles/refrigerator-maintenance-save-energy

How to save money on razor blades

Men's and Women's razors have become the finished product resulting from a refined and optimized art and science of razor design and consumer behavior. This effort has not been in vain, nor gone to waste, but rather allowed the heightened possibility of increased product yield to feed the starved material objectives demanded by corporate shareholders. However, these razors do not necessarily save money.

 Traditional straight blade razor with sharpening strap

Source: Dr. K, GFDL, CC By-S.A 3.0

So what does that actually mean? Razors are created first for profit and second for actual functionality. This has never been more obvious than with the large, 5 blade razors now on the market. These razors are allegedly 'better', smoother, softer and therefore cost more, a lot more than the less functional older razors. 

Think again. Those 5 bladed beasts can't be resharpened with the “Save a Blade" because it only fits the smaller traditional blades. However, products such as "Razor Shield" allegedly do prolong the life of all types of razor blades. Look out though, as getting hair out of the 5 bladers is tough; the tightly bound blades are hair nets that inhibit the functional life of the razor even if it still is sharp. In other words, newer isn't necessarily better unless you're keeping an old  blade new.

Old out of stock razor blades are a gold mine of inexpensive shaving and help save money on razor blades. These blades are no longer 'valuable' from a marketing and statistical sales perspective and are consequently more likely to be sold on the cheap. After that they are all gone so looking around in clearance bins, discount overstock retailers, and anywhere else classic shaving products are offered can save money on razor blades. For example, on April 29, 2011 10 Gillette Sensor blades cost $12.95 on Amazon but 4 Gillette Fusion Pro-Glide cartridges cost $14.24 at Amazon.

Then there's classic blades replicas like the Sweeney Todd Straight Razor listed on 'Google Products'. This razor started at $6.99 on the day of this blog post and can last a literal lifetime if they're cared for and manually resharpened with a sharpening stone also available for under $10.  These were eliminated from mass marketing probably for the same reason 5 blade cartridges replaced the two and three blade razors. The fact is classic blades work and cost less and can also save money on razor blades. They may look scary, but men especially should be able to get over that fear. 

For men and women not looking to go classical, coupons and bulk are another way to go to save money on razor blades. A warehouse retailer like BJs discounts bulk and accepts double coupons. For example, if BJs has  a razor special and a manufacturer's coupon came in the mail, that's two more price reducing opportunities. Granted this does take a little effort, but once it's over a decent supply of razors at a lower cost does inevitably save time shopping and money spent. Also, don't forget the dollar shops just because they sell razors and blades for around a dollar!

The U.S. auto industry stages a comeback

Recent reports have forecasted General Motors will return to the World's number one auto seller sometime in the near future. Reuters reported GMs sales in China were up 10 percent in Q1, 2011 and it sold just over 25,000 more vehicles than Toyota. This is due in part to a culmination of events and steps taken in the last few years, but also because of disruptions caused in the supply chain management of its leading competitor. For the most part, GMs resurgence can be attributed to how the company and the government dealt with the outfall of an outdated business model and financial turmoil amplified by the financial crisis in the late 2000s.

Now that the U.S. auto industry has taken its pain of vast financial losses and bankruptcy in the case of GM, it can start picking up the pieces of its broken industry and reemerge once again into the global auto making industry as a leaner, fuel efficient, cost effective, product friendly and more environmentally friendly set of businesses. Whether or not the new American Auto industry will be in Detroit alone remains to be seen as operational costs may be lower in other locations.

Some of the encouraging news prior to the collapse of General Motors proved to be overly optimistic and was not an accurate reflection of things to come. The American auto industry has a tough path to climb as a number of auto industries that didn't collapse are far more advanced and evolved. Edward Demmings, a U.S. innovator exported his operational methodology to Japan a long time ago, but the U.S. didn't want to change its existing operational model until it was too late. This article will discuss the U.S. auto industry in terms of conditions before and after its decline. In such it will become apparent that not only can news be misleading, but that the U.S. auto industry is in for a change long over due.

Auto industry news prior to GMs bankruptcy

"General Motors Corp.'s second-quarter profits of $891 million were viewed on Wall Street as an important sign of progress in the automaker's comeback bid." (1) The worst is over for Detroit's major automobile manufacturers. For the last year prior to August 2007 General Motors, Ford and Chrysler have been exercising aggressive measures in many fronts to ensure a competitive future for their Global and Domestic market positioning. One need only look at recent developments to realize U.S. auto manufacturers are in the automobile market for the long haul and aren't going to just give up their legacy of Global automobile market positioning. Both General Motors and Ford have been taking drastic but essential measures that will ensure both their survival and competitiveness in the future of automobile manufacturing. A few of these efforts are illustrated in the two following corporate summaries:

General Motors:

• General Motors is already positioned in the Worlds top two auto manufacturers

• Union negations with the Union of Auto Workers (UAW) could lower Health care costs

• Aggressive sales incentives could boost car sales

• Capital restructuring of GMAC and other parts of GM improves cost accounting numbers

• New developments in Energy Efficient automobiles enhances competitiveness

• International profit margins have recently performed well for General Motors

Ford Motors:

• European profit margins have improved for Ford and an 8.2% share of European market

• Niche car markets such as Jaguar, and Mustang have strong brand equity and appeal

• New small sub-compact auto designs could further boost European market share

• Fuel cell technology research such as hydrogen pellets allows Ford to compete 

The new auto industry landscape

Traditionally as Japanese automobile manufacturers have rivaled the U.S. in auto sales and innovation U.S. Auto manufacturers have consistently stepped up to the plate to compete. The current situation is no exception. While the effects of widespread plant shutdowns and layoffs seems daunting this is a necessary step for U.S. car and truck companies so they can adjust for current conditions. The business environment is competitive and the restructuring events of the recent past have reflected that. What they do not reflect is these companies lack of ability to succeed in the future.

To say Detroit is doomed because of restructuring is like comparing apples to oranges. Steps taken to ensure market positioning is the key to these companies reemerging to be global auto industry leaders. The U.S. auto industry has sold off less profitable product lines, restructured its debt and begun the path to a new business model that replaces an outdated antiquated one. The U.S. has the technology, know how, engineering capacity and financial infrastructure necessary to bring itself back into the forefront of the auto industry. This comes at a time when the U.S. is facing challenging competition internationally and confidence in the U.S. economy has wained. What this doesn't have to mean is that the game is over.

Understanding the U.S. and International auto market is also key to rebuilding the U.S. Auto industry. According to auto industry statistics from the Wall Street Journal, the signs of a declining auto industry became increasingly clear in years past. Japanese manufacturers have gained an ever increasing piece of the U.S. market share. Apparently, many American consumers prefer more reliable, efficient vehicles from overseas. This has to be for a reason and it is these reasons the U.S. Auto industry should consider when re-branding, and re-designing future models. Internationally, the same story is important, obtaining market share means providing quality, reliability, efficiency and vehicle models that match the financial and social characteristics of new generations.

Sources:

1. http://www.detnews.com/apps/pbcs.dll/article?AID=/20070801/AUTO01/708010343/1148
2. http://biz.yahoo.com/ap/070824/gm_technology.html?.v=4
3. http://www.reuters.com/article/marketsNews/idUKN2434970120070824?rpc=44
4. http://online.wsj.com/article/SB118790376498007050.html?mod=yahoo_hs&ru=yahoo
5. http://phx.corporate-ir.net/phoenix.zhtml

Ending a General Partnership

Business partnerships involve two or more persons who are owners and in many cases officers of a company. This type of business relationship usually requires significant joint responsibility and collaboration on behalf of the partners for the partnership to succeed. When a partnership is broken it is called dissolution of partnership and the reasons and method for obtaining such dissolution are several.

Dissolution of partnership

A dissolution of business partnership can be caused by conflicts or irreparable differences between one or more of the partners. Additionally, an unsuccessful partnership may influence a partner's decision to leave along with a host of other possible reasons such as health, other commitments, passing away, loss of interest, dispute etc.

Disputing dissolution

Dissolution of partnerships can be contested in a court that has jurisdiction over the geographic area in which the business is registered and/or operated. Generally a court ordered dissolution takes place when an out of court settlement can't be reached. In such cases the judge will review the the positions of the partner(s) seeking dissolution and make a judgment based on his or her hearing of the case and review of the appropriate law. Judges may order a dissolution through appeal to a number of legitimate causes such as infraction of business terms of agreement, mental incapacity, or failure of a partner to comply with financial obligations within the partnership.

Ending business partnerships out of court

Most partnership laws within the United States require certain actions to be taken before a partnership is considered ended. Since partnerships are not incredibly formal types of businesses, the amount of paperwork that needs to be filed can be minimal if the ending of the partnership, and its terms are agreed upon by the partners without lawsuit. The required actions are as follows:

1. Give proper public and governmental notice as required by law
2. Pay all creditors what they are owed
3. Return Capital investments as originally invested by the partners
4. Distribute remaining assets and profits evenly among partners

The above steps may be more difficult than they sound especially if one partner goes bankrupt and leaves the remaining partner(s) with all the debt. For example, even though all partners are equally liable for debt in a partnership, a partner with no assets can't pay what isn't there after a bankruptcy

Tips to consider before ending a partnership:

• Partnership agreements:

Contractual partnership agreements are legally binding contractual documents that can be drawn up and signed during the formation of a partnership. However, it is not necessarily the case that such agreements can only be made at the beginning of a partnership and may help in the process of defining how assets in a partnership will be dissolved.

• Financial documents

Obtaining copies of all the partnerships financial documents at the time of dissolution is essential for determining each partners share of liability if any and also for supporting cases in which partners do not hold themselves accountable for their share of the partnerships debt.

• Avoid going to court

Going to court can be expensive, especially if all the partners decide they need attorneys to represent their interests. Amicable dissolutions are always more cost effective and the partnership laws generally put precedence on the interest of the partnership above the partners anyway.

• Refer to partnership laws

Understanding and referring to laws governing partnerships can be a good measure when one or more members ends their partnership. This is so for purposes of know how and legality. More specifically, the Business Partnership Act of 1958 and the relevant State law in which the partnership operates. The Unified Partnership Act is a more recent federal law that has been adopted by States in the regulation of partnerships.

• Know when to consult a small business attorney

There is a small difference from employing attorneys in the dissolution of a partnership and consulting a small business attorney for issue pertaining to the continuation of a partnership. For one thing it can more cost affective to receive attorney advice than have an attorney manage a case. Secondly, for partnerships that continue to exist after one or more partners leave the business there are on going legal concerns apart from the dissolution.

Ending a business partnership can be easy to do if the partners are agreeable, knowledgeable and capable of doing so. Since the legal formalities of partnerships are somewhat casual and/or limited, the dissolving of a partnership has the potential to be a straightforward process. The dissolution process can be complicated by financial issues such as excess liability, and failure of one or more partners to agree to the dissolution and terms of dissolution. Consulting the IRS Closing a Business Checklist may also a good idea, however the information, steps and tips in this article are provided as a supplemental resource only, and do not replace the terms of agreement between business partners or the laws governing partnerships.

Sources:

1. http://tinyurl.com/ctz8j (IRS)
2. http://findarticles.com/p/articles/mi_m1272/is_2676_130/ai_78256887
3. http://tinyurl.com/3wm3eog (Entrepreneur.com)

The Significance of Hewlett Packard's Palm Acquisition

The significance of Hewlett Packard (HPQ) buying Palm, Inc. (PALM) is expected to be its capacity to gain market share in specific areas of Mobile Communications and Technology such as cellular phones and hand held computing devices. Hewlett Packard's acquisition of Palm, Inc. is scheduled to occur on July 31, 2010. The company will then have improved access to a larger and fast growing market with its new Palm assisted horizontally integrated product line.

Palm is a company that's specialty is hand held computing devices be they phones or mini-computing devices. The company débuted in the late 1990's with its first Palm hardware and has since seen its share prices decline from $100's to around $5.76 in April of 2010. Hewlett Packard has taken advantage of  Palm's low share prices to acquire it  for the price of $1.2 billion or $5.70 per share according to an April 28, 2010 HP press release. (2)
A key to Hewlett Packard's acquisition of Palm, Inc. according to HP and Business World.com (2&1), is Palm's mobile operating system named Palm WebOS. This mobile operating system will allow Hewlett Packard to compete with other mobile operating systems such as Symbian,  iPhone, and Linux. The mobile phone market is forecasted to grow into 2014 according to the Chief Analyst of Mobile and Wireless Communications at Frost and Sullivan, a business growth consulting firm. (3) Such being the case, if Hewlett Packard effectively taps into its own access to capital and distribution network, the development of Palm, Inc.'s product could yield sizable revenue.

Some questions that arise out of such an acquisition are 1)  How long will it take for HP to earn what it paid in cost for Palm Inc.,?, 2) Is the acquisition intended to supplement a decline in HP's existing market? And 3) How much and how capable is HP in increasing its total revenue and net income. The answers to these questions rest in Hewlett Packard's access to financing, its development of the Palm Web OS, and its ability to position itself as a new competitor in the mobile device market. Given HP's experience in the computer hardware industry, its size and its existing know how, this doesn't seem like too much of a leap for HP.

Hewlett Packard is a fairly strong company if existing product market share, financial statements and statistics, and business strategy are any indicator. Hewlett Packard has a current ratio of 1.27, positive profit margin of 6.98% and high return on Equity (ROE) of 19.83% as per May, 2010 Yahoo finance data.(4) Moreover,  according to 1000ventures.com, Hewlett Packard has a division organizational structure allowing critical areas of large the company to be run semi-independently to facilitate focused management, goal setting and benchmark performance.(5) Hewlett Packard is also an old company, that's endurance through multiple business cycles and the dot.com era, points to its strategic success.

The HP acquisition of Palm, Inc. does not seem to be a flippant one as HP is already horizontally integrated in the computer hardware market. It has a product line of printers for which HP is most known, laptops, desktops, calculators,  scanners, and faxes. Hewlett Packard also has a hand-held product line including the HP iPAQ cell phone series. The significance of Hewlett Packard buying Palm, Inc. seems to be one of market share and growth within the parameters of existing horizontal integration and market know how.

Sources:

1. http://www.bworldonline.com/main/content.php?id=10361
2. http://www.hp.com/hpinfo/newsroom/press/2010/100428xa.html
3. http://bit.ly/6dipQk (Frost and Sullivan)
4. http://finance.yahoo.com/q/ks?s=HPQ+Key+Statistics
5. http://www.1000ventures.com/business_guide/organization_flat.html

Me and "The Most Interesting Man in the World"

Why GDP can Decline with Improvements in Quality of Life

Quality of life decreases along with declines in Gross Domestic Product (GDP) due to an intrinsic correlation between the two. Consequently, GDP is the only measurement of progress needed. This article will expand upon the connection between GDP and quality of life in addition to illustrating why GDP is the more important of the measurements.

'Progress' is a relative term open to debate and depending on who one asks. However, if the concept of more is tied with progress, then more productivity as measured by Gross Domestic Product is not the only metric a society can attain increases in. More happiness, more health, more freedom, more rights etc. are all gains in life some might consider progress. 

A significant question of possibility emerges out of this divergent view of progress however. Specifically, can progress be sustained if other metrics of progress besides GDP and related measurements such as Job growth are not the only indicators of progress? In other words, can productivity continue grow side by side with other types of progress? After all, people might get lazy when they're happy so having more of other things considered progress might just be counterproductive to progress. This article will discuss other types of progress side by side with GDP in light of the above considerations.

Since Gross Domestic Product measures the total output of goods and services produced by a country, that measurement is a measurement of total material wealth produced for a given year as valued by currency prices for the cost of those goods and services. The first question one might ask is ,if the GDP were to decline, could other aspects of 'progress' continue to rise? For example, if there is less medical equipment, fewer doctors produced, less health care services etc. one can draw the connection progress in health care may also decline along with the decline in GDP if such GDP declines are comprised of declines in health related products and services. The result becomes less progress in this case, and may be further debilitated by declines in production related to other aspects of the economy.

To further illustrate, progress is linked to the economy and the economy is measured by GDP. While GDP is not the only measurement of an economy, it is a key indicator of the wealth available to a 'population'. The less wealth there is, the lower the standard of living becomes. Since standard of living is related to quality of life, a decline in GDP which is a measure of standard of living means there is likely to be a correlation between GDP and quality of life. So from this perspective, GDP is a measurement of quality of life in so far as the two are related. So why then does the question of quality of life indicators even arise? This is a good question.

The need for quality of life indicators can be thought of as a cry for help regarding disproportionate distribution of Gross Domestic Product. To illustrate, if everyone were to suddenly become rich, a great majority may find it simply unnecessary to work, or their productivity would decline in their lack of need to work. After a short while, inflation would rise, GDP would decline due to so many people being rich, and the quality of life would fall. Granted, some may still be motivated to work for love of labor, and other forms of gain such as social status, or even some kind of ethical conviction. However, the principles of human nature tell us, we are motivated by greed and that greed includes greed for a worry free life. That worry free life would end up leading to a decline in the overall quality of life.

So how can this apparent paradox between GDP and quality of life be solved? That is another question for another day. For the time being, one might realize quality of life is merely the call for more share of the GDP. If one is still not convinced of this relationship consider the notion of quality of life further. Love, comfort, harmony, amenities, entertainment, luxury, services etc. can't all be bought with money but certainly can be facilitated by wealth. 

Since wealth is measured by GDP at the macro-economic level, the correlation between the two is theoretically sound. As we have seen, a micro-economic distribution of GDP that is spread more evenly, has a strong possibility of leading to a decline in GDP and thus quality of life. Human nature is at the bottom of issue but who has the time to worry about that when everyone is chasing the GDP?

Guide to Home Office Tax Deductions

The home office deduction can be used when a business is run out of the home in the form of a sole proprietorship . For the tax deductions to quality, the office must be used exclusively for business purposes which do not include non-profit activities or non-business activities that may be profitable. Generally speaking, for the business to qualify as such, the home office must be used regularly to service clients for profitable gain. This article will illustrate the forms needed to file home office deductions in addition to the types of deductions the proprietor can take.

Tax forms

In the United States the Internal Revenue Service and U.S. Department of the Treasury oversee the implementation of tax laws and regulations through efforts to make the public aware of the requirements placed upon their income whether it be business, personal or otherwise. This being the case, the IRS has specific forms required for filing home office deductions. A useful publication for further understanding the IRS regulations regarding home office deductions is called publication 587.

Specifically, this form required by the IRS for home office deductions is an addendum to the form 1040 known as form 8829. Form 8829 is entitled 'Expenses for Business Use of Your Home' and must be filed by April 15 of a given tax year if no extension has been applied for and approved. In addition to form 8829 the proprietor must also submit all other required forms such as the 1040, 1099's, W-2's, Schedule C's etc. depending on one's specific tax situation. If one is an employee using part of the home exclusively for employment purposes a form 2106 may be used in addition to the form 1040 and other form requirements.

Types of businesses that qualify

There are many types of business types that may qualify for a home office deduction including day care facilities, landscaping businesses, cleaning companies, consulting or counseling proprietorship etc. Areas of homes and built in apartments can also qualify as home office business deductions when the area is used solely for a rental business.

In the case of employees, telecommuters such as computer programmers, customer service representatives and freelance artists may also qualify for at home business deductions. There art two exceptions to the exclusive use qualification according to the Internal Revenue Service. These exceptions are use of space for business inventory and daycare operations. For more detailed information about qualifying it may be advisable to consult the IRS Publication 587.

Home office tax deductions

The good part of home office deductions is they can be deducted from income in addition to the standard 1040 deductions making one's taxable income potentially very low. In the case of mortgage interest deductions and overhead expenses such as electricity or gas, the square footage percentage of the home is first calculated, then that percentage is multiplied by the total mortgage interest and overhead expense to arrive at the deductible business portion of the expense.

Additional deductions include insurance expenses, real estate taxes, repairs and/or maintenance, utilities, "listed equipment" depreciation, and allowable "other" and operating expenses. Listed equipment may include computers, furniture, fax machines etc. that are used more than 50% of the time for the business or businesses in question. In other words, while space must be used 100% of the time, with the aforementioned exceptions, equipment only has to be used 50% or more of the time. Other expenses not included on the form 8829 can be listed on form Schedule C of the 1040 which includes expense deductions such as advertising, employee expenses, businesses services received and equipment maintenance.

Home office deductions can be a great way to make use of extra space as an income tax deduction. Such deductions should not be abused or used dishonestly as this would be tax fraud. For the home office to qualify for deductions it must be an area of the home used solely for the purpose of business. Equipment used in that space only has to be used 50% or more of the time for that business. The space must be used consistently for business use and two exceptions to the sole use requirement exist with the cases of business inventory storage and day care facilities.

How small banks manage financial risk

Risk management is the process of limiting risk while maintaining or growing bank profitability. Assessing risk in a small bank is an ongoing function as the banks clients' credibility can change over time. The same is true for business patrons since local markets and economics can also fluctuate based on various supply and demand trends, competition, lending rates etc. 

Risk management for small banks is achieved through implementing a number of risk management procedures that address the various areas of banking risk. This article will address the different types of risks small banks face and how these risks can be ameliorated for the benefit of the banks ownership and operational performance.

Types of small bank risks

Included in the types of bank risks facing small banks are 1) credit risk, 2) interest rate risk, 3) liquidity risk and 4) price risk. (Fraser, Gup and Kolari, p.9) These risks are linked to the banks solvency, investments, lending and borrowing rates, and clientele. If these risks are too high, the banks net income can decline through written off asset accounts, lowered revenue, and in some cases the bank can face undercapitalization. To illustrate the above credit risk, if small bank A makes credit loans to 100 customers, 25 of whom have less than excellent credit, the bank is taking on more credit risk than it would if all 100 customers had excellent credit.

The above credit risk scenario leads to another risk, specifically underperformance. For example, if bank A's management decides it does not want a high credit risk and instead only lends to customers with excellent credit the risk of underutilizing capital emerges if not enough customers with high credit borrow the same amount of money that would have been lent if people with less than perfect credit were allowed to borrow from the bank on credit. Thus, the adept risk manager will be experienced and knowledgeable enough to realize what adjustments to the bank's credit policy will lead to the highest lending return with the least amount of risk for that return. This is accomplished in part by effectively measuring risk.

Measurement of small-bank risk

Risk can be measured partly with the aid of 'risk ratios' which are usually simple division based mathematical scenarios that focus on specific aspects of the banking operation. For example, risk ratios address small bank concerns such as 1) capitalization, 2) liquidity 3) operating efficiency, and 4) interest rate sensitivity. (Fraser, Gup and Kolari, p.76-80) Moreover, capitalization ratios quantitatively determine how much money a small bank has set aside for loan charge offs in relation to the amount of loans made. 

This is calculated by dividing the loan loss reserve of a bank by the total dollar amount of loans. Risk management theory can be extensive and involved for the purpose of focusing on sufficiently accounting for and dealing with unnecessary risk. The result of this theory yields a number of risk management case studies and forumulaic, quantitative and qualitative measurements with statistical probabilities of success and viability in some cases. Essentially, if the risk a small bank faces can't be measured, that risk becomes a greater hazard to the bank, hence the need for risk management metrics.

Implementing risk management

Implementation of risk management policy involves developing a risk management bank policy that takes into account risk management metrics/measurements with the goal of profit optimization. This requires the bank's management to accurately record, monitor and forecast financial scenarios in which the bank can operate safely and profitably. The task of risk management is performed well when the small bank manager has a firm comprehension and sensitivity to the quantitative and qualitative factors within the banking industry. Over time, experience and knowledge of the banks capacity combined with adequate metrics and forecasting may yield a successful risk management policy that provides the bank with the financial security and success it often seeks.

Additional forms of risk management involve Federal regulatory policies that impact how a bank can borrow and lend funds, the services the banks can provide and how banks disclose information to their clients and the government for insurance and consumer protection purposes. Still further risk management positively affects the banks legal positioning through sound compliance with banking law in addition to strong public relations that can assist with lowering a banks reputational risk. Technological risk is another area of risk that can be soundly dealt with through a banking information technology management.

Summary

Small bank risk management deals with sources of risk to a bank whether it be financial, digital, legal or social and implements risk management policies to prevent and lower the various types of risk that can affect a bank and as described in this article. Implementation of risk management requires the bank's management to monitor, assess and supervise the banking operation to ensure enhanced profitability, adequate capitalization, needed liquidity, regulatory compliance, public relations and unnecessary debt for the bank. Experienced bank managers are or should be familiar with the banking environment, market forces, banking policies and regulations and sound financial management to properly deal with the risks that can face a bank in its daily operations.

Sources:

1. Fraser, Gup and Kolari. 'Commercial Banking: The Management of Risk' 2nd edition' South-Western College Publishing, Cincinnati, Ohio. 2001.
2. http://www.chicagofed.org/banking_information/legal_reputational_risk.cfm
3. http://www.chicagofed.org/banking_information/risk_management.cfm
4. http://fic.wharton.upenn.edu/fic/papers/1096.html

How To Start A Business In Texas

The process for starting a business in the State of Texas first and foremost can benefit from 1) Assessment of the achievability/feasibility of the business via careful planning and business strategy 2) determining what kind of business it will be ex- sole proprietorship 3) which county or counties the business will operate out of 4) the name of the business if any and 5) the service category of the business ex-cattle ranch. Several preliminary steps to starting a Texas business may be garnered by contacting and reviewing the following resources:

• U.S. Small Business Administration (SBA)

• University of Houston Small Business Development Center Network

• Texas Secretary of State

• U.S. Internal Revenue Service

• Texasonline.com "The official portal of Texas"

The above institutions and websites offer information and tips on starting businesses in Texas, steps required for business formation, corporate documentation fees, and provide links to the State's requirements for incorporation and the federal government's tax related requirements. Additional resources may include research of individual businesses through discussion with business owners and/or literature review of business start up procedures written by Texas business owners and organizations.

Texas business related forms and procedure

Depending on the type of business being created, official procedure with local, state and federal Government entities may include any of the following steps 1) Permit or license acquisition 2) Completion of federal tax related forms 3) Certification and documentation of business formation with the Texas Secretary of State and 4) establishment of any additional legal, insurance and tax related agreements.

Documents and forms that may be required to start a business in Texas vary on the category of business, business operation, employees if any, and business structure i.e. shareholders vs. single owner, partnership or limited liability. A few of the forms, applications and procedures that may be required are listed below and are the same as other States in the case of Federal tax related documentation requirements.

• Business license or permit

• Business name registration with county clerk

• U.S. Internal Revenue Service Form SS-4 (EIN application)

• Certificate of business formation (for corporations and partnerships)

• Articles of incorporation and bylaws (if required)

• Trademark and/or patent registration

• Attaining of a registered agent

Obtaining a Texas 'registered agent' can be of assistance in the formation of a business as these entities serve as facilitators of business formation but do require a fee. According to Section 5.251 of the Texas Business Organizations Code, the office of the Secretary of State assumes the role of a registered agent if no registered agent is obtained. Unlike other states this may bypass the services and requirement of obtaining a registered agents.

Essential documentation and requirements vary on the type of business, location of business and complexity of business operations. Generally, the simpler a business is, the less paperwork is required to start the business. For example, in the case of sole proprietorships an Employer Identification Number (EIN) is not required and is replaceable by a social security number of the sole proprietorship has no employees. Additionally, a sole-proprietorship does not require a certificate of business formation and if one's individual name is used as the name of the business, no name registration is needed.

In the case of partnerships, limited liability corporations, S-corporations and C-corporations, registration, documentation requirements and federal filings can vary along with associated fees. Ideally, a business will already have a good idea of its plan, capital structure, ownership, licensing needs, property and/or location related requirements before the official formation or transformation from another type of business occurs.

In some instances of business formation, especially with larger and more elaborate business types, the need for business related services might arise. In other words, when there is doubt about specifics in a business's legality, strategic or tax plan, obtaining the assistance of professionals that specialize in the area of business pursued may be helpful. Specifically, tax accountant, business attorney, and business consulting services are obtained by businesses for matters requiring specialized knowledge in these areas.

Summary

Starting a business in Texas may be envisioned with the blink of an eye, however the formation of the business doesn't, especially in the case of businesses that are not sole-proprietorships. A good business model, sense of direction, understanding of formalities, knowledge of operating environment, market etc. can help in avoiding losing capital from personal business financing or any other type of business funding. Moreover, consulting resources such as those listed in this article may also assist with some of the requirements necessary for starting a business in Texas. In any case, the State of Texas is considered one of the better States's to start a business because of its low corporate taxes, State economy and in the case of sole-proprietorships lack of State income tax.

Sources:

1. http://tlo2.tlc.state.tx.us/statutes/bo.toc.htm
2. http://www.texasonline.com/guide/index.jsp
3. http://www.governor.state.tx.us/divisions/ecodev/sba/guide
4. http://www.irs.gov
5. http://www.sos.state.tx.us/corp/related.shtml

How To Start a Business in Delaware

Starting a business in Delaware can be a good idea for the simple reason Delaware is a "business friendly state". If considering Delaware as a state to register and/or incorporate, a business has already taken an important step in the process of business formation. Several formalities generally pertaining to registration, licensure and documentation may be required by the state of Delaware. These requirements vary depending on the type, and nature of the business. This article will outline necessary steps for various types of businesses wishing to be identified as Delaware businesses.

Step 1: Business licensure and registration

In Delaware, a business license and registration is required for businesses including sole proprietorships. Licenses can be obtained by applying through the Delaware division of revenue and cost anywhere between $3.00-$750.00 based on the type of business. For example, a cigarette machine business license costs $3.00 and a for profit circus business license costs $750.00. An http address to the Delaware license and registration application form aka "Form CRA", is provided at the bottom of this article.

Additional licensure may be required at the municipal level, thus contacting local city and county halls can be of assistance in determine this requirement. Starting a business in Delaware also requires the use of a registered agent by law. Registered agents assist with legal compliance and communication between business and the Government and may be obtained for as little as $50.00 per year.

Step 2: Type of Business and Federal registration

If a business is not a sole proprietorship, but rather a corporation or partnership, federal registration is also required at the outset of business. Typically, this involves completing a U.S. Internal Revenue Service form SS-4 i.e. the application for an employer identification number. It is important to note that even a corporation or partnership with no employees is required to apply for an EIN. An http address to the IRS EIN application form is also included with this article.

Determining which type of business is ideal is a matter of business planning in regard to taxation, growth, size, regulation, legal aspects etc. Researching each type of business type and discovering which one applies best to one's intended practice can be useful in this process. Several business types exist to choose from, sole proprietorships, partnerships, Limited Liability Corporation, limited liability partnerships and small businesses or S corporations. Business name reservations can also be obtained via the Delaware division of corporations.

Step 3: Incorporation and Certifications

Depending on the type, size and capitalization of the business in question, incorporation documentation may be required to start a business in Delaware. These types of documents may include articles of incorporation, bylaws, certification of incorporation etc. The State of Delaware registered agent requirement can assist with determining which, if and in what circumstances corporate documentation are required. 

Fees are charged for corporate certifications and vary based on the type of business. For example, a "Stock certificate of Incorporation" costs $89.00 for a normal sized application whereas a "Statement of Qualification of Limited Liability Partnership" costs $200.00 per partner according to the State of Delaware division of corporations.

Step 4: Additional business start-up considerations

Starting a new business in Delaware may also encompass additional aspects of procedure. These further needs can depend on the operational structure of the business and the decisions made by the businesses owners and/or management. Consequently, some of the following items are variable and are listed for consideration purposes.

• Professional licensure

• Real estate and zoning related requirements

• Business and business asset insurance

• Legal protection for intellectual property

• Loan and capitalization agreements

• Vendor contracts

The process of starting a business in the State of Delaware may seem overwhelming at first, but is really a matter of filing paperwork, applications and paying start up fees. These steps may be best considered within the initial planning stages of a business rather than after the owners, inventory, business network, franchise license etc. if any have been obtained. 

Much assistance in the formal business start up process can be obtained by contacting the Delaware division of corporations, business registered agents, municipal government offices and the internal revenue service. Further business start up considerations unique to the state of Delaware may also be necessary in regards to insurance, property and legal protection. If such aspects of starting up a business in Delaware pertain to a new business, contacting the businesses, attorneys and/or agents directly may be necessary to carry out a more successful starting up of business operations.

Sources:

1. http://dedo.delaware.gov/information/small_business_structure.shtml
2. http://corp.delaware.gov/nameres.shtml
3. http://revenue.delaware.gov/services/Business_Tax/taxforms/Cra/CRA.pdf
4. http://www.irs.gov/pub/irs-pdf/fss4.pdf
5. http://corp.delaware.gov/howtoform.shtml
6. http://ezinearticles.com/?Delaware-Incorporation-A-Very-Business-Friendly-State!&id=689607

How To Start a Business in Nevada

With no State corporate, franchise or personal income tax, Nevada may be just the state to start a business in. What's more, business documentation filing fees in Nevada are lower than in several other States and Nevada Limited Liability Corporations (LLC's) can be managed by one person comprising all the roles of executive officers required by law in some other States. 

To clarify the distinction of non-taxation of Nevada businesses, the Nevada business code specifies that while LLC's are not taxable as business entities at the State level, the income received from the business by its owners is still reportable at the Federal level via Internal Revenue Service filings. (tax.state.nv.us)

The process of starting a business in the state of Nevada follows some standardized procedures similar to other states. That is to say State and Federal regulations are still applicable despite Nevada's limitations on what information they report to the Federal Government. To be sure, an employer identification number is required for most businesses, and acquiring a registered agent is codified in addition to obtaining appropriate licensure and registration via the Nevada Department of Taxation. 

It is important to note, that a State Business License is not required for all corporations such as not-for profit corporations, revocable trusts and individually managed LLC's (tax.state.nv.us), however municipal licenses or permits may be required even if a State license is not. Websites such as businesslicenses.com can be of assistance in determining which local licensure may be needed.

Filing fees and State reporting requirements for Nevada businesses can be ascertained through the Nevada Secretary of State and Department of Taxation, that's website is listed at the bottom of this article. As with other states, the filing fees and requirements can vary based on business structure. A registered agent can assist with this process and both the State filing and renewal fees are lower in cost than in several other States. To simplify the paperwork involved it may help to visualize the process in terms of a small series of tasks as listed below:

1. Compare cost advantages of Nevada businesses with other States
2. Assess legal and regulatory environment for the business
3. Perform a market and SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)
4. Evaluate and/or acquire capitalization, and assets necessary for operation
5. Obtain a registered agent
6. Incorporate, register, document and pay fees as required
7. Appraise the need for equipment, staff, property and additional insurance

Some of the steps involved in starting a business in Nevada should ideally be similar to starting a business in any location. These pre-requisite steps pertain to the business plan, marketability, capitalization, feasibility etc. The latter stages in starting a business are more State specific and involve determining fees, operating cost and profit margin benefits of state registration, filing and incorporation requirements in additional to legal protections and environment which the business will operate under. Researching these steps one by one via the sources provided with this article and via independent consultation with business, and incorporation specialists may be worth the initial costs if the business is likely to achieve profitability.

The advantages to starting a business in Nevada have to do with several factors including 1) 'low' registration fees, 2) favorable income, corporate and property taxes, 3) Business privacy rights and 4) a business litigation process similar to that of the Delaware and 5) ability to have individually run LLC's. Some of these advantages are business specific meaning the type of business can effect how a businesses will be required to report income at the Federal level and file with the Secretary of State and Department of taxation at the State level. Generally, the advantage of registering a business in Nevada may be worth consideration, with potentially added benefits in regard to business that will benefit from local markets, revocable estate trusts and Limited Liability Corporations.

Sources:

1. http://sos.state.nv.us/business/
2. http://ezinearticles.com/?Incorporating-a-Business-in-Nevada&id=831882
3. http://www.activefilings.com/states/nevada.htm
4. http://www.smallbusinessbible.org/nevadacorporation.html
5. http://www.nvinc.com/nevadairs.htm
6. http://www.tax.state.nv.us/documents/TPI%2001.03%20NV%20Business%20License.pdf

Ways to finance college costs

Paying for college is something that can be facilitated by a few practical and thoughtful steps. The opportunity cost of going to college can be in the tens of thousands of dollars, not to mention the actual expenses associated with enrolling in college programs. Despite these education costs and expenses, there are ways to lower both the opportunity cost and the expenses of college education significantly. This article will outline some of those methods.

College savings plans

Depending on how far into the game you are, your parents may have set up a college savings plan such as the 529 college savings plan for you when you were a child. If you don't plan on attending college for several more years it may be a good idea to look into this type of plan as they are completely tax free in terms of deductions and withdrawal so long as the money is used for designated college expenses.

Living with family

Residence is one of the biggest expenses at college. A typical college year can last 8 months and include room and board and dining expenses in excess of $8000/yr. After 4 years that's a lot of money. While living at home doesn't include the complete college experience, it might be worth  not incurring tens of thousands of dollars of student loan debt to miss out on dorm and near campus life depending on how intent you are on paying for college.

Transfer credit from community college

Some community colleges offer courses that can be transferred with relative ease into a University program. If you are planning on enrolling in a university program, looking into the local community college courses and transferability to universities may well be worth it. Additionally, depending on the community college, one may not want to or have to attend university if the program one is interested in can be achieved through community college.

Corporate tuition assistance

If you are lucky, you might be able to land a job with a company that has tuition assistance. Even if it isn't 100 percent assistance or grade based assistance it is worth the time spent filling out the application to try and redeem such valuable job benefits. Additionally, one doesn't always have to be employed by a savvy large corporation to receive such benefits, a small business owner may see such assistance as the perfect tax deduction and might be worth asking for instead of a raise.

Consortium universities

Some universities may be members in a regional tuition consortium allowing students from one state to attend universities in another state at a discount to the normal out of state tuition. After establishing residency which is usually a period of 1 year, those students may qualify for instate tuition. Calling different universities admissions offices is a good place to start in researching this possibility.

Register as in-state not out of state/attend state vs private school

The difference between instate and out of state tuition can be enormous. It might be worth establishing residency before hand in order to qualify for the lower tuition at State schools. Private schools may not honor the in state and out of state guidelines since they are private institutions. Additionally private schools tend to charge much steeper tuition costs. There are many credible state universities that's education program is considered at par with if not better than some top tier private schools.

Buy used text books

Many college and university bookstores offer resale programs for books that are used in consecutive or repeated semesters. This allows new students to buy books from previous students who have resold their books back to the college or university bookstore. After 40 classes of course work, some with 2 or 3 textbooks each the savings on used books can add up. The price of used textbooks can be marked down by 10% or more depending on the condition.

Sell text books online

If the textbooks your class uses are new editions they could be worth something through online retailers. To optimize on this technique, purchase used text books through the book store or online and then resell them to minimize costs. Since textbooks can cost up to and sometimes over $500.00/semester, the potential savings are in the thousands of dollars over a traditional 4 year university program.

Employment during enrollment

Working during school can help pay for costs in addition to making graduating on time a lot tougher. Depending on whether you work full or part time will make a difference on how much you can earn versus how many credits to enroll in. Burn out is possible when working full time and attending a rigorous academic program so be realistic with yourself as well.

Avoid student loans and credit card expenses

Student loans may seem like the easy option at first but depending on the interest rate upon graduation and thereafter, the interest on the loans can multiply the real cost of attending college or university. Avoiding these methods of payment may be impossible, but keeping the future cost in mind is prudent.

Apply for scholarships and grants

Good grades and standardized test scores can mean one very good word, scholarship. While test scores alone don't translate to scholarship they can be a big help. Researching the different types of scholarships and grants available and applying for them properly is key to qualifying for this type of free education. It is worth the time to work for and try for these types of funding.

Paying for college may seem daunting at first and the prospect of debt may not seem appealing at all and that is because it isn't. However, if you decided the opportunity cost of an education is worth it and will pay back more in the future, then the next step is to find ways to minimize these costs and expenses. The tips and methods in this article can help with just that. The more of the tips that are utilized and the more consistently they are applied, the greater the potential savings, affordability and practicality of paying for school can be.

Money Saving Dorm Room Decor Tips

Welcome to University aka college life. Chances are it's not going to be luxury living and your undersized room may already be furnished with a squeaky bed, small desk and dresser. Theoretically, dorm rooms don't have to be decorated especially if you spend all your time in the library, with friends, the dining hall and in class. However, if you do decide to make your student living more pleasant, decorating on the cheap can be easy to do.

Plants

A low maintenance succulent i.e. cactus is a good way to go. I had one of these in my first year dorm and it could survive weeks without water, looked nice and was inexpensive. Some succulents can be expensive but the kind available at home furnishing stores such as Lowes and Home Depot can be quite cheap especially during end of season clearance sales.

Wall decorations

Posters from home are a good way to go. The corners may be a little frayed but it will be free and still feel like home away from home if some of your high school decorations come along with you. Other inexpensive wall decorations include magazine cut outs, and/or a cork bulletin board full of photos of your friends and family.

The Floor

There is a good chance the floor may never be cleaned the whole time you reside in your dorm room. For this reason it may not be a good idea to go all out and get a fancy Persian rug, especially if some drunk guy stumbles into your room and spills beer on it. If you want the floor to be cozy but still save money and be realistic, consider an inexpensive mat or rug with a tasteful design that matches the rest of the room. Rugs can even be pieces of carpet, but the ends of carpet pieces fray and appear messy. Cheap rugs may be obtained from home, church sales, or other independent one time sales or dealers.

Furniture

As mentioned above, if you're lucky, the dorm room will come furnished with pre-engraved desk and graffiti closet. If the room isn't furnished, keeping it light might be a good way to go. After all, this isn't really your home it is a place to live while you initiate and possibly dwell throughout college life. To obtain cheap furniture think Walmart futons, flea market shelving and desks. The hard part is finding a the flea market and transporting the furniture and the easy part is actually getting cheap furniture. Some places may deliver if you don't have access to a truck, but that costs extra. There may also be furniture sales on or near campus but be weary of over inflated prices due to convenience.

Lighting

Keeping it simple, the room probably already has electricity and an overhead light. You may want a desk lamp to read better. This too can be brought from your room at the parents house or inexpensively at a Target, Walmart or neighborhood sale. If you have a pack of candles and a candle holder, there really isn't much need to worry about ambiance and subdued lighting fixtures, candles do the trick just fine, just don't forget about them when you leave the room.

That's pretty much it, anything else you think of to decorate a room that doesn't need to be decorated can be done on your own. The above tips may make your dorm room decorating experience a little more manageable and cost effective. The key things to keep in mind are, it's college not married life, and your property may be treated with some disrespect whether intentionally or unintentionally i.e. lack of cleaning, messy roommates, friends etc. Bringing a few well chosen decorations from your previous home might make the room feel more comfortable and simplicity really can be inexpensive as well as affordable.

Cost Effectiveness of an MBA Degree

A Master's Degree in Business Administration (MBA) can be worth a lot or a little depending on several factors. When MBA's were in their highest demand the degree was almost a ticket to well paying business jobs. Since the 1980's MBA programs are standard in many Universities and consequently the supply has increased. This does not mean a MBA is useless however; what it does mean is that as a prospective MBA candidate one has to be a little prudent.

With a MBA one can broaden one's horizons significantly. A Doctor might pursue a MBA's to better understand the administrative end of their field; Engineers and Computer Scientists may earn MBA's when considering branching out into small Businesses, Corporate employees possibly seek MBA's to assist in promotion etc. In addition to the career implications of MBA's is the knowledge of the world of Business which is pretty much unavoidable in a MBA program. For anyone who didn't know, Business is a big factor in what makes the World go round these days, so having knowledge of this is useful in and of itself.

In a MBA program one learns things like the time value of money, asset management, strategic marketing, brand value, organizational behavior, financial statement analysis, statistical analysis, entrepreneurship etc. The list is quite extensive as the degree programs can average about 60 credits which is double the course work of some degrees and about one third less than law degrees. The value of these courses also depends on how one applies the knowledge one learns in the degree. For example, if one invests time and money to learn how to build a car but never actually builds a car why learn to build a car? A non-MBA student might say, "why not if it's interesting"; a MBA student who has learned his or her stuff would say that is a wasted investment or net loss scenario. One thing that a MBA will teach is how to value money and that is valuable too.

The value of the school and the value of the individual

How one is situated and which school one attends can also influence the value of a MBA. A MBA from Wharton is prized but not necessarily valuable depending on how it's used, while a degree from an accredited 3rd tier school will teach essentially the same information, it may take someone quite high and therefore be quite valuable if the individual knows how to use it. Thus, although all MBA's are not always considered equal in rank and therefore 'value', neither are all recipients of MBA's. In other words value can be found in many degrees, if it is turned into something of greater value.

Short run versus long run value

In the long run, a MBA has more potential value than in the short term, as MBA's do incur opportunity cost and expense when pursued. Then, after graduating one has to generally either get a promotion, increased in income, find a career or start a business for the degree to pay off. That takes more time, energy and investment. So naturally, the short term implications are less favorable than the long term.

Face value

Lastly, a MBA may be free if one has an employer, scholarship or college fund pay for it. In this case, the value of the degree is either $0.00 or any positive dollar value above that as no money from the candidates personal funds are used in paying for the degree. In this instance, the real tangible book value of the degree is good, but sometimes it may be negative depending on the cost of the tuition and the financial situation of the individual pursuing the degree. What's more, if student loans are used to pay for the degree they could negatively amortize if the student is unable to make interest payments on the loans after graduation.

So what we have seen here is that MBA's have a lot of potential value and sometimes immediate value depending on how they're financed. Since the 1980's MBA's have become more popular and less in demand thereby reducing their cultural value or value to the workforce however many opportunities still exist for MBA students for the simple reason the World is comprised of so many business'. A MBA can equip an individual with highly useful information that is not unnecessary in any commercial environment and part of the value of that knowledge is multiplied by the value of the individuals ability to use that know how.

How to create a sales forecast

There are many ways to create a sales forecast, and how a sales forecast is made is not the same as what a sales forecast is. Some sales forecasts are more accurate than others, but the information used in making the sales forecast also contributes to its validity and largely pertains to existing and pre-existing selling activities. Sales forecasts can be made by hand on paper with a calculator, using Microsoft Excel, or with a specialized sales forecast software. Essentially one or more of the following are needed to make a sales forecast:

1. Past sales numbers
2. Sales and marketing budget numbers
3. Intervals at which the numbers are attributable to
4. Other dependent variables ex. Changes in sales force
5. Calculator, or Forecasting software

Determining which sales forecast to use for your business depends on 1) market consistency, 2) historical sales, 3) changes to marketing, project management or product and service line, 4) economic conditions and 5) forecast objective. This article will illustrate how to make different sales forecasts with different tools and methods, and then discuss the importance, relevance, pros and cons of sales forecasts.


Simple sales forecast using moving average

The moving average is a trend line that calculates an average number based on historical data. For example, if sales for the last two years averaged $120K per month and rose an average of 3% per month, a sales forecast that uses both moving average and the percentage rise in the moving average will give a sales prediction based on past sales patterns.

1. List historical sales on a piece of paper or spread sheet
2. Calculate moving average
3. Determine periodic percentage increase in sales
4. Create trend line by applying percentage increase to moving average

Sales forecasts using Microsoft Excel

A few types of sales forecasts can be made using Microsoft Excel. These different forecasts use data differently or adjust data to arrive at more accurate predictions. All forecasts are predictions unless the variables are 100% constant into the future. The sales forecasts below use moving average, dependent variable i.e. causal relationships, and independent variables i.e. sales values. (Microsoft.com)

1. Create three or more columns in a Microsoft Excel Spreadsheet
2. One column for sales and another for time period
3. Click on the chart wizard
4. Highlight data box, proceed through wizard steps
5. Click on Chart tab and add trend line

For more detailed analysis of the above sales forecasting method using Microsoft Excel, regression analysis can be used to calculate accuracy of the sales forecast, and correlations. The following Microsoft website illustrates how to do this and create a forecast in excel with more detail.

Sales forecast using statistical or specialized software

Software that is designed just for creating sales forecasts can provide easier to you applications that save precious time and energy. Additionally, specialized sales forecasting software may offer a variety of forecasting options such as multiple dependent variables, easier data input templates, more dynamic presentation, and greater analytical capacity. Sales forecasting software can be found for free online via sites such as http://www.freedownloadscenter.com

Advantages and disadvantages of sales forecasts

Sales forecasts are useful tools in business management because they help refine the business process and improve the accuracy of business financial planning. Sales forecasts can also be helpful in training teams, illustrating sales performance and planning future sales efforts. Additionally, sales forecasts may assist a business obtain financing for new projects or demonstrate the need for sales related changes.

• Reduce excess inventory and storage costs

• Allow management to gauge effectiveness of sales force

• Improve strategic planning and product testing 

• Assist sales force assess their efforts and market

• Creates records for budget considerations and analysis

Sales forecasts are only as good as the variables and factors put into the equation, software or calculation. Some forecasts may be mere estimates or ball park figures of what sales might be like given non measured past patterns. Other forecasts may fail to take into account significant changes in sales staff, budgets or product line(s). Thus, knowing the business in detail can help improve the accuracy of a sales forecast.

• May not account for changes in economic conditions

• Requires business conditions to remain constant

• Does not necessarily incorporate future projects

• Numbers affected from

In summary, sales forecasts are made relatively easily but do require a record of past sales and business variables to more accurately create a forecast using a moving average trend line. Sales forecasts can compare multiple variables on a graph, in addition to being displayed on data tables. The forecast accuracy can be measured with statistical analysis and multiple methods of creating sales forecasts exist including by hand, Microsoft Excel or specialized sales forecasting software downloads. Sales forecasts are generally not 100% accurate but do assist a sales team, business management and business ownership plan for and project future business situations and revenue which helps in inventory control, assessing human resources, budget and strategic decisions.