How To Budget When You Are Self-Employed

This issue applies to me especially, but I knew many of you also struggle with budgeting when you are self-employed.  Jean Chatzky advises that you plan of cushion of six months if possible.

clipped from www.msnbc.msn.com

Q: How do you budget if you are self-employed? We may have an influx of cash one month and then very little the next. I don’t know how much to keep in our checking account, just in case we don’t make any money the next month. I don’t want to stash too much in a low-interest checking account, but I may need access to it quickly. — Amy in Louisiana

 

A: You’re right Amy, it’s difficult to budget if you don’t know how much is coming in each month, but it’s not impossible. First of all, just because you need accessible cash doesn’t mean it has to sit in a low- or no-interest checking account. You can find savings accounts with low deposit limits and interest rates in the 3 percent range, and you’ll have easy access to your money if you need it in a pinch.

Aside from that, in terms of balancing the months that net bigger paychecks with those that don’t, it’s all a matter of planning.

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Bringing Home The Bacon: Business Women In The News

The founders of social bookmarking community Kirtsy will be hosting the first of a series event called, Hands on Kirtsy. The New York event will be Monday December 1st at the Hudson Hotel.

Entrepreneur Patricia Handschiegel writes about the New Power Girls in her latest column in The Huffington Post.

Also, Girls in Tech is having drinks on December 9 at Lela Bar. RSVP here.

Are You Saving For The Holidays Using SmartyPig Yet?

smartypig.com

Saving money is usually boring and solitary, but it is absolutely necessary. One of the cool things about SmartyPig is that you can get everyone in on the act.  When you set your FREE account, you can make you savings goal public and broadcast out to your friends on Facebook, your blog or website.  Plus when you reach your goal, you can opt to receive a debit card for that amount saved and then get to holiday shopping with no credit card hangover.

Read my prior post about Smarty Pig.

Working Women’s Luncheon at the Javits Center Quick Recap

“It is the time to be essential.” Hearst President Cathie Black said in response to today’s job market and the current economic crisis. Cathie Black was the keynote speaker at WCBS Radio’s Working Women Luncheon which I attended today at the Javits Center.

It was “bitch cold” this morning, so I was happy when I walked into the warmth of the River Pavillion.  Plus, there was a goodie bag waiting for me as soon as I checked in at the registration desk. I met some very entreprising women before sitting down at my table including Venita who runs Danzemergencee, a niche temp firm for dance and fitness instructors and Andrea Dey, event planner.

At lunch, I met the sister of fashion designer Dara Lamb.  Her custom women’s business suits are beautiful and professional. I also met Mary Kagan, CPA and a fellow blogger Carmina Perez, whose blog is Mogulette-In-The-Making. I just glanced at her blog, and she too attended the Econ Women Conference last month. [Smart Small World]

After the luncheon, I had to run and do bookkeeping in DUMBO, then host a Cupcake Takes The Cake Meetup in the Village. I’m exhausted.

Ten Ways To Cut Your Tax Bill (Via Business Week)

Even if you are a start-up and made little this year, you can’t rely on low profit only to minimize your tax bill.  Business Week has 10 great tips that can help.

  1. Buy new stuff. If your business has less than $810,000 in depreciable property, Section 179 of the tax code now lets you deduct up to $250,000 (up from $125,000 last year) on purchases of new equipment. Then you can take bonus depreciation equal to 50% of the equipment’s value, all before regular depreciation kicks in. Just start using the new gear before year end. [external hard drives, laptops, printers are good ones to get now]
  2. Pay your reservists. Get credit for paying employees who have been called up by the reserves. The Heroes Earnings Assistance & Relief Tax Act of 2008 lets businesses with fewer than 50 employees get a tax credit when they pay reservists the difference between their civilian and military pay.
  3. Drive A Green American Car. Buy a hybrid car for your business and you’ll get a tax credit based on the vehicle’s fuel efficiency. The credit comes to $1,300 on the 2008 Chevy Malibu, or $3,000 for a Ford Escape or Mercury Mariner two-wheel drive.
  4. Maximize Your Mileage Deduction. [If you haven’t been keeping up, then you may not know the current maximum mileage.] On July 1, the IRS raised the standard mileage deduction rate to 58.5¢ a mile. The rate remains 50.5¢ per mile for driving during the first six months of 2008.
  5. Take Your Losses. [They reduce taxable income.] You probably know that investment losses in taxable accounts can be used to offset capital gains, but what if you have no gains? Use the losses to offset up to $3,000 in income. A $1,000 loss that offset $1,000 in capital gains will save you $150 at the 15% capital gains rate. But that same $1,000 can save you $350 if you’re in the 35% tax bracket and offset $1,000 in income.
  6. Fund Your Retirement Account. The best tax deduction is still a retirement account, partly because
    you don’t have to buy a thing to be entitled to it. This year, you can fund a defined contribution plan with up to $46,000 ($51,000 if you’re over 50 and qualify for a catch-up contribution).
  7. Become a Landlord. Because of the wonders of depreciation, commercial real estate is one of the few investments that can provide positive cash flow while reporting a loss for tax purposes, says CPA Michael Hanley, managing partner of Merl & Hanley in Smithtown, N.Y.
  8. Opt Out of Installment Sale. If you have sold a capital asset, such as land, this year, it might make sense to pay the taxes on the gain you receive all at once, even if you’re taking payments on an installment basis.
  9. Speed Up Expenses. If you normally restock your office supplies in January or February, or you have a business trip planned for early next year, try to do it now. The more expenses you book this year, the more you can write off.
  10. Clean Up Your Books and Get Ready For Next Year. If you’ve got inventory that’s collecting dust or clients who absolutely won’t pay, now’s the time to throw in the towel. Write off that dated inventory and stock up on goods that are moving faster.

ShoeStringing, Bartering And Co-Writing

Most start-up entrepreneurs and micro-businesses are prepared for  the economic crisis because they already have a habit of working within a small budget and having little cash flow.

Shoestring Mag gives loads of frugalista tips to lead to help you save.

Bartering is a good way for small business for conserve cash and rack up savings.

MixedInk is a free web application that facilitates co-writing.  This is great for business plans and proposals.

Fun and Frugal Holiday Party Tips For Small Businesses

I just read an article in the Seattle Post Intelligencer about small businesses having more subdued holiday parties this year, but that doesn’t mean that they can’t be fun.

Here are some ideas for having a frugal and FUN holiday party:

1) Have it at the office (frugal), but decorate it festively. Silver and gold party decorations always make thing classy (fun).

2) Leverage your vendors and/or clients.  If they can give you sample products or swag that would be appropriate for stocking stuffers or goodie bags, then see if you can use them.  [Note:Make sure it is something that employees haven’t seen all year long.]

3) Have a potluck.  This can be done sweetly as an afternoon cookie or cupcake swap especially if there are avid bakers in the group.  If enough people in the office are big on cooking, then ask them to bring their favorite dish. Be sure to reimburse them for their grocery expenses.

4) Play Games.  It’s fun to play a game (not a team-building exercise) with the office. I don’t mean Rock Band or Guitar Hero. I recommend Apples to Apples because you may get insight on your office mate’s personality. There’s also a Jewish version of the game.

5) Give to a local charity.  The money you are saving on a frugal holiday party can go to a charitable organization.  Canned drives are commonplace this time of year, but seek out a local nonprofit that your office  can help and/or volunteer.

6) Don’t forget the booze, but be prudent.  The article suggested not serving alcohol at the holiday party to save money and lessen the possibility of accidents or bad behavior.  For some, a holiday party is not a party without a glass a wine, so it’s OK to supply wine and beer, but put the kibbosh on the candy cane jelly shots! If your office is more into temperance drinks, then punch and soda are fine.

7)  Give Thanks.  Thank your team for working hard, sharing ideas, bringing in new business and/or being a joy to work with.  Think of something of value that each person brings the company, and let them know.  If you are stuck not having something to say about a person on your team, then you may need to consider whether they should on in 2009, since everyone has to contribute to make 2009 a more prosperous and profitable new year.