Fredrick James-Educating the Masses to Help You Save On Taxes

Posts Tagged ‘economic downturn’

More Regulation Ahead

The bill was signed into law July 21, 2010 largely in response to the Great Recession which began in late 2007.  Although we’re still scratching our heads and wondering how this could happen, economists have come to the conclusion that the recession resulted from easy credit (both industry and government) and securitization of mortgages which led to widespread speculation eventually hurting global trade, consumer confidence, and employment.  Deregulation of financial services is seen by many to have helped fuel the financial crisis.

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It’s been a tough year for Americans, and the numbers are looking pretty grim as we go into the Holiday Season. Florida’s overall unemployment rates are hovering just over 11% and nationwide they’re around 9.6%. According to The Wall Street Journal, the average length of official unemployment increased to 24.5 weeks, and the numbers of long-term unemployed has jumped to an all-time high of 4.4million. Everyone feeling jolly yet?

Well, there is one small ray of sunshine: Last week President Obama signed the unemployment extension legislation which provides for 14 weeks of extended benefit coverage for every state and an additional 6 weeks, for a total of 20 weeks, in high unemployment states where unemployment is over 8.5%. Read the rest of this entry »

“Small businesses create most of the nation’s new jobs, employ about half of the nation’s private sector work force, and provide half of the nation’s nonfarm, private real gross domestic product (GDP), as well a s a significant share of innovations.” -SBA 2008 report to the President

There has been so much media coverage about the current economic decline here in the US that it is easy to find ourselves feeling helpless and, at times, hopeless that the situation will ever turn around. Fear not, my fellow Americans, the end is far from near. Adversity is actually a good thing for our economy—economic upheavals, historically, have proven to be the motivation needed to shake Citizens out of their industrial stupor and get them thinking about new ways to do business, new niche products or services that are not being provided and creative ways to make a living.

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With unemployment rates Nationwide reaching 9.7% in June 2009, and here in Tampa bay area topping the charts this month at 10.4%, in combination with a dismal housing market many homeowners are facing the grim reality of being stuck between the proverbial rock and a hard place; sell at a loss or default on your loan. Unfortunately, even in these situations there are tax issues that can haunt you down the road…just when you think you’ve gotten through the toughest part of your ordeal.

Obviously this isn’t going to be the sunniest blog I’ve posted, but my hope is that readers can use the knowledge I’m sharing to empower themselves; an important step toward starting the financial and emotional recovery process.

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In our previous blog we began exploring the benefits of changing your invoicing policy and how that one small change can effectively save you from becoming a casualty of your clients cash flow problems. Today we are looking at the specifics as to how to go about putting that plan into action.

Very few business owners start their company with the goal of becoming collection agents, so being put in that position can lead to avoidance. You have a personal relationship with your clients and it can become an emotional issue for many small business owners—who wants to add stress to people you know are already struggling? So let’s take the emotional baggage out of the equation by setting up some simple guidelines that communicate your expectations and provide more up to date information for your clients that will help them better budget their payments so you get to avoid being “the bad guy”.

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So you are a business owner. The economy is looking grim, but so far your clients keep calling and new people are walking in the door every week. So far, so good right? Until you start noticing a frightening new trend…your clients who have been so happy about using your product or service aren’t so happy about paying their bill at the end of the month. All of a sudden your cash flow is in jeopardy and the economic crunch has just landed on your doorstep. What now?

With the economy in disarray, many businesses are faced with this scenario that not only causes cash flow to slow to an alarming trickle; it actually adds the additional cost of trying to collect from slow or non-paying clients. Most business owners don’t realize this is actually an added expense but once you take into account the time invested in trying to collect on services/products rendered that could be used to generate new revenue, the added systems needed to check clients’ credit worthiness, the time needed to monitor payment collections, send delinquent account collection notices and, in extreme circumstances, make phone calls and visit non-paying clients, it is easy to see how quickly the additional expense adds up.

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