Since 2003, the top tax rate on most capital gains has been 15% for people in the 25% or higher tax bracket. Although a lower level tax rate has also been in place since 2003 for people in the 15% or lower tax bracket, this rate is only applicable until a person has enough income to cause him / her to enter the 25% tax bracket. As a result, for people incurring a capital gain from selling a business, most of them are in at least the 25% tax bracket so the top 15% rate is generally the rate they experience.
By Emily Maltby, The Wall Street Journal
October 2, 2009
The Small Business Administration ended its 2009 fiscal year on Wednesday, marking the close of a tumultuous year of lending initiatives to keep banks’ doors open. Despite the efforts to revive the credit market, the SBA approved less than 45,000 loans, down 36% compared to last year and 56% from 2007.
The loan volume reflects all the small business loans approved by lenders that are guaranteed by the government under the SBA’s flagship 7(a) lending program. In addition to the drop in number of loans that were approved to small businesses, the total dollar amount also fell drastically to $9.3 billion total, falling short of last year’s total by about $3.4 billion.
Lending, however, appeared to rebound in the later part of the year, which the agency attributes to (more…)
By Monty W. Walker CPA, CBI, BCB
February 26, 2009
The need to use retirement funds for the purpose of making non-publicly traded investments such as buying a building, purchasing a parcel of land or acquiring a business is growing. It is extremely common to find people whose liquidity is located primarily in qualified vehicles such as IRAs, Pensions and 401(k) rollover accounts. As people are being downsized from Corporate America, they find themselves at a crossroad of either taking the entrepreneurial road or finding another job. Many people are deciding to take control of their own destiny by starting or buying a business. Thus comes the problem.
Large bases of these people have been building retirement accounts so most of their money is located in qualified vehicles. If improperly accessed, they stand to be hit with a 10% penalty and often pay 30% or more in federal income tax. Depending on tax bracket and the state of residence, total federal and state taxes can encroach on 50%. The idea of losing from 30% to 50% on a distribution from a qualified account does not set well with most people. So, the question to be answered is, How can a person access his/her retirement funds to purchase a business (more…)Read More
What You Need to Know Before Getting a Loan
If you’re like most people buying a business, you’ll probably need to borrow money to complete the acquisition. Although, you may obtain seller financing or a loan from friends or family, most buyers turn to a commercial lender for financing. Although different lenders specialize in making certain types of loans, in this article we’ll spell out some of the common principles, steps and business terms you’re likely to see when dealing with any commercial lender.
The major business points to be addressed in connection with a business acquisition loan often include the amount to be loaned, the interest rate, the fees and expenses charged by the lender in connection with making the loan, the term of the loan, the obligations (covenants) you’ll have to meet while the loan is outstanding, whether or not a portion of the principal must be paid back each month, and the need for security or a personal guarantee to be posted.
All lenders have what are known as “underwriting guidelines”. These guidelines set out the facts and circumstances (more…)Read More
Starting a new business is a daunting prospect for anybody, whether you are a budding entrepreneur or just an ordinary individual that wants to do what you love for a living. Whilst we all dream about quitting the day job that we hate and working for ourselves, there are many factors to consider and the process has to be fully thought through if you want to stand a chance of succeeding with your dream business.There are certain things that you should think through and processes you should complete before quitting your day job and buying your dream business. The eight steps below will provide you with a quick guide as to what you are supposed to do and help set you on the path to quitting your day job and buying your dream business.
Step One – Play To Your Strengths
If you are considering the possibility of acquiring your dream business then the last thing you want to do is to rush into buying any business that seems cool. You must have a passion for the business if you want it to be your ultimate dream business! Assess your hobbies and interests in line with the types of businesses available and ask yourself whether you would like to go into it for a career.
Step Two – Do Your Homework
Research the market and take a look at the business information you would need to (more…)Read More