Tag: Money (54 articles found) - Clear Search


Understanding Short-Term Rentals #4

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OK, this is our fourth blog on understanding rentals. If you haven’t, go back and read the previous three for a better understanding. We covered the possible local laws restricting short-term rentals, how they are taxed at the federal level, how to hold title and how to save Money on the self-employment tax.

This article is going to discuss another surprise tax that many investors don’t understand: sales and lodging taxes. These are the taxes all hotels have to pay, and they are at the city, county and state levels.

Short-term rentals, like those offered on services such as Airbnb and VRBO, have always been required to collect and remit sales and lodging taxes. Historically, the large vacation rental websites viewed these occupancy taxes as the responsibility of the host or homeowner responsibility, not the platform.

The platform was positioned simply as an advertising website or marketplace, and transactions occurred directly between homeowner and traveler. These taxes, however, were often overlooked and not well understood by homeowners and hosts.

As the short-term rental industry has continued to grow, these lodging taxes are increasingly part of the industry narrative and becoming much better understood. Short-term rentals are now ubiquitous, which has sparked pushback in some communities, with a new and heightened focus on regulation and lodging taxes.
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A Tax On Your Labor (Or Lack Thereof)

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“Build your own dreams, or someone else will hire you to build theirs.” –Farraj Gray

This will be a bit of a scattershooting article, as there are a variety of things that I want to cover that all can be filed under the heading "labor".

As we all know, the "labor force" right now has been massively disrupted. And for those of my readers who are in that category, the word "disrupted" is far too tame. Let's call this for what it was: there was an unprecedented economic tsunami this spring and summer, and we have still to recover from it.

That said, recent data is encouraging. According to last week's DOL report, there was a 12+% decrease of seasonally-adjusted claims for unemployment compared to the week previous.
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Use These Financial Reports For Business Decisions

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A lie has speed, but truth has endurance. - Edgar J. Mohn

Some business owners never like to "look under the hood" of their finances, and their accountants or financial partners can sometimes encourage that behavior by keeping them in the dark.

Well, I hope that won't be you.

In fact, you need the kind of insight into financials to make strong decisions.

One way I'd like to help YOU is by pointing out different reports and metrics that you can find in most accounting software, that business owners or their bookkeepers often neglect. Knowing these numbers will help you avoid an embarrassing flub in YOUR business.

Even if you are using some of these reports, I'm sure you'll find a few more to add to your repertoire. Of course, this is just a very basic introduction, but hopefully it'll spark some ideas.

1) Profit & Loss Summary and Previous Year Comparison:Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting--as well as how fast expenses are rising.

2) Balance Sheet and Previous Year Comparison:As with your income statement, it's important to compare where certain balances stand now versus last year (such as Cash, Accounts Receivable and Payable, etc.).
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Guiding Principles For Raising Money Smart Children

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"One thorn of experience is worth a whole wilderness of warning." - James Russell Lowell

Rather than seeing these ideas as "rules",  it might be helpful to think of them as principles when it comes to helping your kids see Money rightly.

And yes ... some of these may be difficult (the first ones, in particular, if they represent a shift for you), but after seeing many families do this well, these are some of the best things you can do with your children when it comes to financial education.

1. Talk openly about Money.
Parents make a mistake when they keep information from their children. The only way children learn what is a good deal and what is too expensive is by the experience of what their family earns and what items cost. Hiding this information robs children of the financial education they need.

2. Talk factually about Money.
Many parents have strong emotions about Money based on their childhood experiences. These emotions are always transmitted to children. Instead of helping children, they can cripple children from growing up to make sound financial decisions
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Take Action When Your Business' Receivables Are Slowing Down

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"Action is the fundamental key to all success." - Pablo Picasso

Many different types of businesses suffer from the problem of accumulated "past due" receivables.

And it's a problem which shouldn't *just* be addressed by "normal means" (calling, pestering, etc.).

The good news is that you don't have to accept the normal status quo -- you can actually change the way the game normally works. How? Well, I suggest that you use tactics similar to those which WON you the sale in the first place: discounts, premiums for advance or prompt payments, and good old multi-step follow-up.

If you do have (or ever develop) a receivables problem, you'll need to take this same sort of aggressive action to clean it up. "Preserving the relationship" with a client who can't (or won't, more likely) pay his bills is of little value.  And, left alone, collection problems tend to get worse, not better.

Even large, long-established corporations can find themselves in trouble with their payables. In that situation, you as a creditor could wait years for your Money and then recover only a percentage of it.
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Asset Protection – Basics #1

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Asset protection is always in the background of real estate investing. But it should never be far from sight!

We work hard every day to build wealth through real estate, and that can be substantial and fund our retirement. The last thing we want is to lose what we’ve worked so hard to create. That’s where asset protection comes in.

Protecting assets can be very simple to highly complicated. I get asked all the time about complex trusts and layered structuring to out-of-state LLCs. After being the asset protection business for over 20 years, my opinion hasn’t changed. Start basic and then let your protection grow as your assets grow.

There are lawyers who will “sell” you a big, expensive package of “bullet-proof” asset protection structures. When I went to my first Rich Dad, Poor Dad event, there was a lawyer on stage with a silver briefcase that had the full asset protection entities and documents. This cost $5000! And all it included were fill-in-the-blank forms to create LLCs, Family Limited Partnership, S-Corp and a few other documents. You still had to fill out the forms correctly and file them with the state and pay the fees. I had a client purchase the set of documents and was instantly disappointed in herself when she found out I could do everything for her for half the price.

I tell this story for a reason. Be careful of purchasing so called “asset protection packages” at real estate events. Rarely are they beneficial, and you’re probably overpaying for what you get. Further, you probably do not need all of that structuring up front.
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The Foreclosure Process

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Foreclosure is the process of taking back secured real estate on a defaulted loan. It can only begin once a true default has occurred, which we discussed in our last post. Utah uses a non-judicial foreclosure based on the trust deed. Other states must go through the court system.

Once a default has occurred, you must provide notice to the borrower of the default and give him 30 days to bring current. This is called the “Notice of Presentment.” If he does not bring current in 30 days, you can file the notice of default. This notice and 30-day waiting period, however, can be waived by the borrower if it’s included in the note. Make sure it’s in yours.

The true beginning of foreclosure is the notice of default that is recorded on title to the property. This marks the 90-day waiting period during which the borrow can bring the loan current. He must bring the loan fully current and within the 90 days, and the lender must accept it. If default is not fully fixed or later than 90 days, the lender can move to the auction phase.
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Hey Business Owners, Do You Understand The Value of Time?

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“When the storm has passed, put your energy into rebuilding your life, don’t waste time looking back.” -Leon Brown

Entrepreneurship is the conversion of your knowledge, talents, guts, and time into Money.

Time is valuable, although the value differs from person to person. And while I recently covered the best way to think about the value of your BUSINESS ... this calculation is actually a little easier.

But it takes a certain mindset.

You see, when most people place value on their time, they do so based on an eight-hour workday, which is not all that correct. It's hard to get eight productive hours out of each day.

One study involving Fortune 500 CEOs revealed that they achieved 28 productive minutes a day.
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Loan Defaults

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If you are going to be a lender, you’ll need to understand how your borrower might come into default and what to do about it.

The first way to default is failing to comply with any term of the note. This includes making a monthly payment or paying off the note when due. Monthly payments can be tricky. Your note needs to be clear about what constitutes just a late payment versus one that causes a default. General mortgage rules give the borrower 15 days from the due date to make payment without penalty. Then, he can make payment up to 30 days with just a late fee. Then, if payment is not made within 30 days, the note is in default.  Remember, however, that your note can modify any of those payment terms! You just need to know what those terms are. Your note should also be clear on the exact day the note is due.

Also, default can occur under ANY term of the note or deed. Your documents should include that maintaining property insurance and the payment of property taxes are both required or it will result in default. Your note may have other terms as well, such as not putting any other lien on the property. The key here is to really understand your note and deed. This is why you should have and provide your own loan documents that cover all the terms you require. You won’t get this from a title company.
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State Tax Revenue Collection and How It Might Affect YOUR Wallet

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"A man should always consider how much he has more than he wants." -Joseph Addison 

The financial picture for the various states in our nation is a mishmash of various revenue sources (and expenses). 

Unlike, say, the federal government, the states cannot print Money. So, they are forced to go hunting for it. And they get it from a few primary sources: sales tax (based on purchases/consumption), income tax (individual and business taxes based on income), property tax and "other" taxes like the tax on fishing licenses, driver's licenses and a lot of other smaller items.  

And the most volatile -- and COVID-affected -- of these sources is ye olde income tax. Sales tax has obviously taken a hit as well (but people still need to buy stuff) and property taxes, well ... more about that next week. 
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