Category: Cash Flow

Debt Financing 101: How Borrowing Can Power (or Strain) Your Business

Debt financing allows businesses to raise capital by borrowing money that must be repaid over time with interest, using tools like loans, bonds, or lines of credit. It offers benefits such as tax-deductible interest and full ownership retention, but also presents risks like cash flow strain and potential default. Choosing between debt and equity financing depends on factors like cash flow, creditworthiness, and growth goals, and businesses must weigh the trade-offs to make informed financial decisions.  Read more about the pros and cons of debt financing in this PNC post.

Perception vs. Reality: Recent Survey Suggests Small Business Owners Need Stronger Financial Planning

A new TD Bank survey reveals a significant gap between small business owners’ confidence in their financial preparedness and their actual readiness. While 94% of owners believe they’re prepared for the next 12–18 months, many would struggle after just two quarters of revenue shortfalls. The study highlights that although New York-based businesses are slightly more resilient than the national average, most still face challenges like inflation, customer growth, and the rapid evolution of AI tools. Many are turning to digital budgeting tools, loans, and financial advisors, yet underutilize expert guidance. Small business owners are encouraged to seek out trusted financial support to better navigate uncertainty and position their businesses for long-term success.

Year-End Tax Planning Considerations for Business Owners

This article posted in Key Health highlights 10 smart tax planning tips for business owners to tackle before the end of 2024. It suggests revisiting your business structure, retirement plans, and wealth transfer strategies to save on taxes and prepare for the future. You can take advantage of options like bonus depreciation, expensing rules, and the qualified business income deduction to lower your tax bill.

It also reminds online sellers to prepare for updated 1099-K reporting requirements and encourages compliance with the new Corporate Transparency Act to avoid penalties. Plus, there are opportunities to explore energy-related and R&D tax credits for added savings. Whether you’re planning a business transition or just looking to stay ahead of tax changes, now’s the time to consult with your tax advisor and set yourself up for a strong start in 2025.

Avoiding Common Tax Mistakes

This article from CNET discusses common mistakes that attract IRS scrutiny and offers tips to avoid them, such as completing your return accurately and reporting income correctly, as failing to do so can lead to audits or delays. It also emphasizes the importance of meticulous record-keeping, especially for self-employed individuals claiming deductions, and being cautious with charitable deductions to avoid raising red flags with the IRS.

Advantages of Setting Up a Business Checking Account

If you are a busy entrepreneur, you may think that dumping all your earnings and expenses into an existing account will save you time and hassle. According to this article from CNBC, for smoother tax filing and better money management, it’s smart for small business owners to keep personal and business finances separate by having different checking accounts. This not only makes tax time easier but also comes with perks like a business debit card, loan and grant opportunities, and extra benefits from business checking accounts, making it a good move for businesses of any size. See the link for more details!

As an Entrepreneur, Are You Paying Yourself Correctly?

Many entrepreneurs, especially women, face challenges in paying themselves fair salaries, contributing to a gender pay gap in entrepreneurship. Despite efforts to address this issue, a survey reveals that female entrepreneurs, on average, earn 28% less than their male counterparts, emphasizing the need for business owners to ensure profitability and strategic financial planning to afford fair compensation for their work.

To read more about this, see this post by Abigail Ingram, executive director of the Polsky Exchange,  a 34,000-square-foot incubator space that leads the University of Chicago’s Polsky Center engagement with the South Side community through programs and initiatives that support local business owners and entrepreneurs.

Applying for a Small Business Loan

This post from CNN Underscored is a helpful piece that discusses the steps small business owners can take to secure funding through loans. It highlights the importance of determining the type of loan that best suits the business’s needs, considering factors such as the required amount, purpose of funds, and the business’s size. The article suggests comparing lenders, including traditional banks, online lenders, and microlenders, based on factors like interest rates, fees, loan terms, and funding speed. It also emphasizes the importance of gathering necessary documents, submitting a comprehensive loan application, and reviewing the loan agreement before finalizing the funding process. It is a grate reference piece if you are looking to use loans as a source of capital to grow your business.

Embracing Your Scrappy Side

A recent article in TechCrunch discussed the challenges faced by female founders in the startup journey, emphasizing the need for a different approach to fundraising. The author, Andrea Sommer, shares her experience co-founding Hive Founders, a global network and accelerator for women entrepreneurs, highlighting the importance of collaboration, adaptability, and well-roundedness for women seeking investment. She also addresses the unique challenges women face in fundraising, such as different behavioral patterns from investors, and emphasizes the importance of building genuine relationships with investors. Sommer advocates for female founders to embrace their scrappy side, be disciplined with resources, and seek guidance from other women who have successfully navigated the fundraising process.

5 Credit Pitfalls to Avoid as a Small Business

In this article in Entrepreneur, five common pitfalls that small businesses should avoid when establishing business credit are highlighted. These include not regularly monitoring business credit scores, using outdated or inaccurate business information, paying business expenses with personal accounts, choosing the wrong business structure, and using vendors that don’t report trade credit. By addressing these issues, small businesses can build a strong credit foundation essential for accessing funding, fostering growth, and building partnerships.