Danasfields

Tax and Law

The typical characteristic of state franchise tax is that it is based on net worth of total assets tax payer has, rather than the annual income which is not a base for the calculation of tax payable. But more than forty states are direct tax on different corporations, estimated partially through net income. All states have to oblige by the federal law while defining net income. But if in any case there are some adjustments, inclusions or exclusions the reason needs to be justified in accordance with the set of standard rules.

Collection criteria

Also known as proper set of codes or statute a state law determines the method for franchise tax collection. Each state issues its own set of rules a business must follow for the payment of tax through proper collection methods.

Some states have made it compulsory to sum up their annual reports by a certain date. The amount of tax a company owes depends on different aspects such as its annual turn out,origin,size,and structure .etc. Regardless of the main location of the organization a state can impose tax on any franchise of that organization working within.

Purpose

The purpose of this type of tax collection is to generate revenue for the state. States having less franchise tax means income taxes are higher and states having high franchise tax shows less income tax which is also referred to as regressive taxation system.State tax is a constantly moving target as there are frequent changes in law and taxation standards.

Income tax preparation businesses have been growing in appeal for startup entrepreneurs for some time now, and with the current changes in the industry, this might be the best time ever to consider this type of business venture.

Tax Preparation Franchises seem to be popping up in just about every corner strip center across the country. Whether you live in a high population urban center or in a rural town, there is a common denominator, and that is “Everyone has to file taxes.” Wealthy and poor individuals all equally have to file tax returns before April 15th each year, and a disproportionately large portion of the population look to the assistance of paid preparers for assistance in this endeavor. The question surrounding whether or not to go into the tax preparation business is not whether there is a public demand for the service, but what is the best way to get your new business up to speed in the shortest amount of time possible. This is where the option of buying a franchise or income tax business partnership becomes the decision that will shape the way your new tax office operates, and the financial requirements you will need to move forward.

Tax Franchises typically require a significant initial capital investment, but provide more structure and brand recognition. The cash required for a franchise start-up varies depending on the franchise you choose, but typically varies from ,000 to 0,000. Most franchises are very particular as to your business operations such as selection of office space, hours of operation, hiring and training of employees, year-round office leases, allowed marketing campaigns and promotions, etc. Franchises also require that you contribute a percentage of your gross revenue back to the corporate franchise. This percentage ranges anywhere from 20% to 35%. This fee is known as a marketing fee or franchise royalty fees. These fees are very important to factor in when doing analysis and comparing the franchise option to other methods of getting your tax business started, as splitting up your gross revenue has a considerable impact on your businesses break even capabilities.

Tax Prep Partnership options are another option for tax business start-ups. These partnerships generally offer considerably cheaper initial capital requirements versus franchise options. Partnerships allow for you to start a tax business for 0 to ,000. Partnerships provide tax software, tax preparation training, office operational models, tax and technical support, and marketing programs. Most of these services are very comparable to what franchises offer, but what you do not get is the national brand awareness. For the tax preparation industry, it seems that the trend is moving away from franchising and toward partnering. This is due to several factors. Tax preparation is a personal transaction or service. The personal information that must be shared for the service to be completed properly promotes a more personal relationship with the tax preparer. Personal services are not like selling a commodity; the consumer looks more at the level and competency of the tax preparer as opposed to simply the name on the door. Tax prep partnerships also lend themselves to providing tax business owners with a considerably faster break even and profitability in the first year of operation.

When starting a tax prep office you should consider both options available.

Article by Stan Prokop

Clients are always asking what extra steps or information they need to know to complete a successful acquisition a new or existing franchise. Buying a franchise, it goes to says, is clearly one of the largest decisions any entrepreneur might take. Of coruse there are a couple of different versions of the opportunity, as follows – Purchase of a new franchise – Purchase of an excising franchise that is for resale by current owner- Purchase of an additional unit in your chain when you own one alreadyAre there any special tips and critical pieces of information you need to know that will get you a leg up on a ‘ leg up ‘ in the area of franchise finance. Let’s share and discuss three critical points.1. Franchise Finance is a very specialized type of financing – financing options are available but not unlimited – you need to know what they are2. There is a chance for franchise financing failure if you do not have the proper fundamentals in place and are exploring numerous options at the same time – ‘flailing around is not good!3. You might significantly benefit by using the services of a franchise consultant in the area of business financing Lets review our point # 1 – Business financing in general has always been a challenge. Specialized financing in any area of business is a unique challenge because of limited options and a limited number of players. Players = lenders! If you accept business financing is difficult then you can imagine the severity of the challenge in the 20010 global economic crunches that we still seem to be in.So is it all negativity and bad news. Not necessarily of course if you are informed and prepared. Let’s unveil the mystery of franchise financing. How exactly are the majority of franchises financed in Canada? The options are exactly as follows:- A special Government programme called the BIL program under which the majority of franchises in Canada are financed- Owner equity – your own deposit into the deal- Equipment and asset financing- Working capital cash term loan – typically a 5 year payback- Vendor financing ( if available – more often than not it is not )- Revolving line of credit for ongoing operating needs and growth!With respect to the last point we would emphasize that while it is of course important to structure a proper financing around your franchise purchase many business owners forget to consider how they will finance the business on an ongoing basis, and more importantly, how growth options will be financed.It is critical for you to understand that it is very rare that any one option will get you the full financing you need. The reality is that it will be a select combo (and that’s the expertise you require) to fully finance your business with any number of the above options.We point out in our key point # 2 that you must be prepared. This is where many clients tell us they have failed in the past – they have not prepared a proper business plan and executive summary. We encourage you to prepare a proper business plan, understand what your opening balance sheet will look like, and most importantly, understand the cash flow needs of your business. For example, if you take the time to sit down and do all the numbers ( this is actually easier than you think ) you could find that in month one and 2 and 3 that you might be experiencing negative cash flow. If sales ramp up slowly and you have negative cash flow then clearly you will have problems which could accelerate and dampen the overall success of your business. Finally, consider using the services of an experience, credible and trusted franchise consultant that can guide you through the financing maze. Having that party properly prepare a business plan, opening cash flow, executive summary, and proper financial projections is worth a small fee you might be charged. Business financing in Canada dried up in 2008 and 2009 – franchise financing is still alive and well though. Many lenders view franchise financing even more positively than other types of businesses and industries – the reality being that there is a greater chance of success for a brand that is proven and known, and has a reliable business model of proven success.Know your franchise options, be prepared in executing on those options, and consider italicizing a franchise consultant to complete your franchise loan and overall funding. That’s a solid plan!

About the Author

Stan Prokop – founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies, specializing in working capital, cash flow, asset based financing. In business 6 years – has completed in excess of 45 Million $ $ of financing for Canadian corporations.Info re: Canadian business financing & contact details:http://www.7parkavenuefinancial.com/buying_franchise_franchise_finance_franchise_loans.html

Article by Elvis Galevski

Online Business Verses Franchise Business.

So you’ve decided to start a new opportunity, but you’re not sure which way to go. Franchise or online business? Does one give you an upper hand over the other? What are the positives and negatives of each one? How do you choose what’s right for you?

If you’ve been looking around for a new business opportunity for any length of time, you will have realized that there is a massive amount of opportunities out there in terms of both options. One of the biggest questions you need to ask yourself is, “at what cost does success come with a franchise business opportunity?” At the moment the two biggest business models available to a brand new up and coming entrepreneur are the online direct sales opportunities, and the franchise business model.

I would like to talk a little bit about the two options and what my experience and understanding is of both these opportunities. I looked very closely at various franchise and online opportunities before I chose to go with my current business, which is a direct sales Internet marketing opportunity. I will go through the positives and negatives of both options that will hopefully help you to make a decision on what suits you best.

Probably the most important aspect of starting any new business, whether it be a franchise, online, or a bricks and mortar business, is the cost. With online marketing, or direct sales, your start up cost will be a lot less than with a franchise business. You will need to work out what you can afford when starting your new venture very early in your research.

In general the overall costs involved with online marketing will be less than most franchise opportunities, provided you do things the right way. There are so many free ways to market your new online business these days with all the social networks and other free traffic methods that you can reduce your marketing costs from the start, which will give you a better chance of generating income and becoming successful sooner.

Your overheads are also much lower with an online business as you don’t need to hire extra people to work for you, or pay for health benefits or super (401k), no renting a premises, no insurances, and no boxes of inventory or storing your products/food, depending on the franchise you choose.

You could also run a franchise business using free online marketing strategies, but from my experience, there will always be extra marketing costs that go with a franchise. Depending on the franchise model, you could be obliged to spend a certain amount on marketing every month as part of the contract. Most franchises cost thousands of dollars just to get started, if not hundreds of thousands of dollars. Once you get started you have much higher overheads to consider. Employees, rent, insurance, healthcare benefits, and many other costs, which can become quite expensive before you even begin to start making any money.

The franchise model is typically used by those who already have a secure financial back ground, or have the capacity to borrow a large amount of money to get started, and want to try something different, or just get out of what they are currently doing. If you have some equity in your home or investment properties, you can borrow money using that equity to fund your franchise business.

Just make sure to remember that if you are short on cash to start with, you will need to have the knowledge required to market your new business/product effectively. Your business will not promote itself, so make sure the business you choose provides some type of marketing training. Most business models these days will have something in place to cover the marketing aspect. It is in your best interest to use that marketing to make sure you start generating income as soon as possible. In fact, if the opportunity you’re looking at, regardless of what it may be, doesn’t have some form of marketing training, move on and find one that does. The last thing you want to do is hand over all that money, and then have to go and buy a marketing course so you can become an effective marketer.

Another very important factor you need to look at when starting your new business is the time aspect. From my experience, most people looking to start a new business venture are hoping to achieve time freedom and financial security. You need to work out how much time you have in a day, week or month to work on your business. Your time is as much of a cost to you as your initial investment. There’s no point starting a new business only to find that you are tied to your business 24/7 and don’t have time to spend with your family. After all, that’s why you started your business in the first place, to have time and financial freedom.

If you’re coming out of the corporate world, you will understand what I mean. Until you get your business of the ground and have generated enough funds to hire staff, (franchise) you will be working from the moment you open your doors to the moment you close, every single day. In some circumstances this can prove to be more time consuming than a “9 to 5″ job. I don’t think that’s quite what you’re looking for.

When you compare this to an Internet or online marketing business on the basis of time, the online business will win every time. Now I’m not saying that an online business doesn’t take as much time to run, you just have a lot more flexibility to choose how you want to run your business. You are still the business owner, but you’re not confined to a corporate schedule that tells you when you have to be open. If, for any reason you need to take an afternoon off to go see your child’s school play, you can. You have that option. It’s much harder to close a franchise down for a few hours.

You need to remember, regardless of which opportunity you choose, you are 100% accountable for making sure your business becomes a success. You must put in the necessary effort to ensure your business not only survives, but thrives. The benefit of an online business is that you can do this at your own convenience, and if you don’t feel you are ready to leave your fulltime job just yet, you don’t have to. You can build your business part time while still working until you are at the point where you are comfortable and confidant to take it on fulltime. You don’t really have that option with the franchise model. It’s basically, dive in and go for it. And for some, that might be just what they need.

Finally I want to talk a little bit about the length of time it may take you to turn over a profit with the various business opportunities. With a franchise business it is quite possible that it may take anywhere up to 2-5 years to recoup all of your initial investment, considering some franchises can cost anywhere from ,000 to 0,000 or more.

Also keep your “time investment” in mind as well. The hours you spend trying to get yourself out of the red can weigh tremendously on you mentally. Obviously that depends on what type of person you are, as everybody is different. I just want you to be aware of it before making your decision. If you’re the type of person that worries about everything that could go wrong with your business, a franchise may not be for you.

On the other hand, a home based internet/online business gives you the opportunity to turn over a profit much, much sooner. I have seen some of the people I am working with achieve a profit within their first month quite easily. The reason this is possible is because the initial investment to get started is much lower. Where you would spend hundreds of thousands on a franchise, you may only spend a few hundred or at most ,000 on a good online opportunity, depending on what you’re after.

With online businesses there is usually a start up cost, and normally some sort of ongoing monthly payment that covers the training, back office, websites, hosting, updates etc. If you market your business the right way from the start, you set yourself up for larger profits, sooner. Some online marketing businesses have what they call “high ticket items” which can pay the owner a commission of ,000 / ,000 or more. This is the reason why it becomes much easier to make a profit in your first month, even your first week. If it only costs you ,000 to start up your online business and the commissions being paid on each sale are ,000, all you need to do is make 2 sales in your first month and you have generated ,000.

Not a bad way to make a living. I may seem to be more in favor of the Internet business over the franchise business. I’m not saying one is better than the other. They both have their advantages and disadvantages. Both have proven themselves to be successful over the years. It’s just that for me personally, the online business option works better. It may not suit everybody, and that’s fine.

It all comes down to how much effort you put into the business, how much time you are prepared to invest, and how long you’re willing to wait to generate a return on your investment. Regardless of which way you go, the same principle applies to both, or any other business for that matter. You can only expect to get out of your business what you put into it.

If you work your business, your business will work for you!

By Elvis Galevski

The Six Figure MentorsYou Net Biz Platinum Member

About the Author

Elvis Galevski has been involved in Internet Marketing and Personal Development for the past 2 years and has helped many people around the world improve their lives for the better, gaining time freedom and financial security using the power of the internet. Elvis has worked with some of the most successful internet marketers and personal development coaches around the world, including, Stuart Ross, Daniel Wagner, and Bob Proctor, just to name a few. Elvis is committed to helping you get started with your very own online business so you can begin making money online as soon as possible.

If you enjoyed this article, feel free to visit http://www.sfmwithelvis.com and collect your FREE training videos on how you can start your own online business.