What Is Financial Planning and Analysis (FP&A)?

What Is Financial Planning and Analysis (FP&A)?

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Financial planning and analysis (FP&A) is the process businesses use to prepare budgets, generate forecasts, analyze profitability and otherwise inform senior management decisions of how to implement the company’s strategy most effectively and efficiently. The FP&A functions can be accomplished by an individual or a team working alongside other finance professionals such as the controller and treasurer and reporting to the chief financial officer (CFO). While FP&A is often performed by people with an accounting background, it differs from accounting by focusing primarily on forward-looking information as opposed to historical data.

Typical members of an FP&A team include financial analysts and one or more FP&A managers charged with coordinating the work of the analysts. In larger organizations, a director or vice president of FP&A oversees the overall process and strategic direction and communicates with the CFO, CEO and members of the board of directors.

FP&A Functions

To fulfill its function of providing information and insight connecting corporate strategy and execution, FP&A performs a wide range of activities. These can be divided into a few broad categories including planning and budgeting, forecasting and management reporting.

The central output of the FP&A process consists of long- and short-term plans. The job requires using financial and operational data gathered from throughout the company. A key part of the FP&A process is collecting and combining a wide variety of figures from operations, sales, marketing and accounting departments to produce a unified view of the entire business that can guide strategy decisions by senior executives and board members.

Producing budgets is a big part of the FP&A planning function. Budgets describe expectations for the timing and amounts of arriving income, cash generation, disbursements to pay bills and debt reductions. Budgets may be monthly, quarterly and annually. Often FP&A creates a rolling budget for the following 12-month period that will be reviewed, adjusted and extended at the end of each quarter. FP&A also creates income statements and cash flow statements.

One of the performance reporting functions of FP&A is identifying variances when actual numbers reported by business units don’t match up to the budgeted amounts. In addition to identifying and quantifying variances, FP&A can offer recommendations for strategies that could be used to bring actual results in line with expectations.

Reports and forecasts from FP&A may be presented to the board of directors, to the CEO or other senior executives or to outside stakeholders such as lenders and investors. At a strategic level, decision makers use these analyses to choose how best to allocate the company’s resources.

Public companies reply on FP&A to provide shareholders and analysts with guidance on revenue and profits for upcoming quarters and fiscal years. The accuracy of the guidance supplied to the markets can have a sizable effect on stock prices.

Decision Support

Along with the ongoing responsibility to produce budgets, plans and forecasts, FP&A may also be called upon to support specific management decisions. For instance, it might analyze a merger or acquisition proposal to enable management to decide whether to pursue it or not. Other special projects delegated to FP&A could include analyzing internal incompatibilities and bottlenecks and making recommendations about how to improve the company’s processes.

Initiatives to find ways to trim costs and make a business more efficient are also likely to involve input from FP&A specialists. Because it is in constant communication with all areas of the company in order to gather data for its budgets and plans, FP&A is well suited to optimization efforts.

FP&A’s responsibilities could extend to nearly any department in the company, from operations to marketing to finance. For instance, FP&A may conduct internal audits, research markets or evaluate individual customer profitability. FP&A could also be called upon to provide risk management insights or assess the financial impact of tax policy decisions.

Bottom Line

Financial planning and analysis involves gathering financial and other data from throughout a business’s various departments and using that to generate projections, forecasts and reports to help executives make optimum business decisions. Annual and quarterly budgets and forecasts, profit-and-loss statements, cash flow projections and similar decision-making tools are all produced by FP&A.

Tips for Small Business Owners

  • Financial planning and analysis is a job best handled by an experienced financial advisor. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • The 80/20 Rule can help businesses gain insight into issues and opportunities so they can respond more effectively and efficiently. By identifying elements contributing most to a given outcome, businesses can better target resources to remove obstacles and exploit openings.

Photo credit: ©iStock.com/kali9, ©iStock.com/Maica, ©iStock.com/Korrawin

Mark Henricks Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
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Source: smartasset.com

S Corp vs. LLC: Which Is Best for Your Business?

S Corp vs. LLC: Which Is Best for Your Business? – SmartAsset

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So you own a business and you’re looking to incorporate. Two of the most popular business structure are the S Corp and the LLC. Which is best for your business can depend on many factors, such as what you do for a living, your tax situation and more. We’ll walk through the key characteristics of the two, and how to decide between them.

Why Incorporation Is Important

In most cases, the best reason to incorporate is liability. When you create a corporation, you separate your personal assets from your company’s assets. If someone wants to collect a debt or, at worst, file a lawsuit, they can only do so against the company and any assets in that company’s name. In turn, your personal savings remain protected. Both LLCs and S corporations can effectively protect your home life from a downturn in your professional world.

What Is An LLC?

A limited liability company, or LLC, is a type of corporate entity. It’s one of the most basic business types, and chiefly serves to separate the assets of the business owner(s) from the business itself.

If you opt to create an LLC, you will have created an entity that exists entirely separate from yourself. Clients will do business with this entity, which will have its own assets, debts and liabilities. If someone collects a debt or sues the LLC, they cannot pass that debt on to you.

What Is An S Corporation?

An S corporation is a tax status that allows a company to pass all profits directly through to its owner(s). This allows a small business to distribute profit-based income without double taxation.

Under the standard corporate form, known as a C corporation, a company first pays its corporate income tax. It then pays its owners and workers, who in turn pay personal income tax on that salary. This works well when a company functions entirely separately from the people who own and operate it.

However, in many small businesses, owners will take the profits entirely as their personal income. This creates a problem of double taxation, because in this case a business owner’s corporate income tax and personal income tax are one and the same. An S corporation allows the company’s owners to pay taxes only once via their personal income tax forms.

S Corp vs. LLC: Similarities and Differences

It is important to note that, because one is a corporate form and the other a tax status, LLCs and S corporations can, and do, overlap. To be clear, an LLC can file for S corporation tax status. Conversely, if you have S corporation tax status, you can also incorporate as an LLC. These forms do share a number of similar features, though, including:

  • Asset Protection – Both S corps and LLCs protect your personal assets from debt, bankruptcy, legal liability and other possible losses incurred by the corporation.
  • Double Taxation – All corporate profits pass along to the owners of LLCs and S corps without incurring corporate income taxes. This helps you avoid being taxed twice.
  • Multiple Members – LLCs and S corps can each have anywhere from one to multiple members, though an S corporation caps out at 100 shareholders. Further, only U.S. citizens and legal residents can be members of an S corporation.

In practice, one of the largest differences between LLCs and S corporations lies in how they assign payment. Under a default LLC operating as a sole proprietorship/general partnership, profits and expenses pass entirely through to the taxes of the individuals involved. Each participant both deducts business expenses and claims all profits on their personal income taxes. The LLC itself does not have any tax filings.

Under an S corporation, the members assign themselves a salary that the company pays out of its operating budget. This income must be reasonable for their position and industry. Then, after the company pays all expenses, it passes along any additional profits as a distribution to its members.

Here’s an example that illustrates these differences. Sue is a freelance programmer. She currently has an LLC that she operates. Last year she made $100,000 in income and had $10,000 in business expenses. Here’s how her tax situation plays out under the two statuses:

  • Sole Proprietorship LLC – Sue would claim $100,000 of personal income on her income taxes. She would reduce her taxable income by the $10,000 in expenses she incurred, leaving her with $90,000 in taxable personal income.
  • S corporation LLC – Sue has determined that a reasonable salary is $75,000. She would report that $75,000 as earned income. Her corporation would then pay the $10,000 in expenses and pass the remaining $15,000 as a profit distribution to Sue, who would report and pay taxes on it as corporate profit income.

Operating requirements for a multi-member S corporation are also significantly more complex than they are for an LLC. An S corporation must adopt bylaws which meet IRS guidelines and must have a corporate governing body that includes a board of directors and officers.

How Taxes Affect S Corps and LLCs

Most Americans pay a FICA tax of 7.65% of their income under $132,900, encompassing contributions to both Social Security and Medicare. Their employer pays the same 7.65% on their behalf. The self-employed, however, pay both sides of this tax, creating what’s known as the “self-employment tax.” This combines the aforementioned rates to the tune of a 15.3% tax on all self-employment income beneath the $132,900 limit.

The self-employment tax applies to all pass-through income as well. It does not apply to corporate profit distributions, though. The profit distributions will likely be taxed as ordinary income, while you may be able to classify them at the lower dividend income rate. In the end, you will not pay any payroll taxes on them.

S corporation members do not pay self-employment taxes on their profit distributions either. As a result, these members usually try to minimize the income portion of their earnings in favor of profit distributions. This is entirely valid as long as your income remains within a reasonable range. If you attempt to reduce your income too much, you will likely trigger an audit.

Continuing our previous example, Sue’s LLC earned $100,000 and spent $10,000 in business expenses last year. Under the S corporation form, Sue would save herself more than $2,000 in payroll taxes. Here’s how things would shake out:

  • Sole Proprietorship – Sue will claim the $100,000 of income and the $10,000 of expenses herself. This will lead to her having $90,000 of taxable income. She will pay the 15.3% self-employment tax on all of it, leading to $13,770 in self-employment taxes.
  • S Corporation – Sue takes a salary of $75,000. Her LLC will pay $10,000 in expenses and send her $15,000 as a corporate profit distribution. Sue and her LLC will pay the full combined 15.3% tax on her salary earnings, coming to $11,475. She will pay no payroll taxes on her profit distribution.

Bottom Line

In most cases, if you do business as an individual or a partnership, you should consider forming an LLC. This corporate form is inexpensive and highly flexible. Unless you anticipate major growth involving external shareholders and outside investment in the future, an LLC is a good way to protect your personal assets.

For an individual operator, the choice to elect S corporation tax status is largely a matter of accounting. If you would save a meaningful amount of money in self-employment taxes, it is likely worth electing S corporation status.

For a partnership, consider the operating requirements of an S corporation carefully. Would it significantly affect your business to adhere to bylaws and corporate governance? Do you have few enough members, and will you likely keep that membership group small? If so, once again, consider whether an S corporation would create enough tax savings to justify the costs of filing and paperwork.

Tips for Managing Your Finances

  • In-depth budgeting is a worthwhile strategy to adopt if you’re looking to improve your long-term finances. It may, however, be difficult to build a budget if you have little to no experience doing so. To get some help, stop by SmartAsset’s budget calculator.
  • Many financial advisors specialize in financial and tax planning for business owners. You can find a financial advisor today using SmartAsset’s financial advisor matching tool. Simply fill out our short questionnaire and you’ll be matched with up to three fiduciary advisors in your area.

Photo credit: ©iStock.com/andresr, ©iStock.com/PattanaphongKhuankaew,©iStock.com/alfexe

Eric Reed Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
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Source: smartasset.com

How to Add Your Business to Yelp and Optimize Your Listing

If you’re like most Internet users, you’ve used a business listing or directory website to find a restaurant, specialty store, tax preparer, or other service provider in your area.

Yelp, arguably the most popular business information directory for customer-facing services businesses, welcomes many millions of unique visitors per month. According to Expanded Ramblings, Yelp draws more than 175 million monthly visitors, with mobile traffic accounting for the majority.

Consumers use Yelp to search for service providers near them, navigating to its website or mobile app for a few minutes at a time and closing out when they’ve found what they’re looking for. But business owners have a much more intimate relationship with business directory sites like Yelp. For many small, independent outfits, business listings represent a significant source of new customers — far more than word of mouth marketing alone. If your small business doesn’t yet have a listing, it could be time to set one up.

Yelp for Business Owners: Does It Make Sense to List Your Company?

Yelp isn’t ideal for every type of business. Generally speaking, the most popular Yelp searches pertain to businesses that offer sensory experiences, such as restaurants, bars, venues, and specialized experience providers like tour companies. Searches for retailers — both independent and those tied to a larger chain — are popular as well.

Other popular Yelp categories include:

  • Hotels and travel services
  • Beauty shops and spas
  • Automotive
  • Home services, such as house cleaning, plumbing, and general contracting
  • Health and medical

Yelp also segments listed companies by location: county, municipality, and sometimes neighborhoods (mostly in bigger cities). If your business lives and dies by the number of people who walk into its physical location — for instance, you run a restaurant or retail outlet that does a large amount of business through a storefront — a business directory listing is basically mandatory.

On the other hand, if your company doesn’t have a storefront or doesn’t rely on one to drive sales — for instance, if you sell things online — then other means of driving customers to your business, such as social media marketing techniques or a listing on an e-commerce website like Etsy, are likely to offer a better payoff.

Pros of Listing Your Business on Yelp

Listing a business on Yelp has some key benefits, including legitimacy for businesses who’ve claimed their listings, high search rankings for Yelp business profiles and business owner accounts, and value for customer research.

1. Claimed Listings Confer Legitimacy

Regardless of how much effort you put into optimizing and curating it, the simple act of claiming your business directory listing can change how prospective customers see your business. On most business directories, including Yelp, unclaimed listings are plainly displayed as such. To the man or woman on the street, a highly visible prompt to claim a particular listing — which takes a matter of minutes — doesn’t inspire confidence that the listed business is well-run, or that the owner cares about courting new customers.

Although this is an admittedly subjective measure of an owner’s buy-in or a business’s quality, I know that I personally shy away from businesses with unclaimed directory listings unless they’re backed by a recognizable brand or I’m familiar with them by other means, such as word of mouth.

2. Listings Typically Rank Well in Organic Search (Good for SEO)

Although the details of popular search engines’ algorithms are proprietary and ever-changing, it’s clear that online directory listings rank highly in organic search results — the lists you see when you type a search term into the Google or Bing search bar.

The upshot of this: Unless its name can easily be confused with common or generic terms like “Tasty Pizza,” a typical business’s Yelp listings are likely to appear on the first results page of a search engine — an important point, since most searchers never make it to subsequent results pages. And because Yelp is a well-known and ostensibly unbiased source of information, searchers who want to get the unvarnished truth on a given business are likely to click on the results for its listings.

3. Consumers Rely Heavily on Directory Listings for Research

Despite a recent study reported by PCMag that found roughly 40% of online reviews to be bogus, 60% of consumers consider online review sites as useful as recommendations from real-life acquaintances, according to a 2017 ReportLinker survey. In an increasingly jaded world, that’s a pretty high mark — and a strong case for creating and maintaining listings on popular directory sites.

Cons of Listing Your Business on Yelp

Listing your business on Yelp does have some drawbacks, including a significant time component, limited control over reviews, and the potential for abuse.

1. Maintaining Your Business Profile Takes Time and Resources

Claiming or creating a business listing doesn’t take much time or effort. You can handle either in a spare moment.

However, optimizing and maintaining your listing is not so easy. Even free activities such as uploading photos, analyzing customer data, and responding to reviews all take time that you likely don’t have as a busy entrepreneur. If you have other social media accounts or an online store, your digital responsibilities could become overwhelming, diverting your attention from more immediate business needs.

One solution is to hire a part- or full-time marketing employee or social media manager, but that requires a new addition to the payroll — not always a realistic proposition for cash-poor small business owners. Another option is to retain an outside firm to handle your digital marketing needs, although that can be just as expensive as hiring a part-time employee.

If you currently lack the time or resources to produce a first-rate business directory profile, there’s no shame in concluding that it’s better to wait until you do have those luxuries. If you can’t do it right, don’t feel pressured to do it at all.

2. May Not Display All Users’ Yelp Reviews (or Any at All)

In the late 2000s and early 2010s, some online business directories — particularly Yelp — took lots of blowback for failing to do their part to contain the untold millions of fake reviews spreading across the Internet. Fake directory reviews came in several different flavors, but it was particularly common for listed businesses to purchase positive reviews — typically with gushing praise and the highest possible ratings — for their own listings, or post positive reviews themselves using dummy accounts. In competitive markets, less scrupulous companies likewise had no qualms about posting fake negative reviews on competitors’ listings.

Although they haven’t totally eradicated fake reviews, online directory sites have definitely cracked down on the practice. In fact, the crackdown has been so good that some legitimate reviews don’t make it through the directories’ quality filters, which are controlled by proprietary algorithms similar to those used by search engines.

If you want the opportunity to see — and ensure that your customers see — every review of your business, good or bad, this is a big drawback. And although the particulars of directories’ visibility-controlling algorithms aren’t public, one can envision an algorithm deciding that an overly enthusiastic but legitimate positive review is a fake while allowing a tepid review to be seen.

3. Directory Listings Contain Sensitive Information

If you need your customers to come to your physical place of business, they need to know where it’s located and how to contact it. A restaurant can’t survive if no one’s coming in to eat or calling to order takeout.

On the other hand, there are times when it’s better to conceal your business location, and possibly contact information, from the public. For instance, say you provide white-collar services, such as accounting or legal advice, to local businesses — but you typically visit with clients at their offices and don’t want them to know you work out of a home office or coworking hub. Listing your home address as your business address reveals where you live, while listing a coworking space can lead judgmental clients or your competitors to conclude that you can’t afford a “real” office.

Note that if an unclaimed listing already exists for your business, you may need to claim it and edit out sensitive information or request its removal altogether.

4. Your Listing Could Attract Abuse

Even if you’re not paranoid about people knowing where you live or looking down on you for basing your company out of a coworking space, there’s another reason to eschew a public business directory listing: the prospect that your listing could become a venue for abusive or hateful reviews.

Because business directory sites allow rank-and-file Internet users to post reviews on a given business’s listing without proving that they’ve actually interacted with the company in real life, it’s relatively easy to organize a negative publicity campaign utilizing Yelp or another directory site that permits user reviews. (Directories occasionally step in to delete or moderate obscene or threatening reviews, particularly in response to user flags, but you shouldn’t bank on this to single-handedly keep vitriolic reviews off your listing.)

These negative campaigns typically center around a major service gaffe or prominent public support for a controversial political position. A great example: In early 2015, the owners of a small-town Indiana pizzeria called Memories Pizza made headlines when they said they would follow the letter of the state’s recently passed Religious Freedom Restoration Act, which many observers interpreted as giving businesses wide latitude to discriminate on the basis of sexual orientation. The ensuing backlash saw thousands of sarcastic, occasionally obscene comments posted on Memories Pizza’s website. The Indianapolis Star reported that the shop closed shortly thereafter, with the owners citing safety concerns.

In the past, lower-profile incidents of a similar nature have hit businesses expressing opposition to state minimum wage increases or support for creationism and intelligent design. To be fair, some argue that the old saying, “All press is good press,” applies here, as negative directory campaigns sometimes spark a backlash that pays off for the affected business. It’s worth noting that, as reported by Forbes, Memories Pizza raised more than $800,000 in a GoFundMe crowdfunding campaign in the four days following its closure.


How to Claim or Create Your Yelp Listing

Yelp uses publicly available and user-submitted information to generate listings for operational businesses. If you’ve been open for some time, there’s a good chance you’re already in Yelp’s database. Yelp allows the legitimate owners of such a business to “claim” their existing profile.

Claiming your profile provides certain privileges:

  • Updating Listing Information. You can edit critical information about your business, including its physical address, phone number, business hours, and website address. This is important because Yelp doesn’t guarantee that its unclaimed business listings are accurate.
  • Adding Photos and Links. You can upload photos of your storefront, merchandise, and the inside of your business. This is great for restaurant owners who want to show off tasty-looking menu items, or service providers who want to display photos of a van or truck bearing a distinctive logo, which users are more likely to recognize than a faceless storefront or generic uniform.
  • Interacting With Reviewers. Claimed profile owners can respond to user-generated reviews, either by sending the user a private message through Yelp’s system or making a public post on the comments feed. This is particularly useful for owners who want to address negative feedback from users and contain issues that could hurt business. Note that you can’t edit or delete negative reviews, which might call Yelp’s objectivity into question, but you can respond to them.
  • User Views and Leads. Yelp tracks your listing’s page views and displays this information to verified business owners. It also creates Customer Leads, which provide hints about how customers are interacting with your business. Data sources for Customer Leads include:
    • Mobile check-ins
    • Mobile calls made directly to your business using Yelp’s on-site click-to-call feature
    • Map views
    • Click-throughs from your Yelp listing to your company website
    • User-uploaded photos on your business page
    • Bookmarks placed on your listing using Yelp’s bookmark feature

Claiming an Existing Business Listing

To get started, click Yelp’s “Claim Your Listing” button, then type in your exact business name and city. This takes you to a results page that displays similarly named businesses nearby and indicates whether they’ve been claimed. If your business is listed, it should say that it hasn’t been claimed.

To claim your listing, you need to create a Yelp account with your first name, last name, email address, and password. Make sure the phone number on your listing is accurate, then click “Call Me Now.” This prompts Yelp to robo-call the listed business number with a unique verification code.

Once you receive that code, you can enter it into the proper field and start editing your listing. If you’re unable to complete the phone verification process for any reason, you can also manually verify your identity as the business owner by emailing Yelp’s support team.

Creating a New Business Listing

If your business doesn’t have an existing listing to claim, you need to create one. At the bottom of the business search results page, click the “Add a Business” button and enter as much information as possible into the fields on the next screen: your business name, exact address, phone number, and website at a minimum.

After you submit this information, it takes Yelp some time — usually no more than two business days — to verify that the business exists and add it to its listings. Once added, you can search for it as described and claim the listing as your own.


How to Optimize Your Yelp Listing

Claiming or creating a Yelp listing is an important first step. However, building a top-notch Yelp presence takes time and effort.

These tips and resources are useful as you work to set your listing apart from your competitors’:

1. Fill Out Your Profile Completely

The more complete your listing is, the better it looks to Yelp’s internal algorithm — and the higher it’s likely to appear on Yelp’s search results pages. There’s no reason not to fill out your profile completely.

2. Use Google Keyword Planner or a Similar Tool

Yelp listings are visible to Google and other search engines, so it pays to use a keyword planning tool — such as Google Keyword Planner, which requires a free Google AdWords account to use — to identify keywords that relate to your company.

For instance, if you specialize in Neapolitan-style pizza and discover that your company website ranks highly for the term “Neapolitan pizza,” make sure that keyword appears at least once in your business listing.

3. Add Lots of Photos

Photos breathe life into your Yelp listing and boost customer engagement. An internal Yelp study found that consumers linger on photo-enhanced Yelp pages for two and a half times as long than on pages with no photos.

Photos are especially useful for showing off your logo — particularly if it’s already plastered on your company’s vans or outdoor advertising properties, and thus recognizable to prospective customers — as well as for highlighting particular products, especially food. If your business is open to the public, include pictures of its interior and outdoor seating areas to give visitors a sense of what to look forward to.

4. Solicit and Respond to Customer Reviews

Yelp frowns on businesses that court reviews by giving away free stuff or offering special deals to those who post positive reviews — it sees this behavior as a form of manipulation. However, you can skirt this prohibition and stay in Yelp’s good graces by placing the Yelp logo in a visible location in your store (such as at checkout or on a menu), linking to your Yelp page from your company website, and straight-up asking for reviews with no strings attached.

Separately, be sure to respond to detailed, thoughtful reviews, whether they’re good or bad. It’s especially important to respond to negative feedback, which shows other page visitors that you’re willing to address service issues and other problems. Just remember to follow social media etiquette best practices at all times.

5. Try Yelp Deals and Gift Certificates

Yelp Deals and Gift Certificates can help you monetize your Yelp listing and generate buzz around your business. Like Groupons and other social deals, both offer heavy discounts on transactions with the issuing business. Yelp Deals focus on discounts for specific local services — for instance, “20% off a haircut-and-shave package.” Yelp Gift Certificates offer across-the-board discounts — for example, “$20 in merchandise for $10.”

In both cases, Yelp takes a cut of the proceeds: 30% of face value for Deals and 10% of face value for Gift Certificates, subject to change with company policy.

6. Consider Buying Ads

If you can afford another line item in your marketing budget, consider buying ad space on Yelp. Yelp ads appear above the first non-promoted listing in Yelp’s internal search results pages, similar to the paid search ads you see on Google and other search engines.

Although they’re clearly marked “Ad,” they’re highly visible and appear only with relevant search terms, so they’re great for attracting people actively searching for what you have to offer. And because they effectively give you priority placement over competitors, they’re great if you operate in a crowded market.

Costs vary widely depending on your location and industry, but expect to spend at least $50 per month for a high-visibility ad campaign.


Final Word

Yelp isn’t the only business listing site worth looking into. There are dozens of other sites that could get your company’s name in front of potential customers. Listings on some of these sites are free to claim, while others require a one-time or monthly fee. Each has its own set of benefits and drawbacks.

Rather than spend significant amounts of time and marketing dollars going after them all, take a weekend or evening to research the options that work best for your business’s needs. Don’t be afraid to talk to other business owners in your industry, even if you’d normally be reluctant to share trade secrets with them. After all, with everything else you need to keep track of, the last thing you need is to make an investment with little to no chance of paying off.

Source: moneycrashers.com

How to Save Money When You Buy a Home in Idaho

Buying a home is one of the biggest decisions a person can make. It’s the culmination of years of intense saving and budgeting, months of open houses, and weeks of late-night strategizing and offer planning.

In 2020, buying a home has gotten even harder as the COVID-19 pandemic has swept across the United States. Shopping for real estate during a crisis has always been difficult, but necessary safety measures taken to stop the spread of the virus have had a noticeable impact on how most people shop for homes.

One silver lining of this unfortunate situation is that many people in the real estate industry are finally seeing how technology makes the home buying process easier on both buyers and sellers. At Homie, we understand how technology like ours can help buyers and sellers save time and money. Let’s explore how you can leverage technology and other strategies to save money when you buy a home.

Get Your Finances in Order

If you’re thinking of buying a home, the first thing you should do is take a long, hard look at your finances. The two most important financial factors are the amount you have saved for a down payment and your debt-to-income ratio.

The down payment amount is simple. Most of us grew up thinking that 20% was standard, but that isn’t the case anymore. According to a 2017 industry survey, most homeowners only pay 7% down. Let’s all breathe a collective sigh of relief! With the average home value in Idaho rising every year, it’s a huge relief to know that you don’t have to save the full 20% down payment.

While you’re saving for the down payment, you also need to think about your debt-to-income ratio (DTI). This value compares what you make each month to what you owe. You can still buy a house if you have debt from student loans or another source, but you need to ensure your DTI is as low as possible, preferably at or below the 28% standard.

Get a Great Deal on a Loan

Once you’ve gotten your finances in order, you can start exploring mortgage rates and loans. Most people start with their bank. That’s a good start. However, they often make a critical mistake: they don’t shop around for a good rate. If you only check at your bank, you’re missing great deals from companies like Homie Loans™. They’re so confident no one else can beat their locked loan rate that they’ll give you $500 cash if you find a better deal.

Homie Loans doesn’t just give you a good rate, the entire application online, so you don’t even have to leave the house to get approved.

Explore Federal Loan Programs

In addition to shopping around for a great mortgage rate at private companies and commercial banks, you can save tons of money by checking out your options for federal home buyer programs.

These programs are designed by the government and government agencies to ease the burden of homeownership. Each program is different: some require applicants to fall into certain income thresholds, while others are designed to assist veterans or individuals looking to buy homes in rural areas.

Idaho-Specific Programs for Down Payment and Cost Assistance

In addition to exploring federal home loan programs, many state agencies in Idaho have these programs available to residents. The Department of Housing and Urban Development has state-by-state guides for homeownership assistance programs, and lists many area-specific programs throughout Idaho.

Depending on where you live, you may be able to find specific assistance for homeowners in your region. These programs may be smaller, but since they’re regional, it’s usually easier to talk to a person on the phone and get practical advice for getting started on your journey to homeownership.

Look Outside Your Area

If you’ve started your search and all of the suitable homes in your area are out of your price range, you may want to expand your search. The switch to remote work has affected many of us, making cities and other centers of work less reliably desirable. If you’re currently working remotely or have the opportunity to do so in the future, you may be able to expand your search to include larger homes in less urban areas.

Buying in a more urban location like Boise might also get easier with the rise of remote work. Since Boise is such a student-heavy town, classes and work going virtual have opened up real estate in the city. If you’re looking for a good deal on a smaller urban home or condo, this may be a good time to invest.

Leverage Technology by Buying a Home With Homie

Another great way to save money when you’re buying a home in Idaho is to use a service like Homie. Instead of paying a high percentage of the final costs, you’ll pay your Homie agent a low flat fee.

Homie also leverages technology to make the home buying process easier. The Homie family of companies makes everything that much smoother. We’ve brought everything from the mortgage to insurance under one roof, ensuring you don’t have to run all over town to get papers signed and contracts approved. It all happens through Homie.

The best part of working with a Homie agent while buying a house is the refund of up to $2,500 we send you at the end of the process. The Homie team is always here to help buyers in Idaho save money. Get in touch with us today to start your journey towards homeownership.

Get more homebuying tips!

4 Ways to Outsmart the Competition When Buying a Home
5 Tips to Help You Afford Your First Home
Common Home Buying Fears and How To Overcome Them

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Source: homie.com

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Trump Commutes Sentence for Ex-Mortgage Honcho

Former mortgage executive Michael Astley is among the 144 people pardoned or granted sentence commutations by former President Donald Trump before he left the White House. So reports Newsday.

Astley, who was chief business strategist at Long Island-based Lend America before the once-massive lender’s 2009 collapse, pleaded guilty to bank fraud.

The commutation ended Astley’s prison time but not his mandatory $49 million in restitution and five-year supervised release.

Read the full article from Newsday. 

Source: themortgageleader.com

7 Insider Secrets About House Flipping To Put You on the Path to Profitability

Is 2021 the year you’re going to buy a real estate investment property? If you have your sights set on flipping a house for a big profit, you likely know how much work is involved. Sure, popular real estate reality shows like “Flip or Flop” and “Flipping Across America” make fix-and-flip investing look like a feasible endeavor, but you’re wise to the magic of TV, right?

The truth is that flipping a house is rife with challenges, from financial setbacks to breakdowns in communication with your construction crew. Plus, low interest rates mean properties are flying off the market, especially in up-and-coming neighborhoods.

So how can house-flipping newbies compete today? By learning from those with more experience. We spoke to successful home flippers about what they wish they had known when starting out. Hopefully their tips below will help you minimize pain and maximize profits.

1. Stick to your maximum allowable offer

Our experts all agree that buying a fix-and-flip investment should not be an emotional decision. There are certain formulas that every house flipper needs to calculate in order to make a profit.

“Real estate investing is a numbers business, and if the deal doesn’t make sense when you crunch the numbers, you should be able to walk away,” says Hayden Lyon of Cowtown Home Buyers, a real estate investment firm in Fort Worth, TX.

“Stick to your maximum allowable offer. Going above your MAO is just asking for trouble,” says Ryne Lambert, co-founder of Sell My House, a real estate investment firm in Green Bay, WI.

The general rule when determining your MAO is not to pay more than 70% of the property’s after-repair value, or ARV, minus repair estimates. For example, if the property’s ARV will be $150,000, you would subtract the costs to flip (including the cost of a loan, repairs, and other fees) and then multiply that number by 70%. That will give you the MAO you should make on the property.

However, Lambert recommends a more exact formula: “We calculate MAO as ARV minus rehab estimates, selling costs, and minimum gross profit,” he says. “Our detailed formula makes our offer more competitive for sellers while still providing us a nice profit.”

2. Build a buffer into your renovation budget

Anyone who’s undertaken repairs on their house or an investment property knows things rarely go as planned. Permit delays, bad weather, and unforeseen expenses can all throw a wrench in the works—and revise your bottom line.

That’s why Lambert advises new investors to build a buffer of up to 25% into their rehab estimate.

3. Don’t always go with the cheapest contractor

Finding the right contractor can help keep renovation costs in check—but right does not always mean the least expensive.

“When I was new, I thought in order to keep as much profit margin in the flip as I could, I needed to choose the lowest contractor bid,” says Jonathan Faccone of Halo Homebuyers, a real estate consultant in Bridgewater Township, NJ.

“You do have to manage costs prudently, but going with the lowest contractor bids usually end up costing you more in the long run,” says Faccone. “Be cautious about choosing the cheap price and, instead, go with the contractor who offers the best quality and most professional work for your money.”

4. Make sure the contractors have a clear scope of work

You may be able to head off issues with contractors—including plumbers, electricians, and general contractors—by ensuring they present a clear scope of work for the project, experts advise.

“The scope of work usually includes working with the city to obtain permits, ordering materials and equipment, and confirming the house plans. This section will save you a lot of time and money on the back end of the project,” says Shawn Breyer of Breyer Home Buyers, a real estate investing firm in Atlanta.

Most importantly, start building relationships with contractors in the areas where you invest, so you know whom you can trust for any project.

5. Provide a quality product

As fast as homes are selling today, the market is filled with many discerning buyers.

“Often, the ultimate buyer of a flip expects the home to compare with existing homes—or even new construction—in quality and value,” says Greg Kurzner, a Realtor ® for ERA Atlantic Reality in Alpharetta, GA.

Lyon agrees: “Focus on value-add renovations and amenities. Research shows buyers want a nice kitchen and bathrooms. Of course, everything should be functional and up to code, but you want to create an instant emotional connection for potential buyers.”

6. Get your own finances in order before you start

Several investors pointed out the importance of running your blossoming home-flipping company as a business—because it is. That means tracking all of your expenses so you can make better decisions for greater profits. Be extremely organized, and document every purchase order, utility bill, and closing fee that’s involved in the project.

It’s also important to have your own financial house in order before you start.

“If all goes well, you’re about to start making money in large chunks. If you lack proper discipline, you’ll wind up worse than when you started,” says Billy Ross, CEO at RFTA Properties, a residential real estate investment company in Winter Park, FL.

7. Expect to put time and money into marketing

James Fitzgibbons of Ledge Real Estate Solutions, in Windermere, FL, says he wishes he had spent more time in his early years learning how to market homes efficiently.

“We have a wrapped car that we drive around town,” he says. “We’ve driven for dollars, and we’ve used direct mail marketing. Today, we advertise online through Google and Facebook. All of these methods have potential if done right.”

Source: realtor.com

How to Create Your Own Retirement Plan

One of the good things of working for a company is that they create a retirement plan for you. As an employee, you don’t have to do anything else but to participate in the plan. However, when you’re self-employed or a small business owner, you’re responsible of setting up your own retirement plan.

When it comes to operating your own business, time is of the essence. However, even if you’re crazy busy, saving for retirement should be a priority. Indeed, a retirement account allows you to contribute pre-tax money, which lowers your taxable income.

Luckily, a financial advisor can help you save time and help you choose the right plan that is best for you. Below are four retirement saving options you can create as a self-employer individual.

1. Solo 401k

A solo 401k is for small businesses or sole proprietors who don’t have any employees other than a spouse working for the business. The solo 401k mirrors a typical 401k plan that most companies offer. The main difference is that you can contribute as an employee and employer.

In other words, because you’re both the boss and the worker, you get to contribute in each capacity. That in turn allows you to contribute a higher amount each year. However, your total yearly contributions cannot exceed $58,000 or $64,000 for individuals age 50 or older as of 2021. To set up a solo 401k, you have to get in touch with a financial institution.

2. SEP IRA

If you’re an independent contractor, self-employed, or has a small business with 25 employees or less you can set up a SEP (Simplified Employee Pension). It’s very easy to establish and don’t even require you to incorporate your business to qualify.

In a SEP IRA, the employer alone contributes to the fund, not the employees. You can contribute up to 25% of your annual salary or $58,000 in 2021, whichever is less.

3. Keogh Plan

Keogh plans are available to self-employed people, including sole proprietors who file Schedule C or a partnership whose members file Schedule E. This type of plan is preferable among those who have a high and stable income.

But the main advantage the Keogh has is the high maximum contribution you can make. In 2021, you can contribute up to $58,000. To set up, you will need to work with a financial institution such as Charles Schwab. 

4. Simple IRA

The Simple IRA was created by the Small Business Protection Act to help those who work at small companies to save for retirement. The small business can offer the plan if it has 100 or fewer employees.

Both the employer and the employee can contribute up to $13,000 in 2021, plus an additional catch-up amount of $3,000 if you’re 50 or older. If a company offers a Simple IRA, it must match an employee’s contribution dollar for dollar, up to 3% of each participant’s annual salary or make a nonelective 2% contribution to all employees.

Where to Invest Your Keogh, SEP IRA, Solo 401k, Simple IRA

As a small business owner, there is always an investment program that suits your needs for your IRA, SEP, Keogh and solo 401k. Places such as banks, brokerage firms and mutual funds institutions such as Vanguard, Fidelity, Charles Schwab are great options. But before opening account, make sure you consider how much money you have, your appetite for risks, the annual fee, etc.

The Bottom Line

If you’re a small business owner or self employed, you should take advantage of the tax benefits offered by these plans mentioned above. Creating a retirement plan is important, because not only will you be able to grow your retirement savings faster but also no one is going to do it for you. 

Related:

  • 4 Simple Ways to Accelerate Your Retirement Savings
  • How to Retire at 50:10 Easy Steps to Consider

Tips on Retirement Planning

Retirement planning can be a major challenge, but you don’t have to go in it alone. Speak with a financial advisor who can help you come up with a unique plan based on your circumstances and situations. Use SmartAsset advisor matching tool to get matched with fiduciary financial advisors in just 5 minutes.

 

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