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People plan more for a vacation than they do to start a business. When you are looking to do your business plan, remember that the most important part of a business plan is the homework you need to do before you write it. That consists of researching, analyzing, and evaluating the business opportunity you’d like to pursue. Doing your homework will unveil the potential weaknesses and problem areas of your business idea. You need to do this before you hit it full force. The worst possible event is for you to waste your time and money on an idea that just won’t fly.

A business plan is not a guarantee of success, but you better believe it that not having one increases your chances of failing. Why? Because how can you get where you want to go if you don’t know where you’re going?

Everyone has heard that 20 percent of all new businesses will be around in 5 years. You definitely don’t want to be in the 80 percent that didn’t make it. Most businesses don’t have a business plan yet they know that it’s a good idea to have one. It’s like knowing eating vegetables is good for you but you don’t do it.

What a business plan does for you is it evaluates all the particulars of starting a company. It will reveal how much you can potentially make and on paper go through worst and best case scenarios. It’s crazy but most people plan more for a vacation than for a start-up opportunity! For example, it’s a huge mistake to quit your day job before you do a business plan to really see how feasible your business idea is at making you money.

It’s not that hard to do a business plan and if you use Business Plan software it can be pretty easy. You can go to our “In Business University” page and purchase software there. A business plan is a document that is about 40 to 50 pages long. It outlines your intentions and plans for running your business. As your company grows, it will serve as a guidebook and a reference manual for your management team to see if you are on track.

You will be sharing your business plan with many different audiences. Just hold back the confidential information like financial, new technology or client data when you have to share it. The common parts that are less-sensitive you will share like personnel, industry analyses, existing products, and services, and other company information that would normally appear in your marketing material.

What a business plan does is it summarizes the goals and purpose of your company and how you intend to reach those goals. It has sections on what you intend on selling, your industry, your competition, your place against the competition, marketing strategy, your staff, your business operations, equipment, and your financial resources and projections.

If you are looking to get financing, you will definitely need a sound business plan but here is a list of other people who would need to see it:

-Management or board of directors to understand the future direction of the company.
-Strategic partners or joint venture participants who are evaluating whether your overall direction is in alignment with theirs.

-Employees to understand the direction of the company and long-term opportunities for themselves. Granted you should only show them a few sections and not sensitive information.

By: Gail Krystal

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We have been talking about your business Vision as the most critical component of your total planning process. A logical next step is to clarify your business Purpose.

Let’s talk for a moment about Purpose or Mission. Vision is your felt sense and declared assertion regarding where the business is headed and what you want it to become. Purpose is the concise statement defining why your business exists. It declares to the world your prime imperative…your central reason for doing what you do.

You may find shades of difference or various ways to “slice and dice” the concepts of Purpose vs Mission, but don’t get hung up on that. I suggest you simply give some time to think thought your answer to the question, “Why do we exist as a business?”

Sounds like a simple question, but as you start reflecting on this, it can take you into some interesting aspects of what your business is all about. In working with organizations on this issue, I have seen individuals and teams be all over the map in terms of how easy or how challenging it is to answer this question. The complexity – and very often the conflicts and competition – within large organizations can make this a challenging question, not just to answer but to put into practice.

But you as a small business owner or associate have the advantage of not having as many potential cultural and political issues to face in addressing purpose. Let that be one of your great advantages.

In working on this question you would typically consider your customers or clients as primary inputs. How does your purpose serve their needs and wants? If you can engage your customers in some way, or use data from your own or other customer research, all the better. The extent of how much customer data you might need to access in clarifying or reworking your business purpose depends on many factors that are unique to your business and history.

Some small business owners use a finely crafted purpose as part of their branding and marketing strategy. If you have a purpose you are proud of, why keep it a secret? Purpose statements can be thought of as one form of promise we make to our core constituencies, customers being primary among them.

If you have a team, do you define purpose on your own, and declare it to the rest of your organization? Or do you engage the team in answering the “Purpose” question?

My bias is to engage the team, on many levels, regarding most organizational issues. But each business culture is different so no one could make a blanket statement that will apply in all situations.

One other aspect of purpose is worth remembering too. Businesses operate in an ever-changing environment. Business survival requires change and adaptation. Revisit and rethink your purpose from time to time. It may not change much. Then again it may need a serious overhaul. Businesses that look the other way in the presence of a need for change get left behind. Your values may remain constant over a lifetime, but purpose can shift.

If you have defined Vision and Purpose you are already quite different than most small – or large – businesses. If you have come this far, don’t stop now. Fill in the rest of road map. We’ll discuss Values in another article.

By: Fran O'Neal

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As a business management student at West Chester University, I went into my first financial accounting class with a closed mind. I thought the experience was going to be dull and boring. How exciting can dealing with where to put meaningless numbers and unimportant date be in the business world? I could not have been more wrong about financial accounting. Accounting turned out to be the most important business class that I have taken throughout my college career. Accounting is the business language, it helps companies identify, record, and communicate events to a company’s users.

A company must first identify the economic events that are relevant to its interests. Sales, payments, and wages would be examples of events that need to be identified. Companies need to make records of these types of economic events, for historical purposes. A company then needs to communicate these events to its customers or users of interest, which they do through financial statements. However, before an accountant can go through these steps to help a company identify, record, and communicate, they must understand the basic accounting equation.

The basic accounting equation is the foundation of the accounting process. It provides the underlying framework for recording and analyzing economic events. The two basic elements to a company are what the company owns and what it owes. The basic accounting equation, assets equal liabilities plus owners equity, allows accountants to organize the basic elements of accounting into documents that are universal. Just like in algebra the basic accounting equation is used such that both sides of the equation are equal. Assets are recourses that a company owns that enable the organization to carry out its business. Liabilities, or existing debt and obligations, are claims against assets and when they are added to equity, or the ownership claim on total assets, the two combined equals assets. This application can apply to every type of business and organization. It can help record and summarize events and personalize the data for every stakeholder.

There are three basic financial statements that accountants use to display the information that they have gathered- income statement, balance sheet, and statement of cash flows. The income statement records the revenues and expenses for a given period while the balance sheet reports the assets, liabilities, and owners equity at a specific point in time. The income statement lists revenues first followed by expenses. This statement is used to express the final net income. This is useful because it helps managers see what is being expensed versus earned in the corporation. The balance sheet helps accountants to balance the equation and to make sure that there are no account errors at a given time. This also gives executives the opportunity to review the statement when needed to analyze the company’s standings and to correct any obvious mistakes. The statement of cash flows lists the information on the cash receipts for a specific period of time. This statement tells how a company is using cash and how it affects the operations of the organization. It also records the company’s investing and financial transactions as well as the net increase or decrease in cash flows. It is important that a company have detailed and organized financial statements. These statements should be able to provide useful information or financial information for executives and other stakeholders in the company.

One of the most important aspects in business is the ethics of the company. We have heard about companies such as Enron who were not honest and embezzled money from the stakeholders internally and externally in the company. If a company is not honest and has no standards regarding ethics then it will not have stakeholders and clients that will want to invest and do business with that company. It only makes sense if it is known that a company is not honest with their financial statements, someone would want to deal with or invest in the company. Bad credibility will also hurt the stock value of publicly traded companies. This in turn will hurt the company’s ability to succeed in the market. In the past there have been issues regarding companys’ honestly with their financial statements and other dealings within the company.

Due to the continuous mishaps the United States government and lawmakers were worried that the economy would suffer great loses due to the unethical behaviors of companies and top executives. As a result of this, Congress passed the Sarbanes-Oxley Act of 2002 in order to rectify the situation. This act was created to discourage companies from taking part in unethical behavior through more strict regulations in financial statements, and harsher penalties for those caught taking part in such behavior.

By: Chris D Schultz

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Through the early 1990s, there was significant dispute over the U.S. tax classification of a foreign legal entity. Foreign legal entities have characteristics that often differ from U.S. legal entities which U.S. taxpayers are accustom to, like corporations, partnerships, sole proprietorship, and more recently, Limited Liability entities of various types, under U.S. state laws which we are trained to understand.

Tax planners and taxpayers had to apply a maze of regulations and case law to determine if a particular foreign legal entity fit the mold of a corporation or a partnership for U.S. tax purposes. This is/was an extremely important determination as the taxation of income by a U.S. shareholder, partner or trust was dependent on whether a foreign legal entity was allowed the “flow-through” treatment of a partnership of taxable income and foreign tax credits, or the deferral of such items until a “distribution” of earnings and profits is received from a corporation. The complexities grew as tax planners would establish chains of legal entities (often under a tax-haven holding company) and the questions of what taxable income and credits flowed up to which legal entity in a particular year was the subject of full-time work for many tax planners and tax return preparers.

Thankfully, the law was changed to allow a foreign legal entity (with some restrictions) to be classified as whatever a U.S. shareholder wanted amongst the choices of a Corporation (“C” not “S”), a partnership, or a “disregarded entity” which is treated as a mere branch. This was accomplished by either doing nothing and having a “default” classification under the regulations apply, or by filing Form 8832 (AKA, the “check the box” election) to, if qualified, elect a different classification. The ability to tax plan with certainty of the I.R.S.’s agreement with the desired classification is a great tool for tax planners. Unlike the old days, where Private Letter Rulings were obtained in large, sensitive situations (in some cases the I.R.S. would not even provide rulings on this subject), now, a U.S. shareholder group or sole shareholder can file Form 8832 and get a clear, unambiguous, definitive letter back from the I.R.S. stating that the classification of the foreign legal entity by the taxpayer is accepted. No IRS “user fee” is required for the processing of Form 8832, unlike a Private Letter Ruling these days. Such an election is binding for 5 years, so the I.R.S. is not “whipsawed” by taxpayers switching classifications when it best suits their tax reduction desires.

The classification of a foreign legal entity impacts Subpart F calculations, PFIC calculations, Form 5471 reporting requirements, Form 8858 reporting requirements, Form 1118 Foreign Tax Credit calculations, the U.S. tax impact of overseas reorganizations, Cost-Sharing and Transfer Pricing calculations, Form 926 disclosures, FAS 109 and FIN 48 calculations (and their related financial statement impact on earnings per share), a company’s long-term dividend repatriation policy, and on and on.

Form 8832 must be filed with the U.S. taxpayer’s service center and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date the form is filed. Great care must be given to the filing of this form and the timing. It is best to file the form at the creation of the legal entity as the form triggers a deemed liquidation of fair market value to the U.S. shareholder or foreign parent company which can clearly trigger taxable income for FMV in excess of the shareholders tax basis in the foreign entity’s equity. The legal tax fiction under the law is that the foreign entity is immediately re-established after the deemed liquidation into the newly elected type of entity. So, again, take great care in making this election.

So, therein lies the problem. Often clients don’t tell their tax advisor about the existence of the new entity (e.g., “the sales guys set this up”) until sometime after 75 days has passed from the creation of the entity or from the beginning of the tax year.

An expensive, unintended tax result may occur simply from the lack of a timely filed Form 8832. Clients either have no idea of the tax issues involved, or assume that a timely election can be filed with the U.S. shareholder’s tax return for the tax year within which the foreign legal entity was established…generally due March 15th of the following year for a calendar year corporation…before the normal 6 month extension for large corporation. Hence, the discovery of this issue in September of, say, 2009 as the extended return is finalized for filing on September 15th, for an entity set-up in, say, March of 2008, is a big problem.

Private Letter Ruling 200916013 (issued January 8, 2009) gave a taxpayer an additional 60 days from the date of the PLR to make a late election. The PLR is the exercise the of the Commissioner’s authority under Internal Revenue Code Section 301.9100-1(c) to allow a “reasonable” extension. The extension in the letter ruling states the “taxpayer established to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith (which I read to mean it was just an honest mistake), and (2) granting relief will not prejudice the interest of the government.

It would be interesting to know more about how the Commissioner makes such a determination. If the U.S. tax due from the U.S. shareholder would have been $1 million without the extension, but is zero due with the extension, does that “prejudice the interest of the government? Or is the interest of the government served by allowing the taxpayer his choice of entity, as he is then stuck with that classification for 5 years. The PLR does not elaborate on this issue. Perhaps more guidance is in the Sec. 9100 regulations. Is the taxpayer required to provide a “with and without” calculation of U.S. taxable income to allow the Commissioner to make his determination?

That said, it is important to know that a PLR seeking Sec. 9100 relief is available as a last resort if the deadline for filing Form 8832 has been missed. I’d imagine that the PLR filing should be IMMEDIATELY after discovering the missed filing of Form 8832, since, as time passes, it would seem to establish the taxpayer knew what they were doing and intended to do so. Often in Sec. 9100 cases, the taxpayer pleads that they had no idea of the rules and were relying upon their tax advisor who was too busy to identify the issue until, in the tax return preparation process, the tax advisor realizes the consequences of the missed election and/or discovers that the new legal entity was established…long ago.

Often, the legal department of a corporation is required to inform the tax department or tax advisor of the creation of any new legal entity, in an effort to avoid the above and many other tax planning and tax compliance issues that can arise, when, too late, the tax advisor for a client becomes aware of a new legal entity. Various companies have SOX related requirement to avoid big mistakes that could be material to the financial statements (not to mention cash-flow) as a result of a missed tax election.

I am always available for questions or comments on this or other international tax issues at (510) 797-8661 x237.

By: Ron Cohen

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E Business Development: Internet Rich Crowdsourcing

E business is constantly evolving. The crowdsourcing model with its internet rich community of volunteers and followers has proven to be a platform that will enhance e business development. As defined by wikipedia.org, “Crowdsourcing is the act of outsourcing tasks, traditionally performed by an employee or contractor, to a large group of people or community (a crowd), through an open call”.

An example of this; Wikipedia.org itself. Wikipedia.org is an online free encyclopedia where anyone and everyone is invited to participate. In doing so, the “crowd” has become the author of the largest encyclopedia to date. At the time of this writing, there exists 3,384,039 articles in English alone. This is just since 2001, when Wikipedia was first launched by its founders Jimmy Wales and Larry Sanger.

Wikipedia.org paved the way for many other peer to peer sites and opening the ebusiness world up to a multitude of possibilities. Crowdsourcing has developed a new opportunity for ebusiness owners who want to showcase their expertise.WikiHow for example, a How-to encyclopedia created for and by the crowd allows you to learn about different techniques and articles. The site ranges from, How to win big in Vegas to how to knit your baby’s first sweater. Ebay created ebaywiki where it educates its members on “buying and selling photography” (find another example)

What is fascinating about this particular business model is the drive so many have to contribute. Volunteerism is driven my a sense of purpose and community involvement. Wikipedia and many others, which use crowdsourcing as their model for growth have grown exponentially in the last few years and many believe the trend is here to stay.

Crowdsourcing, sustains itself on trust and purpose, making this a true paradigm shift for the economic belief that people are driven by monetary compensation. The community “trusts” its members because they know those who contribute (for the most part) are driven by passion and not monetary gain. BitTorrent, for example is a social site which helps people share music from one another. Music unites people and having the ability to tap into music experts in order to discover new artists and music genres is a luxury even the most deaf tone person can appreciate because through the wisdom of crowds comes the increased wisdom of each individual community member.

Epinions consists solely of reviews and ratings. This allows for people to search reviews they trust and who share similar interests. Therefore, introducing them to new products or experiences. Epinions now goes a step further…You can even review the Reviewer!

Forums and reviews have become popular because of two main reasons: people seek experts for advice, and people want to be seen as experts themselves.

No longer must you feel like you do not have an area of expertise because you can turn your hobby into your Niche specialty and allow others to seek your advice.

Consumers shop differently now. They no longer shop at a bricks and mortar, they shop online. Not just online, but from one another. Non-affiliated private consumers as in the case of ebay.com.

We now live in the age of Transparency. Buyers are more educated because their knowledge base has increased through the interaction of online communities writing reviews, answering questions for one another. Consumers are now more apt to research forums to get the inside “scoop” on products and their developments. Companies have become more savvy to this trend and have now begun interacting with their customers online. Developers are beginning to interact with their “fans” online and involving them in the production process.

This is genius! Can you imagine being part of the process of creating your favorite music video? This is where the trend is going….it is you who decides…the crowd. And when the crowd feels heard acknowledged and looked after… the lines start forming. Buyers are literally waiting in line or should I say “on-line” for products to come out of production. Production they have been in the trenches with, with products they have helped develop. Along the way building loyalty for the companies’ brand and product line. Crowdsourcing is the perfect integration of online and offline merging together in the development of e business.

By: Solange Jazayeri

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As you are aware there has been a huge change in the Mortgage Assignment world as Phill Grove, Inventor of the Mortgage Assignment Profits System or MAPS has officially changed the name to the Assignment of Mortgage Payments System or AMPS.

This has sparked a lot of calls from Mortgage Assignment Investors about “why the name change took place? and “how it affects Mortgage Assignment Investors?” I am going to answer those questions for you.

First off, so why the name change?

I have to be honest; at first the idea of a name change kind of shocked me. After all MAPS has gained such fame nationwide. New MAPS investors were doing deals all over the country and it seems like everything is going well, so why change the Mortgage Assignment Profits System (MAPS) name?

Well from what Phill Grove had told us, it is purely a technical type issue.

You see the name Mortgage Assignment Profit System is regularly called MAPS or M.A.P.S. for short. It turns out there is another business that, unbeknown to Phill Grove, has a prior claim on the “MAPS” abbreviation. So after much deliberation, Phill has simply decided to change the name.

Obviously, for Mortgage Assignment investors who have been marketing for these types of deals, that leads you with two options. You can either keep using the term Mortgage Assignments and continue marketing like before, or you can change all your marketing to say Assignment of Mortgage Payments System or AMPS in the future.

Even though it is a bit of work, I am going with the “changing” option for one simple reason. In the internet age, many of my buyers and sellers do searches on the term Mortgage Assignment to get more educated about the process.

Going forward, all the new content about this style of selling and buying a home will say AMPS. Thus the MAPS stuff is going to get dated pretty quickly. So for me, I know the more up to date information my buyers and sellers have, the more comfortable they are going to be meaning more deals for me.

So for other Mortgage Assignment Investors out there, I would recommend that you continue to use whatever marketing you have already made that says MAPS for now. But as it runs out, start replacing it with AMPS, and also make the appropriate changes to your web pages as well.

Also, I want to add that there is one big advantage to the relaunch as well that directly affects MAPS investors.

We have talked a lot about how much of a team sports MAPS is because the more other investors are getting buyers and seller deals, the more potential homes for your buyers, as well as buyers for you homes.

With the new name launch, the whole product is going to be relaunched which could potentially bring a lot more investors into the fold doing MAPS/AMPS deals which is a big win for you.

Keep in mind, the actual deal process has not changed at all, it’s just the name. The Mortgage Assignment Profits System (MAPS) is now the Assignment of Mortgage Payment System (AMPS), it is still allowing investors to find zero down deals that pay well, with the satisfaction of helping distressed sellers, and getting new buyers a home, done ethically with tons of legal backing.

By: J. James

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