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3 Important Steps Towards Your Success As a Business Owner

Recently, one of my clients who has gone from being an employee to being self-employed asked me, “Do you know anybody who can help me? I can’t do this by myself!” Her question came in spite of her already having a coach and friends who were volunteering to help with the business essentials (web, accounting, marketing, etc.). Furthermore, she had plenty of great networking opportunities and contacts. And yet, she felt “alone” and needy of more help.

I understand her. Transitioning from being a regular employee (in other words, someone who has security and who is a part of a set structure or team) to being an entrepreneur is extremely difficult. To be perfectly honest, it is not for everybody. Therefore, I am compelled to offer some advice to those of you who feel similar to my above-mentioned client.

  1. Accept that you are 100% responsible for your business. If you went through the whole career change process and decided to start your own business, I am assuming that part of the attraction was the opportunity to be your own boss. However, with that role comes responsibility. You have to come up with ideas about your product, your marketing strategies, your budget, your business plan… the list is endless. Frankly, if you can’t accept that responsibility, then this is not the right avenue for you. Re-evaluate your views on responsibility and then make your decision. Please note that even if you have a business partner, they will expect you to be fully responsible for your part of the business.
  2. Take a continuous action. Once you have accepted your responsibility, commit yourself to continuous action. This means taking steps towards building your business on a non-stop basis. Often when things don’t move swiftly enough, people stop, get discouraged and/or begin questioning their decision about having their own business. However, if you want to succeed in your own business, you need to learn to go “through” every obstacle. Don’t go around it, above it, or behind it. Work your way through the obstacle and keep going. Understand that if option A doesn’t work, you always options B, C, D… you get the picture. Remember, persistence always pays off. Always.
  3. Keep your final vision in mind. When you decided to go into your business, I am assuming you had a certain vision in your mind as to how your life would be “then”, how things will work “then”, and how you will feel “then”. Remembering this final vision is crucial in your journey to success, because, believe me, often your reality is as far away from that vision as possible! You need to be emotionally connected to that vision and wholeheartedly believe in it! You need to have a hunger for it and a drive that will not be stopped by anybody. That is the only way forward; in the end, it will be worth it.

There is much more to share from my experience, as well as from my clients’ experiences. However, if you are serious about succeeding in building your own business, these three points will get you started. If you need additional emotional support, having a career or a business coach is a great investment. A coach will support you but also remind you that your business is your own responsibility.

The Business Owner’s Guide to Obamacare

Here is what large businesses (Over 50 employees) can and should do to ease the pain.

Large businesses should employ a “linked” Healthcare Reimbursement Arrangement (HRA). Here is how it works. Let’s say you have a group insurance plan that offers a $1,000 deductible for your employees. With a linked HRA, the business adjusts its group policy to a $5,000 deductible (or higher). However, they maintain the lower deductible for their employees, essentially self insurring the amount between the deductibles.

When an employee hits the $1,000 deductible, the business reimburses the employee for out of pocket expenses until the higher deductible is reached.

The premium for the $5,000 policy will be significantly lower in cost. Most employees will not hit their deductible. The savings can be substantial – and all reimbursed expenses absorbed by the business are deductible expenses.

For businesses with 2 to 49 employees, the answer lies in a Cafeteria 125 plan. With this plan – the business cancels its group insurance plan (if it had one). A business is not required to provide insurance for employees if they are under 50 full time employees.

The Cafeteria 125 plan allows all employees to purchase their own insurance (on or off the exchange depending on their individual needs) and pay for their insurance and other qualified out of pocket expenses with pre tax dollars. Also employees will be able to take advantage of the Federal subsidies if they apply.

Here’s how it works. The employer withholds the amount of individual health insurance premium from the paycheck of the employee (pre tax) and sends the withholding to the plan administrator. The employee pays his insurance premium as always to the insurance company, and submits proof of payment to the administrator. The administrator reimburses the employee the full amount (tax free). If an employee makes $35,000 and pays a post subsidy premium of $5,000 annually, the employee’s tax liability falls to $30,000.

The business wins in several ways. The savings from not having to provide a group healthcare plan will be tremendous. But beyond that, the business will see a significant reduction in FICA, Social Security and Medicare taxes. Also, the amount of the salary reported to its worker’s compensation policy will reduce, providing savings on that premium as well. The Cafeteria 125 plan is a tremendous win/win for businesses and employees alike.

Smaller businesses where the owner employees family members may not get the same bang for the buck, as under a cafeteria 125 plan, the owner and immediate family members may only reduce 25% of the premium expense.

Small “mom and pop” businesses have solutions too. If a person owns a business, is a sole proprietor or and S corp, or even an LLC, they may likely qualify to open an HRA (Healthcare Reimbursement Arrangement) section 105 plan. Under this plan, the business may reimburse the owner 100% of healthcare premiums and out of pocket expenses, creating a very nice tax break. These small business may already “deduct” health care premiums of the owner. This goes a step further by allowing the out of pocket expenses as well. The average business with an HRA 105 plan saves over $4,000 per year in taxes.

Here is a calculator where small business owners may figure their tax savings under the HRA section 105 plan:

Obamacare has created quite a stir. The law is helpful for many, and harmful for others. But, it is the law of the land. The wise and prudent business owner will learn that in order to combat a harmful tax law, one must use other tax law to their best possible benefit. The Linked HRA, the Cafeteria 125 plan, and the HRA 105 are long established solutions for business owners. Their usefulness has just become paramount in the new ACA economy and environment.