Money Addax

How long to keep business insurance policies

Living that small business life

Running your own small business is all about juggling a million moving pieces.

Each step and task brings with it new challenges. One of the largest challenges you’ll have to overcome is getting the right insurance for your business.

Once you’ve got your business insurance in hand, the next step becomes, how long do you keep those insurance policies. What purpose do they serve anyway?

What are business insurance policies?

You’ve done the background work, you’ve created a super awesome logo, and you’ve hired your first few employees.

Now it’s time for the paperwork. First and foremost of which is often insurance. There are a million different kinds and types that work for hundreds of thousands of different businesses.

All small businesses should keep at least three types of insurance:

  • General liability insurance
  • Workers compensation insurance
  • Commercial auto coverage

General liability insurance

This is your catch-all insurance.

It protects your business from any claims stemming from bodily injury or property damage, libel, or slander. Basically, it’s there to protect your business in the event that someone was to be hurt in your store by accident.

This insurance pays the bills if a customer files a claim for injuries that resulted from an accident in your store. If you don’t have this type of insurance, you’d be forced to pay these expenses out of pocket.

Workers compensation insurance

Workers’ compensation takes care of issues inside your business among your employees.

If any of your employees have a work-related illness or injury, workers’ compensation takes care of them and their medical bills. The key to workers’ compensation is that it has to be a work-related injury for the claim to take hold.

Commercial auto coverage

Any company that has employees driving company vehicles should have this type of insurance coverage!

This covers any accidents your employees may have in a company vehicle and the damages that they might incur.

How long do you keep your business insurance policies?

Every business is different.

The first rule is always to evaluate your own business. What do you need for yourself, employees and property to be covered by insurance policies and that will determine what you need to purchase?

Business/auto insurance

This is occurrence-based insurance and the policies themselves should be kept forever after the policies have ended. Claims in these areas can be activated long after the policies themselves have ended and keeping them indefinitely helps ensure that claims can be taken care of appropriately and effectively for your company.

Directors/officers/professional liability

Claims based on insurance like directors, officers, or professional liability are made against the injured business after the incident occurs. These types of policies should be kept for at least 6 years. This covers the tail period when issues could occur and be claimed.

Workers compensation insurance

These policies should be kept indefinitely!

This helps protect your business and your employees as they may have issues that occur after their employment with you has ended. When claims come your way, no matter how large or small, you’ll be ready if you have these records on hand.

Why should they be kept?

Keeping a digital or hard copy of your business insurance policies helps to protect your business, your employees, and your customers. Being able to reference your policies from the past gives your side of the claim more momentum and keeps the insurance companies from trying to pull the wool over your eyes.

Storing your insurance policies and records

Make sure to keep your insurance policies and records, hard copies, in a safe, dry, fireproof place. This ensures that your ability to reference them will not be impeded.

Digital storage

Digital records of insurance policies are a great way to save space and time. But be sure to keep a back-up record these policies somewhere safe for future reference. Storing policies and records in digital form can make them susceptible to hackers or the information can be lost on the cloud.

Keeping one set of digital and one set of physical hard copies of your insurance policies and records will help you make sure that you’re able to access them in the event of a claim.

Check your local listings

Make sure to double-check with your local, state, and federal regulations for how long you must keep your insurance policies. Different agencies will require different guidelines for your business. A good rule of thumb is to keep insurance policies for at least six years but always check for any irregularities within the local rules.

Don’t let yourself be caught outside of the guidelines!

Last but not least

Insurance policies, while occasionally a pain to handle, are part of your business for your protection and the protection of your employees and customers. Keeping track of your policies ensures that you can reference them against any claims brought against your business.

Knowing what insurance you have and what you might need will help you keep track of when you should get rid of your insurance policies. Each business is different and taking a few minutes to iron out what you and your employees need will save you time in the long run.

Insurance policies can be tricky to institute. But making sure they’re easy to reach and access far beyond the time limit is crucial to running your business successfully!

How long to keep business records

Business is booming!

You did it! You’ve hit the big time! Your business is up and running and doing great!

Now.

What to do with all of those business records that keep piling up on your desk? Are they important to keep now that the moment has passed? Will anyone know if you throw them away?

Where, oh where, should my paperwork stay?

Basic records for any business

No matter what business you’re in, there are a few records that you should always keep on hand.

Accounting records

These are any forms that keep a record of your accounts, past, present, and future. Forms like petty cash vouchers, purchase order forms, accounts receivable and accounts payable ledgers, and profit and loss reports should all be kept for 3-6 years.

Forms like these should be kept indefinitely and include company by-laws, meeting minutes, non-disclosure agreements, and more. These documents govern how your business runs and interacts with the government and your employees.

Insurance documents

Any business, big or small, should have several sets of insurance documents available indefinitely. Each business should have property, business auto, liability, and workers’ compensation insurance and the paperwork to prove it.

If for any reason a claim was filed against your business, you want to make sure these sets of forms are easy to find.

Permits and licenses

Documents in this category vary widely by what type of business you’re running. They can be anything from the most up to date liquor license to zoning and land-use permits. Check the local, state, and federal codes for what type of permits you need for your specific business.

Once the permit or license is expired, shred it and make sure the new permit is kept in a secure place.

Bank statements

Bank statements tell the complete story of any business. The quickest rule of thumb is that any bank or credit card statements should be kept for at least 7 years. You can shred them within a year if they aren’t serving any tax or accounting purposes. But make sure everything is accounted for in your annual statements for the next 7 years!

Setting the schedule

Once you sit down to do your office spring cleaning, you’ll want to make sure you don’t swipe something into the trash that should be kept in a sacred space. Taking the time once a year to double-check that all your business forms are in order and easily accessible prevents a crisis in the future.

Choose a time

Work with your accountant or bookkeeper and other office managers to pick a time when you’ll go over all of the business forms in your office. This may be in the run-up to tax season, the beginning of your fiscal year, the end of the calendar year, or any day in between. Pick what works best for you and your employees!

Make a list

Type out or write down a list of all the paperwork needed to keep your business running. This should include any legal documents, insurance paperwork, or permits. Double-check each of these against the state and local recommendations for running your business and make sure they’re up to date.

As you go through each set of documents, determine whether they’re needed indefinitely or if they can be disposed of during this time.

Accounting records like petty cash vouchers, purchase order forms, payable ledgersKeep these for 3-6 years
Legal documents like by-laws, meeting minutes, non-disclosure agreementsKeep these forever
Insurance documents like property, business auto, workers compensation insuranceKeep these forever
Permits and licensesDouble-check when they need to be renewed with your local and state authorities
Bank statementsKeep these for 7 years

Keep track of when things need to be renewed in a form either digitally or manually so that each year you can simply update the list.

Disposing of unneeded documents

Once you check the dates of any documents against your list and other recommendations, dispose of unneeded documents by shredding or burning them. This keeps your sensitive information from being used by someone else.

Keeping documents safe

The digital age is one of great potential! One of the greatest of which is that most documents and forms can be kept in a digital format to help reduce clutter.

If you decide to keep your business records in a digital format, make sure that they’re secure and backed up. Keeping records in two secure places in a digital format or having one form digital and another physical, can back you up if your records were to be lost or destroyed in any way.

Assess your own business

Whether you’re running a small mom and pop store or a huge corporation, one of the key factors in deciding which business forms to keep and which destroy is assessing the needs of your company.

As you grow and expand your business, the amount of paperwork will grow and expand as well. Taking the time to catalog and organize which physical papers or digital files need to be replaced or destroyed will save you energy down the road. This will also keep you out of trouble with the IRS or local authorities who may be wondering why your liquor license has lapsed!

The rule of thumb here is…

Spring cleaning time is here! So declutter your desk! Get started on your spring cleaning! As you get started sorting, you’ve got the confidence to save with pride and know your business is safe because paperwork is safe and updated.

How to register a business partnership

Getting started

Starting a small business can sometimes seem like it is learning to multi-task office work while swimming with the sharks.

Sometimes it’s better to take a friend along on such a dangerous adventure!

While you and your partner are out wading through the shark-infested waters of your new business venture, you may need to stop and register your business partnership. This will ensure that your new enterprise is operating under the current local, state, and federal laws. And it protects you and your company, keeping both partners accountable.

Who should you be in business with?

Let’s start with the basics.

Who EXACTLY are you getting into business with?

Take the time to figure out who you’re working with. Even if you know the person well, take the time to do background checks and call personal references. This way you get a full picture of the person before entering into a business partnership with them.

Talk through the issues

Nobody wants to think about the worst-case scenario but take the time to talk them through with your potential business partner. You can gauge how you would handle each scenario both personally, and as a business.

Read, read, read

Read through your partnership documents before you sign them. Make sure that each of you retains separate counsel and you work with them to clarify details of your partnership documents before signing.

Setting up your partnership

As with any new agreement that will impact the lives of the people involved, take the time to review it carefully. Make suggestions and think long-term. Every business partnership will be different but there are some key things that you should look to set out in your partnership documents.

Who can do what for the company

Set clear guidelines for what each member of your partnership can do for the company. This includes authorizations, purchases, and the ability to sign for anything for your business. Be vocal as you discuss issues so that everyone is on the same page going into the partnership.

Who is doing what during the day today

To avoid conflicts, setting up which partner is taking care of which day-to-day operations will help each of you know clearly at the start of your venture where they stand. Also, setting these day to day operations guidelines will help you develop consequences if operations are not at their fullest potential.

Who has the right to compensations and losses

One of the most crucial things to discuss before signing your partnership documents is how distributions are given out to you and your partners. Knowing where the money is going before even signing can help you avoid conflicts in the future.

This also applies to losses. Guidelines governing who will take on the burden of losses as well as reap the benefits of compensations help keep the peace between you and your partners.

Signing the paperwork

Limited liability Company

This is one of the best set-ups for a partnership with limits and holds on what each partner can do. With the limitations provided by the LLC, you and your partner are shielded from the activities of the other.

Check with your state government for which LLC paperwork you need to fill out with your partner and your attorneys. Then make sure they are submitted with the proper authorities.

There is a lot of flexibility with an LLC and allows for shuffling around capital, profits, and losses to benefit the company and the partners. This set-up also allows each partner to do their tax planning after getting their share of the profits.

Running your partnership well

There are a lot of things you can do to make sure your partnership runs smoothly.

Communicate and document

Business partnerships change over time and most agreements and registrations allow for those changes to be reflected in the original agreement. But these need to be documented and signed by the partners before being incorporated into the partnership agreement.

Set clear expectations

While the overall expectations have been set out in the partnership paperwork be sure to set clear expectations with your partner as your business grows and evolves in the day to day operations. Setting the expectations with your partner helps you be clear with your employees and customers as well.

Make your partner one of the team

With clearly defined roles within the company, many partners don’t interact very often and distance between partners can grow until it’s overwhelming. Making sure they’re included and feel as though they’re part of your team as well as their own can bridge the gap between you and your partners.

Grow together

Don’t let yourselves become stagnant!

You’re not just growing a business but you’re growing together as individuals and partners. Giving yourself and your partner grace and room to grow and change will allow your business to grow and change as well.

Partner up!

Navigating the tricky world of business with a partner is a great way to get your business off the ground.

Take the time to sit down with lawyers and your partner to set out guidelines for how each partner will manage the business. This should include how you split profits and losses, how each of you handles the day to day operations and overall responsibilities for each partner.

One of the most flexible types of business partnerships is a Limited Liability Company which allows each of you to grow and keep track of how each partner is operating.

So even though you may feel like you’re juggling a million things as you start your new business, setting up a business partnership can give you a partner to juggle with and share the burden!

How to start a tutoring business

Intro

The world is a little chaotic right now but where there’s chaos there is also opportunity. As parents, teachers, and students prepare to send their kids back to school, tutors are bridging the gap for many working parents. With everyone working from home, parents are increasingly turning to private tutors to help make their schedules flow for their students and themselves.

The market for private, dedicated tutors has never been higher. You can start your tutoring business today by understanding the current demand and customizing your business to your client’s needs. Whether you want to use this to supplement your income or as your primary source of cash, the time has never been better to launch your own tutoring business.

What does tutoring look like these days?

Private tutors, who work through their networks, whether online or in-person, cater to a wide range of individuals and families. With school happening remotely in many places in 2020, the number of tutors has skyrocketed. This is in response to parents who are looking for options to supplement their child’s education as well as free up their own time.

Tutors can work from home by teaching through video calls or conferences, in the school system as part of an after school program, or in the home with individual families. The choice is yours! As you start to evaluate your strengths and preferences you can choose the right path for yourself, your clients, and your community.

Who can be a tutor?

Tutors are often college students or recent graduates who have specialized skills and knowledge that they share with their students. But anyone with a heart to help kids can be a tutor and start their own business!

As you get started with your own tutoring business, take some time to evaluate your skills and abilities including your time constraints.

Ask yourself:

  • What would I be comfortable teaching?
  • What ages would I want to engage with?
  • Do I communicate well over a Zoom or video call?
  • How would I handle a student who isn’t paying attention?

If you’re willing to listen and cater to the needs of the student, you’re ready to be a tutor!

Getting started

You’re ready to make a difference. What’s the next step?

Decide on an age range.

As you evaluate your strengths, settle on an age range you’d like to tutor. Having an approximate age range that is your specialty will help you cater to your programs directly to students and families within that range. A specific age range will also give you time to brush up on topics before diving back into school work!

Top subjects in demand for tutors:
Math
Physical Science
English
Language

Create a network.

Start small and start local. Ask friends with school-age kids if they’d like to help a few nights a week. Reach out to local teachers in your specialty area and make them aware of your services and enlist them as references.

If possible, you may even consider sitting in with a teacher to hear exactly what happens during a lesson.

Cost matters!

Parents are looking for a great deal as well as quality help for their kids. As you start small in building your client base, keep the base price low to begin. You may even offer a few “trial” hours of tutoring for free to get the family on board with your service. This will ensure that you can prove yourself as a competent tutor and parents will be more inclined to refer you to a friend.

Keep careful track of your hours with students and how many students you have on your roster. Quality over quantity is key!

Keep learning.

If you’re stumped by questions your new charges ask, do a little research. Keep connecting with local teachers, librarians, and specialists who can help you answer questions. Be creative with your students in helping them learn. A creative, outgoing tutor who makes learning fun is going to be noticed by everyone involved in a student’s life!

Have the right equipment.

Most tutoring time is spent over video calls and online during this pandemic. Make sure you have a computer that works with the appropriate software for your clients. Communicate with teachers and parents to find out what online classes and programs the students are currently using.

Start-up costs

Set a budget

Choose a budget that works best for you. If you’re planning on doing mostly in-person tutoring, budget for transportation costs each day, simple tools like pencils, pens, and a planner, and food costs if you’re out later in the evening. If you’re thinking you’ll mostly be working online and over the computer, make sure to have room in the budget for good computer equipment and upgrades if needed.

Set your price point

Choose a cost per hour that works best for you. As you’re getting started, set your price competitively lower to make a good impression on your clients and future clients. When you gain new students, you can raise your prices incrementally to offset any new costs and turn a profit.

Research what the minimum wage per hour is in your area and state so that you can price your time accordingly. Talk to local teachers about which subjects need the most help and what the value of that help would be!

Choose your workday

Whether this is your primary source of income or your newest side hustle, YOU get to set the hours. If Saturdays and Sunday afternoons work best for you and your client, get it done! Listen closely to what your client needs and work to accommodate them.

Overall benefit

Getting into the tutoring business provides you with unlimited opportunities to grow your business with low overhead start-up costs. Not only does running your own tutoring business help you pay your bills but you’ll be making a positive impact on your community as well! Whether this is your side hustle or your main hustle, starting your own tutoring business is a benefit to you and your community.

How to tag a business on Facebook

The Facebook community

No matter who you are, where you are, or what you’re trying to sell, Facebook has something for you.

Grandma’s post pictures of their grandkids, teens use it as a place to vent their issues with the world, and businesses press their advantage in the global market. Large or small businesses utilize the Facebook platform to sell their product. Using keywords that help pull your business to the top as well as a catchy business and page name can help a small business get off the ground.

What are advantageous ways to use Facebook for a business?

Selling a product

Once you’ve created a Facebook page for your business, you can sell products through the platform directly to your customers.

You can post pictures that list the item, price, and how to buy or open up a video and sell directly to a live audience. Having friends and family tag your business drives up recognition and keeps you relevant in a constantly changing internet world.

Creating a culture

Each business whether a brick and mortar store or online creates a culture for their customers that they seek to inhabit and share. Facebook allows you to control the culture that your customers see by posting videos or pictures that reflect the way you wish to be seen.

As each customer experiences your company culture, they’ll share and tag you in their posts which can then be seen by their friends. This helps spread your company culture without it seeming like an advertisement forced on participants. Each customer adds to the culture by contributing their own take on your company and products.

Gaining visibility

With each new follower, you gain an audience of hundreds even thousands of their Facebook friends who will see each time they tag you in a post. This is a huge audience that could cost you hundreds if not thousands of dollars to see in traditional advertising.

Creating giveaways or contests that specifically ask your followers and customers to share posts or your business page give you even greater visibility. Be intentional and ask your followers to share posts to reach those otherwise unreachable audiences.

Steps to tag a business on Facebook

Set up your business page

Log on to Facebook as a private individual. You’ll be able to create a business page through your own personal profile.

This is a chance for you to start by creating your company culture and molding it in a specific way. You can choose pictures, text, videos, and audio that help describe your business and business practices.

Gain followers

Start small. Ask friends and family to follow your business page and share it on their own pages so their friends can see everything you’ve put together.

Keep posting on your business page to keep the content relevant. No one wants to be linked to a stale business page with one post from 2016!

Create opportunities

Develop a plan to get followers and their friends to tag your business. This can be giveaways, contests, riddles, or media tags.

To tag a business

It’s so simple. Create a post or write a comment and start by typing the “@” symbol followed by the first few letters of the business name. This will often cause it to pop up in the suggestions on Facebook and you can click on the name of the business to tag and insert it into your post or comment.

Depending on safety settings, you may have to follow the business first before you’re able to tag them in any post or comment. Some businesses have the ability to tag them turned off as well so if you really want to tag a specific business and can’t, send them a message on Facebook before proceeding.

Why does “tagging” help my business?

Social media is in the center of our lives whether we like it or not. Being able to tag a business in a post helps boost your visibility and keep you in the center of people’s focus.

Unlike traditional types of advertising or media, social media moves fast and is fueled by new trends every day. Keeping up content on your business page helps you stay relevant as trends and people change tactics.

Tagging other businesses on your business page helps incorporate them into your corporate culture as well. They help you stay relevant and you help them stay relevant.

The walls come tumbling down

Writing on someone’s Facebook wall as a personal way to converse has been replaced on the platform with a business takeover. Whether it’s Amazon selling everything or your local boutique looking to make an impact, businesses are all over Facebook.

Tagging a business in a post or comment boosts their visibility to your followers and having someone tag your business boosts you to their followers. Each tag reflects the company culture and values as followers and taggers add to what the company has to offer. Creating opportunities to tag or share your business page continues to increase your visibility and make your business bloom!

If you’re a hardcore Facebook user or this is your first time, it’s a platform that can be easily understood and highly advantageous to any size of business. Start small and keep growing. Create your business page and keep adding to it so that you stay relevant in the bustling world of Facebook business!

 

How does payroll work for a small business

You’ve hung up your three-piece suit at the corporate office and traded in your time card punching days for the sweet relaxation of working your own small business.

But running your own small business comes with its hassles!

Besides the licenses, inventory, personnel hiring, marketing, and other details that make up your small business, one big issue you’ve got to deal with are running payroll accurately and efficiently.

This includes paying your employees, recording tax data, and keeping personal records for your office. No matter the number of employees you have, you want to make sure payroll is done correctly to keep the IRS off your back!

Evaluate your business

When creating a plan for your business, no matter the topic, it’s always best to stop and evaluate your business as a whole to determine what you need.

A small business is categorized as one that employs less than 1,500 and makes less than $35.5 million per year. So unless you’re a Fortune 500 company already, you can rest assured you’ll fit under these guidelines!

Define the terms

There are a few different parts to payroll besides the joy of waking up to see your hard-earned money in your account.

Payroll comes in three parts: calculation and distribution of paychecks to employees on payday, the financial records that determine wages, salaries, withholding, deductions, bonuses, and other items, and the total record of earnings for the fiscal year.

Each of these components is important for you as an employer to keep as a careful record. Knowing where you’ve been and how your money has been earned and distributed will keep you out of trouble in the future.

Paying your employees

Your business plan is set and ready and you’ve just hired your first employee! Congratulations!

Now, you’ve got to get them paid for their hard work. Just doesn’t seem fair to ask them to work for free.

Employer Identification Number

To get started, you’ll need an Employer Identification Number or EIN to identify and set up your company. This helps the state and federal government identify you as a business and classify your employees correctly.

Identity

There are lots of different ways to classify your employees and knowing the difference will save you time in the long run. Some companies choose to classify employees as contractors or freelancers rather than employees. How you choose to classify your employees will directly affect how your payroll works.

Form W-4

Now comes the fun part!

Your employees (should you choose to classify them that way) are required to fill out a W-4 form for federal withholding taxes and return it to you. This allows you to withhold the correct amount of money from their paycheck each time.

Form I-9

This form is required to verify that your employees are all eligible to work in the U.S. legally. Each employer should have a copy of this form in case a question were to arise regarding their immigration status.

Pay period

There are lots of things about payroll for a small business that you can’t control like federal forms and taxes but when your employees will be paid is often up to you!

On some occasions, the pay period is determined by state laws but for the most part, you’re able to pay your employees when it works for you.

Compensation terms

Make sure you’re keeping track of any sort of compensation including hours, paid time off, overtime, and any other requirements. You’ll also need to credit any deductibles including health plans or retirement contributions.

Pay the payroll

Now you’re ready to run your actual payroll! You’ll need to determine if direct deposit, cutting physical checks, or some sort of payment card is necessary.

As you run payroll you’ll also need to keep track of payroll taxes as well. Check-in with the IRS guidelines to determine how you need to file your payroll taxes.

What’s in a paycheck?

Several components go into an actual paycheck and it’s worth knowing what they are to give yourself a full picture of how payroll works with your small business employees.

Pay statement

This includes all the basics including name, filing status, pay period dates, and the check number or routing number for direct deposit. The pay statement will include any deductions that were made as well.

Earnings

These are listed for the pay period and to date in the year. Often this also includes a breakdown of hours worked and pay according to those hours. On this statement, there’s also gross pay which is what your employees will be making pre-taxes.

Taxes

The FICA taxes are listed on the pay statement including local, state, and federal taxes. The IRS has several tax brackets that govern different businesses of different sizes so it’s worth your time to sit down and chat with your accountant or do your research to see which bracket you’d be in.

Everything due to you

Your business is taking off and you’ve just hired your first employee! Now you’ve got more information on what exactly it takes to get them on your payroll.

You’ll need to determine not just when you’d like to pay your employees but also their rate of pay according to your state, local, and federal requirements.

To make sure everything is taken care of you’ll need to set up your employees with the correct forms including the W-4 and I-9. You’ll need to verify your business with your Employer Identification Number or EIN as well.

There are lots of details that determine your business but taking care of your employees whether they’re 1 or 100 is important to any small business employer. Making sure their payroll comes in on time and that it’s taken care of with the IRS takes a little bit of work on your part but keeps the government and your employees happy!

How to approach a bank for a business loan

You’re standing in the shower, minding your own business, getting ready to head back to your cubicle at the corporate office, when out of nowhere, a flash of inspiration! This is it! This could work! Your very own small business!

You’ve got the idea, you’ve got a great product or service, now you just need a little capital to get started.

You could start by asking your parents for some money but since they didn’t support or fund your lemonade stand when you were 12, it seems unlikely that they would fund your small business now.

Maybe take up a collection among your friends? Well, they’re in the same position as you are, funding their own small businesses or working through the corporate ladder.

That leaves the friendly neighborhood bank. But how do you go about approaching the bank for a business loan? What do you need to bring or prove? Who exactly should you talk to?

What you need

There are a few things you’ll need to be aware of as you go into negotiations for a business loan with your local bank. Keep these in mind as you’re looking at banks and wanting to approach them for a loan.

Personal and business credit scores

Credit scores govern nearly everything in our world these days including a business loan. If you’re just getting started the bank may look at your credit score when determining if you’re eligible for a business loan. If your business has been operating with a business bank account already and accumulating credit on its own, they’ll factor in that score as well.

These scores determine if you and your business will be able to pay back the loan as time goes on. The higher the score, the better your chances of getting a loan and getting a larger loan as well.

Minimum requirements

Know what the minimums are for your lender before you approach the bank about a loan. If you’re behind in any of the areas you can take the time to build up to those minimums but often banks won’t lend if you’re not meeting those requirements.

These minimum requirements vary from bank to bank but often refer to credit scores, annual revenue, and years in business. These all determine your ability to repay the loan in the intervening years. Some banks will give you flexibility if you’re doing well in some areas and not others but more often than not they’d like you to meet all the minimum requirements before they extend the loan.

Provide a plan

Banks and lenders will often want to see and hear your business plan so they know exactly how you’ll be spending their money. These plans should include current and future financials, management team, and your product or service description. All of these factors give lenders a clear vision of your business and if it will be a good investment for them to give you the loan.

Paperwork, paperwork

Lenders are going to ask for a lot of paperwork and information as you come to them for a loan. These will often include your income tax returns both personal and business, balance sheet and income statement, business licenses, articles of incorporation, and financial projections if you’re just getting started.

All of this paperwork gives lenders a very clear picture of what your business looks like or will look like. Double-check with your lending institution on exactly what they need for you to receive your loan.

Utilizing your loan

You’ve done the paperwork, proved you can pay the loan, met all of the requirements, and now your bank account is full! How should you go about using this newfound wealth to enhance your business?

Make a comprehensive plan

Work with your partner or employees to decide where to dedicate some cash to grow your business. Whether you put that cash in immediately or set it aside for a later date, having a plan of where to spend the money helps you budget appropriately.

Within this plan, keep track of long-term costs and concerns and budget accordingly.

Launch something new

If you’ve got a loyal following now with your cash infusion might be a good time to launch a new product or service to drive the demand of your business. Carefully determine exactly how much money you’ll need to launch this service or product and budget to make it work.

Pay off old debts

With this cash infusion, this may be a great time to pay off old debts or restructure your financial operations. By getting rid of your old debts you’ll be able to start with a clean slate and grow your business.

Loans build business

Approaching a lender about a business loan can seem intimidating but it’s a fairly simple process.

Start by checking with your chosen lending institution on the minimum requirements for receiving a business loan. Each bank will be different but there are a few standards across the industry including a minimum credit score, annual revenue, and years in business.

They’ll also ask for several specific papers that will most likely already be part of your highly organized business including your business and personal income tax returns, financial projections, business licenses, articles of incorporation, and balance sheet and income statement.

Once you’ve got your loan in hand be sure to have a plan on how to spend it. Great ways to draw more business by utilizing your loan is by launching something new in your business or paying off old debts to free you up. Prepare for slower seasons by giving certain parts of your business a cash infusion whether that’s inventory, marketing, or equipment.

Keep loaning and keep growing!

How to endorse a business check

With all of the payment options, digital and physical, out there in the world writing a check and ripping it out of your checkbook can feel a little dated. A relic from a world that’s passed us by!

But having a checking account and writing those business checks can be a crucial part of owning your own business. This old-time form of payment gives you a physical representation of how payment worked, helps you keep track of the money in your account, and the processing time gives you a chance to make sure all of your dollars are in a row.

A business checking account and business checks can be a little bit trickier than personal ones. So how do you endorse your business checks to keep yourself and your company out of trouble?

How to open a business checking account

You’ve done all of the necessary paperwork with the government to get your business off the ground but now it’s time to do a little banking.

Pick a bank

Work with a bank that you’re comfortable with. Using the same bank you use for your banking is a great resource, to begin with, and it will give you a great platform with people who already know part of your needs.

Evaluate your needs as a business and pick a bank accordingly. Different banks will offer different perks for small businesses so ask lots of questions and be specific.

Perks from your bank

Look for great perks from your bank as you’re searching through options like competitive interest rates, what kind of transaction fees are enacted, and minimum account balance fees that will affect your account for the length you have it.

Bring your ID!

Now that you’ve registered your small business you’ll be issued a federal Employer Identification Number or EIN that will serve as your identification number throughout the business account process.

You’ll need your business’ formation documents as well that detail the set-up of your business. In addition to the formation documents, you’ll need your ownership agreements and your business license.

Writing checks can be a crucial part of your business

What can a business account be used for?

Your newly opened business checking account can be used for a variety of tasks within your company that will keep you up and running and growing.

Checking account

Using your checking account to pay for services or goods for your company helps you keep track of your overall accounts and saves you on credit card transaction fees and interest.

Savings account

This is where you can stash all your extra cash. Most banks offer competitive interest rates for business accounts that keep your money safe and earning interest while you keep working to grow your small business.

Merchant Services account

In an increasingly digital world, your business must be able to accept credit and debit card transactions for your goods and services. A merchant services account inside your business account allows you to process those transactions accurately.

Who can endorse a business check?

Several people in your business may be allowed to endorse a check so be sure to do it correctly is important. Make sure to provide your bank with the names of those who are allowed to endorse and deposit checks so that they can help provide security for your checks and cash as it’s coming in.

How to endorse a business check

On the back of your check, you’ll find a box designated for endorsement and everything from there falls into place.

Name of the business

The first thing you’ll need to do is write the legal name of the business whose account you’ll be depositing the check into in the endorsement box. This helps keep clear where the check will be deposited.

Sign here, please

Next, you’ll sign your name. The bank will have a list of authorized persons who have access to deposits on the account. Signing your name as it appears in their records keeps a close eye on anyone who works with the account.

Title here

After signing your name you’ll give your title. Most business bank accounts only allow a few people to be listed on the account and this will include owners, presidents, or managers. These people will be the only ones authorized to make changes to the business bank account.

Restrictions on the account

Lastly, you’ll write a restriction on the check to keep it moving clearly through the process. You’ll write things like “for deposit only” so that the bank has a note of where your money is going for sure. These aren’t required but works toward preventing fraud in case a check were to be stolen.

Authorized on the account

One of the most crucial aspects of a business bank account is who is authorized to make changes to the account. Employees do not have to be listed as an owner to be able to endorse a check but must be on the official list as a signatory with the bank.

Signed, sealed, delivered

Opening a business bank account is extremely easy and very beneficial to your small business. Not only do you get a checking account but a savings and merchant account in most cases as well. Check with your local banks to find the best interest rates and perks for your business.

As you open your account and get ready to endorse your first business check, make sure you know who is on your signatory sheet at the bank so nothing suspicious happens with your hard-earned money. Once you endorse your check with your business name, personal name, and any restrictions needed, the rest is simple: deposit with the bank!

Just like a personal checking account, a business checking account makes banking your money easy!

How to get a business credit card without a personal guarantee

Your business is booming and you’ve overcome so many hurdles to get to this point!

Making sure that your business is set up financially in every respect may lead you to jump through a few more hurdles but overall, it’s well worth your time to set up a business bank account complete with a business credit card.

All the details needed to open your business bank account and credit card may seem daunting at first but if you tackle it step by step, you’ll have a credit card in your business name in no time!

What is a personal guarantee

You’ve gone to the bank, you’ve got a booming business, now you want a credit card to help grow and expand that business.

And after doing all the paperwork, they’ve asked for a personal guarantee.

Your credit card will have a certain limit and a personal guarantee is what you give the bank saying you will pay back the debt on the card. Most new businesses fail within the first five years and a personal guarantee simply gives the bank or lender peace of mind that they’ll get their money back in one way or another.

Most personal guarantees are built into the application process. Since lots of businesses who are applying for credit cards are new, owner applicants are required to provide their social security number and have their credit scores checked to determine if they’ll be able to pay off the debt on the card.

Options without a personal guarantee

There are very few options for a small business to open a credit card without factoring in a personal guarantee. If it’s not a personal guarantee there are other hurdles to cross that allow the bank to be certain of their investment.

One of the few options on the market is a Brex Card for Startups which doesn’t require a personal guarantee but does require the business to already have $100,000 in the bank. So the bank account acts as a guarantee that the business will pay back the debts incurred on the card.

Corporate cards

The next step for start-ups and small businesses is a corporate card. This doesn’t involve the owners personally putting up a guarantee but allows the business to handle all the debt.

To be approved for this corporate card, a business has to be well –established, have a significant amount of revenue, and credit history of its own.

Drawbacks and pitfalls

There are very few business credit cards that don’t ask for a personal guarantee so be prepared as you work toward opening your business credit card that you may be asked to take on the responsibility if your business fails to pay back the bank.

You can counteract this by having a solid budget and business plan that will keep you from overspending and poorly investing your new credit line. Carefully borrow and only use what you need. The personal guarantee is only an issue if your business can’t pay the money back!

Interest rates

Most banks hold that they can raise the interest rates of your business credit card any time after a payment is late. A few will wait until a payment is 60 days late before raising interest rates on your business credit card.

Select cards

There are a few more business credit cards that will allow you to apply without a personal guarantee but read the fine print! Most of them can only be used at some of their issuing businesses. Cards from Shell, Sam’s Club, and SuperAmerica don’t require a personal guarantee. However, they only allow you to purchase products from them which limits the type of business you’ll be able to do.

Protect yourself and your business

Beyond just making a budget and spending conservatively, there are several things you can do to help keep your spending under control and your business afloat. If your business is afloat and working well, you’ll never have to worry about enacting your guarantee.

0% consumer card for business financing

If you’re purchasing several big things and won’t be able to pay them off in a month, investing in a 0% consumer card can help keep your interest rates down. Business credit cards are not obligated to keep interest rates the same until a payment is 60 days overdue so the cost can increase exponentially from month to month on bigger purchases.

Limits on users

Having a large line of credit can seem like a dream come true if you’re an irresponsible spender!

Most business credit cards allow you to set custom limits for authorized users that keep spending in check. These will even activate if a purchase is more expensive and will require an additional authorization to go through. This can even apply to a particular employee so you can keep track of who is spending money!

One more small business quirk!

There are so many quirks and sacrifices that small business owners make to get their dream off the ground. For the most part, setting a personal guarantee on a business credit card is just one of those quirks.

While there are a few business credit cards that don’t require a personal guarantee, they most likely still require you to jump through some hoops and have some sort of collateral to guarantee a line of credit.

Having a detailed plan, limits on authorized users and a solid budget will keep you out of trouble as you launch your small business, whether you have to put up a personal guarantee or not!

How to get a business loan for a restaurant

You’ve got a recipe or several recipes that you’re ready to share with the world and now seems like the perfect time to open your restaurant!

You’ve got the food, you’ve got a building, and you’ve got a plan.

Now all you need is some cold, hard cash.

Approaching a business loan for a restaurant doesn’t have to be intimidating and can be very beneficial for you and your partners. Finding the right lender, utilizing your loan, and building your restaurant business are all crucial steps toward a growing, thriving restaurant business.

Start with the numbers

As you get started looking for a loan to fund your restaurant, you’ll want to keep in mind several numbers that you’ll need to cover whether with the loan or with personal funds.

Loan guarantee fee

The goal is to repay your loan in total with interest but sometimes it’s just not possible. Whether you hit a rough patch personally or with your business, the loan guarantee fee is the percentage of the loan that you absolutely will pay back no matter what. Make sure to factor this fee into your calculations!

Loan repayment plus interest

This is the ultimate goal of taking out a loan. The lending institution will charge you a certain interest to use their money and slowly repay it. Check with several banks to find an interest rate that works with your budget and timeline.

Commercial lease

When running a restaurant, you want to have a prime location for your business. Most of the time you won’t be able to purchase this outright or it would be too expensive to do so. As you create budgets and make a financial plan, keep in mind that you’ll need to take out a lease on any space you wish to use for your restaurant.

Staff wages and benefits

One of the most important aspects of any restaurant or business is its employees. As you seek out a loan and budget for both it and your funds, keep a close eye on how much you’ll be paying your employees and what kind of benefits they’ll be receiving. This can easily eat up your budget if you’re not careful.

Types of restaurant business loans

There are several types of restaurant loans and choosing the right one for your business may take some research. Choosing the right loan for you can affect you for years to come so choose carefully!

Traditional commercial loan

This loan comes directly through the bank. To receive this type of loan you’ll need a high credit score and it may include a wait of up to 6 months or more before the money enters your account. While the wait may be long, your interest rates will be much lower than at other institutions which means lower monthly payments.

You’re able to choose between short and long-term loans with a traditional commercial loan but because of the instability of new businesses, a short term loan is a better bet. Loans like these traditional ones also require you to put up some type of collateral like a car, home, or business assets.

A business line of credit

A much more flexible type of loan, a business line of credit has several positive aspects that make it ideal for a new restaurant business.

This works much like a credit card where you’re approved for a maximum amount of credit but only pay on what you use. So if you’re approved for $10,000 and only use $2,000 your monthly payments will be based on the $2,000 you spent. This keeps it revolving as well; as you pay down the balance, you’ll open up more credit to use for expenses.

Because this is more flexible than a term loan, interest rates may be higher and you may not be able to take as much money out as you need to cover your expenses.

Small business loan

Most banks offer their small business loans through the Small Business Administration or SBA, a federal organization. Small business loans are ideal for applicants with a lower credit score and they have lower interest rates. These types of loans do require collateral and may take longer to get approved.

What you need to apply

You’ll need several things to apply for a  restaurant business loan so take the time to gather your information before you head to the bank!

Loan application

Your bank or lending institution will provide you with the loan application paperwork to fill out. Be detailed and careful as you fill it out!

Personal background and financial statement

This proves to the bank that you’re responsible and will repay the loan on time.

Profit and loss statement

These papers must be accurate within the last 90 days and include the last three fiscal years to provide the bank with the most up to date information.

Projected financial statements

This is your plan for the future! By giving detailed projections of where you see your business going within the next few years, your bank can extend the right amount of credit or a loan to you.

Ownership and affiliation documents

Bring these documents that detail what businesses you own, are affiliated with, or have partial ownership or affiliation with.

Business certificate or license

This will prove to the bank that you’re on the up-and-up and you’ve got all your ducks in a row.

Loan application history

If you’ve ever applied for a loan before, your new lending institution will want to know that. Bring any documentation showing which loans you’ve applied for and when.

Income tax returns

You’ll need to bring these statements for the last three years to your bank to prove your past tax payments and returns.

Resume

Bring along a personal resume for each of the owners and partners in your restaurant. You’ll want to prove to the bank that you and your partners are up for the task of running a new restaurant.

Business overview

This gives a detailed account of your business, where you’re going in the future, and how you’ll be using the loan that’s extended to you.

Don’t be daunted!

Applying for a loan for your restaurant business can come across as a lot of paperwork but taking the time to get it organized is worth it in the long run. Having a loan extended to you so you can set your dream in motion is an ample reward for an afternoon of paperwork!