Building a Useful Budget

With any company, a budget is the bread and butter of running a successful business. The only problem is budgets are difficult to plan and maintain in the best of times. There is always unexpected events, cash flow problems, etc. that can cause a collapse in the budget. Being able to formulate a successful budget the will take you through the years is an important tool to have in your arsenal that keeps your business successful and running smoothly.

Budgets are the most important part of your business. They set specific spending limits on your business to ensure you reach your profit goals established for the year.  It is a month-to-month road map that guides you though the year. Think of a budget as providing control over your money and looking out for your best interests. If done right is can help predict peak periods so you know when to add additional stock and how to handle sale volume.

Plan to visit your budget monthly to update and see what impact this will have on your income and profit. You can see places where you could invest money into to create a better impact on the market and see where the cash flow is throughout the business.

You budget can help you adjust to unexpected changes. If a client cuts back it will affect how your company is run. You will be able to adjust and predict how long it will take for your company to recover. It can also allow you to adjust in other areas to absorb the impact.

Once you have established a good working budget your can tie incentives to how well you can stay on budget. It is important to maintain a healthy budget and set specific parameters for making a profit and meeting payroll. A solid budget can give the business guidance and help see the trends for the future.

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Budget Talks May Alter the Retirement Landscape

Many people contribute to some form of retirement saving account. Whether it is an IRA or defined contribution plan like a 401(k), Americans have contributed $8.82 trillion to some form of retirement account. With so much money stashed away, and not taxed, it not surprising that the government wants to get their cut, but the proposals will reshape the fundamentals of retirement finances and taxes in the US in general.

President Obama along with congress will begin debating the proposals October 1, and only time will tell how this will effect retirement saving in the future. Below are just three of the six proposals that could have the most impact on the retirement landscape. They are:

  • Inherited IRAs: With the current system, people, other than spouses, that inherit IRAs can spread out the withdrawals over their lifetime to minimize the impact on taxes paid. The proposal is for other people who are not spouses that inherit to empty the account by end of the fifth year after the original owner’s death. This means that more money will be required to be withdrawn from the account each year and the taxes paid will be considerably higher. There will be certain exemptions for beneficiaries, including those with disabilities.
  • Savings Cap: If this proposal passes, there will be a limit to the amount that can be contribute to retirement accounts. To do this all account would be considered as a whole, and when the total survivors annuity produces a joint payout of $205,000 a year then the person will no longer be able to contribute to their retirement accounts. While this probably will not affect most people now, as interest rates rise, annuities paying $205,000 a year would cost less and the cap would be lower.
  • Mandatory IRAs: This edict would apply to any business that has ten or more employees and have been in business for two or more years. It would require employers to develop and establish automatic enrollment in IRA for their workers. The contributions would be made through payroll deductions and the employees would be allowed to choose how much is contributed with 3% being the default amount. Employers would be granted tax credits to help design and establish plans, but this is just another thing business owners will have to worry about.
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