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Rules of Thumb and Business Valuation

December 3, 2018
By Shawn Hyde, International Society of Business Appraisers (ISBA) –

Take a look at your thumb. Now compare your thumb to another person’s thumb. There are differences in size, shape, manicure, strength, and flexibility between these two thumbs. Remember this comparison, as we will come back to it at the end of this article.

A Rule of Thumb is a brief measurement, typically based on a specific part of the operations of a business, such as revenues or some other easily calculated income stream, including Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). The application of a rule of thumb includes some basic math, usually multiplying the selected source of income by a range of numbers.

Each industry, or type of business, usually has three or more different valuation rules of thumb that could potentially be applied to it. This means there are literally thousands of different rules of thumb that are available to provide indications of value for different types of businesses.  (more…)

Filing IRS Form 1099-MISC For Independent Contractors

November 13, 2018
By ComplyRight –

Tax PrepIf you work with independent contractors, you have to file a Form 1099-MISC with the IRS at tax time. Essentially, the 1099-MISC is to contractors what the W-2 is to employees. It covers income amounts, while also indicating you haven’t deducted any federal, state or other taxes.

Here are answers to common questions about filing requirements:

Q: What is the purpose of the Form 1099-MISC?
A: The form is used to report payments of at least $600 to any service provider (i.e., contractor, freelancer, consultant) who isn’t an employee. If the service provided was less than $600, you don’t need to file a 1099-MISC. One monthly payment of $300 wouldn’t require you to file the form, for example. But two separate $300 monthly payments within the same calendar year would. (more…)

Guide to Setting Prices

November 5, 2018
By Jennifer Lobb –

Price TagPricing can and often does make or break your business, and hastily setting prices without addressing important concerns can result in a whole host of problems, including plummeting margins, decreasing market share, or brand alienation.

Every business is different, and in many cases, the pricing strategy you choose is entirely reliant on the industry in which your business exists. However, though differences are plenty, there are some steps that, when incorporated into pricing efforts, will help you set prices that will support your financial goals while growing your business. (more…)

How to Hire Your First Employee (& When)

October 29, 2018
By Linsey Knerl –

EmployeeCongrats! Your small business is growing, and you’re starting to consider if it’s the right time to add on to your talent pool with your first, real hire. Up until now, you may have been relying on your own hard work, independent contractors, or even family members to get all the necessary tasks in your company accomplished. So, how do you know when you’re ready to take the plunge and raise your status to legal employer? These guidelines may help.

Know if You Need an Employee Now

Many tasks related to your business could be done by working with another independent contractor instead of an employee. While the determination should be made by following the laws stated for your state or local area, it’s generally OK to hire a contractor for tasks not specific to your business. Having someone come in and clean your t-shirt printing facility, for example, could be a freelance opportunity. Requiring someone to run your shop, print t-shirts, and deal with customers, however, is more likely an employee situation. Before you look at hiring an employee, be certain that it is indeed an employee you need to hire.  (more…)

What’s a Fair Price for a Privately Held Company?

October 22, 2018
By Shawn Hyde, International Society of Business Appraisers (ISBA) –

Publicly traded companies are valued every day on the stock market. But how do private business owners determine what a fair price is to buy out their partners? At what price they should sell their company? What’s the value of a 10% ownership interest in their company for gifting purposes?

The International Society of Business Appraisers (ISBA), www.intlBCA.com, exists to teach people how to answer these and other questions relating to the values of small businesses. Appraising privately held businesses involves logical thinking, financial analysis, and a healthy dose of practicality. (more…)