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Monday, December 2, 2013

You or your partner is pregnant, should you start thinking about life insurance?

New family members require life insurance adjustments
Pregnancy is a major life change and responsibility
Pregnancy is a time for preparation. You prepare the baby’s bedroom, you buy the baby’s crib, stroller, car seat and anything else a baby might need, and perhaps most importantly, you prepare yourself for the birth of a little person who will be completely reliant on you.

While this can be an emotional preparation, it is also a financial preparation too. You will need to make sure you can take care of this person, and provide for them financially. While it’s not something that everyone like to think about, this includes life insurance (click here to find out more).

Benefits of life insurance as a parent

There are numerous reasons to invest in life insurance as a parent. If you are pregnant, or your partner is pregnant, then this is a good time to mull over these reasons, and consider your life insurance options.

Take care of your partner

If something were to happen to you, could your partner cope financially? Paying the mortgage, the household expenses, the school fees, the grocery bills and everything else? Life insurance could help to cover all these expenses in your absence.

Take care of your children

If you have dependents, it’s important to consider how they would cope if you were no longer around. This includes your own children, elderly family members or anyone else who relies on you financially. Again, life insurance could provide for their day-to-day finances.

 Chart of a life insurance policy
How a life insurance policy works
Life insurance companies help ease the financial stress of life changes
Provide for your children’s carers

If you or your partner were no longer around, who would take care of your kids? Perhaps it would be your parents, your partner’s parents, or another family member or friend. Could they cope financially with the responsibility of your children? Life insurance could help out.

Take care of your partner’s future

If you’re not around, your partner may struggle financially. This can include day-to-day financial struggles, and it can also include not being able to put aside enough for retirement. Life insurance can help your partner prepare for the future, even if your paycheck is not around to help out.

Take care of your children’s future 
School and college fees don’t come cheap. Most parents try to put aside money for their children’s education, but if you were not around, would that still be possible? Life insurance can help provide for your children’s education and future, no matter what they decide to do.

Cover financial responsibilities

If you have a mortgage, a business or any large debts, it’s important to think about what would happen to them if something were to happen to you. Life insurance can help to pay off loans and mortgages, and could help offer financial cover for your business.

Cover funeral expenses

Again, this is not something everyone likes to think about. However, funerals are expensive and someone has to pay for them. Investing in life insurance or funeral insurance means funeral expenses can be covered, and your loved ones won’t have to bear the financial burden.

Image licenses: Justin Arndt, CC BY-SA 3.0, David Monroy CC BY-SA 2.0

Why the Obamacare part-time shift won't hurt or help anyone

Obamacare impacts business profitability
Health insurance costs worry employers
By Dennis Aimes

There has been a lot of hay made recently about the impact that the Affordable Care Act will have on the way that employees in the United States are scheduled and hired.

This opposition has stemmed primarily from businesses insisting that they won’t be able to survive if they are forced to offer their employees insurance. They claim their only option will be to shift their full-time employees to part-time, and most of the noise is coming from the service sector since those employers are less likely than any other to offer health care now.

Economic analysts and social commentators alike have been ringing their hands over how many employees will lose their full-time work, and the fact that most of those workers will be minimum wage already, and therefore least able to absorb the financial hit. While it is true that employers often threaten and even punish their poorest workers for decisions designed to lift those very people out of poverty, in this case their threats are little more than that.

The realities of the service industry

The reality is that most of the jobs in the service industry are part-time, minimum wage jobs. They have traditionally been part-time jobs and they have never come with benefits. Some believe that these positions are still largely filled by teenagers trying to earn some extra money after school or over the summer, but that isn’t the economic reality of the twenty-first century. We’ve become a ‘service-based economy,’ which means that millions of adults struggle to support their families by working these jobs.

Today’s workers don’t apply for food or customer service jobs because they think they’ll make a good living, or because they think they’ll get decent benefits. They apply for these jobs because those are the jobs that are available and for which they are qualified, and those employers have always been happy to shell out as little as possible to those with the fewest alternatives.

The risks of uninsured service employees

Imagine for a moment that you were interested in finding the Typhoid Mary of the 21st century. Would you look in an office setting? On Wall Street? More likely you would look behind a register or in a kitchen. Customer service professionals handle your money and your purchases, and hospitality workers prepare your food and manage the hygiene of your hotel room.

These employees have never been offered insurance by their employers, have always been relegated to part-time, and very rarely creep significantly above the minimum wage. They aren’t offered paid sick days and they can’t afford to see a medical professional, so when the prep cook at your favorite restaurant gets sick he comes to work anyway, and that is a great way to spread illness, not only to the customers but to the rest of the staff.

The cost of insuring the rest

Some business owners have voiced strong opposition to the Affordable Care Act, and many have made claims about the potential costs that could be passed on to customers. John Schnatter, CEO of Papa John’s Pizza suggested that the reforms would be the equivalent of an eleven to fourteen cent increase for each pizza sold. Independent researchers have estimated that it would be closer to three pennies each, but even working with the higher number, most Americans have said that they would be willing to pay a little more in order to ensure the worker preparing their food could have access to health care.

How service employees live today

It is particularly difficult for minimum wage employees to feel sympathy for a restaurant like McDonald’s whose profit margin hovers consistently around 20%. They recently provided their employees with a pamphletdesigned to help them better budget their money. While this may seem like a reasonable item to offer to your workers, upon closer examination it revealed the real flaw in the service industry model.

Their own budget guide assumes that their employees will have a second job and pay only $20 each month for health insurance, and it fails to account for child care, transportation costs such as gas and vehicle maintenance, food, or heat.

Ethical employers who invest in their employees

If all companies treated their employees this way we might have to assume that they really don’t have a choice, but that just isn’t the case. Costco, for example, pays its employees an average of $17/hour, and provides 82% of them with high quality health insurance. The result is loyal and happy employees, the lowest rates of employee theft in the retail industry, and $43 billion in 2012 sales.

A recent Time magazine article put the spotlight on a small but growing chain in the Western US called Winco. This company is often able to undercut Wal-Mart’s prices while treating its employees like an investment. Winco is actually employee owned, which has led to policies such as making health care available to any employee who works more than 24 hours in a week and setting up impressive pensions, a concept generally unheard of in the world of retail.

The actual impact of the Affordable Care Act

For most of the 3.6 million minimum wage workers in the US, and the even greater number of people who have been given less than a dollar raise over that, the reality is that they already have to have two jobs in order to work more than 30 hours a week. At least since the 1990s it has been understood that any job behind a register or in a kitchen will be part-time in order to protect the employer from health care costs. The aspect of the Affordable Care Act that is most likely to impact their lives is the expansion of the Medicaid program, for which they may now qualify.

Employers who prioritize loyalty and engagement in their employees are already offering them the opportunity to survive with one job, and they’ll be just fine under the new law. Employers who prioritize cost cutting at the expense of both their customers and their employees will have to face the consequences of those choices, both financially and in terms of customer perception. Employees who already scrape by on minimum wage will likely be able to get in on one of the socialized health care options in the US, and that will genuinely help millions of Americans.

Abuout the author: Dennis Aimes is an insurance adviser and a writer for HBFinsurance in Australia.

Image license: 401(K) 2012, CC BY-SA 2.0

What type of information does your invoice absolutely have to have?

Complete invoices track transaction history
Invoices should provide a complete transaction record
By Erin Steiner

If you've never had to build your own invoice before, the process can feel incredibly complicated.

As you scroll through templates and forms online, it seems like there is so much information that you need to include (or even come up with for the first time)!

The truth is that your invoices do not have to be complicated at all.


Your invoice needs to contain, at a minimum, the following information:
    • The date
    • Your/your business's name and contact information
    • Your client's name, contact information, and account number (if you assign account numbers to different clients)
    • What you're billing for
    • The cost of that item or service
    • Total amount due
    • Payment instructions
    • Payment due date
    • A tracking number
Invoice details explain transactions
Itemizing invoices clarifies costs
If you are billing for more than one item or service, you will want to make sure to list them individually and include each item's cost.

Ensure that in addition to listing each item/service on your invoice, you write a brief description of those items and services. This way, even if you list your items by inventory numbers, your customers will know exactly they are paying for.

It's good to itemize the total due. This should include a subtotal of items sold, any charges for taxes or other fees, etc. This way the customer can literally see why the total amount due is different than the total amount of each item sold.

Including a sentence or two that explains exactly how the client should pay you is important - especially if the types of payment you accept are limited. A simple "Send checks to ... " or "Make your payments online at ... " is usually sufficient. If you don't want your clients paying in cash, make sure you mention that, too.

The due date is imperative. Without a due date, your payee can drag their feet and pay you whenever they feel like it (even if that is years from now). A due date allows you to charge late fees if they do not pay you before the date you've listed. It gives you legal standing if you have to take a client to small claims court to get payment from them.

A tracking number allows both you and your clients to literally track how much you have billed and how much they have paid. It makes it easier for everyone if someone has a question or concern about the invoice you've sent. It is also helpful, if accepting check payments, to ask the client to write the tracking number on the check so you know which account to credit.


If you wanted to, you could simply type all of this information into a Word document or even write it down on a piece of paper and call it a day. Some companies will use Excel to create a template. Most professionals, however, prefer to use online invoicing software to help them create a professional-looking document. This way you simply input the information asked for by the software and click send!

Still, it's good to know what to include should you ever find yourself without access to your software. Computers do still go down once in a while

About the author: Erin Steiner is from Portland, Oregon. She covers small business, pop culture, and many other topics for a variety of different websites.

Image licenses: Wufoo Team, CC BY 2.0; 2. Keith Ramsey, CC BY-SA 2.0  

Sunday, December 1, 2013

The pros and cons of limited vs. incorporated business in Canada

Different business structure suit businesses differently
Canada has three legal business entities
It’s not an easy question for business to decide on. There are some real benefits and negatives for each of these options. So get informed before you make the big decision.

According to the Globe and Mail, running your business as a limited partnership or sole proprietorship can seem like the right solution, until you get a boost in your revenue and find yourself facing a large tax bill that is billed at the personal rate.

The founder of a Toronto-based consultancy told the paper he would have some a whopping $40,000 in taxes if his sole proprietorship was upgraded into a corporation.

Remember, there are three types of legally recognized businesses in Canada: a sole proprietorship, where the business is owned by a single person; a limited partnership, where the business is owned by two or more people; and a corporation, the biggest option of the bunch, which can be owned be any number of people.

The sole proprietorship, since it is owned by one person, gives that person all legal rights and responsibilities tied to the business. The sole proprietorship has to be registered in order to collect and then pay provincial and federal sales taxes, which must be done when it has more than $30,000 a year in revenue.

Partnerships usually see two or more people pool together their financial, technical and managerial resources and abilities to run a business. Though they’re not required to together register a partnership, it definitely lends more credibility and protects the business name. As with a sole proprietorship, income as taxed as a share of the owners’ personal income, and each partner is responsible for the other partners’ actions.

Corporations are separate and distinct legal entities that stand apart from the owners of the business. Any number of people can launch a corporation, and it can buy, own and sell property on its own or be involved in legal action. Corporations must file their own tax returns that are separate from their owners’ personal tax returns. Those owners are also protected from the corporation’s liabilities.
Corporations are usually designed Inc., Corpo., or Ltd., indicated it’s a separate entity from its owners.

With sole proprietorship and a limited partnership being so similar, there are really only two options of staying self-owned or incorporating. The owner or owners of the business are solely responsible for its taxes, decisions and potential lawsuits.

With a partnership or sole proprietorship, owners are considered part of the business. That means they’re held personally responsible for every move the business makes. Meanwhile, entrepreneurs who go the route of incorporation are legally treated as a separate entity and are protected from being personally held liable for the business’ actions.
This means that for business working in volatile or high-risk areas, incorporation – and the legal protections it brings – can be a highly important move. For example, if your business is active oversees, it can be exposed to risks in the countries it operates, including lawsuits over any possible impact on people and the environment abroad.

What’s more, when the business really starts to grow and make big decisions such as signing leases and hiring staff, incorporating can be the right decision since it will keep the owners free from personal responsibility if the company can’t pay its bills and goes into default.

However, sole proprietorship or limited partnerships definitely have their own advantages. For example, while the owner or owners pay a high personal tax rate on their business’ revenues, they can also gain a big tax advantage by writing losses off against personal income. For this reason, owners of new businesses may prefer to avoid incorporation. 

This is especially true for owners who are looking for their new business to provide a second income. But according to a corporate governance and organization expert at the Richard Ivey School of Business at the University of Western Ontario, once revenues start to trump owners’ living expenses, they should consider incorporating. This will give them a lower tax rate than they were previously paying. And incorporating a business can help loosen the purse strings of government. A corporation, unlike a sole proprietorship or limited partnership, can qualify for government small business and employment grants. This also strengthens its legitimacy and can help bring on certain clients who are looking for markets that the business is a serious one.

Plus, corporations like to work with other corporations. Large companies will only work with other corporations. This is because business incorporations provide some stability in transactions because they have access to omissions and general liability insurance. Those are options that partnerships and sole proprietorships simply cannot get their hands on.

About the author: Being a business personality, Sandy J has turned his career path to business forecasting. He is very much passionate about researching and sharing his valuable lessons in business.

Image license: MikeKorn, RGBStock royalty free