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Smart Credit Cards are an Idea Whose Time Has Come

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Smart Credit Cards

 

It’s amazing to see how credit cards have evolved over the years and while the first ones were issued back in 1951 it wasn’t until the 1970’s that the magnetic stripe changed the face of financial cards.

But today who would have thought that the black or brown stripe you see on the back of your credit cards would come up against a far superior and smarter adversary.

Basically there are two ways a smart card is different from a magnetic stripe card: the amount of data that can be stored is much greater, and some smart cards can be reprogrammed to add, delete or rearrange information.

One of the companies making headway into bringing these ‘smart’ credit cards into the 21st century is a company called Dynamics. Just last week it won the People’s Choice Award at the DEMO conference held in Silicon Valley, California.

At the conference CEO; Jeffrey Mullen demonstrated the Dynamics Card 2.0 and how a cardholder can switch the card from one account to another with the press of a button.

So with this ‘smart’ card you can literally have your personal and business account accessible on one single credit card.

Another cool feature he showed was an added level of security that no other typical credit card or commercial credit card could possibly compete with.

The credit card numbers on the face of the card would be obscured so nobody could view them unless the cardholder entered a security code. How’s that for an extra level of protection?

Dynamics Card 2.0 includes an Electronic Stripe which is the world’s first fully card-programmable magnetic stripe that can be read at any existing point-of-sale (POS) magnetic stripe reader.

The device itself can change any bit of information on this programmable stripe at any given time. What’s also impressive is the fact that this new technology does not require any change to the 60 million magnetic stripe readers currently operating today.

So when can we expect these smart credit cards to hit the marketplace?

According to Mullen there are financial institutions that have these cards in the field for testing as we speak. So you can expect this new generation credit card to become available very soon.

To learn more about the Dynamics Card 2.0 you can watch Jeff Mullen’s DEMO presentation.

Looking to rebuild your business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit solutions membership helping business owners build small business credit. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Top 3 Reasons to Incorporate Your Business

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Incorporate Your Business

If you’re just starting a new business it can be tempting to decide on operating your business as a sole proprietorship simply because it’s one of the easiest structures to create because you don’t have to do anything to start one.

You just decide to run your business in your own personal name or through a fictitious name. You don’t even have to set up a separate bank account or maintain business records but I strongly suggest that you do.

This particular structure is also called a Schedule C business, because when you file your personal 1040 tax returns the income and expenses for your business are reported on a Schedule C that’s attached to it.

Even though the sole proprietorship is easy there is a great deal of risk that comes along with it. So before you decide to go the easy route let me share with you the three main reasons why you should consider incorporating your business.

Liability

Liability is major issue because in a sole proprietorship there’s no barrier between you and your business. If the business can’t pay its bills, creditors will look to you personally to make up the difference. If the business buys a vehicle, you buy that vehicle. If a client gets angry and sues the business, you get sued too! If you have employees and they get into trouble on the job, it’s your trouble, too. You and your business are inseparable. You’re one big target. Even though there’s no cost in selecting a sole proprietorship there’s no protection either.

Taxes

Anyone who’s ever collected a paycheck knows that you lose 6.2% of the first $106,800 of your gross salary on Social Security, and another 1.45% for Medicare (except Medicare has no cap – you pay on every dime you make.

But what you may not know is that employers are required to match those amounts, along with any state payroll tax amounts. So that’s a minimum of 15.3% right off the top of your income. In the right incorporated business structure you can minimize the hit and avoid payroll taxes on a good portion of that income. If you’re using a sole proprietorship or a general partnership you’re stuck.

Audit Risk

According to the IRS’s own statistics, sole proprietorships and general partnerships have a 1 in 7 chance of being audited, versus 1 in 50 or higher for incorporated businesses. The IRS figures that the more casually a business is operated, the more likely it is to have some mistakes in its record-keeping and improper deductions that can be denied or reduced.

Now that you know the main reasons why you should incorporate your business here are the four main types of structures to choose from:

According to entity specialist Megan Hughes of U.S. Tax Aid these are considered “safe” business structures because they offer protection for their owners. Each structure listed is treated as a separate being with its own tax registration with the IRS and state agencies. It files its own tax returns and it can also create its own credit files completely separate from that of its owners.

So before you decide to incorporate your business make sure to take the necessary steps in selecting the right structure that best fits the needs of your business from both a tax and asset protection standpoint.

If you’ve been doing business up to now without a business structure, both the IRS and your state government default your business into either a Sole Proprietorship or a General Partnership so consider incorporating your business and avoid putting your personal credit and assets at risk.

Ready to incorporate your business but have questions? Contact my entity specialist Megan Hughes at [email protected]. Be sure to let her know that Marco referred you!

Looking to start building business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit builder system providing no personal guarantee business credit. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Benefits of Forming an LLC for Your Small Business

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Forming an LLC

 

While all types of entity structures serve a specific purpose forming a Limited Liability Company (LLC) for a small business is growing in popularity. It’s a structure worth looking into from both a tax and asset protection standpoint.

LLCs are great for businesses that:

  • Are being used to invest in appreciating assets such as real estate, stocks, bonds or other securities
  • Want to have the maximum flexibility to distribute profits and losses amongst owners (called Members)
  • Anticipate that all of their Members will live in the United States

LLCs allow you to:

  • Have flow through taxation (i.e., the profits and losses flow through to the personal tax returns of the LLC’s Members), avoiding the double-taxation of C Corporations
  • Protect the assets of the LLC from lawsuit judgments against individual Members
  • Protect your family home and assets without losing the valuable IRS homeowner deduction
  • If set up properly, to allow for estate-planning and succession to your children on a tax-free basis through gifting

Instead of shareholders, a limited liability company (LLC) has members, who either operate the LLC directly or leave it to be managed by a separate group of Managers, or Managing Members.

Members and Managers are protected from liability in the same way that officers, directors and shareholders of corporations are which means that as long as they are acting legally and in the LLCs best interests, they will not be found liable for debts or other liabilities incurred by the LLC. The most that you can lose as a Member of an LLC is what you’ve put into it.

Most LLCs do not pay separate taxes and often don’t even file tax returns. Like an S Corporation, the net profits of an LLC are distributed to the Members in proportion to their individual ownership percentages. Members must then declare and pay taxes on their individual share of the LLC’s net income in the same way that S Corporation shareholders do.

LLCs are also ideal structures for holding real estate. They receive very favorable tax treatment with capital gains, which makes them very attractive business structures to not only hold real estate but other appreciating assets too. According to my good friend and entity specialist, Megan Hughes of U.S. Tax Aid, the three top reasons are protection, cost, and speed of creation.

LLCs also have a special legal protection in many states that corporations do not. If you are sued personally and own shares in a corporation, those shares can be seized and sold by a judgment creditor. That means you could lose control over all of the assets in that corporation. But an LLC, on the other hand, receives special legal protection in many states that prevents a creditor from seizing a Member’s ownership interests. The assets in that LLC stay safe.

Not all states offer this level of protection, so you might want to discuss things ahead of time with your legal advisor to see what the status of LLC law is in your state.

If you’ve been doing business up to now without a business structure, both the IRS and your state government default your business into either a Sole Proprietorship or a General Partnership so consider forming an LLC and avoid putting your personal credit and assets at risk.

Are you already incorporated and ready to build business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit solutions membership helping business owners build small business credit. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Commercial Credit Cards: 7 Key Steps Before Signing the Dotted Line

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Commercial Credit Cards

 

Major credit card issuers are targeting small business owners in an all out effort to expand its commercial credit card business.

According to Synovate, issuers sent out a whopping 46 million commercial credit card offers in just the first quarter of 2010! That’s over a 250% increase from the previous year while consumer credit card offers only increased by 29%.

With these types of numbers it’s led people like Senator Charles Schumer to believe that credit card issuers are attempting to evade the new restrictions on consumer cards.

Even though the CARD Act does not address commercial credit cards business owners should take a careful look at the benefits that these cards provide over personal credit cards.

Here are some of the major benefits:

  • Obtain higher credit limits
  • Build business credit files
  • Protect personal credit files
  • Control employee spending
  • Take advantage of business perks

These benefits alone should give you reason enough to utilize commercial credit cards for your company. But before you apply here are my seven key steps you should take in order to select the right cards that best fit the needs of your business.

  1. Complete a Credit Assessment – Determine what type of assets you and your company have so you know what types of credit types and limits you can expect to qualify for.
  2. Select Business Credit Applications – After reviewing the six major types of business credit applications decide which ones that your company is willing to apply for. This step alone will prevent you from making costly mistakes and taking unnecessary risks.
  3. Select Commercial Credit Card Types –Each type of card has its own unique purpose so if you are looking for the best small business credit card you should know every type of card that’s available. This will enable you to decide what types of cards will meet your company’s needs.
  4. Identify Cards Matching Your Criteria – Once you have identified the applications and types of cards your company is looking for now you will need to locate the cards that fit your commercial credit card criteria.  This makes the whole process so much easier and less time intensive because you know exactly what you’re looking for.
  5. Review Approval Requirements – As soon as you find cards that match your criteria review the card’s credit qualifications. For example, some cards may require a personal guarantee if your company does not meet certain requirements so be prepared ahead of time before you apply.
  6. Set User Guidelines – If you plan to issue cards to employees be sure to set user guidelines as well as credit restrictions with the card issuer so you can protect your company.
  7. Set Credit Guidelines – As a company it’s vital that you maximize the payment experience being reported on your business credit reports. For example, you decide that each card will not exceed 30% of the debt to credit limit ratio and all invoices will be paid a minimum of 10 days ahead of the due date.

All of these steps are meant to serve as a helpful guide and a reminder to you that all commercial credit cards are not created equal. Choosing cards that meet the guidelines you set will not only empower you but protect you from risks that you’re not willing to take.

Looking for the best commercial credit cards for building business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards,commercial credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A step-by-step business credit builder system for busines owners. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Extending Credit to Customers: Key Points to Remember

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Extending Credit to Customers

 

During tough times business owners are looking to build more customer loyalty and discover new ways to increase sales. You may have already implemented the specials, bonus gifts, certificates and discounts but there is one option that can make a dramatic impact to your bottom line.

This has proven to improve sales by as much as 50% and may even attract a new kind of customer to your business. By extending credit to qualified customers you not only improve sales but also offer an excellent alternative to those wanting to conserve their cash.

Extending credit allows customers to purchase your products and/or services upfront but defer the actual payment for a later date. In our industry this is known as trade credit or vendor credit. The larger the purchase amounts your average customer makes in your business the greater the risk your company will be exposed to.

If this sounds like a risk that you are not willing to take because you have hard costs that must be covered keep in mind that you are the one that decides what the credit terms will be.

Some businesses are willing to extend 100% financing for their customers while others require a 25% or even 50% down payment towards the amount of the purchase price.

So before you get started there are several key points to remember:

Credit Risk Assessment

Decide what amount of risk your business is willing to accept including whether it has the financial resources to support the transaction. You will also need to consider the chances of never being paid on a purchase as part of this assessment.

Credit Terms and Conditions

Decide how much credit you are willing to extend as well as how long you expect to wait for payment. The terms and conditions can vary all the way from expecting payment in full in as little as 10 days to as long as net 90 day terms or even more.

Requiring a down payment can also minimize your risk which many companies utilize for the first few purchase orders prior to accepting 100% financing.

Credit Approval Qualification

Will you extend credit to both consumers and businesses? If so, how will you determine whether or not they are creditworthy?

For consumers you may decide on a credit application with references or take it a step further and include a credit check with a consumer credit agency.

For business customers you may want to include a business credit application along with checking their business credit file. There are a variety of reports you can pull and if you expect a large amount of applications you can even subscribe to a business credit bureau for unlimited reports.

Credit Policy

Develop a credit policy that covers the entire process of extending credit to customers. From application submission all the way to the collection process if it’s required. The more detail you have in place the better your accountant, sales staff and management can facilitate the program.

Be sure to also look at a customer’s purchase history by conducting a credit review every several months. With a review you may consider increasing the size of their credit limit especially if they are requesting an increase and have a solid payment record to back it up.

By extending credit to customers you can separate yourself from the competition, increase sales and gain a greater market share. While there is risk involved use the key points outlined in this post as a guide to extending credit.

Ready to get listed with the business credit bureaus? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, merchant cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit solutions membership helping business owners build small business credit. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

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