Ask Entrepreneur - Money

What is the standard to buyout a seller financed note?

The man I purchased my business from wants me to buy him out early. I bought the business is 2008 on a five-year contract at 7 percent. He wants me to pay him all of the principle in 2009. I understand that contracts are usually purchased at a discount. What is the standard operating procedure on this type of buyout?
Galia Gichon

Do I have to file back taxes on my inactive corporation?

I started a California contracting corporation in 2005 after which I began to attend school out of state. I never used the corporation during the 2005, 2006, 2007 years. I am now filing back taxes on the corporation and reporting zero income. Are there any taxes due?
Nina Kaufman

What should I be aware of while creating an LLC with a foreign partner?

My potential partners are in Taiwan and mainland China. What issues should I be careful of before moving forward with my overseas partnership?
Nina Kaufman

How do I apply for government grants?

If possible I would like to receive only government grants -- I don't want any loans. I know government grants are out there, but I need to find legitimate ones, not these schemes. Where should I start?
Tim Berry

How do I find a debt equity backer?

I recently acquired a bankrupt company from a venture capital firm that invested over $7 million. I just purchased the major assets: websites, trademarks, branding, customer database (47,000 customers) and vendor lists.

It was a retail store making $8 million in sales in 2007. This store was to be chained into all 50 states but the capital group dumped it because of the economy. Now I am looking at major investment dollars to reestablish entry.

How do I find a debt equity backer? I'm looking at over $250,000 dollars right off the bat. The original owner is willing to lease me his retail building and staff me with one of his old managers. He won't support my venture, however. I'm looking at around 18 months to re-open.
Pam Newman

Are there ways to finance a startup business even though I have poor credit?

I am trying to start a wireless internet service provider company in Ohio. I have a business plan in the works. At this time I do not have any chosen management staff, nor do I think I need any. My personal credit was foiled due to my parents abusing it when I was younger. How can I get around my bad credit?
Pam Newman

How can I collect money owed for work completed?

I recently started a janitorial cleaning business. Our first job was subcontracted from another cleaning business. We completed three months of work and have yet to receive any payments for the total amount due of $5,400.

Two months ago I met with the cleaning contractor owner to come to an agreement. We signed a promissory note detailing a down payment and monthly payments to pay off the balance. I still haven't received any money. They will not answer any phone calls. What can I do to get the money owed?
Nina Kaufman

How do I separate personal expenses from business expenses?

I run a farm, and I use so many of my resources for both personal and business purposes--such as my telephone and my truck. Further, we consume some of the crops and livestock that we sell.
Pam Newman

Are there taxes on advertising sales?

I am starting an online magazine. Do I need to charge sales or other tax on the ad space I sell? Do I need an LLC in each state that I have a buyer?
Pam Newman

How does a small business owner set aside enough money to actually make a profit?

When we receive payment from a customer we usually have a bill or payroll to apply it to. If not, there is always something on the line of credit. Invoices being paid do not always have a corresponding accounts payable (on labor only jobs) but we may have an outstanding A/P from another customer whose is late paying. We know we are profitable but without borrowing on the line of credit, we do not have cash in hand to allow the owners to take a distribution.
Pam Newman

What fees should I expect to pay to receive help finding financing or investors for my business plan?

I have an investment company who wants to put together a financing package either through banking or angel investors. This company requires a fee of 2.77 percent of the total financing package put together. They require 10 percent of this fee to be paid up front.

The project they are offering to do for me would require about $750,000 total financing, part of which would be a credit line for operations. The 10 percent part of the fee comes out to about $2500. My concern is whether this is common to this industry. I do not like paying for services before they are rendered, especially where this portion of the payment is non-refundable.

I would like to know if the 2.77 percent is high or low for services such as are to be rendered and is it common to have to pay a portion up front.
Tim Berry

Do I have to pay income taxes on debt settlement?

I am contemplating using a debt settlement company to take care of credit cards and a medical bill. I heard that I might have to pay income tax on the saved amount of the negotiated debt.
Nina Kaufman

How do I beat the bank runaround?

I have been in the business world for 16 years and I've never borrowed money in order to survive. I own my entire inventory, which is valued at more than $100,000. I currently have more business than I can handle.

I want to expand my business, and I need $200,000 to do so. But the banks want me to take out lines of credit, which are expensive and usually fall short of the capital I need. This money would allow me to consolidate what debt I do have and open two more stores.
Pam Newman

If I sell non-refundable coupons in 2008 for products that will be available in 2009, can I count the revenue in 2008?

These coupons will be available to customers currently being served by us under exclusive long term contracts (average term - 7 years) for bulk chemicals. These customers can not purchase these products during the contract term from any other supplier. The purpose of the coupons is to encourage greater usage of our products when the use of the commodity during the customer's manufacturing process is partly discretionary.
Nina Kaufman