Thursday, July 1, 2010

Get your records and registrations going as soon as possible

As I mentioned earlier, get your business registered as soon as possible. Get your business credit card going too, rack up some good credit on it. Yesterday I received two major articles in the mail, one good and one bad. the good? A re-sellers permit for the state of California. If you sell anything you need to tax it, and you need a permit to do so. And the one vital reason you need this as soon as you can get it: TAXES! The last person you want to screw with is the government...it's hard to win a fight with them, especially if you are wrong. So with my new re-seller's permit, I don't have to pay taxes of my massive book order which is right around the corner. Imagine, buying 3,000 copies of your own book, and then paying taxes for each one. Absolutely insane right? If this is a new concept to you, think of it this way: you are a re-seller. You are manufacturing books to sell and the end buyer pays taxes on the books they buy (much like you pay taxes on items at target or the grocery store. The same is for you since you own your own business. You buy the product (thousands of books) and the end buyer pays the taxes on them. Had I not gotten this permit in time, I would need to pay for the taxes for the books up front (which would royally suck) and then be slowly compensated one by one with each purchase. And think of the nightmare if you get distribution! How in the world are you supposed to get your "tax" money back?

So the BAD form I got in the mail was a DENIAL letter from my small business loan lender. I filled out a pre-qualification form online (extreme minimal information) and was told "Congratulation, you may apply for a small business loan," and to print out the full application and mail it in. As the days passed, I carefully filled out the application to receive in the mail... a denied letter. What? WTF? "Insufficient lender matrix score" was checked off and that alone. I have a good credit score, in fact, it's listed at the bottom section of "very good." So why this? Not sure exactly, but for the most part there are two reasons: 1 - my business has only legally existed for 4 months and 2- I haven't utilized my business credit card enough. (I have good credit, but could use a little more).

There is no telling why I was denied. The lender for this loan has a serious problem with people defaulting on their monthly payments. It's frustrating that my business could make $0 and be a financial catastrophe and I'd still be able to pay this loan back 100% because I have a day job, but you know what? that doesn't matter. This has to do with my business and to these people, it's worthless. No idea what I am going to do with this. I am still able to apply, but will need to attach additional materials (business plan, example) to make my case. On one hand, I am truly grateful my parents are loaning me some money so this is not an emergency, otherwise I would be in a very terrible spot. But it would be nice to be covered for a lot of the expenses yet to come.

What should you do? Register your business now. You don't need to make any money, but the longer ti's registered the better off you are. Also utilize your business account, which once you are registered you need to open ASAP. Get the credit card and use it for all business expenses and pay it back 100% each month. Also, unlike me, it would be wise to map out all expenses and make sure they are all covered well in advance. It's easy to some degree to cover monthly expenses for your book development aside from the massive printing you may want... which is what I about to start. Had I registered this business when I really started it, back in 2009, and got my ducks in a row back then, I'm sure this situation I have found myself in would be in a much brighter patch of grass.

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