Sole Proprietorship

January 31, 2013





Often when business owners start a business, they start out as sole proprietors. As a sole proprietor, the owner is the operator of the business. Many artisans and self-contractors operate their businesses as sole proprietorships because they are easy to set up. They owners use their own social security number to pay taxes. Sole proprietors often do not delegate their duties and they do not have to set up a trade name in order to operate the business.

Examples of sole proprietorships are hair dressers, landscapers, artists, designers, and daycare. These workers typically make under $100,000 per year and do all the work themselves. The business owner would be responsible for all debts and he/she alone receives all of the profits. They only disadvantage of the sole proprietorship is that he/she would have difficulty receiving funding or a business line of credit from a bank.

In order to qualify for funding, a business owner must change to another form of organization, such as a corporation, S- corporation, LLC, or partnership, which would give him more potential for profits.

Individual Retirement Plans The IRA’s

January 20, 2013


Most people who have planned for their retirement have either Roth or traditional IRA’s which they will use to transfer retirement plans from their employers upon terminating employment. While accumulating retirement income in these plans, it is wise to solicit the help of a CPA in determining how these plans will be taxed at year end and during the distribution phases of these accounts.

A Traditional IRA is a retirement plan in which an individual can accumulate money for retirement over and above the 401(k) or other retirement plan, which one may have at work. Unlike the 401(k), the traditional IRA allows for accumulating money for retirement with after-tax dollars.

The money can be invested in mutual funds, or stocks and the earnings can be reinvested and grow tax deferred, as long as the money remains in the account until age 59 ½. Once the person turns 59 ½, he/she must pay taxes on the money which is withdrawn from the account. By this time, the person in a high income tax bracket may be in a lower tax bracket and therefore will pay a lower tax rate than the year when the money went into the account.

The maximum amount which a person can contribute to an IRA is $6000 per year and the person can no longer contribute money after age 70 ½, which is the latest that the person can begin to withdraw money from the account.

With a Roth IRA, the owner of the contract can withdraw money before age 59 ½ without incurring the 10% penalty in certain situations.. It is suitable for accumulating money for college funding, and other large expenses which must be withdrawn before age 59 ½.

For example. a contract holder may withdraw money from a Roth IRA without incurring a ten percent penalty if he/she becomes permanently disabled, has to withdraw money to pay medical expenses for which he/she will not be reimbursed, he/she plans on withdrawing money to purchase a home as a first time home buyer, needs to pay higher educational costs for the family or self, has been collecting unemployment for more than twelve weeks and needs to pay medical insurance premiums, owes back taxes to the IRS, or has reached age 59 ½. If the contract owner dies before age 59 ½, the estate would not be required to pay taxes upon inheritance of the account.

There are many types of annuities to invest the IRA, if one is seeking safety. With the recent occurrences in the stock market over the last six years, Baby Boomers in particular may be a little hesitant about investing in the stock market or mutual funds. Additionally, an annuity may be the right vehicle for someone who needs safety, but more of a return than the banks are offering. To accurately assess your needs, a qualified insurance agent can offer assistance.

Financial Literacy Conference

January 14, 2013

The National Coalition of 100 Black Women – Rhode Island Chapter is planning a conference, “Building Assets and Strengthening Families,” at the Urban League of Rhode Island, 246 Prairie Avenue, on February 23, 2013 from 9:00 am – 5:00 pm. This would be the first event, of its kind for the organization.

Scheduled speakers are Dwayne Keyes of Bank Rhode Island, Garfield Davidson of MetLife, Manny Barrows of Bank Rhode Island, and Michelle B. Davidson of Trinity Mortgage Solutions.

The Rhode Island Foundation, Bank Rhode Island, and The Black Philanthropy Initiative are sponsoring the event.

A Prosperous New Year to All

January 2, 2013


We have had a very rocky 2012 with all the natural disasters and violence  that occurred to innocent people.  Because of this, we are going to take more responsibility in keeping our families safe.  This means making better decisions and not leaving things to chance.

We are going to have to make difficult decisions involving our financial security, including the decision to purchase life insurance for each member of our families and ourselves in the event that something should happen to us.  This includes our children.  We have a tendency to believe that we will outlive our children, and in most cases that will be true.  However, we have seen what occurred in Newtown, Connecticut, where many innocent children and teachers were slain at the hand of a gunman.

One incident such as this could devastate us emotionally and financially.  When people fail to protect themselves from dangers such as these, it often cause calamites such as financial hardship.  One such person in my area drowned in an incident at sea recently.  Unfortunately, his family did not take out life insurance on him and there was no money for his funeral.  However, they were fortunate in that the community rallied together and raised money to cover his expenses.

This may or may not happen in every case.  Studies have shown that approximately forty-eight percent of the population dies without life insurance to cover final expenses.  LIMRA reports that, “Three in 10 American households (35 million) are
uninsured and half say they need more life insurance.”  People know they need the life insurance, but fail to purchase it.

There are many reasons why people do not purchase life insurance and mainly it is because of priorities.  People mistakenly believe that they cannot afford to purchase life insurance.  Insurance agents can find an affordable insurance plan for you and your family.  Low cost term insurance would be the best option for most families.

If you are overspending,, why not make a New years resolution to stop spending money unwisely and invest in life insurance for you and the family which would give peace and protection when they need it most, at the time of the loss of a loved one.  Not having insurance leaves an unnecessary burden on the rest of the family to provide final expenses.

If you know someone who needs life insurance protection to cover their family and you have an insurance agent, recommend them.  Sadly, some people never get approached about life insurance.