Top 15 business tax deduction

          Tax is one of the main issue every business face small business owner face tax at end of every year cant mess with the income tax department  if you do (tax + penalty) for evading tax but there is no rules that say you can’t take deduction regarding  the expenses of the company 

     Tax deduction help you reduce the tax burden but you can’t clam all your expenses as deduction but some of them can be deducted 

Important tax deduction small business can have 

  1  Travels : travels is one of the good tax deduction for small business you have to travel for business purpose form one place to another that doesn’t have to be long trip but related to the business

      Cost of plane , car operating cost fuel cost all the cost related to travels meal, telephone can be deducted travel deduction should related to business not personal purpose 

  2 Expenses of running a business: if you running a business The business will have day to day expenses like adverting utilities office supplies and repairs transport these all expenses can be deducted as the current business expenses

 In capital expenses you can deduct up to $5000 of start of cost which include all the cost gone into creating your business 

  3 Charity:  if your business can make a charitable contribution to a non-profit inistute  or school can clam deduction on the donation 

  If you donate more than $250 in (US) no need to have a letter of verification from the organization 

  If you donate more than RS 10000  (India) through cheque   you need to have receipt of donation to calm the deduction 

  4 Bad debts : bad debts may or may not be deductible it may depend upon the goods and service of your business  bad debts happens in every business it up to you to utilise those bad debts for tax deduction

   If your business sold goods on the base of credit but the buyer fail to make the payment you can claim the goods as bad debts and the cost of goods can be deducted 

    Service is little complicated in the service your business can only clam deduction only after the person don’t pay after taking service from you 

  5 Employee benefit: any benefit given by the business to your employee is deductible benefit like health plans, life insurance, uniform allowance, travel allowance; house rent allowance   any kind of allowance is given by the business to the employee is deductible 

  6 Theft and loss :  loss can be deductible when starting business you have some loss in business those loss can be deductible  theft if that can’t be avoidable  can be deductible But accidental loss cant be considered in deduction 

  7 Gift: employee gift are full deductible and any gift the business give to client is also deductible is up to $25 a year per person 

  8 Advertising and promotion : advertising cost of the business  and promotion is total deductible as long as it is a current expense  any cost related to promotion of business  in yellow page ads  is deductible

   

  9 Software: any software brought by the business for business use like management software and finance ,account software is deductible with in 36 month  

       These days software is expensive than hard ware and every business use some kind of software like security software  if the software some with the computer it is not treated as separate  it is considers as part of computer  ( only those software is deducted which are bought separately )

  10 Professional fees :  any business expenses related to account or internal audit done by the business is  deductible   (lawyer , accountant , auditor , consulting ) there fees related to business is deductible 

 11 Rent: rent related to business office on the property used for the business is deductible 

 12 Repair and maintenance: any cost to repair or maintenance charge related to business and keep running of business is deductible    

 13 Taxes: any tax charged  or already paid taxes on running your business is deductible means you are not going to pay the tax you already paid do you means its totally deductible

 14 Office equipment:  any furniture bought by the business and the equipment is deductible and desperation is also deductible from year to year  

 15 Home office : if you dedicate your home room for the business purpose it can be deduction the room should well organized for the business purpose  having a single laptop wont do 

                               

venture capital

Venture capital 

          VC is a fund that is available for investment in an enterprise which offers the probability of profit along with the possibility of loss its also called risk capital term venture capital comprises two words ( venture and capital )

                      Venture is a course of proceeding associated with risk whose outcome is uncertain the word capital here means the financial resource to start an enterprise .In other words the venture capital is the capital available for ventures associated with new technology ,production or process involving considerable amount risk 

         VC is financing the investor who provide fund to a start up company and small business that are believed to have long term growth potential its also mean financing a expansion of company that have already demonstrated their business potential but do not yet have access to the funding source 

Features of venture capital 

• ·         Venture capital is usually in the form of an equity participation it may also take the form of convertible debt or long term loan

• ·         Venture capital is a investment not liquid A venture capitalist cannot realise his money on demand  no repayment way the hole investment is loss if the enterprise is unsuccessful

• ·         In VC investment are made in the enterprise using new technology to produce new product in order to gain more profit

• ·         VC join the enterprise as co promoter or as a partner in a project and share the risk and reward

• ·         In Venture capital is for high risk but high growth potential project

• ·         The venture reach full potential the venture capitalist disinvest his holding either to the promoters or in the market the basic objective of investment is not profit but capital appreciation at the time of disinvestment

• ·         Venture capital is for the new idea new technology and not for the enterprise who are engage in booking trading and agency work

• ·         Venture capital is funding the small and medial level company who is need of fund for there project

Venture capital stage

               VC may take various form at different stages of the project there are four stage of development of a project  development of project idea Implementation of the idea Commercial production and marketing and finally large scale investment to exploit the economic of scale and achieve stability 

Financial institute only finance the project only in the third stage or second stage but rarely from the first stage

(1)     Development of an idea  : in the initial stage venture capitalist provide seed capital for translating an idea into business proposition  it is where the all the information is collected and investigation is done regarding the project here it will normally take one year

      (2)    Implementation stage : when the firm is set a began working on the project it is the stage where the work begin its also called work stage ( product  service ) offered in the stage it is a working stage after the acquirer of finance 

      (3)    Fledging stage : in the third stage the firm is in production stage and actively in manufacturing  product the third stage is marketing and distribution stage  getting additional finance and having proper marketing infrastructure 

      (4)    Establishment stage : it is where the firm is established in the market and to expand in this stage it is where the project is successful and the firm is making profit in this stage .At the end of the establishment stage the firm Is listed on the stock exchange and at this point the venture capital disinvest  there shareholding through available exit routes

Venture capital fund 

                         VCF is a business entity whose principal commercial activity is to make investment in the highly risk oriented company whith an expectation of earning high returns in the form of capital gains the venture capital fund may be in the form of a trust 

   Venture capital fund contributes financial capital to new and young enterprise in exchange of substantial equity position in the enterprise ( it take five to eight year for the assisted firm to gain maturity in commercial functioning ) the equity value appreciates and the equity holding of the VCF are liquidated in the market to generate returns  

 Venture capital is difference from capital and finance though these three forms of financial assistace  seem  to ne the same they are different from one another seed capital is the finance provided to technocrats or entrepreneurs to meet the promoters contribution for setting up of manufacturing activity (VCF are mostly 10 year of fixed life )   

 venture capital firm >> venture capital fund 

        the money the firm invest comes form a variety of sources private ,public source those who invest in the VC are limited partners 

marketing concept

Marketing concept 

     A correct understanding of marketing concept is a study of the evolved modern market determining the course of action thinking and doing thing in a way  marketing concept is direct towards to a customer satisfaction ( marketing concept is a way of doing thing in which the all the resource of an organization used to and mobilized to create stimulate and satisfy customer ) this concept tell that marketing organization in future oriented customer oriented value oriented profit oriented and used in to target the desire result 

    The organization structure that is the center of desire of the consumer the company can only make what it can sell rather and marketing is sell what firm makes

Marketing concept is an orientation or a philosophy marketing concept is an integration of marketing activities direct towards customer satisfaction

Evolution of marketing concept 

        Marketing has gone through tremendous change due to the changing market and continues developed market that has make the marketing philosophy evolved from time to time from Industrial revolution of 18^th and 19^th centuries and the service market of 20^th centuries 

     1 product orientation philosophy

       2sales orientation philosophy

         3customer orientation philosophy

           4social orientation philosophy

  (1)Production orientation philosophy : in 1920s to 1940s the firm is under the impression that what can firm produce can sell and there no need for promotion and marketing .This marketing concept was built that a “good product don’t need good promotion” the product is good and it has a reasonable price brand than there is no need for the marketing effort promotion

                 Product >> sales

         Anything can be sold that can be produce and the firm don’t want to increases price for promotion efforts (under this the product is the starting point and there is no planning and marketing where the product is produce under the impression of product well sell after it produce)

(2)Sales orientation philosophy:  the failure of the production concept caused the look of new orientation in these stage the product is no good product if the customer don’t know  about the product  in this stage the firm use its

Aggressive salesmanship

Effective sales promotion

Advertising and public

The firm use salesman ship to adverting and to move the product of the firm “ goods are not bought but sold “ the product is sold only when the product is showed in the market no matter how good may the product is . It’s when the firm try to find the buyer for the product

                                              Product >> promotion >> sales

The sales orientation is mainly based in the promotion of the product and achieve the sales

(3)customer orientation philosophy: this concept was brought into play in 1950s and the fundamental task of business it is when the firm try to understand the customer needs wants desires and values of potential consumer .In the customer oriented the stating point is consumer before the production where the consumer specification are met totally  

                              the customer orientated concept tell that the firm should produce only the product that the consumer has need understanding the consumer needs the firm have the long term goal and profit rather than a quick sale

 customer >> marketing research >> product >> promotion >> sales  

It’s where the customer is treated as the king of the market 

(4)Social orientation philosophy: this market concept formed in 1970s to 1980s according to this concept which try to understand more than consumer needs this social orientation focus on the consumer welfare and social welfare the social welfare is all about the pollution free environment and the quality of human life EXAMPLE ( the firm not only produce the car but the fuel efficient car ) the firm try to understand the customer social responsibility and try to divide them to give the product according to their needs

The firm not only produce the product wanted by the customer but the product which is match the customer social life EXAMPLE ( the firm produce line of automobile cars from luxury  to fuel efficient ) and the customer buy what suitable for the social and daily usage 

Social concept is more than understanding the customer but understanding the customer social states buying power which play an important roal in the consumer decision making

Customer >> marketing research>> product >> promotion >> sales

Business law(contract)

 contract

 

   The law of contract

            The law of contract may be defined as that branch of law which deal with the agreement which can be enforced through court of law ( it is the law which determines the condition and circumstances in which promises made by the parties to a contract will be legally binding on them it’s the rule that define the remedies that ate available in a court of law ) it is remedies that are available in a court of law to the aggrieved party against the party who fail to perform his part of the contract and the condition under which the remedies are available

     

               In business contract play a greater roal to enforce the parties to perform the promise made by the one parties to another (where the promise are made at one time and are performed at another time)  it today business the contract giver security and freedom to act to both party every business should know about contract before they start and operate 

        The main object of the law of contract is to lay down the legal rules relating to promises  their formation  there performance and enforceability Sir William anson “ is to ensure that what a man has been led to expect shall come to pass and that what has been promised to him shall be performed “   

          The nature of the law of contract

The law of contract dose not lay down the various rights and obligations which the law will enforce it merely lays down the limiting principal subject to which the parties may create any right and obligation for themselves the law of contract give complete freedom of a contract to the contracting parties in respect of creation of right and obligations

                       The law of contract deals with only those agreements which can be enforced through court of law only those agreement or promises which create legal obligation according to  Salmound   “ the law of contract is not the whole law of agreement nor is it the whole law of obligations .It is the law of those agreement which created obligation and those obligations which have their source in agreement “ it excludes obligation which are not contractual in nature and agreement which are social in nature promise made in social life which may be morally binding but do not create legal obligations Example if A promises B to attend the dinner at B house but fails to attend the promise of A certainly does not create any legal obligation on the part of A and so dose not allow B to sue A    the law of contract applies only to those contract which create obligation between the parties to the contract and not against the whole world  If a has right to receive a sum of money from B the right to exercised only against B and not against anyone else

the law of contract is the most important branch of commercial law it is the foundation on which structure of modern business is built  

the law of contract is the basis for other branches of commercial law for instance the enactment or laws relating to the sale of goods negotiable instrument  partnerships insolvency

the law of contract apply not only to the mercantile community but also to other common people every on of us enter into a number of contracts everyday we are enter into a contract and we are all regulate d by the same law of contract which regulates the activities of mercantile person

 contract 

            according to Fredrick Pollock “every agreement and promise enforceable at law is a contract “

  sir john salmond “ a contract is an agreement created and defining obligation between the parties “

every contract is an agreement but every agreement is not a contract

         agreement = offer +acceptance

the agreement must have two important requisites they are (1) plurality of the party (2) free  consensus  

kinds of obligation

every agreement creates a obligation impose upon a definite person or person the necessity of doing or abstaining from doing a definite act or acts it may create legal obligation or a social obligation

legal obligation

                                  A legal obligation is a legal or tie which imposes upon a definite person the necessity of doing or abstaining from doing a definite act or acts   If A agree to buy 10 bags of sugar from B at the price of 10$ per bag there is a legal obligation

Social obligation

                              A social obligation is an obligation or duty which related to social domestic  or moral affairs or matters  there is non-performance of a social obligation the aggrieved party cannot take any legal action against the party in default

all agreement are not contracts

the agreement may create a legal obligation or a social obligation but to become a contract an agreement  must give rise to legal obligation only a agreement which create a legal obligation can become a contract

  Essential of a valid contract

    To an agreement to become a contract there are some requirement to fulfil the essential 

1 Plurality of parties : a contract is agreement enforced by law  the agreement only considered when offered by one and accepted by another there must be two person in the contract where the one is the offer and another is the accepted 

2 Offer and acceptance: there must be a valid offer and there must be a acceptance when one party offer to one that willingness to do work and the other party accept the offer that it is a valid offer  there should be a proper offer and there is no forcing the other party to accept 

3 Intention to create legal obligation: the agreement should between two party should be with legal obligation a legal relationship between them a contract for social and domestic is not a contract Example (Agreement between the husband and wife about there marriage is not a contract because marriage is not a contract) A invited B friend to attend the dinner at A house B failed to attend he dinner at A house but B failure to attend the dinner  A can’t sue B because it is not a contract 

4 Lawful consideration: an agreement must be law full supported by the law to enforced by the law a agreement only when each of the contracting parties gives something and get something on return

5 Free consent: the agreement enforced by the law it must be done free consent by the both parties first the agreement must be based on the consent of the parties (free consent is which the party enter into agreement on his own will rather force or in any other way ) the agreement is not an agreement until both the party entered in an agreement on their own will 

6 Capacities of the parties to enter in an agreement: before entered in an agreement the capacity of the party the legal capacity to enter and to performer the contract there many consideration about the party tis age (minority) lunacy idiocy drunkenness these type of person are not competent for contract 

7 Performance possibility: the agreement must be capable of being performed that the agreement can be performed and is legally done Example A agree to B that he will bring magical treasure and this is not a contract and it can’t be performed