tloonya
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Post by tloonya on Jan 13, 2014 11:35:47 GMT -5
I am still chasing out cheerleaders who asking for money to go to 'finals'...
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Deleted
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Post by Deleted on Jan 13, 2014 12:03:46 GMT -5
Not really. I drew money from my retirement. It's not like an ongoing thing, it was a one time deal. My entire retirement account consists of 90,000 shares of Dark Inc stock. That's on my list for this month. Dude, you drove by and didn't come in to say hi? The signs are the maximum size we're allowed in our lease. Only way to get them bigger is to lease way more square footage. Like, the size of the Staples or Ace Hardware. Real advertising, like what? The local paper has crappy circulation and dwindling readership. I could pay Google to get placed on the first page whenever anyone within so many miles searches for certain key words, but we're already the top google search result for half of the keywords I would pay for in this area, so it seems pretty redundant. Radio ad rates weren't as outrageous as I thought they'd be, but they're not cheap either. TV spots cost a fortune when you include the cost of producing the commercial in the first place. marketing for a niche toy store is iffy google is your best bet radio or tv would give you exposure....but ads like that take hundreds if not thousands of spots to generate the returns not saying i would have given them $ 300...... promotions i think are your best bet.....since a lot of your market is teenagers, what about advertising in the local jr and high school papers? put an ad in for 15% off or something like that.....mention your game nights
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tloonya
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Post by tloonya on Jan 13, 2014 13:37:21 GMT -5
Not really. I drew money from my retirement. It's not like an ongoing thing, it was a one time deal. My entire retirement account consists of 90,000 shares of Dark Inc stock. That's on my list for this month. Dude, you drove by and didn't come in to say hi? The signs are the maximum size we're allowed in our lease. Only way to get them bigger is to lease way more square footage. Like, the size of the Staples or Ace Hardware. Real advertising, like what? The local paper has crappy circulation and dwindling readership. I could pay Google to get placed on the first page whenever anyone within so many miles searches for certain key words, but we're already the top google search result for half of the keywords I would pay for in this area, so it seems pretty redundant. Radio ad rates weren't as outrageous as I thought they'd be, but they're not cheap either. TV spots cost a fortune when you include the cost of producing the commercial in the first place. I didn't know drawing money from retirement is indication of successful business. Though Dark didn't say that but one member here insisting that Dark is running successful business... Please, help me here.
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tloonya
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Post by tloonya on Jan 13, 2014 14:07:21 GMT -5
I invested my retirement money in the business to start it. The business is now self sustaining. I don't pull retirement money out to cover expenses or pay myself monthly. It's exactly the same as using 100k of personal savings to start a business except my savings was locked in a retirement account. Can you please, explain self sustaining?
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Deleted
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Post by Deleted on Jan 13, 2014 14:12:08 GMT -5
self sustaining means the cash flow of the business is enough to cover all bills and expenses without additional capital
it is a very important thing....and most businesses take awhile to realize it....
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tloonya
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Post by tloonya on Jan 13, 2014 14:16:19 GMT -5
The business has products. In my case toys and games. I sell those toys and games. People give me money for them. I use that money to buy more toys and games, pay the business bills (electric, security system, lease, etc.), and pay myself. The business keeps the leftover money to build up it's cash position. Self sustaining means the business makes enough selling products to cover everything and turn a profit. I'm not adding any money to it at this point. Everything is paid out of revenue from sales. How much do you pay yourself may I ask? and will that retirement fund ever be returned to where it was taken from?
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milee
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Post by milee on Jan 13, 2014 14:17:40 GMT -5
I invested my retirement money in the business to start it. The business is now self sustaining. I don't pull retirement money out to cover expenses or pay myself monthly. It's exactly the same as using 100k of personal savings to start a business except my savings was locked in a retirement account. I'm not rehashing the debate on whether this was a good idea or not - it's done. But I think we're doing readers a bit of a disservice to oversimplify some of the implications, since some others readers may be considering using this technique to fund businesses. Accessing retirement funds is not exactly the same as using personal savings.
Here are a few of the differences:
Most YMers tend to think of retirement funds as separate from savings. Retirement funds are not just tax advantaged, they are protected from creditors and have other benefits and are intended to be used for living on in retirement. Savings are not usually tax advantaged and are used for shorter term goals. Yes, it's all money but generally when people are using their "savings" to buy something, that doesn't mean they've wiped out or neglected to save at all for retirement. By using all your retirement funds to invest in the business, that means you have no savings and all your retirement funds are now at risk - a whole new level of risk and investment.
Along those lines, you are also eliminating many of the benefits of having money in a retirement fund. By pulling it out like this, you have made it vulnerable to loss, BK and creditors - which it wasn't before. You are also foregoing earning a return on those funds since the business isn't generating a return on the investment. (Yes, you have a small profit, but that's what you're using as salary. You can't double count. If it's salary, that's not return on investment.)
Using retirement funds also concentrates risk in that all your eggs are in one basket. If you save for a business and use the savings - leaving your retirement funds alone - then if the business goes under, you haven't compromised your future retirement. But if you raid the retirement funds and the business goes under, then you not only lose your income and investment, but you're in a world of hurt for retirement as well.
The worst part is because this is a workaround to access retirement funds that government tax and social policy doesn't want you accessing, you have to pay high fees to get a attorney and CPA to properly work the loophole. Getting an attorney and CPA to do the initial plan design and ongoing plan updates/maintenance plus file all the regulatory and tax paperwork will run you approximately $5k the first year and then $2k every year after that. So to get access to your own $100k, you pay a $5k - 5% - fee upfront and then 2% in perpetuity. Ouch.
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tloonya
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Post by tloonya on Jan 13, 2014 14:29:28 GMT -5
The business has products. In my case toys and games. I sell those toys and games. People give me money for them. I use that money to buy more toys and games, pay the business bills (electric, security system, lease, etc.), and pay myself. The business keeps the leftover money to build up it's cash position. Self sustaining means the business makes enough selling products to cover everything and turn a profit. I'm not adding any money to it at this point. Everything is paid out of revenue from sales. I didn't want to get into details but I swear I knew that using retirement was NOT the same as personal saving. I swear I knew it! Dark, I want to ask you what is your daily sales? When it is not right before Christmas? I can not imagine pop-mom toy store that selling enough toys per month to cover all the bills etc. AND house bills, right? It is coming from your 'paying yourself' salary I mean, not from your business account, I know that as well. it is just seems crazy that in a few months you made toy store successful. I would say your business is successful when all the money from retirement fund put back where it was taken with percentage that is would be occurring if it wasn't touched. And only then I would start counting my successfulinest...or successuality...idk
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milee
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Post by milee on Jan 13, 2014 14:41:48 GMT -5
True, but I was trying to explain it in terms Loony would understand. There are other threads where we talked about all the implications, advantages, disadvantages, and risks. Anyone thinking about investing their retirement money in their own business should go look up those threads, or they can PM me, or start a new thread where we can discuss the specifics again. I know and your answer was perfect for that. Just adding some thoughts to consider for any lurkers out there.
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tloonya
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Post by tloonya on Jan 13, 2014 14:53:34 GMT -5
Beats me. We've only been open for Christmas season so far. Our sales suck right now because it's just after Christmas. Everyone is getting their credit card bills, and they just bought a lot of toys. I won't know what a typical month looks like until February or March. At the end of September I'll have a one year baseline to work with. Sooo...you are paying $2500 salary to yourself based on bogus figures based on ski high sales of the year? If I did that I could bought property in Florida! Waterfront! I sold all the gefilte fish I though was forever frozen. I sold stuff that I forgot I had. And how come you don't know how much you were making per day? In total sales I know every day how much I sold. How can you not? $100 or $1500? You must know!!!
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Jan 13, 2014 14:53:55 GMT -5
Dark, you don't kite checks. Right there you've surpassed TLoony's understanding of proper business models.
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tloonya
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Post by tloonya on Jan 13, 2014 14:57:16 GMT -5
My business doesn't have house bills. It's a separate entity from me. It has a lease on a commercial space, and utility bills, that's it. I have a mortgage, my own utilities, a car to keep running, kids to feed and clothe, etc. Business owners have to keep the two separate. The business has its money, inventory, debts, and obligations. I have my own money, debts, and obligations. They aren't interchangeable. I can't pull $200 out of the till to cover my gas/electrical bill, and I can't put $200 in the till to cover the businesses gas/electric bill. They're separate entities with separate pots of money, separate accounts, etc. They aren't interchangeable. I can't pull $200 out of the till to cover my gas/electrical bill, and I can't put $200 in the till to cover the businesses gas/electric bill. They're separate entities with separate pots of money, separate accounts, etc. So I have 4 accounts in the same bank. 2 pers, 2 biz. If I write me a check from biz and deposit into pers - money becoming mine to pay mortgage, no? So it means they are interchangeable IF you doing it correctly!!!
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tloonya
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Post by tloonya on Jan 13, 2014 15:02:54 GMT -5
Nope, I've been paying myself a salary since May and the business didn't open until September. I base my salary on the expected sales given the market research we did when putting together the business plan, and hope, and wishful thinking. I know exactly how much I've sold every single day I've been open. I know how much I've given in discounts, how much I've done in returns, etc. What I'm saying is, I've only been open during Christmas season, and the two weeks after. Every day I've been open is a day impacted by Christmas. I won't know what a typical non Christmas day looks like until we get further away from Christmas. Nope, I've been paying myself a salary since May and the business didn't open until September. I base my salary on the expected sales given the market research we did when putting together the business plan, and hope, and wishful thinking.and crystal ball? What if all of the above just a crap And all you researched was wrong
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Wisconsin Beth
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Post by Wisconsin Beth on Jan 13, 2014 15:04:13 GMT -5
Then the business will go under.
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tloonya
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Post by tloonya on Jan 13, 2014 15:08:25 GMT -5
Just let me ask...you had been paying yourself a salary for 5 month out of that pension fund you took money from? Why? And how is it right to be paid having nothing in the bucket but borrowed dough? I AM different species...
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tloonya
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Post by tloonya on Jan 13, 2014 15:14:50 GMT -5
Then the business goes broke, I lose the money I invested in it, and I go back to working on government contracts. The process won't be nearly that clean of course. I had to personally guarantee the commercial lease so I might end up with personal debt if the business fails. The way it works in California they can't hold me personally responsible for the full term of the lease if they find another tenant, they can only come after me for the time it sits empty. If they find a new tenant quickly I won't owe much, if it sits empty for a year I'd probably have to personally declare bankruptcy. So 'research' IS the crystal ball? And all these money you paid yourself you didn't earn will be just like my bounced checks?
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tloonya
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Post by tloonya on Jan 13, 2014 15:17:13 GMT -5
It wasn't borrowed money. Nobody borrowed anything. It was my money. I worked for it, I saved it. I then used it to buy 90,000 shares of Dark Inc stock. Now my retirement account has 90,000 shares of stock in a tiny company that doesn't even have a retail location open yet. Dark Inc has $90k in cash in its checking account. Still with me here? Dark Inc hires me to do all the work necessary to open a retail location. It agrees to pay me a salary of $2,500 a month for that work. I agree, because while the salary is pitiful, I think the future of the company looks bright and I want to get in early. The company gets an employee willing to work 80+ hour weeks for a pittance. It's a win win for both of us. Maybe. The company gets a great deal either way. I only get a great deal if the business actually becomes successful and I can increase my salary later. Are you crazy? Why are you talking like that? You are the company, right?
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justme
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Post by justme on Jan 13, 2014 15:23:58 GMT -5
My business doesn't have house bills. It's a separate entity from me. It has a lease on a commercial space, and utility bills, that's it. I have a mortgage, my own utilities, a car to keep running, kids to feed and clothe, etc. Business owners have to keep the two separate. The business has its money, inventory, debts, and obligations. I have my own money, debts, and obligations. They aren't interchangeable. I can't pull $200 out of the till to cover my gas/electrical bill, and I can't put $200 in the till to cover the businesses gas/electric bill. They're separate entities with separate pots of money, separate accounts, etc. They aren't interchangeable. I can't pull $200 out of the till to cover my gas/electrical bill, and I can't put $200 in the till to cover the businesses gas/electric bill. They're separate entities with separate pots of money, separate accounts, etc. So I have 4 accounts in the same bank. 2 pers, 2 biz. If I write me a check from biz and deposit into pers - money becoming mine to pay mortgage, no? So it means they are interchangeable IF you doing it correctly!!! Actually, if you write a check for you to put into your personal account as income you also have to take out taxes, Medicare, and other withholdings and send them to the appropriate places while reporting your income to the IRS. So no, it's not as simple as just writing a check. If you're doing things legally anyways.
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Deleted
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Post by Deleted on Jan 13, 2014 15:26:25 GMT -5
Dark, just curious, you started with $90k. Do you know what the book value of your business is worth?
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HoneyBBQ
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Post by HoneyBBQ on Jan 13, 2014 15:27:32 GMT -5
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tloonya
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Post by tloonya on Jan 13, 2014 15:31:42 GMT -5
They aren't interchangeable. I can't pull $200 out of the till to cover my gas/electrical bill, and I can't put $200 in the till to cover the businesses gas/electric bill. They're separate entities with separate pots of money, separate accounts, etc. So I have 4 accounts in the same bank. 2 pers, 2 biz. If I write me a check from biz and deposit into pers - money becoming mine to pay mortgage, no? So it means they are interchangeable IF you doing it correctly!!! Actually, if you write a check for you to put into your personal account as income you also have to take out taxes, Medicare, and other withholdings and send them to the appropriate places while reporting your income to the IRS. So no, it's not as simple as just writing a check. If you're doing things legally anyways. Oh, Boy! I am sending so much to IRS I am crying each quarter! And asking why Why so much
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tloonya
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Post by tloonya on Jan 13, 2014 15:33:16 GMT -5
Dark, just curious, you started with $90k. Do you know what the book value of your business is worth? Yeah, Archie, ask away...help me. And maybe who knows...one day I will help you.
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Deleted
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Post by Deleted on Jan 13, 2014 15:34:08 GMT -5
No, I'm not. The company is the company. I'm just a lowly employee. I have to wear a uniform to work, and have the obnoxious title of funologist. The shareholders are penny pinching slave drivers that are using me like a rented mule. I don't own the business. I own 1,000 shares of the stock. My retirement account owns somewhere around 90,000. If anyone owns the company it's my retirement. I think what Tloony is having trouble wrapping her head around is why you gave your hard earned retirement money to a corporation to then let them treat you like a rented mule. I'm sure she would have kicked you in the nuts for free.
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reader79
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Post by reader79 on Jan 13, 2014 15:36:29 GMT -5
Dark, are you coming to NY for Toy Fair in February?
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tloonya
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Post by tloonya on Jan 13, 2014 15:40:09 GMT -5
No, I'm not. The company is the company. I'm just a lowly employee. I have to wear a uniform to work, and have the obnoxious title of funologist. The shareholders are penny pinching slave drivers that are using me like a rented mule. I don't own the business. I own 1,000 shares of the stock. My retirement account owns somewhere around 90,000. If anyone owns the company it's my retirement. I think what Tloony is having trouble wrapping her head around is why you gave your hard earned retirement money to a corporation to then let them treat you like a rented mule. I'm sure she would have kicked you in the nuts for free. Nuts ARE balls, aren't they? And vise versa...right? I think I do not understand how is that person paying himself money he just took out of his retirement fund just because. No sales, no profit, no nothing but we have salary. And I supposed my salary would be about $4K per month (because this is how much my living cost) so...I am making just as much as I need to pay my bills and roof above my head. I am just admitting it as an idiot when more sophisticated business people are calling it 'paying myself a salary'...
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Wisconsin Beth
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Post by Wisconsin Beth on Jan 13, 2014 15:41:03 GMT -5
I started with 97 thousand something. Legal fees and stuff took a chunk to get the business established. I have no idea what the book value of the business is right now. As of right now we have $18,375.14 in inventory, with a retail value of $41,895.48. There's $20,935.92 in the bank. The value of the fixtures and whatnot would add another chunk, say a grand for the shelving, another $2k for the POS system and laptop. That's basically it. If I was selling the business I'd add a chunk for goodwill since it's an operating venture and value the fixtures higher, but if I had to liquidate tomorrow that's what I'd have and the values I'd put on them. The business has no debt, but would be on the hook for the lease. I need one of you accounting peeps to tell me what it's worth using GAAP or whatever. I'm nosy. I hope someone does!
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Wisconsin Beth
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Post by Wisconsin Beth on Jan 13, 2014 15:42:16 GMT -5
Nope, I hear they get that frozen white stuff up there. I try to avoid that. We're going to ToyFest in Las Vegas in March. HOw does that work then? Does Dark Inc pay for the trip? And do you close the store or will you hire someone to run it while you're gone?
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tloonya
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Post by tloonya on Jan 13, 2014 15:45:58 GMT -5
I started with 97 thousand something. Legal fees and stuff took a chunk to get the business established. I have no idea what the book value of the business is right now. As of right now we have $18,375.14 in inventory, with a retail value of $41,895.48. There's $20,935.92 in the bank. The value of the fixtures and whatnot would add another chunk, say a grand for the shelving, another $2k for the POS system and laptop. That's basically it. If I was selling the business I'd add a chunk for goodwill since it's an operating venture and value the fixtures higher, but if I had to liquidate tomorrow that's what I'd have and the values I'd put on them. The business has no debt, but would be on the hook for the lease. I need one of you accounting peeps to tell me what it's worth using GAAP or whatever. Are these money in the bank left overs from pension fund? Or you have put it there from sales profit?
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Post by Deleted on Jan 13, 2014 15:49:15 GMT -5
I started with 97 thousand something. Legal fees and stuff took a chunk to get the business established. I have no idea what the book value of the business is right now. As of right now we have $18,375.14 in inventory, with a retail value of $41,895.48. There's $20,935.92 in the bank. The value of the fixtures and whatnot would add another chunk, say a grand for the shelving, another $2k for the POS system and laptop. That's basically it. If I was selling the business I'd add a chunk for goodwill since it's an operating venture and value the fixtures higher, but if I had to liquidate tomorrow that's what I'd have and the values I'd put on them. The business has no debt, but would be on the hook for the lease. I need one of you accounting peeps to tell me what it's worth using GAAP or whatever. I'm nosy. I hope someone does! IMHO, the book value of the business is about $42k. Not terrible. As long as the business can pull in about $160k a year, you should be back up to $100k in 3 or 4 years. Then it is all gravy.
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Post by Deleted on Jan 13, 2014 16:01:26 GMT -5
They aren't interchangeable. I can't pull $200 out of the till to cover my gas/electrical bill, and I can't put $200 in the till to cover the businesses gas/electric bill. They're separate entities with separate pots of money, separate accounts, etc. So I have 4 accounts in the same bank. 2 pers, 2 biz. If I write me a check from biz and deposit into pers - money becoming mine to pay mortgage, no? So it means they are interchangeable IF you doing it correctly!!! Actually, if you write a check for you to put into your personal account as income you also have to take out taxes, Medicare, and other withholdings and send them to the appropriate places while reporting your income to the IRS. So no, it's not as simple as just writing a check. If you're doing things legally anyways. not necessarily depends on how the business is set up....and whether or not the checks are marked as distributions
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