Payroll tax cut continues

President Obama signed the next payroll tax cut into law.  This means that you will continue to pay 2% less social security tax for the remainder of this year. The tax cut amounts to about $80/month for an employee earning $50,000 a year, and as much as $2200/year for better-paid employees. Self-employed taxpayers will enjoy […]
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When will you break even?

It is critically important for you to properly use quality cost information when making basic decisions about your business, such as pricing your goods and planning your sales volume.  Over the past few posts, I’ve explained how to determine fixed costs, variable costs, and contribution margin.  If you haven’t already done so, I encourage you to […]
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Fixed costs explained

 A fixed cost is any cost that will remain the same, regardless of changes in your sales volume. For example, suppose you own a candy store.  Your fixed costs would include: rent utilities (electric and gas) employee salaries maintenance because each of these costs would remain the same regardless of how much (or how little) […]
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The Accounting Equation: Assets = Liabilities + Owners’ Equity

Your business is built on the accounting equation: Assets = Liabilities + Owners’ Equity Assets are what your business owns.  Liabilities are what your business owes.  The difference between these what you – the owner – actually own: owner’s equity. Suppose your business has $100,000 in assets and $30,000 in liabilities.  Then $70,000 of your […]
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