Your Stock Support Budget
By William Cate
Published November 1999
[http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
It costs money to create share buying. Every public company must find the buyers for their shareholders' stock. You must have the buyer when your shareholder sells. If your company fails to find the buyers, your share price will collapse.
To maintain your present share price, your float will trade four times annually. Your float is the stock held by your public shareholders. If your company's float is one million shares, you must expect to find four million shares of buying in the next year. If you keep your present shareholders, you'll cut your stock support costs by 100%. If your insiders can't sell and thus add to the company's float, you'll reduce your future stock support costs by fourfold for every unsold insider share.
The annual supply and demand for your company's stock isn't constant in the Market. You get a favorable write-up. Demand for your stock temporarily jumps up. A major shareholder liquidates their position. The supply of your stock temporarily increases in the Market. You need to level the supply/demand curve. You can often do it by working with your shareholders. Your goal should be to maintain a sustainable share price. Your share price should trade within a narrow range.
There's a silver-lining about bad news. If your shareholders hear it from you, you'll gain credibility. If they hear it from you, it won't sound as bad as hearing it from their broker, a newspaper article, or in the Shareholders' Annual Report. Budget money to spread bad news. It's a sound long term strategy.
A Stock Support Rule of Thumb for OTCBB companies is that it costs a dime to create a share of buying, when your share price is below one dollar. For a share price above one dollar add five cents for every dollar of the share price above one dollar. This means that it costs a quarter to support a four-dollar share price. Multiply this share cost by your float and then by four and you have an annual budget for stock support.
Stock support and compliance costs are the best arguments against going public. You must convert these costs into a strong share price. You must use your strong share price to buy profitable assets for your company. The profitable assets must improve your bottomline. If you don't use your stock as money to build your company, your long term shareholders will lose their investment in your company. You'll fail.
If you believe that your share price reflects the merits of your company, don't go public. Your share price will languish for years as you await some Fundamentalist writer to discover the value in your company. Meanwhile the pragmatic CEO builds value by using their strong share price to buy profitable assets. It can take twenty years to create a hundred million dollar private company. It can take 20 months for a public company to buy for stock a hundred million dollar public company. The option is your company can earn the money, pay taxes, reinvest and grow. Or, you can go public, print your own money called stock, and use your strong share price
to buy assets and become a hundred million dollar company. Your decision involves your willingness to spend money to ensure a strong share price.
To contact the author: Visit the Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit the Global Village Investment Club Website:
[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
About the Author
He has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
Sunday, October 28, 2007
Your Tip Earnings and Taxes
The internal revenue service has recently been taking steps to cut down on clutter and streamline the tax filing process. Now they've simplified business tax return extensions.
Automatic Extension Requests For Businesses
In past years, some businesses had to go through a lot of paperwork to file request for extensions to file annual business tax returns. This included filing partial extension forms such as forms 8800, 8736, 7004 and 2758. I get a headache just thinking about it. Apparently, IRS agents got one as well and have decided to do something about.
The internal revenue service has announced it is doing away with all the different forms for filing requests for an extension to file business tax returns. Now, all businesses can use one form to get an automatic six month extension. Form 7004 is the document you will need. It is entitled Application for Automatic 6 Month Extension to File Certain Business Income Tax, Information and Other Returns. Okay, so the IRS hasn't figured out short titles. This is still a positive step in reducing the morass of forms typically required to get extensions.
To use Form 7004 for your 2005 tax filings, you must file it by the date the tax return filing is due. You are then automatically given a six month extension to file the return. Importantly, the extension is only for the filing of the return, not the payment of any tax due. If you owe tax, you still have to the amount due by the original filing period. Failure to do so will lead to penalties and interest being applied to the amount you owe when you finally get around to taking care of the tax returns.
End of the World?
One is tempted to predict the end of the world coming soon. I don't know about hell freezing over, but the actions taking by the IRS in the last calendar year are the stuff of myth. First, the IRS went to bat for the victims of Hurricane Katrina, even issuing detailed instructions on how to claim their losses on past tax returns to get refunds to help them out. Second, the IRS actually raised the mileage allowance in the middle of the year to give business travelers a larger deduction because the IRS felt gas prices were to high. Now, the IRS is eliminating unnecessary and frustrating procedures to make tax filings simpler. The end must be near.
About the author:
Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.
Automatic Extension Requests For Businesses
In past years, some businesses had to go through a lot of paperwork to file request for extensions to file annual business tax returns. This included filing partial extension forms such as forms 8800, 8736, 7004 and 2758. I get a headache just thinking about it. Apparently, IRS agents got one as well and have decided to do something about.
The internal revenue service has announced it is doing away with all the different forms for filing requests for an extension to file business tax returns. Now, all businesses can use one form to get an automatic six month extension. Form 7004 is the document you will need. It is entitled Application for Automatic 6 Month Extension to File Certain Business Income Tax, Information and Other Returns. Okay, so the IRS hasn't figured out short titles. This is still a positive step in reducing the morass of forms typically required to get extensions.
To use Form 7004 for your 2005 tax filings, you must file it by the date the tax return filing is due. You are then automatically given a six month extension to file the return. Importantly, the extension is only for the filing of the return, not the payment of any tax due. If you owe tax, you still have to the amount due by the original filing period. Failure to do so will lead to penalties and interest being applied to the amount you owe when you finally get around to taking care of the tax returns.
End of the World?
One is tempted to predict the end of the world coming soon. I don't know about hell freezing over, but the actions taking by the IRS in the last calendar year are the stuff of myth. First, the IRS went to bat for the victims of Hurricane Katrina, even issuing detailed instructions on how to claim their losses on past tax returns to get refunds to help them out. Second, the IRS actually raised the mileage allowance in the middle of the year to give business travelers a larger deduction because the IRS felt gas prices were to high. Now, the IRS is eliminating unnecessary and frustrating procedures to make tax filings simpler. The end must be near.
About the author:
Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.
Your Tip Earnings and Taxes - Corrected
If you work in a service where you get tips, guess what? The IRS expects you to report them and pay taxes on them.
Your Tip Earnings and Taxes
The internal revenue service takes a very simple approach to tips. It views all tips you make in your job as taxable income that must be reported and for which taxes must be paid. Put another way, the IRS has a simple but brutal view towards taxes
Now tips come in different forms. Some are received directly from customers while others are automatically added to the customer's bill. The IRS takes the position you must report and pay taxes on both amounts. This also includes taxes you earn through any group splitting where all tips are collected together and then split amongst the employees. On top of this, the IRS also takes the view that any non-cash tips such as tickets to something are also income that should be reported and taxes paid on. Put another way, the internal revenue services gets you coming and going.
To make things a little more brutal, the internal revenue service requires you to take some steps in reporting tips. If your tips total $20 or more in any calendar month from a single job, you are supposed to report the total to the employer by the 10th day of the next month. The employer is then supposed to withhold federal income tax, social security and Medicare taxes from your paycheck. Keep in mind that the failure to do so can lead to the placement of a 50 percent penalty on your taxes. Obviously, the IRS is fairly serious about getting its money.
Tips paid to waitresses, bartenders, barbacks and so on are a hot spot with the IRS and always have. Since tips tend to be given in cash form, the potential for forgetting to report them is particularly high. The IRS seems to think so and has shown a generally aggressive attitude on the subject. If you indicate you are a waitress or bartender on your tax return, but fail to report any tip income, it could be audit time.
About the author:
Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.
Your Tip Earnings and Taxes
The internal revenue service takes a very simple approach to tips. It views all tips you make in your job as taxable income that must be reported and for which taxes must be paid. Put another way, the IRS has a simple but brutal view towards taxes
Now tips come in different forms. Some are received directly from customers while others are automatically added to the customer's bill. The IRS takes the position you must report and pay taxes on both amounts. This also includes taxes you earn through any group splitting where all tips are collected together and then split amongst the employees. On top of this, the IRS also takes the view that any non-cash tips such as tickets to something are also income that should be reported and taxes paid on. Put another way, the internal revenue services gets you coming and going.
To make things a little more brutal, the internal revenue service requires you to take some steps in reporting tips. If your tips total $20 or more in any calendar month from a single job, you are supposed to report the total to the employer by the 10th day of the next month. The employer is then supposed to withhold federal income tax, social security and Medicare taxes from your paycheck. Keep in mind that the failure to do so can lead to the placement of a 50 percent penalty on your taxes. Obviously, the IRS is fairly serious about getting its money.
Tips paid to waitresses, bartenders, barbacks and so on are a hot spot with the IRS and always have. Since tips tend to be given in cash form, the potential for forgetting to report them is particularly high. The IRS seems to think so and has shown a generally aggressive attitude on the subject. If you indicate you are a waitress or bartender on your tax return, but fail to report any tip income, it could be audit time.
About the author:
Richard A. Chapo is with http://www.businesstaxrecovery.com - recovery of business taxes through tax help and tax relief. Visit http://www.businesstaxrecovery.com/articles to read more business tax articles.
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