About.com Business Finance

The Other Side of the Health Insurance Story: Insurance Companies

Mon, 23 Nov 2009 14:27:10 +0000

I read an interesting piece today by the Erin Hoeflinger, President of Anthem Blue Cross Blue Shield of Ohio. Specifically, she writes on the profit margins of health insurance companies.

Hoeflinger alleges that the profit margins for health insurance companies are significantly below those for other industries. This is backed up by data from Reuters which states that net profit margins for health insurance companies averaged 3.17 percent as compared to a much higher profit margin for other industries.

Hoeflinger did not say much about gross profit margins, so it's hard to know anything about the health insurance industry's fixed and variable costs. However, she did reference the operating profit margin saying that only 15% of premium dollars are available to pay operating expenses.

Hoeflinger alleges that, if the new health care reform legislation passes, young, healthy individuals could experience a premium increase of 199% and businesses between 16-86%. This is the view of the President of one of the health insurance companies.

The Other Side of the Health Insurance Story: Insurance Companies originally appeared on About.com Business Finance on Monday, November 23rd, 2009 at 14:27:10.

Permalink | Comment | Email this

Latest Economic Reports for October Mixed

Sat, 21 Nov 2009 07:00:21 +0000

According to the latest economic reports, our economic recovery continues to be very fragile and slow. The index of leading economic indicators rose in October for the seventh straight month but by less than it did in September. Jobless claims were down and stock prices were up.

New home construction was down by almost 11 percent, the lowest number in six months. Hopefully, the extension of the $8,000 tax credit for first-time home buyers until April 2010 will fuel new home construction in the months to come.

Retail sales were up 1.4%, based mostly on automobile sales. Only 0.3% of that amount were non-automobile sales.

Industrial production inched up by just a little due to the small increase in retail sales and inventory reduction stalled. The Consumer Price Index did not indicate any need to worry about inflation.

One worry is that the unemployment rate will rise even higher than 10.2% where it is now. These statistics show that we will enter 2010 in a slow and shaky economic recovery.

Latest Economic Reports for October Mixed originally appeared on About.com Business Finance on Saturday, November 21st, 2009 at 07:00:21.

Permalink | Comment | Email this

Check out Government Grants for Small Business

Fri, 20 Nov 2009 08:42:19 +0000

Believe it or not, there actually are government grants available for small business. They are only in certain industries and competition is fierce, but they are certainly worth checking out. There are some size limitations and other eligibility requirements.

Grant applications are notoriously long and time-consuming to write. Not only that, but they are difficult to write. If you decide to write a grant application, you might want to get some help, perhaps from your local Small Business Association or SCORE office.

Check out eligibility requirements and available government grants at Grants.gov.

Check out Government Grants for Small Business originally appeared on About.com Business Finance on Friday, November 20th, 2009 at 08:42:19.

Permalink | Comment | Email this

Warren Buffett and Goldman Sachs Team up to Help Small Business!

Thu, 19 Nov 2009 08:55:33 +0000

In a surprisingly (to me) development, Bloomberg News reported today that Buffett's company, Berkshire Hathway, the largest shareholder in Goldman Sachs, and Goldman Sachs are teaming up to join President Obama's initiative to help 10,000 small businesses. The initiative ranges from counseling to helping small businesses find funding.

The 10,000 Small Business Initiative will be chaired by Buffet, Michael Porter of Harvard Business School, and Lloyd Blankfein, CEO of Goldman Sachs.

When announcing this initiative, Blankfein apologized for the role Goldman Sachs played in the Wall Street crisis in 2008, acknowledged that his company was in the wrong, and stated that they want to play a part in the recovery to make up for it. They have paid back the TARP money they received, with dividends.

This sounds good. We'll see how far it will go!

Warren Buffett and Goldman Sachs Team up to Help Small Business! originally appeared on About.com Business Finance on Thursday, November 19th, 2009 at 08:55:33.

Permalink | Comment | Email this

Are Your Sales Dollars Translating Into Profits?

Wed, 18 Nov 2009 07:00:05 +0000

In a recession, one of the problems small business has is translating the sales dollars they do generate into profits. Why? Because of their expenses. Even when sales drop, many expenses, like overhead, remain the same. Some expenses drop when sales drop. Cost of goods sold, for example, tend to drop when sales go down because they are variable costs.

How do you measure whether your sales dollars are translating into profits? One of the best ways is to calculate the Operating Profit Margin Ratio. A high operating profit margin ratio shows good cost control on the part of the company and/or that sales are increasing faster than costs.

Take a look at your income statement and calculate your operating profit margin ratio. See what you can find out!

Are Your Sales Dollars Translating Into Profits? originally appeared on About.com Business Finance on Wednesday, November 18th, 2009 at 07:00:05.

Permalink | Comment | Email this

Top TARP Recipients Cut Small Business Loans by $10.5 Billion in 2009

Tue, 17 Nov 2009 07:00:58 +0000

On Monday, CNN reported that the U.S. Treasury issued a report which indicated that the top 22 banks that got the most TARP money in the federal financial institution bailout decreased their lending to small businesses by $10.5 billion in the last six months. This happened despite President Obama specifically asking the large banks to step up their small business lending in order to aid economic recovery.

Of course, small businesses already knew this due to their inability during this entire year to get the loans and lines of credit they need, including the ARC loans.

Three of the 22 banks made no small business loans since April, when a requirement went into effect that banks report their small business lending. Fifteen other banks reported a significant drop in small business lending with Wells Fargo leading the way. Banks are under pressure to improve their balance sheets and they see small business loans as risky.

Someone should ask how small business loans with Small Business Administration guarantees are risky and why the banks won't go ahead, at least, with ARC loans and the SBA 7(a) loans with increased loan guarantees? Could it be that they just don't want to deal with the paperwork and it's easier not to do it than to help small businesses?

Is your small business having trouble getting an ARC loan? Share your experience with us!

If you have had trouble with getting a bank loan or losing your line of credit, leave a comment. We would love to hear your story!

Top TARP Recipients Cut Small Business Loans by $10.5 Billion in 2009 originally appeared on About.com Business Finance on Tuesday, November 17th, 2009 at 07:00:58.

Permalink | Comment | Email this

Starting a Business? Here's your Accounting Cycle!

Mon, 16 Nov 2009 07:00:17 +0000

If you are starting a business or even buying an existing business, you need to start or understand the accounting cycle for your company. Bookkeeping or accounting are often areas of the business that the owner really tries to avoid and would rather outsource to a bookkeeper or accountant. Nothing wrong with that!

Even if you outsource, you still need to understand the basic accounting cycle so you know what documents and records to give your accountant and so you can understand the output you receive from the accountant.

The same is true if you use a computerized accounting program. To understand the program, you need to understand the inputs.

Go through the eight steps of the accounting cycle and you will understand how bookkeeping should be done for your firm!

The Accounting Cycle for your Small Business

Starting a Business? Here's your Accounting Cycle! originally appeared on About.com Business Finance on Monday, November 16th, 2009 at 07:00:17.

Permalink | Comment | Email this

Use your Personal Credit Card for Business Operations

Sat, 14 Nov 2009 10:15:35 +0000

At this time, the Credit CARD Reform Act of 2009 does not cover business credit cards, although there is a movement in Congress to extend protection to business cards.

Credit card companies have spent their time, since the passage of the CARD act, raising fees and interest rates for individuals holding their cards in order to beat the deadline for the legislation which was February 2010. In response to this, Congress moved up the implementation date to December 1, 2009.

In order for business owners to take advantage of the protections offered by the Credit CARD Act of 2009, they can use, to a certain extent, their personal credit cards for their businesses, particularly if they aren't incorporated. If you are an entrepreneur just starting up a business, then you will likely be using a personal credit card for your expenses and will be protected by the Credit CARD Act.

Entrepreneurs and other small business owners have the opportunity to take advantage of using personal credit cards for their business transactions until some decision comes down about the business use of personal credit cards and legislation is passed to protect small businesses from predatory business credit card practices.

My advice to small business is to keep careful track of your personal and business transactions and keep all your receipts as source documents.

Use your Personal Credit Card for Business Operations originally appeared on About.com Business Finance on Saturday, November 14th, 2009 at 10:15:35.

Permalink | Comment | Email this

2009 Guidelines on Payroll Taxes for Small Business; Senate Health Care Bill

Fri, 13 Nov 2009 08:47:48 +0000

Payroll taxes are the difference between what your employees earn or their gross pay and what they take home or their net pay. Income tax is the amount withheld based on how the employee fills out their Form W-4 and the current withholding tables.

Social security taxes (also called FICA) and Medicare taxes are other components of payroll taxes. They are established percentages of gross pay. Currently, the Social Security tax rate is 6.2% and the Medicare tax rate is 1.45%. There is a maximum on social security deductions, however. In 2009, the employer can deduct social security only until employee pay reaches $108,900. There is no maximum on Medicare.

Currently, the Senate is considering a hike in Medicare taxes on employees making more than $250,000 to help finance health care reform legislation. It is not known if this increase would apply to the company's portion of the tax.

2009 Guidelines on Payroll Taxes for Small Business; Senate Health Care Bill originally appeared on About.com Business Finance on Friday, November 13th, 2009 at 08:47:48.

Permalink | Comment | Email this

Friday Finance Term of the Week

Fri, 13 Nov 2009 07:00:03 +0000

This Friday's Finance Term of the Week is Retained Earnings. Retained earnings are the portion of net income that companies do not pay out as dividends to their investors but rather reinvest in their firm.

For a more detailed definition, click on the link!

Friday Finance Term of the Week originally appeared on About.com Business Finance on Friday, November 13th, 2009 at 07:00:03.

Permalink | Comment | Email this