A “Cash Flow Statement” shows the sources and uses of cash and is typically divided into three components: Operating Cash Flow. Operating cash flow, often referred to as working capital, is the cash flow generated from internal operations. It comes from sales of the product or service of your business, and because it is generated internally, it is under your control. Investing Cash Flow. Investing cash flow is generated internally from non-operating activities. This includes investments in plant and equipment or other fixed assets, nonrecurring gains or losses, or other sources and uses of cash outside of normal operations. Financing Cash Flow. Financing cash flow is the cash to and from external sources, such as lenders, investors and shareholders. A new loan, the repayment of a loan, the issuance of stock, and the payment of dividend are some of the activities that would be included in this section of the cash 1[low statement.
Good cash management is simple. It involves:
I. Knowing when, where, and how your cash needs will occur 2. Knowing the best sources for meeting additional cash needs 3. Being prepared to meet these needs when they occur, by keeping good relationships with bankers and other creditors
The starting point for good cash flow management is developing a cash flow projection. Smart business owners know how to develop both short-term (weekly, monthly) cash flow projections to help them manage daily cash, and long-term (annual, 3-5 year) cash flow projections to help them develop the necessary capital strategy to meet their business needs. They also prepare and use historical cash flo’v statements to understand how they used money in the past.
Source:
US. Small Business Administration
Advantages to the company include:
Advantages to the company include:
An Executive Bonus Plan can be an excellent low-cost method to reward employees whose hard work helps make your business profitable
Why 401(k) Plans?
40 1(k) plans can be a powerful tool in promoting financial securil:y in retirement. They are a valuable option for businesses considering a retirement plan, providing benefits to employees and their employers. Employers start a 401(k) for a host of reasons.
Initial Actions - Here are four basic actions necessary to have a tax-advantaged 401(k) plan:
A traditional 401(k plan offers the maximum flexibility of the three types of plans. Employers have discretion to make contributions on behalf of all participants, to match employees’ deferrals, or do both. These contributions can be subject to a vesting schedule (which provides that an employee’s right to employer contributions becomes nonforfeitable only after a period of time). In addition, a traditional 40 1(k) allows participants to make pre-tax contributions through payroll deductions. Annual testing ensures that benefits for rank and file employees are proportional to benefits for owners/managers. A safe harbor 401(k) plan is similar to a traditional 40 1(k) plan, but, among other things, must provide for employer contributions that are fully vested when made. However, the safe harbor 40 1(k) is not subject to many of the complex tax rules that are associated with a traditional 401(k) plan, including annual nondiscrimination testing.
Both the traditional and safe harbor plans are for employers of an” size and can be combined with other retirement plans. A SIMPLE 401(k) plan was created so that small businesses could have an effective cost-efficient way to offer retirement benefits to their employees. A SIMPLE 401(k) plan is not subject to the annual nondiscrimination tests that apply to the traditional plans. Similar to a safe harbor 401(k) plan, the employer is required to make employer contributions that are fully vested. This type of 401(k) plan is available to employers with 100 or fewer employees who received at least $5000 in compensation from the employer for the preceding calendar year. In addition, employees that are covered by a SIMPLE 401(k) plan may not receive any contributions or benefit accruals under any other plans of the employer.
Once your have decided on the type of plan for your company, you will have flexibility in choosing some of the plan’s features -- such as which employees can contribute to the plan and how much. Other features written into the plan are required by law. For instance, the plan document must describe how certain key functions are carried out, such as how contributions are deposited in the plan.
Predictable, Secure Lifetime Benefits Defined benefit pension plans offer workers a number of advantages when compared to other workplace retirement plans. They provide workers with a predictable and secure benefit for life.
If a worker is married, a defined benefit plan must also pay an annuity to the worker’s surviving spouse for the spouse’s life, unless the worker and spouse elect otherwise.
Additional Benefit
Possibilities:
Defined benefit plans can provide additional valuable benefits to workers, such as early retirement benefits, extra spousal benefits, disability benefits, or cost-of-living adjustments.
Executive Bonus Plans: Reward key employees with life insurance paid with deductible business dollars. Your key employees are an important reason that your business is profitable. Employers often use selective, discriminatory fringe benefits to reward those employees whose work is more responsible for creating profits. An Executive Bonus Plan is one of these selective benefits. How an Executive Bonus Plan works
Premiums
Employee Life
paye income insurapilce
tax on policy
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Group Life insurance covers the lives of multiple persons, such as some or all employees of a business, or members of a labor union, or those owing money to an automobile finance company, or members of an association. The person owning the “master group policy” in the above examples are the employer, the union, the finance company and the association, respectively. The insured persons, whether they get the life insurance as an “employee benefit”, or a member benefit “for free”, or make a contribution to its cost, or pay for it completely themselves, generally may name their own beneficiaries and are issued “Certificates” that are subject to the underlying Group Life Policy.
Group Life insurance historically was based on the risk characteristics of the group as a whole, without the intensive underwriting of each member, recognizing that some members of the group would be better risks than others, but it all works out. Further many groups generally were strongly cohesive, with many common characteristics linking all members of the group. For example, all employees of an established company like General Motors (who as people working on ajob are healthier than an average of the population of like age, which includes some so ill they cannot work), or a group of lawyers (who do not engage in what is commonly considered a dangerous occupation), or actively flying commercial airline pilots (who, although in a slightly riskier job, must be in far better health to be actively flying). This often produced savings for members, as it lowered the costs of underwriting and issuing policies.
Employer-Provided Disability income Insurance Some employers offer disability income insurance to their employees. The employer or the employee can pay the premium. If the employer pays the premium, the employee will pay tax on any disability benefits you receive. If employee pays the premium on the disability income insuran::e and pay for it out of your own pocket with after-tax dollars, the benefits you receive are generally tax free. This is a very important distinction to consider. If you have employer provided disability insurance, you can supplemeni: it with an individual policy. In some states (NY, NJ, RI, CA, PR), employers may be required to provide disability income insurance. Short-Term Disability
Short-term disability benefits are often included as part of an employee benefits package. Short-term disability plans replace income for the early period of a disability. In general, the j’:lans provide benefits that range from as little as two weeks up to two years replacing the income for the time an employee is disabled. Plans often have an elimination period or a waiting period that is the time after you become disabled until your benefits begin. Short-term disability waiting periods are usually 0 to 14 days. The employee will not get paid benefits until the waiting period expires. Long-Term Disability Insurance Short-term disability benefits provide long term disability coverage. Disability Benefits help replace income for longer period, often five years or until the disabled person turns 65. Plans or even for life. These plans can have different waiting periods, typically 60, 90, 180, or 365 days.
A health insurance policy is a contract between an insurance company and an individual or his sponsor (e.g. an employer). The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the health insurance company are specified in advance, in the member contract or “Evidence of Coverage” booklet. The individual insured person’s obligations may take several forms: Premium: The amount the policy-holder or his sponsor (e.g. an employer) pays to the health plan each month to purchase health coverage. Deductible: The amount that the insured must pay out-of-pocket before the health insurer pays its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health insurer. It may take several doctor’s visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care.
Co-payment: The amount that the insured person must pay out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 co-payment for a doctor’s visit, or to obtain a prescription. A co-payment must be paid each time a particular service is obtained. Coinsurance: Instead of, or in addition to, paying a fixed amount up front (a co-payment), the co-insurance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment, while the insurance company pays the other 80%. If there is an upper limit on coinsurance, the policy-holder could end up owing very little, or a great deal, depending on the actual costs of the services they obtain. Exclusions: Not all services are covered. The insured person is generally expected to pay the full cost of non- covered services out of their own pocket. Coverage limits: Some health insurance policies only pay for health care up to a certain dollar amount. The insured person may be expected to pay any charges in excess of the health plan’s maximum payment for a specific service. In addition, some insurance company schemes have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum and the policy-holder must pay all remaining costs. Out-of-pocket maximums: Similar to coverage limits, except that in this case, the insured person’s payment obligation ends when they reach the out-of-pocket maximum, and the health company pays all ftirther covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
Capitation: An amount paid by an insurer to a health care provider, for which the provider agrees to treat all members of the insurer. In-Network Provider: (U.S. term) A health care provider on a list of providers preselected by the insurer. The insurer will offer discounted coinsurance or co-payments, or additional benefits, to a plan member to see an in- network provider. Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the “usual and customary” charges the insurer pays to out-of-network providers. Prior Authorization: A certification or authorization that an insurer provides prior to medical service occurring. Obtaining an authorization means that the insurer is obligated to pay for the service, assuming it matches what was authorized. Many smaller, routine services do not require authorization. Explanation of Benefits: A document sent by an insurer to a patient explaining what was covered for a medical service, and how they arrived at the payment amount and patient responsibility amount.
Prescription drug plans are a form of insurance offered through some employer benefit plans in the United States. This is where the patient pays a co-payment and the prescription drug insurance part or all of the balance for drugs covered in the formulary of the plan. Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn’t pay. The insurance company pays out of network providers according to “reasonable and customary” charges, which may be less than the provider’s usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider’s standard charges. It generally costs the patient less to use an in-network provider.