Portugal still has plenty to offer to the overseas investor who’s willing to dig in. PeopleImages.com – Yuri A / Shutterstock.com
I’ve been spending time in Europe for decades. I’ve lived in Ireland and hold an Irish passport. I still live part-time in France. And I’ve invested right across the continent, from Cyprus to Spain, Romania, Croatia, and beyond.
What’s the most important first step to launch a small business? Form an LLC or other legal business entity. Read on to find out why. [[{“value”:”
Image source: Getty Images
Want to start a business? Along with choosing a business name, getting a small business website, and making a small business marketing plan, perhaps the most important first step is something that sounds boring and legalistic. But it could be the most important move you ever make for your business and personal finances.
When you are officially ready to launch your small business, it’s important to make it “official” by forming a legal entity for your business. This can include forming a limited liability company (LLC) or incorporating your business as an S Corporation or C Corporation.
No matter what structure you choose, here are a few reasons why forming a legal business entity is crucial to your small business success.
When you form an LLC or incorporate your business, you are making your business “official” in the eyes of the law. You did it! Your business is no longer just a dream or a vision of something you might do “someday”; it’s a real thing that exists in the world, in the government records, with a business name and an Employer ID Number (EIN) all its own.
Registering your business with your state’s Secretary of State office or other business formation authority can feel empowering and inspiring. It gives your business a name that you can put on a website and print on business cards. It helps clarify your sense of purpose and supercharges your motivation — your business is real now, and you can shout it from the rooftops!
Forming an LLC or other entity can create a unique legal identity for your business that is separate from your personal finances. This can help protect your personal assets in case of a lawsuit against your business, and limit your personal exposure to business losses or debts (hence the “limited liability” part of the “company”).
Setting up an LLC is not a “get out of debt free” card, of course — some small business debts and small business credit cards require a personal guarantee from the business owner. And an LLC also doesn’t give you an invincible force field of protection against lawsuits. Creditors or plaintiffs’ lawyers could still try to go after your personal assets if a judge agrees.
But having a legal entity for your business can still provide peace of mind. And it’s the right thing to do if you want to operate your business in the most professional, tax-compliant way, while keeping your business separate from your personal life (and bank account).
Forming an LLC or other legal business entity can help you open a business bank account. This is an important step in your small business journey, because it gives you a home base for your business income. Getting a business checking account is a powerful feeling, because now you have a place to receive payments from your clients!
Opening your first business bank account can also be an occasion to apply for your first business credit card, and start to build credit under your business name. You might want to open a business savings account, too — the best ones are offering 4.00% APY (or higher) now.
Setting up a legal business entity makes it easier for you to get the tax benefits of being a small business owner. Having a separate business bank account and keeping business finances separate from your personal life can make it smoother to track tax-deductible business expenses.
Some business entities, like LLCs and S Corps, also get tax advantages like the 20% qualified business income deduction, and offer flexibility for how to manage your payroll tax liabilities. Talk to an accountant or tax attorney to see how your choice of business entity can affect your personal tax return.
Forming a legal business entity is important not just for the excitement and passion of committing to being an entrepreneur — it can also help protect you from some of the worst-case scenarios of being in business.
Don’t miss out on the financial advantages and possible tax benefits of forming an LLC or other legal business entity. Check with your state’s Secretary of State office to see your options for registering a legal entity for your small business.
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Expectations about retirement don’t necessarily align with the reality of living in the golden years. fizkes / Shutterstock.com
Life is full of surprises, and retirement is no different. Recently, the Employee Benefit Research Institute published its 34th annual Retirement Confidence Survey. The survey of more than 2,500 adults included both workers and retirees. As it turns out, workers’ expectations about retirement differ greatly from the lived experience of those who have actually reached their golden years.
Plan for an early retirement that’s rich in purpose and financially sound. Perfect Wave / Shutterstock.com
Early retirement — retiring at 62 or before — seems like a wonderful dream to a lot of people. You’ve been in the workforce for decades. You have focused on work with the goal of enjoying the rest of your life on your own terms. But is it too early to get out of the rat race? Retiring at age 62 is quite a bit different (good and bad) from retiring later. If you’re wondering whether it’s the…
This type of insurance might not be on your mind yet if you’re not retired. But keep reading to learn why it should be. [[{“value”:”
Image source: Getty Images
Long-term care insurance, or LTC insurance, isn’t well understood by many Americans, especially those who aren’t yet at retirement age. However, a good time to start thinking about this type of insurance is when you’re about a decade away from retiring.
With that in mind, here are three points to consider as you decide whether getting LTC insurance could be a smart move for you.
You might not realize it, but you’re likely to need some form of long-term care later in life. In fact, about 70% of people aged 65 and older will require a nursing home stay or an in-home caregiver, or will need to be housed in an assisted living facility at some point in their lives, according to LongTermCare.gov. This fact should give you pause to consider purchasing insurance to pay for it.
Many pre-retirees don’t realize just how expensive long-term care costs can be. And you don’t want to get hit with sticker shock when you eventually need a long-term stay at a nursing home or an in-home health aide. But here are a few statistics to put things into perspective:
The average cost of a private room in a nursing home is more than $100,000 per year, and it can be much more if you live in a high-cost-of-living area.15% of people will pay more than $250,000 in long-term care costs. And this is in today’s dollars.The median cost of in-home care in the U.S. is $30 per hour. If you need care for eight hours every day, this translates to $87,600 per year.
It’s a common misconception that expenses like nursing home stays and in-home caregivers will be covered by Medicare, but this is usually not the case — especially if the care is needed for a longer period.
LTC insurance benefits typically kick in after a certain waiting period (90 days of needing services is common), and most policies provide benefits for one to five years, usually with a per-day maximum.
The cost of LTC insurance can vary dramatically depending on the policy you want, as well as your personal health, gender, and other factors. But one of the biggest determining factors when it comes to LTC insurance costs is your age when you get the policy.
Here’s one reason to get LTC insurance now as opposed to waiting: The average annual premium for a 55-year-old man in 2022 with $165,000 in level benefits was $950. It would be nearly double that amount if you wait until 65 to get a policy.
Many people might think that paying for LTC insurance in their 50s is a waste of money that could be used elsewhere in their budget. But while you aren’t likely to use the benefits when you’re that young, buying early can save you a lot of money over time.
It’s also worth noting that if you’re married, you can buy a single LTC policy for both spouses, and this can be a great way to make your premiums more affordable. It’s typically cheaper than buying individual LTC policies.
LTC insurance can prevent unexpected long-term care costs from depleting your retirement nest egg. With a roughly 50-50 probability that you’ll need long-term care at some point, the high costs of care that aren’t likely to get any lower, and the ability to lock in a lower premium by purchasing a policy before you retire, it could be a smart idea to take a closer look at LTC insurance as part of your retirement planning.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
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Should you take your Costco membership to the next level? Read on to find out. [[{“value”:”
Image source: Upsplash/The Motley Fool
Many people wonder how Costco is able to offer such competitive prices on the items it carries in its stores. And the reason largely boils down to the fact that the warehouse club giant collects a lot of revenue in the form of membership fees. In fact, Costco is now collecting those membership fees 73 million times over.
Now when it comes to paying membership fees, you have a choice. You could stick to a basic Costco membership and pay $60 a year, or upgrade to an Executive membership and spend $120 a year. The upgraded membership offers the benefit of 2% cash back on your Costco purchases.
You may be torn over whether to stick with a basic membership at Costco or pay an extra $60 for the upgrade. But if these signs apply to you, then the upgrade may be worth pursuing.
Some people shop at Costco once a month, or even once a quarter. But if you’ve started shopping at Costco on a weekly basis, then it may be a good time to upgrade your membership.
Your Executive membership upgrade makes sense when you spend more than $3,000 a year at Costco. That’s because 2% of $3,000 is $60 — your exact upgrade cost. So if you spend $4,000 a year at Costco, you’re getting $80 back on your Executive membership, which more than covers your $60 upgrade fee. And if you’re now coming to Costco every week, there’s a good chance you’ll end up spending enough in the course of a year to make back your upgrade cost and still pocket some additional cash back.
Some people go through periods where they’re more or less strict about spending money. If you’ve decided you’re in a buckle-down period where you’re going to follow a tight budget in an effort to grow your savings, then you may end up more reliant on Costco for affordable groceries and household essentials. You may also end up spending more money on groceries so you can spend less on restaurants and takeout.
In that case, it may be a good idea to upgrade your membership. Replacing two to three restaurant meals a week with home-cooked ones could help you bank a lot of cash, but you’ll still need to feed yourself. And if you think Costco will become your go-to source for ingredients, then you might come out ahead financially with a membership upgrade.
As mentioned, it only takes $3,001 in annual Costco spending for an Executive membership to pay off. So if you’re aiming to buy a single item from Costco that costs that much or more, then upgrading your membership is an easy call. So for example, if you intend to buy a $3,200 couch, you’d want to look at upgrading before doing so to get the cash back.
Keep in mind, too, that vacation packages booked through Costco are also eligible for cash back under an Executive membership. And one of those could easily run you $3,001 or more, especially if you’re booking a trip for a family.
If you only shop at Costco on rare occasions and don’t tend to spend a lot of money while doing so, then you may want to stick with a basic membership. Otherwise, consider an Executive membership upgrade if these scenarios apply to you.
And remember, if your upgrade doesn’t end up benefiting you financially, you can always downgrade. Costco will even give you the difference if, after a year, you haven’t racked up enough cash back to make up for your $60 upgrade cost. So unless you’re absolutely certain you won’t come close to spending $3,000 a year at Costco, the Executive membership is worth trying out.
If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
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