Tag Archives: finance

Sudden Wealth Syndrome

“With the present uncertainty regarding our investments, the viability of our jobs, and our financial future in general, I wonder if it might be a good idea to aggressively focus on winning the lottery as a wealth-building strategy. Even though the odds are against us, this might be the only way some of us will ever achieve financial success.”

As strange as it may sound, an investment plan that involves winning the lottery and other games of chance is probably more widely practiced than we may think. I have seen people consistently purchase lottery tickets, interpret their dreams to ‘catch the cash pot’, or bet on horses using disciplined strategies. Some may not consider this activity as gambling, but would prefer to think that they are working to secure a regular income.

Obviously, gambling is not the best route to secure one’s financial future. However, many people still dream of obtaining a wealth windfall. How many times have we heard people say, “If I had a million dollars, I’d never be broke again,” or If only I could get my hands on a lump sum of money, I could pay off my debts and start a new life.” Continue reading Sudden Wealth Syndrome

Steps to surviving a tough economy

Last week we explored some of the financial challenges being faced by many consumers in this tough economy. It seems that everyone, regardless of financial status, is reeling from the effects of the spiraling cost of living and the shrinking value of money.

There are really only two things to do when there isn’t enough money to meet your needs – cut back on spending or earn more money. Let’s take a look at some practical things you can do right now to ease the pressure of these challenging financial times:

Reduce non-essential spending

With this global financial crisis, it’s definitely not the right time to get involved in extravagant spending sprees. It’s smart to be prudent with your money at this time, so don’t spend too much money on non-essential expenses such as entertainment or clothing.

Become more price-conscious

In the past, shoppers could just pick up their favourite brand name items without concern for price; now you must scrutinize prices to ensure you’re getting the best deals. Recently, I noticed that my regular brand of corned beef cost nearly J$70 more than a perfectly good alternative. What’s worse, the cheaper brand found in this supermarket was over J$20 less at another location! Continue reading Steps to surviving a tough economy

Financial challenges in a tough economy

“I am really confused about how to make ends meet in these times. The cost of living is at an all time high, my salary can’t pay all my bills, and the returns on my investments are a joke. I really need some practical advice on how to make some more money to survive.”

If you haven’t already figured it out, we are living in tough economic times. The global financial markets are experiencing a frightening meltdown that’s affecting both multinationals and mom-and-pop stores, small savings accounts and large investment portfolios, consumers and retirees.

Here in Jamaica, the financial heads have admitted the obvious – we’re all going to be impacted by the international monetary woes in one way or the other.

Under normal conditions, making enough money to meet all our needs can be difficult. In this financial landscape it may seem almost impossible. Let’s look at some of the challenges that are currently impacting the standard ways of making money: Continue reading Financial challenges in a tough economy

Selling on the Web

Last week we looked at the process of setting up an Internet presence for your business. If you have a limited budget, cyberspace doesn’t have to be out of your reach. With less than J$15,000, you can buy a web address, design your own website using templates, and be up and running in a short time.

After you’ve established a website to showcase your products and services, you should consider getting E-commerce capabilities to sell your offerings online. According to ecommerce.networksolutions.com, electronic commerce or E-commerce is a term for any type of business, or commercial transaction that involves the transfer of information across the Internet.

E-commerce is becoming prevalent worldwide as the growth in Internet usage explodes. “In the near future the boundaries between ‘conventional’ and ‘electronic’ commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet,” the website concluded.

Most of us are familiar with E-commerce websites such as Amazon.com, the massive cyberspace shopping mall that allows you to purchase almost anything under the sun. But what exactly does it take to turn your basic website into an online sales outlet? Continue reading Selling on the Web

Put Your Business on the Web on a Budget

One of the most frequent requests I receive from readers is for tips on making money on the Internet. The worldwide web presents almost unlimited potential for both established operations and enterprising individuals alike to create extra income. In the 21st century, if you’re only focusing on customers who walk through your physical door, then you’re missing out on tremendous marketing opportunities.

Many local operators have not yet jumped on the online bandwagon, as they may not be internet savvy or may not have realized the powerful reach of the Internet as a marketing tool. Some are of the opinion that their local customers rarely use the Internet, so they don’t see the economic benefits from pitching their products and services in cyberspace.

The reality is that internet usage in Jamaica has been growing rapidly. Recent statistics published on www.internetworldstats.com reveal that some 1.2 million people in Jamaica have access to the Internet.

Also, as the internet generation (persons 25 years old and younger) start earning in the workforce, they expect to have instant access to products via online shopping options.

So how can you tap into the over 1.3 billion persons worldwide that surf the web? Continue reading Put Your Business on the Web on a Budget

Is Procrastination Destroying Your Financial Dreams?

“I have a big problem with procrastination. I keep putting off important tasks and this is affecting my finances. I hadn’t paid income taxes for several years and I was happy when I heard of the tax amnesty. I delayed getting an accountant to sort things out and now I have to pay significant penalties that could have been avoided.

“I also lost out on renting the perfect office space because I didn’t act fast enough and someone else jumped on it. My life is littered with missed opportunities caused by me dragging my feet. What can I do to cure this horrible habit?”

Don’t worry – you are not alone in your procrastinating habits. I too have experienced that sinking feeling in the pit of my stomach after missing out on a great deal or the chance of a lifetime just because I took too long to take action.

Almost everyone procrastinates on important issues, whether it’s starting an exercise programme, clearing away clutter, or doing homework. However, when the delaying tactics have to do with money, then procrastination can bring tremendous personal and monetary cost. Continue reading Is Procrastination Destroying Your Financial Dreams?

The Five Laws of Gold

“Money is plentiful for those who understand the simple laws that govern its acquisition.” George S. Clason

In these harsh economic times, there are many people who believe that it’s almost impossible for them to become get ahead financially. They focus on their shrinking spending power and their apparent inability to achieve their goals and declare, “I give up!”

What most people fail to recognize that it’s not really their lack of money that’s keeping them broke, it’s their lack of financial literacy that’s holding them back. According to Wikipedia, financial literacy is the ability of individuals to make appropriate decisions in managing their personal finances.

You can actually learn how to manage your money effectively, multiply your money to create wealth, and maintain your money to preserve it for future generations.

So where can you obtain an education on financial literacy? The bad news is that the art and science of managing money is not taught in schools, although it should be. The good news is that the information is still available if you look for it. Continue reading The Five Laws of Gold

Too many taxes for the self-employed?

Last week we discussed the financial obligations of self-employed persons for income tax, National Insurance Scheme (NIS) and National Housing Trust (NHT). This week we’ll complete our look at all the various taxes that the self-employed are responsible for paying.

Education Tax

Self-employed persons are required to pay two per cent of their statutory income in education tax every month. If you’re new to business you’re probably unsure of exactly how much income you may earn for the year, or initially you might not earn any net income at all.

The amount of education tax you pay will be based on the expected taxable earnings that you indicated in your estimated income tax return form, so it’s best to be conservative with this estimation.

It’s interesting that although there are constant reminders about paying your income tax, you hardly hear about your responsibility to pay education tax. In fact, I discovered that even the Inland Revenue Department seems a little ambivalent about when this tax should be collected. Continue reading Too many taxes for the self-employed?

A Taxing Time for the Self-Employed

Over the last two weeks, we have been focusing on the steps that newly self-employed persons should take to start out on the right footing in business. It is definitely a challenge to figure out which taxes are applicable and when they are due to be paid. Let’s take a look at the charges that sole proprietors are required to pay:

Income Tax

Income tax should be calculated on all sources of earnings including business profit, rent, and subcontracts. This tax is charged on the net profit after allowable deductions such as salaries, business rent, bank loan interest, transportation and all other expenses incurred in the production of the business income. The tax rate is 25 per cent of income, but persons are currently allowed to keep J$196,872 of their earnings tax-free.

Even though you are newly self-employed, you are still required to file an estimated income tax return. This outlines how much tax you’ll be liable to pay for the year, based on your expected taxable earnings. It’s best to be conservative when stating how much income you think you will earn when you’re just starting out.

Estimated income tax payments must be paid quarterly on the 15th of March, June, September and December each year, regardless of when you actually started operating. So if you commenced business in August, you will still need to pay up the quarterly amounts for March and June when you are filing for the September quarter.

An annual return outlining your actual income and tax liability is due by March 15th each year. If you earned less than J$1m in gross income you can just fill out an accompanying schedule that outlines your income and expenses. If your income is above this amount, you will need to submit more detailed documents like a profit and loss statement.

Note that losses from a business can be set off against all other income earned in that year. If a loss cannot be fully offset, the balance may be carried forward to the following year’s returns. If your tax liability is nil, it means that your estimated quarterly payments for the next year will also be nil, as they are calculated on the taxable income of the previous year.

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The annual return form can be a little challenging for the average person, so it is advisable to get an accountant to calculate your final statement. Ensure that you keep proper records of all your expenses, as these can help to give you tax savings. You also need to keep your records for at least six years, as the tax department can request an audit on your books.

National Insurance Scheme (NIS)

All employed persons are obligated to make payments to the NIS, which was designed to provide retirement and other welfare benefits for its contributors. The law says that persons should contribute five percent of their gross income to the NIS, up to an earnings ceiling of J$500,000 per year. So the maximum that anyone would pay for NIS is J$25,000 per year.

To start the payment process, visit the nearest NIS office with your NIS card and you’ll be given a blue stamp book to record your weekly contributions. You have to buy J$20 stamps from the post office, which are to be affixed to each of the 53 spots on the blue book. Save time by buying all the stamps at once (J$1,060 for the year). If you’re newly self-employed, the NIS agent will tell you when your weekly obligations should start.

To complete the NIS payments for the year, take a copy of your annual income tax returns to the NIS to calculate the balance owed, if any. The NIS office will issue a demand notice which must be paid at the Inland Revenue Office. Then, take that receipt to the NIS office where they will record your payment and issue a new blue card for the current year.

National Housing Trust (NHT)

The law states that all persons between the ages of 18 and 65 years must contribute to the NHT once they are working and earning at least the minimum wage. The NHT classifies self-employed as persons who are working for themselves or earning an additional income to their regular pay cheque, contract workers and company directors, all of whom should pay three per cent of their income; while domestic workers, and Jamaican citizens working in embassies and consulates in Jamaica or overseas pay two per cent.

To register as a self employed contributor, you need to complete a declaration of income form which should be signed and stamped by a Justice of the Peace. This document outlines what you estimate you will earn for the year. Then, call the NHT office for an appointment with a compliance officer to determine your contribution amount. You will need your NIS card, TRN, valid identification, one passport sized picture, and some form of evidence of your estimated income.

NHT payments for the previous month’s contributions are due by the 14th of the current month. You can pay cash at any commercial bank and by debit or credit card at NHT offices island-wide. Note that late payments attract a 20 per cent interest penalty. Currently the NHT has an amnesty for outstanding contributions, so take advantage of this if you need to.

Next week we’ll conclude our series on self-employed start-up steps by looking at some other tax requirements.

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Copyright © 2008 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, September 4, 2008

Cherryl is a financial columnist, consultant and coach. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

Lessons for the Self-Employed

“I read your article last week outlining all the institutions that self-employed persons need to visit when starting out. I’m trying to decide if I should leave my job and start my own business with an idea that I’m convinced will work. What advice can you give someone who is thinking about becoming self-employed?”

The decision to become your own boss is not always an easy one. If you’re thinking of leaving your regular nine-to-five job to strike out on your own, you’ll be faced with feelings of uncertainty about your plan of action, and fear about an unknown financial future.

After changing my job situation from employee to ‘self-generated-income earner’ last year, I have learnt many lessons about becoming an entrepreneur. Some have come the hard way by learning from my mistakes, but valuable knowledge has also been gained by observing and mirroring the practices of profitable business owners.

Here are some of priceless tips I’ve learned about successful self-employment: Continue reading Lessons for the Self-Employed