In the United States, individuals, members of partnerships, corporations, estates and trusts must pay income tax on their gross income (which is the value before tax). 

According to Title 26 of the United States Code along with Section 61 of the Internal Revenue code, gross income is the total income from whatever sources it may come from before any taxes applied to the income. The gross income is the starting point in figuring out just what income is applicable to be taxed under the federal income tax

Sources of gross income can include:

• Gross income from a business

• Compensation for fees, services, fringe benefits, commissions, and other similar items

• Gains when dealing with property

• Rent

• Dividends

• Royalties

• Annuities

• Alimony and other separate maintenance payments

• Pensions

• Income resulting endowment contracts and life insurance

• Share of partnership gross income

• Income resulting from discharge of indebtedness

• Income from an interest in a trust or estate

• Income of a decedent

In general, all income from whatever source can be considered a part of gross income unless it is specifically excluded by law, such as inheritances or gifts, although there may be an estate or gift tax on the donor.

The United States Supreme Court has taken this interpretation of gross income this to mean that under Article 1 Section 8 Clause 1 of the U.S. Constitution, the federal government can use its full power to tax the gross income as directed by the powers given to it in the Constitution. This power also is from the 16th amendment which says Congress can create an income tax without states approval.

Some items that are excluded gross income and do not get taxed are:

• Social Security benefits, although this exemption is often not given to individuals who have a gross income over a certain amount

• Tax exempt interest such as state and municipal bonds which do tax under the federal income tax

• Life insurance proceeds

• Inheritance and gifts

• Scholarships, although certain types do get taxed, such as teaching scholarships

• Compensation for sickness or injury

• Meals and lodging given to an employee on an employer’s premises for the employer’s convenience

• Specific employee benefits such as group health insurance, certain fringe benefits

• Specific elective deferrals of an employee’s salary, such as for a 401k plan

• Contributions received by a corporation to a capital

• Profit of up to a quarter of a million dollars or half a million on a married joint tax return when selling a personal residence

In both business law and contract law, novation is a mutual agreement of the substitution of a new debt or obligation for an old one. The old one is then relieved and replaced by the newly contracted one. This can happen both with or without a chance in the parties involved. 

A novation is most often applied when the parties involved are in the situation where performance or payments are not possible under the given terms of the original agreement or contract. A novation can also be applied when the debtor has no choice but to default or declare bankruptcy if the debt cannot be restructured. Examples of contracts that are discharged by novation are mortgages, legacies, and negotiable instruments.

 There are three different ways to make a novation, which result in three different types:

• The first scenario does not involve any new person or parties. In this situation, the debtor creates the new engagement with a creditor, which liberates the parties from the former engagement. This form of novation does not have an appropriate term and is simply called a novation.

• The second scenario requires the intervention of a new party for the debtor. Here, a third party becomes a debtor and replaces the former debtor. This new debtor is then accepted by a creditor, now called the expromissor, and the former debtor is then released from the obligation. This is an expromissio novation.

• The third and final type of novation occurs when a new creditor replaces the old one. Here the debtor makes an agreement or contract some with the new creditor. This is a delegation novation.

It is a defined quality of the common law, that a simple agreement for substitution of another obligation in lieu of the original one is not valid unless it is actually executed and accepted to a satisfactory point. No situation or action can be kept upon the new obligation, nor can the obligation be held to the original demand. However, if the agreement is put into by a deed, the deed gives provides a cause of action and can potentially be enough and satisfactory for a for a simple contract debt.

The general rule that applies to a novation is that if one party is indebted to another party through a typical contract, give his creditor a promissory note, drawn by him for the same amount or value, without any new consideration, the new note will not be considered satisfactory to the original obligation unless agreed by the creditor. But if the agreement is transferred, he cannot sue based on the first contract while the note is not in his possession.

Leverage is a basic term for using any technique to increase or multiply gains and losses. Leverage can be done by using borrowed funds, using derivatives, and buying fixed assets. For example:

• A company or public corporation can borrow money to leverage its equity. This means that the more the company borrows, the less capital it requires. Any losses or profits are then shared with a smaller base and as a result, are proportionately larger.

• Hedge funds can be used to leverage assets through using their derivatives. By posting a certain value of cash as a margin, it may be possible for the hedge fun to get losses or gains on a larger value.

• A business entity or company can buy fixed assets to leverage its revenue. Doing so will increase the proportion between the fixed costs, as opposed to variable. This will allow for a change in revenue that then gives a larger operating income change.

While the potential of getting a higher amount of profits is appealing, the obvious risk of leverage makes it somewhat risky. Leverage allows for a chance of multiple losses. Any corporation that winds up borrowing too much can face the possibility of bankruptcy or severe financial struggle when experiencing a business downturn. Meanwhile, a company using less leverage may have a better chance of surviving. For example:

• If an investor purchases a stock that has a 50% margin, the investor can lose 40% of his money if the stock only declines 20%.

There is a very important implied assumption in looking at an account that has leverage versus an identical one that does not have leverage. In a situation where a company borrows money in order to modernize, expand internationally, or add new items to its product line, any additional diversification may potentially offset the additional risk from leverage even further.

Another situation is if an investor uses a certain fraction of his portfolio in order to margin stock index futures and ends up putting the remainder in a money market fund. In this case, the individual may have the equal amount of volatility and same predicted return as another investor who is in an unlevered equity index fund, which will have a limited downside.

Ultimately, adding leverage to a certain given asset will always add risk. However, this does not necessarily mean that a company with leverage or an investment with leverage is always riskier than one without leverage. It is very possible for a fund that has high leverage to have even less volatility in return in comparison to the funds without leverage.

In business, competition between sellers within an open marketplace is beneficial for both businesses and consumers. Competition not only keeps prices lower and raises quality, but it also provides more choices and more reason to be innovative. In order to maintain this sense of competition between sellers, the Federal Trade Commission enforces the antitrust laws.

These laws were first created in response to many companies who concealed their business practices using trusts in the late 19th century, which threatened the free market.

·         The Sherman Act (1890)

o   Created to prevent potential cartels or monopolies that could be detrimental to having competition in a free market

o   The act does not allow companies to artificially raise the price

·         The Federal Trade Commission Act (1914)

o   Created the Federal Trade Commission which now regulates large corporations and stops them from having unfair trading practices

·         The Clayton Act (1914)

o   Prevents certain practices that could harm competition in free market, such as price discrimination or having an individual being a director on two companies in competition with each other.

While the anti-trust laws are applicable to most organizations, there are certain types that are exempt from the anti-trust laws, such as labor unions banks, and agricultural cooperatives.

The Federal Trade Commission still continues to monitor large corporations to ensure that no business practices occur that may harm the free market and healthy competition. The Federal trade Commission Monitors the following activities:

·         Mergers

o   While mergers can allow firms to operate more smoothly, mergers result in fewer options and possibly higher consumers.

·         Agreements Among Competitors

o   Businesses cannot conspire to raise prices, hinder other businesses from operating, or raising prices

o   The Federal Trade Commission pays close attention to potential artificial price fixing

·         Manufacturers and Product Dealers

o   There are some agreements, for example a car with a brand of tires that are acceptable, but others can be illegal if they restrict competition without providing customer benefits.

·         Monopolies

o   By excluding other companies or impairing their ability to compete, it can hurt the consumer by allowing them to control prices.

·         Other Anticompetitive Actions

By regulating major corporations, a free market can exist and competition is possible between sellers. However, there can be downsides to competition in the free market. It can potentially lead to increased costs and if waste if companies repeat ideas without innovation. In certain circumstances, competition is inefficient and a natural monopoly flourishes.

A charity is a non-profit organization that works to benefit the public or accomplish some form of philanthropy. 

Charities can be either public or private foundations. When a charity (even if foreign) qualifies under the Internal Revenue code Section 501(c)(3), which makes them exempt from taxes, they are considered to be a private foundation. A private charity receives the majority of its funds from one source, such as a family, individual or a corporation.

If the charity does not qualify to be a private foundation, it is considered to be a public foundation, and also classifies under Section 508(b) or 509(a). In a public charity, the majority of funding comes from the government, private foundations, or individuals.

For a charity to have 501(c)(3) status, it must be organized and run exclusively for the reasons described in the code, in this case purely for charity. The organization cannot benefit any private interests and none of the earnings should benefit any one private individual shareholder. Because of this status, a charity can get tax-deductible contributions.

A charity is limited in its ability to conduct legislative and political activities, such as lobbying. Under 501(c)(3) code, a charity must do the following:

• Restrict lobbying to a very small part of the charity’s activities

• Refrain from taking part in any candidates during political campaigns on any level of government

• Not let any earnings benefit one individual or private shareholder

• Refrain from operating for the benefit of one private interest or for the purpose of any trade or business that is not related to the exempt purpose

• Refrain from illegal activities

The most common 501(c)(3) charities promote:

• Fighting community deterioration

• Preventing juvenile delinquency

• Eliminating discrimination and prejudice

• Constructing or maintaining public monuments, buildings, or works

• Advancing science or education

• Advancing religion

• Securing civil and human rights through the law

• Helping the underprivileged, the distressed, or the poor

 

A charity that is under 501©(3) must follow two disclosure rules placed by the federal tax law. A donor must receive from the charity a written acknowledgement for any individual contribution that is at least $250 in order for the donor to claim a federal contribution on a federal income tax return. Second, a charity must give a written disclosure to a donor who pays $75 or more as a combination of contribution and payment for a service or good.

A business letter is written differently from most letters due to its use of formal language. Instead of showing creativity using evocative language, a business letter uses more succinct language, while stressing accuracy and specificity. 

The write an effective business letter, it is important to assume that the receiver of the letter will not have much time and will want to quickly understand the point of the message. Depending on the context, the writing style can be more casual, such as what would be found in an email correspondence or more formal, such as what would be found in a contract. The writing style of a business letter relies on the circumstances and it is important to use the correct amount of formality.

Most business letters can be broken down to the following sections:

• Sender’s address

o If the address is not already in the leader head, include one line above the date at the top of the letter.

o Only write the street, city, and zip code.

• Date

o The date is the date that the letter was written or completed.

o Write the month, day, and year 2” from the top of the page either in the center or left justified.

o It should be written in American date format if addressed to an American company.

• Inside address

o This is to a specific individual and his or her business address. 

o The address is left justified and one line underneath the sender’s address or the left.

• Salutation

o This is the name within the inside address with the personal title.

o Use a personal title, full name, colon and a blank line after the salutation.

o The personal title can be omitted if gender is unknown.

• Body

o The body should be in paragraph format that are left justified and single spaced.

o There should be a blank line between paragraphs.

• Closing

o The closing is at one line after the final body paragraph and has the same horizontal point as the date. The first word should be capitalized and four spaces should be left between the closing and the sender’s name.

• Enclosures

o Enclosures should be indicated by typing “enclosure” a line after the closing.

o Documents can be listed optionally, particularly if there are multiple documents.

• Typist initials

o The typist of the document usually initials the document, but if it was written by the sender, initials are omitted.

• It is acceptable to use first person pronouns, but make sure to use “we” when representing the company.

• Avoid using a passive voice in order to maintain clarity in the business letter.

• Be concise but still consider the tone of the letter in order to avoid being blunt.

B2B marketing refers to the marketing that occurs between two businesses that utilize each others products or services.  B2B is short for “business to business”.  B2B marketing is important for those companies, as they need to sustain supply chains or sustain business clients in order to be an active part of commerce.  B2B marketing applies to businesses in several different ways, ranging from the simple (having a good brand name, distinctive logo, and a website) to the very complex (appearing in trade magazines, e-mailing newsletters, and direct mail). 

B2B marketing is for those businesses that are in a supply chain and need to maintain their contacts, either from the supplying or purchasing end.  Identify whether your business has the type of relationships with other businesses that must be maintained for the benefit of your company.  Local, regional, and nationwide businesses can benefit from B2B marketing, but it needs to be adapted to your market.  Retail, distributors, and manufacturers are types of businesses in the supply chain that strive when using B2B marketing.  

B2B marketing poses a unique budgeting problem for businesses, as many companies seek increased revenue rather than nurturing relationships with other businesses.  B2B marketing also does not use traditional methods of marketing, as you are not trying to raise brand awareness, but rather increase the strength of an already existing connection.  Some B2B marketing ideas include have luncheons with other business professionals, providing informational sessions and talks that both benefit your businesses while raising awareness of your products and services, or just keeping in contact with decision makers at the other company.  

Once you have determined that your company has the relationships that can benefit from B2B marketing, you must create a plan that will meet your goals.  Brainstorming to come up with unique ideas is one method in which you and your employees can use to work into your plan. B2B marketing must use non-traditional advertising or marketing ideas in order to keep brand awareness and likability for each business.  B2B marketing will require that the leaders of your business actively work and speak with those in charge of the other companies.  Group outings, co-sponsored events, and the exchange of information can be both enjoyable and serve to market your company to other businesses.  

After coming up with the ideas and planning your B2B marketing strategy, you must put them into place.  Ensure that you follow through with your B2B marketing, in order to show the other businesses that you are capable of providing the services and products they need or that you can provide.  It will also be helpful to receive feedback about your B2B marketing strategies and continue using what works while phasing out any marketing that does not seem as helpful. 

B2B marketing can sometimes create legal and regulatory problems for the businesses involved.  You must ensure that you are compliant with all laws, especially if your business works directly with government agencies, bidding processes, and government officials.  This is due to the fact that much of B2B marketing can involve direct solicitation, providing gifts or items to other entities, and other activities that may be violate business regulations. Contact a legal professional for help if you believe your business may need to abide by such regulation before beginning your B2B marketing plan.  

Article marketing is a form of advertising that uses short articles and informational writings related to a business’ industry.  Typically, these articles will be attached by a prominent text or picture box giving the business’ name and contact information.  Article marketing is a great way of keeping your business relevant to other companies and clients while also providing information that is helpful.  Article marketing’s main goal is to advertise and keep a business’ name relevant so when a client or other business needs their services, the name is available.   

The first step before you can begin article marketing is to identify what your business produces, what services you provide, and who your client base is.  Understanding all of these factors will help you determine what type of articles you should write and at what technical level your article needs to be.  If your business works primarily with other business professionals or other highly educated clients, your articles will need to be much more in depth in order to keep their attention.  If your client base is the general public, your articles will need to be kept at a more simple level in order to keep their attention.  

Article marketing will require both financial and time commitment in order to correctly use it.  Articles that will be sent through traditional mail or given to clients in hard copy require funds to have published and printed in a professional manner.  If your budget does not allow it or it does not make sense to use traditional mail, you can always use electronic mail to send your articles, however you run the risk of having them easily deleted from email.  

After having determined who your articles will be sent to, how you will send them, and within what budget you must work, you can start to develop your plan for article marketing.  You must plan on how you will get your articles.  You have the choice of purchasing articles from professional sources, however this may be a very expensive option.  

Having yourself or an employee who is familiar with your business can be the best option for writing the articles that will be used.  However, you must ensure that you or your employee has the time and ability to write interesting and professional articles.  Your articles should be written either focusing on your business or your industry.  You can write about updates to your business, new clients you have obtained, or new products and services that you can provide.  Likewise, you can write about interesting stories about your industry and exciting new technology. 

Finally, once you have your plan in place, the money allocated for it, and your delivery method chosen, you now have to execute.  You will need to obtain all of the necessary hardware and software if you are writing the articles yourself and using the internet as your delivery.  Word processing programs, such as Microsoft Word or Word Perfect are essential for writing professional articles.  Newsletter software is also available, which will help put your articles into a readable form and send it out to clients.  “SendBlaster” is one such brand of online newsletter software and many other options are available.  

You must be careful that you meet all regulatory requirements for writing business articles and newsletters.  One of the most important regulations that may apply to your company is that you have to identify if you are sending this as an advertisement or as a legitimate informative newsletter that customers subscribe.  Contact a legal professional with experience helping businesses develop their marketing plans while complying with all applicable laws and regulations.  

Mobile marketing is a relatively new form of advertising that always a business to reach its clients via mobile phones.  Mobile phones have become one of the most used new technologies to come out, as about 91% of Americans have or regularly use a cell phone. Mobile marketing can connect you to your client via simple text messages or mobile messages that reach your clients at any time you like.  Mobile marketing is a new strategy, so beware of the pitfalls that may accompany using this new strategy.    

Mobile marketing is highly limited in that only brief messages can be sent and received.  Therefore, it is important to identify areas of your business that can be conveyed in a simple manner.  Highly technical details about new products or services just do not work with Mobile marketing.  Instead, try to determine if there are simple messages that will be of use to your client base or if there is a reason you need to contact them via mobile device.  

While text messaging for personal use is a fairly inexpensive process, businesses sending mass text messages to a large client base are faced with much larger texting fees.  Mobile marketing may also require you to purchase the hardware needed to send such messages, such as new computers, software, or smart phones that fit your mobile marketing needs.  Always investigate the potential costs of a marketing strategy before planning on bringing it to your business.  

Once you have concluded that a mobile marketing plan is both cost effective and fits your businesses needs, you need to come up with a plan that you will abide by during your marketing.  It is helpful to have a detailed plan that lists specific times, dates, and targeted clients for your mobile messages to reach.  You must also plan who will write the messages of the texts and the type of messages that will be sent.  Mobile marketing does not have to be strictly informational, you may text games, contests, announcements, or awards to your clients while keeping your name in their mind. 

Once your plan is in place, follow it as well as you can, while remaining flexible to adapt to changes that may need to be made.  Always listen to your clients about your messages.  If they inform you that they do not wish to receive your messages, you must stop sending them immediately, or else you will lose clients while possibly running afoul of the do not contact list.  

It will be important that you adapt mobile marketing concepts to your specific business and overall marketing plans.  Mobile marketing should be used in conjunction with other marketing methods, so try to determine how well they can work with each other.  Also, make sure that your messages serve a purpose.  Sending mass texts with the sole purpose of having name recognition may adversely affect your overall marketing scheme.  

An affiliate marketing program is a marketing strategy in which one business compensates a third party for bringing clients to the business by using the third party’s own marketing efforts.  Affiliate marketing programs typically involves the use of internet rewards websites and contests, although there are non-website affiliate marketing programs available.  Some of the benefits of affiliate marketing programs are that they can easily be monitored, payment can be conducted on a “cost-per-click” method, and the business is provided online marketing they could not accomplish on their own.    

Before you attempt to use an affiliate marketing program for your business, you must ensure that your business is ready to handle internet traffic or exposure to clients on the internet.  You will need a prominent business website in place, which affiliates can direct traffic for.  You must also have a client base that is dependent on the internet and will be attracted to online marketing strategies.  If all of these requirements apply to your business or you plan on having them apply, then you can seek an affiliate marketing program that works for you.  

Affiliate marketing programs can be an expensive type of marketing, however it can also provide you with great exposure to clients and dramatically increase traffic to your business website.  It is important that you have the marketing budget to afford the costs of affiliate marketing programs, especially considering that the costs may not be established until after your program has been in effect.  Many affiliate marketers charge businesses based on each unique page visit.  While these can be estimated, they can vary widely depending on the success of the program initiated.  

After determining what clients you can reach, whether you have the proper internet presence, and can estimate your budget for the program, you need to contract with an affiliate marketer that is qualified and experienced.  You can choose between an unattached affiliate marketer, related affiliate marketer, or an involved affiliate marketer.

Unattached Affiliate Marketer – This type of affiliate has no connection to the business that is paying for their services.  The marketer has no authority or presence in the industry it is marketing, but instead uses programs such as Google Ad words and Facebook ads to attract clicks.

Related Affiliate Marketer – These marketers have some sort of related content to the industry that you are trying to sell.  These types of websites will attract viewers for a purpose that is related to your business.  These can be much more useful than other forms, as the viewer is already geared towards your business.  

Involved Affiliate Marketer – Is a personal recommendation made by a content writer that has personal experience with your product.  These websites typically review and report on new products and services and give their opinion.  This can be a great way to market your product, as you will have a legitimate unbiased party recommending your product.  Of course, you always run the risk that your product or services will not be reviewed favorably, which can lead to negative marketing.  

Finally, once the program is up and running, you must actively monitor its effects.  Check to see if your website is experiencing increased traffic due to the program.  Modify your website or the affiliate program if you believe that you will benefit.  You will also need to monitor how much traffic your affiliate marketer is generating, as it will likely affect your total costs of the program.  

Affiliate marketing programs that are run with the intention of informing and helping consumers understand products and services are acceptable, however many businesses may run into an issue if these forms of advertisements are spam or have hidden charges, you will face legal issues.  Always double check any affiliate marketer before using their services, as many use illegal methods and promise results that just aren’t possible.  Consult a legal professional who specializes in internet marketing to protect your marketing plan while obtaining valuable information.