In recently released information about the extent of the federal government bailout of US financial institutions, it has been reported that total lending peaked to $1.2 trillion dollars in December of 2008. It is interesting that the titans of corporate finance had failed to effectively lead their organizations and there was very little effort at risk mitigation in arriving at investment and lending decisions. What has effectively happened is the creation of two separate aspects of the free enterprise system in America. The Wall Street chieftains were prepared to take high risk to obtain the high rewards that went with such decisions, as reflected in the stratospheric bonuses that were doled out for year end results during the period prior to the financial meltdown. However, these so called leaders were prepared to access as much of the largesse made available by the Federal Reserve when the future viability of their companies were at stake.

  It certainly speaks volumes that the CEOs were prepared to take the fruits in the good times but in the bad times there were no adverse consequences, since the power of the free market had no corrective action on them. The availability of unlimited federal money ensured the elimination of the risk of failure, which other business enterprises would be required to deal with in the economic environment. Going forward we need to ensure that the financial institutions in this country are unable to hamstrung the American people in this fashion. The big banks like the concept of too big to fail and the synonymous business model of high risk / high rewards and high risks / no consequences of failure, which has evolved over the past 15 – 20 years. As revealed by their recent efforts to lobby Congress to water down certain provisions of the Dodd-Frank Act on the financial industry, the debacle of the past and the consequences we are still facing has not been learned and understood by Wall Street.

Unfortunately the Republicans believe that they have a mandate from last November’s election when that is clearly not the case. Barack Obama’s presidency did not create the debt limit crisis. He has been in office for less than three years, but the bulk of the Republican leadership has sat passively on the sidelines when we had the Republican Party running the full show in both Congress and the Presidency, and spending was allowed to spiral out of control. The then Republican controlled Congress showed timidity and ignorance in taking the “bull by the horn” and getting the budget deficits under control. I believe that the American people need to wake up and realize just what type of situation we have existing on Capitol Hill. Instead of just trying to pass a constitutional amendment for a balanced budget, we need to look at also passing a constitutional amendment that provides for term limits to members of Congress. The bulk of our problems from having career politicians will evaporate, with the advent of a Congress that truly encapsulates, the vision and desires of the founding fathers for a citizen legislature that is representative of the people.

1. Credits which directly reduce your tax liability dollar for dollar. This would be the earned income tax credit and the child tax credit.

2. Deductions which reduce the amount of income subject to tax. Examples are the mortgage interest and charitable contributions for individuals and accelerated depreciation for businesses.

3. Deferrals which postpone the date at which income gets taxed. Examples are 401 (k) and IRA’s.

4. Exclusions and exemptions which allow certain types of income to avoid taxation entirely. Example is interest on municipal bonds.

5. Preferential tax rates for certain classes of income such as dividends and capital gains.

Based on 2010 data, the estimates of revenue foregone through these tax preferences amount to 1.1 trillion dollars annually. As a consequence any meaningful attempt to restructure the size of government finances over the longer term, would entail not only spending considerations but a major review and changes to the system of taxation in the United States to ensure it is both fair, equitable and positions the country to achieve sustained longer term economic growth and for the private sector to be competitive in the new realty of the global marketplace.

As the United States begins to recover from the recent significant economic contraction of the past three years, it is obvious that the economic climate of the second decade of the 21^st century provides very wide ranging challenges to the US government. As countries from outside the traditional spheres of influence in North America and Europe begin to reap the benefits of free market economic policies, deregulated industries and reduced bureaucracies a significant worldwide economic transformation is taking place in major countries like China, India, Brazil, and Indonesia. The United States faces major challenges to stimulate sustained economic growth, reduce unemployment levels and getting the government fiscal situation under control and in proper alignment. It is obvious that in the very near term, important policy decisions need to be taken by the US government to both restrain expenditures and increase the tax revenue intake. Both sides in Congress have failed to adequately address this situation. The budget equation is very simple. It is:-

                                 Revenue – Expenditures = Surplus or Deficit

What is not so simple and clear cut is the road map to get us to where there is a surplus, or a deficit that does not cause fundamental negative economic implications in the economy. Such implications can be manifested through the weakness in the value of the US dollar, higher inflation rates and higher cost of capital. Therefore it is obvious that any realistic attempt to achieve these objectives; need to address the issue of reduced funding for entitlement programs, which cannot be sustained at present levels. At the same time the Congress needs to look at adjustments in the tax code to generate higher tax revenues from higher income earners. In the medium term the Congress will have to look at a broader comprehensive overall of the system of taxation in the United States. The tax code has become very cumbersome and archaic and it is clear a process of simplification needs to be implemented. We need to ensure that the tax system fulfills two principles, namely raising government revenue effectively and efficiently and secondly facilitating the flow of investment capital into industries and businesses in the 21^st Century that will lead to higher economic growth and reduced unemployment, which will also boost the tax receipts. Congress needs to sit down, put the partisanship away and focus on these important tasks. Failure to do so will result in the United States becoming eclipsed economically by China, India and Brazil and we will see a waning of our influence in the 21^st Century world.

Limited liability has traditionally been associated with corporations, and is the main reason that most people consider incorporating. However, other business structures, such as limited liability companies (LLCs – combine the best aspects of partnerships and corporations. ), now offer this limited personal liability to business owners. Sole proprietorships and general partnerships do not.

1. Am I prepared to spend the time, money and resources needed to get my business started?
2. What kind of business do I want?
3. What products/services will my business provide?
4. Why am I starting a business?
5. What is my target market?
6. Who is my competition?
7. What is unique about my business idea and the products/services I will provide?
8. How soon will it take before my products/services are available?
9. How much money do I need to get my business set up?
10. How long can I have to finance the company until I start making a profit?
11. Will I need to get a loan?
12. How will I price my product compared to my competition?
13. How will I market my business?
14. How will I set up the legal structure of my business?
15. How will I manage my business?
16. Where will I house my business?
17. How many employees will I need to start up?
18. What types of suppliers do I need to contact?
19. What kind of insurance do I need to invest in?
20. What do I need to do to ensure I am paying my taxes correctly?

    Taken from: http://www.sba.gov/content/20-questions-before-starting-business

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as “the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.”