Meet EGBI Intern: Avaneesh

By: Alana Lewis

I’m Avaneesh, a junior high school student with a passion for music and anime. In my free time, I love immersing myself in the latest tunes and exploring captivating anime series. With a curious mind and a love for entertainment, I’m always on the lookout for new and exciting experiences.

1. How has being an intern at Egbi helped you?

EGBI has helped me through my journey by teaching me how to interact with people older and younger than me in the workplace and how to properly dress, communicate, and work in the office to maximize my results.

2. What are three ways to succeed?

Three ways I think makes anyone successful are 1. Communicate with your superiors to gain the best understanding of the situation 2. Be consistent with how you do your assignments 3. Keep a positive mindset during your work days.

3. What are some things you like doing outside of work?

I enjoy working out and blasting music in my room at night.

4. After working with EGBI what are some things you would like to work on?

I would like to work on more Customer Relationship Management (CRM) software and understand what all the different modules mean.

5. What is the future career path you would like to take after working with EGBI?

I would like to pursue pre-med but let’s see how far that goes.

6. After being an intern with EGBI would you actually commit to this job?

If not for pre-med, I would like to commit to this job since I enjoy helping those around me, and doing it for free is even better.

Find the Spanish version here.

If you would like to learn more about volunteer opportunities at EGBI please email hello@egbi.org.

Meet Sahith Yamani

Sahith Yamani is an Intern at EGBI in Austin. He has lived his whole life in Austin and is a rising senior. His many career interests so far are finances, data analysis, or business. He likes to spend his free time swimming, gaming, or going out with friends. 

Share a fun fact about yourself

I really enjoy playing games with my friends, it doesn’t matter if it’s a video game or a sport, all things are fun. I also swim for my high school varsity swim team with my friends.

Why did you get involved with EGBI? 

I first got involved with EGBI through the City of Austin’s high school internship program. EGBI’s mission and values perfectly aligned with my own interests.

How does EGBI align with your personal and professional goals?

EGBI aligns with my goals such as wanting to learn through real life experiences and learn more about contributing to community prosperity. Participating in EGBI’s programs allow me to enhance my knowledge and skills in data analysing, business development, and communication skills.

How would you describe your experience with EGBI?

My experience at EGBI is something I call fulfilling. It is so much more different than I would have thought it to be and it’s different in a good way.  From the outset, the onboarding process was seamless, and the team was welcoming and supportive. Participating in EGBI’s workshops on business planning, financial management, and marketing strategies greatly enhanced my entrepreneurial skills. The mentorship program provided invaluable guidance, helping me navigate challenges and boosting my confidence.

How have you grown since the beginning of your internship?

Since the beginning of my internship, I have experienced substantial growth both personally and professionally. I’ve enhanced my technical skills in Salesforce, improved my project management abilities, and become more confident in my decision-making. My adaptability has increased as I’ve navigated various challenges and my problem-solving abilities have been sharpened by tackling complex tasks and projects.

Find the Spanish version here.

If you would like to learn more about volunteer opportunities at EGBI please email hello@egbi.org.

La Incubadora Podcast: Succession Planning for Small Businesses with Miranda Barcena

By: Rutu Ruparel

In the realm of small business management, one critical yet often overlooked aspect is succession planning. This process ensures the smooth transition of business ownership, safeguarding the enterprise’s future and legacy. In an episode of EGBI’s Podcast, hosted by David Fuentes of the Economic Growth Business Incubator (EGBI), Miranda Barcena, a financial advisor from Barcena Financial Group, delved into the intricacies of succession planning. This article synthesizes key points from the podcast, providing a comprehensive understanding of succession planning and its importance for small business owners.

Introduction to Succession Planning

Succession planning is the strategic process of preparing to transition business ownership from one party to another. This can involve passing the business to a family member, selling it to a third party, or even merging with another company. As Miranda Barcena explains, the goal is to transfer the business to the right person at the right time for the right amount of money. This ensures the continuity of the business and secures the financial future of the outgoing owner.

Importance of Succession Planning for Small Businesses

Small businesses form the backbone of the U.S. economy, with over 90% of all businesses falling into this category. However, less than a third of these businesses survive beyond ten years. One of the primary reasons for this high failure rate is the lack of proper succession planning. Small business owners are often caught up in daily operations, leaving little time to consider long-term strategies. Miranda points out that succession planning is essential not only for the business’s longevity but also for the owner’s retirement and overall financial health.

Common Challenges in Succession Planning

Starting Too Late

One of the most significant challenges small business owners face is starting the succession planning process too late. Many owners dream of selling their business for a substantial amount and retiring comfortably but underestimate the time and effort required to achieve this. Proper succession planning can take years, and starting early is crucial to effectively navigating unforeseen challenges.

Lack of Knowledge

Another common hurdle is the lack of knowledge about where to begin with succession planning. As Miranda mentions, many business owners are experts in their fields but not in financial planning or business valuations. This lack of knowledge often leads to procrastination, further complicating the planning process.

Understanding Business Value

A critical aspect of succession planning is accurately valuing the business. Many owners are unaware of the true value of their business, especially how it might change when they are no longer involved. Miranda provides an example of a surgeon whose business was valued at $3.2 million with him actively working but dropped to $800,000 without him. This stark difference underscores the importance of understanding and planning for business value changes over time. By starting early and working with advisors, the surgeon could have developed strategies to increase the business’s value independent of his presence, ensuring a better outcome for his retirement.

Steps in Succession Planning

Assessing the Business

The first step in succession planning is a thorough assessment of the business’s current state and future potential. This involves evaluating financial health, market position, and internal processes. Understanding these factors helps in making informed decisions about the future.

Identifying Successors

Identifying potential successors is a crucial part of the process. This could be a family member, an employee, or an external buyer. Each option has its own set of considerations, and the choice depends on the business’s specific circumstances and the owner’s preferences.

Developing a Transition Plan

A detailed transition plan outlines the steps needed to transfer ownership smoothly. This includes setting a timeline, defining roles and responsibilities, and ensuring that the successor is adequately prepared to take over. This plan should be flexible to accommodate unexpected changes.

Financial Planning

Financial planning is integral to succession planning. This includes valuing the business accurately, planning for taxes, and ensuring that the owner’s retirement needs are met.

Legal Considerations

Legal aspects of succession planning, such as contracts, estate planning, and regulatory compliance, must be addressed to avoid future disputes and ensure a smooth transition. To do this, engaging with legal professionals is advisable.

The Role of External Advisors

Small business owners often wear many hats and may not have the expertise to handle all aspects of succession planning. Engaging external advisors, such as financial planners, attorneys, and accountants, can provide the necessary support and expertise. In the podcast, Miranda emphasizes the importance of having a team of experts to guide business owners through the process, ensuring that all legal, financial, and strategic aspects are covered.

Conclusion

Succession planning is a critical component of small business management, often overlooked due to the daily pressures of running a business. However, as Miranda Barcena articulates, early and strategic planning can significantly impact the business’s future and the owner’s financial security. By understanding the process, recognizing common challenges, and engaging with external advisors, small business owners can ensure a smooth and successful transition, securing their business legacy for the future.

Find the Spanish version here.

La Incubadora Podcast: Brand Identity, Crafting Your Business’s Distinct Persona with Krisi Gaston

By: Rutu Ruparel

In today’s competitive business landscape, standing out is more crucial than ever. Your brand identity isn’t just about a logo—it’s about creating a cohesive and compelling image that resonates with your audience. In an episode hosted by the Economic Growth Business Incubator (EGBI), Krisi Gaston, a seasoned graphic artist and illustrator based in Houston, shared invaluable insights into the art of crafting a powerful brand identity.

Understanding Brand Identity

What Constitutes Brand Identity?

A brand identity encompasses everything that defines your business’s image and reputation. It’s not limited to visual elements like logos; rather, it includes your business’s core values, personality, and the overall experience you provide to your customers. As Krisi Gaston aptly puts it, it’s about how you present yourself to the world and how your audience perceives you.”

Why Does Brand Identity Matter?

Establishing a clear and memorable brand identity is pivotal for several reasons. Firstly, it distinguishes your business in a crowded marketplace, making it easier for customers to recognize and remember you. Moreover, a strong brand identity builds trust and credibility, which is crucial for attracting and retaining loyal customers. It also sets expectations for the quality of products or services you provide, influencing customer perceptions and purchasing decisions.

Practical Tips for Crafting Your Brand Identity

1. Define Your Core Values and Goals: Before diving into design elements, take time to articulate your business’s core values and objectives. Understanding what your brand stands for will guide the entire branding process, ensuring consistency and alignment with your mission.

2. Maintain Consistency Across All Touchpoints: Consistency is key to effective branding. Whether it’ your website, social media profiles, marketing materials, or customer interactions, ensure a unified look and messaging. Consistency reinforces your brand’s identity, fosters recognition, and builds trust among your audience.

3. Invest in Professional Design Expertise: Professional graphic design plays a critical role in shaping your brand’s visual identity. According to Krisi Gaston, who is recognized as an Adobe-certified professional in graphic design and illustration, professional design expertise ensures that your visual assets—from logos to promotional materials—effectively communicate your brand’s values and personality.

4. Build Trust and Credibility: A well-defined brand identity not only attracts customers but also cultivates trust and credibility. Consistent branding signals reliability and professionalism, reassuring customers that they can expect a consistent experience every time they interact with your brand.

Key Takeaways

Crafting a compelling brand identity is a strategic investment in your business’s success. It’s about creating a distinct persona that resonates with your target audience and leaves a lasting impression. By defining your values, maintaining consistency, and leveraging professional design, you can build a strong and impactful brand identity that sets your business apart in the competitive market. In conclusion, developing a robust brand identity goes beyond aesthetics—it’s about strategically positioning your business and shaping how customers perceive you. By implementing the insights shared by Krisi Gaston, you can empower your business with a compelling brand persona that resonates with your audience and drives long-term success.

Find the Spanish version here.

La Incubadora Podcast: Facebook Marketplace, Do You Have a Business & Don’t know About It? with Andrea Harrington

What is La Incubadora Podcast?

La Incubadora Podcast is part of the Economic Growth Business Incubator, a local non-profit with the mission of providing training, coaching, and support to aspiring and existing business owners who face barriers to growing a successful business. La Incubadora Podcast is born out of the need to put in video and audio a lot of the success stories we see here at the business incubator. We also want to answer frequently asked questions and connect with small business owners with the resources to succeed in business on your own time and wherever you are while you have access to a mobile device.

For today’s episode we’ll cover a little bit more information about Facebook Marketplace. We will unravel the intriguing concept of unwittingly owning a Business and its tax implications, particularly in the realm of online selling through platforms like Facebook Marketplace. We will explore scenarios where individuals may unknowingly find themselves in business roles and repercussions that it means for their taxes from understanding IRS criteria to proactive compliance.

Meet our speakers:

Our host, David Fuentes, will be diving deep into today’s topic with our guest speaker, Andrea Harrington. Andrea Harrington is a lawyer and team manager at Texas Rio Grande Legal Aid small business and nonprofits team based in TRLA Austin Offices. Andrea works throughout Texas to serve the areas representing micro entrepreneurs facilitating Pro Bono small business legal clinics and providing Community Legal education on legal issues relevant to micro entrepreneurs. Andrea represents domestic violence survivors in family law cases and in protective order cases. Andrea obtained her Bachelor of Arts at Harvard University in 1998 and completed her Log Degree at the University Texas school of law in 2003. Andrea offers invaluable guidance to navigate this terrain with essential knowledge and be prepared to manage your tax responsibilities effectively in the digital marketplace.

What work does the Texas Rio Grande Legal Aid do?

Andrea Harrington says,

“Texas Rio grande Legal Aid is a non profit law firm and we provide assistance through a wide variety of areas of law from family law to public benefits, housing issues, landlord/tenant issues. We do have eligibility guidelines that we have to meet for our clients.

You can go to www.trla.org/gethelp and there are prompts that can let you know what our legal intake hotline is that can get you started, if you need assistance. To go to through our eligibility screening and get some legal assistance and ,of course, we also offer legal advice to small businesses!

It is a service to the community ,all of our services are free to the community for eligible clients and we have offices here in Austin, all the way west to El Paso and all the way south to Brownsville!”

How does selling on Facebook Marketplace classify someone as a business owner? Does it affect me on my taxes?

Andrea Harrington says,

“The interesting thing about Facebook Marketplace is that people use it for various reasons. For example, if you have a new couch or you’re moving your baby from a crib to a toddler bed and you have to get rid of the old furniture and pull in the new furniture, that is NOT a business.

Other folks are using Facebook marketplace as a way to make some extra money, for example you may go to Goodwill on the buy by the pound day and you receive your items to resell them on Facebook Marketplace.

OR

You purchase furniture or toys, that may be a little bit beaten up, and refurbish them and sell them on Facebook Marketplace. You may be using that extra bit of income to top off your grocery budget, to be able to pay your car insurance

The MAIN thing to know is if you are regularly selling items via Facebook Marketplace, Craigslist, eBay, Etsy, or any online platform. The IRS may consider these activities of you being engaged in a business. With that comes tax implications because the IRS is very clear that all businesses income should be reported and is taxable.”

What are KEY FACTORS that the IRS or tax authorities consider when determining whether someone is running a business?

Andrea Harrington says,

“It is considered a business once the intent is to earn more money than I spend, then that is considered running a business.

One should also take into consideration the regularity of operations. For example if you are listing one/two new items a week or one new item a day, then that’s a regularity of engagement of a platform for a business activity/ economic activity and it will be taken into consideration by the IRS.

Additionally, the production of income and ongoing efforts the person may take to improve their profits of the business. For instance if I am selling on Facebook marketplace but I am also advertising items on Instagram, those are going to be other efforts to further the interest of my business. Which would make it look more like business activity than just a personal transaction.”

David Fuentes: “That makes perfect sense, so there’s profit and then the regularity of operations. Right?”

Andrea Harrington: “Yes and the production of income. If you are bringing in income regularly, then it will become a factor.”

“For a long time people could sell on Craigslist , Facebook Marketplace, and eBay and you would get paid via PayPal or Cashapp and that was the end of the transaction but that’s changing.”

Are there specific thresholds or criteria that individuals should be aware of when it comes to selling goods online and triggering business tax obligations?

Andrea Harrington says,

“The big change that is happening this year, that is really important for people to know, is that these transactions that you’re doing if getting paid by Venmo, Cashapp, PayPal, or through Zelle. These payment providers are going to be sending out 1099-s to you. There has been a big change in the law, starting in 2024 if you make more than $600 in income through one of these payment apps you will be getting a 1099 that is reporting your income. If you think about it, what you have been selling on Facebook Marketplace. if you make more than $600 in a year which is not a lot, this is 50 bucks a month!

This year in 2024, which is the first quarter is already done, the threshold for receiving the 1099 is $5,000.

What does this mean?

If you make $5,000 in just one payment platform you will get a 1099. Something to keep in mind is that 1099-s are given per payment platform, so for those of you that maybe selling higher priced items such as jewelry or furniture you may hit that threshold in several payment providers, you will be receiving 1099-s from each payment provider. It is not aggregate for your whole business since it’s per payment provider so it’s really important to be aware that this hasn’t been an issue for a lot of Facebook Marketplace sellers for a very long time because the threshold used to be $220,000 and in 2024 it is dropping down $5,000 and further down to $600 for this upcoming year 2025.”

What piece of advice would you give to Facebook Marketplace users?

Andrea Harrington says,

“One piece of advice I would give is to start keeping records as soon as possible.

It is really important that you guys who are selling on Facebook Marketplace that you take the steps to at least start keeping records so you can deduct your business expenses from the money you are making reselling these items. If you’re going to a store and you’re buying by the pound and then you’re reselling some of these items of Facebook Marketplace, you NEED to get receipts of your cost of goods sold.

Another thing that folks need to be really aware of is if you are selling online on Facebook Marketplace or any other platform you should have a sales tax permit from the state of Texas and be collecting sales tax because it is another mandatory rule of the law and it affects all sellers.

It is crucial for everyone to learn what items you are selling are taxable and collect the sales tax on that, collect them, and turn them over on your filing deadlines.”

David Fuentes says,

“It really does operate similarly as a business? It is really useful because I have some clients here, for example someone who owned a tire shop and so they would resell used tires on Facebook Marketplace and that counts as a separate business operation in itself so it’s kind of wrapping our heads around this and specifically for tax implications.”

Andrea Harrington says,

“Yes absolutely!”

How can individuals who sell items online proactively ensure compliance with tax regulations and avoid unintended tax liabilities?

Andrea Harrington says,

“The MAIN way to ensure compliance there’s two big things that folks need to do, one is keep records. You will hear this from your business count to lenders at the bank from anyone who works with small businesses will tell you how important it is to keep good records of the money you spend for your business and keep records of the money that you’re earning from your business. This is because any tax compliance is going to be reliant on the quality of your records.

The other MAIN way to ensure compliance is to report because there is no way around it. You have to report your income, you’re able to deduct your but you must be aware and accept that there will be taxes due on your profit that you’re making from your operations.

Additionally you must research what your state sales tax obligations are and make sure that you’re going to be compliant with those as well. It’s the cheapest way to go about doing this otherwise you might get audited at a state level and on the federal level, which is expensive, if you are going to be having someone representing or helping you and any back taxes that were found to be owed you are going to have to pay as well as interests and penalties. In hindsight, the cheapest way to do this is to do it right from the beginning.”

What are some common misconceptions or pitfalls that people may encounter when it comes to understanding their tax obligations related to online selling?

Andrea Harrington says,

“So a big one is that people think that because they’re selling online, that they don’t have a real business so they don’t have any tax obligations. Additionally some haven’t formed a corporation or an LLC (Limited Liability Corporation) or filed a DBA (Doing Business As) so they haven’t formed a business, that is not a threshold that the state or federal government uses to determine whether or not you’re going to owe taxes on business income. What they’re looking at is the reality of the situation, are you engaged in economic activity that’s making you a profit? They are NOT looking at the formalities of whether you filed this paper or that paper. Like we said before, they are looking at the reality of what’s going on. The thing is that when you’re doing stuff online that is a record of itself, that’s evidence that’s out there. You can’t claim that you weren’t doing those activities when posts are up there, so it is essential to have that reality check of yourself and set a budget for these taxes. “

David Fuentes says,

“It’s really important to know before you start doing these things right otherwise you can find yourself in a hard place even without knowing this.”

As a lawyer specializing in this area, what advice do you have for individuals who may be uncertain about their tax status as online sellers?

Andrea Harrington says,

“In my experience people generally have a pretty good idea of what their status is whether or not they have a business, it just may be not the answer you wish it was. So my advice would be to be really honest with yourself about your selling activities online, whether its baby clothes, toys, clothes, etc, then you have a business. Like we said beforehand, if you are selling online to make a profit and you have come to terms with the reality of your situation, if you are uncertain do your record keeping because then you may not know if you are making a profit every month. With that you will find out whether or not you have a business. If you really aren’t sure, I can give you information you need. It may not be a huge profit, you might make $100 or $80 a month so I need to take care of this so you don’t get yourself into hot water. “

Where can I find more information?

Andrea Harrington says,

“One of my favorite places to send customers, of course is to EGBI (Economic Growth Business Incubator)!

Additionally if you want more information specifically about taxes, the IRS has an excellent website, a YouTube channel, and a whole web page dedicated to small businesses tax issues!

The Texas Comptroller offers a lot of information on sales tax issues, so if you have any questions you can contact them if you are not sure whether you should be collecting sales taxes you can do that reading online.

Austin has a lot of resources for small businesses and for entrepreneurs! The City of Austin has a department dedicated to small businesses and there are lots of profits here in town that are also dedicated to assisting small businesses.”

David Fuentes says,

Perfect! We have several resources here in the city of Austin such as the IRS, and they also have a Small business and Self-Employed Tax Center which is a great resource and is the first website that popped up.

Appreciation

Huge thanks to Andrea Harrington for being our guest speaker, especially with all of these new changes and folks will have to adapt. None of us desire to deal with tax issues or the IRS, so it’s better to keep records before getting into trouble. It’s been a pleasure once again chatting with you and we hope that you find this episode entertaining and informative!

This episode was produced by Raycast media to be able to launch our podcast. Huge thanks to Raycast Media for this amazing partnership!

If you know someone else that could benefit from this episode share this article with them or share the Incubadora YouTube podcast! Remember that the Incubadora Podcast is part of the Economic Growth Business Incubator, a business incubator in Central Texas that offers training, coaching, and support to small business owners with barriers to achieving success.

If you would like to learn more about the economic growth business incubator and our services visit our website: https://egbi.org/ Thanks for listening!

Find the Spanish version here.