LinkedIn Co-Founder Reid Hoffman on ‘Blitzscaling’ and Unintended Consequences

“You can’t anticipate everything. You can’t prep for everything,” said LinkedIn co-founder and former CEO Reid Hoffman during an interview Thursday at the 2021 Inc. 5000 Vision Conference. Entrepreneurship, he adds, is like “running really fast through the fog,” so the best thing you can do is equip yourself with learned wisdom from others who have been down the path before you.

Hoffman, who today is a partner at the venture capital firm Greylock, has had a hand in many fast-growth companies that have achieved enormous scale. In addition to LinkedIn, he was a top executive at PayPal, along with Peter Thiel, Elon Musk, and others who’ve gone on to become household names. And he’s been an investor in Facebook and Airbnb, among others.

Hoffman also is a three-time bestselling author whose newest book, Masters of Scale: Surprising Truths From the World’s Most Successful Entrepreneurs, which he co-wrote with June Cohen and Deron Triff, builds on the success of their podcast by the same name. Both the podcast and the book feature stories and lessons drawn from deep interviews with dozens of famous founders, along with tales from Hoffman’s own career. In short: Few people understand the art of scaling a business better than Hoffman.

In his conference appearance, Hoffman highlighted a few of the top takeaways from the new book and discussed the ethics of Silicon Valley-style blitzscaling at a moment when the type of tech giants he has helped create have come under increasing scrutiny.

Beware unintended consequences

One of the most memorable moments of Hoffman’s presentation came when he addressed the ethical complications that can come when scaling as quickly as possible brings unintended consequences. Especially as a growing organization moves “from single-threaded to multi-threaded,” Hoffman says, it can be hard as a leader to both maintain the speed to scale and keep on top of all the new threads–let alone anticipate all potential scenarios.

He recommends hiring “somebody whose responsibility is to say, ‘What could possibly go wrong? What would have the wrong impact with our customers or with society, and what are the things we could do now to prep against it?'” Nothing is fail-safe, he cautions, but the more you think ahead, the more nimbly you can respond when necessary–“because if things start going wrong at scale, that can be even more challenging.”

Let some fires burn

As Hoffman knows well, running a fast-growth company can feel like an exercise in constant crisis management. Rather than trying to put out every fire immediately, he advises, establish a triage system that allows you to, in his words, “let some fires burn.” An entrepreneur should ask herself a series of questions: “Which thing is most likely to kill us first, or limit our scale? Which thing, if we don’t start now, won’t be controllable later?”

The answers aren’t always obvious, he points out–some fires, though harder to control later, will be manageable because you’ll have more resources as you grow. “Generally speaking, you have a limited amount of resources to focus on some fires,” he says. “If you try to do them all at the same time, maybe you won’t get any of them sufficiently.”

It all comes back to mission

It’s not enough, Hoffman says, for your company to provide jobs or for people to love your product. “Those are important things, true, but sometimes your product might be questionable–like cigarettes.” So you should also ask, “Why is society better with your product in it?”–and invest in growing that direction.

That isn’t anti-business, he adds, it’s long-term brand building. It builds cohesion and clarifies decision-making in the company. It’s great for attracting talent. “It can be great capitalism. I think it’s really fundamental to great entrepreneurship and helps through the entire company,” he says.

By Tom Foster, Editor-at-large, Inc.@tomfoster2

Source: LinkedIn Co-Founder Reid Hoffman on ‘Blitzscaling’ and Unintended Consequences | Inc.com

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IMF Cuts Global Growth Forecast Amid Supply Chain Disruptions, Pandemic Pressures

The IMF, a grouping made up of 190 member states, promotes international financial stability and monetary cooperation. It also acts as a lender of last resort for countries in financial crisis.

In the IMF’s latest World Economic Outlook report released on Tuesday, the group’s economists say the most important policy priority is to vaccinate sufficient numbers of people in every country to prevent dangerous mutations of the virus. He stressed the importance of meeting major economies’ pledges to provide vaccines and financial support for international vaccination efforts before new versions derail. “Policy choices have become more difficult … with limited scope,” IMF economists said in the report.

The IMF in its July report cut its global growth forecast for 2021 from 6% to 5.9%, a result of a reduction in its projection for advanced economies from 5.6% to 5.2%. The shortage mostly reflects problems with the global supply chain that causes a mismatch between supply and demand.

For emerging markets and developing economies, the outlook improved. Growth in these economies is pegged at 6.4% for 2021, higher than the 6.3% estimate in July. The strong performance of some commodity-exporting countries accelerated amid rising energy prices.

The group maintained its view that the global growth rate would be 4.9% in 2022.

In key economics, the growth outlook for the US was lowered by 0.1 percentage point to 6% this year, while the forecast for China was also cut by 0.1 percentage point to 8%. Several other major economies saw their outlook cut, including Germany, whose economy is now projected to grow 3.1% this year, down 0.5 percent from its July forecast. Japan’s outlook was down 0.4 per cent to 2.4%.

While the IMF believes that inflation will return to pre-pandemic levels by the middle of 2022, it also warns that the negative effects of inflation could be exacerbated if the pandemic-related supply-chain disruptions become more damaging and prolonged. become permanent over time. This may result in earlier tightening of monetary policy by central banks, leading to recovery back.

The IMF says that supply constraints, combined with stimulus-based consumer appetite for goods, have caused a sharp rise in consumer prices in the US, Germany and many other countries.

Food-price hikes have placed a particularly severe burden on households in poor countries. The IMF’s Food and Beverage Price Index rose 11.1% between February and August, with meat and coffee prices rising 30% and 29%, respectively.

The IMF now expects consumer-price inflation in advanced economies to reach 2.8% in 2021 and 2.3% in 2022, up from 2.4% and 2.1%, respectively, in its July report. Inflationary pressures are even greater in emerging and developing economies, with consumer prices rising 5.5% this year and 4.9% the following year.

Gita Gopinath, economic advisor and research director at the IMF, wrote, “While monetary policy can generally see through a temporary increase in inflation, central banks should be prepared to act swiftly if the risks to rising inflation expectations are high. become more important in this unchanged recovery.” Report.

While rising commodity prices have fueled some emerging and developing economies, many of the world’s poorest countries have been left behind, as they struggle to gain access to the vaccines needed to open their economies. More than 95% of people in low-income countries have not been vaccinated, in contrast to immunization rates of about 60% in wealthy countries.

IMF economists urged major economies to provide adequate liquidity and debt relief for poor countries with limited policy resources. “The alarming divergence in economic prospects remains a major concern across the country,” said Ms. Gopinath.

By: Yuka Hayashi

Yuka Hayashi covers trade and international economy from The Wall Street Journal’s Washington bureau. Previously, she wrote about financial regulation and elder protection. Before her move to Washington in 2015, she was a Journal correspondent in Japan covering regional security, economy and culture. She has also worked for Dow Jones Newswires and Reuters in New York and Tokyo. Follow her on Twitter @tokyowoods

Source: IMF Cuts Global Growth Forecast Amid Supply-Chain Disruptions, Pandemic Pressures – WSJ

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When The Pandemic Forced Young Adults To Move Back Home, They Got a Financial Education

“When we face a stressor, we tend to think more about the future,” says Brad Koontz, a financial psychologist and professor at Creighton University in Omaha, Neb. Young adults’ growing openness to discuss finances with their parents and peers, they say, reflects a kind of tribal response among people to the stress of the pandemic.

Here’s a look at what the adult children and parents of three families learned about money — and themselves — in their time of pandemic together. When the pandemic forced 23-year-old Hannah Froling to move into her parents’ townhouse in Southampton, NY in March 2020 to remotely finish her final semester of college, the financial clock began to tick.

Ms Frohling’s parents, Jennifer Schlueter and Matthew Froehling, set to move to their winter home in Florida during the fall of 2020, told her they would need to begin helping support the household in their absence. That means monthly payments of $500 for rent and $250 for family car use. They also set a deadline for Memorial Day 2022 for her to be out of the house. Ms Schlueter says she wanted to provide her daughter with a “soft landing” after the shocking experience of graduating in the middle of a pandemic. But she also wanted Ms Froling to transition to living independently, so the transfer deadline passed.

So, Ms. Froling got two waitress jobs and eventually began to rely on the savings lessons her parents took as they grew up. She has two income streams—cash tips and a regular paycheck that includes her hourly rate and credit card tips. She keeps the cash tips in a savings account and splits the paycheck between a checking account and an investment account linked to an S&P 500 index fund. She has saved about $10,000 since moving back home and started looking for apartments to rent on Long Island.

Saving and managing money doesn’t always come easily to Ms. Froling. While in college, he received an allowance from his parents at the beginning of each semester. “As a freshman, I’ll blow it in the first two months,” she says. So her parents, who both work in finance, seated her and helped her budget by outlining the necessities and luxuries in her spending habits.

But it’s been the past 18 months at home, and the closeness to her parents, which has allowed Ms Froling to be more proactive about her savings and investments, and to put all those lessons into practice. She says many of her money talks happen on family road trips. Her father helps her stay on top of the latest trends in investing and her mother shares strategies for how Ms. Froling can increase her savings and continue to build a foundation for moving out of the family home. Ms. Froling is taking it further by sharing these tips with her coworkers and encouraging some of them to open their own investment accounts.

“The lesson we want to teach her is that she can do this,” says Ms Schlueter, referencing the financial wisdom she is sharing with her daughter rather than just talking to her from being together during the pandemic. got the opportunity to do. via phone or text. That includes discussing expenses such as health and car insurance after Ms. Froling leaves home again.

Ms Froling says, while she often feels like her parents bother her about how much she’s saving, in the end she knows it’s best: “They don’t want me when I If I get out of here, it will fall flat on my face.”

breaking the money taboo

In November 2020, 27-year-old Rogelio Meza left his $1,500-a-month apartment in Austin, Texas, to move into his parents’ home in Laredo.

The move helped him work towards his goal of saving money and becoming a homeowner, says Mr. Meja, who works as a customer-experience manager for a solar-power company. It also allowed him to help his parents, who were battling the financial stress of the pandemic.

When the pandemic struck, her mother, Eudoxia Meja, who works as a cook, noticed that her hours had been cut in half. His father Juan Meja is handicapped and unable to work. Since living with his parents, little Mr. Majora has helped with grocery and utility bills, paying about $700 a month, which still allows him to take out money for a home down-payment. Is.

When he was growing up, Mr. Meja says, his family never talked about money. “Nobody really taught me how to save, nobody taught me about stock options or investment accounts, good versus bad debt.” He relied on friends who worked in finance to teach him about these things, and the conversation helped him understand where his money was going. Now, he says, he has passed on some of this knowledge to his parents.

One day, when an unusually large and overdue utility bill arrived in the mail, Mr. Majora turned it into an opportunity to start sharing his financial wisdom with his family.

“I was like, ‘Okay, let’s talk about it,’” he says, describing what led to several candid conversations about money with his parents. Indeed, after that initial exchange, he basically became the family financial advisor. Mr. Meja helped his parents calculate how much they were spending on groceries and how much they actually needed each month. He also discovered that he had $3,000 in credit-card debt and advised him to use his stimulus money to aggressively pay it off. Using a combination of direct payments from their mother’s wages, incentives and unemployment benefits, they were able to pay off their utility bills and credit-card debt in just a few weeks.

Thereafter, Mr. Meja set up a savings account for her mother and advised her to put forward 20% of her salary into the account. He also plans to help his parents open an investment account and teach them how to grow their money over time. He says being able to pay off his debt gave his parents a new starting point.

Mr. Meja has learned a few things during his stint at home as well. He says that the time he spent with his parents opened his eyes to how little he needed to be happy. For example, before reuniting with his mother and father, he often ordered takeout for lunch and dinner. But the home-cooked food he eats at home, he says, especially his mother’s enchiladas has inspired him to start cooking for himself.

As far as his parents are concerned, they say that talking about money is no longer a taboo in their family, and they will continue to seek financial advice from their son. He plans to move back to Austin in November and complete the purchase of an apartment in the city at that time.

a new perspective

Edgar Mendoza was living the high life in Chicago. The 41-year-old was paying about $3,000 a month for a downtown apartment. He often dined out and had courtside seats at basketball games.

But when the lockdown began, he began to re-evaluate his habits, limiting his activities and his spending. “What Covid taught me is no, I don’t need all that,” says Mr. Mendoza, who deals in sales and invests in startups. In January, he packed his belongings and moved to McAllister, Mont., to be with his mother and stepfather. And he doesn’t plan to leave anytime soon.

Living in Montana with his family, Mr. Mendoza says, he has reinforced the frugal lifestyle he grew up with. When he was young, he says, his mother, Maria Platt, used to tell him to “watch his money.” Now, he saves his money and invests it in places where it can grow.

Ms Platt says she is proud of the progress she has seen in her son and how she has embraced the lessons she has taught him. The family cooks together and they rarely eat out. Mr Mendoza says he is not being asked to pay the rent, but he buys all the groceries.

“He’s changed a lot,” Ms Pratt says of her son. “He used to spend money like crazy. I would talk to him and he’s like, ‘Mom, you’re right about this and you’re right about that.’ Now, in his view, he is motivated to support the family in the long run, and this has prompted him to refocus on his spending habits.

Mr. Mendoza says seeing his mother come home exhausted from work and budgeting his Social Security benefits has made him see his financial future in a new light. It has forced him to think more realistically about what retirement can be like. “When you see that you love someone… it hits you really hard,” he says. “I don’t want it to be me.”

Ms Pratt says her son still has to work on his financial habits. They sometimes forget to buy their groceries and eat food already in the family’s fridge, she says. She would also like to watch him learn to cook.

“I told him that if you make good money, save it,” she says. “I’m not going to live forever…….

By: Taylor Nakagawa

Taylor Nakagawa hails from Chicago, Illinois and earned a master’s degree from the Missouri School of Journalism in 2017. As part of the Audience Voice team, Taylor is focused on experimenting with new story formats to create a healthy environment for community engagement.

Source: When the Pandemic Forced Young Adults to Move Back Home, They Got a Financial Education – WSJ

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Census Figures Show Americans’ Incomes Fell in 2020

Americans last year saw their first significant decline in household income in nearly a decade, government data showed, with economic pain from the Covid-19 pandemic prompting government aid that helped keep millions from falling into poverty.

An annual assessment of the nation’s financial well-being, released Tuesday by the Census Bureau, offered insight into how households fared during the pandemic’s first year. It arrives as Washington debates how much more to spend to bolster the economy during the worst public-health crisis in a century.

Median household income was about $67,500 in 2020, down 2.9% from the prior year, when it hit an inflation-adjusted historical high. It came as the U.S. last year saw millions lose their jobs and national unemployment soar from a 50-year low to a high of 14.8%.

The last time median household income fell significantly was 2011, in the aftermath of the 2007-09 recession.

The Census Bureau’s top-line income figure includes unemployment benefits but doesn’t account for income and payroll taxes nor stimulus checks or other noncash benefits like federal food programs. If those had been counted, the median household income would have risen 4% to $62,773.

As was the case with the income measure, the report offered conflicting takes on poverty trends because of differing definitions and approaches to the topic.

The bureau said the traditional poverty rate in 2020 was 11.4%, an increase of 1 percentage point from 2019 and the first increase after five consecutive years of declines. That translated to 37.2 million people in poverty, an increase of 3.3 million from 2019. For a four-person household, the threshold for meeting the definition of poverty was about $26,000 in 2020.

The official poverty measure doesn’t reflect how much a household pays in taxes, and it also omits noncash government aid like tax credits, housing subsidies and free school lunches. A broader poverty measure that accounts for such expenses and income actually fell last year to 9.1%, down 2.6 percentage points from 2019.

The decrease, coinciding with an increase in the official poverty rate, highlighted the role of the government safety net, which was expanded during the pandemic. The two poverty yardsticks have tracked closely for a decade, but last year was the first time that the supplemental measure dropped below the official measure.

Without the first two rounds of stimulus checks issued last year, the broader poverty measure would have risen by almost a percentage point instead of dropping, the bureau said.

Specifically, stimulus checks moved 11.7 million people above the poverty threshold if their effect was calculated alone. In the same manner, expanded unemployment programs did so for 5.5 million people. Refundable tax credits, such as the earned-income tax credit, did so for 5.3 million people. The Social Security program, however, remained the largest safety net program, lifting 26.5 million people above the poverty line.

“The increase in poverty would have been even larger if it were not for the ample fiscal support provided over the past year,” said Shannon Seery, an economist at Wells Fargo & Co.

After continued direct federal payments made to households in 2021 and enhanced unemployment benefits that expired in early September, Ms. Seery said, an improving unemployment picture should help households.

“With a robust demand for labor, exhibited by the record 10.9 million job openings in July, and average hourly earnings rising across industries, the current environment should help lure workers back to the job site,” she said.

The bureau also said Tuesday the proportion of Americans without health insurance for all of 2020 was 8.6%, essentially unchanged from 2018. About 28 million Americans lacked health insurance, according to the survey.

Median earnings in 2020 of those who worked full time, year-round increased 6.9% from 2019. The 2020 female-to-male earnings ratio was 83%, essentially unchanged from the previous year.

The distribution of incomes changed little. The top fifth of households—with incomes above $141,100—collected 52.2% of household income, while the top 5% alone—with incomes above $273,700—collected 23%. The bureau reported that the income shares collected by the lowest groups dropped slightly. The lowest fifth of households—making less than $27,000—collected 3%, down from 3.1% in 2019. The second fifth—with incomes from $27,000 to $52,000—collected 8.1%, down from 8.3% in 2019.

In 2020, median household incomes decreased 3.2% in the Midwest and 2.3% in the South and West, the bureau said. The change in the Northeast between 2019 and 2020 wasn’t statistically significant.

Median incomes were highest in the Northeast ($75,211) and the West ($74,951), followed by the Midwest ($66,968) and the South ($61,243). Households with the lowest levels of educational attainment logged the greatest declines in their incomes. For those headed by someone without a high school diploma, incomes dropped 5.7%, while those headed by someone with some college education or a bachelor’s degree or higher recorded a 2.8% decline.

The road ahead for the U.S. economy looks more uncertain than earlier in 2021. In recent weeks, growing evidence has built of lost momentum as Covid-19 cases rose again. Supply-chain challenges and a lack of workers for lower-paying jobs also are weighing on economic growth.

Rocky Smith Jr., a 41-year-old union worker who cuts metal parts down to size after they exit a furnace, said things are looking up for his family of four in Muskegon, Mich. After being laid off in April 2020, he said, he wasn’t hired back until July 2021.

Mr. Smith said he is now making more than $20 an hour at his full-time job. His wife, he said, resumed working during his unemployment and the family skipped meals out and other luxuries.

“We rolled with the punches,” said Mr. Smith, a former boxer. “Life hit us, but we made it work.”

By: John McCormick and Paul Overberg

Source: Census Figures Show Americans’ Incomes Fell in 2020 – WSJ

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How Sweden Became The Silicon Valley of Europe

STOCKHOLM, Aug 11 (Reuters) – As Klarna’s billionaire founder Sebastian Siemiatkowski prepares to stage one of the biggest-ever European fintech company listings, a feast of capitalism, he credits an unlikely backer for his runaway success: the Swedish welfare state.

In particular, the 39-year-old pinpoints a late-1990s government policy to put a computer in every home.

“Computers were inaccessible for low-income families such as mine, but when the reform came into play, my mother bought us a computer the very next day,” he told Reuters.

Siemiatkowski began coding on that computer when he was 16. Fast-forward more than two decades, and his payments firm Klarna is valued at $46 billion and plans to go public. It hasn’t given details, though many bankers predict it will list in New York early next year.

Sweden’s home computer drive, and concurrent early investment in internet connectivity, help explain why its capital Stockholm has become such rich soil for startups, birthing and incubating the likes of Spotify, Skype and Klarna, even though it has some of the highest tax rates in the world.

That’s the view of Siemiatkowski and several tech CEOs and venture capitalists interviewed by Reuters.

In the three years the scheme ran, 1998-2001, 850,000 home computers were purchased through it, reaching almost a quarter of the country’s then-four million households, who didn’t have to pay for the machines and thus included many people who were otherwise unable to afford them.

In 2005, when Klarna was founded, there were 28 broadband subscriptions per 100 people in Sweden, compared with 17 in the United States – where dial-up was still far more common – and a global average of 3.7, according to data from the World Bank.

Spotify allowed users to stream music when Apple’s (AAPL.O) iTunes was still download-based, which gave the Swedish company the upper-hand when streaming became the norm around the world.

“That could only happen in a country where broadband was the standard much earlier, while in other markets the connection was too slow,” Siemiatkowski said.

“That allowed our society to be a couple of years ahead.”

Some executives and campaigners say the Scandinavian nation demonstrates that a deep social safety net, often viewed as counter to entrepreneurial spirit, can foster innovation. It’s an outcome that might not have been envisaged by the architects of Sweden’s welfare state in the 1950s.

Childcare is, for the most part, free. A range of income insurance funds can protect you if your business fails or you lose your job, guaranteeing up to 80% of your previous salary for the first 300 days of unemployment.

“The social safety net we have in Sweden allows us to be less vulnerable to taking risks,” said Gohar Avagyan, the 31-year-old co-founder of Vaam, a video messaging service used for sales pitches and customer communication.

STARTUP RATE VS SILICON VALLEY

Although overall investments are larger in the bigger European economies of Britain and France and their longstanding finance hubs, Sweden punches above its weight in some regards.

It has the third highest startup rate in the world, behind Turkey and Spain, with 20 startups per 1000 employees and the highest three year survival rate for startups anywhere, at 74%, according to a 2018 study by OECD economists.

Stockholm is second only to Silicon Valley in terms of unicorns – startups valued at above $1 billion – per capita, at around 0.8 per 100,000 inhabitants, according to Sarah Guemouri at venture capital firm Atomico.

Silicon Valley – San Francisco and the Bay Area – boasts 1.4 unicorns per 100,000, said Guemouri, co-author of a 2020 report on European tech companies.

No one can say for sure if the boom will last, though, in a country where capital gains are taxed at 30 percent and income tax can be as high as 60 percent.

In 2016, Spotify said it was considering moving its headquarters out of the country, arguing high taxes made it difficult to attract overseas talent, though it hasn’t done so.

Yusuf Ozdalga, partner at venture capital firm QED Investors, said access to funding and administrative or legal tasks connected with founding a company could also prove tough to navigate for non-Swedish speakers.

He contrasted that to Amsterdam, capital of the Netherlands, where the government adopted English as an official language in April to make life easier for international companies.

‘INTERESTING DILEMMA’ FOR VC

Jeppe Zink, partner at London-based venture capital firm Northzone, said a third of all the exit value from fintech companies in Europe – the amount received by investors when they cash out – came from Sweden alone.

Government policy had contributed to this trend, he added.

“Its an interesting dilemma for us venture capitalists as we’re not used to regulation creating markets, in fact we are inherently nervous about regulation.”

Sweden’s digital minister Anders Ygeman said that social regulation could make it “possible to fail” and then “be up and running again” for innovators.

Peter Carlsson, CEO of startup Northvolt, which makes Lithium-ion batteries for electric vehicles and is valued at $11.75 billion, said that ultimately success bred success.

“You’re really creating ripple effects when you’re seeing the success of somebody else and I think that’s perhaps the most important thing in order to create local ecosystems.”

By and

Reporting by Supantha Mukherjee and Colm Fulton in Stockholm; Editing by Pravin Char

Source: How Sweden became the Silicon Valley of Europe | Reuters

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How the New Child Tax Credit Is Helping Parent Entrepreneurs

Eligible parents are slated to receive their monthly child tax credit payments starting Thursday. How you use the money could affect your business or help you start one.

The American Rescue Plan Act of 2021 expanded the tax credit score to $3,600 per baby underneath the age of six and to $3,000 for these aged six to 17. It is in impact only for 2021, although Biden has advocated making it making it everlasting.

Half of the funds might be despatched to folks in installments via December. For instance, a mum or dad with one baby underneath six would obtain $300 per 30 days. Dad and mom can declare the remainder upon submitting taxes for 2021–unless they choose out to allow them to obtain all the cash once they file.

Madilynn A. Beck, founder and CEO of Palm Springs, California-based Fountful–an app that gives “life-style providers” like manicures or DJ appearances on demand–is contemplating that strategy. Beck says that if she meets her enterprise targets this 12 months, Fountful might generate sufficient income to considerably enhance her tax burden come subsequent April. “I am protecting my head above water now,” she says. “What occurs if I’m absolutely underwater then and do not have a life vest?”

The kid tax credit score will have an effect on individuals at a “wide selection” of earnings ranges, says Daniel Milan, managing accomplice at Cornerstone Monetary Providers primarily based in Southfield, Michigan. For aspiring entrepreneurs, it’d offset childcare prices for just a few months whereas they work on getting a enterprise off the bottom. For others, the cash might simply assist alleviate day by day monetary stress.

That is the case for Ruby Taylor, CEO and founding father of Baltimore-based Monetary Pleasure Faculty, which supplies monetary literacy training and produces a card sport that teaches the topic to younger individuals. In April 2021, she and her spouse’s monetary scenario modified consequently of the pandemic however they nonetheless needed to cowl issues like a brand new roof and fence for his or her home.

Their financial savings account dwindled, and Taylor’s nervousness spiked, leading to her occurring blood stress and nervousness treatment. The additional $500 the mom of two expects to obtain means the couple can construct up their security web once more, taking the stress off each of them. “When she’s not pressured, I am not pressured,” Taylor says. It “will assist the enterprise not directly, as a result of I may be extra productive.”

Guardian entrepreneurs face the extra problem of staying current with spouses and kids, says James Oliver Jr., founder and CEO of ParentPreneur Basis, an Atlanta-based nonprofit that helps Black mum or dad founders financially and with an internet neighborhood (of which Beck and Taylor are each members).

 Month-to-month funds “may very well be the distinction of sending the youngsters to summer season camp, shopping for further groceries, taking a bit trip, or taking the youngsters to the amusement park as soon as a month to assist the household bond,” he says.

Source: How the New Child Tax Credit Is Helping Parent Entrepreneurs | Inc.com

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Critics:

The Internal Revenue Service today launched two new online tools designed to help families manage and monitor the advance monthly payments of Child Tax Credits under the American Rescue Plan. These two new tools are in addition to the Non-filer Sign-up Tool, announced last week, which helps families not normally required to file an income tax return to quickly register for the Child Tax Credit. The new Child Tax Credit Eligibility Assistant allows families to answer a series of questions to quickly determine whether they qualify for the advance credit.

The Child Tax Credit Update Portal allows families to verify their eligibility for the payments and if they choose to, unenroll, or opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return next year. This secure, password-protected tool is available to any eligible family with internet access and a smart phone or computer. Future versions of the tool planned in the summer and fall will allow people to view their payment history, adjust bank account information or mailing addresses and other features. A Spanish version is also planned.

IRS Releases Child Tax Credit Payment Dates Here’s When Families Can Expect Relief

Treasury check on top of various currency bills - corona virus relief

The Internal Revenue Service said Monday it has begun sending letters to more than 36 million families likely eligible to receive payments starting in July under the newly expanded Child Tax Credit—one of the major antipoverty initiatives in President Biden’s stimulus plan—and announced the dates those payments are expected to hit bank accounts.

Key Facts

Biden’s $1.9 trillion American Rescue Plan significantly expanded the Child Tax Credit for the 2021 tax year: It will now provide eligible parents with a $3,000 credit for every child aged 6 to 17 and $3,600 for every child under age 6 (up from $2,000 per dependent child up to age 16).

Individuals earning up to $75,000 a year, heads of household up to $112,500 a year, and joint filers up to $150,000 a year are eligible to receive the full amount of the credit.

The amount of the payments will phase out by $50 for every $1,000 in adjusted gross income above those thresholds. The IRS will use information from 2019 or 2020 tax returns or the agency’s online Non-Filers tool to determine eligibility.

Some of that money will come in the form of advance payments, via either direct deposit or paper check, of up to $300 per month per qualifying child on July 15, August 13, September 15, October 15, November 15 and December 15, the IRS said Monday.

Families can claim the remainder of the credit on the 2021 tax returns they file next spring.

Big Number

$4,380. That’s the average benefit over 90% of families with children will receive under the expanded credit, according to the Tax Policy Center.

Tangent

The American Rescue Plan also made the Child Tax Credit fully refundable for 2021. It was previously refundable only up to $1,400 per child, and families needed to earn at least $2,500 to be eligible for any of that money. That means many low-income families or families with no income at all that would have been ineligible for some or all the old credit (because they didn’t earn enough to owe taxes to qualify) can receive the full benefit in 2021.

What To Watch For

The IRS said it will send a second letter to eligible families with information about the estimated monthly payments they can expect to receive. The IRS is also expected to open an online portal where families can check their eligibility, update information about income and qualifying children, check the status of their payments and opt out of the program.

Key Background

The White House has proposed extending the expanded Child Tax Credit for another five years under the American Families Plan (which has yet to be taken up by Congress), but many progressives want to make the expanded credit permanent. “No recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working adults and families,” 41 Democratic senators wrote in a letter to President Biden in March. “Your forthcoming Recovery Plan is the opportunity we have to make the expansions of these credits permanent.“

Further Reading

Expanded Monthly Child Tax Benefit Will Begin Hitting Bank Accounts July 15 (Forbes)

Here’s Everything You Need To Know About The New Expanded Child Tax Credit (Forbes)

41 Democratic Senators Ask Biden To Support Permanent Child Tax Credit And Earned Income Tax Credit (Forbes)

How Much Money You Will Get From Stimulus Checks, Unemployment Benefits And Everything Else Inside Biden’s $1.9 Trillion Relief Bill (Forbes)

I’m a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance.

Source: IRS Releases Child Tax Credit Payment Dates—Here’s When Families Can Expect Relief

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Critics:

There have been important changes to the Child Tax Credit that will help many families receive advance payments starting this summer. The American Rescue Plan Act (ARPA) of 2021 expands the Child Tax Credit (CTC) for tax year 2021 only.

The expanded credit means:

  • The credit amounts will increase for many taxpayers.
  • The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don’t have earned income or don’t owe any income taxes.
  • The credit will include children who turn age 17 in 2021.
  • Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return.

For tax year 2021, families claiming the CTC will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under age 6 at the end of 2021. Under the prior law, the amount of the CTC was up to $2,000 per qualifying child under the age of 17 at the end of the year.

The increased amounts are reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.

Advance payments of the 2021 Child Tax Credit will be made regularly from July through December to eligible taxpayers who have a main home in the United States for more than half the year. The total of the advance payments will be up to 50 percent of the Child Tax Credit. Advance payments will be estimated from information included in eligible taxpayers’ 2020 tax returns (or their 2019 returns if the 2020 returns are not filed and processed yet).

The IRS urges people with children to file their 2020 tax returns as soon as possible to make sure they’re eligible for the appropriate amount of the CTC as well as any other tax credits they’re eligible for, including the Earned Income Tax Credit (EITC). Filing electronically with direct deposit also can speed refunds and future advance CTC payments.

Eligible taxpayers do not need to take any action now other than to file their 2020 tax return if they have not done so.

Eligible taxpayers who do not want to receive advance payment of the 2021 Child Tax Credit will have the opportunity to decline receiving advance payments. Taxpayers will also have the opportunity to update information about changes in their income, filing status or the number of qualifying children. More details on how to take these steps will be announced soon.

The IRS also urges community groups, non-profits, associations, education groups and anyone else with connections to people with children to share this critical information about the CTC. The IRS will be providing additional materials and information that can be easily shared by social media, email and other methods.

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