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Why Business Project Investments Are Dangerous?

Have you the situation when friends or acquaintances suggest you to be engaged in business? More precisely to say to participate in “super favorable and almost safe business the project. Someone was put and burned through. And someone, on the contrary, has managed to earn not bad on it. We have learned, than business projects are dangerous to beginning investors and how to minimize the risks at least at the initial stage.

The sales manager Mr. Solonnik has got into a difficult situation. He can’t return till now money which his friend, the private businessman, has barrowed him on business development. Alas, the most widespread error of private investors is the careless relation to legal fastening and even to elementary determination of conditions of investment. As a rule, it also is as a result a basic reason of loss of money, lawyers warn.

So, someone has offered you participation in business and promises solid profit. The Business plan seems successful, and people seam to be reliable. It would seem that a lot of things are necessary for it. In particular, the whole lots of important papers. The conclusion of the corresponding agreement should become an initial starting point of any business project. And constituted not on one-two pages whom has got and anyhow and the high-grade document comprehensively protecting the rights of the private investor.

The agreement with the investor first of all should describe the form of investment of means. Yes-yes, there can be variants! The first variant is direct investment. In this case the investor becomes the shareholder of the company, depending on pattern of ownership. Thus he on equal terms with other project participants to proportionally share either gets profit, or incurs losses from business. If the profit is paid in the form of dividends then from them it is necessary to pay the incomes tax.

The second variant of investment of means in the business project is to borrow to their partner that is to conclude with them the loan agreement. According to the civil code even if conditions of a payment for using money haven’t been stipulated specially, the creditor has the right to demand compensation of percent at level of discount rate.

In general, such method of capital investments is safer for the investor than participation in business in quality of shareholder. After all in this case the businessman undertakes to return the invested means irrespective of the fact how its business will develop. However, the incomes tax from the sum of the percent received for using money, it is necessary to pay nevertheless ? 5 %, as from dividends, and standard 15 %.

There is one more method of investment – to purchase property (the equipment, the car or real estate) and simply to lease to its businessman. In this case risks of investments in general are minimum (unless rent payments will detain), but it will be necessary to bear repair expenses and insurance and also to pay the tax at a rate of 15 % of the received income.

It is very reasonable that government, despite this recession is not abandoning to assist small businesses. And small business grants can be a real helper today.

But, of course, you should remember that today the fight for small business grants as well as for other kinds of grants has become more fierce. This is natural – more businesses need them. So before you start your battle for the small business grants, please make sure to visit this blog for more info about grant industry.

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