Keep spending in check to help stay current on loan payments

Dear Karen: What’s the best way to stay current on loan payments?

Answer: Manage cash flow closely and be vigilant about bill payment deadlines. “Late payment on any bill may have a negative impact on your credit score,” said Esra Alev, vice president of small-business credit cards for American Express.

Evaluate discretionary spending based on your bottom line. “Only take on debt that helps increase revenue for the business,” Alev said. Buying new equipment or moving to a larger facility will increase growth. But upgrading to a fancy computer system if your current system is adequate will do little to increase revenue.

Dear Karen: I got laid off last month. How do I decide whether I should start my own business?

Answer: First, allow yourself to process the job loss. “It’s similar to other tragic events in life, especially if you were with the company a long time,” said Peggy McHale, co-author of “Black & White Strike Gold.”

Entrepreneurship is for disciplined, self-motivated people who are comfortable selling. The Small Business Administration website offers personality tests to help determine whether you fit the bill at https://www.sba.gov (click “small business planner,” then “plan your business,” then “get ready.”)

Dear Karen: Does the IRS really have a “dirty dozen” list of scams?

Answer: Yes. The term refers to the tax agency’s annual scam list. If you’ve fallen for any, be prepared for an audit and possible fines.

This year’s dozen: tax preparer fraud; offshore bank accounts; phishing (phony e-mails asking for financial information); filing for a fake refund; exaggerating withholding credits; making up charitable donations; using frivolous arguments to avoid taxes; abusing retirement plans; disguising corporate ownership; filing phony statements that reduce your taxable income to zero; misuse of trusts; and fuel tax credit schemes. To see the list and learn more about these scams, go to the IRS website at https://www.irs.gov and search for 2010 Dirty Dozen.

Questions? E-mail Karen at inbox.business@latimes.com. Or write to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.