How To Keep Your Business From Going Bankrupt

The assets of a company are extremely important. Any businessman worth his salt doesn’t need a professional accountant to tell him that assets must be protected by the company. All companies that have gone under and filed for bankruptcy are guilty of improper asset management and lack of resources, which are common reasons why businesses fail. Bankruptcy lawsuits could also occur as well depending on the circumstances, so individuals and companies should have experienced lawyers and attorneys ready.

Assets are essential to a company’s financial survival. They help the company in Revenue generation and increases the value of the company altogether. Without assets, your company would not have any resources to utilize for its improvement and growth. Even your business operations would come to a full halt without any assets to burn. You would not be able to run a company, much less hire staff if your bank is run dry. 

When it comes to running a business and keeping it thriving, you don't have to reinvent the wheel. It truly is a simple process of maintaining a steady level of assets and expenses, making sure that the resources you bring in far exceed the resources you spend. 

Here we have listed some crucial strategies that must immediately be implemented by the company to ensure further asset management and protection. 

How To Select The Right Business Model 

First of all, I need to emphasize the need to choose a proper business model. If your business model is doomed to fail, no matter how you save your assets, it will ultimately fail. Many businesses are operating on an inefficient business model that pushes to lose more money than they are gaining. It is then important that you take the time to check whether your business operations are truly successful or are you just wasting your time and money. Make sure the business model you select is profitable, and if it isn't then you should cut business expenses wherever possible.

Take Care Of Business Contracts 

In an ideal world, just acting on good faith is enough to keep the company alive and running. Unfortunately, this is not quite the case in the world we have today. It is best that you use legal contracts for all your business transactions. 

Contracts are legally binding documents that state the relationship between two or more entities. Stated in it are the expectations and responsibilities of each entity while also providing the ramifications should there be any problems. 

A contract manager must perform a regular contract review to ensure that the performance of every vendor and client are up to par. If you really want to protect your personal assets, especially your contracts, integrating a contract management software would be the easiest way to go about it. This will also ensure that all your contracts are followed. 

A breach of contract is one of the fastest ways for a company to go down. The legal fees not to mention the compliance fees afterwards will run your bank dry, leading to debt or bankruptcy. It should also be mentioned that the hit in your reputation will also make the company struggle with its finances. 

Hire Professional Accountants 

If you really want to have a proper visual of all your cash flows, then it would be best to hire a professional accountant instead of having an inexperienced staff member do it for you. A professional accountant will be able to determine whether there are discrepancies in your accounts and thereby sniff out if someone is stealing from the company. They will also be able to tell if there are any financial problems ahead of you. 

Focus On Frugal Finances

While the adage you have to spend money to make money is often true, you still need to maintain financial discipline. Many companies have already failed and rendered obsolete only because they spent way too much without determining whether they are able to earn it back or not. If your company is earning less than you are spending then that means that your company is on the rocks and will be rendered dry in a limited amount of time. Focusing on frugal finance is key to long-term business success.

4 Short Term Investment Options Paying Off Long Term

Can you imagine being a secret millionaire?

Living a quiet life as an auditor for the IRS, Anne Scheiber had a meager income. However, when she passed away at the age of 101, the truth came out about her personal finances.

Over the years, Anne made several wise investments and acquired a surprising $22 million in assets. In her will, she donated the entire multimillion-dollar fortune to Yeshiva University.

Anyone who wants to gain financial independence can learn a thing or two from Anne’s story. When you know how to choose the right short term investment options, you can slowly and safely grow your money over years and decades.

Are you ready to make your money work for you? Read on to learn about 4 different investment opportunities that pay off in the long run.


Choosing Short Term Investment Options

Before you start learning about the different short term investment options, it's important to remember that risk is relative. Take into account your financial situation, to assess what a low risk and high-risk opportunity would look like for you. We also suggest looking into tactical asset allocation.

Here are a few questions you can ask to determine how risks will affect you

• How many income sources do you have?
• How much of your income is expendable each month?
• What do your current investments look like?

When it comes to determining your risk, you have to be able to quantify the amounts. In other words, get specific about what low risk, medium risk and high-risk means to you.

Now that you have a better idea of what risk means in the financial world to you personally, we can dive into the different investment ideas.


1. High Yield Savings Accounts

Let's start by discussing how high-yield savings can help you build your financial portfolio. Banking institutions that offer high-yield savings or checking accounts like SCCU checking account, are great ways to slowly grow your money. A penny saved is a penny earned after all! Every little bit counts in today's tricky economy. 

Research shows that a standard savings account typically offers less than a 1% return on your money. That means you end up actually losing money to inflation each year, which has been rising rapidly recently.

However, high-yield savings accounts, offer return amounts between 1.8% and 2%, or more. The percentage of your return will vary depending on what institution you go with, and how the markets are doing at the time.

Remember, when it comes to finances, risk and other factors are all relative. While a 2% return, it may not seem like a lot of money, it is when you compare it to what the standard savings accounts are offering.


2. Short Term Bonds

Moving on, short-term bonds are another safe way to invest your money. There are a few different ways you can go about getting different types of short-term bonds.

First, you can buy individual short-term bonds. Corporate bonds and government bonds offer short-term opportunities.

You can also choose to buy mutual bonds, short-term bond funds, or short-term bonds ETF's. If you're going to use short-term bonds, plan to have your money invested for about 3 to 5 years.

Typically, you can expect to see returns starting at 2.5% and up. The return rates on short-term bonds are higher than high-yield savings accounts, and so are the risk factors.

If interest rates go up, you could see a small dip in your principles. However, as long as you are willing to wait for interest rates to stabilize again, you can earn a profit.


3. Treasury Inflation Protection Securities

The third way you can safely invest your money is with TIPS. Treasury inflation-protected securities, or tips, are a long-term investment opportunity.

There are a few different ways you can get TIPs. First, you can find reputable companies that offer you the opportunity to buy them online. When you go to buy TIPS online, it's common to see the securities for sale listed in different yearly installments.

For example, you'll have options to buy 5, 10, 15, up to 30-year investment opportunities. We suggest you steer clear of choosing anything more than the 10-year option.

While TIPS are a safe way to invest your money, they aren't going to offer you incredibly high returns. Having your money tied up for 30 years isn't as wise as diversifying with multiple investment opportunities.

You can also choose to buy ETF's, or mutual funds, which are also TIPS. At the moment, the interest rate on TIPS is comparable to a high-yield savings account.

A typical return would be 1.5 to 2% depending on how long you're investing.

One great thing about TIPS is that they work to keep up with inflation. You'll also have the added in a fit of knowing the government is backing your investment.


4. Dividend-Paying Stocks

So far, we've been discussing investment opportunities that have minimal risk. Keeping in mind that risk is relative to your financial situation, next will be discussing a slightly riskier opportunity.

Dividend-paying stocks mean you will be investing in the stock market directly. However, dividend stocks are different than regular stocks. A dividend stop occurs when a company reaches a point where they are a cash solvent.

When this happens, shareholders get the reward of being able to pay in the form of a dividend. In the stock market, there are two ways to make money. First, you can make money with appreciation, where the value of a stock grows for more than what you paid for it.

The second way to make money is with the dividend. Energy and utilities sector stocks typically have dividend options. Let's say for example that you buy a dividend stock and it doesn't appreciate at all.
You buy the stock for $10 and at the end of the year, it is still worth $10. While you aren't making any money on the appreciation and, you still get paid in the form of a dividend.

You should look for stocks that have a history of not only paying a dividend but also increasing the number of dividends your paid overtime. These can be your smartest options for investing.


Achieve Financial Freedom

It is empowering to learn about the different short term investment options that are out there. We hope that you will take your newfound power to start making wise investments today.

When you know where you stand financially, and you know where you want to go, you can achieve all of your money goals. For more ways to reach financial freedom, check out the rest of the site. Visit the Frugal Finance and Investing sections of our blog right now!

How To Reduce Spending And Monthly Expenses

If you are like most people, cutting back on spending and monthly expenses wasn’t at the top of your to-do list until it forced its way there. There are some people who are just naturally good with money and there are those where they have to learn to get better with money due to certain circumstances. But the majority of us are part of the percentage who are forced to make cutting back a priority when it comes to our recurring expenses. 

Improve Your Savings And Earnings Online Here

Cutting Costs Is Crucial

Everyone’s financial situations are very different. Maybe there was two incomes coming in but then was reduced down to one for being a stay-at-home parent. It could also be because the two-income household lost one income due to being laid off, which is happening a lot again nowadays due to the economy. Regardless of the situation, the worst way to learn about cutting back is to figure it out the hard way, but nonetheless, the lesson will have to be learned in some kind of way, right? 

It may not be at the forefront of your mind now, nor may you even need to adopt these habits right now, but you never know what life may throw at you. So it is always good to at least have the knowledge on what to do in case you are put in a situation where you indeed will need to cut back. According to financial experts, the hardest part of it all is getting in the right mindset to do it. In the event you do need to cut back, follow these frugal tips on how to reduce your monthly expenses. Cut costs crucially and consistently!

Dine-In More Instead Of Dining Out 

Eating out is one of the biggest areas where cutting back can have a major impact on monthly expenses. You may not realize it but eating out is very expensive. Why is eating at restaurants so costly? Because ultimately, you are paying for the convenience of not having to physically prepare the food yourself. Eating out for lunch two to three days out the week can cost you around $30 per week, and that is not including trips to Starbucks in the mornings. There are people who set a $35 food budget weekly and survive off of that! 

Some people don’t cook because they have the luxury of not having to while others don’t cook because they don’t know how to cook. Well, in this day and age where you can use the internet for just about anything, not knowing how to cook is not an excuse anymore. With the simple tap of your finger, you have access to all kinds of recipes online! If you want to learn how to cook but not sure where to start, take a look at this simple Italian baked chicken recipe… this is a recipe that is perfect for beginners in the kitchen. 

Themediterrneandish.com is a great site to check out delicious recipes that are heart-healthy and delicious but they also won’t break the bank either! 

Cancel Subscriptions You’re Not Using 

One of the biggest mistakes that people make is throwing money away on subscriptions they are not using. A lot of people have gym memberships they don’t even use and are subscribed to things like make-up kits and meal boxes that they get too often to even be able to use everything. 

With the new year right around the corner, it is pretty typical for people to join gyms and have $10-$100 taken out of their accounts every month just to maintain membership. They will be pretty consistent with going to the gym for the first few weeks. Some even remain consistent for a month or two but when the bad weather hits or life gets in the way, they let their consistency to work out fall by the wayside. In that, do you know what else falls by the wayside as well? Your money goes down the toilet. 

It is one thing to be consistent and fall off track but then get back on track but it’s a completely different story when you fall off track and never cancel that subscription. That is hundreds of dollars going down the drain that could have been put to great use in other areas of your financial life. 

Get To Know Your Thermostat 

People spend lots of money on their electric bills each month, regardless of the season. In doing that, they are also throwing money away. People feel like when it is hot outside, it needs to be freezing cold in their house. Same thing when it’s cold outside, people think it needs to be extremely warm in their home. Well, the truth is, it doesn’t need to be as hot or cold in your home as you think. 

The main thing is to make your home vary in temperature from what it is outside. Before you leave to go to work, check the news to see what the high or low is supposed to be for the day. Once you know that temp, all you need to do is set your thermostat to be a few degrees above or below that temp. If it is summertime and it is supposed to reach a high of 95°, you can set your thermostat to 80°. You can even set it to 89° (assuming you don't have children and pets). Is that warm? Yes, but it is much cooler in comparison to 95°. 

When you come home from work, your home will feel ten times cooler than what it is outside and it’s not running your bill up all day. By the time you get home, you can then adjust the temp to whatever you want and it won’t take as long to cool off because it’s been cooling off all day. The same rule applies for winter. If it is 50° outside, set your thermostat to 60°, just so long as it is warmer in your home than it is outside and your body will adjust accordingly. Do what you need to do to cut costs without going to extremes. It is time to cut the costs creatively!

7 Cheap Ways to Stay Healthy for Less

Would you believe that a full three-fourths of Americans don’t eat enough fruits and vegetables? Are you one of them? According to research from the Office of Disease Prevention and Health Promotion, most Americans aren’t getting enough healthy foods, but are overdoing it on fat, sugar, and salt. If that is alarming to you, and it should be.

Staying healthy is vital for a long and productive life that allows you to enjoy the things you love. 

However, if finding ways to stay healthy is harder than it looks, you aren’t alone. Fortunately, there are plenty of things to do to stay healthy that won’t cost you a lot but will pay off in a big way when it comes to how you look and feel and quality of life.


1. One of the Best Ways to Stay Healthy is to Lose Weight

Of course, if you are at a healthy weight this doesn’t apply to you, but studies prove that over 93 million Americans are obese, with many more falling into the overweight category. For those individuals, losing weight is an important answer for the best way to stay healthy.

Dropping excess weight reduces the risk of many health problems, including heart disease, diabetes, arthritis, and many more. The best thing to do if you need to lose weight is to work with your doctor on an exercise and eating plan that is right for you. In Germany, for example, many doctors recommend keto dieting as a great supplement to burn fat and lose weight.


2. Exercise for at Least 30 Minutes Every Day

If you aren’t already working out every day, you should be. The average person should be getting 30 minutes of physical activity on a daily basis with two or three strength training sessions each week.

You do not need to join a gym. Going to the gym daily is a big commitment. You can still exercise if you are on a budget, time-poor, or don’t want to join a gym. Running, swimming, biking, walking, and jumping rope all count. Use a BPM beat finder to set your tempo for your fitness playlist. This will keep both your motivation and heart rate up. Pushups, planks, sit-ups, squats, lunges and crunches are all easy and free ways to build strength and muscle through your body.

There are plenty of resources to help you work out at home. Read tutorials and watch YouTube videos for ideas on how to put a routine together, how to work out without equipment, and how to achieve the correct form for the exercises you choose to do.


3. Make Healthy Eating Choices Most of the Time

If you are not overweight, it is important to keep the fat and extra pounds away. You don’t have to give up your favorites, but it’s a good idea to eat healthy most of the time. If you make the right choices on a general basis, you’ll have space for an indulgence now and then.

You should eat a variety of foods from each food group, including fruits, vegetables, whole grains, low-fat dairy, and lean protein. This ensures that you get enough of the vitamins and minerals that you need to stay healthy. Nutritious food doesn’t have to be expensive and is much more affordable than dining out.

Some people worry about the cost of healthy food thinking that fresh produce and lean protein are expensive but you can shop strategically to save money on food.

Buy generic brands whenever possible. Most of the time they are the exact same product at a much lower price. Buying frozen fish, chicken, fruits, and vegetables is another way to save. Shopping in season and buying in bulk can also cut your grocery bill without having to eat a lot of unhealthy foods.


4. Balancing Work and Play is also Important

If you are wondering how to keep healthy overall, you should be paying attention to your work/play balance. Work is important and can even be enjoyable if you find the right career, but it is important for your health to also take time for play.

Setting aside time to take a vacation, read a book, or engage in your favorite hobby is vital for your mental wellness as it gives you a break from any stress that work brings. Taking a break doesn’t have to cost a lot, but it sure pays off in a big way.


5. See Your Doctor at Least Once a Year for a Checkup

It is important to have a standing yearly appointment with your physician to stay on top of your health and help you watch for potential problems. If you have any health issues, you may need to see your doctor more than once a year.

It is also wise to take advantage of any free health screenings you are eligible for. It is a simple way to save money and check for problems like high blood pressure, diabetes, and much more. Look for free health screenings at local clinics or drugstores in your area.


6. Take Advantage of Free Health Apps When You Can

There is a huge array of apps for your smartphone or tablet and finding free ones is an easy way to stay within a budget while also watching your health. For example, you could download a calorie and food intake tracker so you can watch what you are eating. Or you could download a pedometer to keep track of the number of steps you take each day.

You can also find great free apps for healthy cooking, making shopping lists, and keeping track of weight loss or medications. There are also apps to help you sleep better and manage stress.


7. Watch How Much Alcohol You Drink on a Regular Basis

Sure, it is fine to unwind and enjoy a cocktail now and then, but it is not a good idea to imbibe all the time. Why? Because too much alcohol can lead to liver problems and has been linked to certain kinds of cancer.

Alcohol also has quite a few calories, which can add up and get in the way of your weight loss goals. At the same time, a few drinks lowers your inhibitions and that can get you in trouble when it comes to making the right eating choices.

Most experts say to limit yourself to two drinks per day, but you will be doing yourself a favor to cut back even more than that if you want to lose weight or you need to control a health condition. It might not be your favorite of the many ways to stay healthy, but it’s worth it and can help your frugal fitness by cutting costs.


Rounding Up Affordable Health Measures

The best ways to stay healthy for you are those you can incorporate into your lifestyle without feeling you are giving up or losing out. If you make being healthy a lifestyle, it is much easier to maintain a good weight, stay flexible in your joints, and keep your muscles and heart in good condition.

Learn more and find more ways to stay healthy without spending a lot of money right here on Frugal Fitness.

5 Ways Debt Can Improve Your Credit Score

Our credit score is like our blood pressure. We all have one and without much effort we can find out roughly what it is. We are told it is important, and we know a few anecdotal tips to improve it, but beyond that we are pretty much at a loss. Unlike our weight or our bank balance, the numbers appear arbitrary – unrelated to our everyday life. Because credit seems abstract, we often ignore it - to our peril. 

One of the biggest misconceptions is that debt is the enemy of credit. This is almost entirely false. While unmanaged debt can hurt credit, debt itself is essential to establishing good credit and improving bad credit. This is because your credit score is not a measure of your debt aversion, earnings, investments or even your total financial acumen. Your credit score is a measure of how you handle debt. Put another way: how good of a borrower are you? 

With this critical idea in mind, let’s look at ways that effectively managing (and even increasing) debt can improve your credit score. 

Before We Begin: Credit Monitoring 

Before you strategize to improve your credit, you need to gather some information. For starters, you don’t just have one credit score. You have a handful. Experian, Equifax and TransUnion are considered the big three credit monitoring agencies. They may each have a slightly different score for you, based on receiving different pieces of information (and at different times). 

Subscribe to a free credit monitoring service and check your credit on a weekly basis. Besides providing the score itself, these platforms give tailored advice and help you zero-in on specific corrections to improve your credit. 

#1 Credit Age 

One of the most important factors in developing a solid credit score is the age of your credit. The more history lenders have to refer to, the greater their confidence will be in extending you loans, credit or advantageous interest rates. This confidence is reflected by a higher credit score. 

Only time can improve your credit age. The clock starts the moment you take out a loan or opened a credit card. Your credit score should increase substantially within the first year of responsible credit management. 

Payment History 

A critical caveat to the importance of credit age is that this age has to demonstrate the behaviors of a dependable borrower. One of these is payment history. Credit bureaus can report up to 7 years of credit payment history. Missed or late payments are a major red flag to lenders and have an adverse effect on your credit score. Once you’ve missed a credit card or loan payment (by more than 30 days), it will damage your report. Only time will heal this damage. 

#2 Increases To Your Available Credit 

Potential lenders like to see that other lenders have extended you credit and that you’re using it well. This is reflected in your total amount of available credit. Unused credit is a major positive factor in your credit score. 

Credit Utilization Ratio 

Your total revolving credit is the amount of credit available to you at a given time. Lenders like to see that you are using a low percentage (< 30% amount available).

An example: 

Sally has $2,000 total credit and a $500 balance (25% utilization). 

Jim has $1,000 total credit and the same $500 balance (50% utilization). 

Although Sally and Jim have the same amount of debt, Sally will have a higher credit score because she is utilizing a lower percentage of her available credit. 

Number And Diversity Of Accounts 

As with the length of your credit history and ratio of utilized credit, a higher number of open accounts (e.g. credit cards, loans, lines of credit) can improve your credit score. It is also advantageous to have a diverse group of accounts. For example, having 5 credit cards is less beneficial than 3 credit cards, an auto loan and a mortgage. 

However, don’t jump up and start applying for credit cards. Every time you apply for a credit card or a loan, the credit bureaus register a ‘hard inquiry’ on your account. This is somewhat of a necessary evil, but can actually hurt your score instead of helping it. 

#3 Credit Cards 

Reckless credit card use can rack up debt, harpoon your credit score and seriously cripple your financial abilities. Used responsibly, credit cards are a crucial building block for credit. They are also one of the quickest ways for a credit novice to establish credit. 

Credit Cards With Rewards 

Some credit cards entice applicants with offers of 0% APR (interest) for a defined amount of time. For personal use or to finance a small business using a credit card, these offers can be a good way to establish credit without paying interest. However, be careful to make required payments, monitor your credit utilization ratio and reduce your total balance as much as possible before the 0% APR period ends. 

Other credit cards offer members rewards like travel benefits and cash back. If your work allows you to put reimbursable expenses on a personal card, using credit cards can generate travel benefits while simultaneously building your personal credit history. 

Secured Credit Cards 

Secured credit cards are an obscure tool that can get your damaged credit back on track if you cannot be approved for a traditional credit card. 

With a secured credit card, you make deposits into an account that is tied to the line of credit, acting as collateral. For instance, you might deposit $1,000 into an account and the bank would extend you a $1,000 line of credit. Essentially, you are borrowing your own money. However, it’s a useful method for reestablishing positive credit history until your score improves enough to satisfy other lenders. 

Check Your Approval Odds 

Tying into what I mentioned under ‘Number and Diversity of Accounts’, it’s critical to maximize your chances of approval before applying for a new credit card or an increase in a line of credit. If your credit is lukewarm, apply for cards with low credit limits. If you apply for a credit card and get denied, you will have negatively impacted your credit for no advantage. The same platforms that offer credit monitoring will recommend credit sources that have favorable approval odds for your credit score. 

#4 Installment Loans 

Installment loans are fixed amount, fixed-rate loans that you pay off over a designated period of time, typically on a monthly schedule. Mortgages and Auto Loans are the most common types of installment loans. 

This is a great example of how responsible debt management can ultimately improve your credit score. Lenders like to see potential borrowers take out installment loans and pay them off on schedule. Because the initial hurdles are greater, installment loans show an increased level of financial maturity. 

Note that taking out a new installment loan may temporarily cause a decrease in your credit score. This is due to the hard inquiries generated by the loan application process and the lowering of your average account age. 

#5 Piggybacking 

Remember this classic Catch-22? ‘You need a job to get experience and experience to get a job.’ Credit can be like that. It’s hard to get the ball rolling, either with no credit or bad credit. If you have a spouse, parent or other loved one with good credit (and who trusts you), you can try piggybacking as a way to jump-start your own credit. 

For instance, you can apply for a loan with this person as a cosigner. Their established credit gives the lender enough confidence to extend the loan. From there, your responsible behavior (e.g. on-time payments) boosts your own score. 

In another scenario, an established borrower can add you as an authorized user on their credit card. Keep in mind that any delinquent behavior on your part can hurt the credit of the person giving you a helping hand. 

The Bottom Line On Improving Credit Scores

I don’t want to sugarcoat or distract from a truth: debt has become a major problem for a lot of people. It can cost a lot of additional money and be a major source of stress. However, debt itself is a necessary part of establishing credit. The higher your credit score, the better your frugal financial opportunities. 

One final tip. Don’t ignore your credit score – especially if it makes you uncomfortable. Educate yourself and stay involved in your own financial future. Credit establishment and repair don’t happen quickly, but there is a proven formula. Stick to an informed plan and you will see the results you desire with your fiscal finances. 

I hope you enjoyed this blog post about why borrowing smart and utilizing debt to improve your frugal finances and fiscal fitness.

Interested in more articles about improving your frugal finance? 

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How To Manage Your Overseas Tax Bill

Do you dream of living overseas, working for yourself, or a foreign company, while you explore the world? Are you looking to grow your business, expanding into other countries? 

Think you can avoid the high taxes in your country by working somewhere else? 

Well, think again! If you’re not careful, you might find yourself paying taxes twice! 

Read on to learn some basics about managing your overseas tax to help you protect yourself and your income when living abroad. A little knowledge could save you a lot of money on overseas tax bills. 

Tax on Overseas Income for Individuals and Corporations 

Most countries have an income tax on the worldwide income of its citizens/residents and corporations making money within its borders. 

Some countries, like the United States, for example, will allow a ‘Foreign Tax Credit’ or ‘Foreign Earned Income Exclusion (FEIE)’ for individuals on taxes paid to other countries on income made in those other countries. The FEIE lets you exclude a certain amount of earned income from US tax. 

But, keep in mind that these exclusions are only for foreign earned income. You are liable for the US tax on any income on pensions, interest, dividends, capital gains, etc. 

If you are self-employed, the FEIE only applies to income taxes. You must still pay self-employment taxes even if your business is overseas or not. So you may need to file quarterly estimated tax payments throughout the year. 

All countries tax income on multinational corporations that do business within their borders. While many countries exempt the foreign-income of their multinationals, some like the U.S. impose a minimum tax on their multinational corporations.

A U.S. company doing business worldwide must pay taxes on their worldwide income. However, the income made by a foreign subsidiary of a U.S. company may not be subject to U.S. tax if the income is from the active conduct of a business in a foreign country. 

How do you know if this applies to your company? Your best bet is to find a tax- and accounting- service company in the countries your business is in. Whether you’re looking for company tax services for Singapore companies, Brazilian companies, Germany companies, or Saudi Arabian companies, make sure the tax service company you hire is familiar with the laws in your country of origin as well as where you are doing business. 

Overseas Capital Gains Tax 

If you buy stocks or bonds from an overseas company, you must pay taxes on the interest, dividends, and capital gains. Some countries, the U.S. included, requires withholding on the sale of real estate property. 

While some countries do not have a capital gains tax (or, waive it for foreign investors) many do, so again, make sure you know the laws of the country you are purchasing the stocks/bonds in. 

If you have paid overseas taxes, you should receive a 1099-INT or a 1099-DIV at the end of the year. These forms will show how much was withheld by the foreign government. 

Filing Taxes on Overseas Income 

In the United States, all citizens living and working in foreign countries must file an annual US Tax Return, even if you do not owe any taxes. Filing the return is how you report your income and show that you are eligible for the FEIE and/or foreign tax credit. 

This applies to everyone: whether you have lived outside of the U.S. for several years or have never lived in the U.S.; whether or not all of your income is taxed by a foreign country. If you are married to someone who has income even if you do not, you are still required to file. 

The only exception to filing is if your income was below a certain threshold. For the most up to date information be sure to review the international tax information for your country. 

Overseas Withholding Tax 

A withholding tax is when the income payer, and not the income recipient, pays the income that is due to the government. The tax is withheld (or deducted) from the income due to the recipient and paid to the government on their behalf. 

You may be subject to withholding tax if: 

• you are a resident of one country but have income or gains in another 

• you are a resident of one country and receive income from abroad (including dividends, interest, royalties, pensions, or rental income) 

• you are an incorporated company in more than one country 

The withholding tax is a payment towards the recipient’s final tax liability. Depending on how much is withheld, the recipient may get a refund or owe more taxes when they file their return. As noted above, taxes withheld may be eligible for a foreign tax credit in the recipient’s home country. 

Deadline for Overseas Tax Filing 

Individual income taxes are due each year in the United States on April 15th. US citizens residing abroad have an automatic extension deadline to June 15th. It is possible to request an additional extension (Form 4868) but remember, interest will accrue on any taxes due, beginning April 15th. 

Corporate taxes are due by July 15th. A company may request an extension (Form 7004) but will need to pay a deposit of their estimated taxes owed. 

Make Sure You’re Paying Taxes Appropriately 

Whether you are an individual living overseas or a corporation doing business in foreign countries, you want to make sure you are paying your overseas tax properly. 

The safest and easiest way to do that is to understand the basic tax laws in each country and find a trustworthy professional to help you with your taxes and accounting. Explore more legal and business topics on our blog to keep your company profitable and growing!

Paying off Debt in Collections: Who Should Get Paid First?

In the realm of debt payment plans, there are two main schools of thought. One is to pay off your debts, immediately, from the highest interest rate to the lowest. The idea is that this saves the most money, over time.

The other says that, when you pay off your debt from low to high, you gain increased momentum on your debt repayment. This can help in paying off debt fast, but it is more difficult.

Regardless of your strategy, a solid plan will give you what you need to focus on digging your way out of debt quickly and efficiently. Join us today as we bring you what you need to learn how to pay off debt in collections.


Debt In Collections: A Quick Recap

Debt collection refers to any time a financial account is sent out to an external debt collector because it's been unpaid for too long. Debt collectors collect unpaid debts from debtors on behalf of the original company you had the debt with. This happens once you've missed multiple payments for any given reason.

The collection policy your creditor uses may differ. This depends on how they handle business, as well as your specific credit card provider. The latter will supply your information based on their conditions and stipulations, which affect how they do business. Some companies may send you to a collection agency after a few months without paying. Others may do it after a month.


Which Debts Should You Pay, In Which Order?

Becoming debt-free is a good goal to have. That said, it doesn't always make sense to focus on paying every single creditor everything they're owed. This could leave you with less money for other important processes, investments, and savings. It's also a quick way to stress yourself out!

In general, you'll want to pay off high-interest debts first, and quickly. Double-digit interest rates are the most pressing, so get them out of the way as soon as possible.

There are times when, for instance, it will make more sense to pay off a car loan early because your vehicle is consistently depreciating. Interest payments on assets like this constantly lose value, which is less than ideal. To pay off your car loan, pay off this debt as early as you can.

With other debts, however, advance payments actually make less sense. Paying off mortgage debt, for the most part, is not an early priority. The same thing goes with a federal student loan. There's usually a low-interest rate attached to debts like this, so they are on the other end of the spectrum in terms of your priorities. Your interest payments may also be tax-deductible, which is something else to note.

With student loans, you can deduct up to $2,500 worth of interest, here, provided you come in under that income limit. Itemize on your tax return, and you can also deduct interest on mortgages up to $750,000. This number goes as high as $1 million if your home was purchased ahead of December 2017.


And Which Of Those Debts Do You Pay First?


The biggest question to answer is what debt should you spend your extra money on. You have two options:

So you've identified which debts you have to pay off right away. Now you need to decide which of those debts you'll pay in which order. In order to be truly effective with your money, focus mostly on paying one debt immediately. It's not against the rules to make small payments across all of your debts, but that will draw things out. Rather, spend as much extra money as you can as early as you can to pay off one particular debt. Don't miss the rest of your minimum payments by doing this, but spend responsibly with this as your goal.

But how to decide between paying off debt in collections? There are two approaches you could take to help lower your debt:


Snowball

Using this method, you can make additional payments on your debt, starting with the lowest balance. This ignores any differences in interest rates. You can only make additional payments once the smallest debt has been completely paid off.

As far as payments go, simply add whatever you make onto the smallest debt, then move to the next largest debt. Wash, rinse and repeat until all debts are paid off. If you made a monthly payment of $200 on a credit card with a $1,000 balance and a minimum payment of $50, with a $2,500 balance, you'd pay $1,000 first. Add $200 to that monthly minimum, along with the balance, and your new monthly payment comes out to $250.


A Debt Avalanche

This method is to pay off your debt with the highest interest rate first. Dedicate your extra money to pay that debt and, when the balance is paid in full, take that money and begin adding it to your minimum payment. Continue this approach until all of your high-interest debt is paid off.

Using this method, you can start paying off debt with the highest interest rates, first. Spending your budget on that debt, first, before paying the balance, in full, you can take your remaining budget and add it to your minimum payments. 


Paying Off Debt In Collections

In the world of debt consolidation, paying off what you owe is always the best investment you can make into yourself. Put these at the top of your "to-do" list. But, if breaking out of the cycle of your own debt was easy, everyone would do it. It's never straightforward, especially if, like so many others, you find yourself in debt to a host of different creditors.

Today's article should give you everything you need to be able to prioritize your debts in the correct order and pay them off in a way that works for you. For more insights into everything from tips for paying off debt in collections to improving your credit score, check out the rest of our blog content, today. Visit the Finance and Loan sections of the Bootstrap Business Blog right now!

7 Audit Preparation Tips for Your Next Financial Audit

There are a few words or phrases in business that every company cringes at. Words such as "audit" have the potential to send all departments into a panic.

It is a tedious process that takes as much effort as it does time. People come in and critique every move your company has made over the last week, month, or year.

However, the auditing process doesn't have to be as stressful as most companies make it seem. There are things you can do ahead of time for audit preparation, thus creating a seamless process.

Here are some steps you can take to give yourself confidence going into the audit.


1. Draw a Line Between Business Expenses and Personal Expenses

Many business owners make the mistake of improper bookkeeping among their business expenses and personal expenses.

Not separating the two can land you in a world of hurt with both the audit process and tax season. That is why having an accounting division is so crucial to your business. Learn more about that here to give yourself a financial advantage.

By paying for business expenses on your personal account, or vice versa, you are complicating the way in which your purchases are tracked down the line.

All of this can be avoided by starting out on day one with a business bank account. From this day forward, any and all business expenses will be paid for out of the business account. 

That way, when it comes time for those expenses to be tracked during the audit, all of your expenses are listed out in the business account's statement.


2. Create an Internal Auditing Task Force

What is one of the best ways to prepare your company for an annual audit? Create accountability for all departments in the form of an internal auditing task force.

The task force itself can include as many or as few of the members as you see fit.

Take the time to focus on the areas that need auditing and decide how often you need to perform an internal audit to maintain consistent reports.

Most importantly, alert all departments to the dates of both your internal audits and the actual audit itself. This way they can be fully prepared and prioritize the organization of their department accordingly.


3. Enforce Accounting Standards

This is one of the biggest steps that most companies miss out on in preparation for the financial audit. How can your departments prepare for something they don't know the finer details of?

Your accounting standards should be on-par with the reporting and organization the actual financial auditor will demand. 

If you enforce the auditor's accounting standards from the very start, then it will be as simple as handing them over reports that meet their exact requirements. If not, then your departments could be scrambling to compile the proper reports.


4. Consistent Communication

If you shrug the inevitable annual financial audit off to the side throughout the year, then your workers will do the exact same thing. 

However, if you drive home the point of being prepared and concise with things such as a consistent inventory count, they'll see the emphasis you're placing on the audit and follow suit.

Don't just communicate the importance of the audit, be sure to also communicate how the audit is going to be laid out.

For instance, what time constraints should your workers expect with the financial audit? What date(s) will the audit be taking place on? Are there any requests the auditor has laid out prior to the actual audit date?

It's your job to be the messenger. If your departments aren't prepared for something they weren't made aware of prior to the audit, then you only have yourself to blame.


5. Use Your Hindsight

Have you already gone through the financial audit process a time or two in your company's history? If so, fantastic! Use that to your advantage.

What recommendations did the auditor(s) give your company after the past audit? 

Which portions of the audit were you most confident with? Which portions were you most worried about? Line those up and be sure to prioritize them heading into your next audit.

Did you pass along the necessary audit information to your departments? Even if your answer is "yes", think of ways you could communicate that even better this time around.


6. Don't Be Afraid to Ask Questions

Contrary to popular belief, Auditors don't just walk into your company's building, sit down in a quiet room and demand that no one talk to them.

They love answering questions. It's what they're there for.

Don't be shy. Ask them any questions you have on the process, what they've found during their audit, anything you can do to organize your company better, etc.

You asking questions means that you're trying your hardest to do things the right way. That's very reassuring in the auditor's eyes.


7. Be Transparent

The worst thing that you can do is try to cover up errors in your company that you knew was there. 

Not only is that unconstructive to the auditing process, but it will also result in high fees when the auditor finds them.

However, if you make the auditor aware of your errors prior to them coming across it and list out your reasoning behind it, the auditor may excuse the fee since you were honest and upfront about it.


Audit Preparation: Organization and Prioritization Are Key

The two main things to remember with audit preparation is to stay as organized as possible.

Keep it at the top of your company's mind throughout the year and you'll have a smooth audit process all the way around!

Be sure to read our other articles that pertain to both this topic and other topics that are just like it!

Small Business Guide To Credit Card Processing

Almost every person today makes a purchase using their credit card, no matter what the product or service is. Regardless of the type of credit card used, every business now should be well acquainted with credit card processing, especially how it works and the processing fees involved. 

In fact, there are lots of things to consider when it comes to accepting a credit card payment and it applies for any type of business such as: 

• Mom and pop shops 
• Sole proprietors
• Online stores and ecommerce site 
• Brick and mortar stores 
• Small home-based sellers 

Credit card processing as it is may not seem too complicated but the factors to consider and the road to follow to accepting a credit card payment is not easy. There are things like: 

• Getting sanctioned for a merchant account able to accept credit payments

• Using the most appropriate credit card processing technology as a big corporation

• Keeping up with and complying the security protocols and requirements for credit card acceptance that seem to be ever changing (example: EMV chips) 

All these can be time consuming or confusing in their own right and when combined, the hurdles may seem insurmountable to you. 

Knowledge About The Technical Terms

Most businesses, especially the small ones, often do not know about the lingo of credit card processing and acceptance and feel like as if they are at a loss due to this disadvantage. This is why knowing the technical terms and buzzwords is the first of the few very important things that any business should know about credit card processing and acceptance. This will help them to stay ahead. 

Learning the new vocabulary about accepting credit cards will help you to understand: 

• The credit card processing process 
• How the money moves through the system 
• Who moves the money through the system 

Ideally, most of the small businesses are bootstrapped and that is the primary reason they overlook the importance of such details in the credit card industry jargon. Instead they put in all the effort and focus into getting the setup of their credit card processor system right. 

Nonetheless, knowledge of such technical terms will save you and your business from a headache if any problems arise in the future. Well, at least you should have some idea about these buzzwords as it will help you to know a great deal about what actually goes on behind the scenes when it comes to credit card processing. 

Helpful Technical Terminology

The terms used in credit card industry will also allow you to know about the key players in credit card processing. These are terms and buzzwords are as follows: 

The Merchant Banks

This is ideally a financial institution that will provide you with merchant account services. They will also facilitate the transactions to different bank accounts. However, merchant banks should not be mixed up with aggregators as they play different roles in credit card processing services. Sometimes, aggregator companies such as PayPal and Payoneer may create merchant accounts and even process credit card dealings but they are surely not any financial institutions and certainly not banks.  

The Processor Company

This is the typical 3rd party middleman. A processor actually takes on the responsibilities of the merchant bank and facilitate in credit card transactions. It routes all credit card info to the appropriate credit card payment networks and the related merchant accounts.  

The Issuing Banks

This is once again a financial institution but their responsibilities are restricted primarily for issuing credit cards to the different consumers. 

Lastly, you should already be aware of the different card payment brands such as Visa, MasterCard, Discover and American Express. 

Finding the right credit card processor You should never consider that your options for credit card processing are limited simply because you may be an owner of a very small business. Irrespective of the type of your business, how you operate and where you plan to conduct your operation, you will need to have every aspect and process of credit card processing streamlined. 

It's absolutely critical to find the right credit card processor for this matter. They are the only ones who can make your business operation and transactions a lot easier. A couple of examples will make it easier for you to understand the need of a good processor. 

- If you have a mobile business and spend most of your time attending trade shows and want to have a lot of flexibility in accepting a credit card payment anywhere, you should select a mobile credit card processor as your best choice. 

- On the other hand, if you are an owner of an ecommerce store, you should consider selecting a shared commerce POS or Point Of Sale system. This will help you to integrate all your credit card dealings with your accounting and your CRM or Customer Relationship Management software. This will in turn consolidate all your offline and online sales data automatically. 

Make sure that you choose the credit card processor for your business wisely and after conducting a proper research on and interviewing a variety of vendors. 

Revenues Requirement 

Lastly, it is the revenue requirements that you should care for. It may seem to be a no-brainer to you as it is obviously the primary focus of all businesses. However, it is the revenue requirements of the different credit card companies that is referred here. 

The fact that you will find many different credit card processing options available can appear to be a significant drawback, especially when you are a very small business. This is – you may find it very difficult to meet the different requirements of different vendors. This can pose a significant challenge especially if your business is unable to generate adequate revenue because the credit card processing companies may simply reject your application just for this specific reason. 

Such revenue requirements vary from one credit card processor to another widely and it is not wise to believe that every one of them will expect a least amount of transaction of $10,000 in revenue a month. 

Therefore, while selecting a credit card processor, research to meet with such strict revenue requirements. You will find a few processors that typically cater to small businesses with customized solutions for credit card processing.

Savvy SMB Credit Card Processing Power

When your company is small and you are living the lean startup life, it's always important to look into all aspects of your payment systems and overall frugal finances. Keep these tips in mind when you consider your credit card processing programs in the future.

Why Your Personal Loan Applications Were Denied

When your personal loan application gets denied, it can be disappointing. Most people are also puzzled why their request for loans were rejected. Even people with strong credit scores can get denied, and it makes them wonder what went wrong. Below are a few common reasons why banks and other lenders deny personal loan applications so the next time you apply for a loan, you’ll know what and what not to do. 

1. Bad Credit Score 

Let’s get the most obvious reason out of the way. When you have a bad credit score, lenders are most likely to deny your personal loan applications. Your credit score is what tells banks the likelihood of you paying them back for the loan. If your track record is not very good when it comes to paying what you owe, chances are your bank will be resistant to granting you loans. 

2. The Loan Amount Is Too High 

Lenders will take into account your capacity to pay back when you apply for a loan. When you fill out that loan application form and put in too high of an amount in the “desired loan amount” field, banks will most likely deny your application. To avoid this mistake, use an online loan calculator. Loan calculators can tell you how much you can borrow given your current income, assets, credit, and other financial factors. 

3. Unstable Employment Record 

Because banks consider your ability to pay the loan off in the long run, they will be looking at your employment record. So if you have an unstable employment record or worse, no employment at all, banks will be hesitant to grant your loan application. Lenders will require certain employment tenure or length of service, which is why banks typically require you to submit a certificate of employment. 

4. Insufficient Income 

When you don’t make enough to apply for a loan, you will most likely not get approved. You need to be able to make the monthly loan repayments, and If you do not make enough money to pay them and at the same time address your basic needs as well, lenders will not grant you a loan. This is because you are most likely to use your income for your basic needs than to pay off the loan. 

5. You Have Too Much Debt 

When you apply for a personal loan, your bank will do a background check to see if you have any outstanding loans. This is so they are sure that you have the capacity to pay. If you meet the minimum income requirement and have a good credit score but have several outstanding loans, they will most likely be hesitant to grant you another one. The more loans you have, the less capacity you have to pay back an additional loan. 

6. Errors Of Inconsistencies In Your Loan Applications 

If you have any mistakes or inconsistencies in your loan application, lenders might not grant you your personal loan. Your data needs to be complete, correct, and consistent. Lying on your application will get you denial and could possibly land you on your bank’s bad side. Consider the list above the next time you apply for a personal loan. Make sure you fill out the application completely and honestly, have a good credit score and enough income to make the payments, and make sure you’ve been productively employed a while.

How To Get Your Personal Loan Application Approved

Getting approved for personal loans isn't always easy. Avoiding the mistakes listed above and getting your overall finances in order is the best way to increase your chances. Read more Frugal Finance articles to keep yourself fiscally fit and ready to save a fortune.

Tips For Settling Your Debt With Debt Consolidation

You might not be having rest ever since the debt problem has started occurring in your life. Your financial growth may have been stopped, and your current expenses are not in control. It is not that easy to deal with such situations when you are completely ignorant of the possible solution. The debt, naturally, causes a stir in the people’s life. It occurs because of the credit card payment which is not paid on time, the medical bills which are still not cleared and the loans. 

There are many people who due to some problem are not able to keep continuing their payment on time. Many times, they miss it by forgetting about it, or they don't have enough money for the payment. In the desperate times, you may have also taken some decisions that are not considered wise. You might have taken money with the high rate of interest, and unfortunately, you were not able to make the payment on time. Then, you made another mistake and took money from some other lender to pay your first debt, but again, you might not be able to make the shot. Well, this goes on in the circle, and that's how mainly, most people incur the debt. 

Start Settling Your Debt

It is completely debatable of which option should be considered perfect to settle the debt. There are lot many options out there in the market which is helpful in debt settlement, but no one says accurately how good they can be. The debt settlement is the need of an hour, and the person should not delay it for long. You have already seen how worse your financial situation can be if you have not made the payment on time. You have to look for various debt settlement plans and debt relief programs that can actually help you in getting out of the problem. 

Different Ways For Debt Settlement 

Numerous ways can help in settling the debt, but you have to look for the one that can help you in eliminating your debt completely. It is important that debt should be settled a properly and rightfully without leaving a penny behind that can trace you back. The principal and the interest rate should be settled. You can try considering the debt consolidation method for settlement. Many experts speak highly of this method and consider it as an efficient and viable option in the case of multiple debts scenario. 

You have taken the debt from multiple sources at a different rate of interest. When you have trouble financially, you might not be able to keep up with the payment of principal amount along with interest charged. Now, the situation is that you have a lot of debt than the actual one because of interest accumulation which you didn’t pay on time. In that case, consolidation of debt is the best method that can be helpful. 

Debt Consolidation Loan – Best Debt Settlement Practice 

In this method, you have to analyze your debts and the rate of interest charged on it. You can start making a list where the debt with a high rate of interest is on top, and the debt with a low rate of interest is at the bottom. You have to start calculating the interest amount and the principal amount of each listed debt source. This will help in assessing the total amount. You can check debt settlement reviews first and then proceed further. 

Once done, bundle the individual amount into one single calculated debt. Now, you have the total amount in your hand; you can start progressing towards the loan. The loan will be sanctioned to you based on two factors – credit score ratings and past track records for payments. Before you actually apply, you should read the guidelines and start working on your credit ratings accordingly. The bank and the lenders don’t want to risk their money by giving it to someone who has the defaulter case in payments. So, they run a thorough background check of the applicants. 

Role Of Credit Score Ratings In The Debt Consolidation Loan 

The person with good credit score rating has the high chance of getting the loan approval. The good score rating represents the clean and clear record of payment of the person in the market. Such persons are eligible for any type of loan, and many creditors are comfortable in working with them. The credibility of such candidates is good, and so, the bank provides them loan immediately. 

On the other hand, the applicants who have default records of payment for loan and credit card balance and have a bad credit rating, they are not eligible for any loan approval or any business conduct. Lenders and banks have zero faith in them, and they pose a great risk to the funds. Many marketers avoid establishing any kind of cash flow. People lose their credibility and hence, face rejections in case of money matters. 

Even though, few lenders still want to continue a relationship with such liable person and offer them a loan. The condition applicable to the loan is slightly different. The rate of interest is high as compared with the loan provided to the applicant with good credit rating. They get a loan at the lowest possible interest rate. It is done because lenders don’t want to put themselves at the risk of losing their money, so they incurred a high rate of interest. At least, they will manage to get their money in the form of interest even if the person is unable to pay the principal amount. For debt consolidation, these two factors should be maintained regularly for better frugal finances. 

Delete That Debt 

Debt consolidation loans method is very helpful and a viable debt settlement option. A lot of people have considered and followed it, and now, they are living a financially healthy life. This method reduces the size of the debt and eventually gets eliminated through the loan. You can learn more about deleting your debt and maximizing your frugal finances by checking out the rest of our website.

I hope you enjoyed this blog post about the crucial points to consider when settling your debt through debt consolidation.

Interested in more articles about practicing fiscal fitness and frugal finances? 

Read Related Resources:

• How Debt Can Actually Improve Your Credit Score

• The Health And Wealth Debt Connection

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