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what does erisa have to do with health insurance | the majority of health insurance plans that are offered by employers are covered under erisa plans that fall in this category include defined benefit and defined contribution plans | |
what are erisa violations | erisa violations occur when a fiduciary doesn t meet their responsibilities as outlined by erisa for instance a plan administrator who doesn t provide full disclosure about fees and plan benefits may be in violation of the law this may also be the case if a fiduciary misuses funds or fails to send updated information a... | |
what is an employee stock option | an employee stock option eso is a type of equity compensation granted by companies to their employees and executives rather than granting shares of stock directly the company gives options on the stock instead esos are call options that give the employee the right to buy the company s stock at a specified price for a f... | |
when you receive the esos at the time of grant you typically have no intrinsic value because the eso strike price or exercise price is equal to the stock s closing price on that day as your exercise price and the stock price are the same this is an at the money option | once the stock begins to rise the option has intrinsic value which is intuitive to understand and easy to compute but a common mistake is not realizing the significance of time value even on the grant day and the opportunity cost of premature or early exercise in fact your esos have the highest time value at grant assu... | |
when you exercise the esos you would have to pay the exercise price plus tax even if you do not sell the stock recall that exercise of esos is a taxable event in this case that amount equates to 50 000 plus 28 000 for a total of 78 000 if you immediately sell the stock at the prevailing price of 120 you receive proceed... | image by sabrina jiang investopedia 2020early or premature exerciseas a way to reduce risk and lock in gains early or premature exercise of esos must be carefully considered since there is a large potential tax hit and big opportunity cost in the form of forfeited time value in this section we discuss the process of ea... | |
when an eso is granted it has a hypothetical value that because it is an at the money option is pure time value this time value decays at a rate known as theta which is a square root function of the time remaining | assume you hold esos that are worth 35 000 upon grant as discussed in the earlier sections you believe in the long term prospects of your company and plan to hold your esos until expiration below shows the value composition intrinsic value plus time value for itm otm and atm options value composition for in out and at ... | |
what s more it is all due in the same tax year and paid upon exercise with another likely tax hit at the sale or disposition of the acquired stock even if you have capital losses elsewhere in your portfolio you can only apply 3 000 per year of these losses against your compensation gains to offset the tax liability 8 | after you have acquired stock that presumably has appreciated in value you are faced with the choice of liquidating the stock or holding it if you sell immediately upon exercise you have locked in your compensation gains the difference between the exercise price and stock market price but if you hold the stock and then... | |
how do esos differ from listed options | esos differ from exchange traded or listed options in many ways as they are not traded their value is not easy to ascertain unlike listed options esos do not have standardized specifications or automatic exercise finally eso holders must be cognizant of counterparty risk and concentration risks | |
are esos worthless at first | although esos have no intrinsic value when granted they are not worthless because of their lengthy time to expiration compared to listed options esos have a significant amount of time value that should not be frittered away through early exercise | |
what are the tax implications of receiving employee stock options | while the option grant is not a taxable event taxation begins at the time of exercise the sale of acquired stock triggers another taxable event tax payable at the time of exercise is a major deterrent against early exercise of esos despite the large tax liability and loss of time value incurred through early exercise i... | |
what is an employee stock ownership plan esop | an employee stock ownership plan esop is an employee benefit plan that gives workers ownership interest in the company in the form of shares of stock esops give the sponsoring company the selling shareholder and participants various tax benefits making them qualified plans and are often used by employers as a corporate... | |
how does an employee stock ownership plan esop work | an esop is usually formed to facilitate succession planning in a closely held company by allowing employees the opportunity to buy shares of the corporate stock esops are also offered as a retirement benefit esops are set up as trust funds and can be funded by companies putting newly issued shares into them putting cas... | |
when a fully vested employee retires or resigns from the company the firm purchases the vested shares back from them the money goes to the employee in a lump sum or equal periodic payments depending on the plan | once the company purchases the shares and pays the employee the company redistributes or voids the shares employees who leave the company voluntarily cannot take the shares of stock with them only the cash payment | |
how to cash out of an esop | being vested doesn t necessarily mean you can cash out of your esop generally it s only possible to redeem these shares if you terminate employment retire die or become disabled age is often an important factor distributions are rarely permitted to people under 59 or 55 if they have left the company if there are distri... | |
what does esop stand for | esop stands for employee stock ownership plan an esop grants company stock to employees often based on the duration of their employment typically it is part of a compensation package where shares will vest over a period of time esops are designed so that employees motivations and interests are aligned with those of the... | |
how does an esop work | first an esop is set up as a trust fund here companies may place newly issued shares borrow money to buy company shares or fund the trust with cash to purchase company shares meanwhile employees can accumulate a growing number of shares an amount that can rise over time depending on their employment term these shares a... | |
what is an example of an esop | consider an employee who has worked at a large tech firm for five years under the company s esop they have the right to receive 20 shares after the first year and 100 shares total after five years when the employee retires they will receive the share value in cash other types of stock ownership plans may be offered ins... | |
are esops good for employees | yes esops can generally be considered a benefit for workers these programs tend to be adopted by companies that don t chop and change staff frequently and often result in a bigger payout and greater financial compensation for employees the bottom lineesops are generally a win win for employers and employees encouraging... | |
what is an employee stock purchase plan espp | an employee stock purchase plan espp is a company run program in which participating employees can purchase company stock directly at a discounted price employees contribute to the plan through payroll deductions which build up between the offering date and the purchase date at the purchase date the company uses the em... | |
is an espp income or capital gains | if you sell stock purchased through your espp more than 12 months after you purchased it any gain beyond the discount that you received through the plan is taxed as a capital gain the discount is taxed as ordinary income in general capital gains tax rates are much lower than ordinary income tax rates ranging from 0 to ... | |
what is an employer identification number ein | the term employer identification number ein refers to a unique identifier that is assigned to a business entity so that it can easily be identified by the internal revenue service irs eins are commonly used by employers for the purpose of reporting taxes the number is made up of nine digits and is formatted as xx xxxxx... | |
do i need an employee identification number | the irs requires certain companies to obtain an ein as part of reporting requirements a business or other entity needs an ein if it | |
how to get an employer identification number | applying for an ein costs nothing applications can be made by phone for those who aren t in the united states but will do business in the country fax mail or online the process is fairly easy and uncomplicated applicants must fill out form ss 4 application for employer identification number which is available on the ir... | |
what happens if you lose or misplace your ein | if you misplace your ein look for it on the notice sent to you by the irs when your ein was issued you can also try to recover it by contacting the financial institution where you do your day to day banking you can also find it on your previous tax returns if all else fails contact the irs business specialty tax line a... | |
does my business need an ein | most businesses will need an employer identification number specifically one will need an ein if it has employees operates as a corporation or partnership files certain tax returns employment excise or alcohol tobacco and firearms withholds taxes on income other than wages paid to non resident aliens or has a keogh pla... | |
how do i find an employer identification number | you can find an employer identification number using the irs notice generated when you applied for it with banks or creditors you used it to open accounts at on any state licenses or permits previous tax returns or by contacting the irs | |
when applying online you can get an ein immediately it normally takes one week to get an ein when applying by fax the irs also accepts paper mail applications though it quotes an expected turnaround time of four to five weeks | the bottom linean employer identification number ein is a unique nine digit number that is assigned to a business entity every business needs an employer identification number to report taxes to request an ein applicants must fill out form ss 4 available on the irs website the ein must not be confused with the tax iden... | |
what is employers liability insurance | employers liability insurance is an insurance policy that handles claims from workers who have suffered a job related injury or illness not covered by workers compensation a type of liability insurance it can be packaged with workers compensation to further protect companies against the costs associated with workplace ... | |
how employers liability insurance works | the majority of private sector employees are covered by workers compensation laws established at the state level federal employees work under federal workers compensation laws states require most employers to carry workers compensation insurance workers compensation provides some level of coverage for medical expenses ... | |
what employers liability insurance covers | other sorts of claims covered by employers liability insurance include many companies choose to carry employers liability insurance to help cover the costs of defending the organization in court claims can become complicated and costly for employers particularly in the case of a lawsuit a liability claim may be legitim... | |
how is employers liability insurance different from general liability | in terms of the scope of what it encompasses general liability insurance only covers a business from outside claims including customer injuries or negligence it does not protect a business from employee related negligence employers liability insurance is for legal claims filed by injured workers | |
what is excluded from employers liability insurance | there are a number of circumstances not covered by employers liability insurance including criminal acts fraud illegal profit violation of the law and any claims that are the result of downsizing layoffs restructurings mergers or acquisitions | |
do you need epli and eli | epli or employment practices liability insurance epli is different from eli or employers liability insurance employers need to buy epli to make sure that they are covered from employee lawsuits that allege discrimination sexual harassment or wrongful termination none of which are covered by employers liability insuranc... | |
what are employment agency fees | the term employment agency fee refers to a fee paid by a company to an employment agency when it successfully places a suitable employee with that employer fees tend to vary widely from one agency to another as they are at the discretion of the agency there are two types of employment agency fees employer paid fees and... | |
what is employment insurance ei | employment insurance ei is an unemployment insurance program in canada that allows individuals who have recently lost a job to receive temporary financial assistance employment insurance can also be extended to individuals who are unable to work because of illness or who are caring for a young child or a seriously ill ... | |
what is the employment to population ratio | the employment to population ratio also known as the employment population ratio is a macroeconomic statistic that measures the civilian labor force currently employed against the total working age population of a region municipality or country it is viewed as a broad metric of labor unemployment it is often calculated... | |
what does encroachment mean | in real estate encroachment means one property owner is violating the rights of another by building on or extending a structure to the neighbor s land or property intentionally or otherwise encroachment can be a problem along disputed property lines understanding encroachmentproperty and land surveys are an important p... | |
what is an easement | people often confuse encroachment with easement both involve a property owner making extensions over their neighbor s property while encroachments are the unauthorized use of the neighbor s property easements are agreed upon by both parties in many cases the party responsible for the easement compensates the other neig... | |
what is an example of encroachment | a common example of encroachment would be the building of a fence if one property owner constructs a new fence without being certain of where the property line falls he could inadvertently build the fence on his neighbor s property | |
what is a land survey | many people who have bought a new home are familiar with numerous steps and costs involved before closing on the sale can take place one of those fees typically is for a land survey which is handled by a company that confirms the precise boundaries of the property being sold the bottom lineencroachment in real estate c... | |
what is an encumbrance | an encumbrance is a claim against a property made by a party who is not the property owner an encumbrance can impact the transferability of the property and restrict its free use until the encumbrance is lifted the most common types of encumbrance apply to real estate these include mortgages easements and property tax ... | |
what if i buy real estate with an encumbrance | that depends on the encumbrance an encumbrance on your newly purchased property may be simply a mortgage or it may be a financial lien placed by someone owed money for work they did for the previous owner that wasn t paid it could be a property tax lien placed by the county or it might be a zoning regulation that prohi... | |
what does it mean if a property is encumbered | it means that some party has placed a claim on the property that affects what the property owner may do with it | |
how do i find out about encumbrances on a property | you can request this specific information from your real estate agent or the seller in addition when you perform a title search you should find out about any outstanding claims or liens the bottom linean encumbrance is a claim or right held by someone other than a property owner that can affect how someone might use th... | |
what is end to end | end to end describes a process that takes a system or service from beginning to end and delivers a complete functional solution usually without needing to obtain anything from a third party it often refers to vendors that can see a project through from beginning to end and supply everything needed to create a workable ... | |
when dealing with complex systems or services it is often easier and more cost effective for the customer to have only one supplier and one point of contact also it solutions that involve multiple providers for different parts of the workflow only increase the cost of managing the process so are not considered to be tr... | end to end processes are often used to embrace operational efficiency for example the bureau of the fiscal service s office of financial innovation and transformation of the federal government developed end to end frameworks this framework strives to reduce unnecessary steps automate processes and achieve large scale e... | |
what does the phrase end to end mean | end to end refers to a full process from start to finish it is often used to describe a service that sees something through from the kick off or initiation through the final product it may be used to describe a one time project i e implementation of new software or may be an internal process i e setting up a new vendor... | |
what is an end to end product | an end to end product is an item that manages the full development process of a new product from the start of development through final delivery to customers the end to end process may incorporate multiple departments but it refers to the full span of activities needed from start to finish to furnish the final delivera... | |
what is a full project life cycle | the project management lifecycle often consists of four stages initiation planning execution and close out an end to end process will often consist of all four stages as the process begins with the start of a project or process and ends with the final wrap up after product or project delivery has been made | |
how is end to end services implemented in it | end to end services are often utilized in it as it meshes well with the implementation and utilization of software often a provider will offer support in the set up of a product the provider will then offer ongoing support services including troubleshooting assistance upgrading to new versions and daily operational sup... | |
what is endogenous growth theory | endogenous growth theory is an economic theory which argues that economic growth is generated from within a system as a direct result of internal processes more specifically the theory notes that the enhancement of a nation s human capital will lead to economic growth by means of the development of new forms of technol... | |
what is an endogenous variable | an endogenous variable is a variable in a statistical model that is changed or determined by its relationship with other variables within the model in other words an endogenous variable is synonymous with a dependent variable meaning it correlates with other factors within the system being studied therefore its values ... | |
what other fields use endogenous variables | agriculture and meteorology are among the other fields that use models with endogenous variables | |
how do endogenous variables differ from exogenous variables | unlike endogenous variables exogenous variables are considered independent one variable within the formula doesn t dictate or directly correlate to a change in another the bottom linean endogenous variable is a variable in a statistical model it s changed or determined by its relationship with other variables within th... | |
what is an endorsement | an endorsement may be a signature authorizing the legal transfer of a negotiable instrument between parties or it can be an amendment to a contract or document such as a life insurance policy or a driver s license a public declaration of support for a person product or service is also called an endorsement investopedia... | |
what is an endorsement with respect to insurance | in insurance an endorsement is also known as a rider and is an amendment that adds to or modifies the original policy | |
what are other kinds of endorsements | the signature on the back of a check is an endorsement that authorizes the transfer of funds a public statement approval for a product or person running for office is another kind of endorsement | |
how do you endorse a check | simply by signing it on the back that s the short answer to how to endorse a check that said there are several variations on the check endorsement theme if you just scrawl your signature on the reverse it s known as a blank endorsement and anyone can present the check for payment if you add the words for deposit only b... | |
what is an endowment | an endowment is a gift to a nonprofit organization to be used for a specific purpose the term endowment is also used to refer to the total investable assets of a nonprofit institution like a university the endowment also known as the institution s principal or corpus is used for operations or programs that are consiste... | |
where do endowments get their money | the endowment of a university or other nonprofit institution may be made up of many individual donations each called an endowment harvard s total endowment is more than 50 billion that fund is made up of many individual gifts each of which comes with its own rules for example an individual donor may contribute a sum of... | |
what is the endowment effect | the endowment effect refers to an emotional bias that causes individuals to value an owned object higher often irrationally than its market value understanding the endowment effectin behavioral finance the endowment effect or divestiture aversion as it is sometimes called describes a circumstance in which an individual... | |
how to avoid the endowment effect | an investor must be mindful in order to avoid the endowment effect they must take deliberate action or take care to understand the assets they hold and the emotional ties they have to the goods first investors must have a clear investment strategy having a clear investment strategy can help investors make objective dec... | |
how does the endowment effect effect buyers | the endowment effect doesn t just impact sellers buyers are often more willing to sell items for more money than what they would buy that same item for for this reason there is naturally dissonance between the prices offered and prices sought after for many types of trades | |
why is it called the endowment effect | the term endowment effect was first used by the economist richard thaler it was used in reference to the inertia related to consumer choices when goods included in their endowment were more highly valued than goods that were not | |
what is the opposite of the endowment effect | a phenomenon known as the reversed endowment effect is the opposite of the endowment effect this term is used to describe a situation where people tend to have a preference to be rid of an undesirable item in exchange for an equally undesirable item | |
is endowment effect a cognitive bias | yes the endowment effect is a cognitive bias that impacts how individuals feel about the goods they already possess there is little to no rational in the endowment effect as goods of equal value may not be seen or treated as such because of this cognitive bias the bottom linethe endowment effect is a term used to descr... | |
what is energy return on investment eroi | energy return on investment eroi is a ratio for describing a measure of energy produced in relation to the energy used to create it for instance the ratio would illustrate how much energy is used to locate extract deliver and refine crude oil relative to how much useable energy is created the energy return on investmen... | |
when the eroi is large that means that producing energy from that source is relatively easy and cost effective however when the number is small obtaining energy from that source is difficult and expensive for example when the ratio is 1 there is no return on energy invested according to the world nuclear association th... | in its simplest form eroi is calculated as however there are dramatic differences in how certain steps of the input process are measured this measurement is complex because the inputs are diverse and there is uncertainty as to how far back they should be taken in the analysis in addition to energy costs there are other... | |
what is an energy risk professional erp | energy risk professional erp is a professional designation awarded by the global association of risk professionals garp to individuals who work in the oil coal natural gas and alternative energy industries as of 2021 the designation will no longer be offered understanding an energy risk professional erp people seeking ... | |
what the energy risk professional erp exam covers | part i of the exam focuses on the following part ii of the exam focuses on the following | |
what is the energy sector | the energy sector is a category of stocks that relate to producing or supplying energy the energy sector or industry includes companies involved in the exploration and development of oil or gas reserves oil and gas drilling and refining the energy industry also includes integrated power utility companies such as renewa... | |
what is the energy sector responsible for | the energy sector plays a crucial role in the economy aside from powering homes transportation and factories energy sources are also a component in many of the products we use on a daily basis | |
which are the main energy sectors | the global industry classification standard gics breaks down the energy sector into two industries energy equipment and services and oil gas and consumable fuels there are then various sub sectors | |
what is the difference between the energy sector and the utility sector | the energy sector primarily consists of companies that play a role in extracting refining or producing sources of energy utility companies on the other hand focus on providing their customers with electricity water and other public utilities both of these sectors offer customers electricity in some way however their ro... | |
what is an engagement letter | an engagement letter is a written agreement that describes the business relationship to be entered into by a client and a company the letter details the scope of the agreement its terms and costs the purpose of an engagement letter is to set expectations on both sides of the agreement | |
how an engagement letter works | a letter of engagement serves the same purpose as a contract between two parties however its format is less formal than a contract and it generally avoids legal jargon 1the letter is intended to briefly but accurately describe a letter of engagement is a legal document it is binding in a business deal an engagement let... | |
is an engagement letter the same as a contract | engagement letters are less formal and generally shorter than a traditional contract however they also share some important traits such as being legally binding and designed to reduce liability they can be used by any size business from individuals who are sole proprietors to large corporations | |
when should an engagement letter be sent | engagement letters need to be presented to the client at the beginning of the relationship before work commences they should also periodically be reissued especially when the scope of services changes or if the business changes its prices | |
how often should engagement letters be updated | many companies will require their engagement letter to be updated and signed on an annual basis a new one should always be issued if the scope of services changes however even if the agreement remains the same it can still be wise to redraft an engagement letter to increase the legal standing of the document this can a... | |
what is engel s law | engel s law is an economic theory put forth in 1857 by ernst engel a german statistician it states that the percentage of income allocated for food purchases decreases as a household s income rises while the percentage spent on other things such as education and recreation increases understanding engel s lawin the mid ... | |
what is an engel curve | an engel curve is a graphic representation of engel s law showing the relationship between household income and spending on a particular good or service 4 | |
what is engel s coefficient | the engel coefficient based on engel s law is a commonly used measure of a nation s standard of living some countries also use it to set their poverty line the coefficient is arrived at by dividing food expenditures by total expenditures 5 | |
what is income elasticity | income elasticity of demand is a measure of how demand for a particular product or service will rise as income rises luxury products for example have a higher elasticity of demand than so called normal goods like food some items referred to by economists as inferior goods see a decline in demand as income rises the bot... | |
what is enhanced oil recovery eor | enhanced oil recovery eor also known as tertiary recovery is a process for extracting oil that has not already been retrieved through the primary or secondary oil recovery techniques although the primary and secondary recovery techniques rely on the pressure differential between the surface and the underground well enh... | |
how enhanced oil recovery works | enhanced oil recovery techniques are complex and expensive and therefore are employed only when the primary and secondary recovery techniques have exhausted their usefulness indeed depending on factors such as the cost of oil it may not be economical to employ eor at all in those cases oil and gas might be left in the ... | |
what is an enrolled agent | an enrolled agent ea is a tax professional authorized by the united states government to represent taxpayers in matters regarding the internal revenue service irs eas must pass an examination or have sufficient experience as an irs employee and pass a background check 12 enrolled agents first appeared in 1884 due to is... | |
how do i become an enrolled agent | to become an enrolled agent a person must obtain a preparer tax identification number pass the special enrollment exam enroll as an agent and be deemed suitable e g background check to perform as an enrolled agent 5 former irs employees with at least 5 years of experience as field tax professionals 6 | |
what does an enrolled agent do | an enrolled agent is authorized by the u s federal government to represent taxpayers before the irs they may also serve as tax advisors planners and preparers 4 | |
how is an enrolled agent different from a cpa | while an enrolled agent ea and a certified public accountant cpa are skilled and authorized tax professionals however an enrolled agent is specifically focused on taxation whereas a cpa can specialize in taxation and other financial and accounting matters a person may be an ea and a cpa however one appointment does not... | |
what was enron | enron was an energy trading and utility company based in houston texas that perpetrated one of the biggest accounting frauds in history enron s executives employed accounting practices that falsely inflated the company s revenues and for a time made it the seventh largest corporation in the united states once the fraud... | |
what happened to enron | the enron bankruptcy at 63 4 billion in assets was the largest on record at the time the company s collapse shook the financial markets and nearly crippled the energy industry while high level executives at the company concocted the fraudulent accounting schemes financial and legal experts maintained that they would ne... | |
what is enterprise multiple | enterprise multiple also known as the ev multiple is a ratio used to determine the value of a company the enterprise multiple which is enterprise value divided by earnings before interest taxes depreciation and amortization ebitda looks at a company the way a potential acquirer would by considering the company s debt w... | |
what enterprise multiple can tell you | investors mainly use a company s enterprise multiple to determine whether a company is undervalued or overvalued a low ratio relative to peers or historical averages indicates that a company might be undervalued and a high ratio indicates that the company might be overvalued an enterprise multiple is useful for transna... | |
what is enterprise resource planning erp | enterprise resource planning erp is a platform companies use to manage and integrate the essential parts of their businesses many erp software applications are critical to companies because they help them implement resource planning by integrating all the processes needed to run their companies with a single system an ... | |
how enterprise resource planning platforms work | erp has evolved over the years from traditional software models that made use of physical client servers and manual entry systems to cloud based software with remote web based access the platform is generally maintained by the company that created it with client companies renting services provided by the platform busin... | |
what is enterprise resource planning | enterprise resource planning or erp is an interconnected system that aggregates and distributes information across a company the goal of an erp system is to communicate relevant information from one area of a business to another for example an erp system could automatically notify the purchasing department when the man... | |
what is the importance of enterprise resource planning | enterprise resource planning software offers single system solutions that integrate processes across the business these applications allow users to interact within a single interface share information and enable cross functional collaboration they increase productivity collaboration and efficiency | |
what are the 5 components of erp | the components of an erp system depend on the organization s needs however there are key features that each erp should include generally packages include finance human resource logistics and manufacturing supply chain management and customer relationship management | |
which ones are the main applications depends on the business and the industry it operates in most companies can benefit from supply chain management logistics and financial applications to help them streamline their operations and expenses | the bottom lineenterprise resource planning erp manages and integrates business processes through a single system with a better line of sight companies can better plan and allocate resources without erp companies tend to operate in silos with each department using its own disconnected system erp systems promote the fre... | |
what is enterprise risk management erm | enterprise risk management erm is a methodology that looks at risk management strategically from the perspective of the entire firm or organization it is a top down strategy that aims to identify assess and prepare for potential losses dangers hazards and other potentials for harm that may interfere with an organizatio... |
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